TCREUR_Public/170920.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

        Wednesday, September 20, 2017, Vol. 18, No. 187


                            Headlines


G E R M A N Y

AIR BERLIN: IAG Joins Bidding Race for Airline
AIR BERLIN: TUIfly Prepares to Take Back Aircraft from Niki Unit
AIR BERLIN: Condor, Eurowings to Provide Caribbean Flights
EUROGRAPHICS AG: Court Opens Insolvency Proceedings for Unit


I R E L A N D

CELF LOAN IV: Moody's Hikes Rating on Class E Sr. Notes to Ba1
DECO 2015: Moody's Affirms Ba3 Rating on Class D Notes


L U X E M B O U R G

FLY FUNDING: Moody's Hikes Sr. Debt Rating to Ba2, Outlook Stable


N E T H E R L A N D S

ZOO ABS II: Moody's Raises Rating on Class D Notes to Caa2 (sf)


N O R W A Y

RENONORDEN ASA: Files for Bankruptcy, Lenders Halt Funding


T U R K E Y

OJER TELEKOMUNIKASYON: Lazard to Advise Banks to Resolve Default


U N I T E D   K I N G D O M

HBOS PLC: KPMG Cleared of Misconduct Over 2007 Audit
MILLER HOMES: S&P Assigns Preliminary 'B+' CCR, Outlook Stable
PIZZAEXPRESS FINANCING: S&P Cuts CCR to B- on Weak Profitability

* UK Non-Conforming RMBS 90+ Day Delinquencies Drop 10.9% in June


U Z B E K I S T A N

NATIONAL BANK: Moody's Affirms B2 Long Term Bank Deposit Rating


                            *********



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G E R M A N Y
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AIR BERLIN: IAG Joins Bidding Race for Airline
----------------------------------------------
Alistair Smout at Reuters reports that British Airways owner IAG
has joined the field of bidders for parts or all of insolvent
German airline Air Berlin.

Lufthansa and several other parties had put in bids for parts of
Air Berlin by the deadline of Sept. 15 set by the insolvency
administrator, Reuters relates.

According to Reuters, most potential investors appear interested
primarily in the airline's roughly 140 aircraft and its airport
landing and take-off slots rather than in taking over the
business.

It could not immediately be learned what parts of Air Berlin IAG
has bid for, Reuters notes.

                     About Air Berlin

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

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

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

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

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


AIR BERLIN: TUIfly Prepares to Take Back Aircraft from Niki Unit
----------------------------------------------------------------
Klaus Lauer at Reuters reports that tour operator TUI's airline
TUIfly is seeking to cut its costs by at least EUR30 million
(US$36 million) as it prepares to take back aircraft it has
leased out to insolvent Air Berlin's Austrian unit Niki.

According to Reuters, daily Hannoversche Allgemeine Zeitung said
late on Sept.18, citing company sources, that some EUR20 million
of savings are to come from more flexible working hours for its
nearly 500 pilots.

TUIfly has leased out 14 of its planes, including crew, to Air
Berlin's Austrian unit Niki, which is up for sale as part of a
carve-up of Air Berlin, Reuters discloses.

"There is a chance that some aircraft and crew from that wet
lease could fly for TUIfly again, increasing capacity.  But such
'insourcing' would only work if we become more economical than we
are now," Reuters quotes a spokesman for TUI as saying on
Sept. 19.

                     About Air Berlin

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

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

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

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

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


AIR BERLIN: Condor, Eurowings to Provide Caribbean Flights
----------------------------------------------------------
Victoria Bryan at Reuters reports that airlines Condor and
Eurowings plan to provide flights to the Caribbean from
Duesseldorf, meeting demand from Germans seeking winter sunshine
after cancellations by insolvent Air Berlin.

Air Berlin has been forced to scrap long-haul flights from its
two bases of Duesseldorf and Berlin after a leasing company asked
for its planes to be returned, Reuters discloses.

According to Reuters, Condor, part of Britain's Thomas Cook
Group, said it was starting flights to destinations in the
Dominican Republic, Mexico, Jamaica and Barbados from Duesseldorf
from Nov. 1.  Condor said it was leasing an A330 plane with crew
in order to be able to offer the routes, Reuters relates.

Lufthansa's budget unit Eurowings said it would start flights to
the Dominican Republic, Cuba and Mexico from Nov. 8, making
Duesseldorf only the second airport from which it offers long-
haul flights, Reuters relays.

Eurowings, already the market leader at Duesseldorf with its
short-haul routes, currently flies long-haul from Cologne and
plans to start intercontinental tourist routes from Munich next
year, Reuters states.

Both Condor and Lufthansa are among airlines interested in taking
on parts of Air Berlin's business as part of a carve-up of the
company, Reuters notes.

                     About Air Berlin

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

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

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

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

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


EUROGRAPHICS AG: Court Opens Insolvency Proceedings for Unit
------------------------------------------------------------
Reuters reports that Eurographics AG on Sept. 18 said a court has
opened insolvency proceedings in self-administration for the
company's subsidiary Eurographics Digital GmbH.

The company's business will continue to its full extent.

Eurographics AG is based in Germany.


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


CELF LOAN IV: Moody's Hikes Rating on Class E Sr. Notes to Ba1
--------------------------------------------------------------
Moody's Investors Service has upgraded the following notes issued
by CELF Loan Partners IV plc:

-- EUR33M Class D Senior Secured Deferrable Floating Rate Note
    due 2023, Upgraded to Aa2 (sf); previously on Apr 7, 2017
    Upgraded to Baa1 (sf)

-- EUR25.5M (Current outstanding balance of EUR20.1M) Class E
    Senior Secured Deferrable Floating Rate Notes due 2023,
    Upgraded to Ba1 (sf); previously on Apr 7, 2017 Affirmed Ba3
    (sf)

Moody's has affirmed the following notes:

-- EUR42M (Current outstanding balance of EUR16.8M) Class B
    Senior Secured Deferrable Floating Rate Notes due 2023,
    Affirmed Aaa (sf); previously on Apr 7, 2017 Affirmed
    Aaa (sf)

-- EUR39M Class C Senior Secured Deferrable Floating Rate Notes
    due 2023, Affirmed Aaa (sf); previously on Apr 7, 2017
    Upgraded to Aaa (sf)

CELF Loan Partners IV plc, issued in May 2007, is a
Collateralised Loan Obligation ("CLO") backed by a portfolio of
mostly high yield senior secured European and US loans. The
portfolio is managed by CELF Advisors LLP. This transaction's
reinvestment period ended in May 2014.

RATINGS RATIONALE

The rating actions on the notes are primarily the result of the
deleveraging of Classes A-1, A-2 and B notes, following
amortisation of the underlying portfolio since the last rating
action in April 2017.

On the last payment date, the Class A-1 and A-2b notes have been
redeemed in full and Class B notes have paid down by
approximately EUR25.2 million. As a result, the over-
collateralisation (OC) ratios of all classes of rated notes have
increased. As per the trustee report dated July 2017, Class B,
Class C, Class D, and Class E OC ratios are reported at 771.3%,
231.9%, 145.7% and 118.8% compared to February 2017 levels of
230.8%, 159.7%, 126.6% and 112.4%, respectively.

The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par of EUR75.6 million and GBP15.8 million, principal
proceeds balance of EUR21.4 million and GBP8.4 million, defaulted
par of EUR5.4 million, a weighted average default probability of
18.8% (consistent with a WARF of 2938 over a weighted average
life of 3.9 years), a weighted average recovery rate upon default
of 43.4% for a Aaa liability target rating, a diversity score of
16 and a weighted average spread of 3.6%.

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

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in August 2017.

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

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

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

Additional uncertainty about performance is due to the following:

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

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

* Foreign currency exposure: The deal has significant exposure to
non-EUR denominated assets. Volatility in foreign exchange rates
will have a direct impact on interest and principal proceeds
available to the transaction, which can affect the expected loss
of rated tranches.

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


DECO 2015: Moody's Affirms Ba3 Rating on Class D Notes
------------------------------------------------------
Moody's Investors Service has affirmed the ratings of three
classes of Notes issued by DECO 2015 -- Harp Limited.

Moody's rating action is:

Issuer: DECO 2015 - Harp Limited

-- EUR55M Class B Notes, Affirmed Aa3 (sf); previously on
    Nov. 28, 2016 Affirmed Aa3 (sf)

-- EUR17.5M Class C Notes, Affirmed Baa3 (sf); previously on
    Nov. 28, 2016 Affirmed Baa3 (sf)

-- EUR12.5M Class D Notes, Affirmed Ba3 (sf); previously on
    Nov. 28, 2016 Affirmed Ba3 (sf)

Moody's does not rate the Class X Notes.

RATINGS RATIONALE

The affirmation action reflects the stable performance of the
transaction since the last review in November 2016. The default
probability of the single remaining Boland loan (both during the
term and at maturity) as well as Moody's value assessment of the
collateral remains unchanged.

The NTMA lease contributing approximately 20% to the gross income
expired in April 2017. The July 2017 investor report states that
the vacant space is in the process of being leased to an existing
tenant with final lease documentation expected to be signed
before the next IPD. The reported market value has increased by
29% from EUR58.0 million at closing to EUR74.8 million according
to the most recent reported valuation in May 2017. Moody's has
not reviewed the report. Moody's value at refinance of EUR47.8
million is now 36% lower than the 2017 market value and remains
unchanged due to the material risk factor of the low weighted
average unexpired lease term of only one year at loan maturity
based on the current rent roll.

Post prepayment of the Shamrock and New York loans in July 2016
and October 2016 respectively, the liquidity facility (LF) is
being drawn to cover the interest shortfall on the Class D Notes.
Based on the last three Interest Payment Dates (IPD), the excess
spread in the transaction is sufficient to cover the
Administrative Fees but not the amount due on the LF standby
drawing. Though there has been some reduction in the LF draw in
the July 2017 IPD, on-going volatility in the Administrative Fees
combined with the failure to trigger the Available Funds Cap
(AFC) could result in an unpaid draw at the end of the
transaction. Amounts due to the LF provider have a higher
priority of payment and in such a scenario would result in a loss
on the Class D Notes, even if the remaining loan repays in full
at maturity.

Moody's affirmation reflects a base expected loss in the range of
0%-10% of the current balance, unchanged since the last review.
Moody's derives this loss expectation from the analysis of the
default probability of the securitised loans (both during the
term and at maturity) and its value assessment of the collateral.

Methodology Underlying the Rating Action:

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

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

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

Main factors or circumstances that could lead to a downgrade of
the ratings are (i) a decline in the property value backing the
underlying loan, (ii) an increase in the default probability
driven by declining loan performance or increase in refinancing
risk, or (iii) with respect to Class D, higher than expected
volatility in Administrative Fees combined with failure to
trigger the AFC.

Main factors or circumstances that could lead to an upgrade of
the rating are (i) an increase in the property value backing the
underlying loan, or (ii) a decrease in the default probability
driven by improving loan performance or decrease in refinancing
risk.

SUMMARY OF MOODY'S LOAN ASSUMPTIONS

Below are Moody's key assumptions for the Boland loan.

Boland Loan - LTV: 82% (Whole)/ 82% (A-Loan); Total Default
probability: Medium; Expected Loss: 0%-10%.


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


FLY FUNDING: Moody's Hikes Sr. Debt Rating to Ba2, Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded the corporate family rating of
Fly Leasing Limited (Fly) to Ba3 from B1, the company's senior
unsecured debt rating to B1 from B2, and the secured debt rating
of Fly Funding II S.a.r.l. to Ba2 from Ba3. Moody's also revised
the outlook for the ratings to stable from positive.

Issuer: Fly Funding II S.a.r.l.

-- Senior Secured Bank Credit Facility, Upgraded to Ba2 Stable
    from Ba3 Positive

-- Outlook, Changed to Stable From Positive

Issuer: Fly Leasing Limited

-- Corporate Family Rating, Upgraded to Ba3 Stable from B1
    Positive

-- Senior Unsecured Regular Bond/Debenture, Upgraded to B1
    Stable from B2 Positive

-- Outlook, Changed To Stable From Positive

RATINGS RATIONALE

Moody's upgrade of Fly's ratings reflects improvement in the
company's aircraft fleet risks from selling older, out-of-
production aircraft and redeploying capital toward the
acquisition of newer models on long-term lease. In 2015 and 2016,
Fly sold a total of 71 aircraft with an average age of over 13
years and acquired 25 aircraft with an average age under three
years and higher average lease term. As a result, by June 2017
Fly's weighted average fleet age declined to 6.1 years from 8.0
years two years earlier and its average remaining lease term
improved to 6.8 years from 5.2 years. The company's fleet
transformation has reduced aircraft remarketing and residual
risks, leading to more predictable future profits.

The upgrade also reflects Moody's view that Fly's profitability
will likely continue to recover after having weakened from lower
rental income and non-cash impairment charges associated with the
company's credit-positive fleet repositioning strategy. Key to
increasing profitability will be growing the company's owned
fleet by acquiring aircraft on leases at accretive yields, while
also effectively managing operating costs. Fly has ample
liquidity to pursue new transactions, but margins in the sale-
leaseback channel, an important source of new business, have been
weakened by strong competition in recent years. The company has a
$750 million growth target for 2017, but fleet acquisitions have
totaled just over $500 million in each of the past two years, in
part reflecting intensified competition. The firm is focused on
acquiring newer, widely-operated narrow-body aircraft and select
wide-body models, while maintaining overall wide-body exposure of
not more than 25% of fleet carrying value.

Fly's ratings also reflect its modest competitive positioning in
the commercial aircraft leasing business, which is aided by its
affiliation with external manager BBAM Limited Partnership, a
long-established mid-tier aircraft leasing and finance company.
Fly's ratings are constrained by airline lessee concentrations
that are higher than most rated peers as well as comparatively
higher leverage. Fly's net debt/tangible equity leverage ratio
measured 3.9x at June 2017, higher than many rated peers and on
the upper end of the company's target range, reflecting in part
significant repurchases of shares over the past three years.
Moody's expects that the company has the capacity, and management
the intent, to moderate leverage over the intermediate term, but
that leverage will likely remain higher than peers, which is a
rating constraint.

Fly's liquidity profile benefits from its cash balances,
predictable cash flows, low purchase commitments, extended debt
maturity profile and access to the unsecured debt markets. But
secured debt continues to be the dominant form of funding,
resulting in high encumbered assets that constrain Fly's
financial flexibility.

Moody's could upgrade FLY's ratings if the company sustainably
reduces leverage (net debt/tangible net worth) to 3.5x, reduces
its ratio of secured debt to tangible managed assets to
meaningfully less than 50%, and improves profitability through
fleet growth and cost management while maintaining a reasonable
fleet risk profile.

FLY's ratings could be downgraded if its net debt/tangible net
worth leverage shifts to higher than 4.5x or if its profitability
and liquidity positions weaken materially.

The principal methodology used in these ratings was Finance
Companies published in December 2016.


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


ZOO ABS II: Moody's Raises Rating on Class D Notes to Caa2 (sf)
---------------------------------------------------------------
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by Zoo ABS II
B.V.:

-- EUR167M (Current outstanding balance of EUR15.28M) Class A-1
    Senior Secured Floating Rate Notes due 2096, Affirmed Aaa
    (sf); previously on Jan 24, 2017 Affirmed Aaa (sf)

-- EUR18.75M Class A-2 Senior Secured Floating Rate Notes due
    2096, Affirmed Aa1 (sf); previously on Jan 24, 2017 Upgraded
    to Aa1 (sf)

-- EUR10M Class B Senior Secured Floating Rate Notes due 2096,
    Upgraded to Aa2 (sf); previously on Jan 24, 2017 Upgraded to
    A2 (sf)

-- EUR9.25M Class C Deferrable Interest Secured Floating Rate
    Notes due 2096, Upgraded to Baa2 (sf); previously on Jan 24,
    2017 Upgraded to Ba3 (sf)

-- EUR9M Class D Deferrable Interest Secured Floating Rate Notes
    due 2096, Upgraded to Caa2 (sf); previously on Jan 24, 2017
    Affirmed Caa3 (sf)

-- EUR4.25M Class E Deferrable Interest Secured Floating Rate
    Notes due 2096, Affirmed Ca (sf); previously on Jan 24, 2017
    Affirmed Ca (sf)

-- EUR5.7M Class P Combination Notes due 2096, Downgraded to B1
    (sf); previously on Jan 24, 2017 Downgraded to Ba1 (sf)

-- EUR6M Class Q Combination Notes due 2096, Affirmed Aa1 (sf);
    previously on Jan 24, 2017 Upgraded to Aa1 (sf)

-- EUR7M Class R Combination Notes due 2096, Affirmed Aa1 (sf);
    previously on Jan 24, 2017 Upgraded to Aa1 (sf)

Zoo ABS II B.V. is a managed cash-flow collateralized debt
obligation backed primarily by a portfolio of Euro denominated
structured finance securities. At present, the portfolio is
composed of Prime RMBS (84.37%), ABS consumer/auto (7.42%), CLO
(4.95%), CMBS (2.49%) and ABS SME (0.77%).

RATINGS RATIONALE

The upgrade actions on the Classes B, C and D Notes are primarily
a result of the deleveraging of the underlying portfolio
resulting in the accumulation of principal proceeds, and the
improvement in the credit quality of the portfolio since the last
rating action in January 2017.

The downgrade of the Class P Notes is a result of the decrease in
the expected interest payments flowing to this class until
maturity and the increased reliance on the equity component to
fully repay the rated balance.

Class A-1 Notes have paid down by approximately EUR2.29M since
the last rating action and principal proceeds have accumulated to
EUR11.27M. This comprises principal proceeds of EUR9.27M reported
in the July 2017 trustee report and additional proceeds from
asset repayments received in August 2017.

The credit quality has improved as reflected in the improvement
in the average credit rating of the portfolio (measured by the
weighted average rating factor, or WARF) and a decrease in the
proportion of securities from issuers with ratings of Caa1 or
lower. According to the trustee report dated July 2017, the WARF
was 1238, compared with 1479 as of the last rating action.
Securities with ratings of Caa1 or lower currently make up
approximately 15% of the underlying portfolio, versus 20% in
December 2016.

The ratings on the combination notes address the repayment of the
rated balance on or before the legal final maturity. For the
Classes P, Q and R, the rated balances at any time are equal to
the principal amounts of the combination notes on the issue date
minus the sum of all payments made from the issue date to such
date, of either interest or principal. The rated balances will
not necessarily correspond to the outstanding notional amounts
reported by the trustee.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's
Approach to Rating SF CDOs" published in June 2017.

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

In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes:

Amounts of defaulted assets - Moody's considered a model run
where the Caa rated assets in the portfolio were assumed to be
defaulted with no recoveries. The model outputs for this run are
unchanged from the base case for Classes A-1, A-2, B and E,
within one notch of the base case for Class C and within 2
notches of the base case for Class D.

This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
notes, in light of 1) uncertainty about credit conditions in the
general economy 2) divergence in the legal interpretation of CDO
documentation by different transactional parties due to embedded
ambiguities.

Additional uncertainty about performance is due to the following:

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

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

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


===========
N O R W A Y
===========


RENONORDEN ASA: Files for Bankruptcy, Lenders Halt Funding
----------------------------------------------------------
RenoNorden ASA on Sept. 18 disclosed that it has since Sept. 6
entered into new negotiations with certain municipalities in
order to terminate nine unprofitable customer contracts entered
into in 2015 and first half of 2016.  A prerequisite for the
municipalities for accepting termination has been equal
treatment of all the municipalities involved.  The company has
failed to achieve a satisfactory solution and have informed its
parent and lenders thereof on Sept. 18.  Based on this,
RenoNorden ASA's lenders, DNB and Den Danske Bank ("the Banks"),
have announced that no further funds will be available to either
RenoNorden AS or RenoNorden ASA.  Subsequently, both entities
will file for bankruptcy without undue delay.  The Banks have
stated that they intend to offer financing to the subsidiaries in
Denmark, Sweden and Finland on an independent basis to support
their continued business.  The dialogue in this respect will be
carried out between the Banks and each of the subsidiaries.

RenoNorden ASA is a refuse collection and transportation company
based in Norway.


===========
T U R K E Y
===========


OJER TELEKOMUNIKASYON: Lazard to Advise Banks to Resolve Default
----------------------------------------------------------------
Ercan Ersoy, Asli Kandemir and Matthew Martin at Bloomberg News
report that Lazard Ltd. is advising banks that provided a US$4.75
billion loan to Turk Telekomunikasyon AS's major shareholder as
they seek to resolve Turkey's biggest default.

According to Bloomberg, three people with knowledge of the matter
said lenders hired the U.S. investment bank and Raiffeisen
Investment AG to advise on negotiations with Saudi Telecom
Co., Ojer Telekomunikasyon AS, or Otas, and the Turkish Treasury.

The banks and Saudi Telecom, which has an indirect stake in Otas,
have been locked in debt talks for almost a year after Otas
failed to pay a September 2016 installment on the loan, the
country's biggest-ever syndicated facility, Bloomberg relates.
Otas, which holds 55% of Turk Telekom, struggled to make the
dollar-denominated loan repayments after the lira's slump dented
the converted value of the company's local-currency dividends,
Bloomberg discloses.

The lenders have until early October to consider an offer from
Saudi Telecom to inject US$750 million into Otas and restructure
the remaining US$4 billion in two new loans, Bloomberg notes.

People familiar with the matter said at the time Turkey's
Treasury, which has a 25% in the operator, gave Otas 60 days from
early August to find a solution for the debt talks before it may
take control of the company's management, Bloomberg recounts.

Otas has missed two installments of US$290 million each on the
loan it took in 2013 from 29 Turkish and international banks,
Bloomberg states.  Akbank TAS has about US$1.5 billion in
exposure to the loan, Turkiye Garanti Bankasi AS about US$1
billion and Turkiye Is Bankasi AS about US$500 million, Bloomberg
relays, citing their public filings.



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


HBOS PLC: KPMG Cleared of Misconduct Over 2007 Audit
----------------------------------------------------
Emma Dunkley, Madison Marriage and Katie Martin at The Financial
Times report that KPMG has been cleared of misconduct in relation
to its work for HBOS nearly a decade after the UK lender's
monumental collapse, despite mounting political pressure on
Britain's accounting watchdog to clamp down on auditors.

The Financial Reporting Council concluded after a 15-month
investigation that KPMG could not have anticipated the extreme
market conditions that led to the bank's downfall, the FT
relates.

According to FT, the accounting watchdog said the firm's audit of
HBOS's 2007 results "did not fall significantly short of the
standards reasonably to be expected" and that its assessment of
the bank's health in 2008 "was not unreasonable at the time".

The decision provides a reprieve for KPMG, which this week lost
several clients in South Africa over its involvement in a high-
profile political scandal involving the billionaire Gupta family,
the FT notes.

However, the FRC ruling leaves questions unanswered over who is
accountable for the downfall of HBOS -- once one of the UK's
largest lenders, the FT states.  It suffered large losses on
risky commercial property lending and collapsed in the turmoil
after the September 2008 bankruptcy of Lehman Brothers, the FT
relays.  It was rescued by Lloyds Banking Group.  The UK
government provided GBP25 billion of emergency funding, leaving
taxpayers with a 42% stake in the combined bank, the FT recounts.


MILLER HOMES: S&P Assigns Preliminary 'B+' CCR, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings said that it had assigned its preliminary 'B+'
long-term corporate credit rating to U.K.-based homebuilder
Miller Homes Group Holdings PLC (Miller Homes). The outlook is
stable.

S&P said, "At the same time, we assigned our preliminary 'BB-'
issue rating to Miller Homes' proposed GBP425 million senior
secured notes. The recovery rating on the notes is '2',
indicating our expectation of substantial (70%-90%) recovery
(rounded estimate: 70%) in the event of a payment default. We are
also assigning our preliminary 'BB' issue rating to the company's
proposed GBP80 million super senior revolving credit facility
(RCF). The recovery rating on the RCF is '1', indicating our
expectation of very high (90%-100%) recovery (rounded estimate:
95%) in the event of a payment default.

"The final ratings will depend on our receipt and satisfactory
review of all final transaction documentation of the company's
proposed senior secured bond issuance of approximately GBP425
million and RCF of approximately GBP80 million, as well as
shareholder loan documentation. Accordingly, the preliminary
rating should not be construed as evidence of the final rating.
If we do not receive final documentation within a reasonable
timeframe, or if final documentation departs from materials
reviewed, we reserve the right to withdraw or revise our ratings.
Potential changes include, but are not limited to, utilization of
bond proceeds, maturity, size, and conditions of the bonds,
financial and other covenants, and security and ranking of the
bonds.

"The rating reflects our view of the inherent volatility and
cyclicality of the homebuilding industry in the U.K.'s highly
fragmented housing market. Miller Homes' activities cover the
entire value chain, from purchasing land to building homes and
selling individual units. Revenues are mainly generated from
four-bedroom or larger family houses, with small exposure to
apartments. The company has been in business for over 80 years.

"Despite political uncertainties in the U.K. following the Brexit
vote in June 2016, we believe that demand should remain robust
for Miller Homes' main regions. The company's markets are outside
of London, including the North of England (approximately 34% of
revenues in 2016), Midlands and South of England (38%), and
Scotland (28%). Sales to international investors are small,
accounting for less than 3% of total sales. This has been
reflected in the continuously growing sales rate per week of 0.69
on June 30, 2017, versus 0.67 on Dec. 31, 2016, and 0.59 on Dec.
31, 2015. We expect the U.K. government to continue supporting
the domestic housing market with several initiatives and schemes,
such as help-to-buy, a segment in which Miller Homes generates
about 30%-35% of its total annual revenues. "

Miller Homes' EBITDA margin, at about 20%, is in line with peers
rated by S&P Global Ratings, such as Taylor Wimpey (BBB-/Stable/-
-). This reflects Miller Homes' focus on family housing and
limited exposure to the affordable housing segment (about 7% of
total revenues in 2016), as well as an overall average selling
price of about GBP237,000 as of June 30, 2017. Miller Homes ranks
among the top 20 housebuilders in the U.K., but it is small in
size and scale compared with the leading corporations in the
sector, Barratt Development, Persimmon, or Taylor Wimpey.

S&P said, "We understand that the company has 5.3 years of land
supply secured, either thanks to owned landbank or controlled
with planning permission already obtained. Almost all of the
construction is outsourced to a large and diverse subcontractor
base on a regional basis but managed by Miller Homes. The company
completed 2,380 homes in 2016, and it plans to complete a total
of 4,000 units by the end of 2021.

"Our assessment of Miller Homes' financial risk profile mainly
reflects the company's low ratio of free operating cash flow
(FOCF) to debt of less than 10%, given the high working capital
needs inherent to the industry and the requirement to build
landbanks, as well as its moderate leverage ratio of debt to
EBITDA of below 4x. Miller Homes' capital structure will include
senior secured bonds of GBP425 million maturing in six to seven
years, of which about half is expected to be floating rate notes,
and a GBP80 million super senior RCF. The proceeds of these debt
instruments will be used for financing Bridgepoint's acquisition
of Miller Homes, including about GBP117 million of net debt
repayment.

"The capital structure also includes a GBP145 million shareholder
loan that we view as equity, given it is subordinated to all the
first-lien and second-lien debt, has a maturity date at least six
months after all the senior facilities, is stapled to equity and
has no fixed cash interest payment. In addition, about GBP151
million of mainly priority shares will be provided by Bridgepoint
and the management of Miller Homes.

"We also take into account that company management and the new
shareholder are committed to deleveraging over time and
maintaining an S&P Global Ratings-adjusted ratio of debt to
EBITDA at less than 4x in the medium term.

"We acknowledge Miller Homes' solid coverage ratios with expected
post-transaction funds from operations cash interest coverage of
above 5x and EBITDA interest coverage at well above 3x.
Although we expect the company's credit metrics to improve in the
near term, our assessment of the company's financial risk profile
also incorporates its private equity ownership. This could push
the company toward more aggressive leverage or redeployment of
disposal proceeds than listed companies, for example.

"The stable outlook on Miller Homes reflects our view that the
company will continue to generate solid cash flow from its
homebuilding operations, with an EBITDA margin close to 20%,
despite political uncertainty around the U.K.'s Brexit
negotiations.

"The outlook also takes into account Miller Homes' prudent
working capital management, including land procurement, in line
with market demand. We anticipate the ratio of debt to EBITDA
will be below 4x and EBITDA interest coverage will stand well
above 3x in the next 12 months.

"We could lower the rating if the company's liquidity weakens as
a result of significantly higher-than-expected working capital
outflows over the next year, leading also to a significant
decrease in FOCF or if the company started distributing large
dividend payments.

"We might also lower the rating if the company's credit metrics
were to weaken, with an S&P Global Ratings-adjusted ratio of debt
to EBITDA well above 4x or EBITDA interest coverage falls to 3x
or less. This could result from a lower demand for family houses
in the company's operating regions, combined with significant
cash outflows or working capital needs.

"The likelihood of an upgrade is currently remote. A positive
rating action could follow, however, a material improvement in
scale and scope of the business, which would significantly expand
its FOCF, bringing the company's metrics more in line with peers
we see as having better business risk."


PIZZAEXPRESS FINANCING: S&P Cuts CCR to B- on Weak Profitability
----------------------------------------------------------------
S&P Global Ratings said that it lowered its long-term corporate
credit rating on PizzaExpress Financing 1 PLC (PizzaExpress) to
'B-' from 'B'. The outlook is stable.

S&P said, "At the same time, we lowered our issue rating on the
group's 6.625% senior secured notes due 2021 to 'B-' from 'B'.
The recovery rating remains at '3', indicating our expectations
of average recovery in the event of default (50%-70%; rounded
estimate 60%).

"We also lowered our issue rating on the group's 8.625% senior
unsecured notes due 2022 to 'CCC' from 'CCC+'. The recovery
rating remains at '6', indicating our expectations of negligible
recovery in the event of default (0%-10%; rounded estimate 0%).

"At the same time, we lowered our issue rating on the group's
GBP20 million super senior revolving credit facilities (RCF) to
'BB-' from 'BB'. The recovery rating remains at '1+', indicating
our expectations of full recovery in the event of default."

The downgrade follows the sharp 460 basis point (bp) fall in
profitability that PizzaExpress experienced in the first half of
2017, posing a risk that the group's U.K. reported EBITDA margin
could decline by as much as 350 bps in 2017. The company
attributes this drop in profitability mainly to rising labor
costs, increased food and drinks costs, and the revision in
business rates in the U.K. S&P anticipates that the sharp decline
in margins would result in its adjusted debt to EBITDA forecasts
weakening toward 10x in 2017 (or nearly 7x when excluding
shareholder loan notes).

PizzaExpress is a leading pizza restaurant chain operator in the
U.K., with about 490 restaurants located across in the U.K. and
Ireland. It has also established over 100 restaurants overseas,
which are primarily based in China and United Arab Emirates
(UAE). Beijing-based private equity Hony Capital acquired the
restaurant chain in July 2014. Since then, the group has
increasingly been involved in establishing the PizzaExpress
concept in China. In June 2015, the group bought back its China
and UAE franchise through a GBP55 million tap on its 6.625%
senior secured notes due 2021.

Since then, Pizza Express' expansion in China has been funded by
the group's operating cash flow generated in the U.K. and
Ireland. S&P notes that the accelerating pace of overseas
expansion dilutes the group's overall profitability, as its
international segment currently only exhibits an 8%-9% reported
EBITDAR margin. This is notably lower than the 16%-17% seen in
the U.K. and Ireland, where economies of scale is attained.

S&P said, "Overall, given that over 80% of the group's revenue
and earnings is generated in the home segment, we view
PizzaExpress' credit standing as the most sensitive to its
operating performance in the U.K. and Ireland, which, in turn,
supports the group's long-term expansion plan in China. We
understand that PizzaExpress has recently put in place a
dedicated U.K. and Ireland management team focused on operational
execution, and a leadership team to focus on the group's overall
strategy."

Considering the high debt level, the group's ability to increase
its EBITDA base is crucial. This would entail achieving healthy
like-for-like sales growth and retaining a strong EBITDA margin
especially in the U.K. segment. The key challenge for the group
is to pass on rising minimum wages and food costs to customers,
considering that pizza offerings compete with other casual dining
operators and home delivery chains, as well as supermarkets. The
group has been focusing on extensive promotional offers that
attract customers, which helps retain like-for-like sales growth.

S&P said, "At the same time, we believe that more attractive new
food offerings accompanied by well-staffed service would further
support sales through a stronger value proposition and a more
loyal customer base--in our view, the key ingredients to expand
in the highly fragmented restaurant segment.

"Nevertheless, we recognize the group's favorable rent cost
profile relative to other restaurant peers. Notwithstanding
weakened profitability, we forecast EBITDAR interest coverage
(defined as reported EBITDAR before deducting rent costs over
cash interest and rent costs) would only slightly weaken to 1.4x
versus our previous forecast of around 1.4x-1.5x. However, any
further deterioration in EBITDAR interest coverage toward 1.2x,
or high capital spending leading to reported free operating cash
flow (FOCF) turning meaningfully negative, would result in us
reassessing the sustainability of the group's capital structure,
which could result in a further downgrade.

"Despite the high debt level, we currently see limited near-term
refinancing risk as the group's 6.625% senior secured notes will
mature in August 2021, followed by the 8.625% senior unsecured
notes coming due in August 2022. The group is also governed by a
relatively light financial covenant on its super senior RCF,
which requires net senior leverage not to exceed 9x, and is only
tested when it is 25% drawn."

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

-- S&P said, "In anticipation of Brexit, we forecast U.K. real
    GDP growth falling to 1.4% in 2017 and 0.9% in 2018, from
    1.8% in 2016, and see consumer price index inflation rising
    to 2.7% in 2017 and 2.3% in 2018, from 0.6% in 2016. We
    expect that the weak pound sterling will inevitably result in
    rising input costs, as some food ingredients are sourced from
    eurozone countries. However, owing to high competition in
    pizza offerings, we expect that only a small portion of cost
    inflation will be passed onto customers. This would translate
    into like-for-like sales growth of about 1% in 2017 and 2018.

-- S&P forecasts that the group's revenue growth will slow to
    4%-6% in 2017 and 2018, reflecting the increasing challenge
    to pass on cost inflation to customers in the highly
    fragmented restaurant sector. The growth is largely supported
    by maturing new sites and reinvesting most operating cash
    flow for new restaurant openings, particularly in China.

-- S&P revised its adjusted EBITDA margin downward to 26%-27% in
    2017 and 2018 (equivalent to around 17% on a reported basis).
    The drop from 29% in 2016 (or around 20% on reported basis)
    reflects the major cost headwind, particularly in rising
    minimum wages and food and drink costs in the U.K.

-- Most operating cash flow will continue to be reinvested for
    new site expansion, reflecting capital expenditure (capex) of
    about GBP40 million-GBP45 million in 2017 and 2018. We
    understand that while the group continues to focus on
    expansion in China, it has no immediate plan to reduce debt
    from the currently high level.

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

-- S&P said, "We anticipate our adjusted debt to EBITDA
    including shareholder loan notes to weaken toward 10x in 2017
    and 2018. This translates into around 6.9x when excluding
    shareholder loan note held by financial sponsor owner Hony
    Capital and management. The slower deleveraging prospect
    mainly reflects our view that, despite new site openings,
    cost headwinds in light of rising minimum wages in the U.K.,
    and increasing food costs due to the weak pound sterling,
    could constrain EBITDA growth over the next 12-18 months.

-- Despite high leverage, S&P forecasts its EBITDAR interest
    coverage would slightly weaken to 1.4x versus its previous
    forecasts of around 1.4x-1.5x.

-- Minimal FOCF as the group intends to reinvest most operating
    cash flow for capex.

S&P said, "The stable outlook reflects our expectations that,
following the sharp profitability decline, PizzaExpress would
defend its reported EBIDTA margin at around 17% and maintain an
adequate liquidity position over the next 12 months. Although we
note the risk that our adjusted debt to EBITDA could rise toward
10x (or 6.9x when excluding shareholder loan notes), we forecast
adequate liquidity and our EBITDAR cash interest coverage should
remain around 1.4x over the next 12 months.

"Given the high debt level, our downside scenario reflects our
view of the sustainability group capital structure. We would
lower the ratings if the competitive trading environment resulted
in PizzaExpress' U.K. like-for-like sales growth turning
negative, or higher labor and food costs caused further weakening
in EBITDA margins resulting in EBITDAR interest coverage falling
toward 1.2x. Downside rating pressure could also develop if, in
the face of weak operating performance, the group fails to cut
its capital spending, resulting in reported FOCF turning
meaningfully negative, causing the group's liquidity to weaken.

"Due to softening operating performance, we consider an upgrade
unlikely over the next 12 months. Any ratings upside would
require PizzaExpress establishing a track record of sound like-
for-like sales growth and sustainably recover its reported EBITDA
margins to above 20%. This should result in our adjusted debt to
EBITDA meaningfully reducing toward 6x and EBITDAR interest
coverage improving toward 1.8x on a sustainable basis. Any
ratings upside would also depend on our view of conservative
financial policy regarding leverage and shareholder returns."


* UK Non-Conforming RMBS 90+ Day Delinquencies Drop 10.9% in June
-----------------------------------------------------------------
The 90+ day delinquencies of the UK non-conforming (NC)
residential mortgage-backed securities (RMBS) market decreased
slightly to 10.9% in June 2017, from 11.4% in February 2017,
according to the latest indices published by Moody's Investors
Service.

The rate of cumulative losses remained stable at 2.6% over the
same period.

The weighted-average periodic loss severity increased to 27.7% in
June 2017, from 23.1% in February 2017.

Moody's annualised total redemption rate moderately increased to
10.5% in June 2017, from 10.2% in February 2017.

As of June 2017, Moody's rated 81 transactions in the UK NC RMBS
market, with an outstanding pool balance of GBP20.0 billion.


===================
U Z B E K I S T A N
===================


NATIONAL BANK: Moody's Affirms B2 Long Term Bank Deposit Rating
---------------------------------------------------------------
Moody's Investors Service has taken rating actions on five Uzbek
banks. Moody's downgraded the Baseline Credit Assessments (BCAs)
and Adjusted BCAs of National Bank of Uzbekistan (National Bank
for Foreign Economic Activity of the Republic of Uzbekistan, NBU)
and Ipoteka Bank to b3 from b2 and affirmed these two banks'
long- and short-term deposit ratings, with stable outlooks on the
long-term deposit ratings. NBU's and Ipoteka Bank's B1(cr)/NP(cr)
long- and short-term Counterparty Risk Assessments (CRAs) were
also affirmed. Moody's has also changed the outlooks to negative
from stable on the long-term deposit ratings of Asaka Bank, Ipak
Yuli Bank and Hamkorbank, while the banks' BCA's, deposit ratings
and CRAs were affirmed.

Moody's rating actions follow the Central Bank of Uzbekistan's
devaluation of the local currency, the Uzbek soum, by almost 50%
against the US dollar, to UZS8,100 per dollar on September 5,
2017. The rating action reflects the expected negative impact of
the devaluation on asset quality, capitalization and
profitability of these banks, as the credit quality of the banks'
borrowers will likely deteriorate.

Moody's rating action also takes into consideration the upcoming
capital injections from Uzbekistan's Ministry of Finance (MinFin)
and from the state Fund for Reconstruction and Development of the
Republic of Uzbekistan (FRDU) to NBU, Asaka Bank and Ipoteka
Bank. These capital injections partially offset the immediate
negative impact of the devaluation.

RATINGS RATIONALE

-- NATIONAL BANK OF UZBEKISTAN

The downgrade of NBU's BCA to b3 from b2 mostly reflects the
bank's substantial exposure to foreign currency loans. At Jan. 1,
2017, these loans stood at 73% of the bank's total gross loan
book, much higher than the 23% average proportion for other banks
rated by Moody's in Uzbekistan. Moody's estimates that
approximately 60% of all foreign currency loans are issued to
borrowers with foreign currency revenues. Government guarantees,
which cover 55% of NBU's loan portfolio, partially mitigate the
risk. However, the rating agency has not so far observed any
significant cases of enforcement of such guarantees, and it
expects that the servicing of foreign currency loans by borrowers
may worsen as borrowers may be lacking foreign currency revenues.

Moody's also notes the fast cumulative annual growth rate (CAGR)
of NBU's loan portfolio in 2012-2016, which exceeded 23%, whereas
growth in capital lagged significantly behind with CAGR of 14%.
This was possible because the statutory regulation allows local
banks to apply 20% risk weights to credit exposures guaranteed by
the government. In 2017, NBU received UZS120 billion from MinFin
and USD51 million from FRDU, which will be transferred to the
bank's Tier 1 capital by the end of 2017 and will improve its
capital adequacy metrics with estimated tangible common equity
exceeding 11% of risk-weighted assets.

NBU's ratings continue to incorporate a very high probability of
the government support, which results in the uplift to the bank's
long-term local currency deposit rating by two notches to B1 from
its BCA of b3. NBU is fully owned by the government, acts as the
government's major agent in the channeling of government and
international financing to the state's strategic and socially
important projects and holds 25% of the Uzbekistan banking sector
total assets.

-- ASAKA BANK

The change in outlook on the long-term bank deposit ratings of
Asaka Bank to negative from stable is driven by the adverse
pressure on the bank's standalone credit profile over the next
12-18 months, prompted by the expected deterioration of the loan
book quality along with increase in provisioning charges.

According to the local GAAP report as of August 1, 2017, foreign
currency loans accounted for 59% of the bank's total lending.
Moody's estimates that more than 85% of foreign currency loans
were provided to large state-owned enterprises from chemical and
energy sectors which have export revenues to mitigate foreign
currency risks. In addition, about 95% of foreign-currency
lending was covered by state guarantees.

For the rest of the loan portfolio, Moody's expects pressure on
asset quality and an increase in credit costs driven by the
deteriorating creditworthiness of the borrowers that are
dependent on imported goods and equipment. The adverse impact is
aggravated by the bank's significant concentration of the loan
portfolio with the 20 largest exposures exceeding 500% of Tier 1
equity, which may lead to a detrimental effect on the bank's
asset quality should some of these borrowers default.

At the same time, the affirmation of Asaka Bank's b2 BCA takes
into account the bank's improving capitalization. The bank
recently received a USD70 million equity injection from the FRDU
and UZS140 billion from MinFin, which will be transferred into
its Tier 1 capital by the end of 2017. This will materially
improve Asaka Bank's capital adequacy metrics with estimated
tangible common equity exceeding 13% of risk-weighted assets.

Asaka Bank's deposit ratings incorporate a high probability of
the government support which results in the uplift of the bank's
long-term local currency deposit rating by one notch to B1 from
its BCA of b2.

-- IPOTEKA BANK

The downgrade of Ipoteka Bank's BCA to b3 from b2 reflects its
substantial exposure to foreign currency loans, high credit
concentration and the history of very fast loan growth, which was
not always supported by similar capital growth. At July 1, 2017,
the proportion of Ipoteka Bank's foreign currency loans stood at
35% of the bank's total loans, dominated by one credit exposure
issued to a large export-oriented state-owned company (88% of all
foreign currency loans). Although this borrower appears to have
sufficient foreign currency revenues to service its loan, and in
addition 71% of the total exposure to this borrower is covered by
the government guarantee, Moody's notes the very high level of
the bank's credit concentration driven by this exposure. At July
1, 2017, it exceeded 4x of the bank's equity, according to the
rating agency's estimate. When Ipoteka Bank finalizes its capital
increase transaction towards the end of 2017, this exposure will
still exceed 2x of the bank's equity, keeping the bank highly
dependent on the financial standing of just one borrower.

Over 2012-2016, the compound annual growth rate (CAGR) of Ipoteka
Bank loan portfolio was 38%, much higher than the 20-25% sector-
average. The 25% CAGR of Ipoteka Bank's capital lagged behind,
because the statutory regulation allows local banks to apply 20%
risk weights to credit exposures guaranteed by the government. In
2017, Ipoteka Bank received UZS107 billion from MinFin and USD60
million from FRDU which will be transferred to the bank's Tier 1
capital by the end of 2017. This will materially improve Ipoteka
Bank's capital adequacy metrics with an estimated tangible common
equity exceeding 12% of risk-weighted assets, which partially
alleviates Moody's concerns over the potential negative impact on
the bank's financial profile stemming from its high credit
concentration and the long-standing gap between the bank's asset
growth and equity growth.

Ipoteka Bank's deposit ratings continue to incorporate a moderate
probability of the government support, which results in the
uplift of the bank's long-term local currency deposit rating by
one notch to B2 from its BCA of b3. The government's aggregate
direct stake in Ipoteka Bank (through MinFin and FRDU) will
increase to above 70% post-capital injection. The bank holds 7%
of the Uzbekistan banking sector total assets and is involved in
the financing of a number of strategic and social projects
carried out by the government.

-- IPAK YULI BANK

The change of the outlook on Ipak Yuli Bank's B2 long-term
deposit rating to negative from stable reflects its material
exposure to foreign currency loans as well as to the borrowers
that are sensitive to local currency devaluation. Moody's
estimates the bank's share of foreign currency loans at 29% of
gross loans at 1 August 2017. A material portion of the foreign
currency loan portfolio was provided to companies with no export
revenues or reliant on the domestic market. In addition, the
bank's credit exposure to the trade sector, which is sensitive to
domestic demand and devaluation of local currency, exceeded 35%
of its loan portfolio at January 1, 2017. Given worsened economic
conditions and weakened borrowers' creditworthiness, Moody's
expects deterioration of asset quality along with higher
provisioning charges in the next 12-18 months.

The bank reported its tangible common equity (TCE) at 12.0% of
its risk-weighted assets at 1 year-end 2016. As a result of the
sharp soum devaluation and consequent revaluation of its risk-
weighted assets, the bank's capital adequacy metrics will fall by
approximately 150 basis points. This will be mitigated by
projected equity contribution from the shareholders in the next
couple of months and expected positive net financial result of
the bank. The affirmation of the bank's ratings and BCA also
considers robust pre-provision profitability (3.9% of average
assets in 2016), high granularity of its loan portfolio and
diversified funding structure with limited refinancing risks.

Ipak Yuli Bank's B2 long-term deposit ratings do not incorporate
any uplift from external support and therefore are aligned with
the bank's BCA of b2.

-- HAMKORBANK

The change in outlook on Hamkorbank's B2 deposit ratings to
negative from stable reflects the bank's significant exposure to
borrowers that are sensitive to local currency devaluation, as
well as the history of the bank's very fast loan growth with the
capital growth lagging somewhat behind. At January 1, 2017,
Hamkorbank's aggregate credit exposure to borrowers operating in
trade and service industries, mainly micro-, small- and medium-
sized enterprises, stood at 18% of the bank's total gross loans,
another 37% of loans were issued to individuals, of which a large
proportion are individual entrepreneurs. Moody's expects that the
credit quality of these groups of borrowers will deteriorate as a
result of the devaluation, because they will suffer from higher
inflation and weakened consumer demand.

Over 2012-2016, the compound annual growth rate (CAGR) of
Hamkorbank loan portfolio was 52%, the capital CAGR of 42% lagged
somewhat behind. Moody's expects that the past fast growth will
likely exacerbate the negative impact of the devaluation on the
quality of the bank's loans as the portfolio will mature in a
less benign operating environment. At the same time, the
affirmation of Hamkorbank's ratings and BCA takes into
consideration its robust pre-provision profitability (4.5% of
average assets in 2016), high granularity of its loan portfolio
and diversified funding structure with limited refinancing risks.

Hamkorbank's B2 long-term deposit ratings do not incorporate any
uplift from external support and therefore are aligned with the
bank's BCA of b2.

WHAT COULD MOVE THE RATINGS UP/DOWN

The ratings could be downgraded if the risk absorption capacity
and financial fundamentals of the affected banks erode beyond
Moody's current expectations, resulting from a further worsening
in operating conditions. Conversely, improvements in the
Uzbekistan operating environment and/or banks' demonstrated
resilience to the consequences of local currency devaluation
could exert upward pressure on NBU's and Ipoteka Bank's BCAs and
could enable a return to stable rating outlooks on the ratings of
Asaka Bank, Ipak Yuli Bank and Hamkorbank.

PRINCIPAL METHODOLOGY

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

LIST OF AFFECTED RATINGS

Issuer: National Bank of Uzbekistan

Affirmations:

-- LT Bank Deposits (Local Currency), Affirmed B1, Outlook
    Remains Stable

-- LT Bank Deposits (Foreign Currency), Affirmed B2, Outlook
    Remains Stable

-- ST Bank Deposits, Affirmed NP

-- LT Counterparty Risk Assessment, Affirmed B1(cr)

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

Downgrades:

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

-- Baseline Credit Assessment, Downgraded to b3 from b2

Outlook Actions:

-- Outlook, Remains Stable

Issuer: Asaka Bank

Affirmations:

-- LT Bank Deposits (Local Currency), Affirmed B1, Outlook
    Changed To Negative From Stable

-- LT Bank Deposits (Foreign Currency), Affirmed B2, Outlook
    Assigned Negative

-- ST Bank Deposits, Affirmed NP

-- Adjusted Baseline Credit Assessment, Affirmed b2

-- Baseline Credit Assessment, Affirmed b2

-- LT Counterparty Risk Assessment, Affirmed B1(cr)

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

Outlook Actions:

-- Outlook, Changed To Negative From Stable

Issuer: Ipoteka Bank

Affirmations:

-- LT Bank Deposits, Affirmed B2, Outlook Remains Stable

-- ST Bank Deposits, Affirmed NP

-- LT Counterparty Risk Assessment, Affirmed B1(cr)

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

Downgrades:

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

-- Baseline Credit Assessment, Downgraded to b3 from b2

Outlook Actions:

-- Outlook, Remains Stable

Issuer: Ipak Yuli Bank

Affirmations:

-- LT Bank Deposits, Affirmed B2, Outlook Changed To Negative
    From Stable

-- ST Bank Deposits, Affirmed NP

-- Adjusted Baseline Credit Assessment, Affirmed b2

-- Baseline Credit Assessment, Affirmed b2

-- LT Counterparty Risk Assessment, Affirmed B1(cr)

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

Outlook Actions:

-- Outlook, Changed To Negative From Stable

Issuer: Hamkorbank

Affirmations:

-- LT Bank Deposits, Affirmed B2, Outlook Changed To Negative
From Stable

-- ST Bank Deposits, Affirmed NP

-- Adjusted Baseline Credit Assessment, Affirmed b2

-- Baseline Credit Assessment, Affirmed b2

-- LT Counterparty Risk Assessment, Affirmed B1(cr)

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

Outlook Actions:

-- Outlook, Changed To Negative From Stable



                            *********

Monday's edition of the TCR delivers a list of indicative prices
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S U B S C R I P T I O N   I N F O R M A T I O N

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