TCREUR_Public/170908.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Friday, September 8, 2017, Vol. 18, No. 179



BANK OF CYPRUS: Fitch Affirms B- Long-Term IDR, Outlook Stable


INFOPRO DIGITAL: S&P Assigns 'B' CCR, Outlook Stable


RICKMERS HOLDING: Finds Buyers for Ship Management Unit


AURELIUS EURO 2008-1: S&P Cuts Rating Loan A Notes to 'D(sf)'
BLUEMOUNTAIN 2016-1: S&P Affirms B-(sf) Rating on Class F Notes
TRANSACTION ADAGIO V: S&P Affirms B-(sf) Rating on Class F Notes


ALITALIA SPA: Employees to Join Up with Other Parties for Bid


KAZAKHSTAN ENGINEERING: Fitch Affirms BB+ LT IDR, Outlook Stable


PACIFIC DRILLING: Announces Potential NYSE Delisting Events


LYONDELL CHEMICAL: Judge Dismisses Creditors' $5.9B Clawback Suit
PIGMENTS II: S&P Affirms 'B+' LT Corporate Credit Rating


ROSGOSSTRAKH PJSC: S&P Alters 'B' CCR Outlook to Developing


BANCO POPULAR: Group of Bondholders Files Appeal Over Rescue

U N I T E D   K I N G D O M

ENQUEST PLC: Receives Waiver from Banks Ahead of Covenant Test
HSS HIRE: S&P Lowers CCR to 'B' on Weaker Than Expected Results
MITCHELLS & BUTLERS: Fitch Cuts Rating on Class D1 Notes to BB+
RESIDENTIAL MORTGAGE 26: Fitch Raises Cl. B2 Notes Rating From BB
SEADRILL LTD: In Debt Restructuring Talks with Bondholders

STORM 2015-II: Fitch Affirms BBsf Ratings on Two Tranches
SYNLAB BONDCO: Proposed Loan No Impact on Fitch CCC+ Notes Rating


* Fitch: 'B' Losses Exceed EBA OC Proposal in 10% of Cover Pools
* BOOK REVIEW: Hospitals, Health and People



BANK OF CYPRUS: Fitch Affirms B- Long-Term IDR, Outlook Stable
Fitch Ratings has affirmed Bank of Cyprus Public Company Ltd's
(BoC) Long-Term Issuer Default Rating (IDR) at B-. The Outlook is

The rating action follows the announcement on August 21, 2017 of
around EUR500 million of additional provisions created by the
bank, and the publication of the bank's 1H17 results on August 29,
2017. Additional provisions were caused by a change in
provisioning assumptions in the context of the ECB's supervisory
review and evaluation process. This resulted in a EUR554 million
net loss for 1H17, which is equivalent to a material 18% of end-
2016 equity. The additional provisions were not accompanied by any
capital raising.



The affirmation reflects Fitch's view that the impact of the
additional provisioning on the bank's financial profile is broadly
neutral. This is mainly because BoC's capital encumbrance by
unreserved non-performing exposures (NPEs, EBA definition)
remained broadly unchanged due to higher coverage and lower NPEs,
albeit at the expense of lower capital ratios. The additional
provisions do not reflect a deterioration of the operating
environment in Cyprus or a worsening of the bank's asset quality.
BoC's ratings continue to factor in Fitch views that the coverage
of NPEs by provisions reflects the bank's high reliance on
collateral and remains low in light of the bank's asset quality
problems, resulting in high capital encumbrance by unreserved

BoC's loan quality continued to improve in 1H17, with its
NPE/gross loans ratio declining by five percentage points to a
still very high 50% at end-June 2017. The coverage of NPEs
increased to 48% at end-June 2017 from 41% at end-2016, benefiting
from extra provisions, and is now more in line with peers. BoC's
ratings factor in Fitch expectations that the bank will continue
to actively reduce its NPEs. The improved coverage should help
accelerate the process of NPE reduction.

The net loss means BoC's fully-loaded common equity Tier 1 (CET1)
ratio declined to 11.8% at end-June 2017 from 13.9% at end-2016.
Fitch estimates that the ratio of Fitch Core Capital (FCC) to
risk-weighted assets declined to about 10.7% from 12.4% during the
same period. At the same time, capital encumbrance by unreserved
NPEs remained largely unchanged at 2.8x FCC due to asset quality
improvement in 1H17. The level of unreserved NPEs remains very
high and makes capitalisation highly sensitive to shocks in
collateral values, mostly real estate. The Cypriot real estate
market has been showing signs of recovery recently, with an
increased number of transactions and a modest year-on-year
increase in residential real estate prices recorded in 1Q17, the
first since the crisis.

BoC's funding and liquidity profile has moderately improved since
the last review. Deposits were largely stable in 1H17, which
resulted in a slight improvement in the loans/deposits ratio due
to the reduction of gross loans. In March 2017, the bank achieved
compliance with the liquidity coverage ratio (LCR) requirement,
and at end-June 2017 its LCR stood at 108%. The net stable funding
ratio (NSFR) was 102% at end-June 2017 ahead of the introduction
of the 100% minimum NSFR requirement from January 2018.


BoC's subordinated Tier 2 notes are notched off its Viability
Rating. These notes are notched twice off the Viability Rating for
loss severity given that the layer of subordinated debt is very
thin relative to the size of the bank's potential problem
(reflected in the high volume of unreserved NPEs).


The bank's Support Rating of '5' and Support Rating Floor of 'No
Floor' reflect Fitch's view that senior creditors can no longer
rely on receiving full extraordinary support from the sovereign if
BoC becomes non-viable. The EU's Bank Recovery and Resolution
Directive and the Single Resolution Mechanism for Eurozone banks
provide a framework for resolving banks that is likely to require
senior creditors participating in losses, if necessary, instead of
or ahead of a bank receiving sovereign support. Furthermore, Fitch
believes that Cypriot authorities have limited resources at their
disposal to provide support to BoC in case of need given the size
of the bank and the level of its problem assets.



An upgrade is unlikely in the near term given the bank's asset
quality problems, but a significant reduction of NPEs relative to
capital and demonstrated ability to dispose of foreclosed assets,
resulting in a much lower vulnerability of capital to stress,
could be rating positive.

The ratings could be downgraded if the bank fails to reduce
capital encumbrance by unreserved NPE or if asset quality
deterioration jeopardises solvency or if there are any unforeseen
shocks to the stability of the bank's deposits.


Fitch believes there is little upside for BoC's Support Rating and
Support Rating Floor. This is due to the authorities' limited
capacity to provide future support, the presence of a resolution
scheme with bail-in tools that have already been implemented, but
also in light of a clear intention to reduce implicit state
support for financial institutions in the EU.


BoC's subordinated debt ratings are sensitive to changes in the
bank's Viability Rating. They could also be upgraded if unreserved
NPEs become less significant relative to the layer of subordinated
debt, either through an increase in the amount of junior debt or
through a significant reduction of unreserved NPEs.

The rating actions are as follows:

Long-Term IDR: affirmed at 'B-'; Outlook Stable
Short-Term IDR: affirmed at 'B'
Viability Rating: affirmed at 'b-'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior debt long-term rating: affirmed at 'B-'/'RR4
Senior debt short-term rating: affirmed at 'B'
Subordinated debt long-term rating: affirmed at 'CC'/'RR6'


INFOPRO DIGITAL: S&P Assigns 'B' CCR, Outlook Stable
S&P Global Ratings assigned its 'B' long-term corporate credit
rating to France-based Infopro Digital Group B.V. The outlook is

S&P said, "At the same time, we assigned our 'B' issue rating to
the group's EUR500 million senior secured notes, including EUR325
million of senior secured fixed-rate notes and EUR175 million of
senior secured floating-rate notes. The recovery rating is '4',
indicating our expectation of average recovery prospects (30%-50%;
rounded estimate 45%) in the event of a payment default.

"We also assigned our 'BB-' issue rating to the group's EUR70
million super senior secured revolving credit facility (RCF). The
recovery rating is '1', indicating our expectation of very high
recovery prospects (90%-100%; rounded estimate 95%) in the event
of a payment default.

"We assigned Infopro Digital preliminary ratings on July 17, 2017
(see "Business-to-Business Information And Services Company
Infopro Digital Group B.V. Rated Preliminary 'B'; Outlook Stable,"
on RatingsDirect).

"The rating on Infopro Digital primarily reflects our opinion of
the group's small operations, somewhat offset by the
predictability of revenues thanks to the subscription-based
business model, as well as the group's high leverage, and
financial-sponsor ownership.

As of March 31, 2017, Infopro Digital has annual pro forma past 12
months revenues of EUR355.2 million. It enjoys a multimedia
offering, providing databases, leads, and industry-specific
content delivered digitally and via magazines, as well as event
and trade show planning services.

In April 2017, the group acquired the U.K.-based digital
information and research services provider Insight, which operates
in the risk, insurance, and financial technology industries. This
acquisition expanded Infopro Digital's scale of operations to a
reported pro forma past-12-month EBITDA of EUR90 million after the
transaction. S&P said, "Adjusted for capitalized development and
restructuring costs, EBITDA amounts to about EUR78 million, which
we believe is still relatively small and leaves the company
vulnerable to any changes in the competitive and technological
landscape. Although we acknowledge that the Insight deal and the
company's acquisition of Belgium-based EBP in 2015 highlight the
company's expansion outside of France, we regard its business
diversification as narrow. Infopro Digital derives about 76% of
its revenues from France. In addition, advertising makes up 20% of
total revenue generation, which we believe leaves the company
exposed to economic cycles."

S&P said, "Positively, we recognize that Infopro Digital's
products and solutions enjoy key positions in their respective
niche markets. The company has leading titles and brands and no
customer concentration. Also, subscriptions and trade show
services represent about 80% of Infopro Digital's revenues and
benefit from renewal rates of more than 80%. This subscription
stream adds consistency and visibility to the company's revenues
and cash flow, in our view. Furthermore, although restructuring
costs and the integration of the lower-margin ISG (Groupe
Moniteur) have weakened Infopro Digital's adjusted EBITDA margin
in recent years, we forecast that the margin (including
capitalized development costs) will improve to about 21% in 2017
and to greater than 22% in 2018, and therefore be in the 20%-30%
range we view as average for data publishers.

"We forecast that Infopro Digital's credit metrics will remain
highly leveraged over the next few years, with debt to EBITDA of
about 6.5x in 2017. We exclude the shareholder loan provided by
controlling shareholder Towerbrook and management from our debt
adjustments. We treat this instrument as equity, based on our view
that the terms and conditions meet our non-common equity treatment

"We also take into account our forecast that the company's ratio
of funds from operations (FFO) to cash interest will remain
comfortable, at above 2.5x, with positive free operating cash flow
(FOCF) generation of higher than EUR25 million in 2017.

"The stable outlook reflects our view that Infopro Digital will
achieve adjusted EBITDA of EUR75 million-EUR80 million, spurring
FOCF generation of more than EUR25 million in 2017, supported by
organic growth, the ongoing integration of Insight, and high
renewal rates in the data, information, and trade show segments.

"Due to higher debt after refinancing, we could lower the ratings
if management's growth plan does not translate into profitability
sufficient to drop FFO cash interest coverage toward 2x, negative
FOCF, or weakened liquidity. Additional material debt-funded
acquisitions or shareholder returns could also weigh on the

"We currently consider an upgrade to be remote over the next 12
months, due to Infopro Digital's very high leverage and small
EBITDA base. However, we could raise the ratings if Infopro
Digital significantly improved its earnings and diversification,
and deleverages such that adjusted debt to EBITDA falls below 5x.
Furthermore, an upgrade would hinge on the shareholders'
commitment to a more conservative financial policy."


RICKMERS HOLDING: Finds Buyers for Ship Management Unit
Vera Eckert and Jan Schwartz at Reuters report that German
shipping group Rickmers, which filed for insolvency in June, said
on Sept. 7 its ship management unit had the all-clear to continue
business after it was bought by Bremen-based Zeaborn Group and
owner Bertram Rickmers.

According to Reuters, the company said in a statement that a
consortium consisting of Zeaborn and Bertram Rickmers bought the
division, which has its main sites in Hamburg, Singapore and
Cyprus after they won a bidding process, Reuters relates.

"It has only taken a few months after preliminary self-
administration of the assets of Rickmers Holding AG was ordered to
find a solution for continuing the business," Reuters quotes the
company as saying, adding the creditors' committee of Rickmers
Holding had approved the plan.

The purchase price was not given, Reuters notes.

The goal of the consortium is to expand and invest in the business
and pursue further growth in a deal involving the takeover of the
remaining business units of the Rickmers Group, including
insurance and several services companies, Reuters discloses.

The deal is subject to approval by the German federal cartel
office, Reuters states.

                  About the Rickmers Group

The Rickmers Group is an international service provider in the
maritime transport sector and a vessel owner, based in Hamburg.
In the Maritime Assets segment the Rickmers Group is active as
Asset Manager for its own vessels and also for those of third
parties.  The Group initiates and coordinates shipping
projects, organizes financing and acquires, charters and sells
ships.  In the Maritime Services business segment the Rickmers
Group provides ship management services for its own vessels as
well as for those owned by third parties; these services comprise
technical and operational management, crewing, newbuild
supervision, consultancy and insurance-related services.

Rickmers Holding AG on June 2 disclosed that it submitted an
application for insolvency under self-administration to Hamburg
District Court with the aim of restructuring (AG Hamburg Az. 67g
IN 173/17).  The Executive Board remains in office and capable of
acting.  The necessary legal expertise will be provided by
experienced Hamburg restructuring expert, lawyer and tax adviser,
Dr. Christoph Morgen.  He is a specialist insolvency lawyer and
partner in the national law firm Brinkmann & Partner.  Mr. Morgen
was appointed on June 2 by the Supervisory Board of Rickmers
Holding AG as member of the Executive Board and Chief Insolvency
Officer.  Lawyer Dr. Jens-Soeren Schroeder of the law firm Johlke
Niethammer & Partner has been appointed as a temporary trustee by
the Hamburg District Court.


AURELIUS EURO 2008-1: S&P Cuts Rating Loan A Notes to 'D(sf)'
S&P Global Ratings lowered to 'D (sf)' from 'BB- (sf)' its credit
rating on Aurelius Euro CDO 2008-1 Ltd.'s Snr Loan A notes. At the
same time, S&P has affirmed its 'CCC- (sf)' ratings on the Snr
Loan B and class C and D notes.

The rating actions follow S&P's assessment of the transaction's
performance using data from the latest available trustee report,
dated May 2017 payment date report and July 2-17 monthly report,
and the event of default notice we received in relation to a
missed interest payment on the Snr Loan A notes.

The Snr Loan A notes pay a margin of 0.5% over three-month Euro
Interbank Offered Rate (EURIBOR) and were due EUR8,436 on the May
payment date, but only received EUR2,017. Following the missed
interest payment, in June the noteholders called an event of
default for non-payment of interest. Looking at the performance
reports, S&P noted that due to the deleveraging of the underlying
assets, the portion of assets paying less frequently than the note
payment frequency (quarterly) was approximately 22.5%. A liquidity
facility was originally part of the transaction, but it was not
renewed in 2012. The lack of sufficient incoming proceeds and the
absence of the liquidity facility resulted in insufficient funds
being available to pay all the senior expenses and the non-
deferrable interest payment on the Snr Loan A notes.

While the senior class (Snr Loan A notes) was showing an increase
in credit enhancement due to deleveraging, the timing mismatch
between the payment of the assets and liabilities caused the
liquidity shortfall, which was not mitigated through structural
features such as a liquidity facility or smoothing account.
Furthermore, the interest coverage test was passing for all
classes of notes as it was calculated using accrued but unpaid
interest, thus reducing the accuracy of the test.

S&P said, "As our ratings on the notes in this transaction address
the timely payment of interest, we have lowered to 'D (sf)' from
'BB- (sf)' our rating on the Snr Loan A notes. Following the
missed interest payment, an event of default was subsequently
triggered in June.

"Our ratings on the Snr Loan B and class C and D notes address the
ultimate payment of interest and principal. These classes of notes
continue to defer interest due to coverage tests breaches, as the
interest due on these classes of notes is diverted to redeem the
senior notes. We have therefore affirmed our 'CCC- (sf)' ratings
on these classes of notes. We will continue monitoring these
classes of notes and may take further rating actions during the
liquidation process."

Aurelius Euro CDO 2008-1 is a cash flow mezzanine structured
finance collateralized debt obligation (CDO) of a portfolio that
consists predominantly of residential mortgage-backed securities
(RNBS) as well as commercial mortgage-backed securities (CMBS),
and, to a lesser extent, CDOs of corporates and CDOs of asset-
backed securities. The transaction closed in May 2008 and is
managed by Omicron Investment Management GmbH.


  Class                 Rating
                  To             From

  Aurelius Euro CDO 2008-1 Ltd.
  EUR120.1 Million Senior Floating-Rate Loan A And Senior
  Deferrable Floating-Rate
  Loan B And Deferrable Floating-Rate And Subordinated Notes

  Rating Lowered

  Snr Loan A      D (sf)       BB- (sf)

  Ratings Affirmed

  Snr Loan B      CCC- (sf)
  C               CCC- (sf)
  D               CCC- (sf)

BLUEMOUNTAIN 2016-1: S&P Affirms B-(sf) Rating on Class F Notes
S&P Global Ratings affirmed its credit ratings on BlueMountain EUR
CLO 2016-1 DAC's class A1, A2, B1, B2, C, D, E, and F notes.

S&P said, "The affirmations follow our assessment of the
transaction's performance using data from the July 13, 2017
trustee report. We performed a credit and cash flow analysis and
applied our current counterparty criteria to assess the support
that each participant provides to the transaction (see
"Counterparty Risk Framework Methodology And Assumptions,"
published on June 25, 2013).

"We subjected the capital structure to a cash flow analysis to
determine the break-even default rate (BDR) for each rated class
at each rating level. 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. In our analysis, we used the portfolio balance that
we consider to be performing, the current weighted-average spread,
and the weighted-average recovery rates calculated in line with
our corporate collateralized debt obligation (CDO) criteria (see
"Global Methodologies And Assumptions For Corporate Cash Flow And
Synthetic CDOs," published on Aug. 8, 2016). We applied various
cash flow stresses, using our standard default patterns, in
conjunction with different interest rate stress scenarios.

"Since our previous review, the notes have remained fully
outstanding as the transaction remains in its reinvestment period
and the collateral manager reinvests principal proceeds to
purchase substitute assets (see "Ratings Affirmed In BlueMountain
EUR CLO 2016-1 After The Transaction's Effective Date," published
on Sept. 23, 2016). The asset portfolio remains well diversified,
with 90 distinct obligors spread over 21 distinct industries and
17 different countries. Since our previous review, the weighted-
average spread has decreased to 4.28% from 4.99%, but remains well
above the covenant of 4.10%.

"We incorporated various cash flow stress scenarios, using various
default patterns, levels, and timings for each liability rating
category, in conjunction with different interest rate stress
scenarios. To help assess the collateral pool's credit risk, we
used CDO Evaluator 7.2 to generate scenario default rates (SDRs;
the modeled level of gross defaults that CDO Evaluator estimates
for every CDO liability rating) at each rating level. We then
compared these SDRs with their respective BDRs.

"While the transaction remains in its reinvestment period, the
collateral manager can alter the asset portfolio through sales and
purchases. The selection of lower quality assets is mitigated by
our CDO Monitor test, which ensures that any amended portfolio is
of sufficient quality to maintain the ratings on the notes
assigned at closing. As a result, in our analysis, we recognize
that during the reinvestment period the portfolio is subject to
further change, which may constrain the ratings on the notes to
the original ratings assigned.

"Taking into account the results of our credit and cash flow
analysis, we consider that the available credit enhancement for
the class A1, A2, B1, B2, C, D, E, and F notes is commensurate
with the currently assigned ratings. We have therefore affirmed
our ratings on these classes of notes."

BlueMountain EUR CLO 2016-1 is a revolving cash flow
collateralized loan obligation (CLO) transaction that securitizes
loans granted to primarily speculative-grade corporate firms. The
transaction closed in April 2016 and its reinvestment period ends
in April 2020.


  Ratings Affirmed

  BlueMountain EUR CLO 2016-1 DAC
  EUR409.8 Million Senior Secured And Deferrable Fixed- And
  Floating-Rate Notes

  Class      Rating

  A1         AAA (sf)
  A2         AAA (sf)
  B1         AA (sf)
  B2         AA (sf)
  C          A (sf)
  D          BBB (sf)
  E          BB (sf)
  F          B- (sf)

TRANSACTION ADAGIO V: S&P Affirms B-(sf) Rating on Class F Notes
S&P Global Ratings affirmed its credit ratings on Adagio V CLO
DAC's class A, B, C, D, E, and F notes.

S&P said, "The affirmations follow our assessment of the
transaction's performance using data from the July 17, 2017
payment date report. We performed a credit and cash flow analysis
and applied our current counterparty criteria to assess the
support that each participant provides to the transaction.

"We subjected the capital structure to a cash flow analysis to
determine the break-even default rate (BDR) for each rated class
at each rating level. 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. In our analysis, we used the portfolio balance that
we consider to be performing (EUR348.57 million), the current
weighted-average spread (WAS) with EURIBOR (Euro Interbank offered
Rate) floors (416 basis points [bps]), and the weighted-average
recovery rates calculated in line with our corporate
collateralized debt obligation (CDO) criteria (see "Global
Methodologies And Assumptions For Corporate Cash Flow And
Synthetic CDOs," published on Aug. 8, 2016). We applied various
cash flow stresses, using our standard default patterns, in
conjunction with different interest rate stress scenarios."

Since closing, the notes have remained fully outstanding as the
transaction remains in its reinvestment period and the collateral
manager reinvests principal proceeds to purchase substitute
assets. The asset portfolio remains well diversified, with 98
distinct obligors spread over 20 distinct industries and 14
different countries. The portfolio balance is less than the target
par amount of EUR350 million due to the transfer of principal
proceeds to the interest account before the first payment date.
The transaction documents allow for a transfer of up to 1.0% of
the target par amount from the principal account or the unused
proceeds account to the interest account on the first payment
date, subject to the effective date determination requirements
being satisfied.

The WAS with EURIBOR floors earned on the underlying assets is 416
bps, compared with the covenanted 415 bps modelled at closing. The
portfolio's weighted-average life (WAL) has decreased, falling to
5.73 years from 6.12 years, while its weighted-average credit
quality has improved to 'B+' from 'B' over the same period. The
decreased WAL, coupled with the improved credit quality, has led
to a reduction in the expected default rates at all rating levels.

S&P incorporated various cash flow stress scenarios, using various
default patterns, levels, and timings for each liability rating
category, in conjunction with different interest rate stress
scenarios. To help assess the collateral pool's credit risk, S&P
used CDO Evaluator 7.2 to generate scenario default rates (SDRs;
the modeled level of gross defaults that CDO Evaluator estimates
for every CDO liability rating) at each rating level. S&P then
compared these SDRs with their respective BDRs.

While the transaction remains in its reinvestment period, the
collateral manager can alter the asset portfolio through sales and
purchases. The selection of lower quality assets is mitigated by
S&P's CDO Monitor test, which ensures that any amended portfolio
is of sufficient quality to maintain the ratings on the notes
assigned at closing. As a result, in its analysis, S&P recognizes
that during the reinvestment period the portfolio is subject to
further change, which may constrain the ratings on the notes to
the original ratings assigned.

S&P said, "Taking into account the results of our credit and cash
flow analysis, we consider that the available credit enhancement
for the class A, B, C, D, and E notes is commensurate with the
currently assigned ratings. We have therefore affirmed our ratings
on these classes of notes.

"Our credit and cash flow analysis indicates a 'CCC+' rating level
for the class F notes. The indicated one notch decrease below its
current 'B-' rating level stems from two factors: a decrease in
the available credit enhancement due to the reduction in the
target par amount, and the evolution of the WAS on the portfolio.
The unadjusted WAS on the portfolio is 360 bps and once adjusted
for the benefit of the EURIBOR floors it is 415 bps, thereby
implying a weighted-average floor benefit of 55 bps. In our rising
interest rate stress scenario, once the EURIBOR curve rises beyond
55 bps the uptick from the EURIBOR floors falls away, which
reduces the available excess spread for the class F notes.

"However, in line with our criteria for assigning 'CCC' category
ratings, we factored in the notes' available credit enhancement,
the fact that they are current on interest payments, and are not
vulnerable to an event of default over the medium term, and
therefore determined that a 'CCC+' rating level is not warranted
(see "Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC'
Ratings," published on Oct. 1, 2012). We have therefore affirmed
our 'B- (sf)' rating on the class F notes."

Adagio V CLO is a revolving cash flow collateralized loan
obligation (CLO) transaction that securitizes loans granted to
primarily speculative-grade corporate firms. The transaction
closed in September 2016, with a four-year reinvestment period
that ends in October 2020.


  Ratings Affirmed

  Adagio V CLO DAC
  EUR361.00 Million Senior Secured And Deferrable Floating-Rate

  Class     Rating

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


ALITALIA SPA: Employees to Join Up with Other Parties for Bid
Isla Binnie at Reuters, citing Italian weekly Panorama, reports
that a group of Alitalia employees is preparing to join up with a
non-European carrier and two Italian financial partners to bid for
the insolvent airline.

Rome is looking for a buyer for all of Alitalia, which is under
special administration for the second time in a decade, Reuters

Around 10 bidders, including Ryanair, have expressed an interest
in acquiring all of the carrier or part of its assets, Reuters

Panorama reported that two pilots have now rallied support among
Alitalia's roughly 11,600 staff for a plan to buy 10-20% of the
company, possibly partly financed by their severance pays, Reuters
relates.  It did not say how many employees were involved, Reuters

Binding offers for Alitalia must be presented by Oct. 2, according
to Reuters.

                       About Alitalia

Alitalia - Societa Aerea Italiana S.p.A., is the flag carrier of
Italy.  Alitalia operates 123 aircraft with approximately 4,200
flights weekly to 94 destinations, including 26 destinations in
Italy and 68 destinations outside of Italy.  It has a strong
global presence, flying within Europe as well as to cities across
North America, South America, Africa, Asia and the Middle East.
During 2016, the Debtor provided passenger service to
approximately 22.6 million passengers.  Its air freight business
also is substantial, having carried over 74,000 tons in 2016.
Alitalia is a member of the SkyTeam alliance, participating with
other member airlines in issuing tickets, code-share flights,
mileage programs and other similar services.

Alitalia previously navigated its way through a successful
restructuring.  After filing for bankruptcy protection in 2008,
Alitalia found additional investors, acquired rival airline Air
One, and re-emerged as Italy's leading airline in early 2009.

Alitalia was the subject of a bail-out in 2014 by means of a
significant capital injection from Etihad Airways, with goals of
achieving profitability during 2017.

After labor unions representing Alitalia workers rejected a plan
that called for job reductions and pay cuts in April 2017, and
the refusal of Etihad Airways to invest additional capital,
Alitalia filed for extraordinary administration proceedings on
May 2, 2017.

On June 12, 2017, Alitalia filed a Chapter 15 bankruptcy petition
in Manhattan, New York, in the U.S. (Bankr. S.D.N.Y. Case No.
17-11618) to seek recognition of the Italian insolvency
proceedings and protect its assets from legal action or creditor
collection efforts in the U.S.  The Hon. Sean H. Lane is the case
judge in the U.S. case.  Dr. Luigi Gubitosi, Prof. Enrico Laghi,
and Prof. Stefano Paleari are the foreign representatives
authorized to sign the Chapter 15 petition.  Madlyn Gleich
Primoff, Esq., Freshfields Bruckhaus Deringer US LLP, is the U.S.
counsel to the Foreign Representatives.


KAZAKHSTAN ENGINEERING: Fitch Affirms BB+ LT IDR, Outlook Stable
Fitch Ratings has affirmed JSC National Company Kazakhstan
Engineering's (KE's) Long-Term Issuer Default Rating (IDR) at
'BB+' with a Stable Outlook.


Strategic Importance: Under Fitch's Parent-Subsidiary Linkage
Criteria, Fitch deems KE's links with its parent to be moderate to
strong due to the state's control, the strategic importance of the
company to the government's ambition to expand the country's
industrial base and diversify the national economy, and the
tangible financial support that has been demonstrated and pledged
by the state.

The two-notch differential reflects the lack of debt guarantees
provided by the state and the slightly lower priority KE would
probably receive than key natural resources, utilities or
infrastructure companies, whose ratings are notched down by one
notch from the sovereign.

New Ministry Established: The government of Kazakhstan has
established a Ministry for Defence and Aerospace Industry and KE
is the new department's major focus. This has been reflected by
the appointment of the first deputy prime minister to KE's board.
Furthermore, Fitch expects some forms of government support to
persist over the medium term.

Weak Standalone Rating: Fitch believes KE's rating on a standalone
basis to be at a low non-investment grade level, reflecting its
limited business profile, often negative free cash-flow (FCF)
generation, high leverage and barely adequate liquidity.

Weak Financial Profile: KE's financial profile is volatile. It is
characterised by regularly negative FCF generation, weak
underlying profitability, large and volatile working-capital
swings and heavy investment needs. Given the expansion projected
by the company in the short to medium term, the capex requirements
are unlikely to be met from internally generated cash.

Over the past two years, the company's funds from operations (FFO)
have been negative due to low capacity utilisation and high costs.
Over the medium term, Fitch expects KE's FFO to remain negative
before turning positive by the end of the decade, while FFO
adjusted gross and net leverage are expected to gradually improve
to around the high single digits by 2020, from around 80x and 66x,
respectively, at end-2016.

Forex Risk Mitigated: The company repaid its USD200 million
Eurobond in December 2016, and refinanced it with loans from
Kazakh banks denominated in the local currency. As most of the
company's revenue (around 95%) is denominated in tenge, the FX
risks are essentially removed.


JSC National Company Kazakhstan Engineering's (KE) ratings are
based on Fitch's Parent-Subsidiary Linkage criteria and are
notched down by two notches from the ratings of the ultimate
parent -- the Republic of Kazakhstan (BBB/Stable) -- due to the
support the company receives from the state in the form of orders,
equity injections and loans which demonstrate the importance of
the company to the state and strong links with the sovereign.

The majority of other Kazakh companies whose rating incorporate
state support and are notched down from the rating of the
sovereign, such as KazMunayGas (BBB-/Stable) or KEGOC (BBB-
/Stable), have ratings which are closer to that of the parent as
they are in sectors such as natural resources or utilities, which
are perceived as being more strategically important to the parent,
although Mangistau Electric Grid Company (MEDNC, 'BB'/Negative) is
notched down further than KE due to the weaker ties with the


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

- no change in the extent of state support provided to KE by the

- double-digit revenue growth in 2017 driven by the improvement
   in economic conditions and further increase in sales to the
   defence sector, mid-single digit growth in 2018-2020;

- EBITDA margin expected to improve from low to mid-single
   digits over the medium term due to cost-cutting initiatives
   and increased government spending on defence;

- capex in line with historical average of about KZT4 billion

- No equity injections from the shareholder.


Future developments that could lead to positive or negative rating
actions include:

- change to the sovereign's ratings, which could prompt a review
   of the company's IDRs, National Ratings and Outlook.;

- strengthening of support, such as a provision of written
   guarantees for KE's debt from the Kazakhstan Ministry of
   Finance, which would probably lead to closer rating linkage;
- a weakening of support, such as a reduction in the state's
   shareholding in KE, waning commitment to and support of the
   company's projects, or a change in the treatment by the state
   that KE receives relative to other state-owned companies,
   could lead to a widening of the rating gap between Kazakhstan
   and KE.


Weak Liquidity: Despite successfully refinancing its short-term
loans from local banks in July 2017, Fitch believes that KE's
reported cash balances (KZT10bn at end-August 2017) may not be
sufficient to repay the approximately KZT6.5 billion of bank loans
expiring in August 2018. As Fitch expects KE's free cash flows to
remain negative over 2017-2020, the company will continue to rely
on the shareholder's support through new loans or possibly equity
injections. The bulk of the company's debt maturities (KZT23.6
billion) now fall in H219. Of this, KZT6 billion is an interest-
free shareholder loan. The vast majority of the bank loans are
provided by Halyk-Bank of Kazakhstan ('BB'/RWN).


JSC National Company Kazakhstan Engineering

- Long-term local currency IDR affirmed at 'BB+'; Outlook Stable
- Long-term foreign currency IDR affirmed at 'BB+'; Outlook
- Senior unsecured rating affirmed at 'BB+'
- Short-term foreign currency IDR affirmed at 'B'
- National Long-term rating affirmed at 'AA(kaz)'; Outlook
- National senior unsecured rating affirmed at 'AA(kaz)'
- National Short-term rating affirmed at 'F1+(kaz)


PACIFIC DRILLING: Announces Potential NYSE Delisting Events
Pacific Drilling S.A., on Sept. 1, 2017, disclosed that it has
received notice from the New York Stock Exchange, Inc. ("NYSE")
that the Company is considered to be "below compliance" with
NYSE's continued listing standards for a listed company.  The two
NYSE continued listings standards applicable to the Company that
it is at risk of failing to satisfy are maintenance of:

   -- Average market capitalization of not less than $15 million
      over a 30 trading-day period, which is a minimum threshold
      standard that does not allow for any plan/cure period; and

   -- Average closing price of its common stock of not less than
     $1.00 over a consecutive 30-trading-day period.

NYSE notified the Company that as of August 30, 2017, its 30
trading-day average share price was $0.99 and, consequently, the
Company would be delisted if it is not able to return to
compliance with the NYSE continued listing standards within the
applicable six-month cure period.  The Company has until September
15, 2017 to submit to the NYSE a letter indicating whether and how
it intends to cure the share price deficiency.

In addition, the Company notes that its market capitalization
dipped below $15.0 million for the first time on August 16, 2017.
Consequently, the Company expects that unless its market
capitalization increases materially, NYSE will commence delisting
proceedings for the Company's common stock on or about September
13, 2017 and before it is required to respond to NYSE's notice of
delisting due to the share price deficiency.  The $15 million
average market capitalization continued listing condition does not
allow for any plan/cure period and, consequently, the Company
would be automatically and immediately delisted on the date that
this condition ceases to be satisfied.  In that circumstance, the
Company's common shares will trade solely in the over-the-counter

A delisting from the NYSE does not affect the Company's Securities
and Exchange Commission reporting requirements or any of the
Company's existing contractual or debt obligations.

                      About Pacific Drilling

Based in Luxembourg, Pacific Drilling S.A. (NYSE: PACD) -- is an international offshore
drilling contractor.  The Company's primary business is to
contract its high-specification rigs, related equipment and work
crews, primarily on a day rate basis, to drill wells for its
clients.  The Company's contract drillships operate in the
deepwater regions of the United States, Gulf of Mexico and

                     Going Concern Doubt

As reported by The Troubled Company Reporter on August 16, 2017,
Pacific Drilling S.A. filed its quarterly report on Form 6-K,
disclosing a net loss of $138.07 million on $67.07 million of
revenues for the three months ended June 30, 2017, compared with a
net income of $8.23 million on $203.71 million of revenues for the
same period in 2016.

For the six months ended June 30, 2017, Pacific Drilling listed a
net loss of $237.91 million on $172.58 million of revenues,
compared to a net income of $5.72 million on $409.09 million of
revenues for the same period in the prior year.

The Company's balance sheet at June 30, 2017, showed $5.61 billion
in total assets, $3.17 billion in total liabilities, and a
stockholders' equity of $2.43 billion.

Market conditions in the offshore drilling industry in recent
years have led to materially lower levels of spending for offshore
exploration and development by the Company's current and potential
customers on a global basis while at the same time supply of
available drillships has increased, which in turn has negatively
affected its revenue, profitability and cash flows.  As a result,
the Company is engaged in discussions with all of its
stakeholders, including its bank lenders under the 2013 Revolving
Credit Facility and the SSCF and an ad hoc group of holders of the
Company's capital markets indebtedness, regarding a restructuring
of the Company's existing capital structure to be sustainable in
the longer term.

The Sixth Amendments modify or waive application of certain
financial covenants for the fiscal quarters ending on March 31,
2017 and June 30, 2017.  However, the Company expects that it will
be in violation of the maximum leverage ratio covenant in its 2013
Revolving Credit Facility and its SSCF for the fiscal quarter
ending on September 30, 2017.  If the Company is unable to obtain
waivers of such covenants or amendments to the debt agreements,
such covenant default would entitle the Lenders to declare all
outstanding amounts under such debt agreements to be immediately
due and payable.  Such acceleration would also trigger the cross-
default provisions of the Company's 2017 Senior Secured Notes, the
Senior Secured Term Loan B and the 2020 Senior Secured Notes.

If the Company is unable to refinance its 2017 Senior Secured
Notes prior to its maturity in December 2017, and refinance its
2018 Senior Secured Term Loan B and its 2013 Revolving Credit
Facility prior to their maturity in June 2018, or complete a
restructuring and current market conditions persist, the Company
may not have sufficient liquidity to meet its debt obligations
over the next year following the date of the issuance of these
financial statements.  As such, this condition gives rise to
substantial doubt about the Company's ability to continue as a
going concern.


LYONDELL CHEMICAL: Judge Dismisses Creditors' $5.9B Clawback Suit
Patrick Fitzgerald, writing for The Wall Street Journal Pro
Bankruptcy, reported that a bankruptcy judge in New York tossed a
lawsuit filed by creditors of LyondellBasell Industries AF to claw
back more than $5.9 billion the chemical company's shareholders
received from a failed 2007 leveraged buyout.

According to the report, Judge Martin Glenn of the U.S. Bankruptcy
Court in New York in a brief, three-page order dismissed with
prejudice a lawsuit brought by a trustee on behalf of creditors of
LyondellBasell's bankruptcy.

The creditors were seeking to claw back the billions in cash from
hundreds of former shareholders -- pension and mutual funds, Wall
Street banks, hedge funds and retail investors -- of Lyondell
Chemical Co., the report related.  The creditors had also sued
billionaire deal maker Leonard Blavatnik over the 2007 merger of
Lyondell Chemical and Basell AF that created what was then one of
the largest chemical companies in the world, the report further

Mr. Blavatnik's Basell paid $48 a share for Lyondell, what the
creditors called a "blowout price" in court filings, which allowed
the Houston-based chemical company's shareholders to collect
billions from the merger, the report said.

Unhappy creditors sued to claw back the cash from shareholders,
arguing the merger amounted to what was a so-called fraudulent
transfer that left Lyondell insolvent, the report said.  Mr.
Blavatnik denied that he thought the deal would fail and blamed
the global recession for the company's financial troubles, the
report added.

                     About Lyondell Chemical

Rotterdam, Netherlands-based LyondellBasell Industries is one of
the world's largest polymers, petrochemicals and fuels companies.
Luxembourg-based Basell AF and Lyondell Chemical Company merged
operations in 2007 to form LyondellBasell Industries, the world's
third largest independent chemical company.  LyondellBasell became
saddled with debt as part of the US$12.7 billion merger.  Len
Blavatnik's Access Industries owned the Company prior to its
bankruptcy filing.

On Jan. 6, 2009, LyondellBasell Industries' U.S. operations, led
by Lyondell Chemical Co., and one of its European holding
companies -- Basell Germany Holdings GmbH -- filed voluntary
petitions to reorganize under Chapter 11 of the U.S. Bankruptcy
Code to facilitate a restructuring of the company's debts.  The
case is In re Lyondell Chemical Company, et al., Bankr. S.D.N.Y.
Lead Case No. 09-10023).  Seventy-nine Lyondell entities filed for
Chapter 11.  Luxembourg-based LyondellBasell Industries AF S.C.A.
and another affiliate were voluntarily added to Lyondell
Chemical's reorganization filing under Chapter 11 protection on
April 24, 2009.

Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in
New York, served as the Debtors' bankruptcy counsel.  Evercore
Partners served as financial advisors, and Alix Partners and its
subsidiary AP Services LLC, served as restructuring advisors.
AlixPartners' Kevin M. McShea acted as the Debtors' Chief
Restructuring Officer.  Clifford Chance LLP served as
restructuring advisors to the European entities.

LyondellBasell emerged from Chapter 11 bankruptcy protection in
May 2010, with a plan that provides the Company with US$3 billion
of opening liquidity.  A new parent company, LyondellBasell
Industries N.V., incorporated in the Netherlands, is the successor
of the former parent company, LyondellBasell Industries AF S.C.A.,
a Luxembourg company that is no longer part of LyondellBasell.
LyondellBasell Industries N.V. owns and operates substantially the
same businesses as the previous parent company, including
subsidiaries that were not involved in the bankruptcy cases.
LyondellBasell's corporate seat is Rotterdam, Netherlands, with
administrative offices in Houston and Rotterdam.

PIGMENTS II: S&P Affirms 'B+' LT Corporate Credit Rating
S&P Global Ratings affirmed its 'B+' long-term corporate credit
rating on Pigments II B.V., the current parent company of Spain-
based ceramics-product maker Esmalglass-Itaca.

Esmalglass-Itaca is being acquired by private equity firm Lone
Star Funds and plans to refinance its existing debt.

S&P said, "We also affirmed our 'B+' issue rating on the group's
existing facilities. The recovery rating is unchanged at '3'
(rounded estimate 55%).

"At the same time, we assigned our preliminary 'B' long-term
corporate credit rating to LSFX Flavum Bidco SL, which will issue
the group's proposed new debt. The outlook is stable.

"We assigned our 'B' issue rating to the group's proposed new
facilities, to be issued by LSFX Flavum Bidco SL, including a new
EUR60 million revolving credit facility (RCF) and a new EUR375
million term loan B. The recovery rating on these proposed
instruments is '4' (rounded estimate 45%).

"Private equity firm Lone Star Funds is buying Esmalglass-Itaca
and plans to refinance its existing debt. We expect the new owner
to display an increased tolerance for higher leverage and a less
conservative financial policy, increasing the potential for higher
shareholder returns in the future. If the refinancing goes ahead
as planned, we expect the group's credit metrics to be
commensurate with a highly leveraged financial risk profile.
Specifically, the S&P Global Ratings-adjusted debt to EBITDA will
likely be more than 5x at the end of 2017."

Esmalglass-Itaca is a leading producer of intermediate products
that are sold directly to ceramic tile manufacturers worldwide.
The company's product portfolio includes glazing products (frits
and glazes), as well as body stains to color the body of the tiles
and surface products (glaze stains and inkjet inks). The company
is a niche player whose portfolio of products is applied to a wide
range of tiles. The company benefits from strong market positions
in the countries in which it operates and has good geographic and
client diversity.

That said, Esmalglass-Itaca is exposed to particularly cyclical
and volatile construction end markets. The company generates sales
in some moderately high-risk countries, such as Brazil and China,
which have recently experienced economic slowdowns, exposing the
company to difficult market conditions, lower-than-expected
volumes, and tough pricing conditions. Although careful cost-base
management has enabled Esmalglass-Itaca to protect its margins
when markets are choppy, the company's absolute EBITDA has
exhibited high volatility in the recent past and could do so again
in the future, especially if management's efforts to expand the
business meet a sudden sharp drop in demand.

The company has historically reported capital expenditure (capex)
of 5%-8% of revenues, which reflects the asset-intensity of the
business. Management can flex capex down to protect cash flows and
preserve liquidity, but we consider it unlikely that the company
would reduce capex below 5% of revenues for longer than 12-18
months. When calculating recovery prospects, we assume capex of
about 3% of revenues; the lower figure reflects Esmalglass-Itaca
likely capex at the point of a hypothetical default caused by a
period of operational and financial stress.

S&P's base-case scenario for FY2017 assumes:

-- Challenging fundamentals in some of the company's end
    markets, with consolidated revenues forecast to grow to more
    than EUR400 million;

-- S&P anticipates that frits and glazes in Brazil will continue
    to experience volume and price competition, offset by growth
    in the same product suite in the rest of the world;

-- S&P anticipates that inkjet volumes in China will continue to
    contract, but be offset by more robust demand outside of this

-- EBITDA margins gradually rising to more than 19%, supported
    by continued efforts by management to reduce the company's
    cost base;

-- Capex of up to EUR26 million; and

-- No major acquisitions, divestitures, or dividends.

Based on these assumptions, and assuming supportive market
conditions, S&P arrives at the following credit measures:

-- S&P Global Ratings' adjusted debt to EBITDA of about 5.3x;

-- Adjusted funds from operations (FFO) to debt of about 11%;

-- Adjusted cash interest coverage of more than 3x over the 12-
    month rating horizon.

S&P said, "The stable outlook on Spain-based Pigments II, the
current holding company for ceramics-product maker Esmalglass-
Itaca, reflects our expectation that Esmalglass-Itaca will exhibit
positive revenue growth and gradually improve its margins to above
19%. That said, weaker demand and tough pricing conditions in
markets such as China and Brazil will also continue to weigh on
the company's results. We anticipate that the company's adjusted
debt to EBITDA will be about 5.3x in 2017, with good cash interest
coverage of significantly more than 3.0x.

"We currently view the probability of an upgrade as limited over
our 12-month rating horizon. This reflects the group's high
leverage and limited prospects for deleveraging over this
timeframe. Passing to a new private equity owner has increased
uncertainties regarding the possibility of shareholder returns,
and could trigger changes to the group's capex, acquisition, and
disposal strategy.

"We could lower the ratings if the group experienced severe price
or margin pressure, or poorer cash flows, leading to weaker credit
metrics -- specifically, if FFO cash interest coverage fell below
2x. This could occur if the group suffered from persistent
detrimental foreign-exchange movements or if it failed to curtail
its capex in time to reduce debt, before a potential drop in
earnings. A downgrade could also stem from debt-funded
acquisitions or increased shareholder returns."


ROSGOSSTRAKH PJSC: S&P Alters 'B' CCR Outlook to Developing
S&P Global Ratings revised its CreditWatch implications for its
'B' long-term counterparty credit rating on Russia-based insurer
PJSC Rosgosstrakh to developing from negative. S&P said, "We
originally placed the ratings on Rosgosstrakh on CreditWatch with
negative implications on Dec. 12, 2016 (see "Russian Insurer
Rosgosstrakh 'B+' And 'ruA' Ratings Placed On CreditWatch Negative
Following Marked Losses," published on RatingsDirect). On June 13,
2017, we lowered the ratings to 'B' from 'B+' and kept them on
CreditWatch with negative implications (see "Russian Insurer
Rosgosstrakh Downgraded To 'B' On Weakened Business Profile;
Ratings Stay On Watch Negative")."

The revision of the CreditWatch implications follows the Central
Bank of Russia (CBR) announcement on Aug. 29, 2017, that it will
take measures to improve Bank Otkritie Financial Co.'s (BOFC's)
financial stability. These measures include its temporary
administration of BOFC, under which it will effectively take
control of the bank. At the same time, the CBR indicated that
entities forming part of the BOFC group included Rosgosstrakh, by
which we understand that the insurer will also be enabled to
continue to operate its business as usual. S&P said, "We
understand that Rosgosstrakh is not formally owned by BOFC at
present, but we deduce from the CBR announcement that Rosgosstrakh
will formally become part of the BOFC group within the next few

S&P said, "We understand that during 2017 BOFC provided Russian
ruble (RUB) 40 billion (about $690 million) of short-term funding
to the RGS Group, which controls Rosgosstrakh, with shares in
Rosgosstrakh being transferred as collateral. These short-term
loans enabled Rosgosstrakh to comply with the minimum regulatory
capital requirement, with a solvency margin of 119% as of June 30,
2017, relative to a required minimum of 100%. We cannot exclude
the likelihood that Rosgosstrakh will soon be owned by the bank or
by other elements of the same group, although the eventual outcome
will, in our view, largely depend on further steps taken by the
CBR as part of its intervention in BOFC. We expect that within the
next few months the central bank may provide more details
regarding its assessment of the bank's financial standing and its
views on possible next steps, including the bank's
recapitalization, potential changes to its business model, changes
in its shareholding structure, and other important details of the
plan, with the aim of restoring the bank's financial stability.
This might improve our opinion of the insurer's business model and
the possibility of Rosgosstrakh receiving further capital support.

"We consider that the current decision of the CBR raises questions
around the current ownership structure of the insurer as well as
on whose behalf any financial support will be provided, and in
what amount. As of end-June 2017, Rosgosstrakh posted a net loss
of RUB24.6 billion, due to a rapid decline in the volume of
business written, in particular in obligatory motor third party
liability insurance (OMTPL) and still-substantial claims
liabilities adding to the pressure on its capital adequacy.
However, we note that based on the half-year results of 2017
claims incurred (net reinsurance), in particular in OMTPL,
decreased by 14% compared with the same period in 2016. At the
same time, we are not yet entirely clear concerning the strategies
to be adopted by the insurer if indirectly under the control of
the central bank. That said, we believe that Rosgosstrakh provides
a vital social role as a provider of insurance, particularly
OMTPL, in many remote regions of Russian, even though this OMTPL
business is currently heavily loss-making. We would therefore
expect the authorities to remain supportive of Rosgosstrakh.

"In our view, it will take more than a year for this motor
liability business line to return to profitability, and more
financial support will almost certainly be required in the
intervening period. Our view takes into account the difficult
operating conditions for all Russian motor insurance providers. We
also note that Rosgosstrakh remains exposed to legal claims,
increasing the scope for unpredictable liability settlements on
motor risks. We anticipate that the positive effect from noncash
claims payment implemented earlier this year will start to
materialize only in 2018, when the portfolio of old contracts

"Considering the funding already provided by BOFC to RGS and the
likelihood that Rosgosstrakh will post further losses in 2017, we
do not exclude the possibility that BOFC may provide additional
funds to Rosgosstrakh, directly or indirectly, in the near future
to cover the insurer's losses.

"The CreditWatch placement reflects uncertainty about how
Rosgosstrakh's ownership will be structured. We aim to resolve the
CreditWatch within the coming 90 days, after obtaining information
on the CBR's measures with regards to BOFC and its group members,
in particular Rosgosstrakh."

S&P could lower its ratings if:

-- Rosgosstrakh doesn't receive sufficient capital support
    through its new shareholder such that its current business
    position is further constrained, or the insurer's compliance
    with minimum capital requirements becomes questionable;

-- Rosgosstrakh faces issues with liquidity that may arise from
    its need to meet its insurance obligations and to redeem the
    debt maturing in November 2017;

-- Rosgosstrakh's ownership becomes a constraint to the
   company's business or financial profile due to weaker profile
   of the parent; or

-- The CBR negatively revises its view regarding its implicit
    willingness to allow BOFC to support Rosgosstrakh as a formal
    group subsidiary.

S&P said, "In addition, we could reconsider our current view that
Rosgosstrakh is a going concern if there is no capital injection
to support expected 2017 net losses, in which case we could lower
the ratings by multiple notches.

"We could affirm the ratings if we see that the CBR's measures and
the new ownership structure do not materially change
Rosgosstrakh's creditworthiness.

"We could potentially upgrade Rosgosstrakh if the insurer becomes
owned by a stronger parent, or if government support to
Rosgosstrakh is sufficient to lead us to revise the insurer's
group status, or treat it as a government-related entity."


BANCO POPULAR: Group of Bondholders Files Appeal Over Rescue
Jesus Aguado at Reuters reports that a group of bondholders in
failed Banco Popular have filed an appeal against Spain's banking
bailout fund, their law firm said on Sept. 7, after the bank's
rescue landed them with EUR850 million (US$1.02 billion) of

European authorities orchestrated a rescue of Spain's then sixth-
biggest lender in early June, which wiped out shareholders and
junior bondholders while Popular was sold for a nominal one euro
to larger rival Banco Santander, Reuters recounts.

The group of bondholders, including PIMCO, Algebris, Anchorage
Capital Group, Ronit Capital and Cairn Capital, filed the appeal
against the FROB bailout fund with Spain's High Court on Sept. 6,
Reuters relates.

Quinn Emanuel, said in statement the lawsuit is part of efforts by
bondholders to find out more about the process behind Popular's
resolution and recoup their losses, their law firm, Reuters

"The FROB resolution lacked the necessary justification, which
made it impossible for stakeholders to evaluate the reasons, the
legal basis or the valuation underpinning the FROB resolution,"
Reuters quotes Richard East, a lawyer at Quinn Emanuel, as saying.

The appeal contests the FROB's resolution of Popular -- which
followed instructions from the Single Resolution Board, the EU
body to liquidate banks, Reuters states.

Some EUR1.9 billion of subordinated and convertible bonds were
wiped out, Reuters discloses.

According to Reuters, Popular had a stock market valuation of
around EUR1.3 billion the day it was bailed out.

Quinn Emanuel represents holders of EUR850 million of junior bonds
in Banco Popular, according to a July 10 letter seen by Reuters
which was sent to the European Parliament.

                       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.

U N I T E D   K I N G D O M

ENQUEST PLC: Receives Waiver from Banks Ahead of Covenant Test
Nathalie Thomas at The Financial Times reports that heavily
indebted North Sea oil producer EnQuest says it has received a
waiver from its banks ahead of a key test of its loan covenants at
the end of September.

Analysts raised questions about the company's liquidity position
last month, after it warned production from its new Kraken field
in the North Sea had been below expectations due to teething
problems with a vessel used to extract oil, the FT relates.  It is
relying on its Kraken field to pay off its hefty debt load, the FT

EnQuest was last year forced to secure a US$400 million debt
restructuring and equity raising package so it could complete the
US$2.4 billion Kraken project, which was approved before oil
prices crashed in mid-2014, the FT recounts.

It now faces covenant tests at the end of each quarter and
analysts last month highlighted that it will have to cut its level
of net debt to earnings before interest, tax, depreciation and
amortization by the end of this year, the FT discloses.

In its half-year results on Sept. 7, EnQuest, as cited by the FT,
said it had applied for, and received, a waiver from its group of
banks in advance of the September loan covenant test.

It also indicated it would probably have to seek further breathing
space from lenders in future, the FT states.

According to the FT, analysts at RBC Capital Markets pointed out
the company's net debt to ebitda ratio stood at 3.2 times at the
end of the first half and that ratio will have to reach 2.25 times
by the end of the year if the company is to meet its December
covenant test.

They wrote in a note "We believe the company may come close to
breaching this covenant at the end ofthe year if production at
Kraken does not materially improve . . . requiring a further
waiver from the banking syndicate," the FT relays.

EnQuest is an oil and gas development and production company based
in the United Kingdom.

HSS HIRE: S&P Lowers CCR to 'B' on Weaker Than Expected Results
S&P Global Ratings said that it lowered its long-term corporate
credit rating on HSS Hire Group PLC and its 100%-owned subsidiary
HSS Financing PLC to 'B' from 'B+'. The outlook is negative.

S&P said, "At the same time, we lowered our issue rating on the
group's outstanding ú136 million senior secured fixed-rate notes,
due 2019, to 'B+' from 'BB-'. Our recovery rating on these notes
is unchanged at '2', indicating our expectation for a substantial
(70%-90%, rounded estimate: 70%) recovery in the event of a
payment default.

HSS Hire continues to proactively adapt its distribution
model/footprint and streamline its cost base. Management remains
focused on driving sales and raising profitability through
operational transformation and improvements in working capital.
However, following weaker-than-expected half year results, we have
lowered our expectations for fiscal 2017 (FY2017; ending Dec. 31).
S&P notes that HSS Hire remains at risk from tougher-than-expected
market conditions, aggressive competition, volatility in expected
seasonality of demand, or any unexpected delays in management's
continued efforts to optimize HSS Hire's logistics network or
streamline the group's cost base. Given the group's geographic
concentration on the U.K., it could also face market headwinds
arising from the U.K.'s referendum vote to leave the EU.

Any further pressure on profitability and cash flows could weigh
on the group's credit metrics and liquidity profile, resulting in
further ratings pressure. We also note that HSS Hire has been
maintaining a relatively small cash balance and its revolving
credit facility (RCF) is heavily drawn.

S&P's base-case operating scenario for FY2017 assumes:

-- U.K. real GDP growth of about 1.4%.
-- Revenues of about ú330 million.
-- S&P Global Ratings-adjusted EBITDA margin of 22%-24%.

After a period of high growth and ambitious capital expenditure
(capex) to expand its fleet and invest in its centralized
engineering and distribution center, management has improved
capital efficiency and, as S&P expected, reduced capex in order to
protect cash flows and liquidity. No major acquisitions or
divestitures. This results in the following credit measures in
2017: Debt to EBITDA of more than 4x.

Free operating cash flow to debt of less than 5%, reflecting the
capex intensity of the business.

The negative outlook reflects S&P's expectation that HSS Hire
could underperform its base case for fiscal 2017, which would
result in further pressure on profitability, liquidity and, in
turn, the ratings.

S&P said, "We could lower the ratings if, following the
restructuring of its logistics network, we saw no evidence that
the group's results had begun to materially improve from the third
quarter of FY2017. We could also lower the ratings if HSS Hire
experienced further margin pressure or diminished cash flows,
leading to weaker credit metrics and less-than-adequate liquidity.

"We could revise the outlook to stable if HSS Hire posts strong
results in the third and fourth quarters of FY2017, with revenues
in line with expectation and profitability improving to at least
the level we forecast in our base case. This would need to be
supported by the group maintaining at least adequate liquidity."

MITCHELLS & BUTLERS: Fitch Cuts Rating on Class D1 Notes to BB+
Fitch Ratings has affirmed Mitchells & Butlers (M&B) Finance's
class A and AB notes and the interest rate (IRS) and cross
currency swaps (FX swaps) and downgraded the class B, C and D
notes by one notch. The Outlook on all notes and swaps is Stable.

The downgrade of the junior notes reflects continuing cost
pressures, in particular from the step-up in the national living
wage until 2020. At the same time the company continues to operate
in a highly competitive market, with sales volumes expected to
grow only moderately due to many competing offerings available.
M&B's strategy of conversion and remodelling underperforming pubs
and a shortened investment cycle should help to maintain market
share, but requires a relatively high capex spent in the near to
medium term. The outcome of the Brexit negotiations remains
uncertain and has the potential to impact the company through
availability of labour, sterling depreciation, which makes
imported supplies more costly, and the general macroeconomic
situation, which affects consumer spending.

The affirmation of the class A and AB notes and the swaps reflects
strong free cash flow ratios. Class A and the swaps have
sufficient cushion to absorb material deterioration of EBITDA in a
downside scenario, while the class AB rating could come under
pressure if free cash flow ratios were to deteriorate.


Industry Profile: Midrange
The pubs sector in the UK is mature but has been in structural
decline as a result of demographic shifts, social and political
factors. The sector is exposed to discretionary spending and
strong competition including from the off-trade and various forms
of home or other entertainment. External macroeconomic factors are
also likely to affect the industry, which is characterised by a
significant exposure to energy, food and labour costs. The
introduction of the national living wage in April 2016 has and is
expected to further increase wage costs, affecting profitability,
particularly for managed pubcos.

Sub-Key Rating Drivers: Operating Environment: Weaker; Barriers to
Entry: Midrange; Sustainability: Midrange.

Company Profile: Stronger

M&B is a large operator of restaurants, pubs and bars in the UK,
including a range of strong brands aimed at both the more
expensive and value-end of the market. The company's trading
history (10-year revenue CAGR of 2.3%) has shown resilience to
declining UK pub industry fundamentals. However, growth has slowed
in recent years, with like-for-like sales growth in the financial
year to September 2016 at -0.8%. Like-for-like sales growth for
H117 has returned to moderate growth of around 1.6%. Continuing
efforts to reposition underperforming sites and focused capex
should help maintain market share. The fairly large pension
deficit (GBP451 million in 2016) is credit-negative.

The securitised portfolio includes 1,415 outlets, with reasonable
geographical spread. Around 40% of the portfolio is located in
London and south-east England, which are better performing. As the
estate is fully managed, there is visibility over underlying
profitability. Fitch does not views operator replacement as
straightforward but it would be possible within a reasonable
period of time. The pubs are well-maintained and feature a high
minimum maintenance covenant. Furthermore, M&B has historically
spent maintenance capex in excess of the required level.
Maintenance spend over FY16 was GBP135 million compared with a
minimum requirement of GBP92.7 million. Assets are almost all

Sub-KRDs: Financial Performance: Midrange; Company Operations:
Stronger; Transparency: Stronger; Dependence on Operator:
Midrange; Asset Quality: Stronger

Debt Structure: Class A, IRS and FX swaps - Stronger, Class AB, B,
C and D - Midrange

The debt is fully amortising but there is some concurrent
amortisation with junior tranches. The notes are a combination of
fixed-rate and fully hedged floating-rate debt, and a currency
swap removes FX risk on the US dollar-denominated class A3N notes.

The security package is strong, with comprehensive first-ranking
fixed and floating charges over borrower assets. Class A is the
senior ranking controlling creditor, with the junior notes ranking
lower, resulting in a 'Midrange' assessment. A minimum maintenance
requirement of the greater of 5.7% of turnover and GBP35,000 per
pub (indexed) annually compares favourably with peers. The
securitised estate also benefits from a liquidity facility
covering 18 months debt service, tranched at the class C and D
levels. Other structural features include debt service covenants
and restricted payment conditions, which are tested quarterly.

Fitch views the creditworthiness of the issuer's obligations under
the interest rate and cross currency swaps as consistent with the
long-term ratings of the most senior class of notes, as the swaps
are expected to default with the notes under certain scenarios.

Sub-KRDs: Debt Profile: 'Stronger' for the class A notes and swaps
and 'Midrange' for the class AB, B, C and D notes, Security
Package: 'Stronger' for the class A notes and swaps and 'Midrange'
for the class AB, B, C and D notes. Structural Features:
'Stronger' for all notes and swaps.

Peer Group

M&B's class A and AB notes are rated at the pub sector rating cap
and higher than any other senior debt tranches in Fitch's WBS pub
portfolio, due to the strong financial metrics. Following the one-
notch downgrade, the junior notes are now well-aligned with its
pub peers Green King and Marston's. M&B's junior notes' coverage
levels and ratings equate to the senior tranche of Marston, which
benefits from a first-ranking security over assets in contrast to
their junior claim. Positively M&B's EBITDA leverage metrics are
lower than their peers with the same ratings. A further strength
is M&B's more reactive and transparent business model as a result
of being the only fully managed estate among Fitch-rated peers.


Positive: The ratings on the class A and AB notes and the swaps is
constrained from moving above a 'A+' rating by Fitch's overall
midrange industry profile assessment for the pub sector.

For the class B, C and D notes, an improvement in Fitch's base
case free cash flow (FCF) debt service coverage ratios (DSCRs) to
above 1.7x, 1.6x and 1.5x could lead to positive rating action,
when combined with the further deleveraging that is expected over
the next few years.

Negative: Any decline in Fitch's rating case FCF DSCRs (1.45x,
1.35x and 1.25x for Class B, C and D respectively) due to
persistent underperformance against expectations could lead to a
downgrade of the class B, C and D notes.

Fitch could revise the Outlook on the class AB notes to Negative
if the FCF DSCR deteriorates to around 2.2x.


M&B is a whole business securitisation of a portfolio of 1,415
managed pubs and pub restaurants in Britain owned and operated by
Mitchells & Butlers Plc (representing 80% of the M&B plc's pubs).

The rating actions are as follows:

GBP200 million Class A1N floating-rate notes (outstanding as of
Jul 2016 GBP153.9m) due 2030: affirmed at 'A+'; Outlook Stable

GBP482 million Class A2 fixed-rate notes (GBP280.1m) due 2030:
affirmed at 'A+'; Outlook Stable

USD418.8 million Class A3N floating-rate notes (USD322.3m) due
2030: affirmed at 'A+'; Outlook Stable

GBP170 million Class A4 floating-rate notes (GBP170m) due 2030:
affirmed at 'A+'; Outlook Stable

GBP325 million Class AB floating-rate notes (GBP325m) due 2033:
affirmed at 'A+'; Outlook Stable

GBP350 million Class B1 fixed-rate notes (GBP139m) due 2025:
downgraded to 'BBB' from 'BBB+'; Outlook Stable

GBP350 million Class B2 fixed-rate notes (GBP341.8m) due 2030:
downgraded to 'BBB' from 'BBB+'; Outlook Stable

GBP200 million Class C1 fixed-rate notes (GBP200m) due 2032:
downgraded to 'BBB-' from 'BBB'; Outlook Stable

GBP50 million Class C2 floating-rate notes (GBP50m) due 2034:
downgraded to 'BBB-' from 'BBB'; Outlook Stable

GBP110 million Class D1 floating-rate notes (GBP110m) due 2036:
downgraded to 'BB+' from 'BBB-'; Outlook Stable

Mitchells & Butlers Finance Plc interest rate swap affirmed at
'A+'; Outlook Stable

Mitchells & Butlers Finance Plc cross currency swap affirmed at
'A+'; Outlook Stable

The swap ratings address the issuer's ability to make payments
under the swap agreements as per the transaction documentation,
excluding swap termination payments due to default or non-
performance of the counterparty. The ratings also do not address
events related to a change in law or taxation.

Fitch applied its 'Rating Criteria for UK Whole Business
Securitisations', 'Counterparty Criteria for Structured Finance
and Covered Bonds' in addition to applying certain elements from
its 'Criteria for Rating Currency Swap Obligations of an SPV in
Structured Finance and Covered Bonds' relating to counterparty
default and non-performance, tax events and illegality.

RESIDENTIAL MORTGAGE 26: Fitch Raises Cl. B2 Notes Rating From BB
Fitch Ratings has upgraded three tranches of Residential Mortgage
Securities 26 (RMS 26) and affirmed two, as follows:

Class A1 (ISIN XS0825706673): affirmed at 'AAAsf'; Outlook

Class M1 (ISIN XS0825706913): affirmed at 'AAAsf'; Outlook

Class M2 (ISIN XS0825707218): upgraded to 'AA+sf' from 'AAsf';
Outlook Stable

Class B1 (ISIN XS0825707564): upgraded to 'Asf' from 'BBBsf';
Outlook Stable

Class B2 (ISIN XS0825707648): upgraded to 'BBBsf' from 'BBsf';
off Rating Watch Negative (RWN); Outlook Stable

The underlying portfolio comprises highly seasoned UK non-
conforming residential mortgages originated by Kensington.


Portfolio Undercollateralisation

As per the February 2017 investor report the outstanding note
balance (GBP135.8 million) was approximately GBP2.4 million larger
than the outstanding portfolio balance (GBP133.4 million). Part of
this difference (GBP1.9 million) is related to the liquidity
reserve, the amortisation proceeds of which are used to redeem the
outstanding notes. However, the remaining GBP0.5 million led to
portfolio undercollateralisation. The most recent investor report
(August 29, 2017) confirmed that the pre-issue data principal
collections incorrectly paid to the seller in November 2012 has
now been returned to the issuer, addressing the under-
collateralisation. This is reflected in the removal of the junior
notes from RWN and affirmation.

Stable Asset Performance

Delinquent loans (three month plus arrears) have remained stable
in the transaction, with the portion of loans in arrears by more
than three months as of end-March 2017 at around 4.57% (vs. 3.41%
in March 2016). Cumulative repossessions are 0.9% (vs. 0.8% in
March 2016).

Solid Credit Enhancement (CE)

The transaction closed in 2012 and is well-seasoned. As a result
CE has built up through note amortisation, and the reserve fund is
currently fully funded. The transaction does not allow pro-rata
amortisation. Sequential amortisation will allow the transaction
to build further CE.

Unhedged Basis Risk

Fitch does not consider the basis swap to hedge the Libor-linked
notes and the Kensington Variable Rate (KVR), Money Partners
Variable Rate (MVR) and Bank of England Base Rate (BBR)-linked
mortgages as the swap provider (Deutsche Bank; A-/F1) is rated
below what Fitch considers sufficient to support 'AAA' ratings.
BBR-linked mortgages make up 27.2% of the current pool while SVR
represents 62.2%. The rest is Libor-linked mortgages.

Interest Rate Risk

Fitch has stressed the available excess spread. The stress
addresses the mismatch between liabilities that pay on the basis
of three-month LIBOR and assets that pay on the basis of BBR,
Kensington variable rate or Money Partners variable rate. Stresses
are in line with 'Criteria Addendum: UK Residential Mortgage

IO Loan Concentration

The transaction has a large portion of IO loans (69.5%) and a
concentration of more than 20% of IO loans maturing within a
three-year period. As per criteria, Fitch carried out a
sensitivity analysis assuming a 50% increase in default
probability for these loans and found that current CE is able to
accommodate these stresses.

Liquidity Cover

The transaction benefits from sizeable liquidity support. The
liquidity fund represents 2.2% of the class A1 notes' balance to
cover for senior fees and interest shortfalls. The liquidity fund
was funded using principal funds and any excess from it returns to
the principal priority of payments to repay outstanding notes.


In Fitch's opinion, borrower affordability is being supported by
the low interest-rate environment. This is evidenced by declining
three-month-plus arrears balances. However, low constant
prepayment rates suggest that borrowers have been unable to
refinance, leaving performance of the pools highly sensitive to
future interest increases.

SEADRILL LTD: In Debt Restructuring Talks with Bondholders
Luca Casiraghi and Mikael Holter at Bloomberg News report that
Seadrill Ltd. Chairman John Fredriksen and Centerbridge Partners
are in talks with the offshore driller's bondholders about a debt-
restructuring plan, days before a potential bankruptcy-court

According to Bloomberg, people familiar with the situation said
that under the proposal, the billionaire and hedge fund will get
sizable stakes in a restructured Seadrill in return for helping to
fund a new loan totaling about US$1 billion.  They said
bondholders are being invited to join the loan in exchange for
Seadrill stock, Bloomberg relates.

The people said Mr. Fredriksen will remain as Seadrill's biggest
shareholder, while existing equity will be almost wiped out,
Bloomberg relays.

The company is running out of time because US$843 million of bonds
mature on Sept. 15, and management intends to implement a debt
plan via a U.S. Chapter 11 filing no later than Sept. 12,
Bloomberg notes.

Seadrill has spent more than 18 months seeking to restructure what
is the offshore-drilling industry's biggest debt load after a
slump in oil prices curbed demand for its services, Bloomberg

The people, as cited by Bloomberg, said Aristeia Capital and Man
Group Plc's GLG unit are among Seadrill's bondholders.

Seadrill has previously said that bondholders face losses or being
converted into equity under a debt restructuring and
that shareholders "are likely to receive minimal or no recovery",
Bloomberg relays.

Seadrill said last month any plan may also include the extension
of bank loans by five years, as well as losses for shipyards and
other creditors, Bloomberg notes.

Seadrill Limited is a deepwater drilling contractor, which
provides drilling services to the oil and gas industry.  It is
incorporated in Bermuda and managed from London.

Seadrill reported a net loss of US$155 million on US$3.17 billion
of total operating revenues for the year ended Dec. 31, 2016,
following a net loss of US$635 million on US$4.33 billion of total
operating revenues for the year ended in 2015.

PricewaterhouseCoopers LLP, in Uxbridge, United Kingdom, issued a
"going concern" opinion on the consolidated financial statements
for the year ended Dec. 31, 2016, noting that the Company has near
term liquidity constraints due to significant cash outflows for
which sufficient cash is not available which raises substantial
doubt about the Company's ability to continue as a going concern.

STORM 2015-II: Fitch Affirms BBsf Ratings on Two Tranches
Fitch Ratings has upgraded two tranches of Storm 2015-II and
affirmed three.


Stable Performance
The Storm transactions issued since 2015 have generally
outperformed the market, with late-stage arrears (loans in arrears
by more than three months) at 16bp of the current portfolio
balance. As market conditions have recently improved, the deals
have fallen more into line with the broader market.

Foreclosures as a proportion of the original portfolio balance
remain low at 24bp.

Credit Enhancement Build Up
The transaction is fully sequential. With the average prepayment
rate at 7%, the portfolio currently stands at 85.2% of the
original balance. This has led to a build-up in the credit
enhancement available to the rated tranches, which combined with
the sound performance of the deal, has led to the upgrade of the
class B and C notes.

No NHG Foreclosure Frequency Credit
33.1% of the portfolio comprises loans backed by the NHG
guarantee. Based on historical information made available to Fitch
on NHG loan performance, loans originated between 2007 and 2010
show higher levels of NHG loan defaults than non-NHG loan
defaults. Therefore, in this analysis Fitch has not made any
adjustments to the NHG loans in the derivation of the foreclosure
frequency of the portfolio.

Data on recoveries received from WEW has resulted in Fitch
applying a compliance ratio of 85% across all rating scenarios, in
line with criteria.

Interest-only (IO) Concentration
The transaction contains a significant portions of IO loans (54.4%
of the current portfolio balance), with 21.2% maturing between
2038 and 2040.

To assess the risk of more than 20% of the IO loans maturing over
a three-year period, Fitch applied stressed weighted average
foreclosure frequencies (WAFF) to the IO concentration as
described in its criteria. The model-implied ratings using these
stressed WAFF were fewer than three notches lower than the WAFF
derived using standard assumptions. Therefore, the ratings on the
notes were derived using standard WAFF assumptions.

Guaranteed Excess Spread
Under the terms of the swap agreements with Obvion, the structure
receives guaranteed excess spread of 50bp on a notional equivalent
to the outstanding balance of the notes less any balance on the
principal deficiency ledger (PDL).

Principal on the class E notes is entirely dependent on excess
spread. As there have been no losses to date, the class E notes
have amortised by approximately 50% since transaction close.

Insurance Set-Off Risk
Loans with life insurance payment vehicles attached make up 4.0%
of the portfolio. Upon insolvency of the insurance provider there
is a risk that the borrowers may try to set-off their insurance
claim against the lender. Fitch accounts for this risk by assuming
a capital build-up over 30 years and then analysing the effect of
a combined default of the insurance providers, factoring in the
affiliation of the insurance provider to the original lender.

The most stressful scenarios were assessed and the maximum
exposure resulting from this calculation is then applied against
the net loss rate for the various rating levels in Fitch's
surveillance model. The insurance set-off exposure was found to
have a minimal effect on the rating.


Adverse macroeconomic factors may affect asset performance. An
increase in foreclosures and losses beyond Fitch's stresses may
erode credit enhancement leading to negative rating action.

Fitch rates to legal final maturity. At the call option date, as
per transaction documentation, the class B to D notes can be
called net of PDL. Material principal shortfalls in Fitch's cash
flow analysis over the life of the transactions may trigger rating


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 affected the
rating 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.

Prior to closing, Fitch reviewed the results of a third-party
assessment conducted on the asset portfolio information and
concluded that there were no findings that affected the rating

Prior to the transaction closing, Fitch conducted a review of a
small targeted sample of the originator's origination files and
found the information contained in the reviewed files to be
adequately consistent with the originator's policies and practices
and the other information provided to the agency about the asset

Overall and together with the assumptions referred to above,
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.


Class A (ISIN: XS1271705177) affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN: XS1271705334) upgraded to 'AA+sf' from 'AAsf';
Outlook Stable
Class C (ISIN: XS1271705417) upgraded to 'Asf' from 'A-sf';
Outlook Stable
Class D (ISIN: XS1271705680) affirmed at 'BBsf'; Outlook Stable
Class E (ISIN: XS1271705763) affirmed at 'BBsf'; Outlook Stable

SYNLAB BONDCO: Proposed Loan No Impact on Fitch CCC+ Notes Rating
Synlab Bondco PLC's announced EUR300 million term loan does not
impact its ratings, Fitch says. It will, however, help accelerate
investment in growth and support consolidation of the fragmented
European laboratory testing markets.

Synlab's announcement of the new loan in addition to the EUR250
million equity injection received in April 2017, will increase its
financial flexibility and support its growth strategy. Fitch now
estimates that total acquisition spending in 2017 will reach more
than EUR500 million, given that the company has already spent more
than EUR340 million in the first seven months to July 2017.

Fitch therefore expects an acceleration of the "buy-and-build"
strategy consolidating the fragmented laboratory testing market
with acquisitions. Synlab's M&A strategy follows two distinct
routes comprising smaller bolt-on acquisitions to increase the
scale of its existing regional laboratory networks (guided to be
around EUR200 million pa), and strategic larger acquisitions
adding product and geographic diversification. An example of the
latter was the ALcontrol acquisition, adding environmental testing
to the group's capabilities. Acquisition multiples vary between
these two types of acquisition targets, but Fitch assumes an
average EV/EBITDA acquisition multiple post synergies of around
8.0x in Fitch four-year ratings case, which adds growth and
deleveraging capacity to the business.

Fitch also views these acquisitions as generally carrying low
execution risk. Management has a good track record integrating
larger business combinations such as the Labco/Synlab integration.

Synlab's financial leverage upon completion of this loan
transaction will remain high, with FFO adjusted leverage around
7.5x at year-end 2017 (adjusted for acquisitions). Although such
leverage is high for the 'B' rating level, the rating is supported
by adequate free cash-flow (FCF) generation, projected on average
at 5.0% over Fitch's four-year rating horizon, as well as by a
defensive business model, which increasingly benefits from scale
advantages and diversification as the rapid growth strategy is

The "buy-and-build" strategy across the routine testing segment
makes sense leading to the consolidation of a previously very
fragmented market across Europe. Fitch also believes that this
strategy still has some way to go before concentration issues may

Fitch's rating factors continued pressure on reimbursement rates,
which Fitch believes will be an ongoing feature of this health-
care subsector as the implementation of Synlab's growth strategy
remains subject to individual health-care legislation
characterised by pricing pressure as routine lab testing services
are commoditised in the future and may not even require a full
doctor involvement.

In Fitch views, top-line growth will be supported by increasing
volumes in a deflationary environment, with profitability
enhancement coming from scale benefits and synergies. Hence Fitch
assesses a sustainable EBITDA margin for this business at around

Fitch rates Synlab 'B' with Stable Outlook and Fitch assign a 'B+'
instrument rating to the senior secured debt, one notch above the
IDR, to reflect Fitch expectations of above-average recovery in
Fitch hypothetical default analysis based on a going-concern
distressed valuation.


Synlab Unsecured Bondco PLC

-- Long-Term IDR 'B'; Stable Outlook
-- Senior notes 'CCC+'/'RR6'/0%

Synlab Bondco PLC

-- Senior secured RCF 'BB'/'RR1'/100%
-- Senior secured notes 'B+'/'RR3'/55%


* Fitch: 'B' Losses Exceed EBA OC Proposal in 10% of Cover Pools
Expected losses in a mild 'B' stress scenario would not be covered
by the minimum 5% overcollateralisation (OC) proposed by the
European Banking Authority (EBA) in 10% of covered bond programmes
included in Fitch Ratings' latest annual cover pool loss rate

Ten of the 98 programmes in Fitch sample has 'B' portfolio loss
rates (PLRs) higher than 4.76%. This loss rate would reduce
collateralisation to 100% from 105%, which is the minimum level
the EBA has suggested in its recommendations for harmonising
European covered bond frameworks.

The 'B' PLR for the 10 cover pools, which back programmes from
issuers in Cyprus, Greece and Spain, range from 6.8% to 14.3%.
This compares with an average of 2%, unchanged since last year.
Average 'B' PLRs for the Portuguese (3.5%) and Polish (2.9%) pools
analysed in Fitch reports is also above the average for the sample
as a whole.

'B' PLRs are a measure of credit risk in cover pools over the
lifetime of the cover assets under Fitch mild 'B' rating stresses.
The high PLRs for programmes in Cyprus, Greece and Spain reflect
both the impact of the sovereign debt and financial crises on
those peripheral eurozone economies and the cover pool
composition. Notably, Spanish cedulas hipotecarias are secured
against an issuer's entire mortgage book, including riskier SME
loans and loans to real-estate developers.

Fitch's breakeven OC for a given rating is generally higher than
5%. Only eight programmes have a breakeven OC for their rating of
5% or less, most of which are rated not far above their issuer
rating. Fitch's average breakeven OC is 12.3% for its 'AAA'-rated
programmes. This is because OC provides protection for other
sources of risk than the cover pool's loss rate, such as maturity
and interest-rate mismatches between the cover pool and the
covered bonds. Assumed credit losses for the cover pool represent
almost half of the breakeven OC for the rating in cases where
Fitch tests OC for timely payment of the covered bonds in addition
to recovery given default.

In this year's 'B' Portfolio Loss Rates report, Fitch also
compared the 'B' PLR of residential mortgage pools securing
covered bonds with those backing RMBS. While loan-to-value
restrictions and a smaller proportion of riskier loans mean that
credit quality in Dutch and UK cover pools is higher than in RMBS
of the same issuer, this is not the case everywhere. In Belgium,
Italy and Portugal, loans backing RMBS have on average lower 'B'
PLRs than those in cover pools of the same issuers, due to higher
seasoning. In Australia, RMBS have a lower 'B' PLR, due to a
larger share of loans with lenders' mortgage insurance.

* BOOK REVIEW: Hospitals, Health and People
Author: Albert W. Snoke, M.D.
Publisher: Beard Books
Softcover: 232 pages
List Price: $34.95

Review by Francoise C. Arsenault
Order your personal copy today at

Hospitals, Health and People is an interesting and very readable
account of the career of a hospital administrator and physician
from the 1930's through the 1980's, the formative years of
today's health care system. Although much has changed in
hospital administration and health care since the book was first
published in 1987, Dr. Snoke's discussion of the evolution of
the modern hospital provides a unique and very valuable
perspective for readers who wish to better understand the forces
at work in our current health care system.

The first half of Hospitals, Health and People is devoted to the
functional parts of the hospital system, as observed by Dr.
Snoke between the late 1930's through 1969, when he served first
as assistant director of the Strong Memorial Hospital in
Rochester, New York, and then as the director of the Grace-New
Haven Hospital in Connecticut. In these first chapters, Dr.
Snoke examines the evolution and institutionalization of a
number of aspects of the hospital system, including the
financial and community responsibilities of the hospital
administrator, education and training in hospital
administration, the role of the governing board of a hospital,
the dynamics between the hospital administrator and the medical
staff, and the unique role of the teaching hospital.

The importance of Hospitals, Health and People for today's
readers is due in large part to the author's pivotal role in
creating the modern-day hospital. Dr. Snoke and others in
similar positions played a large part in advocating or forcing
change in our hospital system, particularly in recognizing the
importance of the nursing profession and the contributions of
non-physician professionals, such as psychologists, hearing and
speech specialists, and social workers, to the overall care of
the patient. Throughout the first chapters, there are also many
observations on the factors that are contributing to today's
cost of care. Malpractice is just one example. According to
Dr. Snoke, "malpractice premiums were negligible in the 1950's
and 1960's. In 1970, Yale-New Haven's annual malpractice
premiums had mounted to about $150,000." By the time of the
first publication of the book, the hospital's premiums were
costing about $10 million a year.

In the second half of Hospitals, Health and People, Dr. Snoke
addresses the national health care system as we've come to know
it, including insurance and cost containment; the role of the
government in health care; health care for the elderly; home
health care; and the changing role of ethics in health care. It
is particularly interesting to note the role that Senator Wilbur
Mills from Arkansas played in the allocation of costs of
hospital-based specialty components under Part B rather than
Part A of the Medicare bill. Dr. Snoke comments: "This was
considered a great victory by the hospital-based specialists. I
was disappointed because I knew it would cause confusion in
working relationships between hospitals and specialists and
among patients covered by Medicare. I was also concerned about
potential cost increases. My fears were realized. Not only
have health costs increased in certain areas more than
anticipated, but confusion is rampant among the elderly patients
and their families, as well as in hospital business offices and
among physicians' secretaries." This aspect of Medicare caused
such confusion that Congress amended Medicare in 1967 to provide
that the professional components of radiological and
pathological in-hospital services be reimbursed as if they were
hospital services under Part A rather than part of the copayment
provisions of Part B.

At the start of his book, Dr. Snoke refers to a small statue,
Discharged Cured, which was given to him in the late 1940's by a
fellow physician, Dr. Jack Masur. Dr. Snoke explains the
significance the statue held for him throughout his professional
career by quoting from an article by Dr. Masur: "The whole
question of the responsibility of the physician, of the
hospital, of the health agency, brings vividly to mind a small
statue which I saw a great many years is a pathetic
little figure of a man, coat collar turned up and shoulders
hunched against the chill winds, clutching his belongings in a
paper bag-shaking, tremulous, discouraged. He's clearly unfit
for work-no employer would dare to take a chance on hiring him.
You know that he will need much more help before he can face the
world with shoulders back and confidence in himself. The
statuette epitomizes the task of medical rehabilitation: to
bridge the gap between the sick and a job."

It is clear that Dr. Snoke devoted his life to exactly that
purpose. Although there is much to criticize in our current
healthcare system, the wellness concept that we expect and
accept today as part of our medical care was almost nonexistent
when Dr. Snoke began his career in the 1930's. Throughout his
50 years in hospital administration, Dr. Snoke frequently had to
focus on the big picture and the bottom line. He never forgot
the importance of Discharged Cured, however, and his book
provides us with a great appreciation of how compassionate
administrators such as Dr. Snoke have contributed to the state
of patient care today.

Albert Waldo Snoke was director of the Grace-New Haven Hospital
in New Haven, Connecticut from 1946 until 1969. In New Haven,
Dr. Snoke also taught hospital administration at Yale University
and oversaw the development of the Yale-New Haven Hospital,
serving as its executive director from 1965-1968. From 1969-
1973, Dr. Snoke worked in Illinois as coordinator of health
services in the Office of the Governor and later as acting
executive director of the Illinois Comprehensive State Health
Planning Agency. Dr. Snoke died in April 1988.


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

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

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


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

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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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Copyright 2017.  All rights reserved.  ISSN 1529-2754.

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