TCREUR_Public/171013.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, October 13, 2017, Vol. 18, No. 204



AGROKOR DD: Parliament Sets Up Commission to Probe Into Collapse


ICT HOLDING: Moody's Assigns 1st-Time B1 CFR, Outlook Stable


CMA CGM: S&P Hikes CCR to 'B+' on Improved Financial Performance
HOMEVI SAS: S&P Affirms 'B' Corp Credit Rating, Outlook Stable
HOMEVI SAS: Moody's Affirms B1 CFR, Outlook Stable


AIR BERLIN: Lufthansa Inks Deal to Acquire Parts of Airline


ALITALIA SPA: Lufthansa Interested to Revamp Airline
BANCA CARIGE: Bondholders Agree to Swap EUR455MM of Sub. Debt


EASTCOMTRANS LLP: Moody's Hikes CFR to B3, Outlook Stable


* S&P Places Ratings of 20 Portuguese RMBS Deals on Watch Pos.


ABSOLUT BANK: Fitch Affirms B+ IDR, Revises Outlook to Stable
UNITED CONFECTIONERS: Fitch Affirms B LT IDR, Outlook Stable


DERINDERE TURIZM: Fitch Affirms B IDR, Alters Outlook to Negative
TURKCELL FINANSMAN: Fitch Affirms 'BB+' LT IDR, Outlook Negative
YAPI VE KREDI: Moody's Assigns ba1 Baseline Credit Assessment

U N I T E D   K I N G D O M

AMEC FOSTER: Moody's Withdraws Ba2 Corporate Family Rating
CARDINAL HOLDINGS: S&P Assigns 'B' Corporate Credit Rating
JUST FOR PETS: Enters Administration, PSR to Buy 18 Stores
LINCOLN FINANCE: Fitch Affirms BB- Senior Secured Notes Rating
PIONEER HOLDING: Moody's Assigns (P)B3 CFR, Outlook Stable

PIONEER HOLDING: S&P Assigns Preliminary 'B-' Corp Credit Rating
STANDARD CHARTERED: Fitch Affirms BB+ Capital Securities Rating
TESCO PLC: Fitch Affirms BB+ LT IDR & Senior Unsecured Rating


* BOOK REVIEW: Oil Business in Latin America: The Early Years



AGROKOR DD: Parliament Sets Up Commission to Probe Into Collapse
SeeNews reports that Croatia's parliament decided on Oct. 11 to
set up a commission to look into alleged wrongdoing in the
country's ailing food-to-retail concern Agrokor that has brought
the group to the brink of collapse.

According to SeeNews, a live broadcast of the parliament session
showed the motion was backed by 113 members of parliament, while
11 MPs voted against and 13 abstained.

The commission will have nine members and will be chaired by
opposition Social Democratic Party (SPD) member Orsat Miljenic,
SeeNews discloses.  Its secretary will be Marija Jelkovac from
conservative HDZ party, part of the government coalition, SeeNews

The commission will have six months to look into Agrokor's
financial problems, SeeNews relays, citing a local media report.

On Oct. 10, Croatia's government issued a statement saying that
Agrokor has been brought to the verge of bankruptcy by its owner,
SeeNews relates.

"Audited financial statements clearly show the depth and severity
of the problem created by the concern's owner Ivica Todoric, due
to which the entire Agrokor Group is on the verge of bankruptcy,"
the government, as cited by SeeNews, said following the release
of Agrokor's financial reports for 2015 and 2016 audited by
PricewaterhouseCoopers LLP.

                       About Agrokor DD

Founded in 1976 and based in Zagreb, Crotia, Agrokor DD is the
biggest food producer and retailer in the Balkans, employing
almost 60,000 people across the region with annual revenue of
some HRK50 billion (US$7 billion).

On April 10, 2017, the Zagreb Commercial Court allowed the
initiation of the procedure for extraordinary administration over
Agrokor and some of its affiliated or subsidiary companies.  This
comes on the heels of an April 7, 2017 proposal submitted by the
management board of Agrokor Group for the administration
proceedings for the Company pursuant to the Law of Extraordinary
Administration for Companies with Systemic Importance for the
Republic of Croatia.

Mr. Ante Ramljak was simultaneously appointed extraordinary
commissioner/trustee for Agrokor on April 10.

In May 2017, Agrokor dd, in close cooperation with its advisors,
established that as of March 31, 2017, it had total liabilities
of HRK40.409 billion.  The company racked up debts during a rapid
expansion, notably in Croatia, Slovenia, Bosnia and Serbia, a
Reuters report noted.

On June 2, 2017, Moody's Investors Service downgraded Agrokor
D.D.'s corporate family rating (CFR) to Ca from Caa2 and the
probability of default rating (PDR) to D-PD from Ca-PD. The
outlook on the company's ratings remains negative.  Moody's also
downgraded the senior unsecured rating assigned to the notes
issued by Agrokor due in 2019 and 2020 to C from Caa2.  The
rating actions reflect Agrokor's decision not to pay the coupon
scheduled on May 1, 2017 on its EUR300 million notes due May 2019
at the end of the 30-day grace period. It also factors in Moody's
understanding that the company is not paying interest on any of
the debt in place prior to Agrokor's decision in April 2017 to
file for restructuring under Croatia's law for the Extraordinary
Administration for Companies with Systemic Importance.

On June 8, 2017, Agrokor's Agrarian Administration signed an
agreement on a financial arrangement agreement worth EUR480
million, including EUR80 million of loans granted to Agrokor by
domestic banks in April. In addition to this amount, additional
buffers are also provided with additional EUR50 million of
potential refinancing credit. The total loan arrangement amounts
to EUR1,060 million, of which a new debt totaling EUR530 million
and the remainder is intended to refinance old debt.


ICT HOLDING: Moody's Assigns 1st-Time B1 CFR, Outlook Stable
Moody's Investors Service has assigned a first-time B1 corporate
family rating (CFR) and B1-PD probability of default rating (PDR)
to ICT Holding Ltd. (ICT), a Cyprus-domiciled private investment
holding with investments mainly in Russia-based assets. The
outlook on the ratings is stable.

ICT's B1 CFR reflects the risks related to ICT's high dependence
on a single largest asset -- combined with its exposure to
volatile start-ups and immature businesses -- which is primarily
funded by short-term debt financing under sale-and-repurchase
(repo) agreements with several financial institutions.

These risks are only partially offset by the relatively high
stability and strong performance of the company's core investment
in Polymetal International Plc (Polymetal), a major gold and
silver miner with significant assets in Russia and Kazakhstan,
and ICT management's commitment to maintaining ICT's moderately
leveraged financial profile.


ICT's B1 CFR balances the advantages of ICT's holding in the
strong and mature business, Polymetal, with the challenges
related to its high dependence on this single largest asset and
its diversification into volatile, immature and/or unlisted
businesses with uncertain dividend streams and value.

ICT's stake in Polymetal accounts for around a half of its
portfolio of financial assets, excluding cash, as of end-2016,
and is the single stable source of dividends to ICT.

At the same time, the financial performance of Polymetal has been
strong and is expected to remain solid, benefitting ICT.
Polymetal is a gold and silver miner, listed on the London and
Moscow stock exchanges and a constituent of the FTSE 250. It has
high quality reserves, mainly in Russia and Kazakhstan, and a
strong financial profile, with reported leverage of 1.75x, on an
adjusted net debt/EBTDA basis, as of end-2016.

Strong margins and free cash flow generation allowed Polymetal to
decide on an increase in dividend payments to 50% from 30% of net
income in March 2017. As Polymetal reported, it would remain free
cash flow (FCF) positive so long as gold prices are above

Although volatile, gold prices and hence gold producers benefit
from gold being a defensive asset in crises times and in the
current environment of heightened global geopolitical risks.

Currently, gold prices are around $1,250/oz and are unlikely to
fall materially and sustainably below $1,000/oz over the next 12-
24 months and so make Polymetal's FCF negative.

As a result, Moody's expects that ICT's dividend income from
Polymetal will increase and Polymetal's market value (currently
at around $5.0 billion) will demonstrate some stability, in turn
contributing to the stability of the market value of ICT's
investment portfolio.

As of now, except for its stake in Polymetal, ICT does not have
other sources of sustainable dividend income and comparable
market value. ICT is exposed to the volatilities of its
investments in immature, growth or start-up businesses in a few
industries. These range from investment property (O1 Properties
Limited, B1 stable) and heavy manufacturing (United Wagon
Company, UWC) to mining and telecoms (a few start-ups or
relatively small investments) and banking. All of these
businesses have yet to prove their ability to become sufficiently
cash generative to pay dividends and create value.

ICT's financial profile is fairly moderate, with market value
leverage ("MVL") of around 30% and interest coverage by funds
from operations (FFO) of around 1.8x as of end-2016. This
situation reflects the mix of investments and reliance on short-
term repo agreements secured by ICT's stake in Polymetal as a key
financing instrument.

In 2015-16, sustainable dividend income from Polymetal was
supplemented by one-off proceeds from a partial disposal of ICT's
stake in UWC. But the dividend income remains insufficient to
fund the diversification of its investment portfolio.

ICT's revenue and its debt-raising capacity remain dependent on
Polymetal's performance, while the cash-generation capacity of
its other investments is, as indicated, limited. Therefore, ICT's
ability to accommodate pressure on its financial profile and
liquidity from any market shocks, as related to Polymetal's
shares and/or other investments, is low.

At the same time, Moody's positively notes management's
commitment to maintaining MVL at around 35% and interest coverage
by FFO at 1.5x.

Repo agreements, which are the main debt instrument used by the
company, allow ICT to raise debt at low cost and when needed. At
the same time, these are mainly short term and subject to margin
calls. This situation can potentially result in stressed
liquidity as ICT's cash-generation capacity is insufficient to
address its debt maturities without the availability of

In such a context, Moody's sees ICT's short-term debt funding
strategy as risky and as a significant constraint for its B1

At the same time, Polymetal's stake, which secures the company's
debt, significantly exceeds the latter, with the current market-
value-to-loan ratio at 1.6x. Ultimately, if no alternative is
available, the company's liquidity might be supported by the
partial or full disposal of this stake. This assumption underpins
Moody's assessment of the company's adequate liquidity.


The stable outlook reflects Moody's view that ICT will be able to
avoid any sustainable material deterioration in its financial
profile thanks to the strong performance of its investments in
Polymetal and management's commitment to maintaining a moderately
leveraged financial profile.


ICT's rating could be upgraded over time if ICT shifts towards a
long-term debt financing strategy and demonstrates a material
diversification in assets and revenue, resulting in a stronger
financial profile, cash flow generation and liquidity, MVL below
35%, and interest cover by FFO above 2.5x.

ICT's rating could be downgraded if the company fails to
diversify and its revenue stream and the market value of its
investments deteriorate, with MVL trending towards 50% and
interest cover weakening towards 1.5x or below.

Assuming the company continues to fund its investments
predominantly via short-term repo loans or other short-term
instruments, any signs of tension in its relationship with its
bank partners and/or a deterioration in its liquidity would also
trigger a downgrade of the rating.

ICT Holding Ltd. (ICT) is a Cyprus-domiciled private investment
holding with investments in a few sectors and countries, highly
concentrated in Russia's mining industry, namely in Polymetal
International Plc. ICT's investment portfolio totaled around $2.5
billion at end-2016. ICT is ultimately owned by several
individuals, with Mr. Alexander Nesis holding the largest
ownership in the company.


The principal methodology used in this rating was Investment
Holding Companies and Conglomerates published in December 2015.


CMA CGM: S&P Hikes CCR to 'B+' on Improved Financial Performance
S&P Global Ratings raised its corporate credit rating on France-
based container liner CMA CGM S.A. to 'B+' from 'B'. The outlook
is stable.

S&P said, "We also raised our issue rating on the company's
senior unsecured debt to 'B-' from 'CCC+'. The recovery rating
remains at '6', reflecting our expectation of negligible recovery
of 0%-10% (rounded estimate: 0%) in the event of payment default.

"The upgrade follows CMA CGM's realized cost savings and
synergies from its 2016 acquisition of with container liner
Neptune Orient Lines (NOL). The transaction resulted in lower
costs per container transported, an important measure, in our
view, to offset the industry's inherent freight rate volatility.
These supporting factors, alongside the rebound in freight rates
and decent near-term industry prospects, will support the
company's improved EBITDA generation, financial performance, and

"We expect that the positive trend in freight rates and the
company's operating performance will hold for the remainder of
2017. We forecast that CMA CGM will significantly expand its
reported EBITDA to about $2.1 billion-$2.2 billion this year
(from about $530 million in 2016), before seeing a moderate drop
to about $2.0 billion in 2018, due to deliveries of large
containerships that may hinder vessel utilization and freight
rates. Consequently, we project that CMA CGM will achieve a ratio
of funds from operations (FFO) to debt of 16%-17% in 2017,
dwindling to about 15% in 2018, but remaining within our
guidelines for a 'B+' rating (more than 12%).

"As we anticipated, freight rates on major trade lanes are
recalibrating to more sustainable levels this year, based on
decent trade dynamics, higher bunker fuel prices, and supply-side
adjustments (such as vessel demolition or lay-up and
rationalization of networks, thanks to dynamic consolidation
between container liners). These positives, however, may be
counterbalanced by numerous deliveries of ultra-large
containerships in the remainder of 2017 and into 2018. These
vessels were ordered a few years ago when the industry
projections were much brighter, but the increased fleet capacity
now poses a risk to the recent rebound in freight rates, which
will ultimately depend on the supply discipline of the leading
container liners. According to Clarkson Research from September
2017, the order book for post-panamax containerships--which have
a capacity of more than 15,000 twenty-foot equivalent unit (TEU)-
-may almost double the size of the global capable post-panamax
fleet. Accordingly, we forecast flat to slightly negative growth
in freight rates in 2018, following the materially stronger
average rates in 2017.

In its base case for CMA CGM, S&P assumes:

-- Worldwide economic growth will remain vital to the shipping

-- S&P said, "Given the global nature of shipping sector demand,
    we consider the GDP growth of all major contributors to trade
    volumes. We forecast GDP growth in the eurozone of 2.2% in
    2017 and 1.8% in 2018, compared with 1.8% in 2016; fairly
    flat GDP of 5.6% in 2017 and 5.5% in 2018 in Asia-Pacific,
    compared with 5.5% in 2016; and 6.7% this year in China and
    6.3% in 2018, after 6.7% in 2016. On continued job gains,
    wage inflation, and a relatively healthy economy, we expect
    U.S. GDP growth of 2.2% this year and 2.3% in 2018, compared
    with 1.6% in 2016."

-- Annual growth rates in CMA CGM's transported volumes of 4%-5%
    in 2017 and 7%-8% in 2018, reflecting growth in the company's
    fleet capacity and prospects for upturn in demand.

-- An increase in bunker prices (fuel to run ships and CMA CGM's
    one of major cost positions) flowing directly to bottom-line
    earnings in 2017.

-- S&P said, "We estimate that CMA CGM will spend $300-$310 per
    metric ton in 2017 and 2018, compared with about $230 per
    metric ton in 2016. This largely follows our estimates for
    stable crude oil prices, which are typically a good indicator
    of bunker price performance (see "S&P Global Ratings Raises
    Its Oil And Natural Gas Prices Assumptions For 2017,"
    published Dec. 14, 2016).

-- About 12% increase in freight rates in 2017, from historical
    lows in 2016, reflecting the rate trend in the first nine
    months of 2017 and CMA CGM's ability to bring NOL freight
    rates toward a higher average in line with that of CMA CGM.
    S&P forecasts flat to slightly negative growth in freight
    rates in 2018.

-- Additional cost efficiencies and synergies unlocked from CMA
    CGM's takeover of NOL in 2016. S&P said, "As a result, we
    forecast a $15 reduction in cost per TEU (excluding bunker)
    from 2017. We believe that CMA CGM has improved its cost
    competitiveness over the last years. The increase of the
    average vessel size by around 15% in 2017 (as compared with
    2016) and persistent grip on cost control have helped the
    company to consistently lower its unit costs (excluding
    bunker) in the last five years. As such, in the first half of
    2017 the average cost per TEU was about $888, down from $908
    in 2016 and $948 in 2015."

-- Annual cash-paid and lease-funded yearly average capital
    expenditures (capex) of approximately $1.3 billion in 2017
    and 2018. This includes advanced and final payments for new
    containerships to be delivered in 2017-2018 to CMA CGM, new
    containers, terminals, and dry-docking.

-- Proceeds from a disposal of a terminal of about $800 million
    in 2017, with proceeds allocated to the early repayment of
    debt and strengthening the cash balance.

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

-- A ratio of S&P Global Ratings-adjusted FFO to debt of 16%-17%
    in 2017 and about 15% in 2018, compared with about 6% in

-- A ratio of adjusted debt to EBITDA of 4.0x-4.5x in 2017 and
    about 4.5x in 2018, compared with about 8.5x in 2016.

-- Free cash flows to break even because capex will likely
    absorb operating cash flows, resulting in limited capacity
    for debt reduction in 2017 and 2018. S&P forecasts adjusted
    debt (including operating lease commitments) of about $16
    billion as of end-2017.

S&P said, "Our assessment of CMA CGM's business risk profile
continues to be constrained by the shipping industry's high risk
and the company's swings in profitability measures. While we
acknowledge that CMA CGM has achieved significant cost savings
over the past few years and continues its proactive efforts to
improve cost efficiencies, which prop up earnings, we believe
that the company's operating margins and returns on capital will
likely remain volatile. This is tied to the industry's cyclical
swings; the company's heavy exposure to fluctuations in bunker
fuel prices; and its fairly low short-term flexibility to adjust
its operating cost base to falling demand and rates. These
weaknesses are partly mitigated by CMA CGM's top-tier market
positions and global footprint through a broad and strategically
located route network. CMA CGM also benefits from an attractive
fleet profile supported by a large, young, and diverse fleet, and
strong customer diversification incorporating the acquisition of

"The stable outlook reflects our expectation that the improved
industry conditions will largely hold over the next 12 months,
supporting improvements in CMA CGM's adjusted FFO to debt to 16%-
17% in 2017 and its credit measures within the thresholds for our
'B+' rating in 2018, despite the likely moderate decline in
EBITDA. In addition, we expect CMA CGM will benefit from further
cost-cutting initiatives and extraction of synergies from the
acquisition of NOL, while managing its capex, disposal proceeds,
and adjusted debt, such that its credit metrics stay at their
improved levels.

"Given the industry's inherent volatility, an upgrade would
depend on CMA CGM's ability to permanently reduce debt and
therefore achieve an ample cushion under the credit measures for
potential fluctuations in EBITDA, combined with its sustained
solid liquidity coverage. For example, we would raise the rating
if CMA CGM were able to maintain its improved reported EBITDA at
or above $2 billion, underpinned by the continued reduction in
unit cost and industry's supply discipline, and reduce its
financial leverage, such that adjusted FFO to debt improves and
remains at or above 20%.

"We would lower the rating if CMA CGM's liquidity appears to
deteriorate or FFO to debt declines to below 12% because of any
combination of debt-funded investments, operating setbacks, or
weaker industry conditions without prospects for a short-term

HOMEVI SAS: S&P Affirms 'B' Corp Credit Rating, Outlook Stable
S&P Global Ratings said that it had affirmed its 'B' long-term
corporate credit rating on HomeVi, the holding company of France-
based private elderly care home operator DomusVi.  The outlook is

In addition, S&P assigned its 'B' issue rating to the proposed
EUR1.020 billion senior secured Term Loan B issued by HomeVi. The
recovery rating on this facility is '4', indicating our
expectation of average (30%-50%; rounded estimate 40%) recovery
in the event of a default.

The affirmation follows HomeVi's announcement of plans to
refinance the existing debt following the acquisition of the
majority stake in the DomusVi group by Intermediate Capital Group
(ICG) and Sagesse Retraite SantÇ, which is an investment vehicle
of the HomeVi group's founder Yves Journel. As such, the company
is issuing a EUR1.020 billion Term Loan B and a EUR130 million
senior secured revolving credit facility ranking pari passu to
refinance some of its current indebtedness, including all of
HomeVi's existing senior secured fixed-rate notes due 2021 and
its floating-rate senior secured notes due 2021, as well as to
pay applicable redemption premiums.

S&P said, "Our financial risk profile assessment reflects
HomeVi's financial sponsor ownership. This is supported by our
core adjusted credit metrics of debt to EBIDTA of 5.5x-6.5x over
the next 12-18 months. Our estimates of debt include the proposed
EUR1.020 billion term loan B facility and about EUR680 million in
obligations under operating leases. It excludes the shareholders
loans, which we do not view as debt-like. We do not deduct cash
on the balance sheet from our debt calculation, because we
believe it will likely be used to support growth. Due to the high
portion of rents in the group's servicing structure, we focus on
the fixed-charge cover ratio (adjusted EBITDAR divided by rents
and cash interest), which we estimate to be about 1.5x-1.7x in
our base case. Under our base case, this reflects EBITDA of about
EUR170 million-EUR190 million, all-in rent expense of EUR164
million, and interest expense of EUR46 million-EUR40 million over
the next two years.

"The financial risk profile benefits from good cash flow
generation, which we expect to be above EUR30 million in 2017,
reflecting working capital outflow of about EUR20 million and
capital expenditures of about EUR55 million-EUR60 million,
including investments in modernization of acquired facilities. In
2018, working capital outflow is likely to return to normal
levels and free operating cash flow (FOCF) is set to improve to
above EUR60 million.

"Regarding the business risk profile, we still expect the
successful integration of Spanish nursing home operator
SARquavitae will provide increasing scale and revenue
diversification both geographically and payerwise. As such, the
group has enhanced its No. 3 position in Europe in number of beds
provided (33,661) and reported revenues of EUR1.101 billion as of
June 30, 2017. Moreover, HomeVi will benefit from SARquavitae's
presence in high-growth regions with high occupancy rates, such
as Madrid, Barcelona, Valencia, and Catalonia. Thanks to a good
split of private and public payers in Spain, the group's ability
to increase revenues should be balanced with the relative
predictability and stability of public contracts.

"We therefore expect HomeVi will increase its profitability
through solid occupancy rates to about 95% over the next three
years, and thanks to slightly higher prices than historically on
the back of higher expected inflation. We also take into account
some synergies implied by the SARquavitae integration and new
acquisitions in nursing homes."

From a historical performance perspective, the French and Spanish
elderly care markets have proven resilient, unlike in the U.K.
where there is severe margin pressure in the public payer
segment. There has been a slight decrease in the public
concession contract fees in Spain, as these are linked to
consumer price index changes, but HomeVi's existing business in
Spain, Geriatros, has mitigated the impact by increasing volumes
of and fees for private beds. S&P sees the Spanish market as
highly fragmented and consider that it offers opportunities for
growth, owing to the country's aging population and long waiting
lists for publicly funded beds.

S&P said, "However, we consider the Spanish market as riskier
than the French market. The Spanish preference for publicly
funded beds limits incremental rates for private beds. Also, only
a limited part of the population can fund themselves privately,
and Spain lacks the pass-through contracts that are typical in
the French nursing home market.

"In our view, DomusVi's operating environment is stable and
provides relatively good visibility, thanks to an aging
population and high barriers to entry. Furthermore, the
government's well-defined reimbursement regime, mainly via pass-
through contracts, should continue to mitigate risk. The French
government covers the majority of dependence and medical care
costs, reducing the effect of potential policy changes on
DomusVi's profitability.

"We note that DomusVi's revenue mix benefits from the large
contribution of private revenues. Private funding mainly covers
the accommodation fee that each nursing home sets for new
residents, and allows operators to defend their margins. We
expect DomusVi's revenues to rise at least in line with the
market, mainly on the back of increasing average daily rates for
accommodation and associated services, given that occupancy is
already near maximum."

DomusVi leases a large portion of its real estate. HomeVi's
French business is mainly leasehold while Geriatros operates
predominantly via free-hold and concession models with no rental
expenses. Regarding the profitability improvement and lower cash
interest expenses, S&P assumes the fixed-charge coverage will be
around 1.5x-1.7x.

S&P said, "The stable outlook reflects our view that DomusVi's
increased scale and operating model should enable the group to
realize operating synergies and to maintain its track record of
adjusting its fees and successfully rolling out new services. By
doing so, we believe that DomusVi will be able to improve its
profitability, despite the restricted potential for organic
volume growth in France, as it will benefit from higher growth
rates in Spain. In our opinion, DomusVi should maintain an
adjusted fixed-charge coverage ratio of more than 1.5x over the
next 12-18 months, enabling it to comfortably cover its interest
payments and rents while generating modest FOCF above EUR30

"We could lower the rating on HomeVi if the combined entity
experienced significantly weaker adjusted EBITDA margins, owing
to the competitive environment and an inability to optimize
pricing for its services. If the company is unable to maintain
strong profitability metrics, we could revise down our business
risk assessment, which would lead to a downgrade.

"We could also consider a downgrade if DomusVi is unable to
generate positive free cash flow, or faces potential liquidity
and structural operational problems. These could include an
increasing mismatch between reimbursement receipts, projected
volume growth, and operating costs, given DomusVi's high fixed-
cost base, which could lead to a sustained deterioration of the
adjusted fixed-charge coverage ratio to below 1.5x."

A positive rating action would be contingent on positive
operating trends in average fee levels and margin generation,
such that fixed-charge cover stabilizes at or higher than 2.2x
and debt to EBITDA is at or below 5.0x at a sustainable basis.

HOMEVI SAS: Moody's Affirms B1 CFR, Outlook Stable
Moody's Investors Service has affirmed the B1 corporate family
rating (CFR) and the B1-PD probability of default rating of
HomeVi S.a.S. (DomusVi), a nursing homes operator in France and
Spain. The rating agency has concurrently assigned B2 ratings to
the new senior secured term loan of EUR1,020 million due 2024 and
the new pari passu ranking revolving credit facility of EUR130
million due 2024. The outlook on all ratings is stable.

DomusVi plans to refinance the existing EUR808 million senior
secured notes with the proceeds from the new term loan. The
refinancing follows the acquisition of PAI Partners' majority
stake in the company by Intermediate Capital Group PLC (ICG,

The rating action reflects the following interrelated drivers:

-- The company's leverage, as measured by Moody's-adjusted
    debt/EBITDA, pro forma for the refinancing increases to 5.3x
    from 4.7x as of June 30, 2017;

-- Moody's expects that the company will reduce its leverage to
    below 5x by the end of 2018 based on continued cost
    efficiencies and synergies from acquisitions;

-- Moody's also expects that the company will benefit from a
    materially lower cost of debt and its coverage, as measured
    by Moody's-adjusted EBITA/interest expense, will improve to
    around 2.6x pro forma for the refinancing from around 1.7x.

The B2 ratings of the EUR808 million senior secured notes due
2021 remain unchanged. Moody's expects to withdraw them at
closing of the refinancing and repayment of the notes.


DomusVi's B1 corporate family rating (CFR) is supported by the
company's: (1) market leading positions in the fragmented French
and Spanish nursing home sectors (the number three private
operator in France and number one private operator in Spain) with
significant presence in affluent areas with strong demographic
needs, long-standing sector expertise, and no significant
concentration of revenues across its facilities; (2) good growth
achieved over the last five years particularly in its mature
medical homes estate; (3) the attractive features of the nursing
home sectors in Spain and France, including among other features
the regulatory and capital limitations imposed on new homes; (4)
exposure to the growing proportion of protective benefits for the
elderly and dependent in Spain as percentage of its GDP; and (5)
good liquidity and profitability.

Conversely, the B1 CFR reflects the company's: (1) high leverage
of 5.3x pro forma for the refinancing; (2) high exposure to a
very regulated sector in France, with respect to fee rates for
existing clients; (3) high exposure to France and Spain's
economic environments and ultimately to household disposable
income in these countries with private individuals pay the
majority of DomusVi's accommodation services in France and around
half of services in Spain; (4) high operating leverage driven by
a largely fixed cost base structure, mainly including personnel
and rental expenses, although the French public administration
covers substantially all personnel expenses that relate to care
and dependency services.


Positive rating pressure could develop if:

- Leverage, as measured by Moody's-adjusted debt/EBITDA, were to
   reduce towards 4.5x;

- Free cash flow generation were to remain positive; and

- EBITA/interest expense ratio were to go above 3x.

Negative rating pressure could develop if:

- Leverage, as measured by Moody's-adjusted debt/EBITDA, were to
   increase towards 5.5x;

- Increasing margin pressure were to result in an EBITA/interest
   expense ratio falling below 1.5x;

- Liquidity were to weaken; or

- Financial policy becomes more aggressive with regard to debt-
   financed acquisitions or distributions to shareholders.


The stable rating outlook incorporates Moody's expectation that
DomusVi will delever below 5.0x by the end of 2018 based on
modest organic growth and ongoing cost efficiencies, while
maintaining its good liquidity profile. The stable rating outlook
does not factor in any transformative debt-financed acquisitions,
large dividends, nor any material increase in capital


The company's liquidity will remain good pro forma for the
refinancing, supported by around EUR20 million of cash, by the
EUR130 million undrawn revolving credit facility (RCF), and by
positive free cash flow. The RCF lenders will benefit from a net
leverage covenant (although widely-set) tested only the RCF is
drawn by or more than 40% ("springing" covenant). Moody's expects
that the company will have good headroom if this covenant is
tested. The company is responsible for capital expenditures to
maintain leased facilities. These expenditures typically include
refurbishments and furniture/equipment updates, although the
level of these expenditures is relatively low at around 2% of
revenue. In terms of working capital requirements, The company
may have swings of up to EUR15 million per quarter (and higher in
the second half of the fiscal year because of timing differences
in payments of taxes and CICE tax credits accruals). However, on
a year-on-year basis Moody's expects that the company will have a
minimal cash impact from net working capital changes because its
payors are public authorities reimbursing dependency and care
related expenses monthly and individuals paying accommodation
bills monthly.


The B2 ratings of the EUR1,020 million senior secured term loan
and the EUR130 million RCF, one notch below the B1 CFR, reflect
their structural subordination to operating companies'
liabilities including significant operating leases with no
guarantees from operating subsidiaries. The B1-PD probability of
default rating (PDR) in line with the B1 CFR reflects Moody's
typical 50% corporate family recovery rate assumption for a bank
debt structure with a springing covenant. Moody's notes
convertible bonds and payment-in-kind (PIK) notes several levels
above the senior secured restricted group. These instruments are
excluded from Moody's debt calculations because they are not
guaranteed by the company and they do not have creditor claims on
the senior secured restricted group's assets.


DomusVi, headquartered in Suresnes, France, is the third largest
operator of nursing homes in France, primarily in Greater Paris,
Bordeaux, Toulouse, Greater Lyon and the French Riviera regions.
The company is also the largest operator of nursing homes and
mental care facilities in Spain. The company is majority-owned by
funds advised by ICG.


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



Issuer: HomeVi S.a.S.

-- Senior Secured Bank Credit Facilities, Assigned B2


Issuer: HomeVi S.a.S.

-- Probability of Default Rating, Affirmed B1-PD

-- Corporate Family Rating, Affirmed B1

Outlook Actions:

Issuer: HomeVi S.a.S.

-- Outlook, Remains Stable


AIR BERLIN: Lufthansa Inks Deal to Acquire Parts of Airline
Maria Sheahan and Klaus Lauer at Reuters report that Lufthansa
reinforced its position as Germany's largest airline on Oct. 12
by signing a EUR210 million (US$249 million)deal to buy large
parts of insolvent Air Berlin.

According to Reuters, Lufthansa plans to use the Air Berlin
assets to quickly expand its Eurowings budget business.

Air Berlin said in a statement Lufthansa has agreed to acquire
Air Berlin's Austrian leisure travel airline Niki, its LG Walter
regional airline and 20 additional aircraft, Reuters relates.

"This contract provides new opportunities for jobs for a large
part of our workforce.  But we can only really breathe again when
the EU Commission approves the deal," Reuters quotes Air Berlin
Chief Executive Thomas Winkelmann as saying.

Lufthansa CEO Carsten Spohr said earlier he expected the European
Union to approve the transaction by the end of 2017, Reuters

Talks to sell some of Air Berlin's remaining assets to Britain's
easyJet and other bidders are continuing, Air Berlin, as cited by
Reuters, said, without providing details.

                        About Air Berlin

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

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

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

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

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


ALITALIA SPA: Lufthansa Interested to Revamp Airline
Klaus Lauer at Reuters reports that Lufthansa would be interested
if there was an opportunity to create a new Alitalia, the German
flagship carrier's Chief Executive Carsten Spohr said on Oct. 12.

The group's finance chief Ulrik Svensson had said in August that
Lufthansa was interested in helping to shape the Italian aviation
market but was not willing to take over the struggling national
carrier in its current shape, Reuters relates.

"Alitalia as it exists today is not up for debate," Mr. Spohr, as
cited by Reuters, said on Oct. 12.  "But if there was an
opportunity to create a new Alitalia, then Lufthansa as the No. 1
in Europe would be interested in talks."

                        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.

BANCA CARIGE: Bondholders Agree to Swap EUR455MM of Sub. Debt
Sonia Sirletti, Tom Beardsworth and Luca Casiraghi at Bloomberg
News report that Banca Carige SpA's bondholders agreed to swap
about EUR455 million (US$540 million) of the bank's subordinated
debt, allowing the Italian bank to proceed with the next step in
its survival plan.

"Now we're on to the capital increase," Bloomberg quotes
Francesco Castelli, a fund manager at Banor Capital in London who
agreed to the swap, as saying.  "It will not be easy but we
expect it will be completed."

Carige, burdened with non-performing loans, last month won
European Central Bank approval for a three-pronged approach to
replenishing reserves that includes the conversion of EUR510
million of subordinated notes, Bloomberg recounts.

So far, investors have agreed to swap about 89% of the notes, and
each bond exceeded the threshold of 75% of conversion that will
allow the lender to make a mandatory swap for the remainder,
Bloomberg discloses.

The bank can now move on to a EUR560 million stock offering, the
next step of a plan that also includes asset disposals, Bloomberg
states.  Failure of any one part could force Carige into
insolvency and probably lead to losses imposed on shareholders
and bondholders, including individual investors, Bloomberg notes.

Carige offered to exchange a EUR160 million perpetual Tier 1 bond
at 30% of its nominal value and three Tier 2 bonds totaling
EUR350 million at 70% for securities swapped by 4:00 p.m. local
time on Oct. 11, Bloomberg relays.  The swap will be lowered to
25% and 65% respectively for the remaining period of the offer,
which expire Oct. 18, according to Bloomberg.

The bank, which proposes to swap the securities into five-year
senior bonds with a 5% annual coupon, will ask bondholders to
support a mandatory conversion of the bonds subject to the swap
in a so-called consent solicitation procedure, Bloomberg says.

Banca Carige SpA Cassa di Risparmio di Genova e Imperia is an
Italy-based company engaged in the financial sector.  It offers
banking, finance, pension fund and insurance services.  The
Company also operates in the fields of insurance, supplementary
pension schemes and assurances.


EASTCOMTRANS LLP: Moody's Hikes CFR to B3, Outlook Stable
Moody's Investors Service has upgraded the following ratings of
Eastcomtrans LLP (ECT), Kazakhstan's largest private freight
railcar leasing company:

- corporate family rating (CFR) to B3 from Caa1

- senior secured rating of ECT's outstanding notes to B3 (LGD3)
   from Caa1 (LGD3)

- national scale corporate family rating (NSR) to from

Moody's also upgraded the probability of default rating (PDR) to
B3-PD from Caa1-PD.

The outlook on the ratings is stable.

The rating action reflects Moody's view that ECT has resolved the
situation around the covenant breaches under various debt
facilities that it incurred in 2016-17 following a sharp
deterioration of the local currency and a slowdown in the
economic activity in Kazakhstan. The agency believes that the
risk of acceleration of ECT's debts in the next 12-18 months as a
result of non-compliance with covenants has been materially
reduced or eliminated through obtaining of waivers, covenant
resetting, asset sales and refinancing. These achievements
complement the liquidity restructuring process initiated by ECT
earlier in 2017 when it arranged the extension of its senior
secured $100m notes (of which around $50m is currently
outstanding) to 2021-22 from 22 April 2018.


In addition to the improvement in near-term liquidity ECT has
reset or suspended testing of the majority of its financial
covenants embedded in its loan agreements for 2017. Although
certain covenants will remain outstanding in 2017, Moody's
believes that the lenders will not trigger default/acceleration.
ECT expects to be in compliance with the majority of covenants
which include leverage and coverage metrics from Q1 2018.

The B3 corporate family rating is supported by (1) a reasonable
assuredness that the company's cash flow generation underpinned
by the renewed contracts with Tengizchevroil LLP (TCO) has
stabilised, albeit at materially lower levels than those seen in
2014, and will remain sustainable over the course of the next
three years, which is the minimal duration of the new TCO
contracts; and (2) adequate asset coverage of net debt at
approximately 1.3x as of end-June 2017, which provides for a
sound recovery rate of the secured debt, including the Eurobond.

The company's operating and financial profile remains under
pressure due to (1) a material mismatch between the company's
currency of debt (mainly US dollars) and its volatile currency of
operations (KZT, or tenge); and (2) a weakened economic
environment in Kazakhstan (Baa3 stable) and low oil price
environment that affects domestic business activity and tariffs.

As part of the rating review, the agency repositioned the score
"Business profile" for ECT to B from Caa, noting a better
visibility over future cash flow generation following the signing
of long-term contracts with TCO.


The stable outlook reflects Moody's expectation that ECT will
generally comply with its covenants in 2018, thereby maintaining
an adequate liquidity profile. In addition, Moody's notes that
the company's asset coverage remains sound based on the asset
fair value assessment as of end-2016.


Given ECT's small size on the global scale (the equivalent of
approximately $80 million in revenue, which maps to Ca) there is
limited potential for an upgrade. Moody's could consider an
upgrade by one notch if ECT (1) demonstrated a sustainable
improvement in its earnings and profitability; and (2) improved
its Moody's adjusted Ebitda/interest to around 5.0x, FFO/debt to
30%, and debt/Ebitda to 2.5x or below on a sustainable basis. In
addition to the above factors, Moody's would also assess the
sustainability of the company's business profile, contractual
arrangements with its largest customer, TCO, and the company's
vulnerability to their further alterations.

Conversely, the rating agency could downgrade the ratings of ECT
if its financial and/or liquidity profile deteriorated to levels
seen in 2015-16.

The principal methodology used in these ratings was Equipment and
Transportation Rental Industry published in April 2017.

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.

Eastcomtrans LLP (ECT) is the largest private company
specialising in operating leasing of freight railcars in
Kazakhstan. As of year-end 2016, ECT's fleet comprised 12,000 own
and around 900 leased railcars, or approximately 10% of the
country's total. The company derived more than 70% of its
revenues from railcar operating lease agreements, and
approximately 30% from providing transportation and other related
services. 93.33% of Eastcomtrans's share capital is directly and
indirectly controlled by Mr. Marat Sarsenov and 6.67% by
International Finance Corporation (IFC; Aaa stable). In the last
12 months ended June 30, 2017, ECT's revenue amounted to KZT25.0
billion (approximately $75 million) and EBITDA to KZT19.0 billion
(approximately $59 million).


* S&P Places Ratings of 20 Portuguese RMBS Deals on Watch Pos.
S&P Global Ratings placed on CreditWatch positive its credit
ratings on 27 tranches in 20 Portuguese residential mortgage-
backed securities (RMBS) transactions.

S&P said, "The CreditWatch positive placements follow our Sept.
15, 2017 raising of our unsolicited foreign currency long-term
sovereign rating on the Republic of Portugal (see "Ratings On
Portugal Raised to 'BBB-/A-3' On Strong Economic And Budgetary
Performance; Outlook Stable").

"Our structured finance ratings above the sovereign (RAS)
criteria classify the sensitivity of these transactions as
moderate (see "Ratings Above The Sovereign - Structured Finance:
Methodology And Assumptions," published on Aug. 8, 2016).
Therefore, we can rate classes of notes in these transactions up
to six notches above our 'BBB-' long-term sovereign rating on
Portugal, if certain conditions are met.

"We have today placed on CreditWatch positive our ratings on 27
tranches in 20 Portuguese RMBS transactions, as these tranches
could potentially be positively affected by our recent upgrade of

"We will seek to resolve the CreditWatch placements within the
next 90 days, once we have completed further analysis."

The list of affected ratings can be viewed at:


ABSOLUT BANK: Fitch Affirms B+ IDR, Revises Outlook to Stable
Fitch Ratings has revised Absolut Bank's (Absolut) Outlooks to
Stable from Negative. The bank's Long-Term Issuer Default Ratings
(IDRs) have been affirmed at 'B+'.

The revision of the Outlooks on Absolut's IDRs to Stable reflects
anticipated moderation of the currently high credit risks and
hence reduced pressure on the bank's capital position, once the
planned recovery and transfer of some assets considered risky by
Fitch to the bank's shareholder, Non-State Pension Fund
Blagosostoyanie (NPFB), ultimately controlled by JSC Russian
Railways (BBB-/Positive), is completed. NPFB has a track record
of providing liquidity and capital support to the bank.

Absolut's credit profile, however, remains undermined by (i) the
persistently high amount of potentially risky assets and non-core
exposures (partly related to consolidation of rescued
Baltinvestbank), and (ii) sluggish pre-impairment performance,
which offers limited protection against additional credit losses.
As a result, the solvency is likely to remain reliant on buy-out
of risky assets and capital injections by the bank's shareholder.


Absolut's non-performing loans (NPLs) were a high 10% at end-
1H17, up from 9% at end-2016. Restructured loans made up a
further 13% at end-1H17, although Fitch reviewed the bulk of
these and assesses most of them as of moderate risk. However, in
the agency's view, Absolut's asset quality is additionally
undermined by significant exposures to the construction/real
estate sector and other potentially risky assets, which include
(net of reserves):

- RUB27 billion (84% of adjusted end-1H17 Fitch core capital
   (FCC), see below) of construction/real estate exposure
   including high-risk loans (33%), investment property (28%) and
   bonds of construction/real estate companies (23%; of somewhat
   lower credit risk);
- RUB12 billion (36%) of other high-risk loans, mostly including
   unreserved NPLs but also some higher-risk restructured loans;
- RUB7 billion (20%) of unrated or non-traded securities; and
- RUB8 billion (24%) of credit exposures to some Russian private
   banks and their related companies, which, in Fitch's view,
   could be fiduciary in nature.

According to Absolut's and NPFB's management, of these
potentially risky assets, those worth around 0.3x of FCC will be
transferred onto NPFB's balance sheet by end-2017 and a further
0.5x of FCC by end-2018.

Additionally the bank plans to achieve some moderate recoveries
from the remaining amount of risky assets (0.9x of FCC) in the
medium-term, as some are partially mitigated by hard collateral,
although they could still be a source of impairment. Absolut's
modest pre-impairment profit would be enough to reserve only 9%
of the residual amount of potentially risky assets, providing
only a limited safety cushion. Performance is weakened by thin
margins (the net interest margin stood at a low 3.4% in 1H17) and
low cost efficiency (cost/income ratio of 74%, dragged down by

At end-1H17, Absolut's FCC was 10%, but would have been 12% after
adjusting for a RUB5 billion equity injection from the
shareholder in September 2017. The regulatory capital ratios at
end-8M17, adjusted for the injection, would have been 10% Tier 1
and 14% Total, allowing Absolut to absorb RUB9 billion of
additional losses (equal to 32% of the residual risky exposures
post transfer to NPFB) without breaching minimum capital
requirements, but excluding an additional 1.25% capital
conservation buffer. NPFB contributed RUB13 billion of equity in
2015-9M17, and Fitch believes further support may be needed to
bolster solvency.

Absolut's liquidity is rather tight, in Fitch's view, although
NPFB's senior management confirmed their commitment to support
the bank's liquidity in case of need. At end-1H17, the bank's
highly liquid assets, net of the planned RUB9 billion repayment
of Deposit Insurance Agency's deposit maturing in December 2017
and RUB5 billion of short-term interbank funding, were equal to
12% of customer deposits. Wholesale funding repayments in 2018-
2019 are limited. NPFB could provide additional liquidity on top
of the RUB8 billion already deposited/placed in the bank.


The '5' Support Rating (SR) reflects Fitch's view that support
from the bank's shareholder, although possible, cannot be
reliably assessed, due to Fitch not rating NPFB. Fitch
understands that according to Russian legislation on non-
government pension funds, NPFB should transform into a joint
stock company by end-2018 and that Russian Railways therefore may
become its majority owner. Fitch will assess the implication of
this for support to Absolut in due course upon more clarity on
NPFB's ownership structure post transformation and the owner's
strategy for the fund and the bank.

The Support Rating and Support Rating Floor (SRF) of 'No Floor'
also reflect that support from the Russian authorities cannot be
relied upon due to the bank's small size and lack of overall
systemic importance. Accordingly, the IDRs are based on the
bank's intrinsic financial strength, as reflected in the bank's
Viability Rating (VR).


Absolut's senior unsecured debt rating is in line with the bank's
Long-Term IDR, which reflects Fitch's view of average recovery
prospects, in case of default.


Absolut's 'new-style' Tier 2 subordinated debt rating of 'B'
remains one notch below the bank's VR. The notching includes (i)
zero notches for additional non-performance risk relative to the
VR, as Fitch believes this instrument would only absorb losses
once the bank reaches, or is very close to, the point of non-
viability; (ii) one notch for loss severity, reflecting below-
average recoveries in case of default.


Downside pressure could stem from potential asset quality
deterioration if this results in erosion of profitability and
capital, absent of capital support from NPFB. Also delays to or
abolition of plans to transfer the risky assets to NPFB may also
trigger a negative rating action.

Fitch believes the potential consolidation of Absolut by Russian
Railways could be positive for the bank's ratings, depending on
the company's strategy for NPFB and the bank. Otherwise any
upside for Absolut's ratings is limited given significant asset
quality risks, but successful work-outs of problem exposures and
a stronger capital buffer would be credit-positive.


Absolut's senior unsecured and subordinated debt ratings are
sensitive, respectively, to changes in the bank's Long-Term IDR
and VR.

The rating actions are as follows:

Long-Term Foreign and Local Currency IDRs: affirmed at 'B+';
Outlooks revised to Stable from Negative
Short-Term Foreign Currency IDR: affirmed at 'B'
Viability Rating: affirmed at 'b+'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured debt: affirmed at 'B+'/Recovery Rating 'RR4'
Subordinated debt: affirmed at 'B'/Recovery Rating 'RR5'

In accordance with Fitch's policies Absolut Bank appealed and
provided additional information to Fitch that resulted in a
rating action which is different to the original rating committee

UNITED CONFECTIONERS: Fitch Affirms B LT IDR, Outlook Stable
Fitch Ratings has affirmed Russia-based JSC Holding Company
United Confectioners' (UC) Long-Term Issuer Default Rating (IDR)
at 'B'. The Outlook is Stable.

The rating is capped at 'B' by UC's weak corporate governance
practices, while the company's strong business profile and
moderate leverage are consistent with those of higher-rated
peers. The Stable Outlook reflects Fitch expectations that
outflows to related parties will not increase and the company's
funds from operations (FFO) adjusted leverage will remain below
4x over the medium term. This should enable UC to maintain
adequate access to external liquidity to refinance its short-term


Leading Market Position: The ratings reflect UC's leading
positions in the core confectionery market segments in Russia and
its strong portfolio of nationally recognised brands. In 2014-
2016 private labels gained market share amidst constrained
consumer spending, but UC has been able to broadly maintain its
market share in value terms. Fitch believes that the company's
focus on the medium-price segment and its increasing presence in
the economy segment, together with high customer loyalty and a
wide distribution network across the country, will enable it to
retain its leading position in the Russian confectionery market
over the medium term.

Gradual Market Recovery: In 1H17 Russian confectionery sales
volumes grew for the first time since 2014, signalling some
recovery in consumer spending. Fitch expects confectionery
consumption to grow annually in the low single digits over the
next three years, driven mostly by the economy segment and by
bakery and sugary sweets. Fitch does not expects significant
shifts towards more expensive categories or price points due to
the likely persistence of weak consumer sentiment.

Fitch project UC's sales volumes in 2017 will outperform the
market and grow by around 5% (1H17: 6% on 1H16) as the company
has introduced new brands and products in price segments or in
categories that benefit from greater consumer demand.

Drop in EBITDA: UC's EBITDA dropped to RUB4.8 billion in 2016
from RUB7.6 billion in 2015 due to higher raw-material costs and
marketing expenses, with the latter incurred to withstand
increased competition. Fitch does not expects EBITDA to increase
to pre-2016 levels but project some recovery over the medium term
to RUB5.5-6.0 billion due to further growth in sales volumes and
lower raw-material costs.

Loose Corporate Governance Practices: Fitch views weak corporate
governance as potentially affecting unsecured creditors. Fitch
therefore cap UC's rating at 'B', although the company's credit
metrics and business profile are commensurate with a higher
rating. Sizeable loans to related parties, a lack of management
and board independence, and the portion of UC's cash held at the
related Guta Bank are the major constraining factors for the

Manageable Related-Party Outflows: Fitch assumes that outflows to
shareholders and related parties will remain at manageable levels
over 2017-2020, allowing UC to maintain its moderate leverage and
retain adequate access to bank financing. Fitch understand from
management that Guta Group remains committed to keeping a
manageable debt burden at UC as it is its major cash-generating

According to management, UC's debt should fall to RUB10-11
billion by end 2017 due to significant planned cash repayment
from related parties. However, in Fitch ratings case Fitch
conservatively factored in only RUB0.8 billion already received
in September 2017, leading to a stable debt level of RUB14
billion at end-2017.

Increased but Acceptable Leverage: Fitch projects FFO adjusted
gross leverage will decrease to around 3.5x in 2017 after peaking
at 3.8x in 2016. Fitch expects deleveraging to be supported by a
recovery in EBITDA and an inflow of cash from the repayment of
related-party loans. Fitch conservatively assume UC will resume
related-party funding or investments in non-core assets from
2018, leading to higher FFO adjusted leverage of 3.8x over 2018-
2020. Nevertheless, these leverage metrics are strong compared
with those of similarly rated peers, and taking into account UC's
weak corporate governance, are commensurate with the company's
'B' rating.


UC is smaller than the leading Latin American confectionery
producer Arcor S.A.I.C. (Local-Currency IDR of BB/ Stable) and
less geographically diversified, but has similarly strong brands
and credit metrics. UC has the same scale as, and shares the
single-country asset concentration of the Turkish food and
beverage producer Yasar Holding A.S. (B/Stable) but with lower
exposure to FX risks and a more conservative capital structure.
UC's rating is capped at 'B' due to exceptionally weak corporate
governance practices.

No parent/ subsidiary aspects or Country Ceiling constraint were
in effect for this rating.


Fitch's key assumptions within Fitch ratings case for the issuer
- 5% growth in sales volumes in 2017; 2% growth - from 2018;
- selling price increases below food CPI;
- EBITDA margin at around 8.5% over 2017-2020;
- capex related to core business at around 3% of revenue over
- RUB0.8 billion inflows from related parties in 2017;
- RUB1.6 billion payment in 2017 to repurchase non-controlling
- cash distributions (dividends, loans to related parties and
   investments in non-core assets to support the strategy of Guta
   Group) close to prior-year net profit over 2018-2020.


Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
An upgrade is unlikely unless there is consistent evidence of
improved corporate governance practices

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Sustained material deterioration in free cash flow (FCF)
   generation, driven by operating underperformance
- FFO-adjusted gross leverage sustainably above 4.0x
- Larger-than-expected distributions to Guta Group or material
   investments in non-core assets not balanced by greater pre-
   dividend FCF
- Deterioration in liquidity position or inability to refinance
   short-term debt


Weak Liquidity: At end-June 2017 Fitch-adjusted unrestricted cash
of RUB0.9 billion, available undrawn committed bank lines of
RUB1.2 billion and expected positive FCF were not sufficient to
cover short-term debt of RUB3.9 billion. However, the major
portion of short-term debt (RUB2.5 billion) was related to short-
term tranches under long-term RCF due in 2019, which Fitch
expects to be rolled over.
Liquidity and refinancing risks may increase if there is larger-
than-expected cash leakage to related parties.


The recovery analysis assumes that JSC Holding Company United
Confectioners would be considered a going-concern in bankruptcy
and that the company would be reorganised rather than liquidated.
Fitch has assumed a 10% administrative claim.

UC's going concern EBITDA is based on 2016 EBITDA. The going-
concern EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganisation EBITDA level upon which Fitch base the
valuation of the company.

The going-concern EBITDA is 10% below 2016 EBITDA to reflect the
company's exposure to imported raw materials and volatility in
cocoa, sugar and milk prices. Fitch has decreased the EBITDA
discount to 10% from 40% as Fitch believes that EBITDA was
unsustainably low in 2016 and already included commodity price

An EV multiple of 5x is used to calculate a post-reorganisation
valuation and reflects a mid-cycle multiple. It is in line with
multiples Fitch use for Russian companies in retail and packaged
food/ beverage sectors.

Rouble bonds are issued by the finance company OOO United
Confectioners-Finance, but Fitch treats them pari passu with
senior unsecured debt of operating companies due to public offers
(akin to guarantees) from three major production plants.

The waterfall results in a 100% recovery corresponding to 'RR1'
recovery for the senior unsecured rouble bonds (RUB1.2 billion
outstanding external obligation at end-June 2017). However, the
Recovery Rating is capped at 'RR4' due to the company's Russian
jurisdiction. Therefore, the senior unsecured bonds are rated


JSC Holding Company United Confectioners
-- Long-Term IDR: affirmed at 'B'; Outlook Stable

OOO United Confectioners-Finance
-- Senior unsecured rating: affirmed at 'B'/'RR4'


DERINDERE TURIZM: Fitch Affirms B IDR, Alters Outlook to Negative
Fitch Ratings has downgraded Derindere Turizm Otomotiv Sanayi Ve
Ticaret A.S.'s National Long-Term Rating to 'BBB-(tur)' from
'BBB(tur)'. The Outlook is Negative. Fitch has also revised the
Outlook on the Long-Term Issuer Default Rating (IDR) to Negative
from Stable while affirming the rating at 'B'.


The rating action reflects deterioration in Derindere's capital
adequacy and the quality of the entity's capital.

The balance sheet leverage as defined by debt/equity increased to
9.4x at end-1H17 from 7.0x a year before. This was driven by
continuing aggressive growth in 2015-1H17 while profitability
remained modest. Cash flow leverage is also increasing, even
after earnings are adjusted for significant negative FX effect.

Moreover, Derindere has increased its exposure to non-core
assets, including to shareholder's other businesses. These
related-party risks are mainly real estate and construction
projects and total exposure booked on Derindere's balance sheet
reached TRY228 million as at end-1H17 or 83% of the company's
equity, Fitch estimates. In addition Fitch sees uncertainty over
the exit horizon for such non-core investments and their
valuation, particularly given volatility on the real estate
market in Turkey.

The weak capital position and high leverage are counterbalanced
by Derindere's leading local franchise and an established and
cash generative business model. However, the business model still
suffers from sizable FX and debt rollover risks.

Operational leasing services are a growth market in Turkey and
Derindere's fleet size has grown at 16% CAGR since 2011, to reach
33,500 vehicles in 1H17, resulting in a national market share of
10%. Derindere's wide network across Turkey provides advantages
in offering leasing and fleet management solutions to a wide
customer base, including the fast-growing and lucrative segment
of leasing to individuals.

Derindere's profile is marked by volatile earnings, largely due
to FX effects. Assets are mainly denominated in the Turkish lira,
while funding is in foreign currency (FC). The company uses hedge
accounting to reflect cash flow hedges from FC-denominated lease
receivables (recorded off-balance sheet). This somewhat mitigates
FX risk. However, Derindere's reported open currency position,
net of this hedge, was still at an elevated 4.6x equity at end-

FX risk is further mitigated by a natural hedge as the residual
value (RV) of the leased fleet is booked in Turkish lira but as
with the market for new vehicles, the RV can be rather sensitive
to exchange rate fluctuations, primarily against the euro.
However, Derindere's earnings are sensitive to significant
movements of the Turkish lira against the euro, despite the cash
flow and natural hedges.

The company is exclusively wholesale-funded, drawing credit lines
primarily from local banks. Other funding sources include
domestic bonds and sukuk, which jointly amounted to 4% of total
debt at end-1H17. Short-term borrowings represented a high 46% of
total debt at end-1H17. Rollover risk stems from the maturity
mismatch between assets and liabilities and a concentrated
funding profile. However, this risk is mitigated by Derindere's
strong cash generation capacity in run-off mode, if needed.

Derindere has demonstrated negligible delinquency levels, a
function of its business model, where the lessor retains title
over the cars and may swiftly repossess them in case of non-
payment. Turkey's secondary car market is well-established,
resulting in sound liquidity of underlying assets. However, the
company is exposed to material residual value risk as the market
is volatile. So far the company has successfully sold its stock
at the book value of the car at termination/maturity of the
contract, reflecting adequate valuation of leased assets. This in
turn reflects a prudent depreciation model and car price
inflation due to the Turkish lira's depreciation. Nevertheless,
the effect on profitability was neutral as Derindere did not book
profit on these sales in 2015-1H17.

The Negative Outlook reflects the continuing weakening of
Derindere's capital base and performance amid aggressive growth,
which may give rise to funding rollover risks.


An inability to improve leverage by mean of stronger capital
generation would trigger a downgrade. as would a further increase
of related-party non-core assets booked on Derindere's balance

Improvement of performance, particularly in operating
profitability (excluding FX effect), while continuing to control
RV risk would result in the Outlook being revised to Stable.

An upgrade of the IDR is unlikely in the near term, in view of
the company's elevated leverage.

TURKCELL FINANSMAN: Fitch Affirms 'BB+' LT IDR, Outlook Negative
Fitch Ratings has affirmed Turkcell Finansman A.S.'s (TFS) 'BB+'
Foreign and Local Currency Long-Term Issuer Default Ratings
(IDRs) and 'AA(tur)' National Long-Term Rating. The Outlooks are
Negative on the IDRs and Stable on the National Rating.


TFS's ratings are based on potential support from the parent -
Turkcell Iletisim Hizmetleri A.S (BBB-/Negative). Fitch believes
Turkcell would have a strong propensity to support TFS given (i)
its 100% stake and full operational control; (ii) the close
integration of the subsidiary with its parent; and (iii) TFS's
role in customer base acquisition for Turkcell.

The one-notch difference between the ratings of Turkcell and TFS
reflects the subsidiary's focus on a different segment (finance
rather than telecom services), its short operating history and
different branding. These factors in Fitch's view moderately
reduce the potential reputational risk for the parent or
potential negative impact on other parts of the Turkcell group in
case of TFS's default.

TFS amounted to a material 11% of Turkcell's assets as of end-
1H17 but (but a smaller 5% of equity and pre-tax profit) and in
view of planned rapid growth TFS is forecasted to reach 15% of
group assets by end-2017 before stabilising at around this level.

One of the Turkcell's incentives behind TFS's spin-off in 2015
was accounting optimisation, particularly relief on leverage
ratios. Thus the propensity to support may be subject to such
accounting benefit remaining in place.

TFS provides Turkcell retail customers with loans on mobile
devices. The core product is small ticket unsecured loans with a
24-month tenor. The company plans to extend its product range but
keep to Turkcell's clientele for the foreseeable future. However,
over the long term Turkcell plans to develop TFS into a finance

TFS sells its products directly via Turkcell's network across
Turkey with 3,300 sales-points. The business model relying
heavily on digital integration with shops allows TFS to limit
fixed costs.

TFS's internal debt/equity limit is 10x (significantly more
conservative than the domestic regulator's 33x). Factual leverage
at end-1H17 was 4.3x. This would increase to 5x-6x by end- 2017
as Fitch expects portfolio growth to outpace capital generation.

TFS plans to keep loans from banks a core funding source for the
near term. TFS's asset duration is around nine months and
therefore may be comfortably matched by bank funding.
Additionally TFS has placed two domestic securitised bond issues
so far in 2017 (TRY100 million each), with plans to expand the
issues to TRY500 million. These securitisations were structured
as 'true sale' and are therefore off the balance sheet together
with their respective assets. TFS does not plan to attract any
parental funding due to tax implications.


As TFS's IDR is bound to Turkcell's, changes to the latter will
be reflected in the subsidiary. The IDR of Turkcell is currently
one notch above the Turkish sovereign level and may move in line
with it.

An equalisation of TFS's ratings with those of Turkcell is
unlikely in the near term unless (i) TFS's role in the Turkcell
group strengthens, and (ii) TFS shows a longer track record of
operations and of support from Turkcell.

A weakening of Turkcell's propensity or ability to support TFS
may result in a widening of the notching from the parent.

The rating actions are:

Long Term Issuer Local and Foreign Currency IDRs affirmed at
'BB+', Outlook Negative
Short Term Local and Foreign Currency IDRs affirmed at 'B'
National Long Term Rating affirmed at 'AA(tur)', Outlook Stable
Support Rating affirmed at '3'

YAPI VE KREDI: Moody's Assigns ba1 Baseline Credit Assessment
Moody's Investors Service has assigned a provisional (P)Baa1
long-term rating to Series I-2017 of the Turkish Lira (TL)-
denominated covered bonds expected to be issued under the
mortgage covered bond programme of Yapi ve Kredi Bankasi A.S.
(the issuer, Yapi Kredi, long term deposits (foreign) Ba2
negative, adjusted baseline credit assessment (BCA) ba1,
counterparty risk (CR) assessment Baa3(cr)).


A covered bond benefits from (1) the issuer's promise to pay
interest and principal on the bonds; and (2) if the issuer ceases
making payments under the covered bonds (i.e. a CB anchor event),
the economic benefit of a collateral pool (the cover pool). The
ratings therefore reflect the following factors:

(1) The credit strength of the issuer and a CB anchor of CR
assessment plus zero notches. Yapi Kredi's CR Assessment is

(2) Following a CB anchor event, the value of the cover pool. The
stressed level of losses on the cover pool assets following a CB
anchor event (cover pool losses) for this transaction is 39.4%.

Moody's considered the following factors in its analysis of the
cover pool's value:

a) The credit quality of the assets backing the covered bonds.
The mortgage covered bonds are backed primarily by Turkish
residential mortgage loans. The collateral score for the cover
pool is 10.2%.

b) The Turkish legal framework for covered bonds (the
Communique). Notable aspects of the legislation include:

(i) The ring-fencing of cover pool assets from the issuer's
bankruptcy estate. Also, issuer insolvency does not trigger the
acceleration of the covered bonds.

(ii) The segregation of transaction accounts and cash flows from
the issuer's bankruptcy estate.

(iii) Various asset and liability requirements, which include (1)
a nominal value test to ensure that the nominal value of assets
cannot be lower than the nominal value of the covered bonds; (2)
a cash flow test to ensure that the interest and revenues
expected to be generated in one year cannot be lower than that
expected to arise from the covered bonds; (3) a net present value
(NPV) test to ensure that the NPV of the assets must exceed at
least 2% of the NPV of the covered bonds and (4) stress test on
interest rates and foreign-currency denominated cash flows.

(iv) A cover pool monitor that is responsible for monitoring the
cover pool on an ongoing basis and observing the compliance with
the Communique.

c) The exposure to market risk, including potential interest rate
mismatches between assets and liabilities.

d) The over-collateralisation (OC) in the cover pool is 1330% on
a nominal basis, based on data as of the cut-off date (August 8,
2017) and assuming an issuance of TL 528.7 million, of which the
issuer is expected to provide 20% on a "committed" basis (see Key
Rating Assumptions/Factors, below).

e) The 18-months extension maturity that the deals will benefit
from, which aims to mitigate refinancing risk.

The timely payment indicator (TPI) assigned to this transaction
is Improbable. Moody's TPI framework does not constrain the

At present, the total value of the assets included in the cover
pool is approximately TL 7.56 billion, comprising 111,508
residential mortgage loans and substitute assets. The residential
mortgage loans have a weighted-average (WA) seasoning of 29
months and a WA loan-to-value (LTV) ratio of 47.8%.

The provisional ratings that Moody's has assigned address the
expected loss posed to investors. Moody's ratings address only
the credit risks associated with the transaction. Moody's did not
address other non-credit risks, but these may have a significant
effect on yield to investors.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings only represent Moody's
preliminary opinion. Upon a conclusive review of the transaction
and associated documentation Moody's will endeavour to assign a
definitive rating to the covered bonds.


Moody's determines covered bond ratings using a two-step process:
an expected loss analysis and a TPI framework analysis.

EXPECTED LOSS: Moody's uses its Covered Bond Model (COBOL) to
determine a rating based on the expected loss on the bond. COBOL
determines expected loss as (1) a function of the probability
that the issuer will cease making payments under the covered
bonds (a CB anchor); and (2) the stressed losses on the cover
pool assets should the issuer cease making payments under the
covered bonds (i.e., a CB anchor event).

The CB anchor for this programme is CR assessment plus 0 notches.
The CR assessment reflects an issuer's ability to avoid
defaulting on certain senior bank operating obligations and
contractual commitments, including covered bonds.

The cover pool losses for this programme are 39.4%. This is an
estimate of the losses Moody's currently models following a CB
anchor event. Moody's splits cover pool losses between market
risk of 32.5% and collateral risk of 6.9%.

Market risk measures losses stemming from refinancing risk and
risks related to interest-rate and currency mismatches (these
losses may also include certain legal risks). Collateral risk
measures losses resulting directly from cover pool assets' credit
quality. Moody's derives collateral risk from the collateral
score, which for this programme is currently 10.2%.

The over-collateralisation in the cover pool is 1330%, based on
data as of the cut-off date and assuming a first issuances of TL
528.7 million, of which the issuer is expected to provide 20% on
a "committed" basis. Unlike in most covered bond programmes, OC
is committed on a series-by-series basis and not on a programme
basis. However, the highest then existing committed OC level for
any series must be adhered to (and thus benefits) all the series
for the entire programme. The minimum OC level consistent with
the (P)Baa1 ratings is 8.0%. These numbers show that Moody's is
not relying on "uncommitted" OC in its expected loss analysis.

For further details on cover pool losses, collateral risk, market
risk, collateral score and TPI Leeway across covered bond
programmes rated by Moody's please refer to "Moody's Global
Covered Bonds Monitoring Overview", published quarterly. All
numbers in this section are based on Moody's most recent
modelling (based on data, as per the cut-off date).

TPI FRAMEWORK: Moody's assigns a "timely payment indicator"
(TPI), which measures the likelihood of timely payments to
covered bondholders following a CB anchor event. The TPI
framework limits the covered bond rating to a certain number of
notches above the CB anchor.

For Yapi Kredi's mortgage covered bonds, Moody's has assigned a
TPI of Improbable.

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

The CB anchor is the main determinant of a covered bond
programme's rating robustness. A change in the level of the CB
anchor could lead to an upgrade or downgrade of the covered
bonds. The TPI Leeway measures the number of notches by which
Moody's might lower the CB anchor before the rating agency
downgrades the covered bonds because of TPI framework

Based on the current TPI of "Improbable", the TPI Leeway for this
programme is 0-2 notches. This implies that Moody's might
downgrade the covered bonds because of a TPI cap if it lowers the
CB anchor, all other variables being equal.

A multiple-notch downgrade of the covered bonds might occur in
certain circumstances, such as (1) a country ceiling or sovereign
downgrade capping a covered bond rating or negatively affecting
the CB Anchor and the TPI; (2) a multiple-notch downgrade of the
CB Anchor; or (3) a material reduction of the value of the cover


The principal methodology used in this rating was "Moody's
Approach to Rating Covered Bonds" published in December 2016.

U N I T E D   K I N G D O M

AMEC FOSTER: Moody's Withdraws Ba2 Corporate Family Rating
Moody's Investors Service has withdrawn the Ba2 corporate family
rating, the Ba2-PD probability of default rating and the
developing outlook of UK-based engineering services company Amec
Foster Wheeler Plc for reorganization reason.


The rating action follows both companies' announcements on
October 9, 2017 that all necessary requirements for AMFW's
acquisition by Wood Group Plc (unrated) to become effective have
been obtained. Please refer to the Moody's Investors Service
Policy for Withdrawal of Credit Ratings, available on its

AMFW is an engineering services company based in the United
Kingdom. Its activities primarily include engineering,
consultancy, and project management services for the oil and gas,
mining, renewable power, and environmental services sectors. AMFW
operates globally with operations across Europe, the Americas and
Asia. In 2016, the company generated revenue of GBP5.4 billion
and reported trading profit of GBP318 million.

CARDINAL HOLDINGS: S&P Assigns 'B' Corporate Credit Rating
S&P Global Ratings assigned its 'B' long-term corporate credit
ratings to U.K.-based Cardinal Holdings 3 LP and to its
subsidiary Cardinal U.S. Holdings Inc. The outlooks are stable.

S&P said, "At the same time, we assigned our 'B' issue rating and
'3' recovery rating to Cardinal US Holdings' senior secured $250
million term loan B, maturing in 2024, and its $65 million
revolving credit facility (RCF) maturing in 2022. The '3'
recovery rating reflects our expectation of meaningful recovery
prospects (50%-70%; rounded estimate: 55%) in the event of a
payment default.

"These ratings are in line with our preliminary ratings assigned
on July 13, 2017.

"Our 'B' rating on Cardinal Holdings 3, the parent company of
Capco, reflects our view of the company's weak business profile
and highly leveraged financial risk profile. In July 2017, funds
advised by private-equity firm Clayton Dubilier & Rice (CD&R)
acquired a controlling 60% stake in Capco, previously owned and
controlled by Fidelity National Information Services (FIS), which
retains a 40% stake. The carved-out entity operates as a
consulting services company providing technological, digital, and
business advisory services to banks and financial services
groups. In 2016, Capco generated revenues of about $670
million -- including reimbursed expenses -- with the S&P Global
Ratings-adjusted EBITDA margin at about 8.5%.

"In our view, Capco operates in the competitive financial
services consulting market, where we think that barriers to entry
are relatively low. In addition, Capco is much smaller than
global consultancy firms such as Accenture, Deloitte, or KPMG,
and the company shows high customer concentration, with the 10
largest clients contributing 54% of 2016 revenues. We also regard
the group's profitability as below average compared with peers in
the wider professional services sector. That said, Capco's EBITDA
margins have been burdened by operating inefficiencies and
restructuring costs in the past. We expect a moderate improvement
in profitability due to expected lower costs as a stand-alone
entity, combined with management's focus on increasing
utilization of resources.

"We also note the group's fairly volatile working capital
patterns over the past two years. In 2015, Capco's cash flow
generation suffered from a $50 million outflow due to a new
service offering and a large amount of unbilled balances
following loose collection practices. However, this trend
reversed in 2016 after the group's new management implemented
comprehensive measures to strengthen cash management. We
anticipate no further significant fluctuations in our base case.
We foresee some event risk related to contracts that may not be
renewed, which could cause volatility in reported performance, as
illustrated by the expected decline in reported revenue in 2017."

These risks are partly offset by the favorable growth prospects
of Capco's addressable market. This potential for the financials
services consulting market is driven by financial institutions'
need to adapt to increasingly complex regulatory requirements,
pressure to cut costs, and the emergence of new technologies,
which are the key areas of Capco's expertise. In addition, Capco
has built solid relationships with blue-chip customers: mainly
large international banks and financial institutions. This has
translated into high retention rates over recent years, which, if
maintained, support relatively good revenue visibility and
provide cross-selling opportunities. S&P understands that Capco's
share of revenues under long-term contracts or contracts renewed
annually cover about 50%-70% of its annual revenues.

S&P said, "We view the group's new owner CD&R as a financial
sponsor. Private equity firms generally pursue an aggressive
financial strategy to maximize shareholder returns and often
drive value with debt-funded acquisitions. We view FIS' 40% stake
in the business as a financial investment and therefore has no
influence on the rating. Our assessment of Capco's financial risk
profile is also supported by our forecast credit metrics for the
group, including S&P Global Ratings-adjusted debt to EBITDA of
about 5.6x at close of the transaction. Our adjusted debt figure
includes the new $250 million senior secured term loan, an
operating lease adjustment of about $41 million, pension
adjustment of about $5 million, and other adjustment of $20
million related to a former equity award to employees under FIS'
ownership. In our adjusted EBITDA figure, we include reported
EBITDA of about $48 million for 2017 and lease rentals of about
$8 million. We consider that the long-dated maturity profile of
at least seven years limits refinancing risk. We also project
that the group should comfortably cover its future interest
obligations, with FFO to cash interest above 3.5x.

"Our view of the group's historical performance is based on
Capco's stand-alone audited financial statements for 2016, which
were prepared in conjunction with the carve-out transaction. We
therefore rely on several assumptions related to Capco's
operations as a stand-alone entity.

In its base case for Cardinal Holdings 3 for 2017-2018, S&P

-- Decline of reported revenue by about 4% in 2017 to $640
    million (including reimbursed expenses), due to the expiry of
    a one-time contract considered noncore revenue. S&P expects
    core revenue growth of about 4% annually in 2017 and 2018.

-- Modest improvement in the S&P Global Ratings-adjusted EBITDA
    margin to 8.5%-9.0% over the same period (including S&P's
    operating lease adjustment) compared with 8.4% in 2016 as the
    utilization rate improves and the company implements
    operating efficiency measures.

-- Working capital outflows of about $8 million.

-- Capital expenditures (capex) of 1.0%-1.5% of revenues in line
    with historical payouts.

-- Preferred equity contribution of $259 million from CD&R
    qualifies as equity under S&P's noncommon equity criteria,
    and therefore is not included in our adjusted debt

-- 2017 will be a transitional year, owing to the group's carve-
    out from FIS, and therefore S&P anticipates some
    extraordinary expenses that are unlikely to reoccur in later

-- No acquisition spending.

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

-- Adjusted debt to EBITDA of about 5.5x-5.0x.

-- Free operating cash flow (FOCF) of about $10 million.

-- Funds from operations (FFO) cash interest coverage above

S&P said, "The stable outlook reflects our view that Capco will
maintain adjusted debt to EBITDA of about 5.0x-5.5x over the next
12 months, supported by an improvement in profitability on the
back of efficiency measures and better utilization rates. This
will also support reported FOCF of about $10 million in 2017 and
2018. In addition, we expect the group's adequate liquidity
profile will support its near-term liquidity needs following the

"We could consider a negative rating action if Capco failed to
achieve expected levels of revenues and margins, lose material
contracts, face operating setbacks as a stand-alone entity, or
incur higher-than-expected restructuring expenses. Specifically,
we could downgrade Cardinal Holdings 3 if the group were unable
to generate positive FOCF -- which could also result from
inability to improve working capital and cash management -- or
undertook debt-funded acquisitions or shareholder returns such
that adjusted debt to EBITDA exceeded 7.0x.

"We would consider a positive rating action if the group
demonstrated its ability to generate FOCF higher than $30 million
and maintain adjusted debt to EBITDA comfortably below 5.0x for a
sustained period. However, an upgrade is currently constrained by
our assessment of the company's aggressive financial policy
stemming from its private-equity ownership."

JUST FOR PETS: Enters Administration, PSR to Buy 18 Stores
Following the announcement of September 14, 2017, Wynnstay Group
plc reports that Christopher Benjamin Barrett and John Allan
Carpenter of Dow Schofield Watts Business Recovery LLP have been
appointed as Administrators to Just for Pets Ltd ("JfP), and that
terms have been agreed by the Administrators for the sale of 18
stores to PSR Trading Ltd. The remaining 7 stores are,
unfortunately, expected to be closed.

Wynnstay will continue to work with the Administrators to ensure
the preservation of as much value as possible for all
stakeholders of JfP.

The full details of the exceptional charges relating to the
write-off of net assets of JfP and associated costs will be
provided with the Company's full-year results.

As previously reported, for the six months to April 30, 2017, JfP
generated revenues of GBP7 million, representing approximately 3%
of Wynnstay's total revenues for the period, and an operating
loss of GBP0.25 million. The Company's total adjusted operating
profit for this period was GBP4.24 million.  Net assets relating
to JfP stand at approximately GBP2.2 million at the time of the
Administrators appointment.

Just For Pets is a pet retailer based in the United Kingdom.

LINCOLN FINANCE: Fitch Affirms BB- Senior Secured Notes Rating
Fitch Ratings has affirmed LeasePlan Corporation NV's (LeasePlan)
Long-Term Issuer Default Rating (IDR) at 'BBB+' and Viability
Rating (VR) at 'bbb+' following the completion of Fitch fleet
leasing peer review. Fitch has also affirmed the LT rating of
Lincoln Finance Ltd's (LFL) senior secured notes at 'BB-' and the
LT IDR of the notes' guarantor, Lincoln Financing Holdings Pte
Limited (LFHPL), at 'BB-'. The Rating Outlooks on LeasePlan and
LFHPL's LT IDRs are Stable.


LeasePlan's IDRs, VR and senior debt ratings are driven by the
company's franchise position as one of the world's leading
vehicle leasing companies, its regulation as a deposit-taking
bank by De Nederlandsche Bank (DNB) and its stable and
diversified funding and liquidity profile. The ratings also take
into account the company's sizeable but historically well-managed
exposure to residual value risk, and an ownership structure which
incorporates debt at the holding company level.

LeasePlan manages approximately 1.7 million vehicles, across over
30 countries, in many of which it holds leading market positions.
This geographic diversification counterbalances the group's
monoline business model and renders its performance less
susceptible to economic downturn in any individual market.

LeasePlan's banking status is unusual among lessors, and
regulatory risk-weighted capital ratios are strong (CET1 ratio of
18.8% at end-June 2017) and rising. Debt-to-tangible equity
leverage (5.9x at end-June 2017) falls to 5.1x on a net basis
when accounting for the group's significant cash position.

Its banking license has also allowed LeasePlan to achieve a more
diversified funding profile than peers via the gathering of
retail savings in the Netherlands and, since 2015, in Germany. At
end-June 2017 these totalled 28% of non-equity liabilities,
consistent with a year earlier, and most are eligible for the
Dutch deposit guarantee scheme, which supports their stability.
Wholesale funding is mostly unsecured, but LeasePlan is also a
well-established participant in the securitisation market. Fitch
regards liquidity and refinancing risk as prudently managed, and,
as a bank, the group has potential access to European Central
Bank (ECB) refinancing operations, if needed.

Residual value risk arises via the large proportion of closed-end
operating leases in LeasePlan's portfolio, and cannot be entirely
eliminated, as it depends on external factors such as second-hand
car prices. However, efficient risk management has historically
allowed LeasePlan to avoid material losses from this source. On a
consistent basis, net vehicles sales revenues remained
practically stable in 2016 at EUR189 million, after adoption of a
revised presentation of revenues and cost of revenues which
reclassifies elements of net contribution to Lease Services. In
common with other fleet lessors, Fitch expects some medium-term
downward pressure on used vehicle values, but that the impact on
LeasePlan's earnings will be manageable alongside its other more
stable income streams.

Since early 2016, LeasePlan has been ultimately owned by an
investor consortium, via a new holding company, LFHPL. LFL is a
financing subsidiary of LFHPL, and both entities sit outside
LeasePlan's regulatory ring-fence. The investor consortium partly
funded its acquisition of LeasePlan via LFL's issue of EUR1.25
billion and USD0.4 billion senior secured notes, guaranteed by
LFHPL. None of the acquisition-related debt is LeasePlan's own
direct responsibility, but Fitch believes the structure
moderately reduces LeasePlan's financial flexibility through the
need to upstream dividends to service it, as LFHPL presently has
no other source of income. At the same time Fitch recognises that
this potential negative influence on internal capital generation
is limited by LeasePlan's status as a regulated bank, as DNB can
exercise the power to prohibit or restrict upstream dividend

The Stable Outlook on LeasePlan's IDR reflects Fitch's
expectation that management's stated objectives will lead to
maintenance of steady profitability and leverage.

LeasePlan's Support Rating of '5' indicates Fitch's view that
institutional support from its shareholders, if ever required,
may be possible but cannot be relied upon.

In light of LeasePlan's banking status and deposit-taking
activities, Fitch used its "Global Bank Rating Criteria" dated
Nov. 25, 2016 to help inform its assessment of certain aspects of
LeasePlan's standalone profile, such as operating environment (in
particular, the regulatory framework), company profile,
capitalisation and leverage, and funding and liquidity.


LeasePlan represents LFHPL's only significant asset, and neither
LFHPL nor LFL have material sources of income other than its
upstreamed dividends. There are no cross-guarantees of debt
between LFL and LeasePlan, and LeasePlan's regulator could
prohibit or restrict dividend distributions. In Fitch's view,
debt issued by LFL is sufficiently isolated from LeasePlan to
limit the implications for LeasePlan's own creditworthiness if it
fails to service it. Consequently, the senior secured notes'
rating is based on the standalone profiles of LFL and LFHPL as
guarantor, rather than on notching from LeasePlan.

LFHPL holds an interest reserve account and an interest coverage
account between them containing EUR419 million at end-first half
2017, equivalent to 3.9x the annual interest expense of the
senior secured notes. LFHPL is also covenanted to maintain at
least 2.5 years' cash coverage in the interest reserve account,
but replenishment of this cash will depend on both LeasePlan's
ongoing ability to generate profits and DNB approval for their
distribution in dividend form.


Negative rating pressure could develop from a material
deterioration in the group's capitalization or leverage, which
could result from less effective management of residual value
risk amid a fall in used vehicle prices. Demonstration of an
increased risk appetite or a less conservative approach towards
liquidity management would also be negative for the ratings.

Ratings would benefit in the medium term from improving leverage.
A significant reduction of holding company debt, either as a
result of partial repayment or from a build-up and retention of a
dedicated cash cushion at the LFHPL level, could also be credit

Fitch does not currently expect changes to LeasePlan's Support


LFHPL's IDR and LFL's notes' rating are not directly notched from
LeasePlan's IDR. However, as LeasePlan represents LFHPL's
principal asset and source of income, material change in
LeasePlan's financial strength and capacity to upstream dividends
represents a key sensitivity for LFHPL's IDR and LFL's notes'

The ratings could also be affected positively by accumulation of
significant additional cash within LFHPL, or negatively by its
depletion, as these events would respectively reduce or increase
the dependence of ongoing debt service on future LeasePlan

The ratings could also be sensitive to the addition of new
liabilities or assets within LFHPL, but the impact would depend
on the balance struck between increasing LFHPL's debt service
obligations and diversifying its income away from reliance on
LeasePlan dividends.

Fitch has affirmed the following ratings:

-- Long-term IDR at 'BBB+', Outlook Stable;
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb+';
-- Support Rating at '5';
-- Long-term senior unsecured debt rating at 'BBB+';
-- Short-term senior unsecured debt and commercial paper rating
    at 'F2'.

-- Long-term IDR at 'BB-', Outlook Stable.

-- Senior secured notes long-term rating at 'BB-'.

PIONEER HOLDING: Moody's Assigns (P)B3 CFR, Outlook Stable
Moody's Investors Service has assigned a (P)B3 corporate family
rating (CFR) to Pioneer Holding LLC (Pattonair) and a (P)Caa1
(LGD5) rating to the proposed 5-year $280 million senior secured
second Lien notes. The outlook on all ratings is stable. This is
the first time that Moody's has rated Pioneer Holding LLC.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect the agency's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation associated with the
acquisition, Moody's will endeavor to assign definitive ratings
to the group's proposed senior secured notes. Definitive ratings
may differ from provisional ratings.


The (P)B3 CFR reflects Pattonair's good market position in the
distribution of high volume, low value C-Class parts to the
Aerospace and Defence (A&D) industry. Its solutions-based
business model, long-term contracts and a track record of good
customer service is expected to protect its market position from
competitors and new entrants. Favorable industry dynamics, namely
the significant ramp up in production of commercial aircraft, and
the company's recent contract wins, should also support strong
revenue growth over the next 12-18 months, while the company's
proposed cost efficiency measures are expected to improve
Pattonair's profitability and cash flow generation.

This is important because an improvement in earnings and cash
flow will be fundamental to the company's ability to delever to
more sustainable levels, which is also required to maintain the
(P)B3 CFR. Moody's forecasts assume that gross leverage will fall
to just under 6.5x by March 2019 (end of financial year (FY)
2019), which assumes that Moody's adjusted EBITDA grows to around
GBP40 million by FY 2019, but on closing of the transaction,
gross leverage is very high at around 7.6x on a proforma basis,
which positions the company very weakly in the B3 rating. At the
outset, Pattonair will also have no cash on balance sheet.
Liquidity will be entirely dependent on its ability to generate
free cash flow or its partly drawn RCF (asset based lending
facility), thereby further increasing leverage. The availability
under the RCF will be around GBP60 million at closing.

Given the mixed track record that the company has had to date in
generating steady earnings growth the achievement of expected
growth in results could be challenging. Moody's understand that
Pattonair's past earnings volatility was largely due to
underperforming contracts, which Pattonair has sought to exit
since 2014, and a non-recurring change to Rolls-Royce engine
service intervals. Some customer concentration risk and the
highly competitive environment exposes the company to future
pricing and margin pressure. Though Moody's has taken a haircut
to cost efficiencies forecast by management, these are still
material in the context of adjusted EBITDA and by no means
certain, especially considering the strong growth forecast by the
company. Industry peers have seen the need to invest in more
S,G&A because they have needed additional staffing as well as
additional warehousing to ensure they remain strategically
situated near key customers and maintain high levels of customer

Moody's also expects demands on working capital to remain high
because the company will need to ensure that it has sufficient
levels of inventory in order to meet the ramp up of the company's
new contracts and customers' ramp up in production. Historically,
Pattonair has maintained inventory levels, covering around 6
months of revenues (2x inventory turn). Working capital
requirements were modest in 2014-16, but recent growth including
the onset of new contracts drove a material working capital
outflow of around GBP17 million in FY 2017, and a further GBP18
million outflow in Q1-18.

Pattonair and its sponsor have also acknowledged that they will
look at M&A targets in the future. While Moody's would expects
M&A to be EBITDA-enhancing, Moody's expects this will also delay
deleveraging or put additional pressures on liquidity, especially
if M&A is financed by further drawings on the RCF.


The stable outlook reflects Moody's expectations that the
favorable outlook for the Aerospace and Defense industry and new
contracts, which Pattonair has signed will support stronger
EBITDA and cash flow generation. Moody's expects this to support
a strengthening in leverage metrics as well as liquidity, which
Moody's considers to be weak for the rating.

Factors that Could Lead to an Upgrade

* A greater track record in the company's ability to generate
growth and earnings stability

* If Moody's adjusted gross debt/EBITDA improves to below 6.0x on
a sustainable basis

* If FCF/debt is sustainably around 5%

* Liquidity is adequate in excess of 15% of turnover

Factors that Could Lead to an Downgrade

* Liquidity of less than 10% of turnover

* If capital structure appears unsustainable, in excess of 7.5x
gross leverage on a sustainable basis

* Loss or reduced scope of contract with Rolls-Royce

* A more aggressive financial policy, including debt-financed


The (P)Caa1 rating assigned to the proposed $280 million senior
secured second lien notes is one notch below the group's CFR
because it is subordinated to the asset-based senior secured
first lien RCF of GBP75million. Though on a second lien basis,
the bond will benefit from the same collateral package as the
RCF, namely a pledge over the majority of the group's assets
(inventories and trade receivables), a first lien pledge over the
shares and upstream guarantees from most of the group's operating
subsidiaries. These are expected to represent more than 80% of
aggregate EBITDA and assets.

The principal methodology used in these ratings was Global
Aerospace and Defense Industry published in April 2014.

Pioneer Holding LLC, headquartered in Derby, UK, is a leading
supply chain management services provider to the global aerospace
and defense industry. It is focused on supplying C-class parts
such as fasteners, clamps, machined and fabricated products and
bearings for engines and aircraft systems to OEMs, Tier 1, Tier 2
and maintenance, repair and overhaul (MRO) providers. Pattonair's
services include sourcing and procurement, forecasting and
inventory planning, supplier management, operations and quality
assurance and distribution in order to help customers improve
productivity and generate cost efficiencies. Pattonair's business
comprises its solutions business (81% of revenues; 74% of its
material margin), which sources, holds and distributes inventory
as well as its direct business (19% of revenues; 26% of its
material margin), which distributes parts on a spot basis.
Platinum Equity Capital Partners VI (Platinum) signed a
definitive agreement to acquire Pattonair for GBP342 million. The
transaction is due to close on the October 31, 2017. Pattonair's
revenues in 2017 (March 31, 2017) were approximately GBP320

PIONEER HOLDING: S&P Assigns Preliminary 'B-' Corp Credit Rating
S&P Global Ratings assigned its preliminary 'B-' long-term
corporate credit rating to Pioneer Holding LLC (US). The outlook
is stable.

S&P said, "At the same time, we assigned our preliminary 'CCC+'
issue rating with a recovery rating of '5' to the proposed $280
million senior secured notes to be issued by Pioneer Holding and
Pioneer Co-borrower.

"The final rating will depend on our receipt and satisfactory
review of all final transaction documentation. Accordingly, the
preliminary rating should not be construed as evidence of the
final rating. If S&P Global Ratings does not receive final
documentation within a reasonable time frame, or if final
documentation departs from materials reviewed, we reserve the
right to withdraw or revise our ratings. Potential changes
include, but are not limited to, utilization of bond proceeds,
maturity, size and conditions of the bond, financial and other
covenants, security, and ranking.

"Our preliminary 'B-' rating on Pioneer Holding LLC primarily
reflects Pattonair's high customer concentration with the top 1
and top 3 customers accounting for about 50% and 70% of sales,
respectively. The rating also reflects Pattonair's highly
leveraged capital structure, with adjusted debt to EBITDA of 7.2x
(or 11.2x including the preference shares) and funds from
operations (FFO) cash interest coverage ratio of about 1.6x
expected at closing.

On Aug. 18, 2017, private equity firm Platinum Equity Capital
Partner IV (Platinum) signed an agreement to buy U.K. group
Pattonair, a provider of supply chain services for aerospace and
defense original equipment manufacturers and engine suppliers for
a total consideration of about GBP342 million. S&P said, "The
transaction's financing package will comprise $280 million in
senior secured notes to be issued by newly-created holding
company Pioneer Holding LLC (US) and a GBP75 million asset-based
revolving credit facility (RCF), of which we expect GBP15 million
will be drawn at closing. We understand that the equity
contribution will be made up of approximately GBP4 million in
management rollover and GBP130 million in Platinum equity
investment. The equity will comprise common and preference shares
distributed among Platinum and management. We consider the
preference shares to be debt-like instruments."

With about GBP320 million of sales reported for the fiscal year
(FY) ended March 2017, Pattonair is a niche market player with a
particular focus on the distribution of C-class parts (such as
fasteners, clamps, seals, or bearings) for aircraft engines and
aircraft systems. The company offers services such as sourcing,
distribution, warehousing, inventory planning, product
traceability, and customized kitting. Other distributors of C-
class parts for aerospace and defense manufacturers include U.S.-
based KLX and Wesco Aircraft.

S&P said, "We see Pattonair's high customer concentration as a
key risk. In 2017, Rolls-Royce accounted for about half of
Pattonair's revenues. Although the risk is mitigated by the long-
term contracts between Pattonair and Rolls-Royce, which run until
2022 and 2024, we think that the company could be vulnerable to
potential production issues faced by its customers. This would
result in a slowdown of demand for C-class parts if the
production of engines has to temporarily slow or stop.

Given the long certification process required by customers and
the degree of customized services offered by Pattonair, S&P
considers that barriers to entry are moderately high.
Nevertheless, on top of the risk of new entrants or further
consolidation in the market, customers could also decide to take
back the sourcing and management of inventory for C-class parts
in house.

Despite its niche positioning as a provider of supply chain
management for C-class parts, Pattonair does not demonstrate
particularly strong operating margins; its adjusted EBITDA margin
was about 9.5%-10.0% as of FY2017. S&P said, "We consider
companies with an EBITDA margin of below 10% to be below average
in the aerospace industry. Nevertheless, we expect that the
company will gradually improve its EBITDA margin toward 11% over
the next 24 months through accelerated top-line growth and a
reduction in overheads in indirect functions.

"When the transaction closes, we expect Pattonair's capital
structure to be highly leveraged, with debt to EBITDA at about
7.2x (11.2x including the preference shares), but to then decline
toward 6x (10.3x including the preference shares) through EBITDA
growth, mainly as a result of an increase in volume sales. We
expect that the company's ability to generate meaningful free
cash flow will be hampered by the high interest burden forecast
at about GBP18 million-GBP20 million a year."

In its base-case scenario, S&P assumes:

-- Demand for C-class parts will be supported by the large
    backlogs of aircraft to be delivered over the next five years
    by aircraft manufacturers Airbus and Boeing.

-- Revenues to grow by double digits in FY2017/2018 on the back
    of new parts contract wins at Rolls-Royce. About 70% of
    Pattonair's sales are contracted, which provides some revenue
    visibility, although volumes can fluctuate depending on the
    ramp-up production of its customers.

-- Adjusted EBITDA margin to remain stable at around 9%-10% in
    FY2018 and FY2019, supported by pricing improvements,
    procurement savings, and ongoing internal supply chain
    optimization initiatives. S&P deducts a one-time cost from
    S&P's 2019 adjusted EBITDA of GBP2 million-GBP3 million for
    restructuring costs.

-- Capital expenditure (capex) of about GBP2 million,
    corresponding mainly to maintenance capex. This is much lower
    than the GBP11 million spent the year before, when Pattonair
    bought a portion of Rolls-Royce's inventory as part of the
    contract renewal; S&P doesn't expect this to occur again.

-- No acquisitions or dividend paid to Platinum.

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

-- FFO cash interest coverage ratio of about 1.5x-2.0x.

S&P said, "We expect Pattonair's adjusted debt to amount to about
GBP369 million when the transaction closes. Our calculation
includes GBP215 million of senior secured notes; GBP15 million of
the drawn RCF; approximately GBP130 million of preference shares
that we consider as debt-like instruments; GBP2.7 million for
factoring facilities; and GBP7 million for operating leases.

"Based on the draft documentation received, the use of the asset-
based RCF will be subject to a springing covenant (fixed-charge
coverage ratio of 1x, to be tested in specific circumstances
only). We expect that the company will maintain ample headroom
under that covenant.

"The stable outlook reflects our expectations that Pattonair will
grow its top line by about 10% and maintain its EBITDA margin at
around 9%-10% over the next 12 months, leading to a FFO cash
interest coverage ratio of about 1.5x-2x.

"We could downgrade Pattonair if its FFO cash interest coverage
ratio decreases to below 1.5x as a result of operational setbacks
or debt-financed acquisitions. We could also take a negative
rating action if Pattonair's free cash flow generation turns
negative or its liquidity weakens.

"We see the likelihood of an upgrade as remote over the next 12
months. We could consider a positive rating action if Pattonair
materially diversifies its portfolio of customers and
demonstrates its ability to improve and maintain an EBITDA margin
of at least 12%, while maintaining positive free cash flow
generation. A material increase in its FFO cash interest coverage
ratio to well above 3x could also support an upgrade."

STANDARD CHARTERED: Fitch Affirms BB+ Capital Securities Rating
Fitch Ratings has affirmed Standard Chartered PLC's (SC) and its
subsidiary Standard Chartered Bank's (SCB) Long-Term Issuer
Default Ratings (IDR) at 'A+'; Short-Term IDRs at 'F1' and
Viability Ratings (VR) at 'a'. The Outlook on SC's Long-Term IDR
has been revised to Negative from Stable. The Outlook on SCB's
IDR is Stable.


SC's and SCB's VRs are analysed on a consolidated basis and are
equalised because of SC's role as a holding company and the
relatively low common equity double leverage (around 111% at end-
2016, by Fitch calculations). Fitch expects the holding company
to maintain prudent management of liquidity, which should be
helped by existing policies to manage liquidity across a large
number of countries and legal entities globally.

The affirmation of the VRs reflects SC and SCB's consolidated
credit profile, characterised by sound liquidity, a strong global
network and tightened risk appetite. The ratings also capture
asset quality that is weaker than peers due to a still material
share of lending to higher-risk markets and sectors. Fitch take
into consideration SC's more focused strategic direction, but
Fitch also believe that execution of parts of its restructuring
plan will be challenging and take time to complete.

Fitch sees SC's franchise as strong notwithstanding that the bank
is not a leader in many of its markets. Its wide emerging markets
presence enables it to compete for cross-border finance to large
developed market clients despite the bank's relatively small
size. This should help it optimise more low-returning client
relationships as targeted. However, in its retail business, the
bank's market share often tends to rank behind large domestic

SC's non-performing loans (NPL) have remained high with an NPL
ratio of 3.7% at end-1H17 (2016: 3.7%). The NPL ratio for the
ongoing business has remained stable at 2.3% despite a rise in
gross NPLs of 7% in the six months since end-2016. The ratio is
unchanged because of growth in the portfolio. Fitch believe SC's
risk appetite is generally moderate, with robust reporting,
improved controls and a focus on short-term lending. However,
Fitch believe loan quality could remain weaker than peers given
the markets in which the bank operates and still high, albeit
reducing, industry concentrations. The organisation's operational
risks are significant due to its wide-ranging network and

Fitch views SC's consolidated capitalisation and the capital
ratios of its key subsidiaries as broadly commensurate with its
risk profile. The bank retains a sufficient degree of flexibility
to redistribute resources and it should be well positioned to
meet potential increases in required capital due to regulatory or
accounting (e.g. IFRS9) reasons.

Fitch expects continuous earnings pressure over the short term
from slower growth and adhering to a tighter risk discipline.
Fitch would expects the quality of earnings to improve over the
medium term as management's strategic repositioning feeds
through. Fitch also expect earnings to be substantially retained
to support the strength of capitalisation.

Liquidity is managed well. Deposits in key markets significantly
exceed loans. Unencumbered cash, balances and other liquid assets
provide flexibility, the majority of which should be portable
across jurisdictions in case of stress.


SC's and SCB's Long-Term IDRs and senior debt ratings have been
affirmed at one notch above their VRs to reflect the presence of
an adequate buffer of qualifying junior debt (8.4% of risk
weighted assets at 1H17 as calculated by Fitch), which protects
senior obligations from default in case of failure.

In addition, SC has issued senior debt ahead of being subject to
a MREL requirement communicated by the Bank of England of 25.4%
by 2022, which it will downstream in a subordinated manner to its
subsidiary SCB and thus become eligible for the proposed TLAC
requirement. Fitch expects that SC will downstream a sufficient
amount of subordinated senior debt to protect senior debt holders
at SCB over the next 6-12 months for there to remain a sufficient
amount of qualifying junior debt (QJD) and subordinated senior
debt to maintain a one notch uplift of the IDR over the VR in the
medium term. Therefore the Outlook on SCB remains Stable.

The Negative Outlook on SC reflects Fitch's expectation that the
QJD in the group will in time reduce and may not be replaced as
it falls due. If the buffer becomes insufficient to allow for the
uplift of the IDR over the VR over the rating horizon, Fitch
expects to downgrade the IDR by one notch to 'A'. However, if the
bank can rebuild and sustain the QJD buffer over the medium term,
then Fitch could revise the Outlook on SC's IDR back to Stable.

The Short-Term IDR of 'F1' maps to the Long-Term IDR levels, but
does not benefit from an uplift above the VR, in line with Fitch


SC's and SCB's Support Rating of '5' and Support Rating Floor of
'No floor' reflect Fitch's opinion that senior creditors cannot
rely on extraordinary support from the UK government if the group
becomes non-viable.


Subordinated debt and other hybrid regulatory capital securities
issued by SC and SCB are notched down from their VRs. The ratings
on SC's capital securities are notched down five times,
reflecting two notches for loss severity and three notches for
non-performance risk. SCB's legacy upper Tier 2 securities are
notched down three times, with one notch for loss severity and
two notches for non-performance. Subordinated debt is notched
down once from the respective entity's VR.


The VRs may be downgraded if further loan or earnings
deterioration undermines the group's capital strength. Relevant
factors could be outsized fines or significant business
restrictions from litigation or conduct-related charges, or a
change in dividend policy.

SC's and SCB's VRs may be upgraded if diversification, asset
quality and earnings were to improve significantly while
maintaining a moderate risk appetite.

SC's VR is also sensitive to adverse changes to factors that
affect the holding company's notching, including high double
leverage of above 120%, less prudent liquidity management, a more
complex group structure or regulatory and legal risks specific to
the holding company.


SC's and SCB's Long-Term IDRs and senior debt ratings are notched
up from their VRs, making them sensitive to a change in their
VRs. The Long-Term IDRs and senior debt ratings are also
sensitive to a reduction in the size of the QJD buffer relative
to risk-weighted assets. This could be caused by growth or if
maturing or called Tier 1 or Tier 2 instruments are not replaced.
The notching is sensitive to changes in assumptions on resolution
intervention point, post-resolution capital needs and the
development of resolution planning more generally.

SC's IDR will be downgraded if it does not maintain a
sufficiently large QJD. Based on Fitch's expectation of a
regulatory intervention point and post-resolution capital needs,
Fitch believes that the QJD would have to be at least 9%-10% of
risk-weighted assets to be able to afford protection to senior


The Support Rating is sensitive to changes in assumptions around
the propensity or ability of the UK sovereign to provide timely
support. An upgrade of SC's and SCB's Support Rating and upward
revision of their Support Rating Floors would be contingent on a
positive change in the sovereign's propensity to support its
banks, which is highly unlikely in Fitch's view.


The securities' ratings are primarily sensitive to changes in the
VRs. SC's additional Tier 1 securities are also sensitive to
changes in Fitch's assessment of the probability of their non-
performance relative to the risk captured in SC's VR. This could
arise due to a change in Fitch's assessment of SC's conservative
approach to capital management, reducing its flexibility to
service the securities, or an unexpected shift in regulatory
buffer requirements.

The rating actions are:

Standard Chartered PLC
Long-Term IDR affirmed at 'A+'; Outlook revised to Negative from
Short-Term IDR affirmed at 'F1'
Viability Rating affirmed at 'a'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Long-term senior unsecured debt affirmed at 'A+'
Short-term senior debt affirmed at 'F1'
Dated subordinated debt affirmed at 'A-'
Capital securities (US853254AC43, US853254AB69, US853254AA86,
USG84228AT58) affirmed at 'BB+'
Contingent convertible securities (USG84228CE61, US853254AT77,
US853254BA77. USG84228CQ91, US853254BH21, USG84228CX43) affirmed
at 'BB+'

Standard Chartered Bank
Long-Term IDR affirmed at 'A+'; Outlook Stable
Short-Term IDR affirmed at 'F1'
Viability Rating affirmed at 'a'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Senior unsecured debt affirmed at 'A+'/'F1'
Dated subordinated debt affirmed at 'A-'
Upper Tier 2 notes (XS0222434200, XS0119816402) affirmed at 'BBB'

TESCO PLC: Fitch Affirms BB+ LT IDR & Senior Unsecured Rating
Fitch Ratings has affirmed UK-based retailer Tesco PLC's (Tesco)
Long-Term IDR at 'BB+' and senior unsecured rating at 'BB+'. The
Outlook remains Stable. Fitch has also affirmed the Short-Term
IDR and short-term debt ratings at 'B'.

The affirmation of Tesco's IDR and its Stable Outlook reflects
Fitch's expectation of a consolidation of the rating headroom
regained over the past two years, in terms of both Tesco's
business and its financial profile. Fitch forecasts further
recovery in Tesco's operating performance but this is likely to
be hampered by accumulating challenges in the group's core UK
market, including the still uncertain impact of Brexit on
consumer behaviour in the medium term. Significant debt
repayments and Tesco's property management strengthened the
group's financial profile in the financial year ended 25 February
2017 (FY17). Fitch forecasts this to be sustainable, assuming the
maintenance of a strict financial policy, notably regarding
dividend distributions.

Please note that all the metrics mentioned below refer to Tesco's
retail operations only.


Sales Recovery in the UK: Fitch expects like-for-like sales to
continue to increase after coming back to growth on a full-year
basis in FY17, supported by regained competitiveness through
lower prices and an improved offering. In the current inflation
environment the size of Tesco's UK operations is a key
competitive advantage as the retailer can extract scale benefits
from suppliers, which in turn should support pricing power.
However, risks remain that sales growth pace may be compromised
by declining consumer confidence.

Improving International Operations: After a deterioration in
FY17, Fitch expects Tesco's international operations to
strengthen from FY18, supported by management's ability to
implement abroad the measures initiated in the UK. Fitch does not
expects a significant amelioration in the trading environment,
especially in Tesco's largest foreign markets of Poland (highly
competitive environment) and Thailand (political issues).
However, management's initiatives should structurally improve
Tesco's foreign business models. These include organisational
changes towards a better regional focus, optimisation of the
offerings, and a reorganisation of logistics leading to
substantial cost savings.

Scope for Margin Expansion: After a strong uplift to 2.1% in FY17
(FY16: 1.5%), Fitch expects further increases in Tesco's retail
EBIT margin. However, Fitch conservatively forecast EBIT margin
to only reach 2.6% in FY20 (UK: 2.3%) due to important market
risks, especially in the UK. These include structural changes in
consumer behaviour with an increased focus on value and
convenience, and disruptive competition from both discount
retailers and online players, all in the context of the Brexit
process. Such challenges could lead Tesco to reinvest a large
part of its gains from higher sales volumes and cost savings into
measures to maintain competitiveness.

Neutral Free Cash Flow: Fitch expects FCF after dividends will be
at best neutral over the next three years, after inflows in FY16
and FY17 due to capex restrictions and the absence of dividend
payments. FCF should be supported by further improvements in
profitability, but a normalisation of capex, modest further
improvement in working-capital management and the restart of
dividends distribution are likely to limit it to neutral.

Satisfactory Financial Flexibility, Deleveraging: Fitch factors
in management's cash allocation over FY16-FY17, into
profitability but also debt repayments. FFO fixed charge cover
should cross over the 2.0x level in FY18. FFO adjusted net
leverage dropped from 5.4x in FY15 down to 4.5x in FY17, bringing
Tesco's financial profile more in line with its 'BB+' IDR. Fitch
expects FFO adjusted net leverage to remain around the current
level over the next three years. A further reduction appears now
mainly contingent on EBIT margin growing above 2.5%, combined
with broadly self-funded property buybacks and a strict financial
policy regarding dividend distributions.

Booker Acquisition Neutral: Fitch assesses the acquisition of
Booker, planned for end-2017 or early-2018, as broadly credit-
neutral. It should have marginal impact on Tesco's financial
profile as it will be 80% equity-funded and does not require any
new debt. The merger is a defensive move in the highly
competitive and mature UK market. Fitch expects a consolidation
of the group's market share and scale in the UK, some sales and
cost synergies, and more promising growth prospects through an
access to the faster-growing catering and convenience store
segments. However, the group will continue to heavily rely on the
UK (75% of FY17 retail EBIT including Booker).


Compared to European food retailers, Tesco benefits from its
large scale, a leading market share in its core market as well as
adequate format diversification by geography, store formats and
distribution channels. However, its profit margins are lower than
most peers', such as Carrefour SA ('BBB+'/Stable) or Casino
Guichard-Perrachon SA ('BB+'/Stable). Due to its unmatched scale
and market share it should withstand the pressure related to
ongoing UK market challenges better than the other "big four"
traditional food retailers Asda, Morrisons and Sainsbury's.
Therefore Fitch still expects some improvement in Tesco's
operating margins, although these are unlikely to reach the level
of its continental peers in the next three years.

The sale of Tesco's Korean subsidiary Homeplus in 2015 strongly
enhanced its financial flexibility, helping the group to finance
its turnaround in the UK and significantly strengthen its
financial structure. However, the latter remains significantly
weaker than investment-grade peers such as Ahold Delhaize NV
(BBB/Stable) and Carrefour SA.


The assumptions below are for Tesco retail-only operations.
Fitch's key assumptions within Fitch ratings case for the issuer
- completion of Booker acquisition by FYE18;
- low single-digit growth in UK like-for-like sales supported by
   inflation and minor volume growth;
- stabilisation in international sales in FY19 followed by low
   single-digit growth;
- Tesco retail EBIT margin of 2.6% in FY20 driven by UK and
   Irish EBIT margin up at 2.3% in FY20, recovery in
   international margins supported by structural operating
   initiatives, and broadly stable EBIT margin at Booker;
- Fitch also assumes annual cost synergies from Booker
   absorption to rise from GBP50 million in FY19 up to GBP130
   million in year 3 of integration (FY21);
- modest further improvement in working-capital management;
- capex at GBP1.2 bullion in FY18, average GBP1.4 billion
- increasing dividend payments reflecting stable dividend policy
   for Booker and rising dividend outflows for Tesco starting in
- neutral to slightly negative FCF due to resumption of Tesco's
   dividend payments;
- annual asset sales proceeds of GBP250 million;
- average annual spending of GBP250 million to regain property
   ownership, resulting in annual rental cost savings of GBP30
   million and annual additional debt (brought back on balance
   sheet) of GBP300 million.


The rating sensitivities below apply to Tesco retail-only

Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Sustained EBIT margin of more than 2.5% (FY17: 2.1%) with
   clear trend towards 3%, reflecting the success of the
   turnaround of Tesco's operations in the UK, further
   profitability improvement in the international businesses, and
   successful strategic repositioning
- FFO fixed charge cover stabilising above 2.0x (FY17: 1.8x)
- Improving FFO adjusted net leverage to below 4.5x (FY17: 4.6x)
   with clear trend towards 4.0x
- At least neutral FCF generation after capex and dividends

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Inability to maintain EBIT margin at above 2%, reflecting
   Tesco's inability to withstand persistent competitive pressure
   in the UK
- FFO fixed charge cover below 1.8x on a sustained basis
- FFO adjusted net leverage above 5.0x on a sustained basis
- Sustained negative FCF margin after capex and dividends,
   resulting in an increase in leverage


Adequate Liquidity: Liquidity improved strongly following the
disposal of Homeplus in FY15. As of FYE17 liquidity was supported
by Fitch's estimated unrestricted cash of GBP5.5 billion (which
Fitch adjusts at year-end by GBP250 million for what the agency
considers as either legally restricted or being absorbed in the
working-capital cycle, but not for the GBP777 million to be spent
on the acquisition of Booker in FY18, included in Fitch's FY18
forecasts) and undrawn and committed bank facilities of GBP4.4

Fitch does not expect the integration of Booker to lead to a
deterioration in liquidity. At end-March 2017 the group had
GBP161 million of cash on its balance sheet, an undrawn committed
revolving credit facility of GBP120 million and Fitch expects it
to keep on generating positive free cash flow after dividends.


Tesco PLC
Long-Term IDR: affirmed at 'BB+'; Outlook Stable
Senior unsecured debt: affirmed at 'BB+'
Short-Term IDR: affirmed at 'B'
Short-term debt rating (including commercial paper): affirmed at

Tesco Corporate Treasury Services PLC
Senior unsecured debt: affirmed at 'BB+'
Short-term debt rating (including commercial paper): affirmed at


* BOOK REVIEW: Oil Business in Latin America: The Early Years
Author: John D. Wirth Ed.
Publisher: Beard Books
Softcover: 282 pages
List price: $34.95

Review by Gail Owens Hoelscher

Buy a copy for yourself and one for a colleague on-line at

This book grew out of a 1981 meeting of the American Historical
Society. It highlights the origin and evolution of the stateowned
petroleum companies in Argentina, Mexico, Brazil, and

Argentina was the first country ever to nationalize its
petroleum industry, and soon it was the norm worldwide, with the
notable exception of the United States. John Wirth calls this
phenomenon "perhaps in our century the oldest and most
celebrated of confrontations between powerful private entities
and the state."

The book consists of five case studies and a conclusion, as
* Jersey Standard and the Politics of Latin American Oil
Production, 1911-30 (Jonathan C. Brown)
* YPF: The Formative Years of Latin America's Pioneer State
Oil Company, 1922-39 (Carl E. Solberg)
* Setting the Brazilian Agenda, 1936-39 (John Wirth)
* Pemex: The Trajectory of National Oil Policy (Esperanza
* The Politics of Energy in Venezuela (Edwin Lieuwen)
* The State Companies: A Public Policy Perspective (Alfred
H. Saulniers)

The authors assess the conditions at the time they were writing,
and relate them back to the critical formative years for each of
the companies under review. They also examine the four
interconnecting roles of a state-run oil industry and
distinguish them from those of a private company. First, is the
entrepreneurial role of control, management, and exploitation of
a nation's oil resources. Second, is production for the private
industrial sector at attractive prices. Third, is the
integration of plans for military, financial, and development
programs into the overall industrial policy planning process.
Finally, in some countries is the promotion of social
development by subsidizing energy for consumers and by promoting
the government's ideas of social and labor policy and labor

The author's approach is "conceptual and policy oriented rather
than narrative," but they provide a fascinating look at the
politics and development of the region. Mr. Brown provides a
concise history of the early years of the Standard Oil group and
the effects of its 1911 dissolution on its Latin American
operations, as well as power struggles with competitors and
governments that eventually nationalized most of its activities.
Mr. Solberg covers the many years of internal conflict over oil
policy in Argentina and YPF's lack of monopoly control over all
sectors of the oil industry. Mr. Wirth describes the politics
and individuals behind the privatization of Brazil's oil
industry leading to the creation of Petrobras in 1953. Mr. Duran
notes the wrangling between provinces and central government in
the evolution of Pemex, and in other Latin American countries.
Mr. Lieuwin discusses the mixed blessing that oil has proven for
Venezuela., creating a lopsided economy dependent on the ups and
downs of international markets. Mr. Saunders concludes that many
of the then-current problems of the state oil companies were
rooted in their early and checkered histories." Indeed, he says,
"the problems of the past have endured not because the public
petroleum companies behaved like the public enterprises they
are; they have endured because governments, as public owners,
have abdicated their responsibilities to the companies."
Jonh D. Wirth is Gildred  Professor of Latin American Studies at
Standford University.


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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members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
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