TCREUR_Public/170922.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 22, 2017, Vol. 18, No. 189


                            Headlines


C Y P R U S

CYPRUS: S&P Affirms BB+/B Sovereign Credit Ratings, Outlook Pos.


G E R M A N Y

AIR BERLIN: Niki Unit Denies Having Unpaid Bills to Tour Operator
AIR BERLIN: Lufthansa to Focus on Securing 38 Leased Planes


G R E E C E

GREECE: To Remain Under Close Supervision After Third Bailout


L U X E M B O U R G

BMI GROUP: S&P Raises CCR to 'BB+' on Acquisition by Standard
CABOT FINANCIAL: Moody's Puts B2 CFR on Review for Upgrade


M A C E D O N I A

MACEDONIA: S&P Affirms 'BB-/B' Sovereign Credit Ratings


N E T H E R L A N D S

ACCUNIA EUROPEAN II: Moody's Assigns (P)B2 Rating to Cl. F Notes
ACCUNIA CLO II: S&P Assigns Prelim B-(sf) Rating to Cl. F Notes
NIBC BANK: S&P Rates Proposed Additional Tier 1 Securities 'B+'
TIKEHAU CLO III: Moody's Assigns (P)B2 Rating to Class F Notes


S W E D E N

GS-HYDRO HOLDING: Files for Bankruptcy Following Liquidity Woes


U N I T E D   K I N G D O M

CO-OPERATIVE BANK: Co-op Group Sells Remaining 1% Stake
ENQUEST PLC: Moody's Affirms Caa1 CFR, Revises Outlook to Stable
INSIDE BIOMETRICS: GlucoRx Unit Buys Business, 35 Jobs Saved
INTEROUTE COMMUNICATIONS: S&P Affirms 'B+' CCR, Outlook Stable
PROSERV GROUP: S&P Downgrades CCR to 'CCC-', Outlook Negative

ROTHSCHILDS CONTINUATION: Fitch Raises Sub. Notes Rating From BB+


X X X X X X X X

* BOOK REVIEW: Lost Prophets -- An Insider's History


                            *********



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C Y P R U S
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CYPRUS: S&P Affirms BB+/B Sovereign Credit Ratings, Outlook Pos.
----------------------------------------------------------------
On Sept. 15, 2017, S&P Global Ratings revised the outlook on the
long-term sovereign credit ratings on the Republic of Cyprus to
positive from stable. At the same time, S&P affirmed its 'BB+/B'
foreign and local currency long- and short-term sovereign credit
ratings.

OUTLOOK

The outlook revision reflects the following:


-- S&P now projects real GDP will grow by 3% on average over
    2017-2020. This is higher than our previous expectation of
    2.5% over the same period, and well above the forecast euro
    area average of 1.7%.

-- S&P expects the budgetary position to remain in surplus over
    the forecast horizon, without factoring in any further
    discretionary measures. Even if there were some fiscal
    slippage in the run-up to the 2018 presidential election, S&P
    would expect public finances to subsequently consolidate,
    leading to a decline in general government debt.

-- S&P also expects that the strength of the underlying recovery
    -- reflected broadly across economic sectors and evidenced
    further in improved labor market outcomes, resurgent
    corporate profitability, and rising disposable incomes --
    will allow private balance sheets to deleverage further.

S&P could consider raising the ratings on the Republic of Cyprus
over the next 12 months if:

-- Cyprus' economy continues to recover toward pre-crisis
    levels, while fiscal policy remains broadly stable, putting
    government debt-to-GDP on a downward path; or

-- Cyprus' credit and monetary conditions continue to converge
    with those of the eurozone, via a material reduction in
    Cyprus' unusually high nonperforming exposures (NPEs) amid
    further reductions in interest rate differentials.

S&P could revise the outlook back to stable if economic growth is
significantly lower than we currently expect or if a shift in the
fiscal stance leads us to believe that general government debt-
to-GDP is no longer on a declining trajectory over the forecast
horizon.

RATIONALE

The ratings on Cyprus are constrained by the economy's high
degree of leverage--evident in both public and private sector
balance sheets--and its impaired banking system. The ratings are
supported by its income levels, with GDP per capita among the
highest in the 'BB' category, and the ongoing economic recovery
that S&P anticipates will allow for a gradual reduction in
general government and private sector debt, while also supporting
the financial sector's efforts toward normalization.

Institutional and Economic Profile: The broad-based recovery is
ongoing

-- S&P forecasts that the economy will grow by 3% over
    2017-2020, supported by investment activity and services
    exports.

-- S&P expects the impact of Brexit on Cyprus to be limited.

-- In S&P's base case, S&P does not anticipate a detrimental
shift in policy following the presidential election in early
2018.

S&P said, "The Cypriot economy has continued its strong, broad-
based recovery in 2017, growing by 3.6% year-on-year in real
terms in the first half of the year after expanding by 2.8% in
2016. We have therefore revised up our estimate for real GDP
growth in 2017 to 3.3%, from 2.7% previously. Through 2020 we
anticipate that consumption growth will decelerate as household
debt servicing picks up momentum, even though we project the
unemployment rate to decrease further and  disposable incomes to
rise. Investment activity is likely to remain strong, supported
across the forecast horizon by ongoing projects, particularly in
the tourism and energy sectors, with the latter including the
exploration of offshore natural gas.

"We also expect exports, particularly from tourism and business
services, to continue to make an important contribution to
growth. The observable impact of the U.K.'s decision to leave the
EU so far has been negligible. Even though British sterling has
depreciated by more than 15% against the euro since the
referendum, tourist arrivals from the U.K. into Cyprus have kept
increasing. This trend may not hold, in our opinion, should there
be prolonged uncertainty regarding the U.K.'s relationship with
the EU. In any case, we expect the fallout for Cyprus' export
receipts to be cushioned by the country's ability to attract
tourists from new geographies. This ability has been further
bolstered by the addition of new direct flight routes, such as to
and from Israel."

The Cypriot private sector balance sheet is among the most
indebted in Europe at about 250% of GDP. Despite solid growth,
private-sector debt is likely to remain high, albeit tapering
slowly via repayments, currently financed by savings,
restructuring, ongoing write-offs, and debt-for-asset swaps with
banks.

S&P said, "We anticipate that the thrust of the authorities'
macroeconomic policy over the forecast horizon will be on
maintaining public finances close to balance, while pursuing debt
reduction and aiding the recovery of the banking sector. Cyprus
will hold presidential elections in February 2018 and we do not
anticipate a shift in policy in our base-case scenario. We note
that talks around the reunification of Cyprus appear to be at a
standstill after having broken down in Switzerland earlier this
year."

Flexibility and Performance Profile: Government debt and banking
system NPEs are set to decline gradually

-- S&P anticipates that government debt will decline in absolute
    terms over the forecast horizon on the back of small
    recurrent general government surpluses.

-- The underlying current account deficit is likely to widen
    slightly through 2020 reflecting greater demand for imported
    goods and services as project activity picks up.

-- NPEs are likely to reduce gradually over time supported by
    various efforts to unblock banks' balance sheets.

The general government budgetary position moved into a surplus of
0.4% of GDP in 2016. In 2017, so far, revenue growth has well
outstripped expenditure growth despite taxes on immovable
property being removed and the solidarity tax on wages having
ended. While there is some scope for fiscal slippage in the
remaining months of the year and in the run-up to the
presidential election, S&P anticipates that public finances will
remain in a small surplus over 2017-2020.

S&P said, "Despite flows improving, we project that the stock of
general government debt net of liquid assets (such as bank
deposits) will remain high at 93% of estimated 2017 GDP. We
expect this ratio will move gradually down to 82% by 2020. The
pace could be faster if receipts from privatization, if any, are
used for debt reduction. We do not take these into account in our
forecast."

In 2017, as in 2016, Cyprus issued bonds to meet its financing
needs and to build up cash buffers. The authorities also used
part of the proceeds of the debt issuance in July 2017 to make an
early repayment of EUR271 million (1.5% of GDP; about 30% of the
outstanding liability to the IMF) on the relatively more
expensive IMF loan. They also used some of the proceeds to
conduct a buyback of securities to better manage peaks in the
redemption profile and to reduce the interest burden. S&P notes
that the average maturity of the central government's overall
debt stock stood at 7.6 years as of June 2017 while the weighted
average cost of debt on the overall stock of debt has nearly
halved from its peak in 2012 to 2.2%.

Cyprus lost eligibility for the ECB's Public Sector Purchase
Program following its exit from the IMF and EC economic
adjustment program in March 2016. Nonetheless, the sovereign
enjoys good market access and has been able to reduce its cost of
borrowing in recent bond issues. However, access for non-
sovereign entities at affordable rates appears less certain. S&P
note that the Bank of Cyprus, the country's largest bank, paid
down all its emergency liquidity assistance obligations to the
ECB last year and issued Tier 2, 10-year bonds at 9.25% in
January 2017.

S&P said, "The country's banking system (in terms of total
assets) is about 4.5x GDP. While we do not view another round of
recapitalization by the sovereign as imminent, the large size of
the system and the still high level of NPEs lead us to consider
the system as a moderate contingent liability. We note reported
system NPEs (local operations and including the co-operative
sector) reduced to 46% in April 2017 from 48% in November 2014.
The reduction is more marked when viewed in nominal terms; NPEs
reduced by EUR4.4 billion or about one-quarter of estimated 2017
GDP. We note that in addition to including loans past due for
more than 90 days, the NPE definition includes restructured loans
for a minimum observance period of a year even if they are
currently performing."

Banks are making further efforts to bring down NPE levels via
write-offs and restructuring. More recently, some banks have also
engaged debt servicing companies to effect a faster pace of NPE
resolution. S&P said, "We also note the use of debt-for-asset
swaps as a method of NPE reduction. These swaps allow debtors to
exchange debt for property, a faster solution compared to drawn-
out insolvency proceedings. We note that while these transactions
will lead the NPE ratio to reduce, they will not result in cash
inflows until the banks actually liquidate the properties. Also,
the risk that banks will not post additional losses on these
assets does not disappear until the assets are actually sold.
With the increasing use of this method, banks now have about 3%
of their total assets in real estate; if loans to the real estate
sector are included, the exposure to the sector rises to about
20% of total assets.

"We consider the transmission of the ECB's monetary policy to the
Cypriot economy as weak. We believe this is evidenced by still-
high--albeit declining--lending rates in Cyprus relative to the
euro area average. We note that inflation in Cyprus has been
picking up and is converging toward the euro area average in
recent months. Even then, we consider the ECB as less likely to
take into account smaller eurozone economies when setting its
policy decisions."

Cyprus' external finances are heavily distorted, in both stock
and flow terms, by the presence of special purpose entities
(SPEs). These SPEs do not have any direct bearing on the Cypriot
economy. Cyprus' net international liabilities, including SPEs,
stood at an estimated 125% of GDP in 2016. But this number falls
significantly to 46% of GDP if SPEs are stripped out. S&P notes
an improvement in the underlying external position as the economy
gradually deleverages, with net international liabilities (not
including SPEs) reducing from 55% in 2015.

In 2016, the current account deficit (CAD) widened to 5.3% of GDP
from 2.9% in 2015 largely as a result of a large ship import. S&P
said, "We expect imports of aircrafts to further widen the
external deficit in 2017. Over 2018-2020 our forecast excludes
the impact of such large one-off imports given our low visibility
on them. We expect the underlying deficit to widen toward 2% of
GDP in 2020 from 1.2% in 2018 driven by rising imports, in turn
resulting from robust domestic demand, and we expect it to be
financed by direct investment inflows."


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G E R M A N Y
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AIR BERLIN: Niki Unit Denies Having Unpaid Bills to Tour Operator
-----------------------------------------------------------------
Kirsti Knolle at Reuters reports that Austrian airline Niki said
on Sept. 20 it had paid all bills owed to a tour operator and it
therefore expected to avert bankruptcy proceedings which have hit
parent Air Berlin.

Law firm Kosch & Partner said earlier it had applied for
insolvency proceedings against Niki on behalf of an Austrian tour
operator which said it was owed money by Niki, Reuters relates.
The law firm declined to identify the tour operator, Reuters
notes.

"We have reviewed the relevant post, and the claim has been
settled," Niki said in an email to Reuters.  "We thus assume that
the proceedings can be closed."

The Korneuburg regional court said it was examining the case,
Reuters relays.

According to Reuters, a company just paying a bill is not
necessarily enough to convince a judge of its financial health,
said Anton Klikovitz, an insolvency expert at creditor protection
association Kreditschutzverband 1870.

"The court has to examine the overall financial situation,"
Reuters quotes Mr. Klikovitz as saying.  "The examination's
purpose is to find out whether there is a bankruptcy situation or
not."

                        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: Lufthansa to Focus on Securing 38 Leased Planes
-----------------------------------------------------------
Victoria Bryan at Reuters reports that Carsten Spohr, Lufthansa's
chief executive, said Lufthansa is interested in acquiring as
many as 80 planes from rival Air Berlin with its priority on
securing planes it already leases.

According to Reuters, a creditor committee was set to meet on
Sept. 21 to discuss offers for Air Berlin, which filed for
insolvency in August after major shareholder Etihad pulled the
plug on funding.

Mr. Spohr said at a media event late on Sept. 20 Lufthansa's
focus is on securing the 38 crewed planes it currently leases
from the insolvent carrier, plus it would like up to an
additional 20 to 40 planes, Reuters relates.

Mr. Spohr, as cited by Reuters, said Lufthansa expected that was
the most it could take without falling foul of anti-trust
concerns and if it isn't able to get all that it has bid for, it
still plans to grow.

"The next few days will show whether that growth comes
organically via Eurowings or through an Air Berlin transaction,"
Reuters quotes Mr. Spohr as saying, adding that Lufthansa would
need around 3,000 new employees to meet that expansion.

The 38 crewed planes Lufthansa leases from Air Berlin currently
carry passengers mainly for the group's budget unit Eurowings,
and Lufthansa's priority is on keeping that operation stable,
Reuters discloses.

Lufthansa is, however, not interested in Air Berlin's long-haul
routes, with Mr. Spohr saying the flagship carrier could grow in
that area on its own, 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.


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G R E E C E
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GREECE: To Remain Under Close Supervision After Third Bailout
-------------------------------------------------------------
Eleftheria Kourtali at The Financial Times reports that
Thomas Wieser, the president of the Euro Working Group (EWG),
told insider.gr in an interview published on Sept. 20 the Greek
economy will remain under close supervision for years after the
completion of the third bailout deal.

Even though he is confident the cash-strapped country will be
able to recover, Mr. Wieser says that a lot of work needs to be
done first, starting with the timely completion of the third
bailout review, the FT relates.  He also suggests that additional
measures may be needed in 2019 and 2020 depending on the course
of the budget next year, the FT notes.

According to the FT, asked whether he believes this will be
Greece's last memorandum, the Austrian-American economist says
"three programs have already been implemented in the space of
eight years and the political desire for yet another is zero.
The rest of the eurozone also wants the third program to be the
last one."

Mr. Wieser appears confident that Greece will successfully wrap
up the upcoming review in the fall even though the government
needs to push through 95 so-called prior actions, saying the
majority has already been legislated, the FT relays.

However, he adds, Greece may need additional measures after
August 2018 depending on whose scenario plays out: the
International Monetary Fund's pessimistic outlook, or the upbeat
projects of the European institutions and the Greek government,
the FT discloses.

Greece will also remain under supervision -- as have Spain,
Ireland, Portugal and Cyprus -- until 75% of its debts are paid
off, and this will be much stricter "in the first few years at
least, than, say, it was for Ireland," Mr. Wieser, as cited by
the FT, said.


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L U X E M B O U R G
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BMI GROUP: S&P Raises CCR to 'BB+' on Acquisition by Standard
-------------------------------------------------------------
S&P Global Ratings raised its long-term corporate credit rating
on BMI Group S.a.r.l. (BMI; previously Braas Monier Building
Group S.A.) to 'BB+' from 'BB-' and affirmed its short-term
rating at 'B'. The outlook is stable.

S&P said, "We also raised our issue rating on the group's EUR435
million fixed-rate notes due 2021, issued by BMI and BMBG Bond
Finance. Our recovery rating on these notes is unchanged at '4',
indicating our expectation of an average (30%-50%) recovery in
the event of a payment default (rounded estimate 45%).

"At the same time, we removed both the corporate credit and issue
ratings from CreditWatch with positive implications, where they
had been placed on Dec. 22, 2016.

"Finally, we withdrew our issue and recovery ratings on BMI's
EUR200 million revolving credit facility (RCF), as this facility
has been repaid.

The upgrade follows the completion of Standard Industries Inc.'s
acquisition of BMI. In addition, the integration of the Braas
Monier and Icopal businesses in Europe continues to gather
momentum.

S&P said, "We still assess BMI's business risk profile as fair
(at the lower end of the category, which is why we continue to
apply our negative comparable ratings analysis), as we have not
yet had the opportunity to review the fully combined entity in
operation.

"Once we adjust BMI's debt for pensions, factoring, and operating
leases, we calculate that S&P Global Ratings-adjusted debt to
EBITDA is just under 4x. Our view of BMI's financial risk
incorporates its history of good cash flows, which are more than
sufficient to fund working capital, debt service, and capital
expenditure requirements.

"We expect that BMI's liquidity will be at least adequate over
the next 12 months, and note that the company's EUR200 million
RCF was repaid by way of an intracompany loan from Standard
Industries.

"The stable outlook reflects our view that BMI will be able to
maintain at least its current revenue and EBITDA run rate, with
adjusted debt to EBITDA of less than 4x and at least adequate
liquidity. These credit measures support our 'bb-' assessment of
the company's SACP and the 'BB+' corporate credit rating after
applying a two-notch uplift based on the overall strength and
credit profile of BMI's owner, Standard Industries.

"We could lower our ratings on BMI if we lowered the GCP on
Standard Industries, or if we viewed BMI as no longer being
highly strategic to Standard Industries. We view either of these
events as unlikely. Given Standard Industries' strength, we
anticipate that if Standard Industries remained committed to
supporting its investment in BMI, it could support the 'BB+'
rating on its subsidiary even if BMI's leverage exceeded 4x,
assuming that the rest of the Standard Industries group
maintained its current financial strength. Were BMI's leverage to
exceed 5x on a sustained basis, we could lower the SACP and, in
turn, the rating.

"An upgrade is unlikely, unless we change our view of Standard
Industries or the strategic position of BMI within the Standard
Industries family of companies. An upgrade would depend on us
raising our rating on Standard Industries, or revising our view
of BMI as highly strategic to the Standard Industries group's
current identity, implying that the rest of the group would be
likely to support BMI and its issued debt under any foreseeable
circumstances."


CABOT FINANCIAL: Moody's Puts B2 CFR on Review for Upgrade
----------------------------------------------------------
Moody's Investors Service has placed on review for upgrade the B2
long-term corporate family rating of Cabot Financial Ltd (CFL).
At the same time Moody's has placed on review for upgrade the
Backed B2 senior secured bond ratings of Cabot Financial
(Luxembourg) II S.A, Cabot Financial (Luxembourg) S.A and Marlin
Intermediate Holdings plc.

The review will assess (i) the extent to which CFL's leading
position in the UK debt purchasing industry affords a competitive
edge consistent with a higher rating level, (ii) whether CFL's
enhanced operating diversification will create cost synergies and
improve the firm's ability to generate stable earnings streams,
and (iii) the extent to which the expected initial public
offering will have a beneficial effect on leverage, financing
costs, and corporate governance.

RATINGS RATIONALE

i. With GBP1.43 billion in total reported assets as of end-June
2017, CFL is the largest rated debt purchasing company in the UK.
The firm has strong cash generating capability with an annualized
adjusted EBITDA of GBP203 million as of June 2017 (according to
Moody's calculations), which has increased by 10% on average
since 2012. The 120-month estimated remaining collections (ERC)
stood at GBP2.2 billion as of end-June 2017, higher than all
other UK competitors. Founded in 1998, CFL was the first entrant
in the UK debt purchase market and has since developed commercial
relationships with all major UK banks. Moody's believes the UK
debt purchasing market has high barriers to entry, since vendors
are more inclined to sell their portfolios to established and
sizable players. CFL's scale supports its ability to absorb
compliance costs and investments in technological innovation,
while its strong track-record of regulatory compliance is
attractive to vendors facing regulatory scrutiny and conduct-
related costs.

The review will therefore determine whether CFL's strong market
position, supported by its track record of accurately predicting
actual collections and its established relationships with a
variety of debt sellers, is consistent with a higher rating
level.


ii. On August 24, 2017, CFL announced that it would raise GBP260
million of asset-backed financing in order to acquire Wescot
Credit Services Limited, the largest debt service provider for
the UK retail banking sector. The acquisition, which is expected
to double servicing revenues to 20% of total revenues, and
follows the May 2017 acquisition of UK-based debt servicer Orbit
Services, supports the company's ambition to grow its third-party
debt-servicing business. Moody's believes that focusing on a more
asset light segment should mitigate the risk, inherent to the
debt purchasing business, of mispricing acquired portfolios, and
support CFL's ability to generate stable earnings streams. Such
diversification also creates synergies, as the debt servicing
business creates new business opportunities for the purchasing
segment, while leveraging on shared IT platforms and a common set
of credit data on debtors.

Initially focused only on the UK market with a small presence in
Ireland, CFL is also in the process of expanding its presence in
Europe: With the acquisition of Gesif, CFL entered the Spanish
market in 2015, and acquired a portfolio in Portugal and a
controlling share in French Nemo Recouvrement SAS in 2016.
Although such markets present growth opportunities, being either
in a nascent phase (France), or rapidly developing (Spain),
Moody's will monitor whether CFL's limited expertise in non-UK
debtors' behavioral patterns could lead to less accurate pricing
and inefficient collection strategies.

The review will therefore assess whether CFL's improved operating
and geographical diversification will improve the firm's ability
to generate stable earnings streams.

iii. The review will also focus on the impact of the potential
initial public offering (IPO) of CFL on the London Stock
Exchange, which is expected to occur before year-end 2017.
Listing CFL could create an opportunity for the company to raise
capital and deleverage, while reducing private-equity ownership
and improving corporate governance and transparency. It could
also provide the company with access to equity capital markets,
which would ease the company's ability to raise equity in the
future were this needed. Moreover, if equity is raised to pay
down CFL's debt, it would reduce the company's leverage and
likely improve its marginal financing cost compared with some
peers that are owned by private-equity funds. As of the end of
June 2017, Moody's calculates CFL's debt at 4.1x EBITDA.

The review will also assess the impact of the potential IPO on
CFL's long-term strategy. Currently, the US debt purchaser Encore
Capital Group (unrated) holds 43% of the share capital, while
private-equity firm J.C. Flowers & Co. (unrated) holds a similar
stake, with management owning the remainder. Moody's will monitor
whether the current shareholders' ownership and influence will
decline, and whether reduced private-equity ownership would help
the company focus on its long-term goals. The review will also
focus on the evolution of the board of directors' independence,
which would positively affect Moody's assessment of Cabot's
corporate governance. Cabot's board of directors currently has
eight members, four of which are non-executive directors
representing Encore Capital Group and two are non-executive
directors representing J.C. Flowers.

WHAT COULD CHANGE THE RATINGS UP/DOWN

CFL's rating could be upgraded if Moody's determines during the
review period that the company's market position, operating and
geographical diversification are consistent with a higher rating
level. An upgrade could also be warranted if Moody's expects the
potential IPO to have a beneficial effect on leverage, financing
costs, and corporate governance. A significant improvement in the
combination of leverage metrics (gross debt-to-adjusted EBITDA)
to around 3.5x, interest coverage (adjusted EBITDA-to-interest
expense) to around 4x and capital (tangible common equity to-
tangible managed assets) to over 6%, while maintaining other
financial metrics and ratios at current levels, could lead to an
upgrade of CFL's ratings..

CFL's rating could come under downward pressure due to (i)
significant deterioration in profitability metrics; or (ii) a
further increase in leverage or sustained decline in operating
performance, leading to a debt ratio which is higher than 6x
adjusted EBITDA; or (iii) a significant decline in interest
coverage, with an adjusted EBITDA-to-interest expense ratio
around or below 1.0x.

LIST OF AFFECTED RATINGS

Placed On Review for Upgrade:

Issuer: Cabot Financial (Luxembourg) II S.A

-- BACKED Senior Secured, currently B2, Outlook Changed To
    Rating Under Review From Stable

Outlook Actions:

-- Outlook, Changed To Rating Under Review From Stable

Issuer: Cabot Financial (Luxembourg) S.A

-- BACKED Senior Secured, currently B2, Outlook Changed To
    Rating Under Review From Stable

Outlook Actions:

-- Outlook, Changed To Rating Under Review From Stable

Issuer: Cabot Financial Ltd

-- LT Corporate Family Rating, currently B2, Outlook Changed To
    Rating Under Review From Stable

Outlook Actions:

-- Outlook, Changed To Rating Under Review From Stable

Issuer: Marlin Intermediate Holdings plc

-- BACKED Senior Secured, currently B2, Outlook Changed To
    Rating Under Review From Stable

Outlook Actions:

-- Outlook, Changed To Rating Under Review From Stable

PRINCIPAL METHODOLOGY

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


=================
M A C E D O N I A
=================


MACEDONIA: S&P Affirms 'BB-/B' Sovereign Credit Ratings
-------------------------------------------------------
On Sept. 15, 2017, S&P Global Ratings affirmed its long- and
short-term foreign and local currency sovereign credit ratings on
the Republic of Macedonia at 'BB-/B'. The outlook for the long-
term ratings remains stable.

OUTLOOK

The stable outlook reflects the balance between the risks from
Macedonia's rising public debt and remaining political
uncertainty over the next 12 months, and the country's favorable
economic prospects.

S&P said, "We could raise our ratings on Macedonia if reforms
directed toward higher broader-based economic growth led to a
faster increase in income levels than in our base-case scenario,
alongside improved effectiveness and accountability
of public institutions and policymaking.

"We could lower the ratings if major political tensions returned,
impairing growth and foreign direct investment (FDI) inflows and
undermining the country's longer-term prospects. We could also
lower the ratings if large fiscal slippages or off-budget
activities were to call into question the sustainability of
Macedonia's public debt, raise the sovereign's borrowing costs,
and substantially increase its external obligations, given the
constraints of the exchange-rate regime. In addition, if the
parent companies of systemically important banks operating in
Macedonia were to reduce their commitment to subsidiaries, we
could consider a negative rating action."

RATIONALE

The ratings on Macedonia reflect S&P's view of the country's
relatively low income levels; comparatively weak checks and
balances between state institutions, coupled with the still-
fragile political environment; and limited monetary policy
flexibility arising from the country's fixed-exchange-rate
regime. The ratings are primarily supported by moderate--albeit
rising--external and public debt levels.

Institutional and Economic Profile: The formation of a coalition
government should support a gradual acceleration in growth
following output contraction in the first half of 2017

A narrow majority coalition government was finally formed in May
2017, more than half a year after the latest general election.

S&P said, "In our view, the development should support improved
confidence and a gradual acceleration in economic growth. We do
not expect a substantial change in policy direction under the new
administration."

A government centered around the Social Democratic Union of
Macedonia (SDSM) -- the main former opposition party -- was
finally formed in May 2017. The coalition also features two other
parties that represent the Albanian minority -- the Democratic
Union for Integration (DUI) and Alliance for Albanians (AA). The
formation of the government comes more than six months after snap
elections were held in December 2016. Although the incumbent
party, Internal Macedonian Revolutionary Organization-Democratic
Party for Macedonian National Unity (VMRO-DPMNE) secured the
largest proportion of the vote at the time, it failed to secure
enough parliamentary support to govern for another term.

Macedonia has been locked in a protracted political crisis and,
in S&P's view, the recent government formation should help bring
more certainty and improvement in economic sentiment. At the same
time, it remains to be seen whether and how long the new
arrangement will last, given the narrow majority of only two
seats commanded by the administration. Historically, Macedonia
has frequently seen bouts of political volatility and out-of-
cycle elections.

S&P said, "At the same time, we do not expect recent political
changes to bring about a major shift in policy direction. The new
government will likely remain focused on Macedonia's accession to
NATO and the EU, although progress will be only gradual. We also
do not anticipate a radical change in Macedonia's fiscal stance
and its moderate budgetary deficits are expected to persist over
the four-year forecast horizon.

"Although the recent post-election power transfer establishes an
important precedent in Macedonia, we still believe the country's
institutional arrangements remain comparatively weak. We note
that effective checks and balances between government bodies are
often lacking. There also remains a risk of tensions between
ethnic Macedonians and the Albanian minority, as highlighted by
the protests that took place earlier this year."

Nevertheless, the respite in political uncertainty should support
an improvement in confidence and economic sentiment. The
political crisis has already taken a toll on the economy, with
growth slowing to 2.4% in 2016 from almost 4% in 2015, followed
by an output contraction in year-on-year terms in the first half
of 2017 as some private and public investments were put on hold.

S&P said, "We anticipate this drop to have been temporary and
expect growth to strengthen in the second half of this year,
resulting in an overall output expansion of 1% in 2017. It should
accelerate further, averaging about 3% in 2018-2020 supported by
rising investments, consumption, and net exports.

"Downside risks to our forecasts remain, not least if the
political crisis intensifies again. With GDP per capita estimated
at about $5,400 in 2017, Macedonia remains a low-income economy.
In recent years, the government has attempted to attract FDI to
special free economic zones, capitalizing on the country's
comparatively favorable tax regime, low labor costs, and
proximity to European markets. In our view, were major political
tensions to return, this could weigh on growth if a substantial
portion of foreign investments are cancelled or postponed.

"Political risks aside, we believe there is upside potential for
the economy's long-term growth prospects from the expansion of
free zones. Full benefits to growth would only materialize,
however, if companies within the zones become better integrated
into the local economy by using local suppliers. We note that so
far most inputs for goods assembled by foreign companies have
been imported. Consequently, the free zones' impact on the rest
of the economy has been less than might be expected and largely
confined to employment."

Flexibility and Performance Profile: Although the public debt
burden remains moderate, leverage will continue rising in line
with projected fiscal deficits.

Macedonia's public debt burden remains moderate in a global
context.

Nevertheless, the projected deficits will add to the country's
debt stock, and we forecast general government debt (including
obligations of the Public Enterprise for State Roads) will rise
to about 51% of GDP by 2019.

Although Macedonia's monetary flexibility is higher than that of
other Balkan states, the denar-euro peg constrains the policies
of the National Bank of the Republic of Macedonia (NBRM).

S&P said, "Macedonia has been running persistent budget deficits,
but we believe its fiscal profile still leaves some space for
policy flexibility, which supports the ratings. Over the longer
run, the new government aims for a gradual fiscal consolidation
with deficit reducing toward 2% of GDP over the next four years.
However, the consolidation plan so far lacks concrete measures
and could fall short of the target if growth or revenue
collection underperform. Consequently, we forecast slightly wider
deficits averaging 3% of GDP over the next four years."

Following the formation of a new government, a supplementary 2017
budget was adopted at the beginning of August, whereby both
revenue and expenditure projections were revised downward. The
amended budget is based on more modest economic growth
assumptions and aims to reduce less productive spending as well
downsize capital expenditures. The authorities' general
government deficit target for 2017 is 3% of GDP, which S&P thinks
is broadly achievable.

The general government deficit amounted to 2.6% of GDP last year-
-lower than the authorities' revised target of 4%. Importantly,
however, this has largely happened against the background of
underspending, partly attributable to the political stalemate.

S&P said, "We also believe that while net general government debt
remains comparatively low, it will continue to rise to 46% of GDP
in 2020 from an estimated 38% of GDP at year-end 2016. Our
general government debt calculation includes the increasing debt
of The Public Enterprise for State Roads (PESR). This is because
we believe PESR will need to rely on government transfers to
service its debt in the future. In particular, a EUR580 million
loan from the Export-Import Bank of China (and for which the
government provided a guarantee), contracted in 2013 for the
construction of two highway sections, will continue to contribute
to the increasing debt burden."

Macedonia has repeatedly been able to tap the Eurobond market.
This has made the government's balance sheet more vulnerable to
potential foreign-exchange movements, as close to 80% of
government debt is denominated in foreign currency (including
part of domestic debt). The authorities plan to expand their
domestic issuance but also maintain regular foreign capital
market borrowing.

With the public sector increasingly borrowing abroad, the
Macedonian economy's external debt has been rising despite some
deleveraging in the banking sector.

S&P said, "In 2016, we estimate that gross external debt net of
liquid financial and public-sector assets increased to about 30%
of current account receipts.

"We forecast that Macedonia's external debt metrics will remain
broadly stable over the next four years. We anticipate the
current account deficit will gradually tighten and reach 2% of
GDP in 2020, partly owing to the positive impact of the expansion
of foreign companies in the free zones. We project these deficits
will be financed by a combination of borrowing and net FDI
inflows."

The Macedonian denar is pegged to the euro, and we believe the
existing foreign-exchange regime restricts monetary policy
flexibility. However, central bank measures, such as lower
reserve requirements for denar-denominated liabilities, have
lowered overall euroization in Macedonia, with foreign currency-
denominated deposits and loans remaining around 40% of total
deposits and loans in recent years. S&P said, "We note that this
is a lower proportion than in other Balkan economies and affords
the NBRM additional room for policy response. Rather
exceptionally for the region, bank lending in Macedonia has also
continued to increase in recent years. That said, the trends are
uneven: while lending to households has been robust, the stock of
credit to corporates has remained flat. We expect the stock of
domestic credit to grow by a moderate annual average of 5% over
the next four years."

Macedonia's banking system, which is predominantly foreign-owned,
has seen several bouts of volatility in recent years. For
example, political developments caused deposit outflows from
Macedonia's banking sector in April 2016, although the majority
of funds have since flowed back into the system. In general, the
banking system appears well capitalized and profitable, and it is
largely funded by domestic deposits. Macedonia's regulatory and
supervisory framework under the NBRM has proven resilient to past
episodes of volatility; the NBRM reacted swiftly to the
volatility in April by raising interest rates and intervening in
the foreign exchange market to support the currency peg as well
as deploying several other measures. In addition, the NBRM has
introduced macroprudential measures such as higher capital
requirements for consumer loans longer than eight years and is
moving ahead with the implementation of Basel III principles. At
present, S&P estimates that nonperforming loans in the system
amount to about 7% of the total.


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


ACCUNIA EUROPEAN II: Moody's Assigns (P)B2 Rating to Cl. F Notes
-----------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Accunia
European CLO II B.V. (the "Issuer"):

-- EUR223,500,000 Class A Senior Secured Floating Rate Notes due
    2030, Assigned (P)Aaa (sf)

-- EUR38,100,000 Class B-1 Senior Secured Floating Rate Notes
    due 2030, Assigned (P)Aa2 (sf)

-- EUR9,000,000 Class B-2 Senior Secured Fixed Rate Notes due
    2030, Assigned (P)Aa2 (sf)

-- EUR23,100,000 Class C Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)A2 (sf)

-- EUR17,300,000 Class D Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)Baa2 (sf)

-- EUR21,700,000 Class E Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)Ba2 (sf)

-- EUR12,500,000 Class F Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale
of financial instruments, but these ratings only represent
Moody's preliminary credit opinions. Upon a conclusive review of
a transaction and associated documentation, Moody's will
endeavour to assign definitive ratings. A definitive rating (if
any) may differ from a provisional rating.

RATINGS RATIONALE

Moody's provisional ratings of the rated notes address the
expected loss posed to noteholders by the legal final maturity of
the notes in 2030. The provisional ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Accunia
Fondsm√ęglerselskab A/S ("Accunia Credit Management"), has a team
with sufficient experience and operational capacity and is
capable of managing this CLO.

The Issuer is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured loans and senior secured
bonds and up to 10% of the portfolio may consist of unsecured
loans, second-lien loans, mezzanine obligations and high yield
bonds. The portfolio is expected to be approximately 70% ramped
up as of the closing date and to be comprised predominantly of
corporate loans to obligors domiciled in Western Europe. The
remaining of the portfolio will be acquired during the 90 days
expected ramp-up period.

Accunia Credit Management will manage the CLO. It will direct the
selection, acquisition and disposition of collateral on behalf of
the Issuer and may engage in trading activity, including
discretionary trading, during the transaction's four-year
reinvestment period. Thereafter, purchases are permitted using
principal proceeds from unscheduled principal payments and
proceeds from sales of credit risk and credit improved
obligations, and are subject to certain restrictions.

In addition to the seven classes of notes rated by Moody's, the
Issuer will issue EUR41,400,000 of subordinated notes, which will
not be rated.

The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.

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

The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. Accunia Credit Management's
investment decisions and management of the transaction will also
affect the notes' performance.

Loss and Cash Flow Analysis:

Moody's modelled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
August 2017. The cash flow model evaluates all default scenarios
that are then weighted considering the probabilities of the
binomial distribution assumed for the portfolio default rate. In
each default scenario, the corresponding loss for each class of
notes is calculated given the incoming cash flows from the assets
and the outgoing payments to third parties and noteholders.
Therefore, the expected loss or EL for each tranche is the sum
product of (i) the probability of occurrence of each default
scenario and (ii) the loss derived from the cash flow model in
each default scenario for each tranche. As such, Moody's
encompasses the assessment of stressed scenarios.

Moody's used the following base-case modeling assumptions:

Par amount: EUR375,000,000

Diversity Score: 38

Weighted Average Rating Factor (WARF): 2750

Weighted Average Spread (WAS): 3.625%

Weighted Average Recovery Rate (WARR): 42.75%

Weighted Average Life (WAL): 8 years

Moody's has analysed the potential impact associated with
sovereign related risk of peripheral European countries. As part
of the base case, Moody's has addressed the potential exposure to
obligors domiciled in countries with local currency country risk
ceiling of A1 or below. Following the effective date, and given
the portfolio constraints, only up to 10% of the pool can be
domiciled in countries with foreign currency government bond
rating between A1 and A3 with no exposure allowed to countries
with a lower ceiling. Given this portfolio composition, there
were no adjustments to the target par amount, as further
described in the methodology.

Stress Scenarios:

Together with the set of modelling assumptions above, Moody's
conducted additional sensitivity analysis, which was an important
component in determining the provisional rating assigned to the
rated notes. This sensitivity analysis includes increased default
probability relative to the base case. Below is a summary of the
impact of an increase in default probability (expressed in terms
of WARF level) on each of the rated notes (shown in terms of the
number of notch difference versus the current model output,
whereby a negative difference corresponds to higher expected
losses), holding all other factors equal:

Percentage Change in WARF: WARF + 15% (to 3163 from 2750)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: 0

Class B-1 Senior Secured Floating Rate Notes: -2

Class B-2 Senior Secured Fixed Rate Notes: -2

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3575 from 2800)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: -1

Class B-1 Senior Secured Floating Rate Notes: -3

Class B-2 Senior Secured Fixed Rate Notes: -3

Class C Senior Secured Deferrable Floating Rate Notes: -4

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: -2

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.


ACCUNIA CLO II: S&P Assigns Prelim B-(sf) Rating to Cl. F Notes
---------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Accunia European CLO II B.V.'s fixed- and floating-rate class A,
B-1, B-2, C, D, E, and F notes. At closing, Accunia European CLO
II will also issue an unrated subordinated class of notes.

Accunia European CLO II is a European cash flow collateralized
loan obligation (CLO) transaction, securitizing a portfolio of
primarily senior secured euro-denominated leveraged loans and
bonds issued by European borrowers. Accunia Fondsm√ęglerselskab
A/S is the collateral manager.

Under the transaction documents, the rated notes will pay
quarterly interest unless there is a frequency switch event.
Following such an event, the notes will permanently switch to
semiannual payment. The portfolio's reinvestment period will end
approximately four years after closing.

S&P said, "Our preliminary ratings reflect our assessment of the
preliminary collateral portfolio's credit quality, which has a
weighted-average 'B' rating. We consider that the portfolio at
closing will be well-diversified, primarily comprising broadly
syndicated speculative-grade senior secured term loans and senior
secured bonds. Therefore, we have conducted our credit and cash
flow analysis by applying our criteria for corporate cash flow
collateralized debt obligations (see "Global Methodologies And
Assumptions For Corporate Cash Flow And Synthetic CDOs,"
published on Aug. 8, 2016).

"In our cash flow analysis, we used the EUR375 million target par
amount, the covenanted weighted-average spread (3.625%), the
covenanted weighted-average coupon (4.500%), the target minimum
weighted-average recovery rates at the 'AAA' level, and the
actual weighted-average recovery rates for all other rating
levels. We applied various cash flow stress scenarios, using four
different default patterns, in conjunction with different
interest rate stress scenarios for each liability rating
category.

"The Bank of New York Mellon, London Branch is the bank account
provider and custodian. At closing, we anticipate that the
documented downgrade remedies will be in line with our current
counterparty criteria (see "Counterparty Risk Framework
Methodology And Assumptions," published on June 25, 2013).

"Following the application of our structured finance ratings
above the sovereign criteria, we consider that the transaction's
exposure to country risk is sufficiently mitigated at the
assigned preliminary rating levels (see "Ratings Above The
Sovereign - Structured Finance: Methodology And Assumptions,"
published Aug. 8, 2016).

"At closing, we consider that the issuer will be bankruptcy
remote, in accordance with our legal criteria (see "Structured
Finance: Asset Isolation And Special-Purpose Entity Methodology,"
published on March 29, 2017).

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

RATINGS LIST

  Preliminary Ratings Assigned

  Accunia European CLO II B.V.
  EUR386.60 Million Senior Secured Floating- And Fixed-Rate Notes
  (Including EUR41.4 Million Unrated Subordinated Notes)

  Class                 Prelim.         Prelim.
                        rating           amount
                                     (mil. EUR)

  A                     AAA (sf)          223.5
  B-1                   AA (sf)            38.1
  B-2                   AA (sf)             9.0
  C                     A (sf)             23.1
  D                     BBB (sf)           17.3
  E                     BB (sf)            21.7
  F                     B- (sf)            12.5
  Subordinated notes    NR                 41.4

  NR--Not rated.


NIBC BANK: S&P Rates Proposed Additional Tier 1 Securities 'B+'
---------------------------------------------------------------
S&P Global Ratings said that it has assigned its 'B+' long-term
issue rating to the proposed additional Tier 1 (AT1) perpetual
capital notes to be issued by The Netherlands-based NIBC Bank
N.V. The rating is subject to S&P's review of the notes' final
documentation.

In accordance with S&P's criteria for hybrid capital instruments
("Bank Hybrid Capital And Nondeferrable Subordinated Debt
Methodology And Assumptions," published Jan. 29, 2015, on
RatingsDirect), the 'B+' issue rating reflects our analysis of
the proposed instrument and the 'BBB-' long-term issuer credit
rating (ICR) on NIBC.

The issue rating stands four notches below the ICR due to the
following deductions:

-- One notch because the notes are contractually subordinated;
-- Two notches reflecting the notes' discretionary coupon
    payments and regulatory Tier 1 capital status; and
-- One notch because the notes contain a contractual write-down
    clause.

The instrument contains a regulatory capital-based trigger,
linked to a regulatory common equity Tier 1 (CET1) ratio of
5.125% of the consolidated NIBC Holdings N.V. or the issuer
level. S&P said, "We treat this mandatory trigger as a
"nonviability" trigger and don't apply additional notching to
this instrument. The reason for this is that Basel III
requirements and market expectations will likely require banks to
operate with significantly higher capital than a CET1 ratio of
5.125% implies (see "Applying The Bank Hybrid Capital Criteria To
Specific Instruments," published on Dec. 20, 2011). As of June
30, 2017, NIBC Holding N.V. had a CRD IV phase-in CET1 ratio of
18.2% (the bank's transitional CET1 ratio was 20.4%).

"We could lower the rating on the AT1 instrument if we project
that either of these regulatory ratios will fall within 700 basis
points of the trigger within our two-year rating horizon.

"Once the securities have been issued and confirmed as part of
the issuer's Tier 1 capital base, we expect to assign them
intermediate equity content. This reflects our understanding that
the notes are perpetual, regulatory Tier 1 capital instruments
that have no step-up. The payment of coupons is fully
discretionary and the notes can additionally absorb losses on a
going-concern basis through the write-down feature."


TIKEHAU CLO III: Moody's Assigns (P)B2 Rating to Class F Notes
--------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Tikehau
CLO III B.V.:

-- EUR244,700,000 Class A Senior Secured Floating Rate Notes due
    2030, Assigned (P)Aaa (sf)

-- EUR57,700,000 Class B Senior Secured Floating Rate Notes due
    2030, Assigned (P)Aa2 (sf)

-- EUR28,600,000 Class C Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)A2 (sf)

-- EUR19,700,000 Class D Senior Secured Deferrable Floating Rate
    Notes 2030, Assigned (P)Baa2 (sf)

-- EUR26,250,000 Class E Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)Ba2 (sf)

-- EUR12,600,000 Class F Senior Secured Deferrable Floating Rate
    Notes due 2030, Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale
of financial instruments, but these ratings only represent
Moody's preliminary credit opinions. Upon a conclusive review of
a transaction and associated documentation, Moody's will
endeavour to assign definitive ratings. A definitive rating (if
any) may differ from a provisional rating.

RATINGS RATIONALE

Moody's provisional ratings of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2030. The provisional ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Tikehau Capital
Europe Limited ("Tikehau"), has sufficient experience and
operational capacity and is capable of managing this CLO.

Tikehau CLO III B.V. is a managed cash flow CLO. At least 90% of
the portfolio must consist of senior secured obligations and up
to 10% of the portfolio may consist of senior unsecured
obligations, second-lien loans, mezzanine obligations and high
yield bonds. The portfolio is expected to be 70% ramped up as of
the closing date and to be comprised predominantly of corporate
loans to obligors domiciled in Western Europe. The remainder of
the portfolio will be acquired during the six month ramp-up
period in compliance with the portfolio guidelines.

Tikehau will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk obligations or credit improved obligations, and are subject
to certain restrictions.

In addition to the six classes of notes rated by Moody's, the
Issuer will issue EUR45,600,000 of subordinated notes which will
not be rated.

The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.

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

The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. Tikehau's investment decisions
and management of the transaction will also affect the notes'
performance.

Loss and Cash Flow Analysis:

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
August 2017. The cash flow model evaluates all default scenarios
that are then weighted considering the probabilities of the
binomial distribution assumed for the portfolio default rate. In
each default scenario, the corresponding loss for each class of
notes is calculated given the incoming cash flows from the assets
and the outgoing payments to third parties and noteholders.
Therefore, the expected loss or EL for each tranche is the sum
product of (i) the probability of occurrence of each default
scenario and (ii) the loss derived from the cash flow model in
each default scenario for each tranche.

Moody's used the following base-case modeling assumptions:

Par Amount: EUR420,000,000

Diversity Score: 38

Weighted Average Rating Factor (WARF): 2775

Weighted Average Spread (WAS): 3.60%

Weighted Average Coupon (WAC): 4.75%

Weighted Average Recovery Rate (WARR): 43.00%

Weighted Average Life (WAL): 8.5 years.

Stress Scenarios:

Together with the set of modelling assumptions above, Moody's
conducted an additional sensitivity analysis, which was an
important component in determining the provisional rating
assigned to the rated notes. This sensitivity analysis includes
increased default probability relative to the base case. Below is
a summary of the impact of an increase in default probability
(expressed in terms of WARF level) on each of the rated notes
(shown in terms of the number of notch difference versus the
current model output, whereby a negative difference corresponds
to higher expected losses), holding all other factors equal.

Percentage Change in WARF: WARF + 15% (to 3191 from 2775)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: 0

Class B Senior Secured Floating Rate Notes: -2

Class C Senior Secured Deferrable Floating Rate Notes: -2

Class D Senior Secured Deferrable Floating Rate Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: 0

Percentage Change in WARF: WARF +30% (to 3608 from 2775)

Ratings Impact in Rating Notches:

Class A Senior Secured Floating Rate Notes: -1

Class B Senior Secured Floating Rate Notes: -3

Class C Senior Secured Deferrable Floating Rate Notes: -4

Class D Senior Secured Deferrable Floating Rate Notes: -3

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: -2

Further details regarding Moody's analysis of this transaction
may be found in the upcoming pre-sale or new issue report,
available soon on Moodys.com.

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.


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


GS-HYDRO HOLDING: Files for Bankruptcy Following Liquidity Woes
---------------------------------------------------------------
Reuters reports that Ratos AB said GS-hydro Holding oy and its
subsidiary GS-Hydro Oy have filed for bankruptcy.

According to Reuters, Ratos said GS-Hydro Group has experienced
liquidity and profitability problems for some time.  It said
these became acute when one of company's largest customers could
not meet its payment commitments to a group company within GS-
Hydro Group, Reuters relates.

On December 31, 2016, Ratos wrote down consolidated book value in
GS-Hydro by SEK 160 million to SEK0, Reuters discloses.

GS-hydro Holding oy is Ratos AB's Finnish subsidiary.


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


CO-OPERATIVE BANK: Co-op Group Sells Remaining 1% Stake
-------------------------------------------------------
Ashley Armstrong and Jon Yeomans at The Telegraph report that the
Co-op Group has severed its ties with the troubled Co-op Bank by
selling its last remaining 1% stake, while reporting a rise in
sales on the back of its British-sourced food.

According to The Telegraph, Co-op boss Steve Murrells said that
the GBP5 million stake sale was the "logical and right thing to
do" as the mutual no longer had any influence on the banking arm.

Its ownership plummeted to around 20% in 2013 after the bank was
rescued by a group of hedge funds following the discovery of a
GBP1.5 billion hole in its accounts, The Telegraph relates.  A
GBP700 million recapitalization earlier this year meant that the
Co-op's stake dropped to just 1%, The Telegraph notes.

Mr. Murrells, who took over from turnaround expert Richard
Pennycook in February, as cited by The Telegraph, said that the
Co-op Group would continue to have a formal marketing agreement
until 2020 but an independent body would decide how long the bank
could continue to use the Co-op name based on whether it upholds
the ethical standards of the group's articles of association.

                      About Co-operative Bank

The Co-operative Bank plc is a retail and commercial bank in the
United Kingdom, with its headquarters in Balloon Street,
Manchester.

In 2013-2014, the Bank was the subject of a rescue plan to
address a capital shortfall of about GBP1.9 billion.  The Bank
mostly raised equity to cover the shortfall from hedge funds.

In February 2017, the Bank's board announced that they were
commencing a sale process for the Bank and were "inviting
offers."

The Troubled Company Reporter-Europe reported on Sept. 12, 2017,
that Moody's Investors Service upgraded the standalone baseline
credit assessment (BCA) of the Co-operative Bank Plc (the Co-op
Bank) to caa2 from ca in light of its improved credit profile and
capital position given the implementation of the bank's capital
increase.

Moody's upgraded the bank's long-term senior unsecured debt
rating to Caa2 from Ca, reflecting the completion of the bank's
capital raising plan without the imposition of any losses on this
class of creditors.

Moody's confirmed the long-term deposit ratings at Caa2, at the
same level as its standalone BCA, given the reduced amount of
subordination benefiting this class of liabilities due to the
cancellation of Tier 2 capital as part of the restructuring. The
short-term deposit ratings were affirmed at Not Prime.


ENQUEST PLC: Moody's Affirms Caa1 CFR, Revises Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service has affirmed EnQuest plc's corporate
family rating (CFR) and probability of default rating (PDR) at
Caa1 and Caa1-PD, respectively. At the same time, Moody's has
changed the outlook on all ratings to stable from positive.

RATINGS RATIONALE

The change of outlook to stable from positive reflects the
reduced cash flow generation expected in 2017 resulting in
peaking leverage with adjusted gross debt/EBITDA at around 7.0x
in 2017 from 4.7x in 2016. This is mainly due to lower production
expected in 2017 at around 35 kboepd from 45 -- 51 kboepd
previously expected as a result of the delayed production ramp-up
of the Kraken project. The company is facing instrumentation and
familiarisation issues with the Floating, Production, Storage and
Offloading (FPSO) vessel which is causing delay to the ramp up.
This coupled with decline in production on the existing assets
due to the maturing reserve life will result in lower cash flow
generation in 2017 with free cash flow (FCF) expected to remain
negative at around $-200 million.

The Caa1 CFR reflects EnQuest's still high production risk on the
Kraken project, which started producing first oil in June 2017.
The rating also reflects that the company could face liquidity
issues in the coming 12 months if production from Kraken does not
ramp-up in line with expectations. Moody's expects capex spending
to remain at around $400 million in 2017 and at around $250-300
million in 2018. This, coupled with oil price assumptions of
$50/BOE in 2017-18 and after considering the recent hedges, is
expected to result in negative free cash flow (FCF) generation of
around $-200 million in 2017. Moody's expects the company to
return to positive FCF generation in 2018 of around $70-100
million assuming Kraken ramps-up in line with expectations.
Moody's expects adjusted gross debt/EBITDA to peak at 7.0x in
2017, however, should then fall back to around 4.0x-5.0x in 2018
after the ramp-up of the Kraken project.

The Caa1 rating also reflects the weak liquidity profile of
EnQuest, if Kraken ramp-up is not in line with expectations. The
company has access to $1.2 billion of credit facility, split into
$1.125 billion of term loan facility and $75 million revolving
credit facility (RCF), out of which $146 million remains undrawn
as of June 2017. This coupled with cash balance of $67 million as
of June 30, 2017, may not be sufficient to fund its liquidity
needs for the next 12-18 months, assuming an oil price of $50/bbl
in 2017 and 2018 and considering expected negative FCF generation
in 2017. The company has debt maturities of $87 million in the
coming 12 months, which includes maturities under the credit
facility which starts amortising semi-annually in April 2018.
Timely Kraken ramp-up by the end of 2017 remains key to the
company's liquidity profile. Covenant headroom is expected to
remain tight in the coming quarters and waivers may need to be
requested in order to remain compliant, similar to the waiver
requested and approved for September 2017. Moody's notes that the
company is working on options like prepayment facility and
refinancing of the Tanjong Baram facility, which could provide
some buffer to its liquidity in the near term. Successful farm
down of the company's 70.5% stake in Kraken could improve the
company's liquidity position, the timing of which remains
uncertain.

The company expects the issues with the FPSO to be resolved by
the end of the year and Kraken is expected to reach plateau gross
production of 50 kboepd in H1 2018. Moody's notes that production
from Kraken should improve the cash flow generation capacity of
the company resulting into an improved liquidity profile and
deleveraging thereafter, however, ramping its production remains
a key rating driver. Moody's continues to see EnQuest as an
efficient and strong operator in the North Sea, as demonstrated
by its ability to quickly bring down operating costs from $42/BOE
in 2014 to around $25/BOE in H1 2017.

Rating Outlook

The Caa1 rating reflects the weak liquidity profile of the
company. However the stable outlook balances this against the
improving cash flow generation profile which Moody's still
expects to materialise, even though this may not ramp up in time
to fully service the 2018 debt maturities. A refinancing or
extension of debt maturities may be required in 2018. A CFR lower
than Caa1 is only likely if expectations for the operational
recovery fall short of current levels.

What Could Change the Rating - Up

Successful ramping up of the Kraken project leading to
deleveraging and stronger liquidity profile could lead to an
upgrade on the rating.

What Could Change the Rating - Down

The Caa1 corporate family rating could come under pressure should
there be (i) a material delay and/or cost overruns in the
development of Kraken oil field; or (ii) a significant
deterioration in liquidity position of the company, as a result
of lower price realisations, delayed growth or operating issues.

The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.

EnQuest plc (EnQuest) is an independent oil and gas development &
production company with the majority of its asset base on the
United Kingdom Continental Shelf (UKCS) region of the North Sea.
The company also is building new production base in Malaysia,
which contributed about 24% of total production in H1 2017. The
company focusses on exploiting its existing reserves,
commercialising and developing discoveries, pursuing selective
acquisitions and converting contingent resources into reserves.

At the end of 2016 EnQuest had 2P reserves of 215mmboe, with an
average daily production of 37,015 boepd in H1 2017, down from
39,751 boepd in 2016.


INSIDE BIOMETRICS: GlucoRx Unit Buys Business, 35 Jobs Saved
------------------------------------------------------------
Gareth Mackie at The Scotsman reports that more than 30 jobs have
been secured following the collapse of Inside Biometrics, a
Dingwall life sciences company, into administration.

However, administrator Chris Laughton --
chrislaughton@mercerhole.co.uk -- corporate advisory partner at
accountant Mercer & Hole, was called in after the business ran
out of cash and risked having to close its doors, threatening the
jobs of its 35 staff, The Scotsman relates.

According to The Scotsman, Inside Biometrics, which supplies its
health tracking devices to the Sky cycling team, has now been
acquired by a division of GlucoRx, a supplier of diabetes
products and glucose-testing solutions.


INTEROUTE COMMUNICATIONS: S&P Affirms 'B+' CCR, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'B+' long-term
corporate credit rating on U.K.-based European information
communication technology and cloud computing company Interoute
Communications Holdings Ltd. (Interoute). The outlook is stable.

S&P said, "We also assigned our 'B+' issue rating to the EUR640
million proposed term loan B to be issued by Interoute Finco PLC,
the group's financing vehicle.

"At the same time, we affirmed our 'B+' issue and '3' recovery
ratings on Interoute's existing senior secured debt.

"The affirmation reflects our base-case expectation that
Interoute will reduce its S&P Global Ratings-adjusted debt to
EBITDA to less than 4.5x in 2017 despite some delays in
improvement of Interoute's revenues, which resulted in weaker-
than-anticipated performance related to Easynet. This is mainly
thanks to realization of most of the merger-related synergies and
a meaningful decline in integration costs, which have resulted in
a significant 35% increase in EBITDA in the first half of 2017,
with further run-rate synergies expected to be realized during
the second half of the year. Regarding Interoute's top-line
performance, the first half of the year (H1) 2017 was hit by the
currency effect from the depreciation of pound sterling. On a
constant currency basis, however, we see stable revenue growth,
while the currency impact was more than offset by the sterling-
denominated cost base.

"Additionally, we've seen recent signs of stabilization from
Easynet (which Interoute acquired in 2015) when looking at
performance on a quarterly basis. Additionally, churn for the
group remains low at around 1% and demand for the company's
virtual private network (VPN) and security products remain
strong. These elements all support a gradual improvement in the
company's top-line performance, and provide further scope for
leverage reduction.

"While our base case indicates that free operating cash flow
(FOCF) will remain negative in 2017, nonrecurring items (mainly
higher-than-normal working capital outflows and integration-
related cash outflows) will mainly drive this. Excluding
nonrecurring cash outflows, we forecast FOCF of more than EUR20
million in 2017, increasing to more than EUR30 million in 2018,
mainly thanks to interest savings on the refinancing of the
expensive EUR350 million senior secured notes. We therefore
expect FOCF to debt to increase to mid-single-digits from 2018,
and medium-term FOCF generation to provide some cushion against
any potential underperformance.

"Our calculation of Interoute's adjusted EBITDA includes
capitalized development costs and integration costs. Our
assessment of Interoute's financial risk profile is constrained
by its weak FOCF generation, on the back of high capital
expenditure. However, we note that about one third of capital
expenditure (capex) is related to growth of its customer base.

"Our assessment of Interoute's business risk profile continues to
be supported by its high level of recurring revenues; relatively
meaningful switching costs; and Interoute's strategy of
leveraging its own pan-European fiber network within its
enterprise segment, which creates a key competitive advantage.

"Our assessment is constrained by the highly competitive network
segment, which leads to pricing pressure constraints; Interoute's
limited scale in comparison with peers; and its lack of
meaningful operating leverage, which results in relatively low
EBITDA margins of about 20%.

"We assess Interoute's credit quality as weaker than peers such
as Level 3 and Interxion."

S&P's base case assumes:

-- Flat to marginally negative revenue growth in 2017 on a like-
    for-like basis, hindered by continued weakness for small and
    midsize enterprises (SMEs), and negative currency effect in
    H1, largely offset by continued solid demand for the
    company's enterprise solutions, notably VPN and security
    products.

-- Flat to 1% revenue increase in 2018 as growth in enterprise
    services more than offsets a continued minor decline of SMEs
    and lower transactional revenues.

-- Adjusted EBITDA margins improving to about 22% as integration
    costs decline and synergies increase.

-- Capex to sales of 11%-12%.

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

-- Debt to EBITDA of about 4.3x in 2017, declining to about 4x
    in 2018;

-- EBITDA interest coverage of about 4x; and

-- Negative FOCF in 2017, increasing to more than EUR30 million
    in 2018.

S&P said, "The stable outlook reflects our anticipation that
reduced integration related cash outflows, working capital
outflows, full realization of merger-related synergies, and
continued growth from cloud-based products will enable Interoute
to generate mid-single digit FOCF to debt in 2018 and reduce
adjusted debt to EBITDA to 4.0x-4.5x in 2017.

"We could lower the rating if increased customer churn,
significant pricing pressures, or reduced growth in its
enterprise services prevent Interoute from increasing its EBITDA.
These factors could result in adjusted leverage increasing to
above 4.5x on a sustained basis and prospective FOCF for 2018
dropping to less than EUR20 million (excluding any unforeseen
peaks in working capital), which we view as inconsistent with the
current rating.

"We view an upgrade over the next 12 months as unlikely, given
our anticipation of continued limited cash flow generation. We
could raise the ratings if EBITDA margins improve to more than
25%, adjusted leverage improves to less than 4x, and FOCF to debt
increases to more than 5%. We do not envisage this happening over
the next 12 months."


PROSERV GROUP: S&P Downgrades CCR to 'CCC-', Outlook Negative
-----------------------------------------------------------
S&P Global Ratings Services lowered its long-term corporate
credit rating on U.K. oilfield services company Proserv Group
Inc. to 'CCC-' from 'CCC+'. The outlook is negative.

S&P said, "At the same time, we lowered the issue-level rating on
the company's $60 million revolving credit facility (RCF) and
$365 million first-lien term loan to 'CCC-' from 'CCC+'. The '4'
recovery rating is unchanged, indicating our expectation of 30%-
50% (rounded estimate: 35%) recovery in the event of a payment
default.

"We also lowered our long-term issue rating on the company's $115
million second-lien term loan due 2022 to 'C' from 'CCC-'. The
recovery rating is unchanged at '6', indicating our expectation
of negligible (0%) recovery.

"The downgrade reflects our view that a liquidity crisis or
distressed exchange appears inevitable in the next six months in
the absence of significantly favorable changes in Proserv's
circumstances, such as shareholder support.

"We view liquidity as weak because the current covenant
restriction does not provide any availability under the RCF for
cash drawings and the cash balance at the end of the second
quarter of 2017 was only about $5 million.

"Our assessment of Proserv's financial risk profile is currently
underpinned by the group's weak operating performance amid the
very severe downturn that has affected all companies operating in
the oil and gas sector. Proserv's credit measures remain very
weak and we view its capital structure as unsustainable, mostly
because it is based on the higher oil prices that were the norm
when the private equity sponsor acquired Proserv a few years ago.
This private equity ownership, which translates into aggressive
financial policies, is also a key determinant of the financial
risk profile. At the same time, if liquidity support from the
owner were to materialize, we would view this positively. We
anticipate that 2017 will be as challenging for operations as
2016, with continued negative EBITDA and cash burn."

Proserv is a technology services provider to the oil and gas
industry, with products and services covering many stages of the
industry cycle. The lack of long-term contracts and overall
limited backlog are key negatives, as they translate into high
volatility of profitability because demand can vary dramatically
over a short period of time, with limited cash flow protection.
Proserv has a relatively diverse customer base and leading
positions in several niche markets across many regions.

Proserv's business has relatively high barriers to entry, thanks
to the technological complexity of its subsea and offshore
operations, but we consider that Proserv's credit quality is
constrained by its limited size, relatively low business
diversity, and exposure to the spending levels of its customers--
themselves directly or indirectly exposed to volatile hydrocarbon
prices.

S&P said, "In addition, we consider that Proserv's exposure to
price competition in the market is increased by the short-term
nature of its contracts (one year or less, on average). We
continue to believe that oil market conditions will remain
depressed at least into 2018, which, with a very limited contract
backlog, leaves the predictability of future cash flows at very
low levels. This is reflected by our business risk assessment of
vulnerable.

"With only slightly more than $5 million in cash at the end of
June 2017, mandatory debt amortization of $3.7 million in the 12
months started June 30, 2017, and our anticipation of continued
cash burn in operations, we estimate that cash sources cover well
below 1x cash uses. This is reflected in our assessment of
liquidity as weak.

"The outlook is negative. With a liquidity position that is weak
and no tangible signs of a rapid market turnaround, we believe
there is a very high likelihood of a liquidity squeeze or
distressed exchange or similar offer in the coming six months,
which we would view as a default.

"We could lower the ratings if Proserv was to engage in a
distressed exchange offer or similar offer. A liquidity crisis in
the coming months could also lead to a downgrade.

"We view any upside scenario as remote in the coming 12 months.
Exceptional parental support could support rating upside."


ROTHSCHILDS CONTINUATION: Fitch Raises Sub. Notes Rating From BB+
-----------------------------------------------------------------
Fitch Ratings has revised N M Rothschild & Sons Limited's (NMR)
Outlook to Stable from Positive, while affirming the firm's Long-
Term Issuer Default Rating (IDR) at 'BBB+' and Short-Term Issuer
Default Rating at 'F2'. The perpetual subordinated notes issued
by NMR's subsidiary, Rothschilds Continuation Finance PLC (RCF),
have been upgraded to 'BBB-' from 'BB+'.

NMR is a UK-domiciled subsidiary of Paris-based Rothschild & Co
(R&Co), the finance holding company of one of Europe's largest
financial advisory groups. Together with Paris-based Rothschild
Martin Maurel (RMM, 'A'/Negative), NMR is R&Co's main operating
subsidiary.

KEY RATING DRIVERS
IDRS AND SENIOR DEBT

The revision of NMR's Rating Outlook to Stable largely reflects
Fitch's view that despite improvements in NMR's asset quality and
leverage in recent years, they have not been sufficiently
meaningful as to fully offset the inherent cyclicality in NMR's
relatively concentrated business model. NMR's reliance on UK-
based activity - where Fitch expects more challenging advisory
conditions - also means that any further progress in financial
metrics will likely be slower than previously expected by Fitch.

The affirmations of NMR's IDRs reflect the institution's strong
European and, to a lesser extent, global advisory (GA) franchise,
good levels of profitability which have remained robust through
multiple economic cycles, an increasingly low-risk balance sheet,
low leverage, strong capitalisation and healthy liquidity. NMR's
IDRs are primarily constrained by the monoline nature of the
business model and the inherent cyclicality of the financial
advisory industry.

The GA business accounts for the vast majority of NMR's revenue,
with the remainder attributable to growing credit management and,
to a lesser extent, the real estate debt management business. The
GA business benefits from the overall Rothschild franchise, which
is strong in the UK and Europe, particularly in UK and French
mid-cap markets. R&Co enjoys strong league table positions in UK
and European M&A, restructuring and equity advisory and continues
to improve its position in the rankings. Rothschild's franchise
in North America and Asia is less well-established, which means
that unlike some of its peers it lacks a globally dominant
franchise.

Profitability levels are strong at NMR, underpinned by lower loan
impairment charges, lower funding costs and the resilient
performance of the core advisory business. GA revenue is well
diversified by sector (the largest sector generally accounts for
around 20% of gross fee income) but somewhat concentrated in its
home market (the UK generally accounts for around 60% of fees).
NMR's cost base is high, reflecting the company's business model,
but NMR has demonstrated an ability to adjust its cost base to
ensure adequate profitability in adverse market conditions.

NMR's credit risk arises predominantly from the legacy loan book
(mainly comprising secured UK commercial property loans), which
has a high level of impaired loans. In financial year ended March
2017, NMR made progress in reducing this exposure by GBP43
million to leave the legacy loan portfolio standing at GBP117
million (GBP81 million net of provisions). Additionally, NMR's
reserve coverage is, in Fitch views, adequate as illustrated by a
small provision write-back in 2017.

Credit exposure related to European CLO risk retention rules is
small in NMR, but larger in NMR's subsidiary, Five Arrows
Managers LLP (FAM). Given NMR's expansion plans for its credit
management business Fitch expects CLO-related credit risk to
moderately increase in 2018.

NMR's gross debt/EBITDA ratio (including 50% of its outstanding
subordinated perpetuals as debt in line with Fitch's equity
credit approach) stood at around 0.7x at FYE17, which compares
well with securities firm peers. NMR's common equity Tier 1
(CET1) ratio at FYE17 was a sound 36.3% (FYE16: 21.7%). While
internal capital generation is sound, dividend pay-out ratios are
high relative to banks but in line with other cash-generative
businesses such as investment managers or advisory firms. NMR's
dividend pay-out ratio could increase following the retirement of
NMR's banking license, as capital requirements have reduced (NMR
is now solely regulated by the UK's Financial Conduct Authority).
However, Fitch believes that management intends to maintain NMR's
absolute capital base at current levels.

NMR's adjusted business model as a result of the retirement of
the banking license has drastically reduced funding needs, with
all customer deposits fully repaid in 2016. External debt is
limited to GBP124 million of perpetual subordinated notes,
carried at historical fair value. Liquidity is sound with a
strong interest coverage ratio boosted by resilient earnings and
lower interest costs.

As a fully owned subsidiary of R&Co, NMR's disclosure and
reporting requirements are less extensive than those of listed
peers and R&Co manages its businesses largely across segments
(e.g. GA) as opposed to legal entities. Since 2016, NMR reports
on an unconsolidated basis. Family ownership has also resulted in
a stable management team and distinct corporate culture.

The programme ratings of RCF, a fully owned subsidiary of NMR,
are driven by an unconditional and irrevocable guarantee by NMR.
The ratings are equalised with NMR's IDRs.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The upgrade of RCF's perpetual subordinated notes (upper Tier 2
notes) to 'BBB-' from 'BB+' reduces the notching of the notes to
two notches below NMR's Long-Term IDR from three notches,
reflecting Fitch's expectation of lower loss probability in light
of NMR retiring its bank license. Under Fitch's corporate hybrid
criteria, the notes qualify for 50% equity credit.

RATING SENSITIVITIES
IDRS AND SENIOR DEBT

NMR's ratings are primarily sensitive to the stability and
resilience of GA revenue, and the resultant impact on NMR's
profitability, leverage and interest coverage. Improvements in
NMR's non-European GA franchise reducing the firm's reliance on
the UK and, to a lesser extent, continental European market, for
revenue generation could support a positive rating action as
could improvements in EBITDA margin.

An inability to generate adequate GA revenue in more challenging
domestic market conditions or to swiftly adjust the cost base
would be rating-negative. However, NMR has demonstrated the
robustness of its business model during past downturns and the
counter-cyclical restructuring business could aid stability. More
aggressive capital or liquidity management following the return
of its banking licence or worsening leverage metrics, though not
expected by Fitch, would also be rating-negative. In addition,
NMR's ratings remain sensitive to damage to Rothschild's
reputation or franchise, which would impair the ability to
attract new GA business.

The programme ratings of RCF are primarily sensitive to a change
in NMR's Long-Term IDR.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Similarly, the ratings for the subordinated notes are primarily
sensitive to a change in NMR's Long-Term IDR.

The rating actions are as follows:
N M Rothschild & Sons Limited
Long-Term IDR: affirmed at 'BBB+'; Outlook revised to Stable from
Positive
Short-Term IDR: affirmed at 'F2'

Rothschilds Continuation Finance PLC
Senior unsecured programme affirmed at 'BBB+'/'F2'
Perpetual subordinated notes (guaranteed by NMR): upgraded to
'BBB-' from 'BB+'


===============
X X X X X X X X
===============


* BOOK REVIEW: Lost Prophets -- An Insider's History
----------------------------------------------------
Author: Alfred L. Malabre, Jr.
Publisher: Beard Books
Softcover: 256 pages
List Price: $34.95
Review by Henry Berry
Order your personal copy today at http://is.gd/KNTLyr

Alfred Malabre's personal perspective on the U.S. economy over
the past four decades is firmly grounded in his experience and
knowledge. Economics Editor of The Wall Street Journal from 1969
to 1993 and author of its weekly "Outlook" column, Malabre was in
a singular position to follow the U.S. economy in recent decades,
have access to the major academic and political figures
responsible for economic affairs, and get behind the crucial
economic stories of the day. He brings to this critical overview
of the economy both a lively, often provocative, commentary on
the picture of the turns of the economy. To this he adds sharp
analysis and cogent explanation.

In general, Malabre does not put much stock in economists. "In
sum, the profession's record in the half century since Keynes and
White sat down at Bretton Woods [after World War II] provokes
dismay." Following this sour note, he refers to the belief of a
noted fellow economist that the Nobel Prize in this field should
be discontinued. In doing so, he also points out that the Nobel
for economics was not one originally endowed by Alfred Nobel, but
was one added at a later date funded by the central bank of
Sweden apparently in an effort to give the profession of
economists the prestige and notice of medicine, science,
literature and other Nobel categories.

Malabre's view of economists is widespread, although rarely
expressed in economic circles. It derives from the plain fact
that modern economists, even hugely influential ones such as John
Meynard Keynes, are wrong as many times as they are right. Their
economic theories have proved incomplete or shortsighted, if not
basically wrong-headed. For example, Malabre thinks of the
leading economist Milton Friedman and his "monetarist colleagues"
as "super salespeople, successfully merchandising.an economic
medicine that promised far more than it could deliver" from about
the 1960s through the Reagan years of the 1980s. But the author
not only cites how the economy has again and again disproved the
theories and exposed the irrelevance of wrong-headedness of the
policy recommendations of the most influential economists of the
day. Malabre also lays out abundant economic data and describes
contemporary marketplace and social activities to show how the
economy performs almost independently of the best analyses and
ideas of economists.

Malabre does not engage in his critiques of noted economists and
prevailing economic ideas of recent decades as an end in itself.
What emerges in all of his consistent, clear-eyed, unideological
analysis and commentary is his own broad, seasoned view of
economics-namely, the predominance of the business cycle. He
compares this with human nature, which is after all the substance
of economics often overlooked by professional and academic
economists with their focus on monetary policy, exchange rates,
inflation, and such. "The business cycle, like human nature, is
here to stay" is the lesson Malabre aims to impart to readers
interested in understanding the fundamental, abiding nature of
economics. In Lost Prophets, in language that is accessible and
jargon-free, this author, who has observed, written about, and
explained economics from all angles for several decades,
persuasively makes this point.

In addition to holding a top position at The Wall Street Journal,
Malabre is also the author of the books, Understanding the New
Economy and Beyond Our Means, which received the George S. Eccles
Prize from the Columbia Business School as the best economics
book of 1987.



                            *********

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

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

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


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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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Joseph Cardillo at
856-381-8268.


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