TCREUR_Public/170929.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 29, 2017, Vol. 18, No. 194



HRVATSKA BANKA: S&P Alters Outlook to Pos. & Affirms 'BB/B' ICR


AREVA: S&P Cuts CCR to B-; Puts Rating on Credit Watch Negative
LOUVRE BIDCO: Moody's Assigns B2 Rating to Senior Secured Notes
PEUGEOT SA: DBRS Hikes Issuer Rating to BB(high)


KION GROUP: S&P Revises Outlook to Positive, Affirms 'BB+ CCR
SCHAEFFLER AG: S&P Alters Outlook to Positive & Affirms 'BB+' CCR


ALITALIA SPA: Ryanair to Pull Out of Bidding Race
ALMAVIVA SPA: Moody's Assigns B2 CFR, Outlook Stable
MONTE DEI PASCHI: DBRS Hikes LT Sr. Debt Rating to B(high)


STANDARD INSURANCE: A.M. Best Affirms C++ Fin. Strength Rating


GALAPAGOS HOLDING: Moody's Revises Outlook to Neg, Affirms B3 CFR


MOSCOW STARS: Moody's Hikes Rating on Class B Notes to Ba1
NORTH WESTERLY II: S&P Withdraws 'D' Ratings on Two Note Classes


NORSKE SKOGINDUSTRIER: Unsecured Creditors Reject Debt Proposal


VISTAL INFRASTRUCTURE: Unit Files for Bankruptcy


DME LTD: Fitch Revises Outlook Stable, Affirms BB+ IDR


ABENGOA SA: May Face New Financial Pressures After Court Loss
BANCO POPULAR: EU Lawmakers Consider More Protection for Savers
IM PRESTAMOS: Moody's Hikes Rating on Class C Notes to B1
PROMOTORA DE INFORMACIONES: Creditors Tap KPMG to Review Accounts


KUNGSLEDEN AB: Moody's Assigns Ba1 CFR, Outlook Positive


OPTIMA FAKTORING: Moody's Assigns B3 CFR, Outlook Stable

U N I T E D   K I N G D O M

BESTWAY UK: S&P Alters Outlook to Stable Then Withdraws 'B' CCR
HOUSE OF FRASER: S&P Cuts CCR to B- on Weak Earnings, Cash Flows
L1R HB: S&P Assigns 'B' Corp Credit Rating, Outlook Stable
MARKETPLACE ORIGINATED: Fitch Raises Class D Notes Rating From BB
PROSERV GLOBAL: Moody's Withdraws Caa3 Corporate Family Rating

SOUTHERN PACIFIC 05-3: S&P Affirms B-(sf) Rating on Cl. E1c Notes


* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles



HRVATSKA BANKA: S&P Alters Outlook to Pos. & Affirms 'BB/B' ICR
S&P Global Ratings said that it had revised its outlook on
Croatian 100% state-owned development bank Hrvatska
banka za obnovu i razvitak (HBOR) to positive from stable. At the
same time, S&P affirmed its 'BB/B' long- and short-term issuer
credit ratings on HBOR.

S&P said, "We revised our outlook on HBOR to reflect the action
we took on Croatia (see "Republic Of Croatia Outlook Revised To
Positive On Stronger Growth And Public Finances; 'BB/B' Ratings
Affirmed," published Sept. 22, 2017, on RatingsDirect).

"We equalize our ratings on HBOR with our ratings on Croatia. In
our view, the sovereign is almost certain to provide timely and
sufficient extraordinary support to HBOR in the event of
financial distress, and we do not consider this will be subject
to transition risk." S&P bases its assessment of the likelihood
of support on its view of HBOR's:

-- Critical public policy role in implementing the government's
    economic, social, and political policy, namely the
    sustainable development of the Croatian economy and the
    promotion of exports. The bank's role has widened since its
    formation and has evolved alongside the government's
    strategic goals for the country's social and economic
    development. Since 2015, HBOR has officially been in charge
    of coordinating the implementation of the investment plan for
    Europe in cooperation with the European Investment Bank and
    the European Investment Fund; and

-- Integral link with Croatia, demonstrated by the state's 100%
    ownership, regular oversight, and injections of capital. HBOR
    benefits from a public policy mandate and strong government
    support. Croatia guarantees all of HBOR's obligations
    unconditionally, irrevocably, and on first demand, without
    issuing a separate guarantee instrument, as stipulated by the
    HBOR Act. The government is closely involved in defining
    HBOR's strategy. The president of the supervisory board is
    the Minister of Finance, while the Minister of the Economy,
    Entrepreneurship, and Trade serves as the deputy president of
    the board. In addition, the supervisory board includes the
    ministers of regional development and EU funds, agriculture,
    and tourism, as well as other members of parliament and the
    chairman of the Croatian Chamber of Economy. Lastly, the
    government is continuing its capital injections, with the
    stated goal of HBOR reaching total capital of Croatian kuna
    (HRK) 7 billion (roughly  EUR930 million) over the next
    several years.

Established in June 1992, HBOR was tasked with financing the
reconstruction and development of the Croatian economy. HBOR
lends to both the public and private sectors, either directly or
through commercial banks. These banks lend HBOR's funds on to the
ultimate borrowers, who benefit from HBOR's lower funding cost,
while still providing subsidized loans to Croatian corporations.

HBOR's creditworthiness is linked to that of the sovereign. S&P
said, "We do not assess a stand-alone credit profile for HBOR
because we view the likelihood of extraordinary government
support for the bank as almost certain. However, we estimate that
the bank's underlying credit quality, absent extraordinary
support, is in the 'bb' category. This combines our view of the
bank's strong capitalization and the sustainability of its
business model as a government-owned development bank and export
credit agency and, as such, we do not consider government support
to be subject to transition risk."

Positively, HBOR has a relatively stable track record of revenue
generation and profitability, which supports internal capital
generation. In 2016, profits at the group level surged by over
50% year on year, mostly as a result of lower impairment losses
and provisions, but also of higher net interest income. HBOR
continues to use any profits to bolster its reserves. However,
this trend may reverse somewhat in 2017 because HBOR has some
loan exposure to the struggling Croatian retail company Agrokor
and will therefore need to increase provisioning for this
exposure. At the same time, however, these loans are secured, as
opposed to the majority of Agrokor's loans from commercial banks.
HBOR's capital adequacy ratio stood at over 60% in December 2016,
well above the minimum capital requirement for Croatian banks.
This is set against a tougher operating environment -- in which
the bank is exposed to the economic cycle and is susceptible to
higher-than-average credit losses -- due to a fast-growing and
changing loan book portfolio. The bank also exhibits significant,
although reduced, single-name concentrations. As the recovery of
the Croatian economy gathered pace and commercial banks' risk
appetite returned, HBOR's share of direct lending dropped to 46%
in 2016 from its peak of 57% of newly approved loans in 2015.
Moreover, while the number of newly approved loans increased
further over 2016, the amount committed decreased slightly
compared with 2015, indicating continued focus on small and
midsize enterprises (SMEs). The bank continues to rely on
concentrated wholesale funding, especially from multilateral
institutions. At the same time, it benefits from a sizable liquid
asset portfolio that has grown to 12% of assets over the past few
years and an unconditional, irrevocable, and at-first-demand
guarantee from the Republic of Croatia, which is embedded in law.

Of HBOR's total loans in 2016, 49% were disbursed via other
banks, compared with 39% in 2015 and more than 88% in 2009. To
this end, HBOR cooperates with 24 of the 25 Croatian banks. In
addition, another 5% of loans were disbursed through leasing
companies, slightly up from 4% in 2015 when this type of activity
started. Despite this trend, the bank still intends to increase
its direct exposure to clients through risk-sharing models with
banks, and rto meet increasing demand for direct loans from
clients. More generally, the bank is aiming to continue its focus
on SMEs and export-oriented companies, while expanding its
venture capital and private equity portfolio and boosting EU fund
absorption. Furthermore, HBOR's loan exposures have been changing
over the past five years from short-term working capital loans
toward longer-term, new investment projects. In 2016, 75% of
approved funds were for capital investments and 25% for working
capital needs. HBOR has placed particular emphasis on new loans
that target companies emerging from prebankruptcy settlement
proceedings, as well as start-up businesses and SMEs, to support
growth in the economy. S&P therefore notes that HBOR's higher
risk appetite may continue to pose some risk to asset quality in
the future.

Furthermore, HBOR's role in facilitating EU funds absorption has
been crucial, especially for SMEs. In fact, HBOR has
significantly intensified its role in funding SMEs, which account
for almost half of the approved loans since 1992, although only
16% in terms of volume. In light of the government's economic
agenda, we believe that HBOR will continue to play a vital role,
as demonstrated by the state's continued capital injections and
growth in new lending. In 2016, the Croatian government injected
HRK33 million into HBOR, increasing the total amount of capital
contributed by the state to slightly over HRK6.5 billion, or 65%
of HBOR's total equity at year-end 2016. The Croatian government
is planning a further HRK467 million capital injection over the
next few years at roughly the same pace as last year.

The positive outlook on HBOR mirrors that on Croatia. Any rating
action on Croatia will result in a similar action on the bank.

S&P would take a negative rating action on HBOR, regardless of
any sovereign rating action, if it concluded that the bank's
public policy importance for or the link with the government had


AREVA: S&P Cuts CCR to B-; Puts Rating on Credit Watch Negative
S&P Global Ratings lowered its long-term corporate credit rating
on France-based nuclear services group AREVA to 'B-' from 'B+'
and placed the rating on CreditWatch with negative implications.

S&P said, "We also lowered our ratings on AREVA's EUR1.25 billion
revolving credit facility (RCF) to 'B-' from 'B+' and placed the
ratings on CreditWatch negative. The recovery rating is unchanged
at '3', indicating our expectation of meaningful recovery (50%-
70%; rounded estimate 60%) in the event of a default.

"We first put AREVA and its debt on CreditWatch negative on
July 31, 2017 (see "French Nuclear Services Group AREVA 'B+'
Rating On CreditWatch Negative On Increased Litigation Payment
Risk," published on RatingsDirect)."

The downgrade is mainly driven by the increased risk of material
litigation payments related to the arbitration process with
Finnish electric utility Teollisuuden Voima Oyj (TVO) as well as
limited visibility on mitigation plans in case of unfavorable

Recently the International Chamber of Commerce Tribunal gave a
partial unfavorable ruling relating to the preparation, review,
submittal, and approval of design and licensing documents on the
Olkiluoto 3 nuclear power plant (OL3) project aimed at
constructing a European pressurized water reactor plant. The
ruling increases the likelihood that AREVA will bear financial
implications. S&P anticipates that the tribunal will publish its
final decision in the coming months. While the amounts are still
uncertain, the payment under the EUR2 billion TVO claim could be
material and, in turn, challenge AREVA's already limited

S&P said, "We also take into account that the European Union (EU)
legal framework regarding state-aid prevents the French state
from providing further equity or direct state financing to AREVA
S.A. at least until 2029 following the EUR2 billion equity
injection in July 2017. While we believe that the government may
still provide some indirect support, we assume a weakening in the
French government's ability to provide support and have therefore
factored into the rating less uplift.

"In our base case, we continue to assume the divestment of AREVA
NP to EDF for a net consideration of EUR2.1 billion at year-end
(corresponding to 85% of the shares), which implies that cash
would flow in the first few days of January 2018. This would
allow the company to repay the EUR1.25 billion RCF in January
2018 and cover its expected cash burn over the coming 18 months.
We understand that AREVA met the major conditions related to the
sale, but additional conditions, including the quality tests
related to Le Creusot Forge foundry unit, are still pending. If
the sale is postponed or unsuccessful, the company would face
high refinancing risk with regard to the EUR1.25 billion RCF.

"Once AREVA has sold its stake in AREVA NP and repaid the RCF,
its restructuring will largely be over and it should have no
financial debt. The entity will have no operational activities
apart from the finalization of the OL3 construction that we
estimate would require several hundred million euros per year
until completion scheduled at year-end 2018. This should allow
for sufficient headroom to meet the TVO litigation payments, in
our view, as well as potential future calls on guarantees related
to TVO and certain other projects over the next seven to nine

"Other assets in AREVA's portfolio include a 44% stake in New Co,
a nuclear operating entity formed in 2016 and initially owned
100% by AREVA before the capital increase in July 2017. We
understand that AREVA can sell up to 50% of its stake (estimated
value of EUR1 billion) in New Co if needed. In our view, AREVA
could consider this to be a liquidity source over the medium
term, rather than over the short term, given the limited number
of potential possible buyers for this strategic asset, in
addition to the need for regulatory approvals. Because of the
company's thin buffer to meet the potential TVO payments and
calls on guarantees and its weak liquidity, we see deterioration
in AREVA's stand-alone credit profile, which we reassessed as
'ccc', from 'ccc+' previously.

"The negative CreditWatch placement reflects the uncertainty
regarding the amount of potentially material litigation payments
to TVO and our limited visibility regarding AREVA's contingency
plans. Also, the company may face high refinancing risks on its
EUR1.25 billion RCF due in January 2018, if the sale of AREVA NP
does not occur as planned by year-end 2017 for a net
consideration of EUR2.1 billion.

"We will continue to monitor the timing and evolution of the
processes related to the sale of AREVA NP's activities and the
TVO litigation.

"We could lower our ratings on AREVA by one or more notches in
the next three months if any of the aforementioned risks
materialize and are worse than our current assumptions."

LOUVRE BIDCO: Moody's Assigns B2 Rating to Senior Secured Notes
Moody's Investors Service has assigned B2 rating to the Backed
Senior Secured Notes issued by Louvre BidCo SAS (Louvre BidCo).
The outlook on the rating is stable.


On July 25, 2017, Promontoria MCS SAS (MCS), leader in the French
debt purchasing market, announced that it was being acquired by
BC Partners, a French Private Equity firm. Louvre BidCo, a non-
operating holding company controlled by BC Partners, issued
EUR270 million Senior Secured Notes on September 14, 2017, in
anticipation of the acquisition, which will likely occur on
October 18, 2017. The proceeds of the notes will then entirely
refinance the current EUR200 million Senior Secured Notes issued
by MCS, with the remainder of the acquisition being funded by an
equity contribution. The rating and outlook assigned to Louvre
BidCo are currently aligned with the rating and outlook assigned
to MCS. Upon completion of the acquisition, Louvre BidCo will
become the consolidated entity of the MCS group. Moody's
therefore expects to assign its Corporate Family rating (CFR) to
Louvre BidCo and withdraw the CFR currently assigned to MCS.

On September 11, 2017, Moody's affirmed the B2 CFR of MCS. The
affirmation was driven by MCS's leadership in the French debt
purchasing market; adequate debt serviceability with a 30-year
track record mitigating model pricing risk of the purchased
portfolios; and lower than peers' leverage with predictable cash
flow. The rating also reflects the company's monoline business
model, which is both significantly smaller and less diversified
than European peers', and its ambitious organic growth strategy.
The rating further takes into account the company's significant
supplier concentration and volatility of debt supply, as well as
potential key man risk and its unregulated status (albeit
mitigated by a strong risk culture). The rating agency will
monitor over the outlook period whether the new financial
sponsor's strategy impedes MCS' objective to keep leverage and
debt serviceability metrics at current levels.

MCS operates as the leader in the French debt purchasing market
by purchasing from banks their non-performing loans to small and
medium-sized enterprises as well as consumers on an unsecured and
secured basis. The company acquires mainly secured large (i.e.
above EUR20,000 balance) NPLs at a deep discount to the total
outstanding loan, and uses third-party and in-house collection
teams in the process of debt collection, generally through
litigation if settlement is not achieved beforehand. MCS also
acts as a servicer of performing and non-performing bank debt.

MCS's current financing package incorporates EUR200 million
Senior Secured Notes, which are guaranteed on a senior basis by
its operating subsidiary M.C.S et Associes SAS, as well as a
super senior EUR25 million Revolving Credit Facility (RCF), fully
undrawn as of June 30, 2017. Both the Senior Secured Notes and
the RCF are secured by a first ranking security interest in
substantially all the assets and EBITDA of the issuer and the

MCS has a negative Tangible Common Equity to Tangible Managed
Assets ratio, broadly in line with B2-rated peers, and leverage
at around 3.9x EBITDA at half-year 2017, consistent with the B2
rating levels. Although Moody's cautions that the upcoming
acquisition of MCS by BC Partners will lead to a deterioration of
the leverage over the short term, the rating agency expects it to
remain under 5.5x and to decrease over the medium term due to
MCS' expected dynamic cash flow generation.


Moody's could upgrade Louvre BidCo's ratings should MCS's CFR be
ugraded, following sustainable improvements in: (1) leverage,
with gross debt to adjusted EBITDA below 3x; (2) profitability,
with the adjusted EBITDA to interest expenses above 3.5x; (3)
capital position, with a positive Tangible Common Equity over
Tangible Managed Assets; and/or (4) diversification, for example
a shift towards servicing, while showing a track record of
achieving projections.

Conversely, Moody's could downgrade Louvre BidCo's ratings should
MCS's CFR be downgraded, which could occur if: (1) BC Partners
set growth target incompatible with current leverage levels, (2)
gross debt to adjusted EBITDA climbed above 5.5x; (3) adjusted
EBITDA to interest expenses fell below 2x; and/or (4) the company
failed to manage appropriately its step-up in growth.


Issuer: Louvre BidCo SAS


-- BACKED Senior Secured Regular Bond/Debenture, Assigned B2

Outlook Action:

-- Outlook Assigned Stable


The principal methodology used in this rating was Finance
Companies published in December 2016.

PEUGEOT SA: DBRS Hikes Issuer Rating to BB(high)
DBRS Limited, on Aug. 4, 2017, upgraded the Issuer Rating of
Peugeot SA (PSA or the Company) to BB (high) from BB following
the Company's announcement that it had closed the acquisition of
General Motor Company's (GM) Opel and Vauxhall (industrial)
subsidiaries (the Acquisition). Concurrently, pursuant to DBRS's
DBRS Criteria: Recovery Ratings for Non-Investment Grade
Corporate Issuers, PSA's senior unsecured debt rating is also
upgraded to BB (high), given the associated recovery rating of
RR4 (unchanged). The trend on the ratings is Stable. All ratings
have been removed from Under Review with Developing Implications,
where they were placed on March 7, 2017, following PSA's
announcement that it had reached an agreement with GM regarding
the Acquisition.

DBRS noted that prior to the Acquisition announcement, a Positive
trend had already been assigned to the ratings in March 2016,
recognizing that the Company's (stand-alone) operating
performance had been trending markedly positively in line with
material cost-cutting measures. Moreover, improved regional
market conditions helped increase not only volumes, but also
product pricing and mix. This, in combination with implemented
measures to bolster PSA's equity base, served to strengthen the
Company's recent stand-alone credit metrics to levels above those
commensurate with the prior ratings.

The ratings upgrade reflects DBRS's opinion that PSA's business
risk assessment has in turn moderately improved as a result of
the Acquisition, as it represents a meaningful increase in terms
of scale (which remains critical in efficiently absorbing the
high product development costs associated with the automotive
industry), with total global unit sales increasing to 4.3 million
units on a pro forma basis from 3.1 million units on a stand-
alone basis (both as of year-end 2016). Moreover, while DBRS
acknowledges that the Acquisition serves to increase the
Company's dependence on its core European market for automotive
sales, this is more than offset by PSA's materially stronger
market position in the region, with the combined entity attaining
a strong number-two position in the continent, behind only
Volkswagen AG.

Regarding the Acquisition, DBRS noted that this was completed
under favourable terms for PSA, with GM paying down the
indebtedness of Opel and Vauxhall while also effectively
retaining the majority of associated pension and retiree
obligations. DBRS further observed that the Company can
financially absorb the Acquisition cost (of a total amount of EUR
1.3 billion, consisting of EUR 0.67 billion in cash and EUR 0.65
billion in the form of warrants) and near-term projected losses
and associated cash burn of Opel and Vauxhall, such that credit
metrics on a pro forma basis remain at solid levels in the
context of the newly upgraded ratings.

DBRS sees limited upside potential to the ratings over the near
term, recognizing that PSA incurs significant execution risk
associated with the successful integration of the operations of
Opel and Vauxhall (notwithstanding that the entities have closely
collaborated on numerous joint projects over the past several
years) and the fact that targeted synergies are not anticipated
to considerably ramp up prior to 2020 (by which point they are
projected to approximate EUR 1.1 billion per annum). Conversely,
a meaningful downturn in the Company's core European market could
result in negative rating implications.

Notes: All figures are in euros unless otherwise noted.


KION GROUP: S&P Revises Outlook to Positive, Affirms 'BB+ CCR
S&P Global Ratings said that it had revised its outlook on German
material-handling equipment manufacturer KION GROUP AG to
positive from stable and affirmed the 'BB+' long-term corporate
credit rating.

The outlook revision follows KION's successful capital increase
and refinancing measures and solid operating and financial
performance during the first half of 2017. S&P said, "It further
comprises our expectation that the positive trend in operating
performance will continue leading to expanding margins and
stronger cash flow. In addition, we see KION as committed to
improving its credit profile, and expect financial discipline
relating to shareholder distributions and mergers and
acquisitions (M&A). We therefore expect that KION's key credit
metrics, particularly its adjusted funds from operations (FFO)-
to-debt ratio, will continue to strengthen and reach about 27% by
the end of 2018."

In May 2017 KION successfully closed its second capital increase
related to the acquisition of Dematic by raising an additional
EUR603 million of equity capital after having raised  EUR459
million in 2016. The capital increase, as well as issuance of
EUR1 billion of promissory notes in February 2017, has enabled
the group to repay the majority of the EUR3 billion acquisition
financing package, leaving no short-term maturities related to
the acquisition. S&P views this as positive in terms of managing
the group's debt maturity profile and overall credit risk

S&P said, "We continue to view the acquisition as favorable for
KION's credit profile. It enables the group to diversify in terms
of its intralogistics solutions offering, as well as having
improved the group's geographic footprint, in particular in the
important U.S. market, and increased industry diversification. We
also see further growth potential for KION in the U.S., where its
market presence in forklifts is currently low. The group
currently is investing in its product offering and sales
channels. The impact of the Dematic acquisition, as well as
healthy growth in forklifts and related services, for KION's
operating performance has already become apparent during the
first half of 2017 as the group reported revenues of  EUR3.8
billion (+49% year on year) and adjusted EBITDA of  EUR574
million after deduction of nonrecurring items of  EUR15 million
(+37% year on year).

"We have revised our base-case forecast for KION upward, and now
expect reported revenues of about  EUR7.8 billion- EUR7.9 billion
in 2017, with an EBITDA margin at about 16%. We forecast further
moderate revenue growth and margin expansion in 2018, with the
topline comfortably exceeding  EUR8 billion and an EBITDA margin
of about 17%. We expect the group will continue to invest about
2.5%-3.0% of its revenues in its operations as capital
expenditures (operating capex), keep shareholder distribution at
its current moderate level, and curb M&A activity. We think the
likely resulting solid free cash flow generation will translate
into adjusted FFO to debt of about 22% in 2017, about 27% in
2018, and further improvement beyond 30% thereafter, supported by
a conservative financial policy.

"The positive outlook reflects our expectation that KION's key
credit ratios will continue to improve, and in particular
adjusted FFO to debt to gradually strengthen toward 30% by the
end of 2018. We also expect that KION will continue its solid
operational and financial performance and the group's financial
policy will remain supportive of further deleveraging.

"Rating upside could emerge if KION's operating and financial
performance remains in line with our current base-case forecast.
For a positive rating action we would expect the adjusted FFO-to-
debt ratio to gradually improve toward 30% by 2018 with perceived
sustainable strengthening beyond that level. For this scenario to
materialize, continuous solid operational performance and cash
generation will be substantiated by a supportive financial policy
framework and commitment to a stronger financial profile and
credit protection ratios.

"We could revise the outlook to stable if KION didn't show strong
commitment to further improving the strength of its financial
profile and credit protection ratios contrary to our base case. A
revision of the outlook to stable could also emerge if the
group's operating results and cash flow generation remained below
our expectations, hindering the development of key credit
metrics. KION's adoption of a more aggressive financial policy
than we currently expect, or material debt-funded acquisitions,
would also be credit negative."

SCHAEFFLER AG: S&P Alters Outlook to Positive & Affirms 'BB+' CCR
S&P Global Ratings revised to positive from stable its outlook on
Germany-based automotive component and systems and industrial
bearings manufacturer Schaeffler AG (Schaeffler) and its holding
company IHO Verwaltungs GmbH. S&P also affirmed its 'BB+' long-
term corporate credit rating on both entities.

S&P defines Schaeffler and its holding companies (IHO Verwaltungs
GmbH, IHO Beteiligungs GmbH, and IHO Holding GmbH) as IHO group.

The Germany-based manufacturer of automotive components and
systems, and industrial bearings, IHO group, which includes
Schaeffler AG and its holding companies, has further reduced its
debt over the past 12 months.

S&P said, "At the same time, we affirmed our 'BB+' issue ratings
on Schaeffler Finance B.V.'s:  EUR500 million 3.5% senior secured
notes due 2022, EUR400 million 2.5% senior secured notes due
2020, $600 million 4.75% senior secured notes due 2023, EUR600
million 3.25% senior secured notes due 2025. The recovery rating
on these debt instruments is '3', reflecting our expectations of
meaningful recovery (50%-70%; rounded estimate: 65%), in the
event of a payment default.

"We also affirmed our 'BB-' issue ratings on IHO Verwaltungs
GmbH's payment-in-kind (PIK) toggle notes:  EUR750 million notes
due 2021, $500 million notes due 2021, EUR750 million notes due
2023, $500 million notes due 2023, EUR750 million notes due 2026,
$500 million notes due 2026. The recovery rating on these debt
instruments is '6', indicating our expectations of negligible
(0%-10%, rounded estimate: 0%) recovery in the event of a payment

"The outlook revision follows the IHO group's continuous
deleveraging. At Schaeffler, the outstanding $700 million bond
due in 2021 was prepaid early in May 2017 using mainly cash. At
the same time, the group has shown a solid operating performance,
with EBITDA margins of around 17% at the end of June 2017, in
line with our expectations. We expect EBITDA margins of broadly
17%-18% throughout 2018, driven by growth in the automotive
business and stabilizing industrial business. Furthermore, we
expect that the group will maintain financial discipline relating
to shareholder distributions and mergers and acquisitions. We
therefore expect that the group's credit ratios will continue to
strengthen in 2017 and 2018.

"The recently observed shift in new car registrations away from
diesel toward gasoline cars has, in our view, only limited impact
on Schaeffler's operating performance since we expect a similar
content per car for both technologies. A reduction in overall
cars produced is a higher risk to Schaeffler, which we currently
not foresee, given healthy demand in Asia-Pacific and Europe. To
cope with the long-term trend in the automotive sector toward
electric and hybrid cars, Schaeffler has increased its research
and development (R&D) spending to maintain its technological edge
in the industry. We expect that Schaeffler will have higher R&D
spending at least for the next two years, compared with 2016.

"Schaeffler has maintained its leading market positions, strong
profitability, excellent operating and technological
capabilities, wide geographic reach, and customer diversity. A
key business risk is the group's exposure to the volatile and
competitive, albeit fairly entrenched, automotive component and
systems markets and industrial bearings market. Pricing pressure
from car manufacturers and high operating leverage are additional
risks that could affect Schaeffler's operating profitability. We
view the current level of profitability as strongly supportive of
the rating. Overall, we assess the group's business risk profile
as satisfactory.

"We do not expect Schaeffler's management to undertake any large
debt-financed acquisitions or to adopt an aggressive dividend
policy, but rather to continue to focus on deleveraging and
strengthening liquidity, as it has done over the past six years.

"We continue to apply our group rating methodology to Schaeffler
due to strong ties to the IHO group. We continue to assess
Schaeffler as highly strategic within the group. In addition, we
do not delink Schaeffler from the group since INA-Holding
Schaeffler GmbH & Co. KG preserves control of the group through
its indirect 75% capital stake in Schaeffler and 100% voting
rights. In addition, we do not apply our investment holding
criteria to IHO group as the company is only active in two
industries (automotive and industrial) and not in three as
requested by our criteria.

"We equalize our corporate credit rating on Schaeffler with our
group credit profile (GCP) for the IHO group. We calculate our
group credit ratios based on consolidated IHO-group accounts,
with its 46% stake in Continental at equity.

"The positive outlook reflects our expectation that the IHO
group's key credit ratios will continue to improve, and in
particular adjusted FFO to debt will gradually improve toward 30%
by the end of 2018. We also expect that the IHO group will
continue its solid operating and financial performance, including
generation of positive discretionary cash flow and that its
financial policy will remain supportive of further deleveraging.

"Rating upside could materialize if the IHO group's operating and
financial performance is in line with our current base-case
forecast. For a positive rating action, we would expect the
adjusted FFO-to-debt ratio to gradually improve toward 30% by
2018 and remain around that level thereafter. For this scenario
to materialize, the group would need to show continued solid
operating performance, including cash generation and reduction of
adjusted debt, in addition to a supportive financial policy
framework and commitment to a higher rating level.

"We could revise the outlook to stable, if the IHO group
materially underperformed our base case, with no further
improvement in the financial risk profile, and IHO group's FFO to
debt remaining clearly below 30%. This could materialize due to
lower-than-expected sales of new cars, including order cuts from
its larger customers, or lower-than-currently-expected
profitability due to higher costs and pricing pressure than our
current forecasts. We could also revise the outlook back to
stable if the IHO group adopted a more aggressive financial
policy than we currently expect, or engaged in material debt-
funded acquisitions."


ALITALIA SPA: Ryanair to Pull Out of Bidding Race
Adam Samson at The Financial Times reports that Ryanair will
cancel more flights this winter, in a move that will hit some
400,000 flyers, and end a bid for Alitalia as it looks to put a
booking debacle behind it.

The Dublin-based discount airline will fly 25 fewer aircraft out
of its 400 plane fleet in mid-November-March, and then fly 10
fewer planes from April 2018, the FT discloses.  It will also
pull itself out of the running to buy Alitalia, the Italian
carrier, the FT notes.

According to the FT, Ryanair said the move was made as part of
process to "eliminate all management distractions."

The group has notified Alitalia bankruptcy commissioners to say
that it will not be "pursuing our interest in Alitalia or
submitting any further offers for the airline", the
FT relates.

                          About Alitalia

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

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

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

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

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

ALMAVIVA SPA: Moody's Assigns B2 CFR, Outlook Stable
Moody's Investors Service has assigned a B2 corporate family
rating (CFR) and a B2-PD probability of default rating (PDR) to
AlmavivA S.p.A.  Concurrently, Moody's has assigned a provisional
(P)B2 instrument rating to the new EUR250 million senior secured
notes due 2022 borrowed by Almaviva. The proceeds from the notes,
together with approximately EUR6.5 million of cash on balance
sheet, will be used to repay a EUR250 million term loan financing
and pay transaction costs.

The company's capital structure includes a EUR20 million super
senior revolving credit facility due 2022 (unrated), which is
expected to be undrawn at closing of the transaction, and cash on
balance sheet of EUR85.4 million, pro-forma for the refinancing
but before the repayment of EUR12.4 million short term financial
liabilities made after June 2017. The outlook on all ratings is

Moody's issues provisional ratings in advance of the final sale
of securities. Upon closing of the transaction and a conclusive
review of the final documentation, Moody's will endeavour to
assign definitive ratings. A definitive rating may differ from a
provisional rating.


Almaviva's CFR of B2 reflects (1) the protracted decline in both
revenue and profitability of its Italian CRM operations which
resulted in material restructuring costs during 2015-16, (2) the
significant concentration around the contract with its top client
- representing 23% of 2016 revenue and 45% of 2016 IT service
division revenue - partially mitigated by the consistent awarding
of this multi-years contract since 1997 and the recent extension
of the contract for two years, (3) the FX exposure as 45% of the
company's adjusted EBITDA in 2016 was generated in Latin America,
mainly Brazil, (4) the limited scale and geographic
diversification compare to global IT and CRM providers, and (5)
the competitive nature of the CRM and IT service industries which
will likely limit material improvements in EBITDA margin.

The B2 CFR also reflects (1) the company's position in the IT
service sector in Italy and among top three CRM business process
outsourcing providers in Brazil which provides for a degree of
industry and geographic diversification, (2) the long-standing
relationship with large customers and the mission-critical level
of certain IT services, (3) the good revenue visibility for its
IT service division supported by EUR680 million of backlog as of
September 2017 (excluding SPC framework agreement), (4) the
finalization in 2016 of the CRM workforce cost optimisation in
Italy and the set-up of near-shoring CRM operations in Romania
which have improved the company's cost structure, and (5) the
presence of overfunded cash balance post-transaction which is
expected to support operations providing for some liquidity
flexibility in the next 12-18 months.

For the last twelve months to June 2017, Moody's adjusted
leverage is estimated at 4.5x pro-forma for the refinancing.
Moody's adjusted leverage is determined by taking into account
the EUR25.3 million cost savings estimated by the management as a
result of the already implemented workforce cost optimisation and
closure of sites in Italy and the reduction post-refinancing of
factoring facilities to EUR25 million from EUR60.6 million at the
end of June 2017. Factoring facilities are expected to decline
below EUR10 million by the end of 2017. As per Moody's standard
adjustments, any drawn amount under recourse and non-recourse
factoring facilities would be included in the calculation of
Moody's adjusted gross debt.

Moody's considers Almaviva to be weakly positioned in the B2
rating category due to the limited track-record on the turnaround
of its Italian CRM division and on sustainable recovery of the
division's top-line revenues. Moody's understands that there are
early signals of volume recovery and new contract wins which
could support a return to positive organic growth starting from
2018. Moreover, the Moody's adjusted free cash flow to debt is
expected to remain in the low single digits for the next 12-18
months and may turn negative if there are higher than expected
working capital changes. Almaviva's free cash flow generation is
impacted by negative working capital changes, mainly related to a
targeted reduction in the number of days payables outstanding and
potential increase in days receivables outstanding as the company
reduces its reliance on factoring facilities.

The company's capital spending is estimated at around 3% of
revenue and it will mainly consist of investments for new
contracts in IT Services and for the scaling up of Romanian and
Colombian CRM operations. The company made a dividend payment of
EUR4.4 million in August 2017 and it expects another dividend
payment of EUR10.6 million in 2018. Excluding the above mentioned
dividends, there are no further upstream payments currently

Liquidity profile

Almaviva's liquidity profile is adequate, supported by EUR85.4
million of cash on balance sheet as of June 30, 2017, pro-forma
for the overfunding cash from the refinancing but before the
repayment of EUR12.4 million short term financial liabilities
made after June 2017, and a EUR20 million undrawn super senior
Revolving Credit Facility (RCF). Given the cash overfunding post
refinancing, the company decided to cancel the committed
factoring facilities as they were not expected to be used in the
next 12-18 months. The cash overfunding and undrawn RCF should
provide the company with operational flexibility for managing
working capital changes, following the reduction in the reliance
on factoring facilities, and for dividend payments expected in
2017 and 2018.

Moody's notes that with the August 2017 refinancing, the company
repaid all overdue tax liabilities which amounted to EUR66
million. Historically, the company used on average factoring
facilities (recourse and non-recourse) for approximately EUR60
million. Under the new debt documentation, the company would be
able to access up to EUR50 million of qualified receivables
financing for factoring with recourse.

Structural considerations

The pro-forma capital structure comprises a EUR250 million senior
secured notes due 2022, and a EUR20 million super senior RCF due
2022. The (P)B2 instrument rating on the notes is in line with
the company's CFR due to the limited size of the super senior
RCF. Both the notes and the RCF benefit from security interests
over certain bank accounts, intercompany receivables, certain
trade receivables, as well as share pledges over 95.11% of
AlmavivA S.p.A., 100% over Almaviva Contact S.p.A. and 87.9% over
shares in Almaviva do Brazil S.A.. The notes rank behind the RCF
due to contractual subordination via the intercreditor agreement
in an enforcement. The capital structure includes one financial
springing covenant, a net leverage ratio, tested if RCF is drawn
for at least 40%.

Rating outlook

The stable outlook reflects the expectation that Almaviva will
benefit from the completion of the restructuring programme in the
CRM Europe division and will be able to stabilize the historical
revenue decline of its Italian CRM business. The outlook assumes
no major contracts losses or debt-funded acquisitions and that
the company will maintain an adequate liquidity profile in the
coming 12-18 months supported by a meaningful cash position.

Factors that could lead to an upgrade

Upward pressure could develop over time if the company delivers a
sustainable recovery of its Italian CRM operations both in terms
of revenue and EBITDA and (1) Moody's adjusted leverage falls
well below 4.0x on a sustained basis; (2) the company maintains a
solid liquidity profile supported by positive free cash flow
generation; and (3) the company improves its customer and sector

Factors that could lead to a downgrade

Downward pressure could materialize if the company fails to
deliver the expected stabilization of its Italian CRM operations
and if (1) Moody's adjusted leverage trends towards 5.0x; (2)
margins weaken; (3) free cash flow or the liquidity profile
materially deteriorates; and (4) the company is unsuccessful in
renewing any of its major contracts.

Principal Methodology

The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.


Founded in 1983 and headquartered in Rome, AlmavivA S.p.A.
("Almaviva" or "the company") is among the top provider of IT
service solutions in Italy, the second player in Customer
Relationship Management (CRM) services in Italy and the third CRM
operator in Brazil. It provides a broad range of IT and CRM
services primarily to the media and telecom sector and to local
and central public authorities. The company also operates
Almawave, a technology company active in speech recognition and
text analytics technology. The company employs 41,000 people
mainly in Italy (10,000) and Brazil (30,000). As of September
2017, the company is majority owned by Almaviva Technologies
S.r.l. (95.11%) with the remaining 4.89% divided across several
shareholders including RAI - Radiotelevisione italiana S.p.A.
(Baa3, Neg) and Assicurazioni Generali S.p.A (Baa1 IFS, Sta).

For the last twelve months to June 2017, Almaviva reported
revenue and EBITDA, adjusted for the cost savings expected from
the completion of the restructuring programme in the CRM Europe
division in 2016, of EUR763 million and EUR68 million,

MONTE DEI PASCHI: DBRS Hikes LT Sr. Debt Rating to B(high)
DBRS Ratings Limited upgraded the ratings of Banca Monte dei
Paschi di Siena SpA's (BMPS or the Bank) Long-Term Senior Debt
and Long-Term Deposits to B (high) from B (low). The ratings on
the Bank's Short-Term Debt and Short-Term Deposits were upgraded
to R-4 from R-5 and the Trend on all ratings is Stable.
Concurrently, DBRS upgraded the Bank's Intrinsic Assessment to B
(high), and confirmed the Support Assessment at SA-3.

The rating actions follow the implementation of the burden
sharing arrangements and precautionary recapitalisation of BPMS
approved by the European Commission (EC) and concludes the rating
review which was extended on July 11, 2017.

As part of the action, DBRS also downgraded the Bank's Long-Term
and Short-Term Issuer Ratings to Selective Default (SD) to
reflect the burden sharing of BMPS' junior bondholders. Although
DBRS does not rate the Bank's subordinated bonds, the rating
agency viewed the mandatory conversion of the Bank's Tier 1 and
Tier 2 bonds as a distressed exchange. Subsequently, DBRS has
withdrawn these Issuer Ratings.

At the same time, DBRS assigned new Long-Term and Short-Term
Issuer Ratings at B (high)/R-4 with Stable Trend, to reflect the
Bank's improved capital position. In addition, DBRS confirmed
BMPS' Critical Obligations Ratings at BBB (low) / R-2 (middle)
with a Stable Trend. The State Guaranteed Notes, rated BBB (high)
/ R-1 (low), in line with the DBRS's ratings on the Republic of
Italy, are unaffected by this action.

The upgrade to B (high) with a Stable Trend takes into
consideration BMPS's improved capital position following the
implementation of the precautionary recapitalisation for
approximately EUR3.9 billion provided by the Italian Ministry of
Economy and Finance (MEF), as well as the mandatory conversion
into equity of the Tier 1 and Tier 2 bonds for a total
consideration of circa EUR4.5 billion. In upgrading the ratings,
DBRS also considered BMPS's improving risk profile following the
increase in provisioning levels in Q2 2017 ahead of the planned
securitisation of EUR26 billion NPEs. The B (high) rating,
however, continues to reflect the Bank's still high stock of
NPEs, fragile business profile due to the loss of commercial
activity in 2016, as well as execution risks linked to the new
restructuring plan.

In Q2 2017, BMPS reported pro-forma phased-in CET1 and Total
capital ratios of 15.4% and 15.6%, respectively, including the
benefits of the recapitalization completed in July and the
incremental provisions reported in Q2. From January 1, 2018, the
Bank is required to meet a CET 1 ratio of 9.44% and Total Capital
ratio of 12.94% according to the ECB's latest SREP decision.

As a result of the capital increase, the MEF became the largest
shareholder of BMPS with a stake of around 52%, followed by the
former holders of Tier 1/ Tier 2 notes and other shareholders.
Eligible retail investors of the Bank's 2008-2018 Upper Tier II
notes, however, will be offered the option to sell their
converted shares to the MEF, in exchange for senior bonds of BMPS
with the same maturity, for a total estimated amount of around
EUR 1.5 billion. At the end of this process, the stake owned by
the MEF is expected to increase to approximately 70%. The Bank's
securities are expected to be readmitted to stock exchange
listing in 2H 2017.

In line with the EU State aid rules, BMPS is required to
undertake a substantial restructuring plan. Key commitments
include improvements in risk profile and efficiency, as well as
business simplification over the period 2017-2021.

In Q2 2017, BMPS reported EUR 4 billion in additional loan loss
provisions (LLPs) as part of the planned disposal of EUR 26
billion in gross bad loans to a private securitisation vehicle by
June 2018 at a market valuation equal to 21% of the gross book
value. As a result of higher provisions and NPE disposal, based
on pro-forma data as of 1H 2017, BMPS' total stock of gross NPEs
would decrease to EUR 19.7 billion from 45.5 billion, whilst net
NPEs would reduce to 10.5 billion from EUR 15.6 billion. Despite
the material reduction, the Bank's stock of NPEs remains high
with pro-forma gross and net NPE ratios at 19.8% and 11.7%
respectively. The Bank is also exposed to high litigation risks.

The higher LLPs contributed to a net loss of EUR 3.2 billion in
1H 2017. BMPS results were also impacted by a sharp deterioration
in net interest income and commission, down by 13% and 9% YoY,
mainly as a result of the Bank's capital challenges and liquidity
tensions during the second half of 2016. The Bank's liquidity
conditions eased following the issuance of EUR 11 billion of
State guaranteed bonds in Q1 17, as well as improving depositor
confidence in 1H 17.

According to the restructuring plan 2017-2021, BMPS expects a net
profit of EUR 0.6 billion in 2019 and EUR 1.2 billion in 2021,
driven by lower cost of credit in connection with a lower stock
of NPEs and a lower risk profile of impaired loans, lower
operating costs as a result of the closure of 600 branches and
the exit of 5,500 employees by YE 2021, as well as higher
revenues especially fees and commissions. While DBRS recognises
the Bank's past track record in delivering cost reductions, the
required improvement in revenues and credit costs may prove
challenging. DBRS' ratings take into consideration the high level
of competition facing the Bank, a still difficult operating
environment in Italy, commercial restrictions set by the
restructuring plan in line with the State aid rules, as well as
the low interest environment and a more onerous regulatory

The Grid Summary Grades for Banca Monte dei Paschi di Siena SpA
are as follows: Franchise Strength - Moderate; Earnings - Weak;
Risk Profile - Weak; Funding & Liquidity - Weak; Capitalisation -


Progress towards the restructuring targets and improved market
confidence could contribute to positive rating pressure.
Underperformance relative to plan, any further deterioration in
the Bank's risk profile or material weakening in capital and
liquidity could contribute to negative rating pressure.

Notes:  All figures are in Euros unless otherwise noted.


STANDARD INSURANCE: A.M. Best Affirms C++ Fin. Strength Rating
A.M. Best has affirmed the Financial Strength Rating of C++
(Marginal) and the Long-Term Issuer Credit Rating of "b+" of
Standard Insurance Company JSC (Standard) (Kazakhstan). The
outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect Standard's volatile risk-adjusted
capitalisation, track record of weak technical performance and
limited business profile in Kazakhstan's non-life insurance
market. The ratings also take into account Standard's
underdeveloped risk management framework.

In line with A.M.Best's expectations, the company's risk-adjusted
capitalisation declined materially in 2016, due to higher
underwriting risk following its absorption of a major part of the
insurance portfolio of Alliance Polis Insurance Company JSC
(Alliance Polis). As at half-year 2017, Standard's risk-adjusted
capitalisation improved, following the non-renewal of a
significant part of the recently absorbed portfolio. However,
risk-adjusted capitalisation remains relatively low, as measured
by Best's Capital Adequacy Ratio (BCAR) and as demonstrated by a
regulatory solvency margin of 1.27 as of Aug. 1, 2017 (compared
to a minimum requirement of 1.00).

In 2016, the company's underwriting performance improved,
benefiting from a material rise in net written premium. The
company reported technical profit for the first time since 2012,
when it was acquired by the current shareholders, and reported a
combined ratio of 87.6% (2015: 120.9%). However, A.M. Best
believes that the company will report an underwriting loss once
again in 2017, due to the expected reduction in premium income
and the ongoing impact of elevated expenses.

In 2016, Standard's market share improved as a result of the
absorption of Alliance Polis's insurance portfolio and the
addition of a number of large fronted contracts. As of Jan. 1,
2017, the company ranked 11th out of 25 non-life insurers in
Kazakhstan, up from 15th a year earlier, with gross written
premium of KZT 9.0 billion (approximately USD 27 million) and a
market share of 3.3%. The company's prospective market ranking
will depend on the retention levels of the new client base and
the competitive conditions in Kazakhstan's insurance market.

The rating actions also reflect Standard's underdeveloped risk
management framework, specifically with regard to monitoring its
risk accumulations within Kazakhstan's earthquake-exposed areas.
As a result, uncertainty exists as to the ability of Standard's
reinsurance programme to adequately protect the company against a
catastrophic event.


GALAPAGOS HOLDING: Moody's Revises Outlook to Neg, Affirms B3 CFR
Moody's Investors Service changed to negative from stable the
outlook on all the ratings of Galapagos Holding S.A. (Galapagos).
At the same time Moody's affirmed the B3 corporate family rating
(CFR) and the B3-PD probability of default rating (PDR) of
Galapagos. Moody's also affirmed the Caa2 rating pertaining to
the senior unsecured notes of Galapagos and the B2 rating
pertaining to the senior secured notes issued by Galapagos S.A.,
a subsidiary of Galapagos.



The negative outlook mirrors Moody's concerns that Galapagos may
be challenged in the light of management's recent downward
revision of its full-year guidance to meet by year-end 2017 the
rating agency's expectations of a leverage below 7.0x Debt /
EBITDA (8.6x as of June 2017) and no further deterioration of
liquidity set for the B3 rating category. In addition Moody's
highlights the company's challenge -- owing to weaker demand in
selected end markets, most notably oil and gas -- to
progressively improve EBITDA in order to stay compliant with
minimum EBITDA levels as set out in the revolving credit facility
agreement. The headroom under the springing covenant as of June
2017 was very low (4% or EUR3.8 million). Moody's will reassess
the progress the company will have made with its operating
performance improvements when the company releases results for
the third quarter (expected in late November) and updates its
guidance for 2018.

"The decision to change the outlook on Galapagos to negative
reflects (1) the negative trend in order backlog (23.3% lower
year-on-year at group level), in particular at Enexio and (2) the
very low headroom of 4.1% (or EUR3.8 million) under the EBITDA
covenant of the company's revolving credit facility," said Oliver
Giani, Moody's lead analyst for Galapagos. "Despite of initiated
restructuring measures it will become increasingly challenging
for Galapagos to sustainably improve credit metrics to a level in
line with the thresholds set for the B3 rating category and to
meet the financial condition requirement of its credit facility,"
he added.

The B3 CFR reflects Galapagos' (1) high financial leverage (debt
/ EBITDA expected in 2017 to remain around 7.0x; (2) a degree of
customer concentration, particularly to those customer groups
operating in the oil & gas and power generation sectors; (3) the
cyclicality of the heat exchanger market which primarily reflects
the demand environment in the customers' end-markets; and (4)
high restructuring costs, which Moody's expects to end in 2017.

These factors are somewhat offset, however, by: (1) the
criticality of the heat exchanger product, which typically
represents a small percentage of the overall cost of a large
power plant or asset; (2) a strong position in the global heat
exchanger market with a broad product portfolio, global
production capability and geographic diversification; and (3)
long-standing customer relationships as well as technological

Moody's views Galapagos' liquidity position as weak. While the
group's cash position amounted to EUR62 million in Q2-2017,
around EUR40 million of this is trapped due to transfer
restrictions. Other cash sources for the next 12-18 months
primarily comprise its EUR75 million revolving credit facility
and some EUR25 million proceeds expected from property disposal.
At the end of June 2017, drawings under the group's RCF amounted
to EUR45 million reflecting the seasonal build-up of working
capital in the first half. Nevertheless, Moody's forecasts this
to reduce by the end of 2017 supported by disposal proceeds of
around EUR25 million and seasonal working capital releases in the
second half. In its base scenario the rating agency expects
negative free cash flow for 2018 so that drawings under the RCF
will increase again during 2018.


The ratings could be downgraded if leverage were to remain above
7x debt / EBITDA or if liquidity was to deteriorate from current
levels. Conversely, Moody's could consider an upgrade if
Galapagos is able to deliver organic growth and realize
efficiency measures that would facilitate a decrease in leverage
to below 6x debt / EBITDA (as adjusted by Moody's) in conjunction
with positive FCF.

The principal methodology used in these ratings was Global
Manufacturing Companies published in June 2017.

Galapagos Holding S.A. (Galapagos) is a holding company, based in
Luxembourg, for a group of entities involved in the manufacturing
of heat exchangers for a variety of different industrial
applications. These primarily include the power generation and
oil & gas sectors but also the food & beverages, chemicals and
marine business areas. Galapagos was formed through a de-merger
from its previous parent -- GEA AG (a German engineering company)
in May 2014 -- and was acquired by Triton Partners, a private
equity group. In 2016, Galapagos achieved revenues of EUR1.1
billion from continuing operations.


MOSCOW STARS: Moody's Hikes Rating on Class B Notes to Ba1
Moody's Investors Service has upgraded the ratings of 2 notes in
Closed Joint Stock Company "Mortgage agent MTSB" and Moscow Stars
B.V. The rating action reflects:

- better than expected collateral performance for Closed Joint
   Stock Company "Mortgage agent MTSB".

- the increased levels of credit enhancement for the affected

Issuer: Closed Joint Stock Company "Mortgage agent MTSB"

-- RUB3432.641M Class A Notes, Upgraded to Baa3 (sf); previously
    on Apr 29, 2016 Confirmed at Ba1 (sf)

Issuer: Moscow Stars B.V.

-- USD16.2M Class B Notes, Upgraded to Ba1 (sf); previously on
    Apr 29, 2016 Confirmed at Ba2 (sf)


Revision of Key Collateral Assumptions

Moody's updated the MILAN CE of Closed Joint Stock Company
"Mortgage agent MTSB" due to stable performance and lower
expected volatility. The MILAN CE has been decreased to 31% from

Moody's maintained the key collateral assumptions in Moscow Stars
B.V unchanged.

Increase in Available Credit Enhancement

Sequential amortization and non-amortising reserve funds led to
the increase in the credit enhancement available in Moscow Stars
B.V. The tranche B is now the most senior tranche in this deal
following the full redemption of tranche A notes (rated Ba1 (sf)
before withdrawal) in October 2015. For instance, the credit
enhancement for the tranche B affected by rating action increased
from 8.0% to 114.0% since closing consisting of subordination and
USD10.9 million reserve funds. Reserve funds are kept in the
account at The Bank of New York Mellon under the name of the
Dutch SPV. Considering the mortgages denominated in US dollars
taken out by borrowers based in Russia, the rating of the tranche
B takes into consideration the risk associated to possible
shortage of foreign exchange in the country, which could result
in payment in Rubles instead of US dollars.

Sequential amortization led to the increase in the credit
enhancement available in Closed Joint Stock Company "Mortgage
agent MTSB". The credit enhancement level for the most senior
notes affected by rating action increased from 34.2% to 42.0%
since the last rating action.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2017.

The analysis undertaken by Moody's at the initial assignment of
these ratings for RMBS securities may focus on aspects that
become less relevant or typically remain unchanged during the
surveillance stage.

Factors that would lead to an upgrade or downgrade of the

Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) deleveraging of the capital
structure and (3) improvements in the credit quality of the
transaction counterparties and (4) a decrease in sovereign risk.

Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk (2) performance
of the underlying collateral that is worse than Moody's expected,
(3) deterioration in the notes' available credit enhancement and
(4) deterioration in the credit quality of the transaction

NORTH WESTERLY II: S&P Withdraws 'D' Ratings on Two Note Classes
S&P Global Ratings lowered to 'D (sf)' its ratings on North
Westerly CLO II B.V.'s class D-1 and D-2 notes and withdrew these
ratings. S&P's ratings on the class D-1 and D-2 notes will remain
at 'D (sf)' for 30 days before the withdrawal becomes effective.

The notes' legal final maturity date is Sept. 14, 2019. However,
the transaction was terminated early after the subordinated
noteholders approved a notice of optional redemption. Each class
of noteholders had passed an extraordinary resolution to reduce
the redemption price of the class D-1 and D-2 notes so that it
equaled the available funds. As such, the redemption threshold
could be met and the conditions for optional redemption
satisfied. The noteholders then passed an extraordinary
resolution to redeem the transaction on the Sept. 14, 2017
payment date.

As a result of the reduction in redemption price, the class D-1
and D-2 noteholders did not receive the full outstanding
principal balance. As a result, S&P lowered its ratings on the
class D-1 and D-2 notes to 'D (sf)'. The ratings will remain at
'D (sf)' for 30 days before the withdrawals become effective.

The rating on the class C notes was discontinued on Sept. 25,

North Westerly CLO II is a cash flow collateralized loan
obligation (CLO) transaction that securitizes loans to
speculative-grade corporate firms. The transaction closed in
September 2004 and is managed by NIBC Bank N.V.


  Class           Rating

            To         From

  North Westerly CLO II B.V.
   EUR413.5 Million Secured Fixed- And Floating-Rate Deferrable
  Interest And Subordinated Notes

  Ratings Lowered [1]

  D-1         D (sf)       CC (sf)
  D-2         D (sf)       CC (sf)

[1]The ratings will remain at 'D (sf)' for a period of 30 days
before the withdrawals become effective.


NORSKE SKOGINDUSTRIER: Unsecured Creditors Reject Debt Proposal
Luca Casiraghi at Bloomberg News reports that Norske
Skogindustrier ASA suffered another blow in attempts to
restructure a US$1 billion debt pile, as unsecured creditors
rebuffed the papermaker's latest proposal and put forward an
alternative plan.

According to Bloomberg, an emailed statement on Sept. 27 said a
group representing more than 50% of senior unsecured bondholders
have asked the company to withdraw a Sept. 18 proposal.

The noteholders, which include Contrarian Capital Management,
also said the papermaker should no longer work with secured
bondholders who have called in debts and threatened to seize
assets, Bloomberg relates.

The rejection and counter-proposal further complicate efforts by
Christen Sveaas, Norske Skog's new chairman, to restructure debt
and weather falling demand for newsprint, Bloomberg notes.  The
forestry tycoon said earlier this week that the only alternative
to his Sept. 18 plan was insolvency and handing 100% of the
company to secured creditors, Bloomberg relays.

Under the unsecured creditors' plan, Norske Skog will raise EUR50
million (US$59 million) of new equity, or about 25% more than in
the Sept. 18 proposal, Bloomberg discloses.  The new money will
come from unsecured creditors and existing shareholders.  The
plan gives secured creditors 65% of the recapitalized company.
Unsecured creditors get 23% and existing shareholders end up with
12%.  The Sept. 18 plan hands secured creditors at least 77% of
Norske Skog, Bloomberg relays.

The proposal has support from 65% of secured bondholders,
Bloomberg discloses.  It needs 75% support from all creditor
groups by today, Sept. 29, to be implemented, Bloomberg notes.

                       About Norske Skog

Norske Skogindustrier ASA or Norske Skog, which translates as
Norwegian Forest Industries, is a Norwegian pulp and paper
company based in Oslo, Norway and established in 1962.

                           *   *   *

As reported by the Troubled Company Reporter-Europe on
August 7, 2017, S&P Global Ratings lowered to 'D' (default) from
'C' its issue rating on the unsecured notes due in 2026 issued by
Norwegian paper producer Norske Skogindustrier ASA (Norske Skog).
At the same time, S&P removed the rating from CreditWatch with
negative implications, where the rating placed it on June 6,
2017. S&P said, "We also affirmed the long- and short-term
corporate credit ratings on Norske Skog at 'SD' (selective
default) and affirmed our 'D' issue rating on the senior secured
notes maturing in 2019."  The 'C' ratings on the remaining
unsecured debt remain on CreditWatch negative. The recovery
rating on these notes is unchanged at '6', reflecting our
expectation of negligible (0%-10%) recovery in the event of a
conventional default.  The downgrade follows the nonpayment of
the cash coupon due on Norske Skog's 2026 unsecured notes before
the contractual grace period expired on July 30, 2017.

The TCR-Europe reported on July 24, 2017 that Moody's Investors
Service downgraded the probability of default rating (PDR) of
Norske Skogindustrier ASA (Norske Skog) to Ca-PD/LD from Caa3-PD.
Concurrently, Moody's has affirmed Norske Skog's corporate family
rating (CFR) of Caa3.  In addition, Moody's also affirmed the C
rating of Norske Skog's global notes due 2026 and 2033 and its
perpetual notes due 2115, the Caa2 rating of the senior secured
notes issued by Norske Skog AS and downgraded the rating of the
global notes due 2021 and 2023 issued by Norske Skog Holdings AS
to Ca from Caa3.  The outlook on the ratings remains stable.  The
downgrade of the PDR to Ca-PD/LD from Caa3-PD reflects the fact
that Norske Skog did not pay the interest payment on its senior
secured notes issued by Norske Skog AS, even after the 30 day
grace period had elapsed on July 15.  This constitutes an event
of default based on Moody's definition, in spite of the existence
of a standstill agreement with the debt holders securing that an
enforcement will not be made under the secured notes due to non-
payment of interest.  In addition, the likelihood of further
events of defaults in the next 12-18 months remains fairly high,
as the company is also amidst discussions around an exchange
offer that would most likely involve equitisation of debt, which
the rating agency would most likely view as a distressed


VISTAL INFRASTRUCTURE: Unit Files for Bankruptcy
Reuters reports that Vistal Infrastructure Sp. z O.O., a unit of
Vistal Gdynia SA, has filed for bankruptcy.

Vistal Infrastructure Sp. z O.O. is based in Poland.


DME LTD: Fitch Revises Outlook Stable, Affirms BB+ IDR
Fitch Ratings has revised DME Ltd's Outlook to Stable from
Negative, while affirming the Long-Term Issuer Default Rating
(IDR) at 'BB+'. The agency also has revised the Outlook to Stable
from Negative on the USD300 million loan participation notes due
2018 and USD350 million loan participation notes due 2021 issued
by DME Airport Designated Activity Company and affirmed their
ratings at 'BB+'.

The change in Outlook to Stable reflects Fitch's opinion that the
recovery in traffic following the end of the recession in Russia
is underway.


DME benefits from growing, moderately volatile, largely origin &
destination (O&D) and leisure-dominated traffic from the large
Moscow catchment area. De-regulated tariffs provide pricing
flexibility within a competitive airport market. The investment
programme is ambitious but modular. Our leverage forecasts are
low; however, the weak debt structure subject to refinance and FX
risk coupled with corporate governance and some political, legal
and regulatory uncertainty negatively impact the ratings.

Large catchment area with strong traffic growth: Revenue Risk
(Volume) - Midrange
DME benefits from a large catchment area that generates growing
O&D leisure traffic. S7, the main airline operating at DME
accounted for less than 30% passengers in 2016. DME experienced a
peak-to-trough decline of 12.9% during 2008-09 and 13.9% during
2014-16. DME competes with two other airports in Moscow, namely
Sheremetyevo airport, which hosts Russia's national flag carrier
Aeroflot, and Vnukovo airport.

Competition and limited track record of liberalised tariff:
Revenue Risk (Price) - Midrange
DME's revenue structure is well-diversified as the airport
provides a comprehensive range of services. In early 2016, the
regulation of aviation services under a dual-till regime was
lifted and DME can now set tariffs freely. However, the track
record of operations in the liberalised regime is limited and
competition among Moscow airports evolving. We believe the
Russian national regulator Federal Antimonopoly Service could re-
introduce a regulated tariff if it regards any future price
increases as excessive.

Ambitious but modular investment programme: Infrastructure
Renewal - Midrange
DME's runway capacity is sufficient for current operations and
growth. However, substantial investment is underway for the
expansion of the terminal capacity and related equipment. The
expansion programme is ambitious but modular. Most future outlays
after 2018 can be scaled down or postponed. DME uses cash flows
from operations and also the proceeds from debt issuance to fund

Limited protection and refinancing risk: Debt Structure - Weaker
The notes are structured effectively as corporate unsecured debt.
The notes are fixed-rate with bullet maturities in 2018 and 2021
but bear foreign-exchange risk. Reasonable leverage, history of
accessing capital markets and established banking relationships
mitigate refinancing risk. Natural hedge through a portion of
revenue being in US dollars or euros lowers the foreign-exchange
risk. Covenants offer some but not comprehensive protection to
noteholders. There are no liquidity reserve provisions; however,
DME has historically maintained prudent levels of cash.

DME compares favourably in terms of leverage to 'BBB' rated
airports such as Brussels Airport Company S.A./N.V.
(BBB/Positive), Manchester Airport Group Funding PLC
(BBB+/Stable) or Copenhagen Airports A/S (BBB+/Stable). However
DME has an inherent volatility associated with emerging markets
as well as FX exposure and refinancing risk. DME's peers operate
in a more stable regulatory, legal and political environment.


Future developments that may, individually or collectively, lead
to positive rating action include:
- Five-year average forecasted Fitch-adjusted net debt/EBITDAR
   below 2x under the rating case;
- Improvement in the business risk profile due to, among other
   factors, completion of Terminal 2, a longer track record of
   operating within a liberalised tariff environment, an
   improvement in corporate governance, and reduction in
   political, legal and regulatory uncertainty.

Future developments that may, individually or collectively, lead
to negative rating action include:
- Five-year average forecasted Fitch-adjusted net debt/EBITDAR
   above 4x under the rating case, due to, among other factors,
   high shareholder returns or falling operating cash flows;
- Increased refinancing risk as expressed in an inability to
   refinance the 2018 bonds, elevated foreign exchange risk
   and/or worsened liquidity position.


ABENGOA SA: May Face New Financial Pressures After Court Loss
Luca Casiraghi and Katie Linsell at Bloomberg News report
that Abengoa SA, which last year faced becoming Spain's largest
insolvency, may suffer new financial pressures after losing a
court case brought by disgruntled creditors.

The renewable-energy company said in a statement it owes EUR72
million (US$85 million) to creditors as a result of the ruling,
Bloomberg relays, citing a statement on Sept. 27.

According to Bloomberg, Seville, Spain-based Abengoa postponed an
earnings call on Sept. 26, saying it plans to ask the court for
clarifications about the ruling, which came a day earlier.

Stifel Nicolaus analysts Arndt Muthreich and Nicolas
Bourguignon wrote in a note "We do not think that the company
currently has the funds to repay creditors immediately",
Bloomberg relates.

The analysts said Abengoa probably can't appeal the ruling, and
it may have to seek court protection if a deal isn't reached with
the creditors, Bloomberg notes.

The Seville court case was led by insurers and export credit
agencies that suffered 97% losses after rejecting Abengoa's EUR9
billion debt-restructuring package last year, Bloomberg
discloses.  According to Bloomberg, their minority opposition
failed to derail the deal, which left participating creditors
owning 95% of the company.

"The nominal value of the excluded debt which has been claimed by
the challengers amounts to approximately EUR72 million," Abengoa,
as cited by Bloomberg, said in its statement on Sept. 27.

According to Bloomberg, Felix Fischer, an analyst at Lucror
Analytics, wrote in a note on Sept. 27, "We continue to have
doubts about the viability of the restructured Abengoa.

"The latest court ruling adds to the group's troubles."

The company filed for preliminary creditor protection in 2015
after failing to raise capital and struggling under debt built up
through years of overseas expansion, Bloomberg recounts.

                      About Abengoa S.A.

Spanish energy giant Abengoa S.A. is an engineering and clean
technology company with operations in more than 50 countries
worldwide that provides innovative solutions for a diverse range
of customers in the energy and environmental sectors.  Abengoa is
one of the world's top builders of power lines transporting
energy across Latin America and a top engineering and
construction business, making massive renewable-energy power
plants worldwide.

As of the end of 2015, Abengoa, S.A. was the parent company of
687 other companies around the world, including 577 subsidiaries,
78 associates, 31 joint ventures, and 211 Spanish partnerships.
Additionally, the Abengoa Group held a number of other interests
of less than 20% in other entities.

On Nov. 25, 2015 in Spain, Abengoa S.A. announced its intention
to seek protection under Article 5bis of Spanish insolvency law,
a pre-insolvency statute that permits a company to enter into
negotiations with certain creditors for restricting of its
financial affairs.  The Spanish company faced a March 28, 2016,
deadline to agree on a viability plan or restructuring plan with
its banks and bondholders, without which it could be forced to
declare bankruptcy.

On March 16, 2016, Abengoa presented its Business Plan and
Financial Restructuring Plan in Madrid to all of its

BANCO POPULAR: EU Lawmakers Consider More Protection for Savers
Francesco Guarascio at Reuters reports that European Union
lawmakers are considering changing the rules on bank rescues to
ensure bondholders' investments are used to prop up a failing
lender ahead of savers' deposits.

The discussions follow a decision by EU regulators to shut down
Spanish bank Banco Popular in June after a run on its deposits
fueled by fears that depositors' money could be used to rescue
the lender, Reuters relates.

But the proposed changes could expose investors who hold bonds
issued by banks to higher risks should they run into trouble, and
generally push up yields on lenders' senior debt, making it more
expensive for them to raise funds, Reuters states.

Any changes agreed by the European Parliament would have to be
approved by governments of the bloc's members states, Reuters

Banco Popular's liquidity crisis was partly prompted by the new
EU rules that allow regulators to wipe out uninsured savings,
deposits above EUR100,000 (US$118,000), Reuters states.

To prevent panicking depositors from hastily withdrawing money in
the next bank crisis, lawmakers are discussing changes that would
increase the level of protection given to savers, making them the
last to be hit in a future rescue, Reuters discloses.

Under current rules, uninsured depositors have the same level of
protection as holders of senior debt, Reuters says.

"Conferring a priority ranking on all deposits is expected to
enhance the implementation of the bail-in tool," Reuters quotes a
proposal prepared by Ernest Urtasun, a Spanish Greens member of
the European Parliament, as saying.  The document, as cited by
Reuters, said this would lower the risk of contagion -- the kind
of loss of investors' confidence which spread rapidly from market
to market during the crisis.

The document seeks to amend a legislative proposal by the
European Commission on the ranking of unsecured creditors in bank
rescues, Reuters states.

Two EU officials familiar with talks on the issue said the
amendment could be approved by mid-October by the parliament's
economic committee, Reuters relays.

Italy and Portugal are against increasing depositors' protection,
fearing a negative impact on bondholders, the EU official said,
adding that other states may also oppose the move, Reuters notes.

                       About Banco Popular

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

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

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

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

IM PRESTAMOS: Moody's Hikes Rating on Class C Notes to B1
Moody's Investors Service announced that it has taken rating
actions on the following classes of notes issued by IM Prestamos
Fondos Cedulas, FTA, and affirmed the liquidity facility
available to this Issuer.

-- EUR0.9M (Current outstanding balance of EUR0.7M) Class C
    Notes, Upgraded to B1 (sf); previously on Nov. 2, 2015
    Upgraded to B3 (sf)

-- EUR344.1M (Current outstading balance of EUR32.7M) Class A
    Notes, Affirmed Ba1 (sf); previously on Nov. 2, 2015 Upgraded
    to Ba1 (sf)

-- Liquidity Facility Notes, Affirmed Aa2 (sf); previously on
    Nov. 2, 2015 Affirmed Aa2 (sf)

This transaction is a static cash CBO of portions of subordinated
loans funding the reserve funds of two (at closing 14) Spanish
multi-issuer covered bonds (SMICBs), which can be considered as a
securitisation of a pool of Cedulas. Each SMICB is backed by a
group of Cedulas which are bought by a fund, which in turn issues
SMICBs. Cedulas holders are secured by the Issuer's entire
mortgage book. The subordinated loans backing the IM Prestamos
transaction represent the first loss pieces in the respective
SMICB structures (or structured Cedulas). Therefore this
transaction is exposed to the risk of several Spanish financial
institutions defaulting under their mortgage covered bonds

The liquidity facility may be drawn to fund the difference
between interest accrued and due on the subordinated loans of the
two SMICBs and interest actually received on these loans. The
amount drawn under this facility is thus a function of (i) number
and value of underlying delinquent and defaulted Cedulas, (ii)
level of short term EURIBOR and (iii) time taken for final
realization of recoveries on defaulted Cedulas. While the
liquidity facility is currently not drawn, Moody's analysis
assumes that a portion of it will be drawn at some time during
the remaining life of this transaction.


Moody's said rating action is a result of upgrades to the CR
Assessments (CRA) of the following banks:

1) ABANCA Corporacion Bancaria, S.A. CRA upgraded from Ba3(cr) to
Ba1(cr) on May 10, 2017

2) Kutxabank, S.A. CRA upgraded from Baa2(cr) to Baa1(cr) on May
10, 2017

3) Bankia, S.A. CRA upgraded from Baa3(cr) to Baa2(cr) on May 10,

4) Ibercaja Banco SA CRA upgraded from Ba2(cr) to Ba1(cr) on May
10, 2017

5) Unicaja Banco CRA upgraded from Ba1(cr) to Baa3(cr) on 5th
July 2017

6) Upgrades of the private monitored CRAs of three banks in
second and third quarters of 2017

As a result, Moody's loss expectations for some of the underlying
covered bonds within the SMICBs have reduced. Moody's considers
that should a Cedulas Issuer default, it is likely that the
reserve funds that form the underlying portfolio of IM Prestamos
would require to be drawn upon to make good the potential
shortfall suffered by the underlying Cedulas holders. The extent
of such potential shortfall is dependent on the level of over
collateralisation and quality of the Issuer's underlying mortgage
pool. Moody's analysis indicates that in the light of such
potential shortfalls, the credit quality of the reserve funds of
the two SMICBs that form the portfolio of IM Prestamos Fondos
Cedulas is presently more consistent with ratings in a Ba2 (sf) -
- A3 (sf) range compared to a Ba2 (sf) - Baa2 (sf) range in May
2016, a B2(sf) - Baa3 (sf) range in June 2015, a Caa1 (sf) - B1
(sf) range in August 2014, and a Caa2 (sf) - B2 (sf) range in
March 2013.

The credit quality of the reserve funds of these two SMICBs is
substantially driven by high recovery rate assumptions on the
underlying Cedulas. The ratings of the liquidity facility
available to IM Prestamos Fondos Cedulas, FTA and the issued
notes are therefore sensitive to these recovery rate assumptions.

In addition, the credit quality of the liquidity facility is
affected by the estimated level of draw-down, with higher draw-
downs resulting in declining credit quality. As stated earlier,
draw-down is affected by (i) number and value of delinquent and
defaulted Cedulas, (ii) short-term EURIBOR rates and (iii) time
taken for realization of final recoveries on defaulted Cedulas.

Moody's base case scenario assumes that the liquidity facility is
drawn down to the extent of EUR1.3M. This level of draw down
reflects (i) some of the current underlying pool of Cedulas being
delinquent or in default, (ii) conservative short-term EURIBOR at
about 1.75% pa, and (iii) a two year period between Cedulas
default and final recoveries.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's
Approach to Rating Corporate Synthetic Collateralized Debt
Obligations" published in August 2017. The rating of the
Liquidity facility is compliant with Moody's Approach to
Counterparty Instrument Ratings published in June 2015.

Factors that would lead to an upgrade or downgrade of the

A multiple-notch downgrade of classes of notes of IM Prestamos
might occur in certain circumstances, such as (i) a sovereign
downgrade negatively affecting the SMICBs; (ii) a multiple-notch
lowering of the CB anchor or (iii) a material reduction of the
value of the cover pool.

Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes and liquidity facility as evidenced by 1)
uncertainties of credit conditions in the general economy
especially as 100% of the portfolio is exposed to obligors
located in Spain 2) fluctuations in EURIBOR and 3) amount and
timing of final recoveries on defaulted Cedulas. Realization of
lower than expected recoveries would negatively impact the
ratings of the notes and the liquidity facility.

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

PROMOTORA DE INFORMACIONES: Creditors Tap KPMG to Review Accounts
Charles Penty at Bloomberg News, citing El Confidencial, reports
that banks and hedge funds that own Promotora de Informaciones
S.A. (Prisa) loans have hired KPMG to carry out deep review of
the company's accounts to examine capacity to meet financial

According to Bloomberg, the news website says the step comes
after the Prisa board debated the potential sale of Santillana
unit to Rhone Capital.

Promotora de Informaciones S.A. -- is a
Spain-based holding company engaged in various media activities.
The Company has six business areas: publishing, education and
training (Grupo Santillana publishes textbooks and books of
general interest); press (El Pais Internacional is engaged in the
distribution of news material and services to other newspapers
and publications worldwide); radio (Union Radio is a group
broadcasting worldwide); audiovisual (PRISA offers services and
products, including Pay TV, thorough the satellite platform
DIGITAL+, and free-to-view through the channel Cuatro); online
(Prisacom is committed to the development of multimedia content
with broadcasting for Internet-based TV) as well as commercial &
marketing (Sogecable Media SA manages all the advertising on the
Company and its group's media).  The Company is present in 22
countries, such as Portugal, Brazil or the United States.


KUNGSLEDEN AB: Moody's Assigns Ba1 CFR, Outlook Positive
Moody's Investors Service has assigned a first-time Ba1 corporate
family rating to Kungsleden AB, a Stockholm-based commercial real
estate company. The outlook on the rating is positive.

"Kungsleden's Ba1 rating reflects its midsized property portfolio
with some diversification into office, industrial and retail
space positioned in attractive secondary locations of Sweden's
top three growth cities. Other strengths underpinning the rating
include an evenly spread out lease maturity profile and a strong
fixed charge coverage for the rating assigned," says Maria
Gillholm, a Moody's VP - Senior Credit Officer and lead analyst
for Kungsleden.


Kungsleden AB's Ba1 long-term corporate family rating primarily
reflects the good quality and geographic diversification of its
commercial property portfolio in attractive secondary locations
in Sweden's top three growth cities including the MÑlardalen
region. This portfolio is valued at SEK30 billion as of June 30,
2017. Its properties are concentrated in several clusters in
growing Swedish cities that together represent about 50% of the
country's population with Stockholm County accounting for the
largest share (43% of property value). The company's moderate
development program will gradually enhance the quality of its
portfolio while a good weighted average lease maturity of 4.5
years provides visibility to rental income. Another strength
underpinning the rating is a strong fixed charge coverage of
3.2x. Moody's expects leverage as measured by total debt to gross
assets to be below 50% in the next 12 months.

Counterbalancing these strengths are: the focus on secondary
locations of its office portfolio which accounts for 63% of
investment properties by value; some exposure to
industrial/warehouse properties (27%) although on relatively long
leases and with creditworthy counterparties such as ABB Ltd.
(A2/Stable); moderately high vacancy rate (8.2%) especially when
taking into account the mature state of the property cycle; some
tenant concentration, the company's relatively short track-record
in delivering on its strategy that focuses exclusively on four
priority growth markets Stockholm, Gothenburg, Malmî and
MÑlardalen following the disposal of non-core assets and reducing
the number of municipalities and a high net debt/EBITDA. In line
with some local rated peers Kungsleden has a relatively short
debt maturity profile and a high proportion of secured debt which
therefore creates subordination for unsecured bondholders. The
rating is predicated upon the execution of the recently announced
refinancing plan which entails a series of senior unsecured bond
issuances leading to an increase of unencumbered assets.


The positive outlook reflects the expectation that Moody's
adjusted effective leverage will fall below 50% in the next 12-18
months. The outlook also factors in the expectation that
Kungsleden will refinance SEK 4.4 billion of bank debt falling
due in 2018-2019 and for potential future acquisitions with
proceeds from senior unsecured bonds and therefore increase
unencumbered assets to above 30% from 2% currently. The outlook
also reflects the favourable macroeconomic environment in Sweden.


* Sustaining leverage below 50% as measured by Moody's-adjusted
gross debt/assets, and maintaining financial policies that
support the lower leverage

* Improving the debt maturity profile and refinance secured
borrowing with senior unsecured lending leading to an increase in
unencumbered assets of above 30%

* Continue to build track record under the strategy introduced in
2013 of transforming the asset base to defined clusters and focus
on faster growing metropolitan areas


The outlook could be changed to Stable if the company fails to
increase unencumbered assets above 30% in the next 12 months.
Additionally, the rating could be downgraded if:

* Gross debt to total assets rises above 55% on a sustainable

* EBITDA Fixed charge coverage drops below 2.2x on a sustainable

* Liquidity weakens or reliance on short-term debt increases

* Weaker market fundamentals resulting in falling rents and asset

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


OPTIMA FAKTORING: Moody's Assigns B3 CFR, Outlook Stable
Moody's Investors Service has assigned a corporate family rating
(CFR) of B3 and an issuer rating of Caa2 to Optima Faktoring A.S.
(Optima). The outlook on these ratings is stable. Furthermore,
Moody's assigned a National Scale Issuer Rating.



Moody's says that the B3 CFR reflects Optima's solid
profitability, adequate capital buffers and sufficient liquidity,
counterbalanced by its weak franchise, relatively high risk
profile, high problem loans, and the potential risks stemming
from the Turkish operating environment.

Optima is a mid-sized domestic factoring company, based in
Turkey, with assets of USD46 million at December 2016.

With a return on average assets of 2.6% in 2016, Optima exhibits
a solid level of profitability, although this is potentially
volatile in line with the volatility of assets, which can be
built up or run off quickly, given their short-term nature.
Profitability is driven by relatively high margins, and
relatively low operating expenses and cost of credit.

Moody's views Optima's capital ratios to be adequate, based on
tangible common equity (TCE) of 19% of assets at December 2016.
Although this is however lower than Turkish peers, Moody's does
not expect a significant reduction of TCE owing to aggressive
asset growth, given the company's policy of focusing on higher
margins rather than volumes.

Optima's liquidity is sufficient, according to Moody's. The
average maturity of assets is around 3 months, while average
maturity of funding is around 5 months, resulting in a 2-month
positive gap. Furthermore, Moody's estimates that the company is
self-liquidating in about 6 months. Optima's debt is secured by
the dated cheques received by the factoring clients.

Against these positive credit drivers, Moody's views the
company's risk profile as relatively high, constrained by
volatile assets, and still developing corporate governance, risk
and liquidity management frameworks, as well as by reliance on a
small number of key managers, a characteristic inherent to
Optima's family ownership. These factors are partly mitigated by
the high diversification of assets across sectors and borrowers.
As a small private company, Optima's level of information
disclosure and frequency of financial reporting remains limited.

Problem loans were 4.7% of loans and 21% of equity and loan loss
reserves at December 2016, which is weaker than the average of
both factoring companies in Turkey (about 4%) and the Turkish
banking sector (3.1%), despite some sales of problem loans.

Moody's acknowledges that the factoring industry's asset quality
and profitability are currently improving thanks to the liquidity
injected by Turkey's Credit Guarantee Fund into the small and
medium-sized enterprises that are clients of factoring companies.
Nevertheless, Moody's notes that despite this and the current
growth in the Turkish economy, there are potential downside risks
in the Turkish operating environment. These include a combination
of political, security and geopolitical tensions, volatile
currency, high inflation, fragile investor confidence and rising
global interest rates.


Moody's has positioned the issuer rating at Caa2, two notches
below the CFR, to reflect the structural subordination of senior
unsecured debt to secured debt, which stands at around two-thirds
of the total amount.

Optima's TL128 million debt at end-2016 is secured by the dated
cheques received by the factoring clients. Optima has recently
received regulatory approval to issue up to TL90 million senior
unsecured debt and has already issued TL24 million of senior
unsecured bonds. According to Moody's, the senior unsecured debt
is structurally subordinated to the majority of Optima's debt,
which is secured, hence the issuer rating two notches below the


The stable outlook reflects Moody's expectations that the
company's financials will remain consistent with the assigned
ratings for the next 12-18 months.


Moody's could upgrade Optima's rating if (1) problem loans
decline significantly and (2) risk management becomes more
structured and formalised. Moody's could also upgrade the issuer
rating if secured debt declines to significantly less than two
thirds of debt.

Conversely, Moody's could downgrade Optima's rating if (1) the
company is unable to sustain current profitability; (2) TCE
declines below 13% of assets or (3) the liquidity profile


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

Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable
with the full universe of Moody's rated entities, but only with
NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".za" for South Africa.
For further information on Moody's approach to national scale
credit ratings, please refer to Moody's Credit rating Methodology
published in May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be
inferred from the GSR to which it maps back at that particular
point in time. For information on the historical default rates
associated with different global scale rating categories over
different investment horizons.

U N I T E D   K I N G D O M

BESTWAY UK: S&P Alters Outlook to Stable Then Withdraws 'B' CCR
S&P Global Ratings said that it has revised its outlook to stable
from negative on Bestway UK Holdco Ltd. (Bestway UK), the parent
company of U.K.-based food wholesale and pharmacy subsidiaries of
Bestway Group. At the same time, S&P affirmed its 'B' long-term
corporate credit rating on the company.

S&P said, "We also withdrew our long-term issue ratings on
Bestway UK's GBP725 million senior secured facilities (GBP290
million outstanding at the time of refinancing), because they
have been redeemed.

"We subsequently withdrew our long-term corporate credit rating
at the issuer's request. The outlook was stable at the time of
the withdrawal.

S&P said, "Our rating actions follow Bestway UK's refinancing of
its debt, including the redemption of all amounts outstanding
under the GBP725 million senior secured facilities. In our view,
the reduction in reported debt due to voluntary prepayments in
financial 2017 and the recent refinancing have improved the
group's credit metrics and liquidity position by terming out its
maturities. Accordingly, we revised the outlook on Bestway UK to

HOUSE OF FRASER: S&P Cuts CCR to B- on Weak Earnings, Cash Flows
S&P Global Ratings said that it lowered its long-term corporate
credit rating on U.K. department store retailer House of Fraser
(UK & Ireland) Ltd. -- previously known as Highland Group
Holdings Ltd. -- to 'B-' from 'B'. The outlook is negative.

U.K. department store retailer House of Fraser's recently
reported second quarter results were characterized by a further
weakening in earnings and cash flows due to challenging trading
conditions in the U.K., the transition to a new web platform, and
a relaunch of the group's own brands.

Near-term liquidity and covenant pressure have eased following an
equity contribution of GBP15 million from the majority
shareholder, Sanpower.

S&P said, "At the same time, we lowered to 'B-' from 'B' our
long-term issue rating on House of Fraser's GBP175 million senior
secured notes floating-rate notes (of which GBP164.9 million
remain outstanding), in line with the corporate credit rating.
The '3' recovery rating on these notes is unchanged, reflecting
our expectation of meaningful recovery prospects (50%-70%;
rounded estimate: 50%) in the event of default."

Further like-for-like sales and EBITDA margin declines underlined
House of Fraser's underperformance in its recent second quarter
results (ending July 29), resulting in a continued trend of
materially negative free operating cash flows (FOCF) over the
last 12 months. S&P said, "As such, we believe liquidity is now
under pressure, with covenant headroom very limited under our
current base case. Notwithstanding the equity contribution of
GBP15 million from the shareholder, we think the risk of a
covenant breach over the next few quarters has increased owing to
the company's tightening covenant test levels and its increasing
reliance on fourth quarter earnings and cash flows. In addition,
our forecast S&P Global Ratings-adjusted credit metrics for House
of Fraser are materially weaker than in our previous base case,
with adjusted debt to EBITDA climbing to about 10x and adjusted
funds from operations (FFO) to debt dropping to below 5%.

"We continue to forecast soft trading conditions in the U.K. over
the next two years. We believe this will continue to weigh on
House of Fraser's top line, and to some extent its operating
margins as the protection from pre-Brexit hedges continues to
wear off. This, combined with the group's continued commitment to
its ambitious transformation strategy -- which is reliant on
significant investment in a new web platform and the upgrading of
its distribution centre -- will, in our opinion, result in a
prolonged period of cash outflows.

"We think weak operating trends in the U.K. retail sector are a
result of both cyclical headwinds exacerbated by the Brexit vote
and a secular change in consumer spending habits. Consumers have
increasingly shifted their purchases online, drawn by
convenience, selection, and price transparency. While House of
Fraser continues to expand its e-commerce business, revenue at
its physical stores still comprises the vast majority of retail

"We expect the difficult conditions of the past several quarters
to continue through calendar years 2017 and 2018, slowing
customer traffic and ensuring the discretionary retail landscape
remains fiercely competitive. We anticipate that House of
Fraser's focus on raising average prices and reducing staffing
expenses will mitigate some cost inflation resulting from the
weakening of the pound sterling and higher wages and business
rates; however, we also believe the impact of the U.K.'s Brexit
decision on consumer confidence, discretionary spending, and
sterling value will escalate over the next two years, more than
offsetting the company's various operating initiatives. This
could sustainably hurt the efficiency of the company's operations
and its competitive standing, in our opinion.

"At the same time, we think that House of Fraser's channel
diversity will continue to improve as revenue and earnings
contribution from e-commerce expands -- from its already high
base of around 20% -- which should support the company's business
model by providing growth opportunities against a backdrop of
broadly neutral or slightly negative like-for-like U.K. store
sales. We expect this will marginally dilute gross margins. We no
longer expect any meaningful improvements in geographic diversity
as previous expansion plans into China appear to have been

"House of Fraser's relatively high share of concession income and
its multi-brand approach, which combines own-brands and
international third-party brands across a wide product range,
provides some degree of protection to inter-year earnings
volatility, in our opinion. House of Fraser also aims to
differentiate itself from its competitors by focusing on the
higher end of the department store segment. However, the company
remains exposed to seasonality -- particularly given that the
bulk of its EBITDA is generated in its fourth quarter -- changing
fashion trends, and consumer preferences, as well as to shifts in
spending patterns.

"We view House of Fraser as a moderately strategic subsidiary
within the wider Sanpower Group Co., Ltd. a Chinese industrial
conglomerate whose operations span retail, information services,
medical and healthcare, and real estate. We do not rate Sanpower,
but we estimate the overall creditworthiness of the Sanpower
group as being one notch above the 'b-' stand-alone credit
profile for House of Fraser. In light of the GBP15 million equity
funds injected in September 2017, we believe Sanpower could
provide some level of liquidity support to House of Fraser. That
said, in the absence of any formal commitments or guarantees from
Sanpower, we do not view House of Fraser's role within the group
as strong enough to suggest the likelihood and magnitude of any
potential further support is sufficient to warrant a higher
rating to equalise it with the group credit profile of the wider
Sanpower group."

S&P's base-case assumptions for House of Fraser are:

-- Moderate U.K. real GDP growth of 1.4% in calendar year 2017
    and 0.9% in 2018, along with consumer price inflation (CPI)
    of 2.7% in 2017 and 2.3% in 2018, with the latter supported
    by exchange rate pressures, some of which will be passed on
    to consumers and suppliers. We also expect a slowdown in U.K.
    real consumption growth to 1.6% in 2017 and 0.5% in 2018;

-- Mild underperformance in the U.K. retail sector in calendar
    years 2018 and 2019 relative to nominal GDP, as real
    wages begin to contract and consumer spending continues to
    shift toward entertainment and away from more traditional
    retail propositions;

-- Modest topline growth of 1%-3% in each of the next two years,
    from the GBP836 million posted in financial 2017. This
    assumption incorporates a reduction in sales volumes owing to
    the temporary disruption in customer traffic following launch
    of the new online platform and womenswear range as well as
    disposable income squeezes in the U.K. However, we expect
    average sale price increases to more than offset these volume
    declines as a result of general CPI and strategic initiatives
    aimed at managing inventory tighter and reducing markdown

-- Moderate contraction (50-100 basis points) in reported gross
    margins over the next two financial years (FY) -- from 57.8%
    in FY2017 (ending February). This contraction reflect foreign
    exchange pressures and a requirement to discount old stock
    ahead of the relaunch of the group's own brands. We also
    believe gross margins will be somewhat protected by pre-
    Brexit hedging contracts, the limited proportion of goods
    sourced in foreign currencies, and the aforementioned tighter
    inventory management, which we expect to help with delivering
    higher full-price sell-through;

-- Moderate contraction in reported EBITDA margins in FY2018 to
    7.0%-7.5% as modest staffing, distribution, and rental
    expense inflation compounds gross margin pressures. We expect
    profitability to rebound somewhat in FY2019 as capital
    expenditure (capex) and strategic initiatives -- including
    investment in expanding and repurposing the group's
    distribution centre -- begin to bear fruit;

-- Negative reported free cash flow generation for the current
    financial year, due to elevated capex spend; and

-- Capex of GBP55 million-GBP60 million in FY2018, in line with
    management's public guidance. We expect this to fall to a
    normalized level of around GBP30 million-GBP35 million from
    FY2019 onward. Notwithstanding the elevated capex, we expect
    that management will prudently moderate capex if it
    encounters any liquidity pressure.

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

-- Adjusted debt to EBITDA of 9.0x-10.0x in both FY2018 and

-- Adjusted funds from operations (FFO) to debt of 2%-5% in both
    FY2018 and FY2019;

-- Reported FOCF burn of GBP30 million-GBP35 million in FY2018,
    before recovering to about neutral in FY2019 as capex is
    reduced; and

-- Adjusted EBITDAR (reported EBITDA plus rent) to cash interest
    plus rent coverage (EBITDAR coverage) of 1.3x-1.5x in FY2018
    and FY2019.

S&P said, "The negative outlook reflects our view that House of
Fraser's operating performance will remain under pressure over
the next 12 months against a backdrop of challenging trading
conditions in the U.K. retail market, increasing the possibility
of a covenant breach in the event of any unexpected operating
setbacks. That said, absent such significant operating weakness,
which we do not forecast in our base case, we believe that House
of Fraser will be able to service its debt and generate
sufficient cash flow over the next 12 months to meet its
liquidity needs.

"Additionally, in combination with the ultimate parent, we
anticipate that House of Fraser will appropriately manage the
tightening of its covenant headroom, such that the debt repayment
is not accelerated. During this period, we forecast that House of
Fraser will report negative reported FOCF and that its adjusted
debt to EBITDA will approach 10x.

"We could lower the ratings if management is not able to
successfully implement its turnaround initiatives and House of
Fraser fails to grow its earnings and return to positive reported
FOCF generation as the maturity dates in their existing capital
structure approach. Considering the significant maturities in
July 2019, we think this could also pose significant refinancing
risk, rendering the group's capital structure unsustainable.

"More specifically, we could also lower the ratings if covenant
headroom were to tighten to the point that we expect a breach
under our base case. We believe this could call into the question
the full availability of the RCF, putting further pressure on the
group's liquidity.

"We could also lower the ratings if House of Fraser or its
shareholders were to repurchase portions of its debt at
materially below par value within the next 12 months. This could
trigger a downgrade to 'SD' (selective default).

"We could revise the outlook to stable if House of Fraser's
various management initiatives succeed in reversing the currently
negative operating trends, leading to an improvement in operating
performance and its competitive position. Most importantly for a
stable outlook, we would expect the group to take positive action
to restore headroom under its maintenance financial covenants,
either through an arrangement with its lenders, or through EBITDA
growth and FOCF generation, on the back of an improvement in
trading performance."

L1R HB: S&P Assigns 'B' Corp Credit Rating, Outlook Stable
S&P Global Ratings said it has assigned its 'B' long-term
corporate credit rating to L1R HB Finance Ltd. (H&B), the parent
of U.K.-based health and wellness retailer Holland & Barrett. The
outlook is stable.

S&P also assigned its 'B' issue rating to the group's seven-year
GBP450 million senior secured term loan B1 and seven-year
EUR415.5 million senior secured term loan B2. The recovery rating
is '3', indicating its expectations of meaningful recovery (50%-
70%; rounded estimate: 55%) in the event of payment default.

H&B is the U.K.'s leading specialty health and wellness retailer,
with over 800 stores in the U.K. and Ireland, and a 22% market
share in the U.K.'s specialist health and wellness retailing
segment. Despite the relatively niche area of its operations, one
in five U.K. households are Holland & Barrett's active members.
H&B directly competes with pharmacy chain Boots UK and major
supermarkets, such as Tesco PLC. The group has a moderate level
of geographical diversification outside the U.K. and Ireland with
about 16% revenue generated from over 200 self-operated stores
across the Netherlands, Belgium, and Sweden.

The vertically integrated business model -- whereby H&B benefits
from its in-house production facilities for product packaging,
coating, and mixing -- supports the group's strong margins. The
group achieved S&P Global Ratings-adjusted EBITDA margins of
around 34% in financial year (FY) 2016, ended Sept. 30 (or 23% on
reported basis). Moreover, management has established a track
record of sound operating execution, in a highly competitive
retail environment in the U.K. -- demonstrated by the group
achieving 33 consecutive quarters of positive like-for-like sales
growth (over eight years).

S&P said, "Overall, despite its strong brand awareness and market
position within the U.K.'s health and wellness segment, we view
H&B's business as constrained by its relatively small scale and
niche focus within the context of the wider retail sector.
Furthermore, it is exposed to fluctuations in discretionary
spending that could weigh on the group's profitability and
working capital as price competition and cost inflation
intensify. We also see a risk of branded retailers increasing
their exposure in this lucrative high-margin segment. These
factors led to our expectation that profitability will gradually
trend downward in the long term.

"Nevertheless, in light of rising health awareness and the aging
population in the U.K., we expect a generally supportive trading
environment for H&B. The group plans to expand its footprint,
primarily in the U.K. and Western Europe, by about 60 stores per
year. This includes about 20 new store-in-store openings per year
under the partnership with Tesco PLC.

"We expect the group to report S&P Global Ratings-adjusted debt
to EBITDA of around 5.4x in FY2017 and could see it reduce
leverage to about 5.2x on the back of increasing EBITDA and
strong margins. However, rapid expansion could entail high rent
costs and related expenditure. We forecast EBITDAR cash interest
coverage to be around 1.9x in FY2018 and FY2019.

"The acquisition financing also involves GBP799 million
preference shares and GBP150 million shareholder loan notes as an
equity injection by LetterOne Investment Holding S.A. We view
these shareholder instruments as equity-like, reflecting our view
that the economic incentives align with common equity. The
instruments are contractually and structurally subordinated with
no events of default, cross-default, or cross-acceleration in the

In S&P base case, it assumes:

-- In anticipation of the U.K. leaving the EU, we forecast U.K.
    real GDP growth falling to 1.4% in 2017 and 0.9% in 2018 from
    1.8% in 2016. Consumer price index inflation rising to 2.7%
    in 2017 and 2.3% in 2018 from 0.6% in 2016. These generally
    supportive macroeconomic conditions together with the
    increasing consumer spend on health and wellness should
    support the group's growth plans.

-- S&P forecasts revenue growth to improve to 7.2% in FY2017 and
    8.9% in FY2018, rising from 6.7% in FY2016. This reflects the
    group's reinvestment of operating cash flow in new store
    openings in both conventional and store-in-store formats, in-
    store sales platform, and online sales channel.

-- S&P said, "Margins will remain strong compared with retail
    peers, but we expect them to gradually trend down owing to
    rising minimum living wages and food costs in the U.K., as
    well as emerging competition and store cannibalization. We
    expect an adjusted EBITDA margin of about 32.7% in FY2017 and
    31.0% in FY2018, gradually reducing from 34.2% in FY2016.
    This would translate into a strong reported EBITDA margin of
    around 21.8% in FY2017 and 20.2% in FY2018 (falling from
    23.4% in FY2016).

-- Capital expenditure (capex) of about GBP53 million in FY2017
    and about GBP40 million in FY2018, relative to GBP55 million
    in FY2016. This should support the group's EBITDA growth
    mostly on the back of the new store openings, online sales
    platform development, and a more robust inventory system.
    No shareholder returns.

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

-- S&P forecasts its adjusted debt to EBITDA to be 5.4x in
    FY2017, which could improve to 5.2x in FY2018 on the back of
    increasing EBITDA thanks to new store openings.

-- EBITDAR cash interest coverage (defined as reported EBITDA
    before deducting rent over cash interest plus rent) of about
    1.9x in FY2018 and FY2019.

-- Positive reported free operating cash flow (FOCF) of around
    GBP30 million in FY2017 and FY2018.

S&P said, "The stable outlook reflects our view that H&B will
maintain its leading market position within the health and
wellness retail subsegment in the U.K. and increase its revenues
and profits on the back of the favorable spending environment in
the country and also its store expansion plans. We forecast H&B's
adjusted debt to EBITDA to be about 5.4x, with EBITDAR cash
interest coverage of around 1.9x over the next 12 months.

"We would consider a negative rating action if management's
operating plan is executed inefficiently or highly competitive
trading conditions resulted in the deterioration of H&B's top-
line performance or weakened the margins relative to our base

"This could arise if, for example, the group experienced a
decline in EBITDA margins due to higher labor and food costs,
resulting in our adjusted debt to EBITDA rising toward 7x and the
EBITDAR cash interest coverage falling toward 1.5x. We could also
lower the ratings if FOCF generation weakened owing to
accelerated capital spending and working capital investment.

"In addition, we could lower the ratings if we perceive a more-
aggressive financial policy regarding capital investment or
shareholder returns.

"Due to the company's niche focus within the highly competitive
U.K. retail market, we consider an upgrade unlikely over the next
12 months. The group continues to consume cash for investment,
which will likely curtail any meaningful improvement in its
credit metrics.

"We could raise the ratings if H&B establishes a track record of
sound operating performance under LetterOne's ownership,
sustainably defends its margins, and meaningfully increases its
FOCF generation from its current levels. This should result in
our adjusted debt to EBITDA falling sustainably below 5x and
EBITDAR interest coverage rising toward 2.2x. Any ratings upside
would also depend on our view of conservative financial policy
regarding leverage and shareholder returns."

MARKETPLACE ORIGINATED: Fitch Raises Class D Notes Rating From BB
Fitch Ratings has upgraded Marketplace Originated Consumer Assets
2016-1 Plc's (MOCA 2016-1) notes, as follows:

GBP114 million class A notes upgraded to 'AAsf' from 'AA-sf';
Outlook Stable
GBP7.5 million class B notes upgraded to 'A+sf' from 'Asf';
Outlook Positive
GBP7.5 million class C notes upgraded to 'A+sf' from 'BBB+sf';
Outlook Stable
GBP9 million class D notes upgraded to 'BBBsf' from 'BBsf';
Outlook Stable

MOCA 2016-1 is a true-sale securitisation of a static pool of UK
unsecured consumer loans, originated through the marketplace
lending platform of Zopa Limited and sold by P2P Global
Investments (P2PGI). This transaction was the first marketplace
lending securitisation to be rated by Fitch in EMEA.


Credit Enhancement Increasing
The notes began amortising at closing in October 2016, resulting
in increased credit enhancement for each class of notes,
supporting the upgrades. Credit enhancement available to the
class B notes could support a rating higher than 'A+sf', but they
would not benefit from dedicated liquidity coverage to address
payment interruption risk while the class A notes remain
outstanding. Since the general reserve can also be used for
credit losses it may not be available in stressed scenarios. This
prevents the class B notes from being upgraded to a rating
commensurate with timely interest payments. The Positive Outlook
reflects the likelihood that liquidity coverage will improve
further as the class A notes pay down, in which case the current
liquidity related cap to the class B notes may no longer apply.

Shifting Pool Composition
Fitch's default base case was based on sub-pool base cases broken
down by loan term and risk band. The sub-pool base cases were
then weighted by the portion of these pools in the pool. Fitch
has updated some sub-pool base cases to reflect slightly revised
performance expectations. As a result, Fitch has revised its
expectation of the lifetime default rate to 5.1%, from 4.7%.
Fitch has revised the default multiple at 'AAsf' to 5.5x from
6.0x to reflect the increased performance history since closing.

'AAsf' Rating Cap
Zopa has been in business since 2004, but originations have only
grown to a significant volume in recent years, with dramatic
growth since 2011. The short performance history for most of the
origination volume, together with Zopa's operational platform
that has yet to be tested in a full cycle at its current scale,
is reflected in the 'AAsf' rating cap.

Strong Back-Up Servicer
Target Financial Services acts as back-up servicer and has a
strong track record as a servicer of consumer products. Target
receives periodic pool information and has specified an
invocation plan with a readiness level of 60 days. Fitch
therefore views exposure to Zopa as servicer to be adequately


Expected impact upon the note rating of increased defaults:
Current rating: 'AAsf'/ 'A+sf'/ 'A+sf'/ 'BBBsf'
Increase base case defaults by 10%: 'AAsf'/ 'A+sf'/ 'A+sf'/ 'BBB-
Increase base case defaults by 25%: 'AAsf'/ 'A+sf'/ 'A-sf'/

Expected impact upon the note rating of decreased recoveries:
Current rating: 'AAsf'/ 'A+sf'/ 'A+sf'/ 'BBBsf'
Reduce base case recovery by 10%: 'AAsf'/ 'A+sf'/ 'A+sf'/ 'BBBsf'
Reduce base case recovery by 25%: 'AAsf'/ 'A+sf'/ 'A+sf'/ 'BBBsf'

Expected impact upon the note rating of increased defaults and
decreased recoveries:
Current rating: 'AAsf'/ 'A+sf'/ 'A+sf'/ 'BBBsf'
Increase default base case by 25%; reduce recovery base case by
25%: 'AAsf'/ 'A+sf'/ 'A-sf'/ 'BB+sf'

PROSERV GLOBAL: Moody's Withdraws Caa3 Corporate Family Rating
Moody's Investors Service has withdrawn Proserv Global Inc.'s
(Proserv) Caa3 corporate family rating (CFR) and probability of
default rating (PDR) of Caa3-PD. Concurrently, Moody's has also
withdrawn the Caa2 ratings on the USD135 million first lien term
loan and the USD60 million first lien revolving credit facility
at Proserv Operations Limited, and the USD230 million first lien
term loan at Proserv US LLC, as well as the Ca rating on the
USD115 million second lien term loan at Proserv US LLC.


Moody's has decided to withdraw the ratings because it believes
it has insufficient or otherwise inadequate information to
support the maintenance of the ratings.



Issuer: Proserv Global Inc.

-- LT Corporate Family Rating, Withdrawn, previously rated Caa3

-- Probability of Default Rating, Withdrawn, previously rated

Issuer: Proserv Operations Limited

-- BACKED Senior Secured Bank Credit Facility, Withdrawn,
    previously rated Caa2

Issuer: Proserv US LLC

-- BACKED Senior Secured Bank Credit Facility, Withdrawn,
    previously rated Ca

-- BACKED Senior Secured Bank Credit Facility, Withdrawn,
    previously rated Caa2

Outlook Actions:

Issuer: Proserv Global Inc.

-- Outlook, Changed To Rating Withdrawn From Negative

Issuer: Proserv Operations Limited

-- Outlook, Changed To Rating Withdrawn From Negative

Issuer: Proserv US LLC

-- Outlook, Changed To Rating Withdrawn From Negative

Headquartered in the United Kingdom, Proserv is a provider of
equipment and services to the upstream oil and gas industry
worldwide, specializing in the offshore and subsea segments. The
company's offering is divided across four business segments:
Drilling Control Systems, Production Equipment and Systems,
Subsea Production Systems, and Marine Technology Services.

Proserv is owned by funds managed or advised by Riverstone
Holdings LLC, an energy and power-focused private investment

SOUTHERN PACIFIC 05-3: S&P Affirms B-(sf) Rating on Cl. E1c Notes
S&P Global Ratings raised to 'BBB+ (sf)' from 'BB+ (sf)' its
credit ratings on Southern Pacific Securities 05-3 PLC's class
D1a and D1c notes. At the same time, S&P has affirmed its ratings
on the class B1a, B1c, C1a, C1c, and E1c notes.

S&P said, "The rating actions follow our credit and cash flow
analysis of the most recent information that we have received for
this transaction (as of June 2017) and the application of our
relevant criteria (see "Related Criteria").

In the December 2012 investor report, the servicer (Acenden Ltd.)
updated how it reports arrears to include amounts outstanding,
delinquencies, and other amounts owed. The servicer's definition
of other amounts owed include (among other items), arrears of
fees, charges, costs, ground rent, and insurance. Delinquencies
include principal and interest arrears on the mortgages, based on
the borrowers' monthly installments. Amounts outstanding are
principal and interest arrears, after payments from borrowers are
first allocated to other amounts owed.

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

S&P has refined its analysis of these other amounts owed by using
the available reported loan-level data. The new approach results
in a minor increase in the weighted-average foreclosure frequency
(WAFF) and a decrease in the weighted-average loss severity

Acenden references the level of amounts outstanding to arrive at
the 90+ day arrears. The transaction pays principal sequentially
because the 90+ day arrears trigger of 22.5% remains breached.

Total delinquencies decreased to 34.5% (as of June 2017), from
36.2% a year earlier. However, S&P has projected arrears in its
credit analysis as delinquencies remain higher than our U.K.
nonconforming residential mortgage-backed securities (RMBS) index
and the transaction has a low pool factor (the outstanding
collateral balance as a proportion of the original collateral
balance), potentially exposing the transaction to tail-end risk.

Overall, this has led S&P to lower its WAFF assumptions since its
previous review (see "Ratings Raised On Southern Pacific
Securities 05-3's Class D1a, D1c, And FTc U.K. RMBS Notes;
Remaining Classes Affirmed," published on Sept. 29, 2016).

  Rating  WAFF   WALS
  level    (%)   (%)
  AAA    51.12  34.51
   AA    45.56  27.16
   A     38.69  16.97
  BBB    33.14  11.98
   BB    26.96   8.98
   B     23.95   6.98

The combination of lower credit coverage and transaction
deleveraging has resulted in improved cash flow results. S&P
said, "Consequently, following the decrease in our WAFF and WALS
assumptions and the results of our cash flow analysis, we have
raised to 'BBB+ (sf)' from 'BB+ (sf)' our ratings on the class
D1a and D1c notes.

"We consider the available credit enhancement for the class E1c
notes to be commensurate with the currently assigned rating.
Available credit enhancement for the class E1c notes is 4.1% and
continues to increase as the notes are paid sequentially.
Furthermore, we do not expect this class of notes to experience
interest shortfalls in the next 12 to 18 months as the reserve
fund is at its required amount and the liquidity facility would
also be available to cover potential interest shortfalls. We have
therefore affirmed our 'B- (sf)' rating on the class E1c notes.

"We have also affirmed our ratings on the class B1a, B1c, C1a,
and C1c notes because our current counterparty criteria continue
to cap the maximum achievable ratings at our long-term 'A-'
issuer credit rating on Barclays Bank PLC as the guaranteed
investment contract account provider (see "Counterparty Risk
Framework Methodology And Assumptions," published on June 25,

Southern Pacific Securities 05-3 is a securitization of
nonconforming U.K. residential mortgages originated by Southern
Pacific Mortgage Ltd. and Southern Pacific Personal Loans Ltd.


  Class      Rating
           To       From

  Southern Pacific Securities 05-3 PLC
  EUR304.3 Million, GBP153 Million, And $100 Million Mortgage-
  Floating-Rate Notes Plus An Over-Issuance Of Mortgage Backed
  Floating-Rate Notes And Mortgage-Backed Deferrable Interest

  Ratings Raised

  D1a    BBB+ (sf)    BB+ (sf)
  D1c    BBB+ (sf)    BB+ (sf)

  Ratings Affirmed

  B1a    A- (sf)
  B1c    A- (sf)
  C1a    A- (sf)
  C1c    A- (sf)
  E1c    B- (sf)


* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
Author: Sallie Tisdale
Publisher: BeardBooks
Softcover: 270 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy at

An earlier edition of "The Sorcerer's Apprentice" won an American
Health Book Award in 1986. The book has been recognized as an
outstanding book on popular science. Tisdale brings to her
subject of the wide and engrossing field of health and illness
the perspective, as well as the special sympathies and
sensitivities, of a registered nurse. She is an exceptionally
skilled writer. Again and again, her descriptions of ill
individuals and images of illnesses such as cancer and meningitis
make a lasting impression. Tisdale accomplishes the tricky
business of bringing the reader to an understanding of what
persons experience when they are ill; and in doing this, to
understand more about the nature of illness as well. Her style
and aim as a writer are like that of a medical or science
journalist for leading major newspaper, say the "New York
Times" or "Los Angeles Times." To this informative, readable
style is added the probing interest and concern of the
philosopher trying to shed some light on one of the central and
most unsettling aspects of human existence. In this insightful,
illuminating, probing exploration of the mystery of illness,
Tisdale also outlines the limits of the effectiveness of
treatments and cures, even with modern medicine's store of
technology and drugs. These are often called "miracles" of modern
medicine. But from this author's perspective, with the most
serious, life-threatening, illnesses, doctors and other
healthcare professionals are like sorcerer's trying to work magic
on them. They hope to bring improvement, but can never be sure
what they do will bring it about. Tisdale's intent is not to
debunk modern medicine, belittle its resources and ways, or
suggest that the medical profession holds out false hopes. Her
intent is do report on the mystery of serious illness as she has
witnessed it and from this, imagined what it is like in her
varied work as a registered nurse. She also writes from her own
experiences in being chronically ill when she was younger and the
pain and surgery going with this.

She writes, "I want to get at the reasons for the strange state
of amnesia we in the health professions find ourselves in. I want
to find clues to my weird experiences, try to sense the nature of
being sick." The amnesia of health professionals is their state
of mind from the demands placed on them all the time by patients,
employers, and society, as well as themselves, to cure illness,
to save lives, to make sick people feel better. Doctors,
surgeons, nurses, and other health-care professionals become
primarily technicians applying the wonders of modern medicine.
Because of the volume of patients, they do not get to spend much
time with any one or a few of them. It's all they can do to apply
the prescribed treatment, apply more of it if it doesn't work the
first time, and try something else if this treatment doesn't seem
to be effective. Added to this is keeping up with the new medical
studies and treatments. But Tisdale stepped out of this
problemsolving outlook, can-do, perfectionist mentality by opting
to spend most of her time in nursing homes, where she would be
among old persons she would see regularly, away from the high-
charged atmosphere of a hospital with its "many medical students,
technicians, administrators, and insurance review artists." To
stay on her "medical toes," she balanced this with working
occasional shifts in a nearby hospital. In her hospital work, she
worked in a neonatal intensive care unit (NICU), intensive care
unit (ICU), a burn center, and in a surgery room. From this
combination of work with the infirm, ill, and the latest medical
technology and procedures among highly-skilled professionals,
Tisdale learned that "being sick is the strangest of states."
This is not the lesson nearly all other health-care workers come
away with. For them, sick persons are like something that has to
be "fixed." They're focused on the practical, physical matter of
treating a malady. Unlike this author, they're not focused
consciously on the nature of pain and what the patient is
experiencing. The pragmatic, results-oriented medical profession
is focused on the effects of treatment. Tisdale brings into the
picture of health care and seriously-ill patients all of what the
medical profession in its amnesia, as she called it, overlooks.
Simply in describing what she observes, Tisdale leads those in
the medical profession as well as other interested readers to see
what they normally overlook, what they normally do not see in the
business and pressures of their work. She describes the beginning
of a hip-replacement operation, the surgeon "takes the scalpel
and cuts -- the top of the hip to a third of the way down the
thigh -- and cuts again through the globular yellow fat, and
deeper. The resident follows with a cautery, holding tiny
spraying blood vessels and burning them shut with an electric
current. One small, throbbing arteriole escapes, and his glasses
and cheek are splattered." One learns more about what is actually
going on in an operation from this and following passages than
from seeing one of those glimpses of operations commonly shown on
TV. The author explains the illness of meningitis, "The brain
becomes swollen with blood and tissue fluid, its entire surface
layered with pus . . . The pressure in the skull increases until
the winding convolutions of the brain are flattened out . . . The
spreading infection and pressure from the growing turbulent ocean
sitting on top of the brain cause permanent weakness and
paralysis, blindness, deafness . . . ." This dramatic depiction
of meningitis brings together medical facts, symptoms, and
effects on the patient. Tisdale does this repeatedly to present
illness and the persons whose lives revolve around it from
patients and relatives to doctors and nurses in a light readers
could never imagine, even those who are immersed in this world.

Tisdale's main point is that the miracles of modern medicine do
not unquestionably end the miseries of illness, or even
unquestionably alleviate them. As much as they bring some relief
to ill individuals and sometimes cure illness, in many cases they
bring on other kinds of pains and sorrows. Tisdale reminds
readers that the mystery of illness does, and always will, elude
the miracle of medical technology, drugs, and practices. Part of
the mystery of the paradoxes of treatment and the elusiveness of
restored health for ill persons she focuses on is "simply the
mystery of illness. Erosion, obviously, is natural. Our bodies
are essentially entropic." This is what many persons, both among
the public and medical professionals, tend to forget. "The
Sorcerer's Apprentice" serves as a reminder that the faith and
hope placed in modern medicine need to be balanced with an
awareness of the mystery of illness which will always be a part
of human life.


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

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

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


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

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,

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

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