TCREUR_Public/170823.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 23, 2017, Vol. 18, No. 167


                            Headlines


F I N L A N D

STORA ENSO: S&P Raises CCR to 'BB+' on Improved Business Risk


I R E L A N D

BAIN CAPITAL 2017-1: S&P Gives Prelim B- Rating to Cl. F Notes


N E T H E R L A N D S

HIGHLANDER EURO: S&P Raises Class D Notes Rating to B+ (sf)
PANTHER CDO V: S&P Affirms B- (sf) Rating on Class E Notes


R U S S I A

KHANTY-MANSIYSK: S&P Alters Outlook to Stable & Affirms BB+ ICR
MOSCOW: S&P Affirms BB+ Issuer Credit Rating; Outlook Positive


U N I T E D   K I N G D O M

DECO 8 - UK: S&P Lowers Class A2 Notes Rating to 'D(sf)'
EUROSAIL-UK 2007-2NP: S&P Affirms B- Rating on Class E1c Notes
FAB UK 2004-1: S&P Affirms CC (sf) Rating on Class BE Notes
NEW LOOK: S&P Cuts CCR to CCC+ on Unsustainable Capital Structure


                            *********



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F I N L A N D
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STORA ENSO: S&P Raises CCR to 'BB+' on Improved Business Risk
-------------------------------------------------------------
Stora Enso has successfully transformed itself into a growth-
oriented forest and paper company with a focus on stable end
markets and less dependence on structurally declining paper
markets.

S&P said, "We believe the group's business risk profile has
sustainably strengthened as a result, demonstrated by improved
profitability, while the execution risks from recent large
investments have now diminished following successful ramp ups.

S&P Global Ratings raised its long-term corporate credit rating on
Finland-based forest and paper products company Stora Enso Oyj to
'BB+' from 'BB'. The outlook is stable.

S&P said, "At the same time, we have affirmed our 'B' global scale
short-term corporate credit rating and our 'K-4' Nordic regional
scale short-term rating on Stora Enso.

"We also raised the issue ratings on Stora Enso's senior unsecured
debt to 'BB+' from 'BB'. The '3' recovery rating is unchanged,
indicating our expectation of meaningful recovery (rounded
estimate: 50%) in the event of a payment default.

"The upgrade reflects our belief that the group's business risk
profile has sustainably strengthened as a result of a number of
successfully completed large-scale investments. These investments
have transformed Stora Enso into a more profitable, diversified
and integrated forest products company with a focus on growth
markets such as packaging, while reducing the group's dependence
on structurally declining graphic paper markets."

Stora Enso has made some significant investments over last few
years, the latest being the Beihai paperboard mill in China, which
it now expects to break even in the fourth quarter of 2017 (ahead
of earlier statements) and the Varkaus containerboard mill, which
is ramping up as planned and will reach full production in the
second half of 2017. In addition, the company has also announced
that it will not go ahead with a pulp mill at the Beihai site and
also that it will not go ahead with an expansion of the Ostroleka
containerboard mill in Poland. S&P views this as positive for
Stora Enso's business risk profile as it results in considerably
lower project and execution risks, something we previously
considered to be a constraint for the rating.

At the same time, the group has continued to divest and close its
less profitable publication paper mills, exiting in 2016 its Kabel
mill in Germany, and Suzhou in China, while reducing costs across
the rest of the paper segment. We think that Stora Enso's strategy
to steer its business portfolio away from declining paper and
toward growing segments such as consumer paperboard and
containerboard continues to make sense because these segments
enjoy healthy growth prospects at least in line with GDP growth in
its countries of operation. S&P anticipates that these measures,
teamed with continued stringent cost control in the paper segment,
have led to a business portfolio that is less cyclical and less
exposed to structurally declining segments, while continuing to
enjoy solid growth prospects.

S&P said, "As a result of the new profitable growth investments,
as well as the reduced share of low margin paper production, we
view Stora Enso's profitability as having sustainably improved. We
hence forecast adjusted EBITDA margins to improve to around 15%
for the next few years, compared with 14.6% in 2016 and 10%-12% in
2010-2014."

Stora Enso's stronger operational performance is also leading to
improvements in credit metrics, with a ratio of funds from
operations (FFO) to debt currently at 25%, compared with around
20% two years ago. With the group's large investment phase now
behind it, we expect capital expenditure to reduce to around
EUR600 million-EUR650 million per year, which, combined with
higher operational cash flows from new projects, leads to higher
free operating cash flow generation. S&P said, "As a result, we
forecast a gradual strengthening of credit metrics, with
FFO-to-debt trending toward 30% and debt to EBITDA falling below
3.0x on an adjusted basis. Stora Enso has a clearly stated
financial target to maintain reported net debt to EBITDA below
3.0x (which is equivalent to about 3.5x after our adjustments). We
believe this is consistent with a financial risk profile
assessment of significant. We view this positively because it
limits downside risk to the ratings, in our view. Although we
think credit metrics may continue to strengthen further, we don't
necessarily expect such improvements to be sustainable, in light
of the group's financial policy.

"The stable outlook reflects our view that Stora Enso will scale
back investments, maintain a stable dividend policy, and improve
profitability, leading to improved cash flow generation and a
gradual strengthening of credit metrics. We forecast that S&P
Global Ratings-adjusted ratio of FFO to debt will increase within
the 25%-30% range and adjusted debt to EBITDA will improve to
below 3x over through 2018.

"While we forecast improvements in credit metrics, we do not
foresee a material improvement from current levels, due to the
group's investment ambitions and financial policy, which we view
as consistent with a significant financial risk profile.
Nevertheless, with improving cash flow and a disciplined dividend
policy, we could raise the rating to investment grade ('BBB-') if
FFO to debt rose to above 30% and if we believed that operations
and financial policy supported such metrics in the long term.

"We could lower the long-term rating if weakening market
conditions resulted in increased competition and material price
reductions, leading to a deterioration of Stora Enso's credit
metrics. We would consider ratios of FFO to debt of somewhat below
20% and debt to EBITDA of more than 4x, for an extended period of
time and with no scope for improvement, as not commensurate with
the 'BB+' long-term rating. Furthermore, we think the group's
credit quality could weaken if its financial policy became more
aggressive. This could occur as a result of large, debt-financed
acquisitions or exceptionally shareholder-friendly measures,
although we think these are currently unlikely."


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I R E L A N D
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BAIN CAPITAL 2017-1: S&P Gives Prelim B- Rating to Cl. F Notes
--------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to Bain
Capital Euro CLO 2017-1 DAC's class A, B-1, B-2, C, D, E, and F
notes. At closing, the issuer will also issue unrated subordinated
notes.

The preliminary ratings assigned to the notes reflect S&P's
assessment of:

-- The diversified collateral pool, which consists primarily of
     broadly syndicated speculative-grade senior secured term
     loans and bonds that are governed by collateral quality
     tests.

-- The credit enhancement provided through the subordination of
    cash flows, excess spread, and overcollateralization.

-- The collateral manager's experienced team, which can affect
     the performance of the rated notes through collateral
     selection, ongoing portfolio management, and trading.

-- The transaction's legal structure, which is expected to be
    bankruptcy remote.

S&P said, "We consider that the transaction's documented
counterparty replacement and remedy mechanisms adequately mitigate
its exposure to counterparty risk under our current counterparty
criteria.

"Following the application of our structured finance ratings above
the sovereign criteria, we consider the transaction's exposure to
country risk to be limited at the assigned preliminary rating
levels, as the exposure to individual sovereigns does not exceed
the diversification thresholds outlined in our criteria.

"At closing, we consider that the transaction's legal structure
will be bankruptcy remote, in line with our legal criteria.

"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe that our preliminary
ratings are commensurate with the available credit enhancement for
each class of notes."

Bain Capital Euro CLO 2017-1 is a European cash flow corporate
loan collateralized loan obligation (CLO) securitization of a
revolving pool, comprising euro-denominated senior secured loans
and bonds issued mainly by speculative grade borrowers. Bain
Capital Credit, Ltd. is the collateral manager.

RATINGS LIST

  Bain Capital Euro CLO 2017-1 DAC
  EUR362.50 Million Floating- And Fixed-Rate Notes (Including
  EUR37.00 Million Subordinated Notes)

  Class                  Prelim.          Prelim.
                         rating            amount
                                         (mil. EUR)
  A                      AAA (sf)          206.50
  B-1                    AA (sf)            31.50
  B-2                    AA (sf)            15.00
  C                      A (sf)             22.00
  D                      BBB (sf)           17.50
  E                      BB (sf)            22.50
  F                      B- (sf)            10.50
  Subordinated           NR                 37.00

  NR--Not rated.


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N E T H E R L A N D S
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HIGHLANDER EURO: S&P Raises Class D Notes Rating to B+ (sf)
-----------------------------------------------------------
S&P Global Ratings took various credit rating actions on
Highlander Euro CDO B.V.'s (primary issuer; issued the class A-1,
A-2, B, C, and D notes) notes and Highlander Euro CDO (Cayman)
Ltd.'s (secondary issuer; issued the class E notes) notes
(collectively, Highlander Euro CDO).

Specifically, S&P has:

-- Raised its ratings on the class C and D notes; and
-- Affirmed its rating on the class E notes.

S&P said, "Today's rating actions follow our credit and cash flow
analysis of the transaction using data from the June 20, 2017
trustee report and the application of our relevant criteria.

"We conducted our cash flow analysis to determine the break-even
default rate (BDR) for each rated class of notes. The BDR
represents our estimate of the maximum level of gross defaults,
based on our stress assumptions, that a tranche can withstand and
still pay interest and fully repay principal to the noteholders.
We used the portfolio balance that we consider to be performing,
the reported weighted-average spread/coupon, and the weighted-
average recovery rates that we considered to be appropriate. We
incorporated various cash flow stress scenarios using our standard
default patterns, levels, and timings for each rating category
assumed for each class of notes, combined with different interest
stress scenarios as outlined in our corporate collateralized debt
obligation (CDO) criteria.

"The class B notes have fully repaid since our previous review.
This has increased the available credit enhancement for the class
C and D notes. The proportion of assets rated 'CCC+', 'CCC', or
'CCC-' as a percentage of the performing portfolio has reduced to
0.0% from 1.6% since our previous review.

"Our cash flow analysis results indicate that the available credit
enhancement for the class C and D notes is commensurate with
higher ratings than those currently assigned. We have therefore
raised to 'AAA (sf)' from 'A+ (sf)' our rating on the class C
notes and to 'B+ (sf)' from 'B- (sf)' our rating on the class D
notes. The largest obligor test constrains our rating on the class
D notes. The largest obligor test measures the risk of several of
the largest obligors within the portfolio defaulting
simultaneously. As a result of structural deleveraging, the
underlying portfolio is more concentrated now with nine performing
obligors, compared with 22 at our previous review. The largest
performing obligor exposure is at 23.5%, while the average
performing obligor exposure is 11.1%.

"We have affirmed our 'CCC- (sf)' rating on the class E notes as
the notes continue to be undercollateralized. The class E
overcollateralization test is failing and as a result, the
interest payments on these notes are being deferred pursuant to
the transaction's payment waterfall."

Highlander Euro CDO is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily speculative-
grade corporate firms. The transaction closed in August 2006 and
its reinvestment period ended in August 2012. CELF Advisors LLP is
the transaction's manager.

RATINGS LIST

  Class                Rating
               To              From
  Highlander Euro CDO B.V.
  EUR500 Million Secured Floating-Rate And Subordinated Notes

  Ratings Raised

  C            AAA (sf)         A+ (sf)
  D            B+ (sf)          B- (sf)

  Highlander Euro CDO (Cayman) Ltd.
  EUR38.25 Million Secured Floating-Rate Notes

  Rating Affirmed

  E            CCC- (sf)


PANTHER CDO V: S&P Affirms B- (sf) Rating on Class E Notes
----------------------------------------------------------
S&P Global Ratings raised its credit ratings on Panther CDO V
B.V.'s class A1, A2, B, C, and D notes. S&P said, "At the same
time, we have affirmed our rating on the class E notes."

S&P said, "The rating actions follow our analysis of the
transaction using data from the May 31, 2017 trustee report, and
the application of our relevant criteria.

"Since our previous review, the class A1 notes received EUR73.52
million of principal as the portfolio continues to amortize. As
here have not been any new asset defaults since our previous
review, the available credit enhancement has increased for all
classes of rated notes.

"We assessed the credit quality of the outstanding portfolio using
our relevant criteria. For the structured finance assets not rated
by S&P Global Ratings, we apply our mapping criteria to map
notched ratings from another ratings agency and to infer our
rating input for the purpose of inclusion in CDO Evaluator. In
performing this mapping, we generally apply a three-notch downward
adjustment for structured finance assets that are rated by one
rating agency and a two-notch downward adjustment if the asset is
rated by two rating agencies.

"The credit quality of the portfolio has improved to 'BB+' from
'BB' since our previous review.

"Over the same period, the portfolio's average recovery rate has
also improved in each of our rating scenarios, which had a
positive effect on the break-even default rates .

"We have applied our supplemental tests to address event and model
risk, in line with our corporate cash flow collateralized debt
obligations (CDO) criteria." As the transaction employs excess
spread, we have applied this test by running our cash flows using
the forward interest rate curve.

"Following these developments and the application of our criteria,
we believe that the available credit enhancement for the class A1,
A2, B, C, and D notes is commensurate with higher ratings than
those currently assigned. We have therefore raised our ratings on
the class A1, A2, B, C, and D notes.

"We have affirmed our 'B- (sf)' rating on the class E notes as the
available credit enhancement for this class of notes is
commensurate with the currently assigned rating."

Panther CDO V is a cash flow CDO transaction backed by pools of
structured finance assets, as well as speculative-grade corporate
loans and bonds. M&G Investment Manager Ltd. is the manager. The
transaction closed in August 2007 and its reinvestment period
ended in October 2014.

RATINGS LIST

  Panther CDO V B.V.
  EUR350 mil senior secured and deferrable floating-rate notes
  and subordinated notes

                                       Rating
  Class          Identifier         To               From
  A1             XS0308597748       AAA (sf)         AA+ (sf)
  A2             XS0308598399       AAA (sf)         AA+ (sf)
  B              XS0308598803       AA+ (sf)         A+ (sf)
  C              XS0308599447       A+ (sf)          BBB+ (sf)
  D              XS0308600047       BB- (sf)         B+ (sf)
  E              XS0308600559       B- (sf)          B- (sf)


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R U S S I A
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KHANTY-MANSIYSK: S&P Alters Outlook to Stable & Affirms BB+ ICR
---------------------------------------------------------------
On Aug. 18, 2017, S&P Global Ratings revised its outlook on the
Russian region Khanty-Mansiysk Autonomous Okrug (KMAO) to stable
from positive and affirmed the 'BB+' long-term issuer credit
rating.

OUTLOOK

The stable outlook on KMAO reflects S&P's expectation that the
region will maintain its liquidity position and high operating
balance in the next 12 months.

Upside Scenario

S&P said, "We could take a positive rating action on KMAO if it
manages to contain contingent risks to the budget through, for
example, improved financial performance if its key government-
related entities (GREs), and/or the region demonstrates
structurally stronger budgetary performance than in our current
forecast."

Downside Scenario

S&P would likely take a negative rating action on KMAO if its
budgetary performance deteriorated, with deficits after capital
accounts exceeding 5% of total revenues because of weaker revenue
collection or mounting spending pressures, or if the risk from
contingent liabilities further increased.

RATIONALE

S&P said, "The outlook revision follows our reassessment of KMAO's
stand-alone credit profile (SACP) to 'bb+' from 'bbb-'. We believe
that KMAO may have to provide potentially higher support from the
budget to its GREs than we previously thought, based on financial
pressures experienced by some of its largest companies and the
recent track record of financial support to some regional
companies, such as UTair Aviation and Ugoria Insurance Company.
Existing financial stress at some of the GREs, alongside only
moderate economic and revenue growth prospects, will likely
increase KMAO's exposure to contingent risks and may result in
weaker budgetary performance and/or a larger debt burden for the
region."

A wealthy economy in the context of a volatile institutional
framework

Like other Russian regions, KMAO's financial position is highly
dependent on the federal government's decisions under Russia's
institutional framework, which remains unpredictable, with
frequent changes to taxing mechanisms affecting regions. The
application of the consolidated-tax-payer-group, the tax payment
scheme used by corporate tax payers since 2012, continues to
undermine predictability of corporate profit tax (CPT) payments.
However, as of 2017, the government has limited the amount of
losses interregional holdings are allowed to apply to the tax
base. The change will likely support CPT collection in the near
term. This change will also partly mitigate the effect from the 1%
decrease in the CPT redistribution to local and regional
government (LRGs) from the federal level, which will result in an
approximately Russian ruble [RUB] 3 billion loss for KMAO in 2017.

Decisions regarding regional revenues and expenditures are
centralized at the federal level, leaving little budgetary
flexibility to the okrug's authorities. More than 90% of KMAO's
tax revenues are controlled by federal legislation, which makes it
especially difficult for the okrug to address potential revenue
volatility. Similar to most Russian LRGs, KMAO's modifiable
revenues (mainly transport tax and nontax revenues) are low and
don't provide much flexibility. S&P said, "We forecast they will
account for less than 10% of the okrug's operating revenues on
average over the next three years. However, we believe KMAO has
more flexibility on the spending side than peers, due to its
relatively large self-financed capital program, which we believe
it could reduce at least by half in case of need."

KMAO is wealthy by international standards, with the gross
regional product (GRP) per capita at about $34.500 on average in
2014-2016. But its economy is highly concentrated on the cyclical
oil production industry. The okrug accounts for about 44% of
Russia's oil production, and the extractive industries contribute
about 80% of the region's GRP.

S&P said, "We view KMAO's financial management as weak in an
international comparison, as we do that of most Russian LRGs. This
is mainly because the region lacks reliable long-term financial
and capital planning. Nevertheless, we expect the okrug to
maintain a cautious liquidity policy with ample cash reserves and
a smooth debt repayment schedule. Also, the region has a good
track record of cutting expenditures when faced with revenue
stress."

Contingent liabilities will likely weigh on the budget

S&P said, "We believe that, in the near term, the region will
continue to provide extraordinary financial support to its GREs.
Our assumption is based on the track record of the past several
years when the regional government had to step in and support some
regional companies. Last year KMAO made a RUB4.3 billion capital
injection to Ugoria Insurance Company in order to bring the
company's capital into regulatory compliance. The insurance market
is currently under pressure and the prospects for Ugoria Insurance
Company's privatization remain unclear. We therefore believe the
company may require higher potential support from the okrug in the
future. At the end of 2015, KMAO acquired a 38.8% stake in UTair
Aviation, a Russian airliner headquartered in the region, which
was under financial stress, for the amount of RUB11.5 billion
(approximately $192 million as of the date of this publication).
KMAO owns about 30 GREs, some of which are not self-supporting. We
currently estimate that the overall amount of support the sector
may require in the event of stress will likely exceed 2% of KMAO's
consolidated operating budget in the coming two years.

"We forecast KMAO's operating balance will remain about 5% of
operating revenues on average in 2017-2019. We anticipate that the
okrug's key revenue source, corporate profit tax (CPT), will
continue to account for about 30% of operating revenues in the
near term and will remain volatile due to its strong link with the
cyclical oil industry. In 2014-2015, KMAO's tax revenue growth was
supported by the strong financial performance of the oil industry,
which benefited from the ruble's depreciation. As we anticipated,
this growth started to decelerate in 2016 as the depreciation
effect on exporters' profits was progressively exhausted. Regional
revenues will also be affected by the centralization of 1% of the
CPT, which will result in a loss of about RUB3 billion in budget
revenues for KMAO this year. Although the okrug's revenues
continue to be supported by the property tax increase resulting
from the cancellation of a property tax relief that had been
granted to corporate entities on the federal level a few years
ago, we believe overall tax revenues will increase at only a
modest rate, well below the inflation rate in 2017.

"KMAO's management has a track record of effective spending
controls. However, we anticipate that expenditure growth could
pick up in the coming three years as the budget comes under the
pressures of the presidential elections in 2018 and as the okrug
implements a number of capital projects and continues to provide
financial support to its GRE sector. We therefore expect the
deficit after capital accounts to average 4% in 2017-2019.

"We anticipate that the okrug's tax-supported debt will comprise
about 41% of consolidated operating revenues at year-end 2019.
This estimate factors in not only KMAO's direct debt, but also the
liabilities of UTair Aviation and energy transmission company
URESK, both of which benefited from substantial financial support
from the budget in the past couple of years and which we consider
not self-supporting. At the end of 2016, the okrug successfully
placed a new RUB6 billion bond with a seven-year maturity, helping
extend KMAO's debt maturity profile. As the market expects
interest rates to decrease in line with lower inflation, the
okrug's management aims to decrease the average weighted interest
it pays on its debt by conducting regular placements in 2017-2019.

"We assume that KMAO's liquidity will remain strong. The okrug's
accumulated cash reserves, net of the anticipated deficit after
capital accounts, will continue to comfortably exceed its very low
debt service over the next 12 months, which we estimate at RUB6.58
billion. We expect that the okrug could spend part of its current
cash reserves in the next 12 months; however, the debt service
will continue to remain suppressed, at about 3% of operating
revenues on average in 2017-2019. Similar to Russian peers, KMAO's
access to external liquidity is limited, in our view, given the
weaknesses of the domestic capital market and the banking system.

"In accordance with our 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." 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 contingent liabilities had deteriorated.
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.

RATINGS LIST

                                       Rating
                                  To               From
  Khanty-Mansiysk Autonomous Okrug
   Issuer Credit Rating
     Foreign and Local Currency    BB+/Stable/--   BB+/Positive/--



MOSCOW: S&P Affirms BB+ Issuer Credit Rating; Outlook Positive
--------------------------------------------------------------
On Aug. 18, 2017, S&P Global Ratings affirmed its 'BB+' long-term
issuer credit rating on Russia's capital city of Moscow. The
outlook is positive.

At the same time S&P affirmed its 'BB+' issue rating on the city's
senior unsecured bond issues.

OUTLOOK

The positive outlook on Moscow mirrors that on Russia. Any rating
action S&P takes on the sovereign would likely be followed by a
similar action on Moscow.

Downside Scenario

S&P said, "We could revise the outlook to stable in case of a
similar action on Russia. We view a downside scenario based on
Moscow's intrinsic creditworthiness as highly unlikely, because
our assessment of Moscow's stand-alone credit profile (SACP) is
two notches higher than the long-term rating on the city.

Upside Scenario

S&P could raise the rating on Moscow if we raise the foreign
currency long-term sovereign credit rating on Russia.

RATIONALE

S&P said, 'The long-term rating on Moscow reflects, and is capped
by, the 'BB+' foreign currency long-term rating on the Russian
Federation because we believe that Russian local and regional
governments (LRGs) cannot be rated above the sovereign. This
reflects our view of Russia's institutional framework, in which
LRGs have very restricted revenue autonomy and are unable to
withstand possible negative intervention by the federal
government.

"In accordance with our criteria, we assess Moscow's SACP at
'bbb', two notches higher than the issuer credit rating. The SACP
results from the combination of our assessment of an LRG's
individual credit profile and the effects we see of the
institutional framework in which it operates."

Still modest economic growth and weak management continue to
constrain Moscow's intrinsic creditworthiness.

S&P said, "We view Moscow's economy as average internationally
because its relatively high income level in terms of GDP per
capita is counterbalanced by the very modest economic growth. As
Russia's capital, Moscow accounts for about 17% of the country's
GDP and its urban area is home to more than 13% of the country's
population (8.4% reside within the city limits). The GDP per
capita was about $20,800 on average in 2014-2016 and we expect it
to grow in line with the national GDP in 2017-2019, at an average
1.6% per year over this period. The city's economy is relatively
diversified, with trade contributing 35% to the regional gross
product, followed by real estate (19%) and industry (16%)."

Under the volatile and unbalanced institutional framework for
Russian regions, the majority of Moscow's budget revenues is
controlled by the federal government, and remains subject to
regular changes in the national tax legislation and interbudgetary
relations. S&P said, "Nevertheless, we believe that, thanks to
better infrastructure, Moscow has more flexibility on the capital
spending side than most Russian LRGs. In our base case, we expect
the city will maintain its capital program at about 21% of total
expenditures.

"We view Moscow's financial management as weak in an international
context, as we do for most Russian LRGs. In our view, Moscow's
long-term financial and capital planning lacks transparency and
predictability, especially given delays in implementation of
capital projects. Visibility of the policy regarding its numerous
government-related entities (GREs) is also constrained.
At the same time, Moscow's cautious debt and liquidity management
is better than the Russian average, in our view.

"We expect budgetary performance to deteriorate, although cash
depletion will help keep debt very low.

"In our base-case scenario, we now forecast structural
deterioration of the city's budgetary performance, with a still
solid operating balance at 17% of operating revenues on average in
2017-2019 but a widening deficit after capital expenditures of 4%
on average compared with a 4% surplus over 2014-2016. This is due
to the new Russian ruble (RUB) 2.5 trillion-RUB3.5 trillion ($40
billion-$60 billion) long-term program to renovate or rebuild
residential buildings announced in late February this year. More
than 5,000 dilapidated houses built during Nikita Krushchev's rule
("Khrukhchyovki") are set to be demolished and their residents
(about 1.6 million people) relocated to newly built apartment
houses. The city expects to complete the program within the next
15-20 years.

"Despite our forecast weakening of Moscow's budgetary performance,
its tax-supported debt will likely increase only very gradually
and in our forecast reach only 7.7% of consolidated operating
revenues by the end of 2019. In our base case, we don't expect the
city to borrow in 2017-2018; instead, we expect it to finance
deficits by depleting its currently large cash reserves. Borrowing
in 2019-2020 will depend on how quickly the implementation of the
renovation program goes and will be contingent on revenue
collection.

"Moscow's liquidity position remains the major strength for its
intrinsic creditworthiness. Over the next 12 months, we expect the
city's debt-service coverage will remain robust: cash reserves
will stay well in excess of annual debt service. In our opinion,
Moscow also has a structurally strong capacity to generate
internal cash, thanks to high operating margins, but we also think
that it remains exposed to the weaknesses of the Russian domestic
capital and financial markets.

"We expect that, in the next 12 months, the city will spend a
portion of its cash to cover the deficit after capital accounts.
However, it will still have about RUB450 billion (about $7.5
billion) of free cash on its accounts, which will exceed its debt
service by 29x. Thanks to reliance on amortizing medium-term bonds
with gradual repayment profiles, and only limited borrowing in
recent years, debt service will likely remain at below 1% of
operating revenues through the end of 2020.

"We believe that Moscow's contingent liabilities are low. The city
owns a number of transport and utility GREs. The city provides
ongoing support to many of them, but the actual potential
financial support to these GREs in the event of stress is likely
to be limited. We estimate that the maximum amount of
extraordinary financial support that might be required by the
numerous city-owned public service providers would not exceed 10%
of its operating revenues.

"In accordance with our 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." 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 all key rating factors remained
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.

  RATINGS LIST

                                 Rating
                                 To                From
  Moscow (City of)
   Issuer Credit Rating
    Foreign and Local Currency   BB+/Positive/--  BB+/Positive/--
   Senior Unsecured
    Local Currency                BB+              BB+


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


DECO 8 - UK: S&P Lowers Class A2 Notes Rating to 'D(sf)'
--------------------------------------------------------
S&P Global Ratings lowered to 'D (sf)' from 'CCC (sf)' its credit
rating on DECO 8 - UK Conduit 2 PLC's class A2 notes. S&P said,
"At the same time, we have affirmed our 'D (sf)' ratings on the
class B, C, D, E, F, and G notes.

S&P said, "Our ratings in DECO 8 - UK Conduit 2 address the timely
payment of interest and the ultimate payment of principal no later
than the April 2018 legal final maturity date for the class A2
notes and the January 2036 legal final maturity date for the class
B to G notes. On the July 2017 interest payment date all classes
of notes experienced interest shortfalls.

"We understand that interest on the class A2 notes was not paid as
the liquidity provider did not accept part of the liquidity
drawing request submitted by the special servicer. We further
understand that the unfunded amount comprised, among other things,
amounts due and payable to the interest rate swap provider."

As a result, an interest shortfall has occurred on the most senior
class of notes and the issuer issued a note event of default.

S&P said, "In accordance with our interest shortfall criteria, we
have therefore lowered to 'D (sf)' from 'CCC (sf)' our rating on
the class A2 notes.

"At the same time, we have affirmed our 'D (sf)' ratings on the
class B, C, D, E, F, and G notes as they continue to experienced
interest shortfalls."

DECO 8 - UK Conduit 2 is a commercial mortgage-backed securities
(CMBS) transaction, which closed in April 2006 and was secured by
a portfolio of 22 mortgage loans backed by 75 U.K. commercial
properties and 92,464 ground leases.

  RATINGS LIST

  Class        Rating          To          From
  DECO 8 - UK Conduit 2 PLC
  GBP630.131 Million Commercial Mortgage-Backed Floating-Rate
  Notes

  Rating Lowered

  A2       D (sf)      CCC (sf)

  Ratings Affirmed

  B        D (sf)
  C        D (sf)
  D        D (sf)
  E        D (sf)
  F        D (sf)
  G        D (sf)


EUROSAIL-UK 2007-2NP: S&P Affirms B- Rating on Class E1c Notes
--------------------------------------------------------------
S&P Global Ratings raised its credit ratings on Eurosail-UK 2007-
2NP PLC's class A3a, A3c, M1a, M1c, B1a, B1c, C1a, D1a, and D1c
notes. S&P said, "At the same time, we have affirmed our rating on
the class E1c notes.

S&P said, "The rating actions follow our credit and cash flow
analysis of June 2017 information and the application of our
relevant criteria."

Since December 2012, the servicer (Acenden Ltd.) reports arrears
to include amounts outstanding, delinquencies, and other amounts
owed in its investor reports.

Other amounts owed include, among other items, arrears of fees,
charges, costs, ground rent, and insurance. Delinquencies include
principal and interest arrears on the mortgages, based on the
borrowers' monthly installments. Amounts outstanding are principal
and interest arrears, after payments by borrowers are first
allocated to other amounts owed.

In this transaction, the servicer first allocates any arrears
payments to other amounts owed, then interest and principal
amounts. From a borrowers' perspective, the servicer first
allocates any arrears payments to interest and principal amounts,
and then to other amounts owed. This difference in the servicer's
allocation of payments for the transaction and the borrower,
results in amounts outstanding being greater than delinquencies.

S&P said, "We have refined our analysis of these other amounts
owed by using the available reported loan-level data. The new
approach results in a minor increase in the weighted-average
foreclosure frequency (WAFF) and a slightly larger increase in the
weighted-average loss severity (WALS).

The pool factor (the outstanding collateral balance as a
proportion of the original collateral balance) in this transaction
is 35.4%. Acenden references the level of amounts outstanding to
arrive at the 90+ days arrears trigger. The level of 90+ days
amounts outstanding (including repossessions) has been rising and
is at 28.8%.

The notes in this transaction amortize sequentially, as the pro
rata conditions are not satisfied. Amounts outstanding continue to
increase and with cumulative losses at 3.54% (the threshold is
1.25%), it is very likely that the transaction will continue
paying principal sequentially. S&P said, "We have incorporated
this assumption in our cash flow analysis. This transaction
benefits from increased credit enhancement compared with our last
review, due to a nonamortizing reserve fund and the sequential
amortization."

  Rating    WAFF    WALS    Expected
  level      (%)     (%)      credit
                             loss (%)
  AAA      34.90   38.50       13.44
  AA       28.80   30.80        8.87
  A        23.53   19.66        4.63
  BBB      19.35   13.64        2.64
  BB       14.99    9.78        1.47
  B        13.19    6.95        0.92

S&P said, "Our current WAFF assumptions have decreased because of
the lower level of arrears (actual and projections) and greater
seasoning than in our previous review. We applied arrears
projections because the transaction has underperformed our U.K.
nonconforming residential mortgage-backed securities (RMBS) index.
Our WALS assumptions have also decreased because of the refined
treatment of potential losses, given the servicer's method of
allocation of payments of other amounts owed for the transaction.

"The lower expected losses combined with an increase in available
credit enhancement allows the class A3a, A3c, M1a, M1c, B1a, B1c,
C1a, D1a, and D1c notes to pass our stresses at higher rating
levels that those currently assigned. We have therefore raised our
ratings on these classes of notes.

"We have also affirmed our rating on the class E1c notes as they
do not face any shortfalls in the next 18 months and enjoy a
reasonable level of credit enhancement.

"The currency swap provider, Swiss Reinsurance Co. Ltd. (AA-
/Stable/A-1+) is not in line with our current counterparty
criteria. Accordingly, our ratings on the notes in this
transaction are capped at our long-term issuer credit rating on
Swiss Re plus one notch, i.e., at the 'AA' rating level.

"Our credit stability analysis for this transaction indicates that
the maximum projected deterioration that we would expect at each
rating level over one- and three-year periods, under moderate
stress conditions, is in line with our credit stability criteria."

This transaction is a U.K. nonconforming RMBS transaction,
originated by Southern Pacific Mortgage Ltd., GMAC Residential
Funding Co. LLC, Preferred Mortgages Ltd., and London Mortgage
Company.

RATINGS LIST

  Class            Rating
            To              From

  Eurosail-UK 2007-2NP PLC
  EUR480.7 Million, œ267.575 Million Mortgage-Backed Floating-
  Rate Notes And An Overissuance Excess Spread Backed Floating-
  Rate Notes

  Ratings Raised

  A3a       AA (sf)         A (sf)
  A3c       AA (sf)         A (sf)
  M1a       AA (sf)         A (sf)
  M1c       AA (sf)         A (sf)
  B1a       AA- (sf)        A- (sf)
  B1c       AA- (sf)        A- (sf)
  C1a       A+ (sf)         BBB (sf)
  D1a       BB- (sf)        B (sf)
  D1c       BB- (sf)        B (sf)

  Rating Affirmed

  E1c       B- (sf)


FAB UK 2004-1: S&P Affirms CC (sf) Rating on Class BE Notes
-----------------------------------------------------------
S&P Global Ratings raised its credit ratings on FAB UK 2004-1
Ltd.'s class A-1E, A-1F, A-2E, and S1 notes. S&P said, "At the
same time, we have affirmed our ratings on the class A-3E, A-3F,
and BE notes."

S&P said, "The rating actions follow our updated credit and cash
flow analysis of the transaction using data from the latest
trustee report available to us, and the application of our
relevant criteria.

"Similar to our previous review of the transaction, the class A-1E
and A-1F notes have continued to amortize as the transaction
continues to deleverage. Over the same period, however, our
analysis highlights that the transaction has incurred further
losses, due to an additional default in the portfolio. This has
resulted in a reduction in credit enhancement for all classes of
notes, according to our analysis, which has offset any benefit
achieved through the structure's deleveraging.

"The transaction's credit quality has improved since our previous
review. Our analysis indicates an increase in the proportion of
assets rated in the 'A' and 'BBB' rating categories. This has led
to an improvement in the scenario default rates (SDRs) at all
rating levels. The SDR represents the level of gross defaults the
transaction can expect at each rating level.

"For the portion of the assets not rated by S&P Global Ratings, we
apply our third-party mapping criteria to map notched ratings from
another ratings agency and to infer our rating input for the
purpose of inclusion in CDO Evaluator. In performing this mapping,
we generally apply a three-notch downward adjustment for
structured finance assets that are rated by one rating agency and
a two-notch downward adjustment if the asset is rated by two
rating agencies.

"We conducted our cash flow analysis to determine the break-even
default rate (BDR) for each rated class of notes. The BDR
represents our estimate of the maximum level of gross defaults,
based on our stress assumptions, that a tranche can withstand and
still fully repay the noteholders. We used the portfolio balance
that we consider to be performing, the reported weighted-average
spread, and the weighted-average recovery rates that we considered
to be appropriate. We incorporated various cash flow stress
scenarios using our shortened and additional default patterns and
levels for each rating category assumed for each class of notes,
combined with different interest stress scenarios as outlined in
our collateralized debt obligations (CDOs) of pooled structured
finance assets criteria and our corporate CDO criteria.

"Additionally, as part of our analysis and in accordance with our
criteria, we have applied our supplemental tests to address event
and model risk. In accordance with paragraph 21 of our corporate
CDO criteria, as the transaction employs excess spread, we have
applied the supplemental test by running our cash flows using the
forward interest rate curve, including the highest loss from the
largest obligor test net of their recoveries.

"At closing, the class S1 notes represented GBP10.000 million of
combination notes, which comprise GBP7.500 million of class A-1F
notes and GBP2.500 million of class C subordinated notes, which
has an outstanding rated balance of GBP1.125 million. Based on the
reduction in the class S1 notes' outstanding rated balance, our
credit and cash flow analysis indicates that this class of notes
is able to achieve a higher rating than that currently assigned.
We have therefore raised to 'AA+p (sf)' from 'AAp (sf)' our rating
on the class S1 notes.

"Our credit and cash flow results indicate that the available
credit enhancement has increased for the class A-1E, A-1F, and A-
2E notes and is now commensurate with higher ratings than those
currently assigned. We have therefore raised our ratings on these
classes of notes.

"Overall, our analysis indicates that, although slightly
decreased, the available credit enhancement for the class A-3E, A-
3F, and BE notes is commensurate with the currently assigned
ratings. We have therefore affirmed our ratings on these classes
of notes."

FAB UK 2004-1 is a cash flow mezzanine structured finance CDO
transaction that closed in April 2004.

  RATINGS LIST

  Class              Rating
              To                From

  FAB UK 2004-1 Ltd.
  GBP214.5 Million Fixed-, Floating-, And Zero-Coupon Notes

  Ratings Raised

  A-1E        BBB+ (sf)         BBB (sf)
  A-1F        BBB+ (sf)         BBB (sf)
  A-2E        BB+ (sf)          BB (sf)
  S1          AA+p (sf)         AAp (sf)

  Ratings Affirmed

  A-3E        CCC- (sf)
  A-3F        CCC- (sf)
  BE          CC (sf)



NEW LOOK: S&P Cuts CCR to CCC+ on Unsustainable Capital Structure
-----------------------------------------------------------------
S&P Global Ratings said that it lowered its long-term corporate
credit rating on U.K. apparel retailer New Look Retail Group Ltd.
to 'CCC+' from 'B-'. The outlook is stable.

S&P said, "At the same time, we lowered our long-term issue-level
ratings on New Look's œ700 million and EUR415 million senior
secured notes to 'CCC+' from 'B-', in line with the corporate
credit rating. The '4' recovery rating on these notes is
unchanged, reflecting our expectation of average recovery (30%-
50%; rounded estimate: 40%) in the event of default.

"We also lowered our long-term issue-level rating on the group's
œ200 million senior unsecured notes (of which œ176.7 million
remain outstanding) to 'CCC-' from 'CCC'. The '6' recovery rating
is unchanged, indicating our expectation of negligible recovery
(0%-10%; rounded estimate: 0%) in the event of default."

New Look continued to underperform in the first quarter of the
fiscal year ending June 24, 2018, as soft conditions in the U.K.
apparel market and merchandising missteps led to further declines
in like-for-like sales and negative free operating cash flows
(FOCF).

S&P said, "In our view, earnings visibility remains poor and a
turnaround looks increasingly unlikely in the near term, as New
Look's offering appears to consistently lack appeal. Given that
reported net leverage rose to 10x in June 2017, and we assume that
it will increase further under our base-case scenario, we now
consider New Look's capital structure unsustainable. We expect the
significant cash interest burden to weigh heavily on the EBITDA,
resulting in further negative FOCF generation. Although we expect
liquidity sources will be sufficient to cover uses over the next
12 months, we expect this cash burn will exert pressure on
liquidity in the next 12-24 months.

"The stable outlook reflects our view that New Look should not
face a liquidity crisis or any refinancing risks in the upcoming
12 months, given its material committed facilities and long-term
debt maturities. This should help management focus on implementing
operating initiatives such as changes to its merchandising
strategy in an attempt to turn around the business and stabilize
its operating performance.

"We could lower the ratings if we anticipate a specific default
scenario within the next 12 months. This could occur if New Look's
liquidity position deteriorates such that a payment shortfall is
likely, underpinned by a failure to stabilize its earnings decline
and further material cash burn.

"We could also lower the ratings, including the long-term
corporate credit rating, if we think New Look is likely to take
steps to restructure the group's significant balance sheet debt
obligations through a distressed exchange. This includes any debt
repurchases conducted at below par. Given the group's rating,
fragile operating performance, and weakening liquidity, we may
well view any such transactions as akin to a distressed exchange
offer, which could trigger a downgrade to 'SD' (selective default)
at the issuer level.

"We could consider an upgrade if we anticipate that New Look would
return to sustainably positive like-for-like revenue and EBITDA
growth over several quarters, leading to material FOCF generation
and demonstrating that management's strategic initiatives are
turning around operating performance. This could demonstrate the
long-term sustainability of the capital structure, underlined by a
sustainable trend of deleveraging and a return to adequate
liquidity."



                            *********

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

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

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


                            *********


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

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

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

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