TCREUR_Public/170809.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

           Wednesday, August 9, 2017, Vol. 18, No. 157


                            Headlines


A L B A N I A

ALBANIA: S&P Affirms 'B+/B' Sovereign Credit Ratings


A U S T R I A

HYPO ALPE-ADRIA JERSEY II: HETA Approves Winding-Up Process


A Z E R B A I J A N

AZERBAIJAN: Fitch Affirms BB+ Long-Term IDR, Outlook Negative


F R A N C E

RAMSAY GENERALE: Moody's Affirms Ba3 Corporate Family Rating


G E R M A N Y

SOLARWORLD AG: Administrator Inks Purchase & Transfer Agreement


I R E L A N D

AVOCA CLO XIII: Fitch Assigns 'B-(EXP)' Rating to Cl. F-R Notes
HARVEST CLO IX: Moody's Assigns (P)B2 Rating to Cl. F-R Notes


I T A L Y

LIMACORPORATE SPA: Moody's Rates EUR60MM Sr. Credit Facility Ba2


L U X E M B O U R G

OBSIEGER CAPITAL: Management Put Into Liquidation


M A C E D O N I A

MACEDONIA: Fitch Affirms 'BB' Long-Term IDRs, Outlook Negative


M A L T A

VISTAJET GROUP: Fitch Affirms B- Long-Term IDR, Outlook Stable


N E T H E R L A N D S

NEPTUNO CLO II: Moody's Cuts Rating on Cl. E Notes to Caa3(sf)
PENTA CLO 2: Fitch Affirms 'B-sf' Rating on Class F Notes


P O L A N D

HYPERION SA: Warsaw Court Opts to Discontinue Rehabilitation


R U S S I A

CB KRYLOVSKY: Put On Provisional Administration, License Revoked
ECONOMIC UNION: Liabilities Exceed Assets, Assessment Shows
SAMARA CITY: Fitch Affirms 'BB+' IDR, Outlook Stable


S P A I N

ALMIRALL SA: S&P Lowers CCR to 'BB-', Outlook Negative
BANCO SANTANDER: Moody's Affirms Ba1(hyb) Pref. Shares Rating
MOTOVILIKHINSKIYE ZAVODY: Court Applies Observation Proceedings


U N I T E D   K I N G D O M

ASHTEAD CAPITAL: Moody's Rates New USD1,200MM Sr. Sec. Notes Ba2
CAVENDISH SQUARE: Fitch Affirms B- Rating on EUR9MM Class C Notes
DECO 11 CONDUIT 3: S&P Cuts Ratings on Three Note Classes to 'D'
GELPACK INDUSTRIAL: Administrators Appointed
GRIFFON FUNDING: Moody's Affirms Ba3(sf) Rating on Cl. B1 Notes

L1R HB: Moody's Assigns B2 Corporate Family Rating
L1R HB: S&P Assigns Preliminary 'B' CCR, Outlook Stable
TES FINANCE: Moody's Affirms Caa1 CFR, Outlook Negative


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A L B A N I A
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ALBANIA: S&P Affirms 'B+/B' Sovereign Credit Ratings
----------------------------------------------------
On Aug. 4, 2017, S&P Global Ratings affirmed its 'B+/B' long- and
short-term sovereign credit ratings on the Republic of Albania.
The outlook remains stable.

OUTLOOK

S&P said, "The stable outlook reflects our expectation that the
government of Albania will maintain its commitment to fiscal
consolidation, particularly on the revenues side, supported by
steady economic growth and the authorities' increased capability
to enforce tax compliance. Lower risks associated with the
country's gradually declining debt-to-GDP ratio will also help to
reduce the government's interest bill as a share of government
revenues. At the same time, the country will continue to
strengthen its institutions ahead of the EU accession process,
and we expect its external financing position will not
deteriorate.

"We could raise the ratings if structural reforms established a
stronger track record of more robust institutions and
strengthened economic growth prospects. A positive action could
also follow should ongoing fiscal consolidation efforts result in
a faster-than-expected decrease in government debt.

"We could lower the ratings if we observed deterioration in
government finances--for example, due to a significant deviation
from our current forecast--alongside resumed constraints on
borrowing conditions. We could also lower the ratings if we saw a
marked deterioration in Albania's external position and ability
to fund its high current account deficit.

RATIONALE

The ratings on Albania reflect the country's steady progress
toward fiscal consolidation, despite political tensions in mid-
2017, aided by steady economic growth and reform progress. We
believe that the policy anchor provided by the International
Monetary Fund's Extended Fund Facility arrangement (IMF EFF) that
concluded in February 2017 strengthened Albania's fiscal
framework. In particular, the formalized deficit brake, the
"organic budget" law, and generally enhanced institutional
oversight, helped to prevent the renewed accumulation of arrears
and secured the country from a fiscal slippage ahead of this
year's general elections. A prudent fiscal framework, political
commitment, and declining interest spending will likely enable
the government to set the country's currently high public debt
burden on a gradual downward trajectory. Overall, we note that
Albania fiscally outperforms its peers in the same rating
category. The current exchange rate regime is more stable than
peers', and Albania has improved its institutional set-up.

Institutional and Economic Profile:

-- Cooperation with international organizations strengthen
    Albania's institutional framework and supports economic
    development.
-- The results of the recent general elections enable the new
    government to push ahead with structural reforms.
-- The new government's actions will likely support gradual
    improvements in Albania's institutional effectiveness and
    predictability.

The economy is growing at a relatively fast pace, albeit from a
low base.

Despite high pre-election tensions, the July general elections
went smoothly, pointing to Albania's capacity to reach political
compromise. S&P said, "The Socialist party emerged as the winner
and will form the new government, which we expect will deliver
policy continuity. In particular, we expect the government will
advance in widening structural reforms, thus building on recent
improvements in the nation's institutional framework." Aided by
its cooperation with international organizations--such as the IMF
(which expressed willingness to renew its engagement with Albania
after the EFF program concluded in February 2017) or the EU, in
the run-up to the EU accession process--the Albanian government
has made significant efforts to strengthen the rule of law and
combat the informal sector.

S&P said, "We note that last year's judicial reform has the
potential to create a more independent judiciary. This will
improve the country's business environment, for example, by
increasing the effectiveness of enforcement of property rights
and offering a more effective bankruptcy resolution process.

"We expect that Albania, coming from a low base, will be able to
generate solid economic growth rates of about 3.8% per year on
average in real terms during 2017-2020. Growth will primarily
stem from strong domestic demand, with rising consumption and
private investment, in our view. Economic development in 2017
will also benefit from two large investment projects in the
energy sector, for which most of the construction will occur this
year. Progress on the Trans-Adriatic Pipeline (TAP), which will
connect Albania with Italy and the Caspian Sea, appears on track,
with completion expected by year-end 2018 and costing an
estimated EUR1.5 billion. An improved business environment and
stonger institutions will help the country to attract more
foreign direct investment (FDI) in energy, tourism, and
agriculture."

Flexibility and Performance Profile:

-- Continued fiscal consolidation will reduce risks and improve
    sustainability of the large stock of public debt.
-- Albania's government continues to pursue budget consolidation
    as revenues have risen and fiscal reforms have proven
    effective.
-- The country's large public debt burden is likely to start
    declining.
-- External vulnerabilities remain high whereas monetary
    flexibility is severely limited by high euroization.

The government will continue on a path of fiscal consolidation as
general government deficits are projected to decline to merely 1%
of GDP in 2020. Revenue growth has been solid as tax revenues
have consistently risen by over 8% over the past 18 months on the
back of rapid nominal GDP growth and stronger tax enforcement. At
the same time, the shadow economy continues to weigh on revenues,
leaving room for improvements in tax compliance.

S&P said, "On the expenditure side, we acknowledge efforts to
prevent the accumulation of government arrears through tighter
monitoring. Successful implementation and adherence to the
"organic budget" law, which stipulates limits on government
spending in an election year, also delivered sound results. The
government is currently in surplus for the first half of 2017.
However, we forecast a deficit of 1.9% of GDP for the full year
2017, which will be significantly lower than in 2013-2014 when
election-driven arrears subsequently resulted in financing
pressures for the government."

Fiscal consolidation will reduce Albania's general government net
debt to slightly above 62% of GDP in 2020 from 72% at the end of
2016. Partly benefiting from a global decline in interest rates,
Albania reduced its interest payments to 8.9% of general
government revenues in 2016 from over 11.7% on average in 2012-
2015. The interest bill (as a share of general government
revenues) will likely remain suppressed in the medium term as the
revenue base of the budget expands.

Although the average maturity of government debt has lengthened
considerably over the past three years, for the domestic portion
of debt, average maturity remains relatively short, at slightly
above two years. Domestic debt currently accounts for around 54%
of the total public-sector debt stock and approximately 49% of
total government debt is denominated in foreign currency.

Albania's banking system still holds the largest share of
domestic debt, and about 24% of the banking system's assets are
government securities. However, higher revenue growth, generally
improved government finances, and lower risks associated with
Albania's still-high public debt stock have markedly reduced
interest payments.

At the same time, Albania's external vulnerabilities remain high.
S&P said, "The current account deficit has slightly contracted
recently due to higher exports, but we still forecast it will
average a high 9.6% of GDP over the coming four years. We expect
FDI to remain the key external financing source since a number of
large FDI projects remain in the pipeline. For example, the TAP
project has stayed on schedule. Given that the largest share of
the TAP investments, totaling EUR1.5 billion, will be executed in
2017, we estimate the FDI inflow at 9% of GDP in 2017. Further
FDI inflows are related to Albania's energy sector, particularly
projects in the hydropower sector. The improvement of the
institutional environment could therefore help by attracting a
broader base of FDI inflows in the coming years. Albania's DFI
projects are very import intensive, which is the primary reason
behind material trade imbalances.

"Remittances present another major source of foreign financing
and we estimate a relatively steady, but declining, transfer
balance of above 7% of GDP over our forecast horizon (compared
with an average 13% of GDP over 2004-2008). Albania has been hit
by the economic developments in Greece, where a significant
Albanian diaspora lives, but migration of Albanians to other
countries will help by further diversifying remittance sources.

"Albania's external indebtedness is relatively low, as financing
for the current account deficit has historically been more in the
form of net foreign investment than in debt-creating inflows.
Narrow net external debt of the country, by our definition, has
even significantly decreased at the end of 2016 to 13% of current
account receipts (CARs) due to higher external assets of the
financial sector and we expect this ratio to remain close to 10%
in the near-term and to slightly pick up at the end of our
forecast horizon. At the same time, we see a risk that Albania's
large projected FDI flows could drop or reverse in the coming
years, especially as Albania's net external liability position is
much weaker than its narrow net external debt position,
surpassing it by over 110% of CARs in 2017.

"The deposit-funded financial sector has strengthened its
position as a net external creditor. This ongoing rise of the
financial sector's net foreign assets -- partly reflecting high
liquidity -- mirrors the country's limited lending opportunities
for banks in recent years. We estimate domestic growth of bank
credit to the entire domestic sector at merely 2% over the next
years.

Generally, the high share of foreign currency in the economic
system hinders the effectiveness of Albania's monetary policy, as
it does in several economies across the region. Despite the Bank
of Albania's (BoA's) efforts to achieve de-euroization, deposits
in foreign currencies will remain well above 50% of total
deposits. However, loans in foreign currencies have decreased
over the past years and could dip below 50% of total loans over
the next years.

Since the second quarter of 2016, the BoA has maintained a rather
accommodative policy to try and meet its 3% target inflation
rate. Nevertheless, the central bank missed the target again in
2016. S&P said, "We project that the target inflation rate will
not be reached before 2019.

"At the same time, we acknowledge some progress toward the
reduction of nonperforming loans in the banking system to 18% at
the end of 2016 from its peak of 25% in September 2014, although
mainly driven by write-offs." Capital buffers and liquidity in
the banking system remain comfortably above minimum capital
requirements. Subsidiaries of Greek banks maintain a sizable
presence in Albania and the authorities have taken measures to
limit exposure to their parents and prevent contagion risks to
the rest of the sector.

The lek remains a free-floating currency, which has more recently
been underscored by strong upward pressure. The BoA has
intervened only marginally in the foreign exchange market in the
past years, primarily with the intent of increasing its foreign
currency reserves in line with its targets. The central bank's
only significant open market operations included three-month
liquidity injections to help enforce its policy rate, which
remains historically low at 1.25%.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable (see 'Related Criteria And Research'). At
the onset of the committee, the chair confirmed that the
information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was
sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee agreed that the fiscal assessment: debt burden had
improved. All other key rating factors were unchanged.

The chair ensured every voting member was given the opportunity
to articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action (see 'Related Criteria and Research').


RATINGS LIST

                                           Rating
                                   To               From
  Albania (Republic of)
   Sovereign Credit Rating
    Foreign and Local Currency      B+/Stable/B     B+/Stable/B
   Transfer & Convertibility
     Assessment                     BB              BB
   Senior Unsecured
    Foreign Currency                B+              B+



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HYPO ALPE-ADRIA JERSEY II: HETA Approves Winding-Up Process
-----------------------------------------------------------
Hypo Alpe-Adria (Jersey) II Limited on Aug. 4 disclosed that as
previously announced on February 9, 2017, the sole holder of all
of the ordinary shares of the Company, HETA Asset Resolution AG
("HETA", formerly "HYPO ALPE-ADRIA-BANK INTERNATIONAL AG"), had
informed the board of directors of the Company (the "Board"), by
written notice, that HETA had gone into liquidation within the
meaning of the Company's articles of association and that HETA
intended to pass a special resolution to put the Company into a
summary winding-up.

The Board met on Aug. 8 to consider the contents of a letter
dated 8 February 2017 from HETA together with legal opinions
under Austrian law, English law and Jersey law.  The Board
concluded that Heta is indeed in liquidation, dissolution or
winding up within the meaning of the Company's articles of
association and that, under such circumstances, the Board was
required to approve the summary winding-up of the Company.

The Board was satisfied that the Company has no assets and no
liabilities. Accordingly, the Board approved the summary winding-
up of the Company and HETA adopted a special resolution in
writing approving the winding-up of the Company.  The Company
will be dissolved following the filing of the relevant documents
at the Jersey Companies Registry.  The Preferred Securities will
be cancelled upon dissolution of the Company.  No liquidator will
be appointed, no assets will be realized, no debts will be
discharged and no liquidation proceeds will be distributed.

Heta Asset Resolution AG is a wind-down company owned by the
Republic of Austria.  Its statutory task is to dispose of the
non-performing portion of Hypo Alpe Adria, nationalized in 2009,
as effectively as possible while preserving value.




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AZERBAIJAN: Fitch Affirms BB+ Long-Term IDR, Outlook Negative
-------------------------------------------------------------
Fitch Ratings has affirmed Azerbaijan's Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDR) at 'BB+' with
Negative Outlooks. The issue rating on Azerbaijan's senior
unsecured foreign- and local-currency debt has also been affirmed
at 'BB+'. The Country Ceiling has been affirmed at 'BB+'. The
Short-Term Foreign- and Local-Currency IDRs have been affirmed at
'B' and the issue rating on Azerbaijan's senior unsecured short-
term local-currency bond has been affirmed at 'B'.

KEY RATING DRIVERS
Azerbaijan's 'BB+' ratings balance a strong external balance
sheet and low government debt, stemming from accumulated
surpluses in times of high oil revenues, with a heavy dependence
on hydrocarbons, an underdeveloped and unpredictable policy
framework, low governance indicators and a weak banking sector.

The Negative Outlook reflects continued risks and uncertainty
around the macroeconomic and financial sector adjustment
currently under way.

Azerbaijan's 'BB+' IDRs reflect the following key rating drivers:

Policy credibility continues to be tested by the fallout from
lower oil prices. The impact of from a mishandled devaluation is
still reverberating across the economy. Evolution of the monetary
policy framework lags other CIS oil producers. The FX debt
restructuring at International Bank of Azerbaijan (IBA), the
largest state-owned bank, potentially at the cost of reputational
damage, may not be sufficient to restore IBA's financial health,
in Fitch's opinion.

The sovereign external balance sheet is strong. Assets held by
the State Oil Fund of Azerbaijan (Sofaz) were USD34.8 billion at
end-June (88% of end-2016 GDP) and the transparency of Sofaz's
financial stocks and flows is greater than the sovereign wealth
funds of most higher rated oil producers. Sovereign net foreign
assets will fall due to debt issued as part of the IBA
restructuring, but at a forecast 65% of GDP at end-2017 (down
from 81.1% at end-2016), well in excess of the peer median of
0.6%. The IBA restructuring demonstrates a desire to preserve
Sofaz assets, in Fitch's opinion. However, Sofaz assets are
playing a major role in restoring macroeconomic stability.

Higher oil prices returned the current account to a surplus in
1Q17, the first since 3Q15. Rising prices, and greater oil and
gas production in 2019, will support continued surpluses. These
will allow the central bank to rebuild its revenues, although at
USD8 billion, Fitch end-2019 projection is little more than half
the end-2014 level. CXP coverage will stay around four months, in
line with the 'BB' median. At present, Sofaz is the sole provider
of FX at the central bank's auctions.

IBA's debt restructuring is the latest government effort to
return the country's dominant bank to health. Government support
for IBA has totalled 27% of 2016 GDP since 2013. A stronger IBA
that can eventually play an effective role in financial
intermediation would support the economy. However, Fitch's bank
analysts are uncertain whether the current restructuring will be
sufficient. Much of the banking sector remains troubled, with
NPLs at 24% and capital adequacy of 11.8% at end-June 2017, but
Fitch is not assuming direct capital support from the government
for other entities in the sector.

Public finances have significantly outperformed the budget over
the first half of the year, reflecting pronounced under-
expenditure. A surplus of AZN0.1 billion was recorded compared
with a full year deficit target of AZN8.7 billion (12.3% of GDP).
Underspending primarily reflects a lower than planned use of a
budgeted AZN7.5 billion transfer from Sofaz to the Central Bank.
Fitch has greater clarity in the use of this transfer and as a
result has cut its deficit forecast to 3.3% of GDP in 2017.
Subdued growth in spending, potentially underpinned by a new
fiscal rule, and rising oil prices should allow the general
government budget to return to surplus in 2019.

General government debt is low relative to peers, at a projected
24.5% of GDP at end-2017 compared with a 'BB' median of 50.9%.
Debt/revenues and net debt/GDP are less than half the peer
median. Contingent liabilities of 25% of 2016 GDP have been
created by the removal of bad assets from IBA's balance sheet,
but as these take the form of 30-year concessional bonds held by
the central bank, Fitch views them as unlikely to crystallise on
the sovereign's balance sheet. However, they are likely to
undermine the profitability of the central bank; transfers of
central bank profits have been used to pay down the bulk of non-
IBA-related government guarantees in 2017.

The monetary policy framework is under-developed and hindered by
stubbornly high dollarisation (deposit dollarisation was 75% in
May). The exchange rate has been stable in recent months,
reflecting a lack of demand and higher oil prices, which has
allowed some rebuilding of central bank reserves. However, its
ability to act as a shock absorber remains to be tested. Exchange
rate stability has allowed a moderation in inflationary
pressures, although the headline rate remains high, at 13.8% in
May. Average inflation is forecast to decline, to 5.0% in 2019
from 11.8% in 2017, as higher oil prices underpin modest exchange
rate appreciation, but will remain well above peers (4.0% 'BB'
2017-2019 average).

Non-oil growth is slowly recovering after a sharp contraction in
2016. Over the first six months, the non-oil economy grew by
1.7%, driven by export-oriented manufacturing and agriculture,
which have benefited from the improvement in regional growth and
enhanced exchange rate competitiveness. Headline growth remains
negative due to falling oil production. Declining oil production,
lower government spending and weaker private sector confidence
will keep growth subdued over 2017 and 2018, at an average of
0.4%, compared with a peer median of 3.4%.

Significant energy projects will support growth and the balance
of payments in the medium term. Output from the Shah Deniz 2
project is scheduled to start in late 2018 and will double gas
production when fully operational. The construction of associated
major pipelines is ongoing. As a result, real GDP growth is
forecast to rise to 4.3% in 2019. Economic diversification is
progressing slowly, despite some improvement in doing business
indicators.

Governance indicators, as measured by the World Bank, are weak
relative to peers. Centralisation of power was strengthened after
a referendum in September 2016, and small social protests
occurred in early 2016. Economic policy may be constrained by
concerns about the potential adverse social consequences of a
depreciation of the manat. Following the April 2016 four-day
military conflict over Nagorno-Karabakh, incidents between Azeri
and Armenian forces and have picked up in magnitude and frequency
since late 2016. As formal negotiations over Nagorno-Karabakh
issue seem to be at a standstill, further escalation is a
material risk.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Azerbaijan a score equivalent to
a rating of 'BB-' on the Long-term FC IDR scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final LT FC IDR by applying its QO, relative
to rated peers, as follows:
- External finances: +2 notches, to reflect the size of Sofaz
assets which underpin Azerbaijan's exceptionally strong foreign
currency liquidity position and the very large net external
creditor position of the country.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within
Fitch criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main factors that could, individually or collectively,
trigger negative rating action are:
- Failure of the policy response to improve macroeconomic
   stability and reduce vulnerabilities in the financial sector.
- An erosion of the external asset position resulting from a
   failure to sustainably adjust budget execution to the lower
   oil price environment, or from a materialisation of large
   contingent liabilities.
- A further sustained and prolonged fall in hydrocarbon prices.

The Outlook is Negative. Consequently, Fitch does not anticipate
developments with a high likelihood of triggering an upgrade.
However, the main factors that could, individually or
collectively, trigger a revision of the Outlook to Stable are:
- Greater confidence in macroeconomic and financial policy
   management.
- Higher hydrocarbon prices that help preserve fiscal and
   external buffers.
- Improvement in governance and the business environment, and
   progress in economic diversification underpinning growth
   prospects.

KEY ASSUMPTIONS

Fitch forecasts Brent Crude to average USD52.5/b in 2017, USD55/b
in 2018 and USD60/b in 2019.

Fitch assumes that Azerbaijan will continue to experience broad
social and political stability and that there will be no
prolonged escalation in the conflict with Armenia over Nagorno-
Karabakh to a level that would affect economic and financial
stability.


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RAMSAY GENERALE: Moody's Affirms Ba3 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 corporate family
rating (CFR) rating at Ramsay Generale de Sante (RGdS) and the
Ba3 rating assigned to the company's senior secured loan
facilities. Concurrently Moody's upgraded the probability of
default rating (PDR) at RGdS to Ba3-PD from B1-PD. The outlook on
all ratings remains positive.

RATINGS RATIONALE

- UPGRADE OF THE PDR TO Ba3-PD

The upgrade of the PDR to Ba3-PD reflects the lower recovery rate
of 50% from 65% used in Moody's Loss Given Default for
Speculative-Grade Companies methodology due to the transition to
a covenant-lite capital structure as part of RGdS' proposed amend
and extend transaction which is expected to close on the August
9, 2017. As part of this transaction RGdS will replace the
existing financial maintenance covenant (set at 4.0x adjusted
leverage) with a springing net leverage covenant set at 5.0x and
triggered only when the EUR100 million revolving credit facility
is drawn by more than 40% .

In addition, RGdS will reduce the interest rate on the Term Loan
B from 3.5% to 3.125% and extend the maturities on its EUR840
million Term Loan B and its EUR175 million acquisition and capex
facilities to October 2022 (currently October 2020). The
transaction will also include certain increases to real estate
debt and finance and capital leases baskets and increase the
leverage ratio test for debt finance acquisitions larger than
EUR30 million to 4.5x from 4.0x.

Moody's believes that the transaction is overall credit neutral
as the increased financial flexibility generated by the maturity
extension and the interest rate reduction is offset by the less
protective financial documentation and covenant suite and the
increased flexibility to increase leverage and make acquisitions.

- AFFIRMATION OF CFR AND INSTRUMENT RATINGS

The affirmation continues to reflect (1) the company's large
scale and leading positioning within the market for French
private hospital providers; (2) the industrial ownership through
Ramsay Health Care; (3) RGdS's overall high degree of visibility
in terms of future operating performance, which is supported by
the role of social security as the payor; (4) favourable
demographics, which should continue to drive volume growth and
thereby mitigate some of the anticipated pressure from tariff
reductions allowing for continued solid Moody's-adjusted EBITDA
margins of around 20%; (5) the overall high barriers to entry
resulting from the need to obtain necessary authorisations and
attract qualified personnel; the latter being supported by the
strengthening of RGdS's clusters of private hospitals.

These factors are balanced to an extent by (1) RGdS's high
leverage, which Moody's estimates to be around 4.5x as measured
by Moody's-adjusted (gross) debt/EBITDA; (2) the rating agency's
expectations of continued pressure on tariffs, which, in view of
the company's largely fixed-cost structure, will constrain
profitability improvement; (3) a certain degree of event risk, as
RGdS continues to play an active role in the consolidation of the
French private hospital market. That being said, given the market
position of RGdS and structure of the French market, Moody's
views bolt-on acquisitions as more likely at this stage.

LIQUIDITY

Moody's expects that RGdS will maintain a good liquidity profile
over the next 12 months. The liquidity profile is supported by
cash balances of around EUR102 million as of March 2017, the
rating agency's expectations of positive free cash flows as well
as access to the undrawn EUR100 million revolving credit
facility. RGdS's loan facility will mature in 2022. Moody's
expects RGdS to maintain ample headroom against the proposed net
leverage springing covenant on the RCF which is set at 5.0x (3.7x
as of June 2017).

RATIONALE FOR POSITIVE OUTLOOK

The positive outlook on the rating continues to reflect a
resilient operating performance which has allowed for the
company's leverage -- defined as gross debt/EBITDA (after Moody's
adjustments) -- to improve to an estimated 4.5x. Moody's
expectations of further deleveraging below 4.5x in the next 12 to
18 months would support a higher rating provided that the rating
agency gains comfort in that a capping of profit margins will not
materialise. Whilst bolt-on acquisitions can be accommodated, the
current rating does not leave flexibility for larger debt-
financed acquisitions.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive pressure on the rating could develop if RGdS's operating
performance continues to improve, allowing for the company's
leverage, measured by debt/EBITDA (after Moody's adjustments), to
move to below 4.5x while maintaining a robust positive free cash
flow.

Conversely, negative pressure could develop if RGdS's Moody's-
adjusted leverage increases sustainably above 5x or if the
company's liquidity weakens (including tighter covenant
headroom).

PRINCIPAL METHODOLOGY

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

RGdS is a France-based private hospital company. It serves around
2.0 million customers in its 121 facilities. For the financial
year ended June 30, 2016, the company reported revenues of EUR2.2
billion and an EBITDA of EUR270 million.


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


SOLARWORLD AG: Administrator Inks Purchase & Transfer Agreement
---------------------------------------------------------------
Alexander Kell at Bloomberg News reports that Solarworld AG's
insolvency administrator Horst Piepenburg on Aug. 8 signed a
purchase and transfer agreement with SolarWorld Industries GmbH
as buyer.

According to Bloomberg, the goal is to continue operating
significant parts of the solar cell and module production as well
as the distribution of the products.

The agreement covers almost all property, plant and equipment and
all inventories and intangible assets of SolarWorld AG,
SolarWorld Industries Sachsen GmbH, SolarWorld Innovations GmbH,
SolarWorld Industries Thueringen GmbH, Bloomberg discloses.  It
also covers certain receivables from these companies and
SolarWorld's ownership interest in SolarWorld Africa, SolarWorld
Asia Pacific, SolarWorld France and SolarWorld Japan, Bloomberg
states.

The purchase price consists predominantly in the repayment of
liabilities that are secured by the creditor's protection rights,
Bloomberg notes.

Shareholders of SolarWorld AG will not receive any distributions
or other significant assets from the sale proceeds, Bloomberg
says.

SolarWorld AG is based in Bonn, Germany.



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


AVOCA CLO XIII: Fitch Assigns 'B-(EXP)' Rating to Cl. F-R Notes
---------------------------------------------------------------
Fitch Ratings has assigned Avoca CLO XIII Designated Activity
Company refinancing notes expected ratings, as follows:

Class X: 'AAA(EXP)sf'; Outlook Stable
Class A-R: 'AAA(EXP)sf'; Outlook Stable
Class B-1R: 'AA(EXP)sf'; Outlook Stable
Class B-2R: 'AA(EXP)sf'; Outlook Stable
Class B-3R: 'AA(EXP)sf'; Outlook Stable
Class C-R: 'A(EXP)sf'; Outlook Stable
Class D-R: 'BBB(EXP)sf'; Outlook Stable
Class E-R: 'BB(EXP)sf'; Outlook Stable
Class F-R: 'B-(EXP)sf'; Outlook Stable
Subordinated notes: not rated

Avoca CLO XIII Designated Activity Company is a cash flow
collateralised loan obligation (CLO) securitising a portfolio of
mainly European leveraged loans and bonds. Net proceeds from the
issue of the notes will be used to refinance the current
outstanding notes. The portfolio is managed by KKR Credit
Advisors (Ireland) Unlimited Company.

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

KEY RATING DRIVERS

'B/B+' Portfolio Credit Quality: Fitch assesses the average
credit quality of obligors in the 'B'/'B+' range. The agency has
public ratings or credit opinions on all the obligors in the
current portfolio (outstanding portfolio at the latest payment
date). The weighted average rating factor of the outstanding
portfolio at the latest reporting date of June 30, 2017 is 31.7.

High Expected Recoveries: At least 90% of the portfolio will
comprise senior secured loans and bonds. The weighted average
recovery rate of the outstanding portfolio at the latest
reporting date of June 30, 2017 is 68%.

Limited Interest Rate Risk Exposure: Between 0% and 5% of the
portfolio can be invested in fixed-rate assets, while most of the
liabilities pay a floating-rate coupon. The fixed-rate exposure
is more limited than is typical, but fixed-floating basis risk
still exists. Fitch modelled both 0% and 5% fixed-rate buckets
and found that the rated notes can withstand the interest rate
mismatch associated with each scenario.

Diversified Asset Portfolio: This deal contains a covenant that
limits the top 10 obligors in the portfolio to 20% of the
portfolio balance. This ensures that the asset portfolio will not
be exposed to excessive obligor concentration.

8.5 Year Weighted Average Life: The maximum weighted average life
of the transaction is 8.5 years, slightly longer than the typical
eight years. A longer weighted average life allows for a longer
period for defaults to occur, which results in higher expected
default rates.

RATING SENSITIVITIES

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


HARVEST CLO IX: Moody's Assigns (P)B2 Rating to Cl. F-R Notes
-------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to the notes to be issued by
Harvest CLO IX Designated Activity Company:

-- EUR1,850,000 Class X Senior Secured Floating Rate Notes due
    2030, Assigned (P)Aaa (sf)

-- EUR294,500,000 Class A-R Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aaa (sf)

-- EUR50,000,000 Class B-1-R Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aa2 (sf)

-- EUR25,000,000 Class B-2-R Senior Secured Fixed Rate Notes due
    2030, Assigned (P)Aa2 (sf)

-- EUR26,000,000 Class C-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)A2 (sf)

-- EUR27,500,000 Class D-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)Baa2 (sf)

-- EUR34,300,000 Class E-R Senior Secured Deferrable Floating
    Rate Notes due 2030, Assigned (P)Ba2 (sf)

-- EUR15,200,000 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, Investcorp Credit
Management EU Limited, has sufficient experience and operational
capacity and is capable of managing this CLO.

The Issuer has issued the Class X Notes, the Class A-R Notes, the
Class B-1-R Notes, the Class B-2-R Notes, the Class C-R Notes,
the Class D-R Notes, the Class E-R Notes and the Class F-R Notes
(the "Refinancing Notes") in connection with the refinancing of
the Class A Senior Secured Floating Rate Notes due 2028, the
Class B Senior Secured Floating Rate Notes due 2028, the Class C
Senior Secured Deferrable Floating Rate Notes due 2028, the Class
D Senior Secured Deferrable Floating Rate Notes due 2028, the
Class E Senior Secured Deferrable Floating Rate Notes due 2028
and the Class F Senior Secured Deferrable Floating Rate Notes due
2028 ("the Refinanced Notes") respectively, previously issued on
July 16, 2014 (the "Original Issue Date"). The Issuer will use
the proceeds from the issuance of the Refinancing Notes to redeem
in full the Original Notes that will be refinanced. On the
Original Issue Date, the Issuer also issued EUR55,000,000 of
unrated Subordinated Notes, which will remain outstanding.

Harvest CLO IX Designated Activity Company 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.

Investcorp Credit Management EU Limited ("Investcorp") will
manage the CLO. It 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 risk 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.

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

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. Investcorp's 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: EUR508,500,000

Diversity Score: 40

Weighted Average Rating Factor (WARF): 2820

Weighted Average Spread (WAS): 3.65%

Weighted Average Coupon (WAC): 6.00%

Weighted Average Recovery Rate (WARR): 42.00%

Weighted Average Life (WAL): 8.5 years

Stress Scenarios:

Together with the set of modelling assumptions above, Moody's
conducted additional sensitivity analysis, which was an important
component in determining the definitive ratings 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: WARF + 15% (to 3243 from 2820)

Ratings Impact in Rating Notches:

Class X Senior Secured Floating Rate Notes: 0

Class A-R Senior Secured Floating Rate Notes: 0

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

Class B-2-R Senior Secured Fixed 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: 0

Percentage Change in WARF: WARF +30% (to 3666 from 2820)

Ratings Impact in Rating Notches:

Class X Senior Secured Floating Rate Notes: 0

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

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

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

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

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

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

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

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
=========


LIMACORPORATE SPA: Moody's Rates EUR60MM Sr. Credit Facility Ba2
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to EUR60
million Super Senior Secured Revolving Credit Facility (RCF) to
be borrowed by Limacorporate S.p.A.. Lima's other ratings,
comprising the B2 corporate family rating (CFR), B2-PD
probability of default rating (PDR) and B2 instrument rating of
the EUR275 million Senior Secured Floating Rate Notes (FRNs) due
2022 to be issued by Lima remain unchanged. The outlook on all
ratings is stable.

RATINGS RATIONALE

The RCF is rated Ba2, three notches above the B2 CFR, because it
is contractually senior to the FRNs via the intercreditor
agreement in an enforcement scenario. Both the notes and RCF
benefit from a senior ranking security and guarantee package
incorporating guarantees from all material group entities, share
pledges and some assets security.

The B2 Corporate Family Rating (CFR) is supported by: 1)
notwithstanding its limited overall scale, Lima benefits from
attractive niche positions and differentiated products, with
positions that appear defensible in the short to medium term; 2)
the Company has a strong track record of successful R&D
investment, product innovation and manufacturing automation,
which have supported market share gains, high margins that are
comparable with the largest players in the industry and a strong
long term through the cycle track record of growth; 3) Lima's
technical advantage in the shoulder market, which is a less
commoditized, more fragmented and higher growth and margin
segment, which, together with a degree of market disruption that
continues to exist, supports early year growth forecasts; 4) the
Company has also developed its geographic and product diversity,
in part by strengthening its position in the knee market through
the acquisition of certain product lines from Zimmer Biomet and
also through investment in direct routes to market; and 5) volume
growth in the orthopaedics industry is underpinned by long-term
attractive demand drivers, primarily associated with demographic
trends.

Conversely, the rating is constrained by: 1) Lima's significantly
weaker global position and less diverse product range than much
larger peers, which, in Moody's views, reduces the potential
capacity to drive cost efficiencies (absent material volume
growth) and the ability to bundle products in response to growing
buyer pressure to reduce overall healthcare expenses; 2) the
potential for competitors to bridge Lima's technical advantage in
shoulder products, which explains a possibly limited window
available for the Company to build share and improve scale in the
US market; 3) at 5.9x on a Moody's adjusted (gross) basis,
leverage pro forma for the transaction is high, such that early
year deleveraging is important, as the Company takes advantage of
its ability to grow at above market rates (and build market
share); 4) meaningful free cash flow generation is expected to be
delayed until 2018 as the Company invests in rapid growth,
although Lima has a good fundamental ability to generate cash
driven by normalised modest capex requirements; 5) while much
less pronounced in the shoulder sector currently, the
orthopaedics industry is characterised by persistent pricing
pressure, which necessitates ongoing industry-wide R&D led
product innovation and cost efficiency improvements; and 6)
product liability, regulatory and patent litigation risks exist,
albeit that Moody's considers these are limited compared to other
industries (e.g. the pharmaceuticals industry).

RATIONALE FOR THE STABLE OUTLOOK

Moody's adjusted leverage of 5.9x is considered to be high given
the absolute scale of the Company and the threats posed by
expected increased levels of competition in the shoulder market
over time. Nonetheless, the stable outlook reflects Moody's
expectations that Lima will take advantage of the window of
opportunity that is available to build market share in the US,
its strengthened position in the knee market, particularly in
Europe, and ongoing market disruption to deliver above market
rates of growth that will allow comparatively rapid deleveraging
towards 4.5x (on a Moody's adjusted basis) over an 18 month
period. While Moody's anticipates that Lima will continue to make
bolt-on acquisitions, Moody's considers that the need to take
advantage of high early growth rates to deleverage will be a
limiting factor. The outlook therefore also assumes that: 1) the
management team will not embark on any material or
transformational debt funded acquisitions; and 2) shareholder
distributions outside those defined as permitted payments, which
require significant deleveraging, will not be made.

WHAT COULD CHANGE THE RATING UP/DOWN

Given high Moody's adjusted leverage, upward pressure on the
rating is unlikely currently, however could be exerted if: 1)
revenues increase significantly; 2) Moody's adjusted debt /
EBITDA reduces to below 4.5x; and 3) Moody's adjusted free cash
flow / debt improves to above 5.0%.

Conversely, downward ratings pressure could develop if: 1)
Moody's adjusted debt/ EBITDA does not decline below 5.5x within
6-12 months; 2) margin performance deteriorates; 3) free cash
flow generation does not turn positive; and / or 4) the liquidity
profile weakens materially.

The principal methodology used in this rating was Medical Product
and Device Industry published in June 2017.

Headquartered in San Daniele del Friuli, Italy, Limacorporate
S.p.A. ('Lima' or the 'Company') is a global orthopaedic medical
device company with subsidiaries in 23 countries and sales across
47 countries. The Company manufactures and markets innovative
joint replacement and repair solutions through f Moody's business
areas, which include hips (37.2% of LTM March 2017 sales),
extremities (predominately shoulder products -- 37.4%), knees
(19.0%) and general fixation & other (6.4%). The Company is
majority owned by EQT Partners AB.


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


OBSIEGER CAPITAL: Management Put Into Liquidation
-------------------------------------------------
Luxembourg Post reports that Luxembourg-based currency broker
Obsieger Capital Management has been put into judicial
liquidation, following a decision on August 3, the Commission de
Surveillance du Secteur Financier, the country's financial
watchdog, said.

Obsieger was unable to meet its payment obligations, the CSSF
said in a statement, according to Luxembourg Post.

The Luxembourg District Court put lawyer Laurent Fisch in charge
of the winding down operations and named Nadine Walch as judicial
commissioner, the report relays.

The financial sector creates one-third of Luxembourg's gross
domestic product, according to the country's official website.


=================
M A C E D O N I A
=================


MACEDONIA: Fitch Affirms 'BB' Long-Term IDRs, Outlook Negative
--------------------------------------------------------------
Fitch Ratings has affirmed Macedonia's Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) at 'BB' with
Negative Outlooks. The issue ratings on Macedonia's long-term
senior unsecured foreign- and local-currency bonds have also been
affirmed at 'BB'. The Country Ceiling has been affirmed at 'BB+'
and the Short-Term Foreign- and Local-Currency IDRs at 'B'. The
senior unsecured short-term local currency issues have also been
affirmed at 'B'.

KEY RATING DRIVERS

Macedonia's ratings are supported by a track record of credible
monetary and macro-prudential policy, which has maintained
longstanding stability of its exchange rate peg, supporting an
environment of low inflation and stable economic growth.
Government fiscal finances are also in line with its 'BB'
category rated peers. However, GDP per capita is below the median
of its 'BB' peers, and governance is a relative weakness. The
Negative Outlook reflects Fitch's assessment that political risks
for effective economic policy making and implementation, higher
growth and progress towards EU accession remain, despite the
formation of a new government.

At the end of May, Zoran Zaev, leader of SDSM, was appointed
Prime Minister in formal coalition with ethnic Albanian parties,
DUI and the Alliance for Albanians, officially ending a prolonged
political hiatus. The new government's policy programme, known as
"Plan 3-6-9", aims to realign Macedonia's policies towards EU
accession, NATO membership, and restore public confidence in the
independence and transparency of public sector institutions but
faces considerable challenges in its implementation. There is the
risk of disagreements between SDSM and its coalition partners. In
addition, opposition VMRO-DPMNE remains the largest political
force in parliament and could attempt to obstruct the new
government's agenda. Local elections scheduled for October will
represent an early test of the government's progress.

Macedonia's World Bank Governance Indicators are currently in
line with the median of its 'BB' category peers. However, 2015's
high level corruption scandal revealed severe shortcomings in
standards of governance on a wide scale, resulting in a
deterioration in certain indicators, notably "rule of law",
"control of corruption", "political stability" and "voice and
accountability".

The impact of the political crisis negatively impacted growth in
1Q17 as the economy stagnated. High frequency indicators in
retail sales and industrial production suggest another weak
quarter of growth in 2Q. As a result, Fitch has revised down its
2017 real GDP forecast to 2.3% from 3.4%, six months ago. The
formation of a new government should support an improvement in
economic sentiment and activity in 2H17, and Fitch projects
growth to recover towards an average of 3.2% in 2018-2019, in
line with Macedonia's five-year average and the median growth
rate of 'BB' category peers. Against Fitch's baseline, higher-
than-forecast GDP could come from a robust recovery in
investment. However, a resurgence in political uncertainty could
present a negative shock to GDP.

Macedonia's fiscal finances are currently in line with the median
of its 'BB' peer group, but deterioration is forecast by Fitch
for 2017. The new government's supplementary budget will increase
public spending on social transfers, subsidies and minimum wages,
despite targeting a lower deficit (2.9% of GDP). Fitch projects a
general government deficit of 3.3% of GDP, up from 2.6% in 2016,
as a result of lower tax revenues due to weaker economic
activity, social expenditure pressures and the expected clearance
of outstanding public sector arrears.

Wider fiscal deficits increase pressure on an already upward
trending general government debt ratio, although at 39.9% of GDP
for 2017 it is forecast to remain below the projected 49.5% ratio
of its 'BB' peers. 2017's fiscal financing requirements are
covered by an adequate cash buffer, including resources from
2016's EUR450 million Eurobond. However, fiscal vulnerabilities
are growing, reflected in the sovereign's relatively high share
of short-term maturity debt (6.2% of GDP, 2017) and increasing
guarantees accompanying large infrastructure projects.

Macedonia's external finances remain broadly in line with its
'BB' peer group. Net external debt to GDP at 23.5% for 2016 is
above the median 18.3% of its peer group, but the composition of
debt is considered sustainable, accounted for mainly by the non-
bank private sector, where just over half is inter-company
lending. Current account deficits meanwhile remain adequately
financed by a stable net inflow of FDI.

Strong commitment by the National Bank of Macedonia (NBRM) and an
adequate level of foreign reserves, covering 4.3 months of
imports (2016), maintain the stability of the denar-euro peg. A
track record of credible macro-prudential and monetary policy-
making by the NBRM also supports a stable banking sector, where
capital adequacy ratios (15.4% at 1Q17) are in line with the 'BB'
median, coverage ratios of non-performing loans are at 114%
(1Q17), and liquid assets to total assets are considered
sufficient at 27.8% (1Q17).

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns Macedonia a score equivalent to a
rating of 'BB+' on the Long-Term FC IDR scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final Long-Term IDR by applying its QO,
relative to rated peers, as follows:

  - Structural Features: -1 notch, to reflect Fitch's assessment
that the political risks are higher and levels of governance are
weaker than what is captured in the SRM.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within
Fitch criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main risk factors that, individually or collectively, could
trigger negative rating action are:
- A re-emergence of political instability that adversely affects
   the economy and government policy direction.
- Fiscal slippage or the crystallisation of contingent
   liabilities that jeopardise the sustainability of public
   finances or the currency peg.
- A widening of external imbalances that exerts pressure on
   foreign currency reserves and the currency peg.

The main factors that could, individually or collectively, result
in a stabilisation of the Outlook include:
- A marked easing in political uncertainty supporting a more
   stable policy environment.
- Implementation of a credible medium-term consolidation
   programme consistent with a stabilisation of the public
   debt/GDP ratio.

KEY ASSUMPTIONS

Fitch assumes that Macedonia will continue to pursue monetary and
fiscal policy measures consistent with its currency peg to the
euro.


=========
M A L T A
=========


VISTAJET GROUP: Fitch Affirms B- Long-Term IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed Malta-based business jet owner and
operator VistaJet Group Holding Limited's (VistaJet) Long-Term
Issuer Default Rating (IDR) at 'B-' with a Stable Outlook.

Fitch has also affirmed the senior unsecured 'B-' rating of the
USD300 million 7.75% notes due 2020 with a Recovery Rating of
'RR4'. The notes are co-issued by VistaJet's 99.5%-owned
subsidiaries, VistaJet Malta Finance P.L.C. and VistaJet Co
Finance LLC and are unconditionally and irrevocably guaranteed by
VistaJet and its key subsidiaries.

The affirmation reflects VistaJet's 2016 financial performance in
line with Fitch's forecast and Fitch's expectation that the
company will improve its credit metrics from 2017 to be within
Fitch's negative rating guidelines for the 'B-' rating. Fitch
expects the company's liquidity to remain stretched over
2017-2018 with a high reliance on refinancing of short-term
maturities. The rating is supported by VistaJet's operations on a
global scale in executive jet services market and the fact that
56.3% of its revenue was contracted in 1Q17.

KEY RATING DRIVERS

2016 Performance as Expected: Financial performance for 2016 was
in line with Fitch's forecast, albeit VistaJet's financial
structure remains weak for the rating. Lower EBITDA margins in
2016 reflected the increasing operating costs to support the
growth in fleet size. Fitch expects revenue growth benefiting
from the larger average fleet size in 2017 to result in improving
EBITDA and cash-flow margins, reducing funds from operations
(FFO) gross adjusted leverage. VistaJet's higher proportion of
non-euro-denominated revenues compared to 2016 will limit the
impact of any further euro depreciation.

Fleet Growth Stalled: Fitch views the suspension of fleet growth
at 72 aircraft from the previously planned 100 aircraft as a
credit-positive, allowing the company to improve its aircraft
utilisation and therefore cash flow without incurring additional
leverage beyond 2017. As a result of its high rate of expansion,
VistaJet's cash-flow measures have lagged its capital structure,
as aircraft and matching leverage are on its balance sheet before
the aircraft start to make a meaningful contribution. VistaJet's
forward sales are reliant on having aircraft in place and
operational before the hours can be sold.

Medium-Term Performance Key: Fitch expects VistaJet to
substantially increase its operating hours per aircraft, which
should result in significant increases in free cash flow (FCF)
from 2018. Fitch forecasts VistaJet will reach aircraft
utilisation of 900 hours per aircraft in 2018 from 726 hours in
2016. Fitch expects VistaJet's FFO gross adjusted leverage to
fall below 10x in 2017 and remain within Fitch's leverage
guideline for VistaJet's 'B-' rating over 2017-2021. A reduction
in demand for executive jet flight hours, driven by weakening
economic growth, could add uncertainty to demand for VistaJet's
services, however.

Network Growth Improving Utilisation: VistaJet's success in
registering aircraft in China and the US is a substantial boost
to its competitiveness, allowing it to operate domestically, as
well as internationally, increasing utilisation rates, and
reducing ferrying. As a result, Fitch expects the number of hours
flown per aircraft to increase gradually in 2017 and beyond.
Fitch also expects VistaJet to increase the yield per flight
hour, supported by increases in Flight Solutions Program (FSP)
agreements.

Positive FCF, Stretched Liquidity: Fitch expects VistaJet to
generate strong operational cash flow over 2017-2021, which along
with a moderation in capex should support increasing positive
FCF. However, Fitch expects the liquidity position to remain weak
in 2017-2018 as cash and positive FCF are insufficient to cover
the rapid amortisation of its aircraft related debt. The amount
of unencumbered assets is also limited. The company retains
access to aircraft financing, but it will need to raise
additional cash to offset equity paid for new aircraft and the
amortisation of the aircraft financing.

DERIVATION SUMMARY

Fitch views VistaJet as operating a niche product which is
differentiated from airlines in terms of its cost and revenue
structures. Unlike commercial airlines such as Public Joint Stock
Company Aeroflot - Russian Airlines (B+/Stable), American
Airlines Group, Inc. (BB-/Stable) or United Continental Holdings,
Inc. (BB/Stable), VistaJet does not operate a fixed route
timetable, nor does it operate its fleet as heavily, with fleet
utilisation of 726 hours per aircraft in 2016, and a high
operating margin. VistaJet offers both lower all-in cost and
greater flexibility than partly used corporate jets. In addition,
VistaJet's revenues are supported by contractual revenues and
changes in luxury spending by high net worth individuals, which
continues to increase. This is offset by substantially higher
debt leverage than its airline peers.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for VistaJet
include:
- number of aircraft to stabilise at 72 in 2017 with no growth
   afterwards;
- average fleet yield to grow at an underlying rate of 1% pa;
- utilisation with gradual increase for the next five years (to
   800 hours per aircraft in 2017 from 726 hours for 2016 and to
   900 in 2018);
- fuel, handling, flight control, maintenance and catering costs
   to grow in line with growth in flight hours;
- personnel expenses and depreciation and amortisation costs are
   semi-variable and linked to the fleet size;
- 2017-2021 capex in line with management plan;
- no dividend over 2017-2021.

KEY RECOVERY RATING ASSUMPTIONS

- The recovery analysis of VistaJet is driven by liquidation
   value.
- Fitch has assumed a 10% administrative claim.

Liquidation Approach
- The liquidation estimate reflects Fitch's view of the value of
   net property, plant and equipment, accounts receivables and
   other assets that can be realised in a reorganisation and
   distributed to creditors.
- Fitch excluded aircraft under lease from net property, plant
   and equipment calculation as finance leases are not part of
   the waterfall in this recovery analysis. Therefore, owned
   aircraft comprise most of net property, plant and equipment.
- Fitch assumed an 85% advance rate for net property, plant and
   equipment given that the company's aircraft are new and Fitch
   assume they will preserve market value.

- Capital leases are not in recovery waterfall. All senior
   unsecured debt is treated as pari passu.
- The waterfall results in a 67% recovery corresponding to 'RR3'
   recovery for the senior unsecured debt. However, the recovery
   rating is capped at 'RR4' given that the guarantor for the
   bonds (VistaJet Group Holding Limited) is registered in Malta
   in accordance with Fitch's Country-Specific Treatment of
   Recovery Ratings criteria.

RATING SENSITIVITIES

Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- FFO gross adjusted leverage consistently lower than 8.0x, FFO
   fixed charge cover above 2.0x along with improvement in
   aircraft utilisation rates leading to improvement in profit
   margins and high revenue visibility

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- FFO gross adjusted leverage sustainably above 10.0x (2016:
   14.1x), decline in FFO fixed charge cover below 1.5x (1.7x),
   or reduction in the company's contracted revenues to below 40%
   of total revenues (56.3% in 1Q17)
- The notes' rating may also be downgraded if Fitch expectation
   for recovery rates fall below 31%

LIQUIDITY

Insufficient Liquidity: Fitch assess VistaJet's liquidity profile
as weak. It is dominated by the high-rate amortisation of its
aircraft-related debt at a rate of approximately USD200 million
per year. VistaJet's liquidity in 2017 is limited to expected
modest FCF, and cash of about USD17 million as at end-2016.
VistaJet is reliant on additional equity inflow to support the
purchase of its final aircraft in 2017, and will have to
refinance existing amortising amounts within its 85% debt to
assets incurrence financial covenant.


=====================
N E T H E R L A N D S
=====================


NEPTUNO CLO II: Moody's Cuts Rating on Cl. E Notes to Caa3(sf)
--------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on the
following notes issued by Neptuno CLO II B.V.:

-- EUR23M (Current balance outstanding: EUR9.3M) Class C Senior
    Secured Deferrable Floating Rate Notes due 2023, Upgraded to
    Aaa (sf); previously on Dec 16, 2016 Upgraded to Aa1 (sf)

-- EUR23M Class D Senior Secured Deferrable Floating Rate Notes
    due 2023, Upgraded to A3 (sf); previously on Dec 16, 2016
    Affirmed Ba2 (sf)

Moody's has also downgraded the rating on the following notes:

-- EUR19M (Current balance outstanding: EUR16.6M) Class E Senior
    Secured Deferrable Floating Rate Notes due 2023, Downgraded
    to Caa3 (sf); previously on Dec 16, 2016 Affirmed Caa2 (sf)

Neptuno CLO II B.V., issued in December 2007, is a Collateralised
Loan Obligation ("CLO") backed by a portfolio of mostly senior
secured European loans. The portfolio is managed by Halcyon
Neptuno II Management LLC. This transaction exited its
reinvestment period on January 16, 2013.

RATINGS RATIONALE

The upgrade actions on Class C and Class D Notes are primarily a
result of the deleveraging of the transaction following the large
amortisation of the underlying portfolio since the last rating
action in December 2016. In the last two payment dates the Class
A and Class B Notes have been fully redeemed and Class C Notes
were paid down by EUR13.7 million or 60% of their original
balance. As a result of this deleveraging, the OC ratios have
increased for Classes C and D Notes. According to the July 2017
trustee report, the OC ratios of Classes A/B, C and D are 409.1%,
184.0% and 118.7% compared to 213.6%, 149.7% and 115.3%,
respectively in November 2016. Moody's notes that the July 2017
principal payments are not reflected in the OC ratios reported.

The downgrade action on Class E Notes rating is a result of the
deterioration of Class E OC ratio. According to the July 2017
trustee report, the Class E OC ratio is 94.8% compared to 98.9%
in November 2016.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par and principal proceeds balance of EUR39.1 million,
and principal proceeds balance of EUR2.5 million, defaulted par
of EUR12.3 million, a weighted average default probability of
22.7% (consistent with a WARF of 4300 over a 2.4 years weighted
average life), a weighted average recovery rate upon default of
42.5% for a Aaa liability target rating, a diversity score of 6
and a weighted average spread of 4.6%.

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

Methodology Underlying the Rating Action:

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

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it assumed lower weighted average recovery rate for the
portfolio. Moody's ran a model in which it reduced the weighted
average recovery rate by 5%; the model generated outputs were
unchanged for Classes C and E and were within one notch of the
base-case results for Class D.

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

Additional uncertainty about performance is due to the following:

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

* Around 45% of the collateral pool consists of debt obligations
whose credit quality Moody's has assessed by using credit
estimates. As part of its base case, Moody's has stressed large
concentrations of single obligors bearing a credit estimate as
described in "Updated Approach to the Usage of Credit Estimates
in Rated Transactions," published in October 2009 and available
at http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461.

* Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's over-
collateralisation levels. Further, the timing of recoveries and
the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's
analysed defaulted recoveries assuming the lower of the market
price or the recovery rate to account for potential volatility in
market prices. Recoveries higher than Moody's expectations would
have a positive impact on the notes' ratings.

* Lack of portfolio granularity: The performance of the portfolio
depends to a large extent on the credit conditions of a few large
obligors with Caa1 or lower ratings, especially when they
default. Because of the deal's low diversity score and lack of
granularity. Moody's supplemented its typical Binomial Expansion
Technique analysis with a simulated default distribution using
Moody's CDOROMTM software.

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


PENTA CLO 2: Fitch Affirms 'B-sf' Rating on Class F Notes
---------------------------------------------------------
Fitch Ratings has assigned Penta CLO 2 B.V.'s refinancing notes
final ratings and affirmed the others as follows:

EUR234.00 million class A-R notes: assigned 'AAAsf'; Outlook
Stable
EUR49.00 million class B-R notes: assigned 'AAsf'; Outlook Stable
EUR25.25 million class C-R: assigned 'Asf'; Outlook Stable
EUR20.00 million class D-R: assigned 'BBBsf'; Outlook Stable
EUR26.75 million class E: affirmed at 'BBsf'; Outlook Stable
EUR13.00 million class F: affirmed at 'B-sf'; Outlook Stable
EUR46.10 million subordinated notes: not rated.

Penta CLO 2 B.V. is a cash flow collateralised loan obligation
securitising a portfolio of mainly European leveraged loans and
bonds. Net proceeds from the notes are being used to refinance
the current outstanding notes. The portfolio is managed by
Partners Group (UK) Management Ltd.

KEY RATING DRIVERS

'B' Portfolio Credit Quality
Fitch places the average credit quality of obligors in the
'B'/'B-' range. The weighted average rating factor (WARF) of the
current portfolio is 35.5, above the current WARF covenant of 33.
After closing, the asset manager will be able to choose a point
in the updated matrix for which the current portfolio WARF is
compliant.

High Recovery Expectation
The portfolio comprises a minimum 90% senior secured obligations.
The weighted average recovery rating (WARR) of the current
portfolio is 62.1% above the current WARR covenant of 58.6%.
After closing, the asset manager will be able to choose a point
in the updated matrix for which the current portfolio WARR is
compliant.

Extended Weighted Average Life
The weighted average life (WAL) of the current portfolio is 5.27
years. The issuer will extend the WAL covenant to 7.12 years as
part of the refinancing of the notes. The breakeven WARR was
determined based on the extended WAL covenant.

Limited Interest Rate Risk
All liabilities are floating while fixed assets may represent
between 0% and 10% of the target par amount, respectively. Fitch
tested both 0% and 10% fixed rate assets and the rated notes can
withstand the interest rate mismatch associated with each
scenario.

Diversified Asset Portfolio
This transaction contains a covenant that limits the top 10
obligors in the portfolio to 20% of the portfolio balance. This
ensures that the asset portfolio will not be exposed to excessive
obligor concentration.

Documentation Amendments
The transaction documents may be amended, subject to rating
agency confirmation or noteholder approval. Where rating agency
confirmation relates to risk factors, Fitch will analyse the
proposed change and may provide a rating action commentary if the
change has a negative impact on the ratings. Such amendments may
delay the repayment of the notes as long as Fitch's analysis
confirms the expected repayment of principal at the legal final
maturity.

If, in the agency's opinion the amendment is risk-neutral from a
rating perspective, Fitch may decline to comment. Noteholders
should be aware that the structure considers a confirmation to be
given if Fitch declines to comment.

TRANSACTION SUMMARY

Penta CLO 2 B.V. closed in June 2015 and is still in in its
reinvestment period, which is set to expire in August 2019. The
issuer is now issuing new notes to refinance part of the original
liabilities. The refinanced class A, B, C and D notes are to be
redeemed in full as a consequence of the refinancing.

The refinancing notes bear interest at a lower margin over
EURIBOR than the notes being refinanced.

In addition to the lower margin, the WAL covenant will be
extended to 7.12 years from the refinancing date. The remaining
terms and conditions of the refinancing notes (including
seniority) are the same as the refinanced notes.

In its analysis, Fitch has applied a 15bp haircut to the weighted
average spread calculation. In this transaction, the aggregate
funded spread calculation for floating rate collateral debt
obligation with an Euribor floor is artificially inflated by the
negative portion of Euribor.

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of two notches for the rated notes.

A 150% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of five notches for the rated notes.

A 25% reduction in recovery rates would lead to a downgrade of
two notches for the rated notes.

A 50% reduction in recovery rates would lead to a downgrade of
five notches for the rated notes.

A combined stress of default multiplier of 125% and recovery rate
multiplier of 75% would lead to a downgrade of fix notches for
the rated notes.


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


HYPERION SA: Warsaw Court Opts to Discontinue Rehabilitation
------------------------------------------------------------
Reuters reports that Hyperion SA on Aug. 5 said the court in
Warsaw decided to discontinue rehabilitation proceedings of the
company.

Hyperion S.A. engages in the construction and handling of optical
fiber infrastructure in Poland.  It serves mobile operators,
telecom network and cable TV operators, Internet providers,
public institutions, and educational establishments.  The company
was founded in 2006 and is based in Warsaw, Poland.


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


CB KRYLOVSKY: Put On Provisional Administration, License Revoked
----------------------------------------------------------------
The Bank of Russia, by its Order No. OD-2190, dated August 2,
2017, revoked the banking license of Krasnodar-based credit
institution Joint-stock Commercial Bank Krylovsky from August 2,
2017, according to the press service of the Central Bank of
Russia.

According to the financial statements, as of July 1, 2017, the
credit institution ranked 360th by assets in the Russian banking
system.

The credit institution's resource base was mainly formed by
borrowed household funds.  In 2017, the bank pursued an
aggressive household fund raising policy.  The Bank of Russia has
repeatedly applied supervisory measures to Joint-stock Commercial
Bank Krylovsky, including restrictions (twice) and a prohibition
(once) on household deposit taking.

On July 26, in the course of the inspection of tills at several
offices of Joint-stock Commercial Bank Krylovsky, the Bank of
Russia revealed a large-value cash shortage.  Creation of
required loss provisions for actually missing assets revealed a
full loss of capital by the credit institution.

The management and owners of the bank failed to take effective
measures to normalise its activities.  In addition, their
behaviour was unscrupulous: they submitted unreliable statements
to the Bank of Russia and withdrew assets to the detriment of
creditors and depositors' interests.  The Bank of Russia will
forward information about the mentioned facts to law enforcement
authorities.  Under these circumstances, the Bank of Russia
performed its duty on the revocation of the banking license from
Joint-stock Commercial Bank Krylovsky in accordance with Article
20 of the Federal Law "On Banks and Banking Activities".

The Bank of Russia took such an extreme measure -- revocation of
the banking license -- because of the credit institution's
failure to comply with federal banking laws and Bank of Russia
regulations, because all capital adequacy ratios of this credit
institution were below 2% and its equity capital dropped below
the minimum authorised capital value established as of the date
of state registration, and taking into account the repeated
application within a year of measures envisaged by the Federal
Law "On the Central Bank of the Russian Federation (Bank of
Russia)".

The Bank of Russia, by its Order No. OD-2191, dated August 2,
2017, appointed a provisional administration to Joint-stock
Commercial Bank Krylovsky for the period until the appointment of
a receiver pursuant to the Federal Law "On Insolvency
(Bankruptcy)" or a liquidator under Article 23.1 of the Federal
Law "On Banks and Banking Activities".  In accordance with
federal laws, the powers of the credit institution's executive
bodies have been suspended.

Joint-stock Commercial Bank Krylovsky is a member of the deposit
insurance system.  The revocation of the banking licence 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.


ECONOMIC UNION: Liabilities Exceed Assets, Assessment Shows
-----------------------------------------------------------
The provisional administration of the credit institution Economic
Union Bank (JSC), appointed by Bank of Russia Order No. OD-629,
dated March 13, 2017, due to the revocation of its banking
license, revealed operations aimed at diverting bank's assets
through lending to borrowers with dubious creditworthiness or
incapable to meet their obligations, and through assigning non-
residential premises owned by the bank, according to, according
to the press service of the Central Bank of Russia.

In addition, the provisional administration revealed operations
of preferential satisfaction of claims of the bank's management
when the bank experienced solvency problems.

The provisional administration estimates the value of Economic
Union Bank (JSC) assets to be under RUR0.6 billion, whereas its
liabilities to creditors amount to RUR1.9 billion, including
RUR1.6 billion owed to individuals.

On April 21, 2017, the Court of Arbitration of the city of Moscow
ruled to recognize the credit institution Economic Union Bank
(JSC) bankrupt. The State Corporation Deposit Insurance Agency
was appointed as a receiver.

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


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

The affirmation reflects Fitch's unchanged base-case scenario
regarding the city's sound fiscal performance, supported by taxes
and transfers from Samara Region and moderate albeit short-term
debt.

KEY RATING DRIVERS

The 'BB+' rating reflects the city's stable operating margin and
narrowing fiscal deficit, which will contain direct risk at below
40% of current revenue. The ratings also consider the relatively
short tenor of the city's debt and the weak institutional
framework for Russian local and regional governments (LRGs).

Fitch projects Samara to post a sound fiscal performance with an
operating surplus of 11%-13% of operating revenue over the medium
term (2016: 11.3%; 2015: 12%). The agency views this as
stabilisation following an average margin of 16% in 2013-2014.
Operating performance stabilised in 2016 due to stable tax
revenues (58% of 2016 operating revenue) and current transfers
from Samara Region (34%).

Fitch expects Samara to post a deficit before debt variation in
2017 of up to 3%-5% of total revenue, after a small full-year
surplus before debt variation of 0.75% of total revenue in 2016
and deficit of 5.6% in the previous year. The expected 2017
deficit will be linked to infrastructure investments as Samara
will host the FIFA 2018 championship along with other selected
Russian cities. As the city's budgetary policy is historically
prudent, the city could turn its balance before debt positive in
2018-2019, in light of an expected sluggish economic recovery in
Russia.

In Fitch's view, direct risk will remain moderate at RUB7.5
billion-RUB8 billion at end-2017, versus RUB7.3 billion in 2016,
in line with Fitch projections. Fitch expects Samara to curb
direct risk growth to below 40% of current revenue over the
medium term, underpinned by the city's conservative fiscal
management. The city's contingent risk is low, stemming solely
from debt at its public sector entities, which they are able to
fund with their own resources.

Samara's refinancing risk somewhat reduced in 1H17 as the city
replaced matured short-term bank loans with new loans with
slightly longer maturities, ranging from 12 to 18 months. The
city's interim market debt stock reduced to RUB5.7 billion by
end-6M17, although the city plans to contract additional bank
loans by the year end (RUB2.3 billion-RUB2.5 billion). The
interim cash position at end-6M17 was satisfactory with RUB403
million held in accounts. Fitch expects the city will manage to
roll over the remaining maturing bank loans, as it has done in
previous years.

With a population of above one million, the city is the capital
of Samara Region, which has a well-developed diversified economy
based on processing industries and services. The city receives
steady current and capital transfers from the region, which
support its development needs and fiscal performance. In its
updated forecast, Fitch projects 1.6% growth in Russia's GDP in
2017 and 2.2% in 2018.

The city's credit profile remains constrained by the weak
institutional framework for Russian LRGs. Weak institutions in
Russia lead to lower predictability of LRGs' budgetary policies,
narrow their planning horizon and hamper long-term development
plans.

RATING SENSITIVITIES

Strong budgetary performance with an operating margin above 15%
on a sustained basis and moderate debt with a lengthening of the
debt maturity profile that is in line with debt payback (direct
risk-to-current revenue: 4.7 years in 2016) could lead to an
upgrade.

Sustained deterioration of budgetary performance leading to a
direct risk growth above 50% of current revenue (2016: 36.9%)
driven by short-term financing, would lead to a downgrade.


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


ALMIRALL SA: S&P Lowers CCR to 'BB-', Outlook Negative
------------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on Spain-based pharmaceutical company Almirall S.A. to 'BB-' from
'BB'. The outlook is negative.

The downgrade follows the rapid decline of earnings in Almirall's
U.S. dermatology franchise in the first half of the year and the
group's earlier revision of its forecast earnings for 2017.
Because of the challenging operating environment in the U.S.
dermatology market, Almirall anticipates its total profits for
the full year will drop by one-third. S&P said, "We consider that
this sharp decrease in profitability will markedly constrain
credit metrics, leading us to forecast deterioration in
Almirall's leverage (debt to EBITDA) to above 3x in the next 18-
24 months. We have also reassessed Almirall's liquidity as
adequate versus strong previously."

Almirall posted weak performance in the first half of 2017,
primarily because of multiple hurdles in the U.S. dermatology
market. First, Almirall suffered inventory reductions from
wholesalers and pharmacies, pulling down its net sales by EUR25
million. Although further destocking may be less pronounced in
the coming quarters, the group expects the market will operate on
these relatively lower levels going forward. In addition, price
growth for dermatology products has slowed steadily since mid-
2016 as a result of increased scrutiny and price pressure from
private payers. More recently, Almirall experienced a material
deterioration of its gross-to-net price owing to a misuse of
Patient Assistance Program (PAP) cards, resulting in an
additional loss of EUR26 million of sales over the same period.
Furthermore, a generic version of the group's U.S. top-selling
oral acne drug Acticlate was launched in June after receiving
approval from the U.S. Food and Drug Administration. Competition
from generics will likely further erode sales of the group's U.S.
division in 2017-2018 by capturing up to 50% market share by
2018. While the timing was unexpected, Almirall had anticipated
generic competition and launched its own authorized generic with
Teva, based on a confidential profit-sharing agreement. These
factors prompted Almirall to revise its earnings guidance for
2017, with reported EBITDA now set to drop to the EUR140 million-
EUR170 million range from EUR227 million in 2016.

S&P said. "Despite our expectations of lower profitability and
operating cash flow generation in 2017 and 2018, we believe the
group will continue to seek acquisitions and to contract further
in-licensing agreements to replenish its pipeline, enhance its
overall dermatology franchise, and progressively recover its
operating leverage.

"After incorporating our projections on future acquisitions, we
estimate the group's leverage will exceed 3x in 2018 and then
remain in the 3x-4x range over a protracted period. In 2017, the
lower nominal projected EBITDA will be compensated by lower
reported debt as a result of the group's redemption of senior
notes in April. In our base case, we incorporate additional debt-
financed acquisitions of about EUR300 million for 2017 and 2018.
These estimates are contingent on profitability recovering from
the second half of 2017. In addition, we would expect volume
decline to stabilize and non-recurring pressure from PAP and
inventory destocking to ease from the first half of 2018. There
is limited headroom for any potential deviation from our base
case, owing to potential unexpected increases in operating costs,
a need for higher investment into working capital, or larger-
than-forecast debt-financed acquisitions at high multiples.
Adverse working capital outflows, as well as the marked erosion
of profitability in 2017, will weigh heavily on the group's free
cash flow generation, according to our forecasts."

The recent operating setbacks underpin the vulnerability of
Almirall's business, still in transition and constrained by its
focus on the competitive, price-sensitive dermatology therapeutic
field and lack of critical mass following the transfer of its
entire respiratory franchise to AstraZeneca in 2018. The group's
business model remains bound by its small scale of operations
compared with big pharma competitors, and we believe that
Almirall's modest research and development (R&D) capabilities
impair its ability to bring new products to market. Additionally,
it has a relatively small product pipeline in its core
therapeutic areas. This is, however, offset by limited exposure
to patent expirations in the coming years. S&P said, "We also
consider that the group continues to be highly concentrated in
Spain and across Europe, accounting for 32% and 46%,
respectively, of the group's core sales as of half-year 2017. We
project that U.S. operations will represent only 17% of group
sales in 2017. The legacy portfolio in the non-dermatology
therapeutic areas -- including gastrointestinal and
respiratory -- with a high skew toward Spain, still represents a
significant portion of the group's profitability.

"Nevertheless, we view Amirall's recent acquisitions and
licensing agreements as positive moves -- with full benefits yet
to be reaped -- that will reinforce the group's dermatology
platform. The acquisition of Poli, consolidated as of February
2016, enriches the group's current dermatology-branded product
portfolio and pipeline, with three promising late-stage products
to be registered if regulatory approvals are cleared between 2019
and 2021. Furthermore, Almirall's recent purchase of Thermigen
enables a first step into the U.S. aesthetics market, although we
expect this segment to only gradually contribute about 10% of the
group's core portfolio by 2019, in light of sluggish performance
in the first half of the year. Lastly, in Europe, the recent
license agreement with Sun Pharma on the development and
commercialization of Tildra, dedicated to psoriasis treatment,
constitutes another relevant strategic move in building up its
dermatology pipeline, although the potential launch is not due
until mid-2018 and the group expects competition to be stiff.
Moreover, we expect the European dermatology portfolio's sales
will be supported by the upcoming launch of Skilarence, a
psoriasis treatment.

"We expect the U.S dermatology franchise (Aqua) to face
increasing pricing pressure in 2017 and sharply declining sales,
the most significant being on Acticlate due to generic
competition. The launch of Veltin and Altabax -- two products
incorporated in Almirall's portfolio after an agreement with
GlaxoSmithKline -- in third-quarter 2017 will bring an only
marginal earnings contribution in the next 18 months. As such,
it's difficult to assess the trajectory of the profitability of
its U.S. operations, in our view. Although Almirall posted EUR48
million in EBIT losses for Aqua in the first half of the year,
the group expects to generate positive EBITDA in this division by
the end of the year.

"We project reported EBITDA at the lower end of the group's
guidance and consider that the pace of recovery in 2018 will
greatly depend on the efficiency of the restructuring process,
the magnitude of generic penetration in the U.S., and Aqua's
market share. In the next 18 months, profitability will likely
remain hampered by increasing R&D expenses, at around 12% of
revenues, to support the late-stage pipeline, as well as by
sustained sales and marketing costs and restructuring expenses
given the tough conditions in the U.S. market.

"Positively, we recognize that the income stream of royalties
from AstraZeneca, which is still in the process of registering
three respiratory products, continues to support Almirall's
revenues over our forecast horizon. Still, there is some
uncertainty on the timing of the royalties.

"The negative outlook reflects the lack of visibility on U.S.
dermatology dynamics and continuing uncertainties around volumes
and pricing over the next 12 months, which could lead to
fluctuations in our base-case assumptions.

"That said, we don't rule out that the group might accelerate
acquisition spending in the face of continuing volatile
performance in its core business, resulting in a debt-to-EBITDA
ratio exceeding 4x for a prolonged period of time.

"We could lower our rating on Almirall within the next 12 months
if its adjusted debt to EBIDTA appeared likely to settle between
4.0x and 4.5x over our forecast horizon. This could stem from
persistent operating setbacks that hinder profitability
improvement of the group's U.S. dermatology franchise, coupled
with the pursuit of an acquisitive strategy that exceeds our base
case in magnitude. We shall continue monitoring the group's
ability and willingness to adjust its discretionary spending to
offset some of the constraints on profitability.

"We could take a positive rating action if the group restored its
adjusted EBITDA margin comfortably into the 3x-4x range, which
would most likely stem from operational improvements, such as
EBITDA margin improving to more than 20%."


BANCO SANTANDER: Moody's Affirms Ba1(hyb) Pref. Shares Rating
-------------------------------------------------------------
Moody's Investors Service has affirmed all of Banco Santander
S.A. (Spain)'s (Banco Santander) and its supported entities'
ratings: (1) the A3/Prime-2 deposit and senior debt ratings; (2)
the Baa2 subordinated debt ratings; (3) the Baa2 junior senior
unsecured debt ratings; (4) the Ba1(hyb) and Ba2(hyb) preference
shares ratings; (5) the bank's baseline credit assessment (BCA)
and adjusted BCA of baa1; and (6) its Counterparty Risk
Assessment (CR Assessment) of A3(cr)/Prime-2(cr). The outlook for
the long-term senior debt and deposit ratings remains stable.

The rating action reflects Moody's assessment of Santander
group's resilience amidst weaker operating conditions in two of
their key markets, namely the UK and Brazil, which together
account for 36% of the group's estimated total assets. Moody's
re-assessment of Santander's credit fundamentals follows the
recent lowering of the Macro Profiles of the UK and Brazil which
reflect weakening operating environments in both countries.

RATINGS RATIONALE

The affirmation of Banco Santander's standalone BCA at baa1
follows Moody's assessment that Banco Santander's credit
fundamentals are resilient to lower Macro Profiles in the UK. On
August 2, 2017, Moody's lowered the UK's Macro Profile to Strong+
from Very Strong- and on July 24, 2017, Brazil's Macro Profile
was lowered to Moderate- from Moderate. Moody's Macro Profiles
reflect the rating agency's assessment of the macro environment
in which a bank operates and have a direct bearing on Moody's
assessment of the financial profile of the bank.

The lower assessment of both countries' operating environments
did not, however, trigger a subsequent negative rating action on
Santander's subsidiaries in those countries (Santander UK PLC
(Aa3/Aa3 stable, a3) and Banco Santander (Brasil) S.A. (Ba3
stable/(P)Ba1, ba2)). This reflects Moody's belief that both
banks are in a position to withstand more challenging operating
conditions in their core markets.

The affirmation of Santander's ratings also takes into account
the group's leading market positions in several major markets
that result in a widely diversified balance sheet. This underpins
Santander's sustained profit generation even during periods of
severe stress and the bank's low earnings volatility. Moody's
expects that Santander's geographical diversification will remain
a positive credit driver.

The affirmation of Banco Santander's deposit and senior debt
ratings reflects: (1) the affirmation of the bank's standalone
BCA at baa1; (2) the outcome of Moody's Advanced Loss-Given-
Failure (LGF) analysis that results in two notches of uplift
respectively for the deposit and debt ratings; and (3) Spain's
sovereign rating of Baa2 stable, which caps Banco Santander's
deposit and senior ratings, in turn, at A3, which is two notches
above the sovereign rating.

-- RATIONALE OF THE CR ASSESSMENTS

As part of rating action, Moody's has also affirmed at
A3(cr)/Prime-2(cr) the CR Assessment of Banco Santander, one
notch above the adjusted BCA of baa1 and reflecting the cushion
provided by the volume of bail-in-able debt and deposits (20% of
tangible banking assets at end-December 2016), which would likely
support operating obligations in resolution. The CR Assessment is
capped at A3(cr), two notches above Spain's sovereign rating.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward pressure on Banco Santander's ratings would primarily
materialise in the event of an upgrade of the government of Spain
as the bank's home country sovereign, given that Moody's current
A3 long-term debt and deposit ratings already exceed the
sovereign ratings by two notches and are constrained at that
level under the rating agency's methodology.

Moody's assessment of the BCA already incorporates some expected
further improvement in the bank's fundamentals, and as such the
rating agency does not expect to increase the BCA over the medium
term. In addition, any upward pressure on Santander's BCA is
unlikely to materialise as long as the Spanish government's bond
rating remains at Baa2, because the bank's BCA already exceeds
the Spanish sovereign rating by one notch.

Banco Santander's current BCA already incorporates Moody's
expectation for an improvement in its financial fundamentals. A
weakening or reversal in the positive trajectory could,
therefore, have negative rating implications.

A downgrade of Spain's government rating could also lead to the
downgrade of Banco Santander's BCA and of its deposit and senior
unsecured ratings. The bank's debt and deposit ratings are linked
to the standalone BCA; as such, any change to the BCA could also
affect these ratings.

LIST OF AFFECTED RATINGS

Issuer: Banco Santander S.A. (Spain)

Affirmations:

-- Long-term Counterparty Risk Assessment, affirmed A3(cr)

-- Short-term Counterparty Risk Assessment, affirmed P-2(cr)

-- Long-term Bank Deposits, affirmed A3 Stable

-- Short-term Bank Deposits, affirmed P-2

-- Long-term Issuer Rating, affirmed A3 Stable

-- Senior Unsecured Medium-Term Note Program, affirmed (P)A3

-- Senior Unsecured Shelf, affirmed (P)A3

-- Subordinate Regular Bond/Debenture, affirmed Baa2

-- Subordinate Medium-Term Note Program, affirmed (P)Baa2

-- Subordinate Shelf, affirmed (P)Baa2

-- Junior Senior Unsecured Regular Bond/Debenture, affirmed Baa2

-- Junior Senior Unsecured Medium-Term Note Program, affirmed
    (P)Baa2

-- Junior Senior Unsecured Shelf, affirmed (P)Baa2

-- Preferred Stock Non-cumulative, affirmed Ba1(hyb)

-- Commercial Paper, affirmed P-2

-- Adjusted Baseline Credit Assessment, affirmed baa1

-- Baseline Credit Assessment, affirmed baa1

Outlook Action:

-- Outlook remains Stable

Issuer: Banco Espanol de Credito, S.A. (Banesto)

Affirmations:

-- Preferred Stock Non-cumulative, affirmed Ba2(hyb) (assumed by
    Banco Santander, S.A. (Spain))

-- No Outlook assigned

Issuer: Banesto Holdings, Ltd.

Affirmation:

-- Backed Preferred Stock Non-cumulative, affirmed Ba2(hyb)

-- No Outlook assigned

Issuer: Santander International Products PLC

Affirmations:

-- Backed Senior Unsecured Regular Bond/Debenture, affirmed A3
    Stable

-- Backed Senior Unsecured Medium-Term Note Program, affirmed
    (P)A3

-- Backed Other Short Term, affirmed (P)P-2

-- Backed Commercial Paper, affirmed P-2

Outlook Action:

-- Outlook remains Stable

Issuer: Banco Santander, S.A., London Branch

Affirmations:

-- Long-term Counterparty Risk Assessment, affirmed A3(cr)

-- Short-term Counterparty Risk Assessment, affirmed P-2(cr)

-- Long-term Deposit Note/CD Program, affirmed (P)A3

-- Short-term Deposit Note/CD Program, affirmed (P)P-2

-- No Outlook assigned

Issuer: Emisora Santander Espana S.A.U

Affirmations:

-- Backed Senior Unsecured Regular Bond/Debenture, affirmed A3
    Stable

-- Backed Senior Unsecured Medium-Term Note Program, affirmed
    (P)A3

Outlook Action:

-- Outlook remains Stable

Issuer: Santander Central Hispano International Ltd

Affirmations:

-- Backed Senior Unsecured Medium-Term Note Program, affirmed
    (P)A3

-- Backed Other Short Term, affirmed (P)P-2

-- Backed Commercial Paper, affirmed P-2

-- No Outlook assigned

Issuer: Santander Central Hispano Issuances Ltd.

Affirmations:

-- Backed Subordinate Medium-Term Note Program, affirmed (P)Baa2

-- Backed Subordinate Shelf, affirmed (P)Baa2

-- No Outlook assigned

Issuer: Santander Commercial Paper, S.A. Unipersonal

Affirmations:

-- Backed Commercial Paper, affirmed P-2

-- No Outlook assigned

Issuer: Santander Finance Capital, S.A. Unipersonal

Affirmations:

-- Backed Preferred Stock, affirmed Ba2(hyb)

-- Backed Preferred Stock Non-cumulative, affirmed Ba2(hyb)

-- No Outlook assigned

Issuer: Santander Finance Preferred, S.A. Unipersonal

Affirmations:

-- Backed Preferred Stock Non-cumulative, affirmed Ba2(hyb)

-- No Outlook assigned

Issuer: Santander Int'l Debt, S.A. Unipersonal

Affirmations:

-- Backed Senior Unsecured Medium-Term Note Program, affirmed
    (P)A3

-- Backed Other Short Term, affirmed (P)P-2

-- Backed Senior Unsecured Regular Bond/Debenture, affirmed A3
    Stable

Outlook Action:

-- Outlook remains Stable

Issuer: Santander International Preferred, S.A.U.

Affirmations:

-- Backed Preferred Stock Non-cumulative, affirmed Ba2(hyb)

-- No Outlook assigned

Issuer: Santander Issuances S.A. Unipersonal

Affirmations:

-- Backed Subordinate Medium-Term Note Program, affirmed (P)Baa2

-- Backed Subordinate Regular Bond/Debenture, affirmed Baa2

-- Backed Subordinate Shelf, affirmed (P)Baa2

-- No Outlook assigned

Issuer: Santander Perpetual, S.A. Unipersonal

Affirmations:

-- Backed Junior Subordinated Regular Bond/Debenture, affirmed
    Baa3(hyb)

-- No Outlook assigned

Issuer: Santander US Debt, S.A. Unipersonal

Affirmations:

-- Backed Senior Unsecured Regular Bond/Debenture, affirmed A3
    Stable

-- Backed Senior Unsecured Shelf, affirmed (P)A3

Outlook Action:

-- Outlook remains Stable

PRINCIPAL METHODOLOGY

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


MOTOVILIKHINSKIYE ZAVODY: Court Applies Observation Proceedings
---------------------------------------------------------------
Reuters reports that Motovilikhinskiye Zavody PAO said the court
applied observation proceedings for the company.

Motovilikhinskiye Zavody PAO, formerly Motovilikhinskiye zavody
OAO, is a Russia-based company which is involved in the
manufacture of weapon and ammunition. The Company's other
activities include the production of steel; manufacture of
special oil-field equipment, which includes drill pipes, drill
collars, automatic elevators, power tongs and tube swivels;
production of construction equipment, such as truck-mounted
cranes and floating cranes, as well as production of equipment
for the coal industry. In addition, the Company offers rental
services of its non residential properties.


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


ASHTEAD CAPITAL: Moody's Rates New USD1,200MM Sr. Sec. Notes Ba2
----------------------------------------------------------------
Moody's Investors Service has assigned Ba2 instrument ratings to
the new USD1,200 million second priority senior secured notes due
2025 and 2027 (the notes due 2025 and 2027) to be issued by
Ashtead Capital, Inc., a subsidiary of Ashtead Group plc
(Ashtead).

The proceeds from the issuance of the notes due 2025 and 2027
will be used to (1) refinance the USD900 million second priority
senior secured notes due 2022 including a USD29 million call
premium, (2) repay a portion of the outstanding borrowings under
the USD3,100 million first priority senior secured credit
facility (the ABL Facility), and (3) pay transaction fees.

Ashtead's Ba1 corporate family rating (CFR) and Ba1-PD
probability of default rating (PDR) and the Ba2 instrument rating
on the USD900 million second priority senior secured notes due
2022 and USD500 million second priority senior secured noted due
2024 (the notes due 2024) both issued by Ashtead Capital, Inc.
remain unchanged. The outlook on all ratings remains stable.

Moody's expects to withdraw the Ba2 rating on the USD900 million
second priority senior secured notes due 2022 at the closing of
the refinancing.

RATINGS RATIONALE

The notes due 2025 and 2027, which will rank pari passu with the
notes due 2024, are rated Ba2, one notch below the CFR,
reflecting the size of the ABL facility ranking ahead. The notes
due 2024, 2025 and 2027 benefit from second lien guarantees from
entities accounting for 99% of the group's combined assets as at
April 30, 2017 and 99% of EBITDA for the fiscal year ending April
30, 2017 and second lien pledges over most of these guarantors'
assets. The ABL facility benefits from the same guarantee and
security package but on a first lien basis.

Moody's positively views the fact that the transaction will
contribute to enhancing the group's liquidity profile to support
its future capital expenditures needs as well as external growth
through bolt-on acquisitions. Pro forma for the transaction,
availability under the ABL facility (including letters of credit
totaling USD41 million) will increase to USD1,559 million from
USD1,305 million as of April 30, 2017.

The transaction will also contribute to improving the group's
maturity profile thanks to the long-dated maturity of the new
notes due 2025 and 2027 replacing the USD900 million second
priority senior secured notes maturing in 2022.

The transaction will be relatively leverage neutral as the
proceeds from the issuance of the notes will be mostly used to
repay debt except for outflows to pay the call premium and
transaction fees. Pro forma for the transaction, Moody's
estimates that adjusted gross leverage (as adjusted by Moody's
for operating leases and pension liabilities) will remain at 1.8x
as of April 30, 2017.

Despite a significant increase in spend on acquisitions in fiscal
year 2017 to GBP421 million from GBP68 million a year earlier,
Ashtead was able to maintain adjusted leverage flat compared to
fiscal year 2016 thanks to the strong revenue and EBITDA growth
driven by the contribution from acquisitions and organic growth
to a larger extent. In fiscal year 2017, revenues on a constant
currency basis increased by 10% and EBITDA (as reported by the
company) by 12% compared to prior year. Strong EBITDA growth as
well as lower replacement capex needs enabled the group to
generate positive free cash flow (FCF, as calculated by Moody's)
of GBP196 million in fiscal year 2017 after a long period of
negative FCF driven by growing capex spend.

The stable outlook assumes that the company will maintain a
conservative financial policy with no major debt-funded
acquisitions, excessive shareholder returns, or fleet
overspending leading to lower utilization, and Moody's
expectation for continued moderate growth in the industry.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's believe that further upward pressure is constrained due
to the company's exposure to an inherently cyclical industry.
While not expected in the near future, positive pressure could
arise if (1) Ashtead further improves its client mix such that
exposure to the cyclical construction industry reduces
significantly, (2) the company tightens its publicly-stated net
leverage target, and (3) the company maintains a good liquidity
position.

On the other hand, negative pressure on the ratings could arise
if (1) a sharp market reversal were to result in fleet
utilization and margins decreasing at a higher rate than
previously expected leading to adjusted leverage remaining above
2.5x, (2) liquidity deteriorates due to a significant capex spend
while existing facilities are not upsized, or (3) the company
loosens its net leverage targets or adopts a more aggressive
shareholder return policy.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Equipment and
Transportation Rental Industry published in April 2017.

Ashtead is a London-based equipment rental company with national
networks across North America and the UK. The company rents a
full range of construction and industrial equipment across a wide
variety of applications to a diverse customer base. Ashtead
recorded revenues of GBP3,187 million and EBITDA of GBP1,504
million in fiscal year ending (FYE) April 30, 2017.


CAVENDISH SQUARE: Fitch Affirms B- Rating on EUR9MM Class C Notes
-----------------------------------------------------------------
Fitch Ratings has upgraded Cavendish Square Funding PLC's senior
class A-1 and junior class B notes, and affirmed the others, as
follows:

EUR18.4 million Class A1 (XS0241540763): upgraded to 'Asf' from
'BBBsf'; Outlook Stable
EUR31.2 million Class A2 (XS0241541571): affirmed at 'BBsf';
Outlook Stable
EUR9.3 million Class B (XS0241542033): upgraded to 'BB' from
'Bsf'; Outlook Stable
EUR9.0 million Class C (XS0241543353): affirmed at 'B-sf';
Outlook Stable

Cavendish Square Funding is a cash arbitrage securitisation of
European structured finance assets, mainly mezzanine RMBS, CMBS
and commercial ABS assets of speculative-grade quality.

KEY RATING DRIVERS

The upgrade of the senior class A1 notes follows significant
deleveraging of the transaction coupled with the portfolio's
improving credit quality. The notes pass Fitch's cash flow model
analysis at the 'AAsf' rating stress level and in line with its
'Structured Finance CDOs Surveillance Rating Criteria' Fitch has
upgraded the notes to 'Asf' from 'BBBsf'.

The class A1 notes received principal repayment of EUR36.4
million in the past year, which has resulted in their credit
enhancement increasing to 85.4% from 70.3%. The credit quality of
the portfolio has improved, with upgrades currently outpacing
downgrades by 2 to 1. As a result the weighted average rating
factor of the performing portfolio has fallen to 16.2 from 18.4.

Credit enhancement for the class A2 notes has increased by 10.7%
to 60.6% over the past year. However, as the notes require timely
payment of interest they remain vulnerable to a missed interest
payment event of default. The transaction would rely on principal
to cover interest payments in a high default environment and
given the non-linear amortisation profile of the portfolio, a
missed interest payment results in a best pass rating of 'BBB-'.
This is one notch higher than the best pass rating at last review
but is insufficient to warrant an upgrade. Consequently, Fitch
has affirmed the class A2 notes at 'BBsf'.

Credit enhancement for the class B notes has increased by 9.4% to
53.2% in the past year. The class B notes have lower credit
enhancement compared with the class A2 notes, but they are
comparatively thin, representing EUR9.3 million, and can defer
interest. The model-implied rating has therefore increased by two
notches to 'BBB-sf' from 'BBsf' at last review and Fitch has
upgraded the notes to 'BBsf' from 'Bsf'.

The class C notes are also a comparatively thin tranche
representing only EUR9 million and credit enhancement has
increased by 8% to 46% in the past year. The model-implied rating
has increased by two notches to 'BBsf' from 'B+sf' but itis not
sufficient to warrant an upgrade and so Fitch has affirmed the
class C notes at 'B-sf'.

RATING SENSITIVITIES

A 25% increase in the obligor default probability or a 25%
reduction in expected recovery rates would not impact the ratings
of the notes.


DECO 11 CONDUIT 3: S&P Cuts Ratings on Three Note Classes to 'D'
----------------------------------------------------------------
S&P Global Ratings lowered its credit ratings on DECO 11 - UK
Conduit 3 PLC's class A-1A, A-1B, A-2, and B notes. S&P said, "At
the same time, we have affirmed our 'D (sf)' ratings on the class
C, D, E, and F notes.

"Today's rating actions follow our review of the transaction's
five key rating factors (credit quality of the securitized
assets, legal and regulatory risks, operational and
administrative risks, counterparty risks, and payment structure
and cash flow mechanisms)."

DECO 11 - UK Conduit 3 is a U.K. multi-loan European commercial
mortgage-backed securities (CMBS) transaction that closed in
December 2006, with notes totaling GBP444.387 million. The
original 17 loans were secured on 56 properties throughout the
U.K. As of the last available cash manager report, three loans
remain, with a current securitized loan balance of GBP260.64
million.

S&P said, "Upon publishing our updated S&P Cap Rates for various
jurisdictions and property types, we placed those ratings that
could potentially be affected "under criteria observation" (see
"Application Of Property Evaluation Methodology In European CMBS
Transactions," published on April 28, 2017). Following our review
of this transaction, our ratings that could potentially be
affected are no longer under criteria observation."

CREDIT QUALITY OF THE SECURITIZED ASSETS

S&P said, "Our analysis considers the revenue and expense drivers
affecting the portfolio of properties in forecasting property
cash flow, in order to make appropriate adjustments. These
adjustments are intended to minimize the effects of near-term
volatility and ensure that the net cash flow (NCF) figure derived
from the analysis represents our view of a long-term sustainable
NCF (S&P NCF) for the portfolio of properties. This S&P NCF is
then converted into an expected-case value (S&P Value) using a
direct capitalization approach and capitalization rates
calibrated to our expected-case approach, which is akin to a 'B'
stress level. We derive our view of the loan-to-value ratio (S&P
LTV ratio) by applying our CMBS global property evaluation
methodology. We consider the S&P LTV ratio in our transaction-
level analysis, in conjunction with stressed recovery parameters
and pool diversity metrics, to determine credit risk and
ultimately credit enhancement for a CMBS transaction at each
rating category in accordance with our European CMBS criteria
(see "CMBS Global Property Evaluation Methodology," published on
Sept. 5, 2012, and "European CMBS Methodology And Assumptions,"
published on Nov. 7, 2012).

"Our credit analysis also takes into account our foreign currency
long-term sovereign rating on the relevant jurisdiction (see
"Ratings Above The Sovereign - Structured Finance: Methodology
And Assumptions," published on Aug. 8, 2016)."

MAPLEY GAMMA LOAN (83% OF THE POOL)

The securitized loan is secured against 24 office properties
located throughout the U.K. The loan entered special servicing in
October 2016 following a loan-to-value (LTV) event of default.
The loan matured in January 2017.

LOAN AND COLLATERAL SUMMARY (AS OF APRIL 2017)

-- Securitized loan balance: GBP216.36 million
-- LTV ratio: 175.6%
-- Net operating income: GBP6.41 million
-- Market value: GBP123.2 million
-- Net yield: 5.2%

S&P's KEY ASSUMPTIONS

-- S&P NCF: GBP5.5 million
-- S&P Value: GBP52.0 million
-- Net yield: 10.6%
-- Haircut-to-market value: 58%
-- S&P LTV ratio (before recovery rate adjustments): 416%

WILDMOOR NORTHPOINT LOAN (14.2% OF THE POOL)

The loan is secured on a shopping center in Hull, Yorkshire. The
loan entered special servicing in March 2010 following an LTV
event of default. The loan matured in July 2010.

LOAN AND COLLATERAL SUMMARY (AS OF APRIL 2017)

-- Securitized loan balance: GBP37.09 million
-- Securitized LTV ratio: 209.6%
-- Net operating income: GBP0.74 million
-- Market value: GBP17.7 million
-- Net yield: 4.2%

S&P's KEY ASSUMPTIONS

-- S&P NCF: GBP0.66 million
-- S&P Value: GBP7.8 million
-- Net yield: 8.5%
-- Haircut-to-market value: 56%
-- S&P LTV ratio (before recovery rate adjustments): 533%

CPI RETAIL ACTIVE LOAN (2.8% OF THE POOL)

The loan is secured against a purpose-built, fully-let shopping
center in the town of Ross-on-Wye, 15 miles from Gloucester and
20 miles from Cheltenham. The loan entered special servicing in
March 2010 following an interest cover ratio event of default.
The loan matured in July 2011.

LOAN AND COLLATERAL SUMMARY (AS OF APRIL 2017)

-- Securitized loan balance: GBP7.19 million
-- LTV ratio: 119.8%
-- Net operating income: GBP0.38 million
-- Market value: GBP6.0 million
-- Net yield: 6.3%
S&P's KEY ASSUMPTIONS

-- S&P NCF: GBP0.24 million
-- S&P Value: GBP2.82 million
-- Net yield: 8.4%
-- Haircut-to-market value: 53%
-- S&P LTV ratio (before recovery rate adjustments): 255%

OPERATIONAL RISKS

S&P said, "We apply our operational risk criteria to assess the
operational risk associated with transaction parties that provide
an essential service to a structured finance issuer (see "Global
Framework For Assessing Operational Risk In Structured Finance
Transactions," published on Oct. 9, 2014). Where we believe that
operational risk could lead to credit instability and have an
effect on our ratings, these criteria call for rating caps that
limit the securitization's maximum potential rating.

"Situs Asset Management acts as servicer and Solutus Advisors
Ltd. acts as special servicer. Our assessment of the operational
risk associated with the transaction parties does not constrain
our ratings in this transaction."

LEGAL AND REGULATORY RISKS

S&P said, "Under our legal criteria, we assess the extent to
which a securitization structure isolates securitized assets from
bankruptcy or insolvency risk of the entities participating in
the transaction, as well as the special-purpose entities'
bankruptcy remoteness (see "Structured Finance: Asset Isolation
And Special-Purpose Entity Methodology," published on March 29,
2017).

"Our assessment of the legal and regulatory risk is commensurate
with the ratings assigned."

COUNTERPARTY RISKS

S&P said, "Our current counterparty criteria allows us to rate
the notes in structured finance transactions above our ratings on
related counterparties if a replacement framework exists and
other conditions are met (see "Counterparty Risk Framework
Methodology And Assumptions," published on June 25, 2013). The
maximum ratings uplift depends on the type of counterparty
obligation.

"Our assessment of the counterparty risk for this transaction
does not constrain the ratings achieved from our credit review of
the securitized assets."

PAYMENT STRUCTURE AND CASH FLOW MECHANICS

S&P said, "Our ratings analysis includes an analysis of the
transaction's payment structure and cash flow mechanics. We
assess whether the cash flow from the securitized assets would be
sufficient, at the applicable rating levels, to make timely
payments of interest and ultimate repayment of principal by the
legal maturity date in January 2020, after taking into account
available credit enhancements and allowing for transaction
expenses and external liquidity support."

The July 2017 cash manager reported interest shortfalls on the
class A1-B, A-2, B, C, D, E, and F notes.

RATING ACTIONS

S&P said, "We consider the available credit enhancement for the
class A1-A notes to be insufficient to absorb the amount of
losses that the underlying properties would suffer at the
currently assigned rating level. We have therefore lowered to 'B+
(sf)' from 'BBB- (sf)' our rating on the class A1-A notes.

"We anticipate the interest shortfalls on the class A1-B, A-2, B,
C, D, E, and F notes to be permanent (see "Structured Finance
Temporary Interest Shortfall Methodology," published on Dec. 15,
2015). We have therefore lowered our ratings on the class A1-B,
A-2, and B notes, and affirmed our 'D (sf)' ratings on the class
C, D, E, and F notes (see "Timeliness Of Payments: Grace Periods,
Guarantees, And Use Of 'D' And 'SD' Ratings," published on Oct.
24, 2013)."

RATINGS LIST

  Class            Rating
            To            From

  DECO 11 - UK Conduit 3 PLC
  GBP444.387 Million Commercial Mortgage-Backed Floating-Rate
  Notes

  Ratings Lowered

  A-1A      B+ (sf)       BBB- (sf)
  A-1B      D (sf)        CCC+ (sf)
  A-2       D (sf)        CCC- (sf)
  B         D (sf)        CCC- (sf)

  Ratings Affirmed

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


GELPACK INDUSTRIAL: Administrators Appointed
--------------------------------------------
The Shuttle reports that a Hereford-based plastic packaging
company has appointed administrators and sent the majority of its
staff home as future options are reviewed.

However, no redundancies have yet been made at Gelpack Industrial
Limited and Gelpack Excelsior Limited where 'difficult trading
conditions' have led to an additional funding requirement,
according to The Shuttle.

Chris Pole and Mark Orton from KPMG have been appointed joint
administrators to the firm which is headquartered in Hereford and
employs approximately 200 staff, the report notes.

Following the appointment of the joint administrators, the
majority of staff have been sent home, although the
administrators have retained a skeleton staff to help fulfil
outstanding orders, the report relays.

The report says that Mark Orton, partner at KPMG and joint
administrator commented: "Gelpack is a leading name within the
packaging industry, with customers including well-known names
from across the food and drink, pharmaceutical and bedding
sectors.

"However, both companies have recently suffered difficult trading
conditions that have led to an additional funding requirement,
which has prompted them to enter into administration.

"We are currently reviewing options for the companies, including
the option to continue to trade in the short term, while we seek
a buyer for the businesses and their assets."

He urged anybody interested to contact the joint administrators
as soon as possible, the report discloses.

The report notes that Jesse Norman, MP for Hereford and South
Herefordshire said: "This is dreadful news.

"We must do whatever we can to help the company, support
employees who have been laid off and assist local suppliers who
may be exposed as well.

"I have spoken to administrator Mark Orton of KPMG.  He has told
me that the company has had to endure a very difficult trading
period after a major refinancing, but that the order book is
strong.

"I have since been helping the administrator to notify a range of
potential investors, but needless to say time is of the essence.
Anyone interested in supporting or investing in Gelpack should
come forward to Mr. Orton as soon as possible."


GRIFFON FUNDING: Moody's Affirms Ba3(sf) Rating on Cl. B1 Notes
---------------------------------------------------------------
Moody's Investors Service has affirmed the ratings of 4 classes
of Notes issued by Griffon Funding Limited.

Moody's rating action is:

-- GBP1822.337087M Class A1 Loan Debentures due 2028
Certificate,
    Affirmed Aaa (sf); previously on Sep 26, 2016 Assigned Aaa
    (sf)

-- GBP328.020676M Class A2 Loan Debentures due 2028 Certificate,
    Affirmed Aa3 (sf); previously on Sep 26, 2016 Assigned Aa3
    (sf)

-- GBP133.638053M Class A3 Loan Debentures due 2028 Certificate,
    Affirmed Baa3 (sf); previously on Sep 26, 2016 Assigned Baa3
    (sf)

-- GBP85.042397M Class B1 Loan Notes due 2028 Certificate,
    Affirmed Ba3 (sf); previously on Sep 26, 2016 Assigned Ba3
    (sf)

Moody's does not rate the Class B2 Loan Notes due 2028 or the
Class Z loan Note due 2028.

RATINGS RATIONALE

The affirmation action reflects the stable performance of the
transaction since closing in September 2016. Nine loans have
repaid during this time, reducing the loan count to 48 from 57
and marginally decreasing the pool's herf score to 23.4 from
29.3. Along with the loan repayments, the scheduled amortization
on the remaining loans has reduced the securitised aggregate loan
balance by 19.3%, to GBP1,962 million. Moody's senior LTV ratio
has marginally decreased to 64.9% from 65.5% as at closing,
compared to the current underwritten LTV of 45.5%. As no
sequential triggers have been breached, all principal receipts
are allocated pro-rata towards the notes, ensuring that credit
enhancement levels remain unchanged as at closing

Moody's affirmation reflects a base expected loss in the range of
0%-5% of the current balance, and range from 0% for the strongest
loans to 5% to 10% for the weakest, which is the same as at
closing. Moody's derives this loss expectation from the analysis
of the default probability of the securitised loans (both during
the term and at maturity) and its value assessment of the
collateral.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was Moody's
Approach to Rating EMEA CMBS Transactions published in November
2016.

Other factors used in these ratings are described in European
CMBS: 2016-18 Central Scenarios published in April 2016.

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

Main factors or circumstances that could lead to a downgrade of
the ratings are generally (i) a decline in the property values
backing the underlying loans or (ii) an increase in default risk
assessment or (iii) a deterioration in the credit of the
counterparties, especially the swap provider, the liquidity
facility provider and the account bank.

Main factors or circumstances that could lead to an upgrade of
the ratings are generally (i) an increase in the property values
backing the underlying loans, (ii) repayment of loans with an
assumed high refinancing risk, (iii) a decrease in default risk
assessment.

MOODY'S PORTFOLIO ANALYSIS

As of the July 2017 IPD, the transaction balance has declined by
19.3% to GBP 1,962 million from GPB 2,430 million at closing in
September 2016 due to the payoff of nine loans originally in the
pool. The notes are currently secured by 1,311 commercial and
multi-family properties which all have first-ranking legal
mortgages. The pool has an above average concentration in terms
of geographic location (100% UK, based on UW market value) and
property type (27% mixed use). Moody's uses a variation of the
Herfindahl Index, in which a higher number represents greater
diversity, to measure the diversity of loan size. Large multi-
borrower transactions typically have a Herf of less than 10 with
an average of around 5. This pool has a Herf of 23.4, down from
29.3 at closing.

Moody's Senior LTV has marginally decreased to 64.9% from 65.5%
at closing compared to the current underwritten LTV of 45.5%.


L1R HB: Moody's Assigns B2 Corporate Family Rating
--------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating (CFR) and B2-PD probability of default rating (PDR) to L1R
HB Finance Limited, a holding company of the UK specialist health
and wellbeing retailer Holland and Barrett. Concurrently, Moody's
has assigned a B2 instrument rating to the GBP900 million
equivalent worth of senior secured credit facilities comprising a
GBP75 million revolving credit facility (RCF) due 2023 and GBP825
million equivalent term loan B, incorporating a Sterling tranche
of GBP550 million and a EUR denominated GBP275 million equivalent
tranche, both due in 2024.

The proceeds of the transaction will be used to finance the
acquisition of the company by LetterOne, a privately owned
investment vehicle set up by 5 Russian investors, the largest
individual shareholder is Mikhail Fridman. The outlook on the
ratings is stable.

RATINGS RATIONALE

The B2 Corporate Family Rating (CFR) reflects (1) the small scale
and niche nature of H&B's operations relative to Moody's rated
universe of retailers, (2) its concentration in the UK market and
(3) its leveraged capital structure. The rating agency estimates
that, pro forma for the transaction, Moody's-adjusted gross
leverage (defined as Debt to EBITDA) will be around 5.5x. In
addition, the rating factors in a degree of execution risks
associated to the company's ongoing expansion strategy, inside
and outside of the UK, and to the expected working capital
enhancement largely related to improved inventory management. The
rating reflects the risks and challenges arising from the
management's ambitious growth plans in the next four years such
as the need to scale and strengthen operational structures and
the need to balance the focus on growth with the management of
existing operations.

However, the B2 rating also factors in the strengths of H&B's
retail proposition as evidenced by its high profit margins,
supported by effective cost management, and expected strong free
cash flow generation. The rating also takes into consideration
the favorable industry demand dynamics and the company's ability
to compete with much larger retailers through its high quality
products, strong brand reputation, good value for money customer
perception and expert advice in stores.

"Moody's expects H&B will achieve top line growth at least in the
mid-single digit range as a result of its store roll out plans,
its relocation strategy to more prime locations and its strong
customer proposition. However, there are downside risks in the
form of a softer UK macroeconomic environment, the squeeze in
consumer's disposable income as result of increasing inflation
and the slowdown in wage growth as well as Brexit related risks.
As such, Moody's anticipates H&B will face margin pressure in the
next couple of years and Moody's expects a Moody's-adjusted gross
leverage ratio to remain close to 5.5x in the next 12-18 months",
said Victor Garcia, a Moody's analyst and lead analyst for H&B.

Moody's views the company's liquidity profile as adequate. At
closing of the transaction, H&B will have GBP27 million in cash
on the balance sheet and access to a GBP75 million RCF which,
coupled with Moody's expectations of a positive free cash flow
generation, will allow H&B to meet is cash requirements
comfortably in the next 12-18 months.

The B2 instrument rating assigned to the senior secured credit
facilities is in line with the CFR. The company's probability of
default rating (PDR) of B2-PD, is also in line with the CFR. The
PDR reflects the use of a 50% family recovery rate resulting from
a covenant light debt package. The pari passu RCF has a springing
covenant to be tested when drawings exceed 35% of the total
commitments. Moody's forecasts sufficient headroom under this
covenant in the next 12-18 months.

RATING OUTLOOK

The stable outlook reflects Moody's expectation of a mid-single
digit sales growth, derived from both like for like sales growth
and new store openings. The stable outlook also incorporates
Moody's expectation of a moderate deterioration in profitability
margins, positive free cash flow generation and does not factor
in any large debt funded acquisitions.

FACTORS THAT COULD LEAD TO AN UPGRADE

Positive rating pressure could develop if the company
successfully executes its growth strategy and earnings growth
leading to: (1) a Moody's-adjusted leverage sustainably below
5.0x and (2) a Moody's-adjusted retained cash flow (RCF)/Net Debt
rising sustainably above the low-teens (in percentage terms).

FACTORS THAT COULD LEAD TO A DOWNGRADE

Downward pressure on the ratings could arise if earnings or cash
flow generation weaken as a result of changes in industry
dynamics or increased operational or financial risks derived, for
example, from the company's rapid growth or weaker quality in
execution. Quantitatively, ratings could come under pressure if
Moody's-adjusted leverage increases above 6.0x or if the
company's liquidity profile deteriorates, for example as a result
of a prolonged negative free cash flow generation.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Retail
Industry published in October 2015.

COMPANY PROFILE

L1R HB Finance Limited (H&B), headquartered in Nuneaton, England,
is a health and wellbeing retailer specialist with a strong
market position in the UK market. The company packages, markets
and retails a wide and deep range of products. These are divided
in five different categories: (1) vitamins, herbals, minerals and
supplements (VMHS); (2) fruits, nuts, seeds and snacks (FNSS);
(3) specialist food and drink; (4) ethical beauty; (5) and sports
nutrition.


L1R HB: S&P Assigns Preliminary 'B' CCR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B' long-term
corporate credit rating to L1R HB Finance Ltd. (H&B), the parent
of U.K.-based health and wellness retailer Holland & Barrett. The
outlook is stable.

S&P asaid, "We also assigned our 'B' preliminary issue rating to
the group's seven-year GBP550 million senior secured term loan
B1, and seven-year euro-denominated senior secured term loan B2
(equivalent to GBP275 million). The recovery rating is '3',
indicating our expectations of average recovery (50%-70%; rounded
estimate 50%) in the event of payment default.

"The ratings on the proposed refinancing are subject to the
successful completion of the transaction along the lines outlined
to us, and to our review of the final documentation. If S&P
Global Ratings does not receive the final documentation within a
reasonable timeframe, or if the final documentation materially
departs from the information we have already reviewed, we reserve
the right to revise or withdraw our ratings."

H&B is the U.K.'s leading specialty health and wellness retailer,
with over 800 stores in the U.K. and Ireland, and a 22% market
share in the U.K.'s specialist health and wellness retailing
segment. Despite the relatively niche area of its operations, one
in five U.K. households are Holland & Barrett's active members.
H&B directly competes with pharmacy chain Boots UK and major
supermarkets, such as Tesco PLC. H&B has a moderate level of
geographical diversification outside the U.K. and Ireland with
about 16% revenue generated from over 200 self-operated stores
across the Netherlands, Belgium, and Sweden.

The vertically integrated business model -- whereby H&B benefits
from its in-house production facilities for product packaging,
coating, and mixing -- supports the group's strong margins (S&P
Global Ratings-adjusted EBITDA margins of around 34% or 23% on
reported basis in financial year [FY] 2016, ended Sept. 30).
Management has established a track record of sound operating
execution, in a highly completive retail environment in the
U.K.--demonstrated by the group achieving 33 consecutive quarters
of positive like-for-like sales growth (over eight years).

S&P said, "Overall, despite its strong brand awareness and market
position within the U.K.'s health and wellness segment, we view
H&B's business as constrained by its relatively small scale and
niche focus within the context of the wider retail sector.
Furthermore, it is exposed to fluctuations in discretionary
spending that could weigh on the group's profitability and
working capital as price competition and cost inflation
intensify. We also see a risk of branded retailers increasing
their exposure in this lucrative high-margin segment. These
factors led to our expectation that profitability will gradually
trend downward in the long term.

"Nevertheless, in light of rising health awareness and the aging
population in the U.K., we expect a generally supportive trading
environment for H&B. The group plans to expand its footprint,
primarily in the U.K. and Western Europe, by about 60 stores per
year. This includes about 20 new store-in-store openings per year
under the partnership with Tesco PLC.

"We expect the group to report S&P Global Ratings-adjusted debt
to EBITDA of around 5.4x in FY2017 and could see it reduce
leverage to about 5.2x on the back of increasing EBITDA and
strong margins. However, rapid expansion could entail high rent
costs and related expenditure. We forecast EBITDAR cash interest
coverage to be around 1.9x in FY2018 and FY2019.

"The acquisition financing also involves GBP799 million
preference shares and GBP150 million shareholder loan notes as an
equity injection by LetterOne Investment Holding S.A. We view
these shareholder instruments as equity-like, reflecting our view
that the economic incentives align with common equity. The
instruments are contractually and structurally subordinated with
no events of default, cross default, or cross acceleration in the
proposed documentation."

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

-- In anticipation of the U.K. leaving the EU, S&P forecasts
    U.K. real GDP growth falling to 1.4% in 2017 and 0.9% in 2018
    from 1.8% in 2016.
-- Consumer price index inflation rising to 2.7% in 2017 and
    2.3% in 2018 from 0.6% in 2016. These generally supportive
    macroeconomic conditions together with the increasing
    consumer spend on health and wellness should support the
    group's growth plans.
-- S&P forecasts revenue growth to improve to 7.2% in FY2017 and
    8.9% in FY2018, from 6.7% in FY2016, reflecting the group's
    reinvestment of operating cash flow in new store openings in
    both conventional and store-in-store formats, in-store sales
    platform, and online sales channel.
-- Margins will remain strong compared with retail peers, but
    S&P expects it to gradually trend down owing to rising labor
    and input costs in the U.K., as well as emerging competition
    and store cannibalization.
-- S&P expects an adjusted EBITDA margin of about 32.7% in
    FY2017 and 31.0% in FY2018, gradually reducing from 34.2% in
    FY2016. This would translate into a strong reported EBITDA
    margin of around 21.8% in FY2017 and 20.2% in FY2018 (falling
    from 23.4% in FY2016).
-- Capital expenditure (capex) of about GBP53 million in FY2017
    and about GBP40 million in FY2018, relative to GBP55 million
    in FY2016. This should support the group's EBITDA growth
    mostly on the back of the new store openings, online sales
    platform development, and a more robust inventory system.
-- No shareholder returns.

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

-- S&P forecasts its adjusted debt to EBITDA to be 5.4x in
    FY2017, which could improve to 5.2x in FY2018 on the back of
    increasing EBITDA thanks to new store openings.
-- EBITDAR cash interest coverage (defined as reported EBITDA
    before deducting rent over cash interest plus rent) of about
    1.9x in FY2018 and FY2019.
-- Positive reported free operating cash flow (FOCF) of around
    GBP30 million in FY2017 and FY2018.

S&P said, "The stable outlook reflects our view that H&B will
maintain its leading market position within the health and
wellness retail subsegment in the U.K. and increase its revenues
and profits on the back of the favorable spending environment in
the country and also its store expansion plans. After the
transaction, we forecast H&B's adjusted debt to EBITDA to be
about 5.4x, with EBITDAR cash interest coverage of around 1.9x
over the next 12 months.

"Due to the company's niche focus within the highly competitive
U.K. retail market, we consider an upgrade unlikely over the next
12 months. The group continues to invest, which will likely
curtail any meaningful improvement in its credit metrics.

"We could raise the ratings if H&B establishes a track record of
sound operating performance, sustainably defends its margins, and
meaningfully increases its FOCF generation from its current
levels. This should result in our adjusted debt to EBITDA falling
sustainably below 5x and EBITDAR interest coverage rising toward
2.2x. Any ratings upside would also depend on our view of
conservative financial policy regarding leverage and shareholder
returns.

"We would consider a negative rating action if weak execution of
management's operating plan or highly competitive trading
conditions resulted in the deterioration of H&B's top-line
performance or weakened the margins relative to our base case.

"This could arise if, for example, the group experienced a
decline in EBITDA margins due to higher labor and food costs,
resulting in our adjusted debt to EBITDA rising toward 7x and the
EBITDAR cash interest coverage falling toward 1.5x. We could also
lower the ratings if FOCF generation weakened owing to
accelerated capital spending and working capital investment.

"In addition, we could lower the ratings if we perceive a more-
aggressive financial policy regarding capital investment or
shareholder returns."


TES FINANCE: Moody's Affirms Caa1 CFR, Outlook Negative
-------------------------------------------------------
Moody's Investors Service has changed the outlook to negative
from stable for the UK-based education advertisement company TES
Global Holdings Limited, and TES Finance PLC. Concurrently
Moody's affirmed TES's Caa1 Corporate Family Rating (CFR), Caa1-
PD Probability of Default Rating (PDR), and the Caa1 instrument
ratings on the GBP200 million senior secured notes due 2020 and
the GBP100 million senior secured floating rate notes due 2020
issued by TES Finance PLC.

RATINGS RATIONALE

The change in outlook to negative reflects the ongoing pressure
on the company's performance as a result of declining volume in
its transactional advertising business and limited visibility on
any potential near term stabilization as conditions continue to
remain challenging for schools across the UK. TES's positive
inroad into subscription model has not been able to offset the
impact of the 22% volume decline of its transactional advertising
business during the first nine months of fiscal year 2017.

For the twelve months to May 2017, the company reported EBITDA of
GBP34.1 million down from GBP43 million in 2016 and GBP51 million
in 2015.

According to the management, the migration toward a subscription
model, which requires the company to recognize revenue in a
linear way throughout the year, had a negative impact on revenue
during Q3 2017 of approximately GBP3 million. This should reverse
in Q4 2017. As such, the company expects adjusted EBITDA to
recover to GBP37.5 million for the full year ending August 2017.
Moody's adjusted gross leverage is forecast at around 8.0x at the
end of August 2017.

As acquisitions are now fully consolidated and the company
continues to migrate toward an all-you-can-eat subscription
model, a sustainable material recovery in TES' EBITDA will not
only require a stabilization in the decline in volume of
transactional advertising but also the successful implementation
of price increases across the subscription business.

The UK Government signaled in the first half of 2016 its
intention to develop a national teacher vacancy website. More
recently, the Conservative party manifesto, during the June 2017
UK election, reaffirmed the intention to create such a portal.
While such public alternative would represent a potential threat
to TES' offering and to the company's ability to increase prices
on its subscription model, at present there are still many
uncertainties around timing and resources needed to create a
compelling public platform for schools within the next 6-12
months.

The change in outlook to negative also reflects Moody's concerns
around the declining free cash flow generation, the reduced
access to only 30% of the undrawn GBP20 million revolving credit
facility (RCF), which however may become again available in
August 2017 -- as EBITDA slightly recovers -- albeit with minimal
headroom, and the sustainability of the current capital structure
as the RCF and the outstanding notes are due in July 2019 and
July 2020 respectively.

Liquidity Profile

TES' liquidity profile remains adequate as a result of positive
free cash flow supported by limited working capital changes and
capital needs. However the steady decline in EBITDA and reduced
access to the undrawn RCF, which however may become available
again in August 2017 albeit with minimal headroom, has weakened
the overall liquidity profile of the company.

For the nine months to May 2017, reported Free Cash Flow --
calculated after interest expense and capital spending but before
acquisition related payments -- has declined to GBP6.4 million
from GBP12.8 million during the same period in 2016 and GBP26.9
million in 2015

At the end of May 2017, the company reported cash and cash
equivalents on balance sheet of GBP17.6 million. TES is not
exposed to any material term debt maturities until July 2020
however the company's cash flow will be impacted by cash payments
of deferred considerations estimated at approximately GBP4.7
million for 2018, GBP1.1 million in 2019 and GBP2.1 million in
2020. Moody's expects the first quarter of 2018 to be the the low
point in terms of Free Cash Flow generation in the coming 12
months due to the historical lower activity in the transactional
advertising business and the GBP8 million payment for the semi-
annual interest.

The RCF has one springing covenant, based on a senior secured net
leverage ratio, which is tested if the facility is drawn for more
than 30%. The covenant test level is set at 7.75x. At the end of
May 2017, the company reported a net leverage ratio of 8.4x.

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook reflects the ongoing challenges to the
transactional advertising business with limited visibility on any
near term stabilization or sustainable recovery. A stabilization
in the outlook would require the company to return to revenue and
EBITDA organic growth supported by the successful migration
towards a subscription-based model.

WHAT COULD CHANGE THE RATING UP

Moody's does not anticipate any catalyst for an upgrade in the
near term in view of the continued pressure on transactional
advertising business and the high leverage. However upward
pressure could exerted on the ratings if: (1) TES is able to
return to sustainable operating performance growth; (2) it
completes successfully the transition to a subscription based
model for targeted schools; (3) liquidity profile strengthen as a
result of improving free cash flow generation; and (4) Moody's
adjusted gross leverage ratio moves sustainably below 6.0x.

WHAT COULD CHANGE THE RATING DOWN

Downward pressure on the rating could arise if: (1) the sustained
weakness in operating performance were to become more pronounced;
(2) free cash flow generation were to turn negative; and/or (3)
the company's liquidity position deteriorates markedly. A
downgrade could also occur if there are increased risks of a
restructuring of the company's debt and/or lower expected
recoveries.

The principal methodology used in these ratings was Media
Industry published in June 2017.



                            *********

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
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trades are probably different.  Our objective is to share
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Each Tuesday edition of the TCR contains a list of companies with
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                            *********


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

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