TCREUR_Public/170816.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 16, 2017, Vol. 18, No. 162



AGROKOR DD: Retail Side of Business Starts to Stabilize


AIR BERLIN: Files Petition for Opening of Insolvency Proceedings


MONTE DEI PASCHI: Fitch Hikes LT Issuer Default Rating to B


AURORUS BV 2017: S&P Assigns 'B' Rating to Class F Notes
PANTHER CDO V: Fitch Affirms 'CCCsf' Ratings on 2 Note Classes


NORSKE SKOGINDUSTRIER: Optimistic on Debt Restructuring Deal


EUROPLAN JSC: Fitch Affirms BB- Long-Term Issuer Default Ratings
MORDOVIA REPUBLIC: Fitch Affirms B+ Long-Term IDR, Outlook Stable
NOVOSIBIRSK CITY: Fitch Affirms BB Long-Term IDR, Outlook Stable
ORENBURG REGION: Fitch Affirms BB Long-Term IDR, Outlook Stable
TOMSK CITY: Fitch Withdraws BB Long-Term Issuer Default Ratings

U N I T E D   K I N G D O M

CELESTE MORTGAGE 2015-1: S&P Raises Class F Notes Rating to BB
CONTRACT SERVICES: Enters Liquidation, 100+ Jobs Affected
LEARNDIRECT: At Risk of Collapse Following Damning Ofsted Report
VIRIDIAN GROUP: Moody's Affirms B1 CFR, Outlook Positive



AGROKOR DD: Retail Side of Business Starts to Stabilize
European Supermarket Magazine reports that the extraordinary
administration of troubled Croatian retail and food conglomerate
Agrokor has issued its latest monthly report on the group's
progress, in which it states that retail side of the business "has
started to stabilize, with the customer numbers recovering and
nearing the levels recorded in previous years".

In addition, "optimization of cost and restructuring measures
continue with the objective of further improving the results", ESM

According to ESM, the administrators said as a result of new
financing arrangements, the group's Food and Agri businesses have
also posted a more positive performance.

They said the Food sector, "which is mostly seasonal, has achieved
solid results in the six-month period", ESM relays.  "After the
petition and with the liquidity assured, the food companies
normalized production and business processes which had been
disrupted in the pre- petition period."

The administrators also report that "significant progress" has
been made on the group's future viability plans, with draft
viability plans now drawn up for its five divisions, Agrokor Group
including Agrokor d.d., retail, food, agri-business, and Agrokor
Portfolio Holdings, ESM discloses.

In addition, as of August 10, some 10,782 claim applications from
creditors have been "fully processed", and 1,269 are still to be
processed, ESM states.

For the first half of 2017 (January to June), Agrokor posted
revenues of HRK7.29 billion (EUR0.99 billion) in its retail and
wholesale business, HRK3.98 billion (EUR540 million) in its food
operations and HRK1.35 billion (EUR180 million) in its agri
businesses, ESM relays.

Zagreb-based Agrokor is the biggest food producer and retailer in
the Balkans, employing almost 60,000 people across the region
with annual revenue of some HRK50 billion (US$7 billion).

                            *   *   *

The Troubled Company Reporter-Europe reported on June 7, 2017,
that Moody's Investors Service downgraded Croatian retailer and
food manufacturer Agrokor D.D.'s corporate family rating (CFR) to
Ca from Caa2 and the probability of default rating (PDR) to D-PD
from Ca-PD. The outlook on the company's ratings remains
negative.  Moody's also downgraded the senior unsecured rating
assigned to the notes issued by Agrokor due in 2019 and 2020 to C
from Caa2.  The rating actions reflect Agrokor's decision not to
pay the coupon scheduled on May 1, 2017 on its EUR300 million
notes due May 2019 at the end of the 30 day grace period. It also
factors in Moody's understanding that the company is not paying
interest on any of the debt in place prior to Agrokor's decision
in April 2017 to file for restructuring under Croatia's law for
the Extraordinary Administration for Companies with Systemic

The TCR-Europe on April 17, 2017, reported that Moody's Investors
Service downgraded Agrokor D.D.'s corporate family rating (CFR)
to Caa2 from Caa1 and its probability of default rating (PDR) to
Ca-PD from Caa1-PD. "Our decision to downgrade Agrokor's rating
reflects its filing for restructuring under Croatian law, which
in Moody's views makes a default highly likely," Vincent Gusdorf,
a Vice President -- Senior Analyst at Moody's, said. "It also
takes into account uncertainties around the restructuring
process, as creditors' ability to get their money back hinges on
numerous factors that will become apparent over time."


AIR BERLIN: Files Petition for Opening of Insolvency Proceedings
The Board of Directors of Air Berlin PLC has, after close
evaluation, determined that Air Berlin PLC has no longer a
positive continuation prognosis.  The reason for this conclusion
is that its main shareholder Etihad Airways PJSC has notified Air
Berlin PLC of the fact that it will not provide any further
financial support to the Air Berlin group.

Furthermore, two members of the Board of Directors of Air Berlin
PLC who were appointed upon nomination by Etihad Airways PJSC have
resigned from their offices.

Against this background, the Board of Directors has filed with the
competent local district court of Berlin-Charlottenburg a petition
for the opening of debtor-in-possession insolvency proceedings on
Aug. 15.  In addition, a petition for the opening of debtor-in-
possession insolvency proceedings has been filed with the local
district court of Berlin-Charlottenburg for
Air Berlin PLC & Co. Luftverkehrs KG and airberlin technik GmbH
and will be filed for further subsidiaries of the Air Berlin
group.  It is not intended to file a petition for the opening of
insolvency proceedings for NIKI Luftfahrt GmbH and Leisure Cargo

There are ongoing negotiations with Lufthansa and other parties
regarding the disposal of business units.

The German Federal Government, Lufthansa and other parties are
supporting Air Berlin in its restructuring efforts.  The German
Federal Government is supporting Air Berlin with a bridging loan
secured by a federal guarantee to maintain flight operations.

The flight operations of Air Berlin PLC & Co. Luftverkehrs KG,
Luftfahrtgesellschaft Walter mbH, NIKI Luftfahrt GmbH and Belair
Airlines AG will be continued.

Air Berlin Plc is a Germany-based airline that is registered in
the United Kingdom.


MONTE DEI PASCHI: Fitch Hikes LT Issuer Default Rating to B
Fitch Ratings has upgraded Banca Monte dei Paschi di Siena's (MPS)
Long-Term Issuer Default Rating (IDR) and senior debt ratings to
'B' from 'B-'. The Outlook on the Long-Term IDR is Stable.

The upgrade follows the recapitalisation of the bank through a
EUR3.9 billion capital injection from the Italian state and a
EUR4.3 billion capital increase from the conversion of junior and
subordinated debt into equity.

Fitch has downgraded MPS's Viability Rating (VR) to 'f' and
subsequently upgraded it to 'b'. The downgrade reflects the bank's
failure, according to Fitch definitions, as MPS received an
extraordinary precautionary recapitalisation from the state to
cover a material capital shortfall. Additionally, in order to
receive public sector funds, the bank's junior and subordinated
creditors were subject to burden sharing through the mandatory
conversion of junior and subordinated notes into equity. This
conversion qualifies as a distressed debt exchange (DDE) under
Fitch criteria since it represents a material reduction in terms.
The subsequent upgrade of the VR reflects Fitch's view of the
bank's restored viability following the recapitalisation. Fitch
believes the bank's future performance is vulnerable to
deterioration in the business and economic environment.


Following the downgrade of the VR to 'f' and subsequent upgrade to
'b', MPS's Long-Term IDR is now aligned with its VR and the
ratings are driven by the bank's standalone creditworthiness.

The upgrade is based on Fitch's expectation that after being
recapitalised, the bank will dispose of over EUR28 billion
doubtful loans (sofferenze), primarily through a securitisation
transaction. The upgrade also reflects Fitch's expectation that
the European Central Bank will continue to regard the bank as
fully meeting solvency requirements. The upgrade therefore
reflects the bank's stronger capitalisation, improved asset
quality as a result of the deconsolidation of its doubtful
exposures and significantly lower pressure on capital from net
impaired exposures. The Stable Outlook reflects the bank's stable

Disposing of the entire portfolio of doubtful loans will bring the
bank's gross impaired loan ratio broadly into line with the
domestic industry average, down from the extremely high 36.5% at
end-1Q17. The bank will retain its unlikely-to-pay exposures,
which are currently 40% covered by loan impairment allowances.
Following the transaction and the capital increase, net impaired
loans will continue to weigh on capital, but encumbrance levels
will be much lower as unreserved impaired loans will be equal to
about 100% of core capital, down from over 400%.

The bank's restructuring plan covers a five-year period, during
which Fitch expects a gradual improvement in profitability.
However, these will depend on management's ability to realise the
significant cost reductions that the bank has agreed with the
authorities. The bank plans to restructure its organisation and
change its processes significantly, which in Fitch opinion
encompasses execution risk. Fitch also believes that the bank's
ability to generate sustainable profit will remain very sensitive
to the operating environment in Italy.

Fitch said, "We continue to assess the bank's funding and
liquidity as unstable in the absence of formal external support
mechanisms. The bank's funding and liquidity are supported by the
EUR11 billion state-guaranteed notes issued in 1H17. In Fitch
opinion, for funding and liquidity to be assessed more positively,
the bank's funding profile has to normalise as MPS has to re-
establish its retail customer funding franchise and access to
wholesale market funding."

MPS's senior unsecured debt is rated in line with its IDRs, the
'RR4' recovery rating reflects Fitch expectations of average
recovery prospects for senior bondholders.


The SR and SRF reflect Fitch's view that although external support
is possible it cannot be relied upon. Senior creditors can no
longer expect to receive full extraordinary support from the
sovereign in the event that the bank becomes non-viable. The EU's
Bank Recovery and Resolution Directive (BRRD) and the Single
Resolution Mechanism (SRM) for eurozone banks provide a framework
for the resolution of banks that requires senior creditors to
participate in losses, if necessary, instead of or ahead of a bank
receiving sovereign support.


The notes' long- and short-term ratings are based on the Republic
of Italy's direct, unconditional and irrevocable guarantees for
the issues, which cover the notes' payments of principal and
interest. Italy's guarantees were issued by the Ministry of
Economy and Finance under Law Decree n. 237 dated 23 December
2016, subsequently converted into Law 15/2017.

The ratings reflect Fitch's expectation that Italy will honour the
guarantees provided to the noteholders in a full and timely
manner. The state guarantees rank pari passu with Italy's other
unsecured and unguaranteed senior obligations.


The 'RR5' recovery rating for Tier 2 securities, which were valued
at 100% of their nominal value upon the conversion into newly
issued shares of the bank, reflects Fitch expectations of
recoveries in the range of 11% to 30% for bondholders. As a result
Fitch downgraded the securities' long-term rating to 'C' in line
with Fitch criteria for rating non-performing hybrid obligations.

The ratings, including the 'RR6' Recovery Rating, of the Tier 1
instruments and preferred securities reflect the likelihood of
severe economic losses being sustained by bondholders, likely to
be below 10% of the notes' nominal value. Tier 1 securities were
valued at 75% of their nominal value upon the conversion into
newly issued shares of the bank.

Fitch has withdrawn the ratings of all outstanding subordinated
securities as the notes were cancelled following their mandatory
conversion into equity as part of the bank's precautionary


MPS's IDRs, VR and debt ratings reflect Fitch's assumption that
the bank will deconsolidate EUR26 billion doubtful loans by end-
1H18 as announced in its plans. The bank's ratings would be
downgraded, probably by several notches, if the securitisation
transaction does not go through. The ratings could also be
downgraded if the bank fails to execute on its cost reductions,
the planned future impaired loan reductions or is unable to turn
its profitability around. If its impaired loan ratio was to
increase significantly and impaired loans returned to represent
multiples of its core capitalisation the bank would be downgraded.

Good progress in implementing its new strategy and a return to
normalised funding and liquidity levels could over time result in
an upgrade.

An upgrade of the SR and any upward revision of the SRF would be
contingent on a positive change in the sovereign's propensity to
support MPS. While not impossible, this is highly unlikely, in
Fitch's view.


The notes' long- and-short term ratings are sensitive to changes
in Italy's IDRs. Any downgrade or upgrade of Italy's IDRs would be
reflected in the notes' ratings. The notes' ratings are also
sensitive to any changes in the nature of the guarantee, which
Fitch does not expects.


Not applicable

The rating actions are as follows:

Long-Term IDR: upgraded to 'B' from 'B-'; removed from Rating
Watch Evolving (RWE), Outlook Stable

Short-Term IDR: affirmed at 'B', removed from Rating Watch

Viability Rating: downgraded to 'f' from 'c' and subsequently
upgraded to 'b'

Support Rating: affirmed at '5'

Support Rating Floor: affirmed at 'No Floor'

Debt issuance programme (senior debt): upgraded to 'B'/'RR4' from
'B-'/'RR4'; removed from RWE

Senior unsecured debt: upgraded to 'B'/'RR4' from 'B-'/'RR4';
removed from RWE

Tier 2 subordinated debt: downgraded to 'C' from 'CC', recovery
rating changed to RR5 from 'RR3' and withdrawn

Preferred stock and Tier 1 notes: affirmed at 'C'/'RR6' and

State-guaranteed debt: affirmed at /'BBB'/'F2'


AURORUS BV 2017: S&P Assigns 'B' Rating to Class F Notes
S&P Global Ratings has assigned its credit ratings to Aurorus 2017
B.V.'s asset-backed floating-rate class A, B, C, D, E-Dfrd, and F-
Dfrd notes. At closing, Aurorus 2017 also issued unrated class G

At closing, Aurorus 2017 used the issuance proceeds of the class
A, B, C, D, E-Dfrd, F-Dfrd, and G notes to fund the purchase of
the collateral. A portion of the proceeds from the G notes was
also used to fund the general reserve. The collateral comprises
unsecured consumer loans and credit card loans that Qander
Consumer Finance B.V. originated for its Dutch customers. An
initial prefunding amount of up to EUR19.1 million is available to
purchase further assets during the revolving period. The initial
general reserve, funded by the proceeds of the class G notes, is
approximately 1.5% of the class A to D notes' initial balance.

S&P said, "Our ratings on the class A, B, C, D, E-Dfrd, and F-Dfrd
notes reflect our assessment of the underlying asset pool's credit
and cash flow characteristics, as well as our analysis of the
transaction's exposure to counterparty, legal, and operational
risks. Our analysis indicates that the class A, B, C, D, E-Dfrd,
and F-Dfrd notes' available credit enhancement is sufficient to
mitigate noteholders' exposure to credit and cash flow risks at
the assigned rating levels. We base our ratings on the class A, B,
C, and D notes on the timely payment of interest and principal,
while our ratings on the class E-Dfrd and F-Dfrd notes are on a
deferrable basis, i.e. ultimate interest and principal."


Economic Outlook

S&P said, "We expect GDP growth of 2.2% for 2017, 1.9% in 2018,
and 1.8% in 2019 in the Netherlands, compared with 1.8% in 2016.
We estimate unemployment to decrease to 5.0% in 2017, 4.6% in
2018, and 4.3% in 2019, from 6.0% in 2016. Against this backdrop,
we expect stable collateral performance for Dutch securitizations
in the next few years (see "Europe Displays Financial Calm, But
What About The Brexit And QE Clouds Ahead?" published on June 30,
2017). We have considered this outlook when determining our base-
case assumptions. However, we have also taken into account the
potential long life of the assets which, due to the relatively
long timeframes for which the notes will be outstanding, results
in a greater potential for the economy to decline."

Credit Risk

S&P said, "We have analyzed credit risk by applying our European
consumer finance criteria for the non-credit card loans (see
"European Consumer Finance Criteria," published on March 10,
2000). We have used the originator's historical performance data
to size our base-case gross loss and recovery rate assumptions for
the consumer loans. For the credit card loans we have applied our
global consumer finance criteria to size the base-case charge off,
yield, and payment rates for these loans (see "Global Methodology
And Assumptions For Assessing The Credit Quality Of Securitized
Consumer Receivables," published on Oct. 9, 2014).

"Borrowers can obtain further advances for over 77% of the loans
in the portfolio, which have a revolving feature. The portfolio's
weighted-average borrowers' age is 49 years. The loan accelerated
amortization period begins once the borrowers have reached the age
of 65. From that date the loan amortizes fully until the borrower
reaches 74 (with the exception of full balance revolving credits,
which can be originated without age limit, but the credit limit
decreases to EUR2,500 from the age of 75). We have set our base-
case assumptions by considering the long loan terms, the revolving
period, and the further advance feature, which could extend the
transaction's life, thereby exposing it to external shocks arising
from any further deterioration in the Dutch economy. After the end
of the revolving period, the initial purchase price related to
further advance receivables is either funded by the subordinated
loan or its payment is subordinated in the priority of payments.
Amounts in the prefunding account are also used to acquire new
loan receivables and further advances during the revolving period.

"Following our view of the increased uncertainty associated with
the transaction's potentially longer life, we have applied high
rating level loss multiples and recovery rate haircuts (discounts)
for the assigned ratings."

Payment Structure

S&P said, "We have analyzed the payment structure and other
structural features of the transaction under our European consumer
finance criteria. The transaction has separate principal and
interest waterfalls. A principal deficiency ledger (PDL)
comprising seven sub-ledgers is in place for each class of notes
in order to record any realized loss on the loans and any interest
shortfall amount.

"The results of our cash flow runs are in line with our ratings on
the class A, B, C, D, E-Dfrd, and F-Dfrd notes. We base our
ratings on the class A, B, C, and D notes on the timely payment of
interest and principal, while our ratings on the class E-Dfrd and
F-Dfrd notes are on a deferrable basis, i.e. ultimate interest and

The issuer can use principal collections and any of the notes
proceeds to purchase additional loan receivables and further
advance receivables. The transaction has a reserve account, which
was initially sized at 1.5% of the principal balance of the class
A to D notes' initial balance (the reserve target level) and which
was funded by a portion of the sale of the class G notes. The
reserve amortizes in line with the portfolio, subject to a floor
(minimum level) of EUR250,000. The reserve only provides benefit
to the class A, B, C, and D notes. Once these classes of notes are
fully repaid, or once the portfolio has fully amortized, the
reserve amortizes to zero. There is also a liquidity reserve fund
in place. It had a balance of 0 at closing and was funded at item
12 in the revenue waterfall. The target amount of this reserve is
the target reserve balance minus the general reserve balance and
it only provides benefit to the class A, B, C, and D notes.

The interest on the notes is based on floating-rate one-month Euro
Interbank Offered Rate (EURIBOR). The loans bear both fixed and
variable rates, and the concentration limits stipulate a minimum
weighted-average annual percentage rate (APR) for the fixed rate
amortizing loans of 5.50% and a minimum weighted-average margin
above EURIBOR for APR on the revolving loans of 6.5%. An interest
rate swap is also in place. This covers 100% of the net present
value of the fixed rate amortizing loans  (excluding defaulted
receivables) held by the issuer on the previous cut-off date.

S&P said, "Under our European consumer finance criteria, we ran a
high and low prepayment scenario, as well as up, flat, and down
interest rate vectors and an equally distributed default curve. We
applied our global consumer finance criteria to the credit card
loans portion of the transaction. Our cash flow runs at the
assigned rating levels show that the class A, B, C, and D notes
pay timely interest and ultimate principal, while the class E-Dfrd
and F-Dfrd notes pay ultimate interest and ultimate principal."

Operational Risk

Qander is a provider of consumer credit to obligors domiciled in
the Netherlands. The firm specializes in credit cards, unsecured
fixed-term loans, and revolving credit facilities. The firm was
previously a wholly owned subsidiary of BNP Paribas Personal
Finance. In January 2015, funds managed or advised by Chenavari
Investment Managers acquired the firm. S&P said, "We performed a
corporate overview in October 2015 and have attended a follow up
conference call and presentation in May 2017 and we believe that
the company's origination, underwriting, servicing, and risk
management policies and procedures are in line with market
standards and adequate to support the ratings assigned."

Counterparty Risk

ABN AMRO Bank N.V. is the issuer account bank, ING Bank N.V. is
the collection foundation account provider, and BNP Paribas is the
swap counterparty. S&P's long- and short-term issuer credit
ratings on the banks and swap counterparty, and the documented
replacement triggers support S&P's ratings on the class A, B, C,
D, E-Dfrd, and F-Dfrd notes under our current counterparty

Legal Risk

S&P considers that the issuer is bankruptcy remote under its legal

Set-Off Risk

If a borrower cannot obtain a further advance due to the
originator's insolvency, the borrower may have the right to set
off the cost of a substitute loan during the two-month notice
period to terminate the loan. S&P has sized a stressed set-off
amount, which it deducted from its cash flow run at closing.

The pool does not contain loans granted to the originator's
employees and the originator is a not deposit-taking institution,
so set-off risk does not occur from these sources.

Rating Stability

S&P has analyzed the effect of a moderate stress on its credit
assumptions and their ultimate effect on the ratings assigned to
the class A, B, C, D, E-Dfrd, and F-Dfrd notes. S&P ran two
scenarios and the results are in line with its credit stability


Ratings Assigned

  Aurorus 2017 B.V.
  EUR330 Million Asset-Backed Floating-Rate Notes (Including
  Unrated Subordinated Notes)

  Class               Rating         Amount
                                 (mil. EUR)

  A                   AAA (sf)        178.2
  B                   AA (sf)          28.0
  C                   A+ (sf)          16.5
  D                   A- (sf)          24.8
  E-Dfrd              BBB- (sf)        33.0
  F-Dfrd              B (sf)           17.3
  G                   NR               32.2

NR--Not rated.

PANTHER CDO V: Fitch Affirms 'CCCsf' Ratings on 2 Note Classes
Fitch Ratings has upgraded Panther CDO V B.V. class A1 and C
notes, and affirmed the others:

EUR25.4 million Class A1: upgraded to 'AAAsf' from 'AAsf';
Outlook Stable

EUR29.8 million Class A2: affirmed at 'AAsf''; Outlook Stable

EUR24.5 million Class B: affirmed at 'Asf''; Outlook Stable

EUR17.5 million Class C: upgraded to 'BBBsf' from 'BBsf'; Outlook

EUR18 million Class D: affirmed at 'CCCsf'

EUR4 million Class E: affirmed at 'CCCsf'

Panther CDO V B.V. is a managed cash arbitrage securitisation of a
diverse pool of assets, including high-yield bonds, asset-backed
securities, senior loans, second lien loans and mezzanine loans.
The portfolio is managed by M&G Investment Management Limited.


The upgrades reflect increases in credit enhancement (CE) across
the capital structure and broadly stable asset performance over
the last 12 months.

The class A1 notes have amortised by EUR73.5 million over the past
year, which has resulted in their CE increasing to 93.4% from
58.5%. As of the June 2017 investor report, EUR17 million had been
collected in the principal account, which Fitch expects to be
distributed on the October payment date.

The portfolio is a combination of ABS assets and leveraged loans.
The proportion of ABS assets has increased to 67.9% from 50.3%
over the last 12 months and subsequently the leveraged loans
exposure has decreased to 32.1% from 49.7%.

Asset performance has been broadly stable over the last 12 months.
The credit quality of the ABS assets improved to
'BBB-'/'BB+' from 'BB+'/'BB' but for the corporate portfolio it
deteriorated to 'B+'/'B' from 'BB-'/'B+'. Assets reported as
defaulted by the trustee currently stand at EUR8.4 million, down
from EUR13.2 million a year ago.

The transaction is increasingly exposed to concentration risk as
the portfolio is paid down. The top one and top 10 obligors saw
their share of the portfolio, excluding principal proceeds,
increase respectively to 6.5% from 4% and to 47% from 31.4% over
the last 12 months. During the same period, the number of obligors
decreases to 42 from 68. The largest sector in the portfolio is UK
RMBS which represents 28% of the total portfolio excluding
principal proceed.

As of June 2017 investor report, all the coverage tests are
passing with healthy cushions and the rated notes saw no deferred
interest. The weighted average spread continues to decrease and
currently stands at 2.09%, down from 2.23% a year ago.

The class B notes have been affirmed at 'Asf'. Fitch analysis
shows that in 'AA' rating scenario, the class B notes may be
exposed to a missed interest payment due to the relatively low
weighted average spread of the portfolio. The transaction would
then rely on principal to cover interest payments. In a high
default environment and given the non-linear amortisation profile
of the portfolio, principal proceeds may be difficult to predict.


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


NORSKE SKOGINDUSTRIER: Optimistic on Debt Restructuring Deal
Sveinung Sleire at Bloomberg News reports that Norske
Skogindustrier ASA, the Norwegian paper maker struggling to
restructure its debt, is confident a solution will be reached with
its banks and bondholders.

"We believe that the creditors will eventually reach an agreement
on what's an acceptable solution," Bloomberg quotes CEO Lars
Sperre as saying in an interview on Aug. 15 in Arendal, Norway.

Norske Skog is "a company with factories that generate cash flow
-- people have invested in that -- we have a lot of creditors who
are very familiar with the business and believe in the underlying
case," Mr. Sperre, as cited by Bloomberg, said.

The paper maker is seeking to restructure debt after sales
collapsed amid a slump in newspaper readership, Bloomberg
discloses.  Two groups of creditors put forward competing plans to
restructure the Norwegian paper maker's US$1 billion debt pile
after both rejected a management proposal in July, Bloomberg
relates.  The company said on Aug. 11 that creditors extended a
standstill until Aug. 18, when it's expected that longer term
standstill agreements will be entered into, Bloomberg recounts.

The company is preparing a revised offer this week, Bloomberg
relays, citing the CEO.

                      About Norske Skog

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

                           *   *   *

As reported by the Troubled Company Reporter-Europe on
August 7, 2017, S&P Global Ratings lowered to 'D' (default) from
'C' its issue rating on the unsecured notes due in 2026 issued by
Norwegian paper producer Norske Skogindustrier ASA (Norske Skog).
At the same time, S&P removed the rating from CreditWatch with
negative implications, where the rating placed it on June 6, 2017.
S&P said, "We also affirmed the long- and short-term corporate
credit ratings on Norske Skog at 'SD' (selective default) and
affirmed our 'D' issue rating on the senior secured notes maturing
in 2019."  The 'C' ratings on the remaining unsecured debt remain
on CreditWatch negative. The recovery rating on these notes is
unchanged at '6', reflecting our expectation of negligible (0%-
10%) recovery in the event of a conventional default.  The
downgrade follows the nonpayment of the cash coupon due on Norske
Skog's 2026 unsecured notes before the contractual grace period
expired on July 30, 2017.

The TCR-Europe reported on July 24, 2017 that Moody's Investors
Service downgraded the probability of default rating (PDR) of
Norske Skogindustrier ASA (Norske Skog) to Ca-PD/LD from Caa3-PD.
Concurrently, Moody's has affirmed Norske Skog's corporate family
rating (CFR) of Caa3.  In addition, Moody's also affirmed the C
rating of Norske Skog's global notes due 2026 and 2033 and its
perpetual notes due 2115, the Caa2 rating of the senior secured
notes issued by Norske Skog AS and downgraded the rating of the
global notes due 2021 and 2023 issued by Norske Skog Holdings AS
to Ca from Caa3.  The outlook on the ratings remains stable.  The
downgrade of the PDR to Ca-PD/LD from Caa3-PD reflects the fact
that Norske Skog did not pay the interest payment on its senior
secured notes issued by Norske Skog AS, even after the 30 day
grace period had elapsed on July 15.  This constitutes an event
of default based on Moody's definition, in spite of the existence
of a standstill agreement with the debt holders securing that an
enforcement will not be made under the secured notes due to non-
payment of interest.  In addition, the likelihood of further
events of defaults in the next 12-18 months remains fairly high,
as the company is also amidst discussions around an exchange
offer that would most likely involve equitisation of debt, which
the rating agency would most likely view as a distressed


EUROPLAN JSC: Fitch Affirms BB- Long-Term Issuer Default Ratings
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of JSC Leasing company Europlan and Baltic Leasing JSC
(BaltLease) at 'BB-', and of Sollers-Finance LLC (SF), Element
Leasing (EL) and Carcade LLC at 'B+'. Fitch has revised the
Outlook on Carcade's IDR to Stable from Negative. The other
companies' Outlooks are Stable.


The affirmation of Europlan, BaltLease, EL and SF reflect the
companies' healthy performance through the cycle, low credit
losses helped by solid underwriting and a rigorous collection
function, strong liquidity positions and low leverage. EL's and
SF's one-notch lower IDRs reflects their narrower franchises,
shorter track record of operations, slightly higher leverage (EL)
and more concentrated lease book (SL).

The revision of Carcade's Outlook to Stable from Negative mainly
reflects the return to positive core profitability and reduced
leverage. It is rated one notch lower than its closest peer
(Europlan) due to weaker margins and asset quality (bigger stock
of impaired assets, higher level of lessee defaults and final
credit losses), reflecting some weaknesses in underwriting.

The Russian leasing sector is very small relative to the banking
sector (below 3% of banking sector assets, according to Fitch
estimates) and dominated by state-owned and quasi-state companies
specialising in aircraft and railcars leasing. The reviewed
companies are rather small, ranked below the top tier ones and
have a combined market share of below 5%.

The companies focus on providing smaller ticket leases to SMEs for
motor vehicles (passenger cars, light commercial vehicles (LCVs)
and trucks, including buses), which made up from 59% of net
investments in lease at BaltLease to 99% at Carcade. However, some
also finance less liquid specialised vehicles (like cranes,
bulldozers, agricultural equipment) and illiquid equipment (e.g.
production lines), which made up sizable shares at BaltLease (23%
and 17%, respectively) and EL (25% and 5%). With the exception of
SF, all companies have nationwide sales networks/presence in car
dealerships, despite their small sizes.

Given the companies' specialisations, their new business volumes
are sensitive to the car market, which is volatile, like the
Russian economy. Car sales were flat in 2016 after falling by 24%
in 2015 (in monetary terms), although the car leasing market has
been slightly growing, helped by increasing leasing penetration
(from 5% in 2015 to 8% in 2016) and state subsidies. In 1H17 sales
of motor vehicles grew ahead of expectations (in non-monetary
terms, passenger cars sales grew by 7%, LCVs by 25% and trucks by
44%), resulting in the companies' lease books growing by 10% to
20%. However, Carcade's portfolio shrunk by 10%, although Fitch
expects it to return to growth in 2018.

The companies' credit losses have been very low due to effective
foreclosure and sales of leased property. This is additionally
supported by (i) high down payments (typically equal to 20%-30% of
initial cost); (ii) significant diversification of the lease books
(more concentrated in SF); (iii) sufficient liquidity of the
secondary market (especially, for mid-range passenger cars and
LCVs); and (iv) good repossession rates. 1H17 default rates were
low at Europlan, BaltLease and SF (below 3%, according to Fitch's
estimates) and higher at Carcade and EL (around 9%). However,
strong LTVs allowed Europlan, BaltLease and SF to achieve zero
final credit losses, which were only slightly higher (about 1.5%)
at Carcade and EL. At the same time large stock of foreclosed and
impaired assets at Carcade (18% of assets at end-1H17) and its
investment in affiliated Belarusian Idea Bank (5% of assets) put
additional pressure on its asset quality.

All companies reported low leverage, with Fitch-adjusted
debt/equity ratios ranging from 2.7x at SF to 5.1x at EL at end-
1H17. Leverage has been supported by strong internal capital
generation (Europlan, BaltLease and SL) or by deleveraging
(especially at Carcade). However, Europlan's leverage increased to
3.5x at end-1H17 from 1.7x at end-2016 after the completion of a
group reorganisation in 1H17 (see 'Fitch Rates New Europlan Opco
'BB-', Withdraws Ratings on Holdco' dated July 7, 2017 at Fitch expects all companies to increase
their debt-to-equity ratios in 2017 as a result of renewed
business growth, but this should still be in line with their

In 1H17, all companies (apart from Carcade) reported solid
financial results with ROAA from 4% at EL to 7% at Europlan and
SF, supported by wide margins amid declining cost of funding and
low credit costs. Carcade's core performance (before impairment)
improved in 1H17 (pre-impairment ROAA increased to 5% in 1H17 from
3% in 2016), which resulted in stabilisation of its ratings.
However, its net profitability remains weaker than peers.

Fitch views Europlan and BaltLease as more exposed to potential
contagion risks from shareholders or their other businesses. This
risk already warranted a one-notch downgrade of Europlan in 2016
(after it was acquired by Safmar group). For BaltLease, the main
risk stems from the sizable debt at the shareholder level raised
to finance the acquisition of a majority stake in the company, as
debt service may require upstreaming of dividends and liquidity.
As Fitch already factor in shareholder risks into BaltLease's
ratings, its potential acquisition by Safmar group will be neutral
for its ratings unless Safmar significantly alters the company's
management team or business model.

The five companies are predominantly funded by Russian banks (as
direct lenders or bondholders). Refinancing risks are limited,
mitigated by the short tenors of lease books, which are largely
matched by funding maturities. Europlan and Carcade have
diversified borrowings, but are more dependent on market funding
than BaltLease, EL and SF, which have more concentrated funding,
often from affiliated parties.


The senior debt ratings are aligned with the companies' IDRs,
reflecting Fitch's view of average recovery prospects for
unsecured senior creditors in case of default. This in turn is
driven by the low to moderate proportion of company assets
(ranging from 14% at BaltLease to 49% at Carcade of their lease
portfolios) that have been pledged to secured creditors.


SF's Support Rating of '4' reflects Fitch's view that the company
could potentially be supported by one of its shareholders,
Sovcombank (BB-/Stable/bb-), in case of need. This view takes into
account support provided to date and SF's small size relative to
Sovcombank (equal to less than 1% of assets). However, the only
50% ownership, apparently non-strategic nature of the investment
and Sovcombank's intention to gradually decrease its share in SF's
funding make support somewhat less certain, in Fitch's view.


Upgrades of the companies are unlikely in the near term given the
still challenging operating environment, expected increases in
leverage from renewed business growth, small size (SF), modest
performance (Carcade) and shareholder risks (Europlan and

The companies could be downgraded if asset quality and performance
weaken significantly, to the extent that this results in a marked
increase in their leverage ratios or compromises the quality of
their capital. Europlan and BaltLease could be also downgraded if
Fitch concludes that their strategy, risk appetite, balance sheet
structure and/or financial metrics are likely to significantly
weaken following shareholders actions, or if the companies become
significantly exposed to related parties, non-core assets or other
contingent risks arising from the other assets of their owners.

SF's Long-Term IDR would only be downgraded if both its standalone
financial profile deteriorated significantly and Sovcombank failed
to provide timely support.

The senior debt ratings could be downgraded in case of a lowering
of IDRs, or a marked increase in the proportion of pledged assets,
potentially resulting in lower recoveries for the unsecured senior
creditors in a default scenario.

The rating actions are as follows:

JSC Leasing company Europlan

Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BB-';
Outlooks Stable

Short-Term Foreign-Currency IDR: affirmed at 'B'

Senior unsecured debt: affirmed at 'BB-'

Baltic Leasing JSC

Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BB-';
Outlooks Stable

Short-Term Foreign-Currency IDR: affirmed at 'B';

Senior unsecured debt of Baltic Leasing LLC: affirmed at 'BB-'

Sollers-Finance LLC

Long-Term Foreign- and Local-Currency IDRs: affirmed at 'B+';
Outlooks Stable

Short-Term Foreign-Currency IDR: affirmed at 'B';

Support Rating: affirmed at '4'

Senior unsecured debt: affirmed at 'B+'; Recovery Rating 'RR4'

Carcade LLC

Long-Term Foreign- and Local-Currency IDRs: affirmed at 'B+';
Outlooks revised to Stable from Negative

Short-Term Foreign-Currency IDR: affirmed at 'B'

Senior unsecured debt: affirmed at 'B+'; Recovery Rating 'RR4'

Element Leasing

Long-Term Foreign- and Local-Currency IDRs: affirmed at 'B+';
Outlooks Stable

Short-Term Foreign-Currency IDR: affirmed at 'B';

MORDOVIA REPUBLIC: Fitch Affirms B+ Long-Term IDR, Outlook Stable
Fitch Ratings has affirmed the Russian Mordovia Republic's Long-
Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'B+' with Stable Outlooks and Short-Term Foreign-Currency IDR at
'B'. The republic's senior debt ratings have been affirmed at
long-term local currency 'B+'.

The affirmation reflects Fitch's unchanged base line scenario
regarding Mordovia's high direct risk and fragile current balance
leading to weak debt payback metrics.


The 'B+' ratings reflect Mordovia's volatile operating performance
and high direct risk, resulting from large capital expenditure,
which is mitigated by significant exposure to long-term low-cost
budget loans. The ratings also consider Fitch expectation that the
republic will continue to receive support from the federal
government, while its financial flexibility will remain weak.

Fitch projects that Mordovia's direct risk will remain high at
130%-140% of current revenue (2016: 120.9%) as the region will
continue to record a deficit before debt variation over the medium
term. In 2016, Mordovia's direct risk grew to RUB38.6 billion from
RUB34.7 billion at end-2015 and Fitch expects it could reach RUB42
billion by end-2017. Debt payback (direct risk to current balance)
was negative in 2016 due to the negative current balance and will
remain weak, according to Fitch's base case scenario.

In mitigation, at July 1, 2017, 57% of the direct risk (RUB24.5
billion) was represented by budget loans that the federal
government provided to the republic at a preferential 0.1%
interest rate. In addition RUB8.6 billion of these budget loans
are long-term and mature between 2023-2034.

Immediate refinancing risk is moderate, as the republic needs to
repay RUB4 billion (9% of direct risk) in 2H17. The republic's
refinancing risk is concentrated in 2018-2019 when RUB20.1 billion
or 47% of direct risk will mature. To meet this obligation
Mordovia plans to issue domestic bonds in 2018 and 2019.
Additional funding could come from new loans from domestic banks
and the federal government.

For 1H17, the region collected 46.7% of full-year budgeted tax
revenue and incurred 46.9% of budgeted expenditure, leading to an
interim RUB4.4 billion deficit. Fitch expects higher tax revenue
proceeds over 2H17 to result in a narrowing of full-year deficit
to around RUB3.5 billion, or 9.7% of total revenue, which is close
to the RUB3.9 billion deficit (10.6%) in 2016. Fitch expects
deficit will gradually narrow to 7%-8% in 2018-2019 following
completion of infrastructure projects linked to the FIFA world
football championship in 2018.

Fitch forecasts Mordovia's operating performance will be stable
over the medium term, with an operating balance at 7%-9% of
operating revenue (2016: 6.9%) and low current balance at 1%-2% of
current revenue due to high interest payments. Fitch notes that
the republic's fiscal flexibility remains limited due to modest
size of its budget and below average tax capacity, while its
performance is supported by regular transfers from the federal
budget. The latter constitute a significant proportion of
Mordovia's budget, averaging more than one-third of revenue
annually in 2014-2016.

In 2016, Mordovia's economy was estimated by the republic's
government to have grown 4.6% while the national economy
contracted 0.2% (Fitch's estimate). Growth was supported by a
developing agricultural sector and FIFA championship-related
construction. Nevertheless, Fitch expects that the republic's
wealth metrics will remain low, with GRP per capita being 70%-75%
of the national median (2015: 71%).

Russia's institutional framework for sub-nationals is a
constraining factor on the region's ratings. Frequent changes in
the allocation of revenue sources and in the assignment of
expenditure responsibilities between the tiers of government
hampers the forecasting ability of local and regional governments
in Russia. The republic's budgetary performance, in particular, is
reliable on support provided by the state.


Continuous growth of direct risk towards 150% of current revenue,
or negative current balance on permanent base, would lead to a

Sustainable narrowing of fiscal deficit leading to debt
stabilisation and improvement of debt payback to about 20 years,
could lead to an upgrade.


The republic will continue to have reasonable access to domestic
financial markets to enable it to refinance maturing debt.

Mordovia will continue to receive support from the federal
government over the medium term.

NOVOSIBIRSK CITY: Fitch Affirms BB Long-Term IDR, Outlook Stable
Fitch Ratings has affirmed the Russian City of Novosibirsk's Long-
Term Foreign and Local Currency Issuer Default Ratings (IDRs) at
'BB' with Stable Outlooks and Short-Term Foreign Currency IDR at
'B'. Novosibirsk's senior debt has been affirmed at long-term

The affirmation reflects Fitch's expectation that the city will
continue to record a stable, positive current balance and will
narrow its fiscal deficit over the medium term, leading to a
stabilisation of its direct risk.


The ratings reflect Novosibirsk's moderate direct risk with a
smooth maturity profile, satisfactory budgetary performance with a
positive current balance and the city's diversified economy. The
ratings also factor in Russia's weak institutional framework and a
sluggish national economic environment.

According to Fitch's base case scenario the city will continue to
record stable fiscal performance, with an operating margin between
5% and 7% in 2017-2019, which will be sufficient to cover annual
interest payment. This will be backed by steady growth of personal
income tax, which accounts for about two-thirds of the city's tax
revenue. Novosibirsk's budgetary performance improved in 2016 with
an operating margin of 8.6%, from a low 5% in 2015. However, the
improvement was due to additional transfers from the regional
budget of about RUB0.8 billion in December 2016, which were not
spent. If adjusted for this amount, the operating margin would
have been 6.4%.

For 6M17, the city collected 43.4% of its budgeted revenue for the
full year and incurred 46.5% of budgeted expenditure, leading to
an interim RUB2.1 billion deficit. Fitch expects higher tax
revenue proceeds over 2H17 to take the full-year deficit to around
RUB1.4 billion, or 3.7% of total revenue (albeit still larger than
the RUB0.8 billion deficit or 2.3% in 2016). Deficit widening in
2017 is likely to be a result of some expenditure being shifted
from 2016 but Fitch expects the deficit will gradually narrow to
1.5%-2% in 2018-2019.

Novosibirsk's fiscal flexibility remains limited and the city's
performance is supported by regular transfers from Novosibirsk
Region (BBB-/Stable). Current transfers are largely earmarked for
certain expenditure, including the region's mandated
responsibilities, and accounted for about 40% of the city's
operating revenue in 2016.

Fitch expects the city's direct risk to total around RUB18.5
billion by end-2017 (2016: RUB17.5 billion), and to increase to
RUB20 billion in 2018-2019, driven by an expected modest fiscal
deficit. Fitch expects direct risk to peak at 53.4% of current
revenue in 2017 (2016: 52.8%) before declining toward 50% over the
medium term on the back of revenue growth exceeding nominal debt

Novosibirsk demonstrates sophisticated debt management and unlike
most of its Russian peers, the city does not rely on short-term
funding. The city's primary source of borrowing is amortising
domestic bond issues (49% of direct risk as of July 1, 2017) with
up to 10-year maturity followed by revolving lines of credit from
local banks with maturity of up to six years (28% of total direct
risk). This smooths the city's annual refinancing needs.

With a population of about 1.6 million inhabitants, the city is
the capital of Novosibirsk Region and is the largest metropolitan
area of Siberian Federal District. The city's economy is
diversified, with a well-developed processing industry and service
sector. The sound economic performance of local companies supports
Novosibirsk's fiscal capacity, with tax revenue accounting for
47.5% of operating revenue in 2016. Fitch forecasts national GDP
will start to gradually recover with 1.6% growth in 2017, after a
0.2% decline in 2016, which should support Novosibirsk's economic
and budgetary performance.

The city's credit profile remains constrained by the weak
institutional framework for local and regional governments (LRGs)
in Russia. Russia's institutional framework for LRGs has a shorter
record of stable development than many international peers. The
predictability of Russian LRGs' budgetary policy is hampered by
the frequent reallocation of revenue and expenditure
responsibilities among government tiers.


Restoring the operating margin to above 10% on a sustained basis
and maintaining direct risk below 60% of current revenue with a
debt maturity profile corresponding to the debt payback ratio
could lead to an upgrade.

Deterioration of the budgetary performance, leading to an
inability to cover interest expenditure with the city's operating
balance, and direct risk increasing to above 70% of current
revenue would lead to a downgrade.

ORENBURG REGION: Fitch Affirms BB Long-Term IDR, Outlook Stable
Fitch Ratings has affirmed the Russian Orenburg Region'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 region's senior unsecured debt long-term rating has been
affirmed at 'BB'.


The 'BB' rating reflects the region's moderate direct risk with
limited exposure to refinancing risk, low contingent liabilities
and sustainable fiscal performance. The ratings also take into
account the concentration of the region's tax base in oil and gas
companies as well as a weak institutional framework for Russian

1H17 interim financial results show that the region remains in
line with Fitch's base case scenario. Fitch expects the region's
operating margin will remain above 10% over the medium term (2016:
16.3%) supported by continuous control of operating spending and
moderate expansion of the tax base.

Fitch projects that the administration will keep the deficit
before debt at about 3% of total revenue in 2017-2019, the same as
the 2014-2016 average. For 1H17, the administration collected 50%
of its full-year budgeted revenue and expenditure and recorded a
RUB1.2 billion deficit, which is in line with Fitch expectations
of a RUB2.1 billion full-year deficit.

The region's management follows a prudent debt policy and
maintains moderate direct risk, which Fitch expects will remain
below 45% of current revenue in 2017-2019 (2016: 39%). As of  July
1, Orenburg's direct risk was dominated by low-cost budget loans
due in 2017-2034, which composed 63% of the total. The residual
37% was represented by domestic bonds with up to 10-year maturity.
Bank loans of RUB1.8 billion that the region held at the beginning
of the year were redeemed by new budget loans provided by the
federal government in 2017.

The region's maturity profile is longer than most of its domestic
peers, but around half of the maturities are concentrated in 2017-
2019. As of 1 July, the region has to refinance RUB1.2 billion of
issued debt and RUB5.7 billion of budget loans (out of which RUB3
billion are short-term treasury lines) in 2017. Federal government
allocates an additional RUB0.5 billion budget loan in 2H17, which
will be used for refinancing purposes. Other sources of funding
are a committed RUB5 billion of unused bank credit lines or bond
issuance. The region registered a RUB4 billion bond programme in
1H17 and now has the flexibility to place the bond in case of

The region's contingent risk further declined in 1H17 after
Orenburg Housing Mortgage Corporation redeemed the residual part
of its RUB1 billion domestic bond, which was guaranteed by the
region. As a result, contingent liabilities declined to less than
1% of the region's operating revenue and are likely to remain low
as the region does not plan to provide any new guarantees over the
medium term.

Orenburg's economy is dominated by oil and gas companies, which
provide a sustainable tax base. However, the concentration in one
particular sector exposes the region to potential changes in the
fiscal regime, business cycles or price fluctuations. The regional
economy contracted 2.4% yoy in 2016 mostly due to decline in oil
and gas extraction (national economy: contraction by 0.2%). The
administration expects a slow recovery of the regional economy
with GRP to grow by 1%-2% in 2018-2020. This is supported by
Fitch's projection of Russian GDP moderate growth of 1.6%-2% in

The region's credit profile is constrained by the evolving nature
of Russia's institutional framework for local and regional
governments (LRGs). It has a short track record of stable
development compared with many of its international peers. The
unstable intergovernmental set-up reduces the predictability of
LRGs' budgetary policies and hampers Orenburg's forecasting


The ratings could be positively affected by a sustained debt
payback ratio of below four years (2016: three years) and direct
risk remaining below 40% of current revenue.

The ratings could be negatively affected by consistently weaker
budgetary performance with an operating margin below 5% and direct
risk increasing above 60% of current revenue.

TOMSK CITY: Fitch Withdraws BB Long-Term Issuer Default Ratings
Fitch Ratings has withdrawn the Russian City of Tomsk's 'BB' Long-
Term Foreign- and Local-Currency Issuer Default Ratings (IDRs)
with Stable Outlooks and the city's 'B' Short-Term Foreign-
Currency IDR. Tomsk's outstanding senior unsecured domestic bonds'
rating of 'BB' has also been withdrawn.


Fitch is withdrawing the ratings as the city of Tomsk has chosen
to stop participating in the rating process. Therefore, Fitch will
no longer have sufficient information to maintain the ratings.
Accordingly, Fitch will no longer provide ratings or analytical
coverage for the city of Tomsk.

U N I T E D   K I N G D O M

CELESTE MORTGAGE 2015-1: S&P Raises Class F Notes Rating to BB
S&P Global Ratings took various rating actions in Celeste Mortgage
Funding 2015-1 PLC.

Specifically, S&P has:

-- Raised ratings on the class C, D, E, and F notes; and
-- Affirmed ratings on the class A and B notes.

S&P said, "T[he] rating actions follow our credit and cash flow
analysis of the transaction information that we have received as
part of our surveillance review cycle. Our analysis reflects the
application of our European residential loans criteria and our
current counterparty criteria.

"The collateral performance has improved since the transaction was
initially rated (see "Ratings Assigned To U.K. RMBS Transaction
Celeste Mortgage Funding 2015-1's Class A To F Notes," published
on March 27, 2015). As of March 2017, total arrears according to
our calculations were 8.00% compared with 10.17% at the time of
the initial rating. Our calculation of arrears may differ from
that reported by the issuer due to differing approaches of how
different loans to the same borrower are reported when one or more
loan is in arrears. The transaction contains loans where a
borrower has more than one loan secured on property. In such a
scenario, a borrower may be in arrears on one of their loans but
not others. In this case, we would assume all loans were in
arrears, reflecting the possibility that the servicer may choose
to enforce security and would in effect default on all the loans
secured on that property.

"We have observed a decrease in our weighted-average foreclosure
frequency (WAFF) since our previous review. In addition, we have
observed an increase in our weighted-average loss severity

  Rating     WAFF    WALS
  level       (%)     (%)

  AAA       49.50   58.95
  AA        36.63   49.66
  A         29.52   35.28
  BBB       22.90   25.99
  BB        16.12   18.99
  B         14.03   12.83

The decrease in the WAFF is primarily due to the increase in
seasoning, reduction in arrears, and decrease in the original
loan-to-value ratio. The increase in the WALS primarily reflects
an increase, since the initial rating, in jumbo valuations because
positive indexation has led to more properties above the jumbo

S&P said, "Under our credit and cash flow stresses, the class C
notes are able to support a rating at the 'AA-' level. We have
therefore raised to 'AA- (sf)' from 'A (sf)' our rating on the
class C notes. In addition, the class D notes are able to support
a rating at the 'A' level. We have therefore raised to 'A (sf)'
from 'BBB (sf)' our rating on the class D notes. The class E notes
are able to support a rating at the 'BB+' level. We have therefore
raised to 'BB+ (sf)' from 'BB (sf)' our rating on the class E
notes. Finally, the class F notes are able to support a rating at
the 'BB' level. We have therefore raised to 'BB (sf)' from 'B
(sf)' our rating on the class F notes.

"The transaction's counterparty documentation commits relevant
transaction counterparties to specific remedial action in the
event of the breach of documented rating triggers and is in line
with the remedial actions stipulated in our current counterparty
criteria. The transaction does not have a swap to hedge the
predominantly Bank of England Base Rate-linked assets and the
liabilities which are linked to the three-month GBP LIBOR. As a
result, we analyze the historical difference between the indices
paid on the assets and the liabilities. Our analysis then uses the
percentiles of the resulting distribution according to table 106
of our European residential loans criteria.

"The reserve fund is split into two parts, a liquidity component
and a credit component. The liquidity component amortizes as the
rated notes pay off. The credit reserve fund does not amortize
which, if fully funded, will mean the reserve fund as a percentage
of the rated notes will increase as the transaction delevers. All
rated notes have benefitted from an increase in available credit
enhancement and a fall in credit coverage compared with our
previous review.  At the same time, our credit and cash flow
analysis indicates that the class A and B notes can withstand the
stresses that we apply at the currently assigned rating level. We
have therefore affirmed our 'AAA (sf)' and 'AA (sf)' ratings on
the class A and B notes, respectively."

Celeste Mortgage Funding 2015-1 is a U.K. residential mortgage-
backed securities (RMBS) transaction. The collateral pool is
composed of predominantly first-ranking buy-to-let mortgages
originated by Basinghall Finance Ltd. and GMAC-RFC Ltd., and
secured on residential properties located in England and Wales.


  Class        Rating
         To                From

  Celeste Mortgage Funding 2015-1
  EUR258.157 Million Mortgage-Backed Floating-Rate Notes

  Ratings Raised

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

  Ratings Affirmed

  A     AAA (sf)
  B     AA (sf)

CONTRACT SERVICES: Enters Liquidation, 100+ Jobs Affected
Stephen Farrell at Insider Media reports that more than 100 jobs
have been lost at Port Talbot-based Contract Services (South
Wales) Ltd. after the construction and maintenance company
appointed liquidators.

Business recovery practice Begbies Traynor has been appointed to
oversee the liquidation of the company, Insider Media relates.

The business ceased trading on August 11, 2017 and is set to enter
voluntary liquidation on August 22, Insider Media discloses.  It
employed 102 staff, including apprentices and trainees, Insider
Media notes.

According to Insider Media, "unexpected cashflow pressures" at the
start of the year was cited as the reason behind the company's

The Company unable to secure funding to allow trading to continue,
despite an agreement in principle for Welsh Government assistance,
Insider Media relays.

Contract Services operated from bases in Port Talbot and
Caerphilly for 21 years, specialising in large volume maintenance
and repair work, retrofitting, as well as undertaking general
construction projects.

LEARNDIRECT: At Risk of Collapse Following Damning Ofsted Report
Kadhim Shubber at The Financial Times reports that Learndirect,
the UK's largest adult training and apprenticeships provider, is
at risk of collapse following a damning report by education
regulator Ofsted that the company tried to suppress.

Learndirect, which currently has 73,000 people on training courses
and apprenticeships, was given Ofsted's lowest grade possible
after an inspection in March, the FT discloses.

The company, which was privatized and sold to the private equity
arm of Lloyds Bank in 2011, obtained an injunction, warning that
it might lose government contracts and be forced into
administration if the Ofsted report was published, the FT relates.

Learndirect is almost entirely reliant on government funding, and
had received contracts worth GBP158 million in the year to July
2017, the FT relays, citing latest Department for Education

Details of the Ofsted report, the lengths to which Learndirect has
gone to keep it secret, and the tens of millions of pounds
extracted from the operating business since the company's
privatization can now be revealed following an investigation by
the FT and FE Week.

VIRIDIAN GROUP: Moody's Affirms B1 CFR, Outlook Positive
Moody's Investors Service has changed the outlook on all of
Viridian Group's ratings to positive from stable. Concurrently,
the rating agency has affirmed (1) the B2 (LGD4) rating of the
Senior Secured Notes due 2020 (the Notes) issued by Viridian Group
FundCo II Limited; (2) the B1 corporate family rating (CFR) and
B1-PD probability of default rating of the restricted group of
companies owned by Viridian Group Investments Limited
(collectively referred to as Viridian); and (3) the Ba1 (LGD1)
rating of Viridian Group Limited's GBP225 million backed super
senior secured revolving credit facility



The positive outlook for Viridian's ratings reflects (1) an
improvement in the group's business risk profile primarily
stemming from the build out of its wind generation portfolio which
will add stable cash flows; and (2) Moody's expectation that the
consolidated group's leverage, expressed as debt/EBITDA, will
decrease to around 6.0x by 2017/18 as cash flows are boosted by
the newly operational renewable assets.

Following the completion of 168MW of wind farms in Q4 2016/17 the
group now has 225MW of installed owned wind capacity in Ireland,
compared to a medium term target of 300MW. Moody's expects EBITDA
from a full year's operation of the wind portfolio to be GPBP30
million in 2017/18, equivalent to more than 20% of the rating
agency's projected group EBITDA of c. GBP130 million. Wind
generation generates stable cash flows because it benefits from
government support mechanisms (Renewable Obligation Certificates
or ROCs in Northern Ireland and renewable energy feed-in tariff or
REFIT in the Republic of Ireland). It will also reduce the extent
to which the group is short in generation and provide greater
diversity to its fuel mix, which had previously been skewed
towards gas with the Huntstown CCGT plants.

The profitable entry into the residential supply market in the
Republic of Ireland and the further growth in contracted
operational PPAs have also helped to improve Viridian's business
risk profile. This improvement is reflected in the loosening of
Viridian's debt/EBITDA ratio guidance. Moody's now expects
Viridian to maintain debt/EBITDA below 7.0x to support the current
B1 CFR, vs. below 6.0x previously.

Now that the majority of the wind portfolio is operational,
Moody's expects Viridian's leverage to decrease from 6.8x in
2016/17 to around 6.0x in 2017/18, absent further acquisitions, as
EBITDA is boosted by earnings from the commissioned assets and
capex declines. Moody's takes further comfort from the fact that
Viridian continues to exhibit strong operating performance, as
reflected in reported pro-forma EBITDA growth of 7% in 2016/17. In
addition, Moody's believes that the impact of the planned reform
of the Irish power market (Integrated Single Electricity Market,
I-SEM), which is due to 'go-live' in May 2018, will be manageable.
This is because, although the capacity payments that Viridian's
Huntstown plants receive will likely decrease under I-SEM, this
will be partly offset by (1) the plant's ability to extract
locational benefit from grid constraints in Dublin; and (2) growth
in ancillary services revenue from a larger expenditure cap (c.
four times increase by 2020). Both factors reflect the flexible
and essential nature of Huntstown.


The affirmation of Viridian's ratings reflects the group's
earnings diversity across its businesses, including: generation
capacity payments; price-regulated supply in Northern Ireland;
unregulated energy supply across the island of Ireland; and a
portfolio of contracted wind farm output. At the same time, the
rating remains constrained by (1) a challenging operating
environment, primarily a continued low power price environment
which Moody's expects to persist until at least the end of this
decade; as well as (2) Viridian's high level of leverage, with
debt/EBITDA for the consolidated group of 6.8x in 2016/2017.


The ratings could be upgraded if Viridian exhibits debt/EBITDA of
below 6.0x, without an increase in business risk.

Conversely, the outlook could be stabilised in the event that
leverage stays above 6.0x. This could be as a result of (1) a more
material reduction in thermal generation earnings resulting from
the implementation of I-SEM; (2) prolonged unavailability at one
or both of its Huntstown plants; and/or (3) further acquisitions
by its owners which means Viridian deleverages more slowly than
Moody's expects.

Although not currently expected, downward rating pressure would
arise if Viridian was unable to meet Moody's ratio guidance for
the current B1 CFR of debt / EBITDA below 7.0x, without an
offsetting improvement in Viridian's business risk profile.

The principal methodology used in these ratings Unregulated
Utilities and Unregulated Power Companies was published in May

Viridian Group Investments Limited and its subsidiaries (together,
Viridian) are an integrated power utility based in Belfast and
operating across the island of Ireland. Viridian generated revenue
of GBP1,318 million in the full year ending March 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
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

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

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


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

Troubled Company Reporter-Europe is a daily newsletter co-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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Copyright 2017.  All rights reserved.  ISSN 1529-2754.

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