TCREUR_Public/170829.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

          Tuesday, August 29, 2017, Vol. 18, No. 171


                            Headlines


A R M E N I A

VTB BANK: Moody's Lowers Local Currency Deposit Rating to B1


G E R M A N Y

AIR BERLIN: Assets Attract Rival Operators' Interest
AIR BERLIN: Bridge Loan Better Than Uncontrolled Insolvency


I R E L A N D

G HOTEL: Enters Examinership After Deutsche Bank Receivership Bid
PERMANENT TSB: Moody's Lifts Senior Unsecured Debt Rating to Ba3


M A L T A

VISTAJET GROUP: US$150MM Equity Investment Positive, Fitch Says


N E T H E R L A N D S

AERIALTRONICS: In Suspension of Payments


R U S S I A

AFK SISTEMA: No Creditors Demanded Early Debt Repayment
DONAVIA: Russian Court Declares Unit Insolvent


S P A I N

BANCO POPULAR ESPANOL: Investors Sue Over Sale to Santander
HIPOCAT 9: Fitch Affirms 'Csf' Rating on Class E Tranche


S W E D E N

FASTIGHETS AB: Moody's Rates New EUR350MM Subordinated Notes Ba2


U K R A I N E

UKRAINE: Moody's Hikes Ratings to Caa2 & Alters Outlook to Pos.


U N I T E D   K I N G D O M

BHS GROUP: Creditors to Get GBP30MM After Arcadia Settles Claim
TURNSTONE MIDCO 2: Fitch Cuts IDR to B- Then Withdraws Rating


                            *********



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A R M E N I A
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VTB BANK: Moody's Lowers Local Currency Deposit Rating to B1
------------------------------------------------------------
Moody's Investors Service has downgraded VTB Bank's (Armenia)
local currency deposit rating to B1 from Ba3. Concurrently,
Moody's has downgraded the bank's baseline credit assessment
(BCA) to b3 from b2 and adjusted BCA to b1 from ba3, and the
long-term counterparty risk assessment to Ba3(cr) from Ba2(cr).
The bank's B2 long-term foreign currency deposit rating, NP
short-term bank deposit ratings, and NP(cr) short-term
counterparty risk assessment were affirmed.

All long term deposit ratings carry a stable outlook.

RATINGS RATIONALE

The downgrade of VTB Bank's (Armenia) (VTBAR) BCA to b3 from b2
and long-term local -- currency deposit ratings to B1 from Ba3 is
driven by the bank's weakened standalone credit profile, in
particular, its solvency position. This is reflected by its large
stock of problem assets, loss-making performance and Moody's
expectation that the bank will be increasingly reliant on
external support from its parent Bank VTB, JSC (LT LC deposits
rating Ba1 stable/LT FC deposit rating Ba2 stable, b1 BCA) to
strengthen its capital position.

VTBAR's total stock of problem (individually impaired) loans
increased to around 33% of gross loans at the end of 2016 from
22% of gross loans at the end of 2015, though Moody's expects the
level of problem loans to gradually decrease over the coming
years. Moody's also estimates that the bank will need to
gradually increase its problem loans coverage which currently
remains low at around 56% of problem loans.

VTBAR maintains a sufficient capital buffer reported under Basel
I, but a modest capital position reported under local GAAP. The
bank currently complies with the Central Bank of Armenia's
capital requirements and reported total CAR of 12.99% (against
minimum requirements of 12%) at the end June 2017 down from 14%
at the end of 2016. Because of under provisioning, Moody's
expects the bank to remain loss-making this year before returning
to profitable performance in 2018. As the bank will need to
strengthen its capital position in order to comply with
regulatory requirements, Moody's expects VTB group to provide
capital support as it has done in the past. VTB group has shown
commitment to the bank's financial support through a track record
of capital injections and funding allocation.

VTBAR's liquidity and funding profiles remain stable. Liquid
assets amounted to around 30% of total assets at the end of June
2017, providing a sufficient buffer against funding and liquidity
shocks.

VTBAR's B1 local-currency deposit ratings benefit from two-notch
uplift above the bank's b3 BCA, based on Moody's expectations of
a high probability of affiliate support from Russia-based Bank
VTB JSC.

STABLE OUTLOOK

The stable outlook reflects Moody's expectation that VTBAR's
credit profile will not deteriorate going forward and the bank
will return to profitable performance over the next 12-18 months,
and also receive capital injection from its parent.

WHAT COULD MOVE THE RATINGS UP/DOWN

The ratings could be upgraded if the bank materially improves its
solvency profile by successfully repossessing and disposing of
collateral, including writing off large parts of its problem
assets. Furthermore, a substantial core capital increase would be
positive for the rating.

The ratings could be downgraded if the bank fails to improve its
solvency profile and its capital position materially
deteriorates. A material worsening in VTBAR's credit costs beyond
the level currently anticipated by Moody's, or a change in
Moody's supports assumptions could also negatively impact the
ratings.

LIST OF AFFECTED RATINGS

Issuer: VTB Bank (Armenia)

Downgrades:

-- LT Bank Deposits (Local Currency), Downgraded to B1 from Ba3,
    Outlook Changed To Stable From Negative

-- Adjusted Baseline Credit Assessment, Downgraded to b1 from
    ba3

-- Baseline Credit Assessment, Downgraded to b3 from b2

-- LT Counterparty Risk Assessment, Downgraded to Ba3(cr) from
    Ba2(cr)

Affirmations:

-- LT Bank Deposits (Foreign Currency), Affirmed B2, Outlook
    Changed To Stable From Negative

-- ST Bank Deposits (Local & Foreign Currency), Affirmed NP

-- ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

-- Outlook, Changed To Stable From Negative

PRINCIPAL METHODOLOGY

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



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G E R M A N Y
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AIR BERLIN: Assets Attract Rival Operators' Interest
----------------------------------------------------
Tobias Buck at The Financial Times reports that the assets of
insolvent German carrier Air Berlin are attracting growing
interest from rival operators as worries increase that the
group's demise could deal a blow to competition and raise prices.

Lufthansa, the national flag carrier, has already made clear it
plans to bid for parts of the group and further boost its already
strong position in the German market, the FT relates.

But Lufthansa is likely to face competition from rival airlines
including Condor, a subsidiary of Thomas Cook, the FT notes.

Condor is expected to bid for a "high double-digit" number of
medium-haul planes currently belonging to Air Berlin, as well as
"some" long-haul planes, the FT relays, citing a person briefed
on the negotiations.

According to the FT, EasyJet, the UK low-cost carrier, has been
tipped as another bidder for Air Berlin assets, while a
consortium led by German businessman Hans Rudolf Woehrl has said
it wants to take over the stricken airline in its entirety.

Over the past six years Air Berlin racked up losses of about EUR2
billion, with net debt reaching EUR1.2 billion, the FT discloses.

                        About Air Berlin

In operation since 1978, Air Berlin PLC & Co. Luftverkehrs KG is
a global airline carrier that is headquartered in Germany and is
the second largest airline in the country.

In 2016, Air Berlin operated 139 aircraft with flights to
destinations in Germany, Europe, and outside Europe, including
the United States, and provided passenger service to 28.9 million
passengers.  Within the first seven months of 2017, the Debtor
carried approximately 13.8 million passengers.  It employs
approximately 8,481 employees.  Air Berlin is a member of the
Oneworld alliance, participating with other member airlines in
issuing tickets, code-share flights, mileage programs, and other
similar services.

Air Berlin has racked up losses of about EUR2 billion over the
past six years, and has net debt of EUR1.2 billion.

On Aug. 15, 2017, Air Berlin applied to the Local District Court
of Berlin-Charlottenburg, Insolvency Court for commencement of an
insolvency proceeding.  On the same day, the German Court opened
preliminary insolvency proceedings permitting the Debtor to
proceed as a debtor-in-possession, appointed a preliminary
custodian to oversee the Debtor during the preliminary insolvency
proceedings, and prohibited any new, and stayed any pending,
enforcement actions against the Debtor's movable assets.

To seek recognition of the German proceedings, representatives of
Air Berlin filed a Chapter 15 petition (Bankr. S.D.N.Y. Case No.
17-12282) on Aug. 18, 2017.  The Hon. Michael E. Wiles is the
case judge.  Thomas Winkelmann and Frank Kebekus, as foreign
representatives, signed the petition.  Madlyn Gleich Primoff,
Esq., at Freshfields Bruckhaus Deringer US LLP, is serving as
counsel in the U.S. case.


AIR BERLIN: Bridge Loan Better Than Uncontrolled Insolvency
-----------------------------------------------------------
Richard Weiss at Bloomberg News reports that TUI AG Chief
Executive Officer Fritz Joussen said supplying insolvent Air
Berlin Plc with liquidity through the help of a government bridge
loan was a better option than letting the airline go bust.

"The alternative to the process chosen would have been an
uncontrolled insolvency, an airline grounding, employees would
have lost their jobs, and customers would have stranded,"
Bloomberg quotes Mr. Joussen as saying on Aug. 25 in Hamburg.
Keeping the carrier afloat through an orderly procedure was "the
right thing to do."

Germany provided the EUR150 million (US$179 million) loan after
Air Berlin filed for insolvency on Aug. 15, Bloomberg recounts.
The move, which authorities said was aimed at keeping the airline
flying until its liquidation, has been criticized by industry
players as favoring Deutsche Lufthansa AG, which is looking at
taking on half of its German competitor's fleet, Bloomberg
states.

Germany's government has supported Lufthansa's interest on the
assumption that any deal would be speedy and allow many of Air
Berlin's 8,600 employees to keep their jobs, Bloomberg relates.

A deal to combine TUI's German airline TUIfly with Air Berlin's
Niki leisure-flight unit collapsed in June, Bloomberg recounts.
Under an earlier agreement between the two carriers, TUIfly
leases 14 planes and crews to Niki, Bloomberg discloses.

"TUI, like all other parties sitting with the insolvency
administrator, has an interest in getting things wrapped up in a
fair way for employees to save as many jobs as possible,"
including those in the TUIfly-Niki partnership, Mr. Joussen, as
cited by Bloomberg, said on Aug. 25.

According to Bloomberg, Bild am Sonntag reported on Aug. 27,
citing unidentified people familiar with the negotiations, that
the bridge loan to be provided by state-owned Kreditanstalt fuer
Wiederaufbau development bank hasn't yet been signed, and no
money has been paid out, amid a dispute on the terms.  The
newspaper cited an Economy Ministry spokeswoman as saying talks
are going according to plan amid technical discussions, Bloomberg
notes.

                        About Air Berlin

In operation since 1978, Air Berlin PLC & Co. Luftverkehrs KG is
a global airline carrier that is headquartered in Germany and is
the second largest airline in the country.

In 2016, Air Berlin operated 139 aircraft with flights to
destinations in Germany, Europe, and outside Europe, including
the United States, and provided passenger service to 28.9 million
passengers.  Within the first seven months of 2017, the Debtor
carried approximately 13.8 million passengers.  It employs
approximately 8,481 employees.  Air Berlin is a member of the
Oneworld alliance, participating with other member airlines in
issuing tickets, code-share flights, mileage programs, and other
similar services.

Air Berlin has racked up losses of about EUR2 billion over the
past six years, and has net debt of EUR1.2 billion.

On Aug. 15, 2017, Air Berlin applied to the Local District Court
of Berlin-Charlottenburg, Insolvency Court for commencement of an
insolvency proceeding.  On the same day, the German Court opened
preliminary insolvency proceedings permitting the Debtor to
proceed as a debtor-in-possession, appointed a preliminary
custodian to oversee the Debtor during the preliminary insolvency
proceedings, and prohibited any new, and stayed any pending,
enforcement actions against the Debtor's movable assets.

To seek recognition of the German proceedings, representatives of
Air Berlin filed a Chapter 15 petition (Bankr. S.D.N.Y. Case No.
17-12282) on Aug. 18, 2017.  The Hon. Michael E. Wiles is the
case judge.  Thomas Winkelmann and Frank Kebekus, as foreign
representatives, signed the petition.  Madlyn Gleich Primoff,
Esq., at Freshfields Bruckhaus Deringer US LLP, is serving as
counsel in the U.S. case.



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


G HOTEL: Enters Examinership After Deutsche Bank Receivership Bid
-----------------------------------------------------------------
Colin Gleeson at The Irish Times reports that the landmark
G Hotel and adjoining Eye Cinema in Galway have been placed in
examinership days after Deutsche Bank had a receiver appointed to
the properties owned by high-profile developer Gerry Barrett.

According to The Irish Times, in an affidavit filed to the High
Court on Aug. 22, Mr. Barrett applied for the appointment of an
examiner after receiver KPMG had been dispatched to the five-star
hotel on the edge of Lough Atalia days earlier.

Following the High Court's appointment of Neil Hughes as
examiner, the hotel and cinema have been granted the protection
of the court for a period of 100 days, during which time the
receiver can take no action, The Irish Times relates.


PERMANENT TSB: Moody's Lifts Senior Unsecured Debt Rating to Ba3
----------------------------------------------------------------
Moody's Investors Service upgraded the long-term senior unsecured
debt and deposit ratings of Permanent tsb p.l.c. (PTSB) to Ba3
and Ba2 from B1 and Ba3, respectively. The short-term deposit
ratings of Not Prime were affirmed.

As part of the same rating action, Moody's upgraded the
standalone baseline credit assessment (BCA) to b2 from b3,
reflecting improvements in the bank's credit fundamentals.

Moody's maintained a positive outlook on the bank's long-term
senior unsecured debt and deposit ratings, driven by the
expectation of a further recovery in its asset quality and
profitability in the context of the supportive operating
environment in the Republic of Ireland.

RATINGS RATIONALE

BCA

The upgrade of PTSB's long-term ratings was driven by the
revision of the bank's BCA to b2 from b3. The upgrade of the BCA
reflects: (1) the bank's decreased reliance on wholesale and
central bank funding, which resulted in an improved net loan-to
deposit ratio of 110% as at end-June 2017, down from 124% a year
earlier; (2) a return to profitability, net of write-backs, and
an improved net interest margin of 1.6% in the first half of
2017; (3) a solid capital level, with Tangible Common Equity
(TCE) of 16.5% of Risk-Weighted Assets (RWAs) as at end-June
2017, up from 16.2% as at end-December 2017.

The sale of PTSB's non-core UK mortgage book in December 2016 has
enabled the bank to reshape its funding profile, eliminating a
key structural weakness, reducing its use of expensive wholesale
funding and supporting improvements in its profitability and
capital metrics. In addition, the bank has continued to enhance
its operating efficiency, with a reported cost-to-income ratio of
65% as at end-June 2017 versus 69% a year earlier. The bank's
stock of non-performing loans continued its slow decline, to
EUR4.8 billion at end-June 2017, with a coverage ratio of 51%
broadly unchanged.

The BCA remains lower than those of the other major Irish banks,
reflecting the remaining sizeable stock of non-performing loans,
in addition to a significant portion of forborne loans with low
amortization rates. The bank's problem loans as a percentage of
its capital and loan loss reserves was 112% as at end-June 2017,
comparing unfavorably with its higher-rated Irish peers, and is
improving at a slower rate.

However, Moody's expects that the improving trend in the bank's
profitability will prevail and that the management's focus on an
accelerated reduction of non-performing assets will bear visible
results for asset quality ratios over the outlook horizon.
Positive trends in the bank's fundamentals are also expected to
be supported by the benign operating environment in Ireland,
reflecting growing economic activity, increasing consumer
confidence and strong demand for housing.

LONG-TERM RATINGS

The long-term senior unsecured debt and deposit ratings were
upgraded to Ba3 and Ba2 from B1 and Ba3 respectively, as a result
of the upgrade of the bank's BCA, with uplift under Moody's
Advanced Loss Given Failure (LGF) analysis relative to the BCA
remaining unchanged. The senior unsecured debt rating and bank
deposit rating benefit from one notch and two notches of uplift
respectively, given their different weights in the bank's
liability structure and, consequently, different degrees of
subordination and loss-rates. In addition, the long-term ratings
incorporate one notch for potential government support, which
also remains unchanged, in view of PTSB's systemic importance in
Ireland.

In addition, Moody's has corrected the rating originally assigned
on June 22, 2017 to Permanent TSB Group Holdings plc's senior
unsecured medium-term note program to (P)Caa1 from (P)B1, and
subsequently upgraded it to (P)B3. The program was assigned an
incorrect rating due to an internal administrative error.

OUTLOOKS

The positive outlooks on PTSB's long-term senior unsecured debt
and deposit ratings reflect the potential upside for the bank's
standalone BCA during the outlook period, as noted above. While
Moody's expects the group to issue debt from its holding company,
which would provide additional protection for the bank's senior
unsecured debt and deposits, the rating agency does not believe
that this issuance will be sufficient to lead to higher ratings
over the outlook horizon.

CR Assessment (CRA)

The bank's long-term CRA was upgraded to Ba1(cr) from Ba2(cr).
The CRA incorporates four notches of uplift from the bank's BCA
given the protection provided by subordinated debt, senior debt
and wholesale deposits. The CR Assessment also benefits from one
notch of government support, in line with the agency's assessment
of a moderate probability of support for deposits and senior
unsecured debt.

WHAT COULD MOVE THE RATINGS UP/DOWN

PTSB's long-term debt and deposit ratings could be upgraded as a
result of: (1) an increase of its standalone BCA; or (2) a
significant increase in the bank's bail-in-able debt, beyond the
agency's current expectations. PTSB's BCA could be upgraded if
the bank (1) continues to improve its asset risk metrics; and (2)
shows further sustainable improvements in profitability.

PTSB's ratings could be downgraded as a result of: (1) a lowering
of its standalone BCA; or (2) the redemption of maturing
instruments without their replacement. PTSB's BCA could be
downgraded because of: (1) an unexpected significant
deterioration in the bank's capital level; (2) a reversal in the
improving profitability trend; or (3) a deterioration in asset
quality and provisioning coverage.

LIST OF AFFECTED RATINGS

Issuer: Permanent tsb p.l.c.

Upgrades:

-- LT Bank Deposits, Upgraded to Ba2 from Ba3, Outlook Remains
    Positive

-- Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 from
    B1, Outlook Remains Positive

-- Senior Unsecured MTN Program, Upgraded to (P)Ba3 from (P)B1

-- Subordinate MTN Program, Upgraded to (P)B3 from (P)Caa1

-- Junior Subordinate MTN Program, Upgraded to (P)Caa1 from
    (P)Caa2

-- Adjusted Baseline Credit Assessment, Upgraded to b2 from b3

-- Baseline Credit Assessment, Upgraded to b2 from b3

-- LT Counterparty Risk Assessment, Upgraded to Ba1(cr) from
    Ba2(cr)

Affirmations:

-- ST Bank Deposits, Affirmed NP

-- Other Short Term, Affirmed (P)NP

-- ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

-- Outlook, Remains Positive

Issuer: Permanent TSB Group Holdings plc

Upgrades:

-- LT Issuer Rating, Upgraded to B3 from Caa1, Outlook Assigned
    Positive

-- Senior Unsecured MTN Program, upgraded to (P)B3 from
corrected
    (P)Caa1

Affirmations:

-- Other Short Term, Affirmed (P)NP

Outlook Actions:

-- Outlook, Remains Positive

PRINCIPAL METHODOLOGY

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



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M A L T A
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VISTAJET GROUP: US$150MM Equity Investment Positive, Fitch Says
---------------------------------------------------------------
Fitch Ratings views the USD150 million equity investment in
VistaJet Group Holding Limited (B-/Stable) by Rhone Capital as
positive. The investment is in the form of preferred equity with
no cash dividend payment requirement and will improve the
liquidity position of VistaJet. VistaJet plans to retain the
majority of the USD150 million investment as cash, substantially
improving its financial flexibility. Fitch expects VistaJet to
continue to secure the refinancing of its amortising aircraft
finance for the time being, preserving cash. Fitch believes this
liquidity buffer will help the company refinance any balloon
payments that come due.

VistaJet has a heavy debt amortisation profile, with over USD200
million of debt principal repayments every year during 2017-2019,
substantially higher than Fitch's forecast average free cash-flow
generation of USD126 million pa during the same period.

VistaJet's rating is based on Fitch's expectation that its
leverage will substantially improve, driven by increases in yield
per hour, increases in hours flown per aircraft, greater revenue
certainty through its flight solutions programme as well as
repayment of debt. VistaJet's 2Q17 results, reported along with
the equity investment announcement, show some of this expected
improvement.

Fitch affirmed VistaJet's Long-Term IDR at 'B-' with a Stable
Outlook on Aug. 4, 2017. The affirmation reflected VistaJet's
2016 financial performance in line with Fitch's forecast, and
Fitch's expectation that the company will improve its credit
metrics from 2017 to be within Fitch's negative rating guidelines
for the 'B-' rating. At the time of the rating affirmation, Fitch
expected the company's liquidity to remain stretched over 2017-
2018 with a high reliance on refinancing of short-term
maturities. The announced equity investment improves the
liquidity position, but the company will need to continue to
refinance existing debt amortisation until internal cash-flow
generation exceeds amortising debt, at which point the company
will build up a cash balance that could be used to repay debt
maturities.



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


AERIALTRONICS: In Suspension of Payments
----------------------------------------
Gary Mortimer at sUAS News reports that Dutch multirotor
manufacturer Aerialtronics are in suspension of payments.

This was confirmed by communications coordinator Katy Spring by
email to sUAS News on Aug. 17.

"We are working with the trustee, Mark Aukema of RWV Advocaten.
Together, we are working to find a sustainable solution for the
enterprise," the report quotes Ms. Spring as saying.

The Dutch insolvency code has three types of insolvency --
bankruptcy, suspension of payments and debt restructuring, the
report discloses.

sUAS News relates that the goal of suspension of payment is to
solve, if possible, problems of liquidity, through
rationalization or restructuring or otherwise. Suspension of
payment can be terminated if all creditors are paid, a private or
judicial agreement is reached, or if the company is declared
bankrupt.

Founded in 2012, Aerialtronics (AT) --
https://www.aerialtronics.com/ -- was one of the first movers in
the market for commercial drones.



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


AFK SISTEMA: No Creditors Demanded Early Debt Repayment
-------------------------------------------------------
Olga Voitova and Ilya Khrennikov at Bloomberg News report that
AFK Sistema company representative Sergey Kopytov said none of
the company's creditors demanded early repayment of debt after
covenant violation due to the claim of Rosneft.

In July, Sistema had technical default on RUR3.9 billion credit
because of dispute with Rosneft, Bloomberg relates.

According to Bloomberg, on July 17, Sistema said it continues to
service debt "on time and in full," and the technical default "is
a pure formality".

AFK Sistema PAO is a Russia-based diversified investment company.
The investments of the Company comprises stakes in Russian
businesses in a range of sectors, including telecommunications,
electric power, real estate, retail, high technology, paper and
packaging, pharmaceutical, medical and healthcare services,
agriculture, finance services, hospitality and tourism, among
other industries.  It invests in a range of private and public
companies.  The Company's investment portfolio includes MTS,
SSTL, MTS Bank, RTI, Sistema Venture Capital, OZON, Concept
Group, Detsky mir, Intourist, Medsi, Binnopharm, Segezha Group,
Agrokholding Step, among others.


DONAVIA: Russian Court Declares Unit Insolvent
----------------------------------------------
Polina Montag-Girmes at ATW Online reports that a Russian court
has declared Aeroflot Airline subsidiary Donavia insolvent
following a bankruptcy filing in January when Aeroflot filed on
behalf of its two subsidiaries -- Orenburg-based Orenair and
Rostov-on-Don-based Donavia.

Orenair was declared bankrupt in February 2017.

In November 2011, Aeroflot received shares of five Russian
regional carriers -- including Orenair, Donavia and Saint
Petersburg-based Rossiya Airlines -- from Russian state
corporation Rostec. In October 2015, Aeroflot announced it would
combine the assets of three subsidiaries under the brand Rossiya
Airlines. In May 2016, Donavia's air operator's certificate was
canceled after the assets were combined.

In August 2016, Aeroflot recovered a RUB884 million ($13 million)
overdue loan it had granted to Donavia last year, ATW Online
recalls.



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


BANCO POPULAR ESPANOL: Investors Sue Over Sale to Santander
-----------------------------------------------------------
Thomas Hale at The Financial Times reports that international
investors have launched legal action against the European
authorities that oversaw the failure of Banco Popular Espanol, in
the latest attempt to overturn the decisions that led to the
bank's sale to Santander in June for EUR1.

The FT relates that Quinn Emanuel, a law firm, filed a claim at
the European Court of Justice on August 17 on behalf of clients
including Anchorage Capital, Algebris and Ronit Capital, that
aims to annul decisions made by the European Commission and a
Brussels body designed to address bank failure.

In June, regulators deemed Banco Popular to be "failing or likely
to fail", in a process in which shareholders and junior
bondholders were wiped out, the FT recalls.

The report says the incident was the first significant
intervention by European officials since a new post-crisis system
for dealing with financial failure was developed, which includes
a wide-reaching Brussels directive.

According to the FT, the suit is the latest of several legal
challenges to the Single Resolution Board, set up in 2015 to
handle bank failure, as part of the fallout over the treatment of
Banco Popular.

This month, a group of Mexican investors led by Antonio del
Valle, a prominent businessman, launched a similar claim at the
ECJ, the FT notes. Those investors had bought around $600 million
of shares in total in Banco Popular.

The FT says Richard East of Quinn Emanuel pointed to public
comments from the SRB on Banco Popular, which he says "undermined
investor confidence and resulted in a run on the bank".

Investors have raised a series of questions about the process
that led to the sale, not least how Banco Popular was valued, why
other offers of help were not taken up and why the bank ran out
of emergency liquidity so quickly, the FT states.

The FT relates that the bondholders represented by Quin Emmanuel
contend that SRB relied on "incomplete information" for its
decision, and point to a valuation report by Deloitte that has
not been made public.

Pimco is part of the originally formed "bondholder group" created
following the losses, but is not included in Thursday's specific
action, the report says. It held EUR279 million of the bank's
riskiest bonds as of the end of March, the FT discloses citing
regulatory filings.

Before regulators intervened, Banco Popular's share price had
fallen sharply over concerns regarding its exposure to bad real
estate assets. Earlier in August, Blackstone agreed to buy a
majority stake in that property portfolio, the FT notes.

The Ft says the attempt to overturn the regulators' decisions
around Banco Popular has potential implications for Santander.
Brussels signed off on the purchase this month, saying the
transaction "would not raise market concerns".

Quinn Emanuel wrote a letter to Santander in early July, seen by
the Financial Times, which asks for assurance that it "will not
take any steps to deal with, and/or dissipate the current shares
in Banco Popular and/or its assets in a manner which would be
likely to materially and adversely affect the interests of the
AHG and its Bonds, pending the outcome of the likely proceedings
for annulment".

Santander in the same month launched a EUR1 billion scheme to
compensate retail investors in Spain who lost out over the
process. Lawyers in Spain welcomed the move, but said they would
press ahead with legal action, the FT adds.

Santander declined to comment, the FT notes.

                         About Banco Popular

Banco Popular Espanol SA is a Spain-based commercial bank.  The
Bank divides its business into four segments: Commercial Banking,
Corporate and Markets; Insurance Activity, and Asset Management.
The Bank's services and products include saving and current
accounts, fixed-term deposits, investment funds, commercial and
consumer loans, mortgages, cash management, financial assessment
and other banking operations aimed at individuals and small and
medium enterprises (SMEs).  The Bank is a parent company of Grupo
Banco Popular, a group which comprises a number of controlled
entities, such as Targobank SA, GAT FTGENCAT 2005 FTA, Inverlur
Aguilas I SL, Platja Amplaries SL, and Targoinmuebles SA, among
others.  In January 2014, the Company sold its entire 4.6% stake
in Inmobiliaria Colonial SA during a restructuring of the
property firm's capital.

As reported in the Troubled Company Reporter-Europe on June 15,
2017, S&P Global Ratings said that it raised its long- and short-
term  counterparty credit ratings on Banco Popular Espanol S.A.
to 'BBB+/A-2' from 'B/B'.  The outlook is positive.

In addition, S&P lowered its issue-level ratings on Banco
Popular's outstanding preference shares and subordinated debt to
'D' from 'CC' and 'CCC-', respectively, and S&P subsequently
withdrew them.

The rating actions follow the Single Resolution Board's
announcement on June 7, 2017, that it had taken a resolution
action in respect of Banco Popular.  This resulted from the ECB's
conclusion that the bank was failing or likely to fail as a
result of a significant deterioration in its liquidity position.
The resolution entailed the sale of Banco Popular to Banco
Santander S.A. (A-/Stable/A-2) for EUR1, after absorption of
losses by Banco Popular's shareholders and holders of Tier 1 and
Tier 2 capital instruments.


HIPOCAT 9: Fitch Affirms 'Csf' Rating on Class E Tranche
--------------------------------------------------------
Fitch Ratings has upgraded seven tranches of the Hipocat RMBS
series and affirmed 20 tranches.

The transactions consist of mortgages originated in Spain by
Catalunya Banc S.A. (now part of BBVA Group; A-/Stable/F2), which
previously traded as Caixa Catalunya.

KEY RATING DRIVERS

Improving Asset Performance
The Hipocat series continues to see fewer borrowers falling into
early-stage arrears as the macroeconomic environment in Spain
improves. As late stage arrears continue to roll through to
default the transactions continue to report a decline in three
months plus arrears.

As of end-May 2017 loans in arrears by more than 90 days stood at
between 0.7% (Hipocat 6) and 1.9% (Hipocat 9), down from between
2.0% (Hipocat 7) and 4.0% (Hipocat 11) in June 2016. The volume
of cumulative defaults currently ranges between 1.0% (Hipocat 6)
and 24.7% (Hipocat 11) of the initial pool balance.

Fitch believes that asset performance is likely to continue
improving across transactions, mainly driven by the high
seasoning of the underlying portfolios, between 140 months
(Hipocat 11) and 196 months (Hipocat 6), and stable macroeconomic
conditions. This expectation is reflected in the affirmations.

The solid performance combined with growing credit enhancement
led Fitch to upgrade the senior, B, and C notes of Hipocat 7 and
the senior and B notes of Hipocat 9 and the class C note of
Hipocat 8. Fitch has also assigned the highest rated notes in
Hipocat 7 a Positive Outlook, in light of the revision of the
Outlook on the Spanish sovereign to Positive.

Exposure to Payment Interruption Risk
Payment interruption risk is adequately covered in Hipocat 6 as
the cash reserve is sufficient to pay senior expenses and
interest due on the notes. The level of cash reserve for Hipocat
7 continues to replenish and is currently sufficient to pay
senior expenses and interest due on the notes. However, the
senior notes may be exposed to payment interruption risk if
significant draws on the reserve fund take place, given there are
no structural mitigants to cover for a disruption to the
collection process.

In Hipocat 8-11, payment interruption risk is not mitigated as
the cash reserves remain fully depleted. The notes exposed to
payment interruption can achieve a maximum rating of 'A+sf',
given BBVA's rating.

High Deficiency Ledgers
The principal deficiency ledgers (PDL) have reduced for Hipocat 8
to EUR10.6 million (as of June 2017) from EUR16.4 million (as of
May 2016), for Hipocat 9 to EUR20.2 million from EUR22.8 million
(as of June 2016), and for Hipocat 10 to EUR79.2 million from
EUR82.3 million (as of June 2016). The PDL for Hipocat 11 has
increased slightly to EUR138.6 million from EUR137.1 million (as
of May 2016).

RATING SENSITIVITIES

The ratings on Hipocat 6 and 7's class A notes are sensitive to
changes to Spain's Country Ceiling and, consequently, changes to
the highest achievable rating for Spanish structured finance
notes.

A worsening of the Spanish macroeconomic environment, especially
employment conditions, or an abrupt shift in interest rates could
jeopardise the ability of the underlying borrowers to meet their
payment obligations.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

No third party due diligence was provided or reviewed in relation
to this rating action.

DATA ADEQUACY

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that were
material to this analysis. Fitch has not reviewed the results of
any third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.

Fitch did not undertake a review of the information provided
about the underlying asset pools ahead of the transactions'
initial closing. The subsequent performance of the transactions
over the years is consistent with the agency's expectations given
the operating environment and Fitch is therefore satisfied that
the asset pool information relied upon for its initial rating
analysis was adequately reliable.

Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION

The information below was used in the analysis:

Transaction reporting provided by Europea de Titulizacion SGFT
S.A:
- May 2017 for all the transactions

Loan-by-loan data provided by Europea de Titulizacion SGFT S.A
and downloaded from the European Data Warehouse as of:
- June 2017 for Hipocat 6 and 8
- April 2017 for Hipocat 7, 9, 10 and 11

MODELS
The models below were used in the analysis. Click on the link for
a description of the model:

ResiEMEA.
EMEA RMBS Surveillance Model.
EMEA Cash Flow Model.

The rating actions are as follows:
Hipocat 6
Class A (ISIN): affirmed at 'AA+sf'; Outlook Positive
Class B (ISIN): affirmed at 'AAsf'; Outlook Stable
Class C (ISIN): affirmed at ' A+sf'; Outlook Stable

Hipocat 7
Class A2 (ISIN): upgraded to 'AA+sf' from 'AA-sf'; Outlook
Positive
Class B (ISIN): upgraded to 'AAsf' from 'A+sf' '; Outlook Stable
Class C (ISIN): upgraded to 'BBB+sf' from 'BBBsf'; Outlook Stable
Class D (ISIN): affirmed at 'BBsf'; Outlook Stable

Hipocat 8
Class A2 (ISIN): affirmed at 'A+sf'; Outlook Stable
Class B (ISIN): affirmed at 'Asf' '; Outlook Stable
Class C (ISIN): upgraded to 'BB+sf' from 'BBsf'; Outlook Stable
Class D (ISIN): affirmed at 'CCCsf'; Recovery Estimate 40%

Hipocat 9
Class A2a (ISIN): upgraded to 'Asf' from 'BBB+sf'; Outlook Stable
Class A2b (ISIN): upgraded to 'Asf' from 'BBB+sf'; Outlook Stable
Class B (ISIN): upgraded to 'BB+sf' from 'BBsf'; Outlook Stable
Class C (ISIN): affirmed at 'CCCsf' '; Recovery Estimate 100%
Class D (ISIN): affirmed at 'CCsf'; Recovery Estimate 15%
Class E (ISIN): affirmed at 'Csf'; Recovery Estimate 0%

Hipocat 10
Class A2 (ISIN): affirmed at 'Bsf'; Outlook Stable
Class A3 (ISIN): affirmed at 'Bsf'; Outlook Stable
Class B (ISIN): affirmed at 'CCsf' '; Recovery Estimate 10%
Class C (ISIN): affirmed at 'CCsf' '; Recovery Estimate 0%
Class D (ISIN): affirmed at 'Csf'; Recovery Estimate 0%

Hipocat 11
Class A2 (ISIN): affirmed at 'CCCsf'; Recovery Estimate 100%
Class A3 (ISIN): affirmed at 'CCCsf'; Recovery Estimate 100%
Class B (ISIN): affirmed at 'CCsf' '; Recovery Estimate 0%
Class C (ISIN): affirmed at 'CCsf' '; Recovery Estimate 0%
Class D (ISIN): affirmed at 'Csf'; Recovery Estimate 0%



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


FASTIGHETS AB: Moody's Rates New EUR350MM Subordinated Notes Ba2
----------------------------------------------------------------
Moody's Investors Service has changed the outlook to positive
from stable and affirmed the Baa3 long term issuer rating of
Fastighets AB Balder (Balder). Concurrently, Moody's assigned a
Baa3 rating to the proposed EUR500 million unsecured notes and a
Ba2 to the proposed issuance of EUR350 million junior
subordinated ("hybrid") notes to be issued by Balder.

"We have changed the outlook on Balder's long term issuer rating
to positive from stable because of the company's improved debt
maturity profile and unencumbered asset ratio following recent
and planned senior unsecured bond issuances whose proceeds will
refinance outstanding short dated secured debt", says Maria
Gillholm, Moody's Vice President -- Senior Credit Officer and
lead analyst on Balder.

Moody's expects the net proceeds from the proposed EUR 500
million senior unsecured notes to be mainly be used for
refinancing part of the company's outstanding, shorter-dated
secured debt. The bond maturity is not finally decided but will
be between 2025-2027. The transaction is credit positive because
it will lengthen Balder's average debt maturity to 3.9 years,
decrease its average borrowing costs and increase its
unencumbered asset ratio to around 65%. The notes will rank pari
passu with all other unsecured obligations of the issuer and
benefit from a negative pledge limited to secured indebtedness
capable of being listed, quoted or traded - bank loans are
therefore excluded from the negative pledge. The notes will
benefit from (i) a cross default at any subsidiary including debt
at its 53.8% owned subsidiary Sato, (ii) a change of control
provision and (iii) financial covenants including solvency ratio,
interest coverage ratio and secured debt to total assets.

The Ba2 rating assigned to the hybrid notes (whose proceeds will
be used to repay existing preference shares) is two notches below
Balders' long-term issuer rating of Baa3. The two-notch rating
differential reflects the deeply subordinated nature of the
hybrid debt. The hybrid instrument is senior only to common
equity but equal to preferred shares, has no events of default
and provides the company with the option to defer coupons on a
cumulative basis

In Moody's view, the notes have equity-like features to allow
them to receive basket "C" treatment, i.e. 50% equity and 50%
debt for financial leverage purposes (please refer to Moody's
Rating Implementation Guidance "Hybrid Equity Credit" of January
2017).

RATINGS RATIONALE

Balder's long term issuer rating primarily reflects (i) its
excellent tenant diversification resulting from a majority of its
revenues coming from rental housing operations, (ii) the
excellent quality of its commercial portfolio, (iii) good fixed
charge coverage, although sensitive to changes in short term
interest rates, (iv) a good level of unencumbered assets, (v) the
company's conservative practice to fully retain earnings.

Partly offsetting these strengths are Balder's (i) still somewhat
elevated leverage which is expected to improve, (ii) reliance on
short dated debt albeit reducing pro forma for the announced bond
and mitigated by a good track record in rolling over such
maturities, (iii) high debt to EBITDA, (iv) still high proportion
of secured debt and (iv) the presence of a dominant shareholder
potentially limiting the company's ability to raise equity.

When fully consolidating SATO into Balder, the consolidated
effective leverage, measured as gross debt to total assets, was
53.4% as of June 30, 2017, with fixed charge coverage of 3.3x.
When proportionally consolidating SATO, Balder's effective
leverage is 53.3%

The rating also reflects the structural strengths of Sweden's and
Finland's economies, which positively impact on their property
markets despite persistent macroeconomic headwinds in Finland and
potential risks of overheating in Sweden's residential property
markets.

RATIONALE FOR THE POSITIVE OUTLOOK

The positive outlook reflects Moody's expectations that effective
leverage will continue to improve towards 50% and that Balder's
reliance on short term funding will reduce over time. The outlook
also reflects Moody's stable view on the rental housing sector in
Sweden and Finland and the office sector in Sweden.

What Could Change the Rating -- Up

Moody's could upgrade the rating if effective leverage improves
to around 50% and fixed charge cover rises above 3.75x, both on a
sustained basis and underpinned by financial policy targets that
are consistent with these levels.

Moody's has changed its leverage guidance for an upgrade to
around 50% from previously towards 45% to reflect an improving
debt maturity profile following the recent and planned bond
issuance.

An upgrade would also be conditional on a further reduction in
the company's reliance on short term funding maintenance of
stable macroeconomic conditions in Sweden and Finland.

What Could Change the Rating - Down

Conversely, downward pressure on the rating or outlook could
result if effective leverage increased above 55% (53.4% as of
June 30, 2017) or fixed charge cover dropped below 2.75x (3.3x as
of June 30, 2017), both on a sustainable basis. A material
deterioration in the Swedish or Finnish property markets or a
meaningful increase in interest rates in Sweden could also create
negative rating pressure.

The principal methodology used in these ratings was Global Rating
Methodology for REITs and Other Commercial Property Firms
published in July 2010.



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


UKRAINE: Moody's Hikes Ratings to Caa2 & Alters Outlook to Pos.
---------------------------------------------------------------
Moody's Investors Service has upgraded the government of
Ukraine's local and foreign currency issuer and senior unsecured
ratings to Caa2 from Caa3, and changed the rating outlook to
positive from stable. Consequently, Moody's has upgraded to Caa2
from Caa3 the ratings of Ukraine's nine senior unsecured
eurobonds issued in the context of the government's debt exchange
operation in November 2015.

At the same time, Moody's affirmed the Ca senior unsecured rating
of the government's USD3 billion bond sold to Russia in December
2013. The bond is currently in default.

Moody's also upgraded the backed long-term foreign-currency
issuer rating of Financing of Infrastructural Projects (Fininpro)
to Caa2 from Caa3, and changed the rating outlook to positive
from stable. Fininpro's debt is fully guaranteed by the Ukrainian
government.

The upgrade of Ukraine's government ratings to Caa2 from Caa3 is
based on the following key drivers:

1. The cumulative impact of structural reforms that, if
   sustained, are expected to improve government debt dynamics;
   and

2. The significant strengthening of Ukraine's external position.

The rating upgrade was constrained to one notch because Ukraine
faces a heavy external debt servicing burden over the next
several years that will require additional foreign currency
funding beyond what official lenders are likely to provide.
Moreover, both domestic politics and geopolitical tensions could
disrupt Ukraine's access to private capital markets as well as
weaken the currency, with corresponding adverse implications for
the government's debt metrics and economic stability.

Still, the positive rating outlook captures the momentum of
reforms that, if sustained, could lead to further improvements in
Ukraine's public and external debt sustainability. Such reform
momentum would also support Ukraine's renewed access to global
capital markets, which would provide an easier route to
refinancing significant external debt payments from 2019 onward.
Ukraine could also anticipate those payments through proactive
debt management operations.

Concurrent with rating action, Moody's has raised the country
ceiling for foreign currency bonds to Caa1 from Caa2, whereas the
country ceiling for foreign currency deposits has been raised to
Caa3 from Ca. The country ceilings for local currency debt and
deposits have been raised to Caa1 from Caa2. The short-term
foreign currency country ceilings for deposits and bonds remained
at Not Prime (NP). Country ceilings generally determine the
highest rating that can be assigned to obligations of an issuer
resident within a given country.

RATING RATIONALE

RATIONALE FOR UPGRADING UKRAINE'S ISSUER RATING TO Caa2 FROM Caa3

FIRST RATING DRIVER: STRUCTURAL REFORMS LIKELY TO IMPROVE DEBT
DYNAMICS

The first driver for the rating upgrade is the impact of
structural reforms already undertaken in the natural gas sector,
public procurement system, taxation and banking sector and those
still to be implemented, including pension reform, which together
are expected to improve government debt dynamics. In Moody's
view, the current government remains determined to press forward
on reforms even though it faces considerable headwinds from
powerful vested interests, in particular regarding land reform
and privatization. Civil society is also strongly backing reform,
especially the government's anti-corruption efforts and the
associated strengthening of the judicial and law enforcement
systems, where progress is piecemeal but nonetheless crucial if
the reform agenda is to succeed in the longer term.

Whereas Ukraine's government debt is very high at about 81% of
GDP as of the end of 2016, Moody's expects the debt trend to
improve against the backdrop of significant consolidation
efforts. The introduction of new fiscal rules and medium-term
spending ceilings will be incorporated into the 2018 budget plan.
On this basis, the rating agency projects primary budget
surpluses of about 1% of GDP in the next few years, which would
be consistent with a downward trajectory in government debt
absent a further substantial weakening of the exchange rate.

The most important of the public finance-related changes adopted
since the start of the IMF Extended Fund Facility (EFF) in March
2015 was the rapid shift of gas tariffs to a full cost-recovery
basis, eliminating the quasi-fiscal deficit of the state-owned
gas enterprise Naftogaz, which had heretofore added up to eight
percentage points of GDP to the general government's borrowing
requirements annually.

Tax reforms adopted in connection with the 2017 budget are a
significant driver of the robust revenue performance this year.
The reforms include the simplification of the tax payment system
and the automation of VAT refunds. In addition, revenues were
boosted by one-offs such as a significant central bank profit and
the seizure of USD1.4 billion from the bank accounts of
associates of former President Yanukovych. Still, Moody's
forecasts the deficit for the whole year to come in near the
budgeted 3% of GDP due to seasonal spending considerations.

With respect to Ukraine's pension reform, Moody's expects the
respective legislation to be approved at the second reading in
September -- potentially freeing up the USD1.9 billion tranche
associated with the fourth review of the IMF program. The reform
is envisaged to cut in half the current pension deficit to
roughly 3% of GDP within a decade.

SECOND RATING DRIVER: THE SIGNIFICANT STRENGTHENING OF UKRAINE'S
EXTERNAL POSITION

The second driver of the rating upgrade reflects Ukraine's
significantly strengthened external position. At the time the IMF
program was signed in early 2015, Ukraine's central bank had less
than USD5 billion in foreign exchange reserves, the external
vulnerability indicator (EVI) -- measuring the country's external
debt service requirements relative to foreign exchange reserves
-- was approaching 700% and Moody's rating on Ukraine was Caa3,
anticipating an imminent default, which occurred later that year.
Now, the central bank has about USD15 billion in liquid foreign
exchange reserves, which covers roughly three months of imports,
and the EVI has come down to 200%-250%, which reflects a still
high but more manageable level of external vulnerability.

The improvement in Ukraine's external position derives mainly
from substantial disbursements from IFIs and bilaterals as
Ukraine largely complied with reforms specified in the IMF
program. In addition, the current account deficit narrowed
sharply, initially due to the exchange rate depreciation and
recession. More recently, exports have risen strongly,
benefitting from a pickup in trading partners' demand and
improved competitiveness afforded by the depreciation, but
imports have also increased and the current account widened again
to roughly 4% of GDP last year, where it is likely to remain
assuming adequate capital account financing.

In addition, Ukraine's external debt service requirements were
eased when the government restructured USD15 billion in official
Eurobonds at the end of 2015 -- which Moody's classified as a
distressed exchange and hence a default -- and obtained a 4-year
grace period on the new bonds. The corporates and banks that had
Eurobonds outstanding in 2015 concluded restructurings as well.
Also, as the exchange rate stabilized over the last year, excess
foreign currency liquidity allowed the central bank to buy USD3
billion in the domestic market.

In Moody's opinion, the government's willingness to continue with
reforms will support Ukraine's renewed access to the global bond
market. The government's return to the private bond market in
2017 is a feature of Ukraine's IMF program that is meant to
improve the government's external debt sustainability through
credit risk repricing as well as partial early repayments.

FACTORS CONSTRAINING UKRAINE'S RATING AT Caa2

The rating upgrade was limited to one notch because Ukraine faces
a heavy external debt servicing burden in 2019-21 that will
require additional foreign currency funding beyond what official
lenders are likely to provide over that period. The debt service
for those years includes paying off the first three of the bonds
issued in the 2015 debt restructuring. The risk that Ukraine will
be unable to achieve a smooth refinancing of these debt
obligations due to an unexpected domestic or external financial
shock is a key risk, keeping the rating at Caa2 at present.

Other factors constraining Ukraine's rating upgrade include
domestic politics and geopolitical tensions, either of which
could disrupt Ukraine's access to private capital markets as well
as weaken the currency, with adverse implications for the
government's debt metrics and economic stability. While the
conflict in Ukraine's Donbas has not prevented the economy from
recovering and local financial markets from normalizing, a
potential new escalation could deter investors and undermine
Ukraine's economic stability. Domestic politics could also
interfere: while the current administration is pursuing reforms,
presidential and parliamentary elections are scheduled for March
and November 2019, respectively. The political challenges that
come with the election calendar add to the uncertainties over
Ukraine's ongoing compliance with the IMF program, which is
scheduled to end in mid-2019.

RATIONALE FOR CHANGING THE RATING OUTLOOK TO POSITIVE FROM STABLE

The positive outlook captures the momentum of reforms that, if
sustained, could lead to further improvements in Ukraine's public
and external debt sustainability. Should the program continue,
Ukraine would likely be eligible to receive sizeable additional
disbursements from the IMF, other IFIs and bilateral creditors.
Such reform momentum could also support more substantial access
to global capital markets, facilitating the refinancing and even
the prefinancing of large external debt payments over the medium
to longer term.

WHAT WOULD CHANGE THE RATING UP/DOWN

An upgrade of Ukraine's issuer rating would require a further
strengthening of the official foreign exchange reserves,
meaningfully reducing Ukraine's refinancing risk, and in such a
scenario, Ukraine's government rating could be better placed at
Caa1 than Caa2.

Conversely, Moody's could change Ukraine's rating outlook to
stable if the IMF program terminates early, leaving substantive
elements of the reform agenda incomplete, which in turn could
endanger debt sustainability.

Moody's could downgrade Ukraine's issuer rating if the government
was unable to strengthen its foreign reserves position and to
refinance its external obligations sufficiently to avoid a
situation that could lead to a default in 2019 and beyond.

GDP per capita (PPP basis, US$): 8,305 (2016 Actual) (also known
as Per Capita Income)

Real GDP growth (% change): 2.3% (2016 Actual) (also known as GDP
Growth)

Inflation Rate (CPI, % change Dec/Dec): 12.4% (2016 Actual)

Gen. Gov. Financial Balance/GDP: -2.2% (2016 Actual) (also known
as Fiscal Balance)

Current Account Balance/GDP: -4.1% (2016 Actual) (also known as
External Balance)

External debt/GDP: 121.7% (2016 Actual) (also known as Foreign
Debt)

Level of economic development: Very low level of economic
resilience

Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.

On August 23, 2017, a rating committee was called to discuss the
rating of the Ukraine, Government of. The main points raised
during the discussion were: The issuer's institutional
strength/framework, have materially increased. The issuer's
governance and/or management, have materially increased. The
issuer has become less susceptible to event risks. Strengthening
of external position.

The principal methodology used in these ratings was Sovereign
Bond Ratings published in December 2016.

The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.



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


BHS GROUP: Creditors to Get GBP30MM After Arcadia Settles Claim
---------------------------------------------------------------
Mark Vandevelde at The Financial Times reports that BHS creditors
will receive GBP30 million after Sir Philip Green's retail empire
Arcadia relinquished a claim on the assets of the department
store chain whose collapse culminated in thousands of job losses
and the billionaire paying GBP363 million to cover the pensions
of former workers.

According to the FT, people briefed on the situation said the
deal with BHS liquidators FRP Advisory ends the prospect of a
legal battle surrounding a secured loan that the collapsed chain
owed to Sir Phillip's Arcadia Group.

Some GBP30 million that had been set aside to cover Arcadia's
secured claim will now be released to unsecured creditors, the FT
discloses.

The loan had remained in place after Sir Philip sold BHS for GBP1
to an acquisition vehicle led by Dominic Chappell, who presided
over the retailer's demise just 13 months later, the FT notes.

But lawyers for FRP had cast doubt on whether the security was
valid, the FT states.

FRP Advisory, as cited by the FT, said: "The liquidators of SHB
Realisations, formerly BHS, reached an agreement with Arcadia
Group in relation to a number of matters, including Arcadia's
floating charge dated April 14, 2015.

"We can confirm that as part of the agreement, over GBP30 million
was released from reserves held in relation to Arcadia's secured
claim into the monies available for BHS unsecured creditors and
the floating charge is to be released."

                          About BHS

BHS Group was a high street retailer offering fashion for the
whole family, furniture and home accessories.

BHS was put into administration in April 2016 in one of the
U.K.'s largest ever corporate failures, according to The Am Law
Daily.  More than 11,000 jobs were lost and 20,000 pensions (the
U.K. equivalent of a 401k) put at risk after it emerged that the
company, which had more than 160 stores across the U.K., had a
pension deficit of GBP571 million (US$703 million), The Am Law
Daily disclosed.

Sir Philip Green, a retail magnate with a net worth of more than
US$5 billion, has been heavily criticized for his role in the
collapse of BHS, The Am Law Daily said.  Mr. Green and other
shareholders had taken around GBP580 million (US$714 million) out
of the business before selling it for just GBP1 (US$1.23), The Am
Law Daily noted.

Linklaters acted for Green's Arcadia Group on the sale of the
company to Retail Acquisitions, which was advised by London-based
technology, media and telecoms specialist Olswang, The Am Law
Daily added.

Weil Gotshal & Manges and DLA then took the lead roles on the
administration, acting for the company and administrators Duff &
Phelps, respectively, while Jones Day was appointed by the
administrators to investigate the actions of the company's former
directors, The Am Law Daily related.


TURNSTONE MIDCO 2: Fitch Cuts IDR to B- Then Withdraws Rating
-------------------------------------------------------------
Fitch Ratings has downgraded Turnstone MidCo 2's (Mydentist)
Long-Term Issuer Default Rating (IDR) to 'B-' from 'B'. The
Outlook is Stable. Fitch has also downgraded the senior notes
issued by IDH Finance PLC to 'B' from 'B+' and Mydentist's super
senior revolving credit facility (RCF) to 'BB-' from 'BB'. The
Recovery Ratings for the senior notes and the RCF remain at 'RR3'
and 'RR1', respectively.

Concurrently, Fitch has also withdrawn Mydentist's IDR and
instrument ratings for commercial reasons.

The downgrade reflects Mydentist's higher leverage and weaker
coverage ratios post refinancing to levels more commensurate with
a 'B-' rating, following profit margin deterioration and
continued units of dental activity (UDA) underperformance. As a
result Fitch projects funds from operations (FFO) adjusted net
leverage to peak around 8.6x and FFO fixed-charge cover to weaken
to 1.4x.

The rating, however, remains underpinned by the strengths of the
rebranded Mydentist (previously IDH), and its leading market
position in the UK's National Health Service (NHS) dental sector,
characterised by long-term contracts supporting stable cash
generation.

KEY RATING DRIVERS

Continued UDA Under-Delivery: The ratings reflect decreased (UDA)
delivery at 90.4% in FY17 (financial year ended March 2017)
compared with 92.4% in FY16 and management's guidance of flat
near-term delivery. This was the result of a change in the
underlying patient mix and increased NHS scrutiny over delivery,
claims and performance benchmarks, which Fitch views as an
industry-wide trend to improve the system's value and service.

As a result Mydentist's productivity suffered with new management
taking active measures to recover UDA performance. This includes
increasing the number of dentists, actively managing dentist
productivity, and streamlining administration, in addition to
increasing the share of private treatments.

Margin Deterioration: Fitch expects EBITDA margin to stabilise at
10.5% in FY18 before gradually increasing under assumed low
single-digit sales growth and slow recovery in UDA delivery. This
follows a decline in EBITDA margins to 10.9% in LTM 1Q FY18, from
11.7% in FY17 and 14.2% in FY16, primarily driven by reduced
gross margin as a result of increased usage of locums in dental
practices and adverse FX impact on the Dental Directory division,
increases in both headcount and living wage, as well as an
increasing share of the lower-margin private and Dental Directory
businesses in total revenue.

Weak Leverage & Financial Flexibility: As a result of a larger
amount and the high cost of debt following the recent refinancing
and profit deterioration due to UDA underperformance and FX
impact, FFO adjusted net leverage increased to 7.9x in FY17 (vs.
6.7x in Fitch prior ratings case projections) and is expected to
increase further to 8.6x in FY18 in light of the even weaker
operating results in 1Q FY18. FFO fixed charge cover weakened to
1.6x (vs. 2.0x as per prior expectation) and is expected to
decrease further to 1.4x in FY18. Fitch views these metrics as
commensurate with a 'B-' rating.

Elevated Execution Risk: New management has been put in place to
tackle the challenges the company is facing. Strategy has been
changed to limit acquisitions and focus on productivity of
existing practices. There are plans to improve business
performance. However, actions will take time to feed into
performance. In order to drive growth, capex is still needed to
improve facilities to attract privately funded patients. Failure
to turn around could compromise the deleveraging profile.

UK's Largest Dental Practice: Mydentist is the largest dental
corporation in the UK and is almost twice the size of its closest
competitor Oasis, now owned by Bupa. The company's dominant
market positioning and size make Mydentist an important market
participant and provides it with benefits of scale in terms of
sourcing, administration, and marketing.

DERIVATION SUMMARY

Fitch places Mydentist in the hospital & care home subsector of
the healthcare sector. It is characterised by limited geographic
diversification; however, it has a leading position in the UK
dentistry market. It is the largest dental corporation in the UK
and is almost twice the size of its closest competitor Bupa. The
ratings are also underpinned by NHS contracts, which support
Mydentist's defensive business model and stable cash generation.

KEY ASSUMPTIONS

Fitch's expectations are based on the agency's internally
produced, conservative rating-case forecasts. They do not
represent the forecasts of rated issuers individually or in
aggregate.

Key Fitch forecast assumptions are:

- Slow recovery in UDA delivery and NHS contract handbacks
   leading to a decline in NHS revenue for the next two years.
- 10% annual growth in the private segment.
- Moderate growth in Dental Directory (10% in FY18 and 5% p.a.
   thereafter).
- Growth in group revenue of 1.1% in FY18 and 1.8% in FY19.
- EBITDA margin declining to 10.5% in FY18 before slowly
   recovering towards 11.5% in FY21.
- No acquisition of dental practices in FY18 and FY19 as
   management shifts focus to performance improvement over
   external growth.

RATING SENSITIVITIES

Not applicable.

LIQUIDITY

Satisfactory Liquidity Profile: With no material debt maturity
over the next five years post refinancing, Mydentist's liquidity
is satisfactory, with GBP12.8 million of readily available cash
available at end-June 2017 and GBP100 million of an undrawn
committed RCF.



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

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

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


                            *********


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

Troubled Company Reporter-Europe is a daily newsletter co-
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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.

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