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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Wednesday, October 25, 2017, Vol. 18, No. 212


                            Headlines


C Y P R U S

CYPRUS: Fitch Raises Long-Term IDR to BB, Outlook Positive
GLOBAL SHIP: Moody's Rates Proposed $360MM Sr. Sec. Notes (P)B3
GLOBAL SHIP: S&P Rates New $360MM Senior Secured Bond 'B'


G E R M A N Y

AIR BERLIN: Zeitfracht Agrees to Acquire Cargo Marketing Unit
AIR BERLIN: Lufthansa Plans to Scrap Niki Brand Name


H U N G A R Y

KERESKEDELMI & HITEL: Moody's Hikes Deposit Ratings from Ba1


I R E L A N D

AVOCA CLO XIV: Moody's Assigns (P)B2 Rating to Cl. F-R Notes
DIRECTROUTE LIMERICK: S&P Affirms 'BB-' SPUR on Sr. Sec. Debt
STRAWINSKY I: Moody's Affirms C Rating on Class E Sr. Sec. Notes


I T A L Y

GIUSSANO: Asset Sale Scheduled for December 19
MONTE DEI PASCHI: ECB Bad Loan Rules to Hit Turnaround Targets


L U X E M B O U R G

PINNACLE HOLDCO: S&P Hikes CCR to 'CCC' on Sale to Acquisition


N E T H E R L A N D S

CAIRN CLO III: Moody's Hikes Class F Sr. Sec. Notes Rating to B1
HALCYON EUROPEAN 2007-1: S&P Cuts Rating on Class E Notes to B-


N O R W A Y

SEADRILL LTD: Receives Two Add'l Debt Restructuring Proposals


R U S S I A

BRUNSWICK RAIL: Moody's Puts Ca CFR on Review for Upgrade
INGOSSTRAKH INSURANCE: S&P Affirms 'BB+' Long-Term Credit Rating
KEMEROVO REGION: Fitch Affirms BB- Long-Term IDR, Outlook Stable
KHAKASSIA REPUBLIC: Fitch Affirms B+ IDR, Outlook Stable
MARI EL REPUBLIC: Fitch Affirms BB Long-Term IDR, Outlook Stable

UDMURTIA REPUBLIC: Fitch Affirms B+ LT IDR, Outlook Stable


S P A I N

SANTANDER HIPOTECARIO 2: S&P Affirms D (sf) Rating on Cl. F Notes


T A J I K I S T A N

TAJIKISTAN: Moody's Credit Profile Balances Growth Prospects


U N I T E D   K I N G D O M

AVANTI COMMUNICATIONS: S&P Withdraws 'SD' CCR on Lack of Info
CARILLION PLC: Lenders Agree to New Debt Facilities, Serco Sale
JUNO ECLIPSE 2007-2: S&P Cuts Class A Notes Rating to 'BB+ (sf)'
SHOP DIRECT: Moody's Assigns B2 CFR, Outlook Stable


                            *********



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C Y P R U S
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CYPRUS: Fitch Raises Long-Term IDR to BB, Outlook Positive
----------------------------------------------------------
Fitch Ratings has upgraded Cyprus's Long-Term Foreign-Currency
Issuer Default Rating (IDR) to 'BB' from 'BB-'. The Outlook is
Positive.

KEY RATING DRIVERS

The upgrade of Cyprus's IDRs reflects the following key rating
drivers and their relative weights:

High

Cyprus is experiencing a strong improvement in the performance of
and outlook for its public finances. The budget is on track to
record a surplus of 1% of GDP in 2017, after 0.4% in 2016,
compared with the 'BB' median of a 3.2% deficit. Gross general
government debt (GGGD) is forecast to fall just below 100% of GDP
in 2017 from 108% at end-2016, owing to strong nominal GDP
growth, the budget surplus and a one-off effect from early debt
repayment. Medium-term debt dynamics point to a firmly declining
trend. Fitch baseline medium-term assumptions of 2% GDP growth
and gradually increasing effective interest rates would lead GGGD
to decline to around 80% in 2022, an average 4pp decline
annually.

Medium

The economic recovery has broadened and GDP growth has
consistently outperformed forecasts over recent years. Fitch now
forecasts an average 3.5% GDP growth in 2017 and 2018, in light
of the broad-based recovery in 1H17 (3.6%) and improving
confidence indicators, compared with around 2.5% a year ago when
Cyprus was upgraded to 'BB-'. The recovery is also reflected in
the labour market, where unemployment rate has declined to 10.6%
in 2Q17 from a post-crisis peak of 16% in 2014.

Nevertheless, medium-term growth potential remains highly
uncertain after the global financial crises. Although the strong
growth momentum creates a favourable backdrop for the necessary
deleveraging of the private sector, faster resolution of mortgage
arrears could slow the recovery through weaker household
consumption in the short run.

The sovereign is gradually rebuilding its track record of market
access: it issued a seven-year bond in June 2017 at a 2.8% yield.
Current cash reserves exceed the sovereign's total 2018 financing
needs.

Cyprus's 'BB' IDRs also reflect the following key rating drivers:

Notwithstanding the cyclical recovery, the banking sector's
exceptionally weak asset quality remains a key weakness for
Cyprus's credit profile and material downside risk to the
recovery. The ratio of non-performing exposures (NPEs) to total
loans was 44.1% in June 2017, among the highest of Fitch-rated
sovereigns, compared with 46.4% in December 2016. The total value
of NPEs was EUR22.8 billion, more than 125% of GDP, but down from
a peak of EUR28.4 billion in December 2014. Losses on unreserved
NPEs could be significant if further haircuts were needed to
liquidate underlying collateral, highlighting the potential need
for further capitalisation. In such a scenario, it is unclear if
that would come from the private or public sector.

Deleveraging is progressing slowly, despite the improved
repayment capacity of the private sector and banks' focus on NPE
resolution. The persistently high level of NPEs constraints new
lending capacity and poses a significant downside risk to the
recovery. The three largest banks (Bank of Cyprus, Hellenic Bank
and Cyprus Coop Bank) have had ambitious and detailed strategies
since 2015, including debt-to-equity swaps, restructuring and
establishment of servicing platforms but the resolution of NPEs
remains slow and moral hazard risks high.

Deposits in the banking sector were EUR49.1 billion in August
2017, little changed since December 2016, but liquidity
conditions have improved, reflected for example in the full
repayment of ECB emergency liquidity assistance balance earlier
this year. However, the sector's liquidity remains sensitive to
changes in market sentiment.

Cyprus's ratings are supported by high GDP per capita, a skilled
labour force, and strong governance indicators relative to 'BB'
peers.

The country's current account deficit widened to 4.9% of GDP in
2016 from 1.5% a year earlier. The data is distorted by special
purpose entities (SPEs, mainly the non-resident shipping
industry). The current account deficit would have been
significantly lower excluding SPEs, according to central bank
estimates. For 2017 and 2018 Fitch forecasts deficit (including
SPEs) to remain close to 5%, due to a pick-up in domestic demand,
including investment with high import elasticity.

Net external debt (NXD) was 150% of GDP at end-2016, compared
with the 'BB' median of 19%. Cyprus's international investment
position (IIP) was -128% of GDP, the second-highest indebtedness
among eurozone members, almost 4x the EU's Macro Imbalance
Procedure threshold of -35%.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns a score equivalent to a rating of
'BBB+' on the Long-Term Foreign-Currency (LT FC) IDR scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final LT FC IDR by applying its QO, relative
to rated peers:
- External finances: -2 notches, to reflect the very high net
   external debt relative to peers (not captured in the model)
   and not fully benefiting from the euro's reserve currency
   status (assigned by the model)
- Structural features: -2 notches, to reflect the banking sector
   weakness that could pose a large contingent liability to the
   sovereign and lead to macro-stability risks.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within
Fitch criterias that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

Future developments that may, individually or collectively, lead
to an upgrade include:
- Reduction of private sector indebtedness and banking sector
   NPEs that materially reduce the sovereign's contingent
   liabilities;
- Track record of declining GGGD/GDP ratio; and
- Narrowing current account deficit and reduction in external
   indebtedness.

The Outlook is Positive. Consequently Fitch does not currently
anticipate developments with a high likelihood of leading to a
downgrade. However, future developments that may individually or
collectively lead to negative rating action include:
- Failure to improve asset quality in the banking sector; and
- Deterioration of budget balances or materialisation of
   contingent liabilities that results in the stalling of the
   decline in the government debt-to-GDP ratio.

KEY ASSUMPTIONS

Fitch does not expect substantial progress with reunification
talks between the Greek and Turkish Cypriots over the next
quarters. The reunification would bring economic benefits to both
sides in the long term but would entail short-term costs and
uncertainties.

Gross government debt-reducing operations such as future
privatisations are not considered in Fitch's baseline scenario.
The projections also do not include the impact of potential
future gas reserves off the Southern shores of Cyprus, the
benefits from which are several years into the future.

The full list of rating actions is:

-- Long-Term Foreign- and Local-Currency IDRs upgraded to 'BB'
    from 'BB-'; Outlook Positive;
-- Short-Term Foreign- and Local-Currency IDRs affirmed at 'B';
-- Country Ceiling upgraded to 'BBB' from 'BBB-';
-- Issue ratings on long-term senior unsecured - local-currency
    bonds upgraded to 'BB' from 'BB-';
-- Issue ratings on short-term senior unsecured local-currency
    bonds affirmed at 'B'.


GLOBAL SHIP: Moody's Rates Proposed $360MM Sr. Sec. Notes (P)B3
---------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)B3 senior
secured rating to Global Ship Lease, Inc.'s ("GSL" or "the
company") proposed issuance of $360 million senior secured notes
due 2022. The company's B3 corporate family rating (CFR) and B3-
PD probability of default rating (PDR) are unaffected by this
action and remain unchanged at B3 and B3-PD, respectively. The
rating outlook is stable.

"The (P)B3 senior secured rating reflects the proposed notes'
position as the largest portion of GSL's capital structure," says
Maria Maslovsky, a Vice President-Senior Analyst at Moody's and
the lead analyst for Global Ship Lease. "The company's B3
corporate family rating continues to reflect GSL's stable
revenues, strong asset base and consistently positive free cash
flow counterbalanced by high customer concentration, embedded re-
chartering risk and the company's limited size and leveraged
capital structure which could exacerbate over time," adds
Maslovsky.

The notes and the new super senior secured amortizing term loan
will be secured by mortgages on GSL's vessels and the term loan
will have priority over the notes in an enforcement situation.
The notes and the term loan will benefit from amortization of $40
million per year. The proceeds of the notes and the term loan
will be used to repay the existing debt of the company including
the preferred ship mortgage notes due 2019 and the bank
facilities.

Moody's issues provisional ratings in advance of the final sale
of securities, and these ratings represent only Moody's
preliminary opinion on the transaction. Upon a conclusive review
of the transaction and associated documentation, Moody's will
endeavor to assign a definitive rating to the securities. A
definitive rating may differ from a provisional rating.

RATINGS RATIONALE

The (P)B3 rating for the proposed senior secured notes reflects
the notes' position as the largest instrument in the capital
structure of GSL. The rating also incorporates the security of
ship mortgages and the guarantees of vessel-owning subsidiaries.

The B3 corporate family rating of GSL reflects (1) the company's
very stable revenue stream, given that almost its entire fleet
(excluding two vessels that have contracts expiring over the next
twelve months) is chartered out under long-term contracts, with
an average remaining weighted-charter term of 3.3 years as of
September 30, 2017; (2) GSL's consistent positive free cash flow
generation; and (3) its strong asset base of wholly-owned fleet
with some above-market charters. The rating also takes into
account (1) the company's high customer concentration as a result
of a business model that is based on chartering out 16 out of its
18 vessels to CMA CGM, the company's main fleet manager and
largest shareholder; (2) the re-chartering risk embedded in GSL's
current long-term charter contracts - given that the company may
not be able to redeploy its vessels after contract expiry at
current contracted rates, which are at a substantial premium to
the current spot markets; and (3) GSL's limited size and
leveraged capital structure, with the company's debt/EBITDA ratio
on an adjusted basis possibly increasing over time closer to 5.0x
from 3.5x for the twelve months ending June 30, 2017 depending on
future market conditions.

Pro forma for the proposed refinancing, GSL's liquidity is
adequate with no near-term maturities and positive cash flow
sufficient to address the $40 million annual amortization.

RATIONALE FOR STABLE OUTLOOK

The stable outlook on GSL's ratings reflects Moody's expectations
that the company will maintain its position as a pure ship owner
and, over time, manage a degree of deterioration expected in its
credit metrics. The outlook also reflects that GSL's current
contractual arrangements with CMA CGM will remain unchanged.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive pressure could be exerted on the ratings or outlook in
case of improving market rates that would help GSL in its re-
chartering activity supporting credit metrics with debt to EBITDA
not to exceed 5x beyond 2017 on a sustainable basis.

Negative pressure on the ratings or the outlook could develop if
the company's (FFO + interest)/interest ratio is sustained below
1.5x and debt/EBITDA ratio exceeds significantly 6.0x for a
prolonged period of time. Immediate downward pressure on the
ratings could also result if GSL experiences constrained
liquidity and difficulties in terms of the re-chartering of
vessels when contracts expire. Finally, a significant contraction
in CMA's credit quality might also result in a deterioration of
GSL's ratings.

Global Ship Lease, Inc. ("GSL" or "the company") is a Republic of
the Marshall Islands corporation, with administrative offices in
London. The company, via its subsidiaries, owns a fleet of 18
container vessels with a combined capacity of 66,349 twenty-foot
equivalent units (TEU), characterised by a TEU-weighted average
age of 12.5 years. GSL operates in the shipping container market
as a pure lessor and its entire fleet is chartered out to CMA CGM
S.A. and OOCL. GSL collected revenues of $162 million on a last
twelve month basis to June 30, 2017.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global
Shipping Industry published in February 2014.


GLOBAL SHIP: S&P Rates New $360MM Senior Secured Bond 'B'
---------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '4'
recovery rating to the proposed $360 million senior secured bond
to be issued by Global Ship Lease Inc. (GSL; B/Stable/--). In
addition, we assigned our 'BB' rating and '1+' recovery rating to
the company's proposed $55 million senior secured term loan. The
company will use the proceeds to refinance its existing debt.

RECOVERY ANALYSIS

Key analytical factors

S&P said, "The '4' recovery rating on the bond indicates our
expectation of average (30%-50%; rounded estimate: 40%) recovery
in the event a payment default occurs. The recovery rating is
further supported by the company's security over its total fleet,
consisting of 18 vessels, but is constrained by the volatility in
their second-hand values. The bond's contractual subordination to
proposed super senior secured term loan is also a constraint. The
'1+' recovery rating on the term loan reflects our view of its
strong structural features and overcollateralization. We see a
limited risk in the company's failure to fully repay this loan in
the event of default. The recovery rating is further supported by
the proposed amortization schedule over a period of three years
and the term loan's strong security package over GSL's entire
fleet. We expect 100% recovery in the event of default.

"Although the latest maturity on the term loan is 2020, our
hypothetical default scenario assumes that only up to 40% of the
term loan principal would be amortized by the year of default, in
line with our criteria. Therefore, we expect about $34.2 million
of the term loan will be outstanding at the hypothetical year of
default in 2022, despite its proposed maturity in 2020. In
addition, our hypothetical default scenario assumes a sustained
downturn in the container shipping industry amid persistent
oversupply of ships and cargo-carrying capacity, which we expect
to further depress charter rates and vessels' market values. We
believe that this, combined with GSL's debt service, would impair
its cash flow generation or prevent the company from refinancing
its debt and lead to a payment default on or before 2022.

"We value GSL as a going concern, underpinned by our view that
the business would retain more value as an operating entity and
would be reorganized in a bankruptcy scenario. Individual ships,
however, could be sold to other operators to generate liquidity.
We consequently use a discrete asset valuation to evaluate the
recovery prospects associated with the underlying assets, on the
basis of a deterioration of the second-hand containership market
values.

Simulated default assumptions

-- Year of default: 2022
-- Jurisdiction: U.S.

Simplified waterfall

-- Gross enterprise value at default: about $173.4 million
-- Administrative costs: 10%
-- Net value available to creditors: $156.1 million

Priority claims

-- Super senior debt claims: about $34.2 million[1]
    --Recovery expectation: 100%
-- Senior secured notes: $273.0 million[1]
    --Recovery expectation: 40%[2]

[1] All debt amounts include six months' prepetition interest.
[2]Rounded down to the nearest 5%.


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G E R M A N Y
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AIR BERLIN: Zeitfracht Agrees to Acquire Cargo Marketing Unit
-------------------------------------------------------------
Victoria Bryan at Reuters reports that family-owned Zeitfracht
has agreed to a deal to buy Air Berlin's cargo marketing platform
Leisure Cargo for an undisclosed price.

According to Reuters, Zeitfracht also remains in talks with a
consortium for the airline's maintenance unit and said in the
statement it hoped these talks could be concluded soon.

Several people familiar with the matter told Reuters last week
that Zeitfracht and maintenance group Nayak were together poised
to strike a deal to buy the cargo marketing platform and
maintenance units.

                        About Air Berlin

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

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

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

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

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


AIR BERLIN: Lufthansa Plans to Scrap Niki Brand Name
----------------------------------------------------
Kirsti Knolle at Reuters reports that Lufthansa plans to scrap
the brand name of Austrian airline Niki as it integrates the
carrier into its Eurowings budget business.

Lufthansa signed a EUR210 million (US$247 million) deal this
month to take over insolvent Air Berlin's Niki and LG Walter
units, plus some short-haul planes, to cement its position as
Germany's biggest carrier and expand its Eurowings budget brand,
Reuters relates.

According to Reuters, Eurowings aims to sell flights on current
Niki routes under its own brand as soon as antitrust proceedings
are completed, Eurowings Chief Executive Thorsten Dirks told
journalists in Vienna, adding that he hoped for approval by year-
end.

Mr. Dirks, who is also a Lufthansa board member, said Lufthansa
would apply for regulatory clearance at the European Commission
early next month, Reuters relays.

Austrian competition authorities have said they will voice
concerns in Brussels because they believe Lufthansa, which also
owns Austrian Airlines, would be too dominant in Vienna if it
also owned Niki, Reuters notes.

The German cartel office has said it expects the Commission to
take a close look and that it would follow the process closely,
Reuters discloses.

                        About Air Berlin

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

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

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

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

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


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H U N G A R Y
=============


KERESKEDELMI & HITEL: Moody's Hikes Deposit Ratings from Ba1
------------------------------------------------------------
Moody's Investors Service has upgraded Kereskedelmi & Hitel Bank
Rt.'s (K&H) long- and short-term local and foreign-currency
deposit ratings to Baa3/Prime-3 from Ba1/Not Prime. Concurrently,
the rating agency has upgraded the bank's baseline credit
assessment (BCA) to ba3 from b1 and its adjusted BCA to ba1 from
ba2. K&H's long-term and short-term Baa2(cr)/Prime-2(cr)
Counterparty Risk Assessments (CRA) were affirmed. The outlook on
the bank's local-currency deposit rating is changed to positive
from stable, while on the foreign-currency deposit rating it
remains stable.

RATINGS RATIONALE

According to Moody's, the upgrade of K&H's local-currency deposit
ratings with a positive outlook was driven by: (1) the upgrade of
the bank's BCA to ba3 from b1; (2) the rating agency's unchanged
high affiliate support assumption from its parent, Belgium's KBC
Bank N.V. (KBC, deposits A1 Stable/P-1, BCA baa1), resulting in
an unchanged two-notch rating uplift and a higher adjusted BCA of
ba1 from ba2 previously; and (3) maintaining one notch of rating
uplift from Moody's Advanced Loss Given Failure (LGF) analysis.

The upgrade of K&H's BCA reflects the improvements in the bank's
asset quality, capitalisation and profitability. The bank
reported a non-performing loans (NPL) ratio at 8.6% as of June
2017, down from 9.8% at year-end 2016 (13.3% at the end-of 2015),
stronger than the Hungarian banking system average of 10.8%
(calculated using loans to retail and non-financial corporate
segments). However, K&H's coverage of problem loans with loan
loss reserves was modest at 47.6% as of year-end 2016, compared
with the average of 59% for the Hungarian banking system, as of
that date.

In the first six months of 2017 K&H reported a net income of
HUF18.9 billion (EUR61 million), in line with the profit
generated in the corresponding period of 2016, and translating
into in a return on average assets (RoAA) of 1.35%. The financial
results benefited from a combination of a release of provisions,
lower bank levy and income tax expense.

K&H's reported capital adequacy ratio was little changed in the
first six months of 2017 at 15.1%, compared to 15.3% at year-end
2016, but was considerably higher than the 13.9% at year-end
2015. The bank's capital adequacy will likely remain stable over
the next 12 to 18 months driven by good earnings and lending
growth and despite anticipated significant dividend payments.

The positive outlook on K&H's long-term local-currency deposit
rating reflects Moody's expectation of further improvements in
the bank's credit profile over the next 12-18 months owing to
continued reduction in problem loans and maintaining adequate
level of capitalization on the back of a supportive operating
environment in Hungary. The bank's long-term foreign-currency
deposit rating is at the level of the foreign-currency deposit
ceiling for Hungary and will be constrained at that level if the
local-currency deposit rating is upgraded.

-- WHAT COULD MOVE THE RATINGS UP/DOWN

An upgrade of K&H's local-currency deposit ratings could be
prompted by either (a) an upgrade of its BCA, or (b) higher
affiliate support uplift owing to higher parental support
assumptions, or (c) an increase in uplift resulting from Moody's
LGF analysis. The bank's Baa3 long-term foreign-currency deposit
rating is at the level of the foreign-currency deposit ceiling
for Hungary and will be constrained at that level if the local-
currency deposit rating is upgraded. Upward pressure on K&H's BCA
could develop in the event of a further material improvement in
asset quality while maintaining its adequate capitalisation and
good profitability.

A downward pressure on K&H's deposit ratings could arise due to a
downgrade of its BCA and/or a reduction in rating uplift as a
result of Moody's LGF analysis. K&H's BCA could be downgraded in
case of a material erosion of the bank's capital from high loan
loss provisions and/or declining revenues.

LIST OF AFFECTED RATINGS

Issuer: Kereskedelmi & Hitel Bank Rt.

Upgrades:

-- Adjusted Baseline Credit Assessment, upgraded to ba1 from ba2

-- Baseline Credit Assessment, upgraded to ba3 from b1

-- Long-term Bank Deposit (Foreign Currency), upgraded to Baa3
    Stable from Ba1 Stable

-- Long-term Bank Deposit (Local Currency), upgraded to Baa3
    Positive from Ba1 Stable

-- Short-term Bank Deposits (Foreign & Local Currency), upgraded
    to P-3 from NP

Affirmations:

-- Long-term Counterparty Risk Assessment, affirmed Baa2(cr)

-- Short-term Counterparty Risk Assessment, affirmed P-2(cr)

Outlook Action:

-- Outlook changed to Stable(m) from Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks
published in September 2017.


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I R E L A N D
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AVOCA CLO XIV: Moody's Assigns (P)B2 Rating to Cl. F-R Notes
------------------------------------------------------------
Moody's Investors Service has assigned provisional ratings to ten
classes of notes (the "Refinancing Notes") to be issued by Avoca
CLO XIV Designated Activity Company:

EUR3,000,000 Class X Senior Secured Floating Rate Notes due 2031,
Assigned (P)Aaa (sf)

EUR274,400,000 Class A-1R Senior Secured Floating Rate Notes due
2031, Assigned (P)Aaa (sf)

EUR25,000,000 Class A-2R Senior Secured Floating Rate Notes due
2031, Assigned (P)Aaa (sf)

EUR16,300,000 Class B-1R Senior Secured Fixed Rate Notes due
2031, Assigned (P)Aa2 (sf)

EUR48,500,000 Class B-2R Senior Secured Floating Rate Notes due
2031, Assigned (P)Aa2 (sf)

EUR18,000,000 Class C-1R Deferrable Floating Rate Notes due 2031,
Assigned (P)A2 (sf)

EUR15,000,000 Class C-2R Deferrable Mezzanine Floating Rate Notes
due 2031, Assigned (P)A2 (sf)

EUR25,000,000 Class D-R Deferrable Mezzanine Floating Rate Notes
due 2031, Assigned (P)Baa2 (sf)

EUR25,700,000 Class E-R Deferrable Junior Floating Rate Notes due
2031, Assigned (P)Ba2 (sf)

EUR14,800,000 Class F-R Deferrable Junior Floating Rate Notes due
2031, Assigned (P)B2 (sf)

RATINGS RATIONALE

Moody's provisional rating of the Notes addresses the expected
loss posed to noteholders. The rating reflects the risks due to
defaults on the underlying portfolio of assets, the transaction's
legal structure, and the characteristics of the underlying
assets.

The Issuer will issue the Refinancing Notes in connection with
the refinancing of the following classes of notes: Class A Notes,
Class B Notes, Class C Notes, Class D Notes, Class E Notes and
Class F Notes due 2028 (the "Original Notes"), previously issued
on June 23, 2015 (the "Original Closing Date"). On the
Refinancing Date, the Issuer will use the proceeds from the
issuance of the Refinancing Notes to redeem in full its
respective Original Notes. On the Original Closing Date, the
Issuer also issued one class of subordinated notes, which will
remain outstanding.

Avoca CLO XIV is a managed cash flow CLO. The issued notes are
collateralized primarily by broadly syndicated first lien senior
secured corporate loans. At least 90% of the portfolio must
consist of senior secured loans, senior secured bonds and
eligible investments, and up to 10% of the portfolio may consist
of second lien loans, unsecured loans, mezzanine obligations and
high yield bonds.

KKR Credit Advisors (Ireland) Unlimited Company (the "Manager")
manages the CLO. It directs the selection, acquisition, and
disposition of collateral on behalf of the Issuer. After the
reinvestment period, which ends in January 2022, the Manager may
reinvest unscheduled principal payments and proceeds from sales
of credit risk obligations, subject to certain restrictions.

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

Loss and Cash Flow Analysis:

Moody's modeled the transaction using a cash flow model based on
the Binomial Expansion Technique, as described in Section 2.3.2.1
of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in August 2017.

The cash flow model evaluates all default scenarios that are then
weighted considering the probabilities of the binomial
distribution assumed for the portfolio default rate. In each
default scenario, the corresponding loss for each class of notes
is calculated given the incoming cash flows from the assets and
the outgoing payments to third parties and noteholders.
Therefore, the expected loss or EL for each tranche is the sum
product of (i) the probability of occurrence of each default
scenario and (ii) the loss derived from the cash flow model in
each default scenario for each tranche. As such, Moody's
encompasses the assessment of stressed scenarios.

The key model inputs Moody's used in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. For modeling
purposes, Moody's used the following base-case assumptions:

Performing par and principal proceeds balance: EUR500,000,000

Diversity Score: 37

Weighted Average Rating Factor (WARF): 2750

Weighted Average Spread (WAS): 3.60%

Weighted Average Coupon (WAC): 4.75%

Weighted Average Recovery Rate (WARR): 43.5%

Weighted Average Life (WAL): 8.5 years

Moody's has analysed the potential impact associated with
sovereign related risk of peripheral European countries. As part
of the base case, Moody's has addressed the potential exposure to
obligors domiciled in countries with local currency country risk
ceiling (LCC) of A1 or below. As per the portfolio constraints,
exposures to countries with a LCC of A1 or below cannot exceed
10%, with exposures to countries with a LCC of below A3 further
limited to 5%. Given the current composition of qualifying
countries, Moody's has assumed a maximum 5% of the pool would be
domiciled in countries with LCC of Baa1 to Baa3. The remainder of
the pool will be domiciled in countries which currently have a
LCC of Aa3 and above. Given this portfolio composition, the model
was run with different target par amounts depending on the target
rating of each class of notes as further described in the
methodology. The portfolio haircuts are a function of the
exposure size to peripheral countries and the target ratings of
the rated notes and amount to 0.75% for the Class A notes, 0.50%
for the Class B notes, 0.375% for the Class C notes and 0% for
Classes D, E and F.

Methodology Underlying the Rating Action:

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

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

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

Stress Scenarios:

Together with the set of modeling assumptions above, Moody's
conducted an additional sensitivity analysis, which was a
component in determining the provisional rating assigned to the
rated Notes. This sensitivity analysis includes increased default
probability relative to the base case.

Below is a summary of the impact of an increase in default
probability (expressed in terms of WARF level) on the Notes
(shown in terms of the number of notch difference versus the
current model output, whereby a negative difference corresponds
to higher expected losses), assuming that all other factors are
held equal:

Percentage Change in WARF -- increase of 15% (from 2750 to 3163)

Rating Impact in Rating Notches

Class X Notes: 0

Class A-1R Notes: 0

Class A-2R Notes: 0

Class B-1R Notes: -2

Class B-2R Notes: -2

Class C-1R Notes: -2

Class C-2R Notes: -2

Class D-R Notes: -2

Class E-R Notes: 0

Class F-R Notes: -1

Percentage Change in WARF -- increase of 30% (from 2750 to 3575)

Rating Impact in Rating Notches

Class X Notes: 0

Class A-1R Notes: -1

Class A-2R Notes: -1

Class B-1R Notes: -3

Class B-2R Notes: -3

Class C-1R Notes: -4

Class C-2R Notes: -4

Class D-R Notes: -3

Class E-R Notes: -1

Class F-R Notes: -2


DIRECTROUTE LIMERICK: S&P Affirms 'BB-' SPUR on Sr. Sec. Debt
-------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' S&P underlying rating
(SPUR) on the senior secured debt issued by Ireland-based
limited-purpose entity, DirectRoute (Limerick) Finance DAC. The
outlook on the SPUR is stable.

S&P said, "The 'BB' long-term issue rating on the senior secured
debt reflects our rating on the monoline insurer, Assured
Guaranty (London) plc (AG London; BB/Watch Pos/--), formerly
known as MBIA U.K. Insurance Ltd., which provides an
unconditional and irrevocable guarantee of payment of scheduled
interest and principal. As per our methodology, the long-term
rating on a monoline-insured debt issue reflects the higher of
the rating on the monoline insurer and the SPUR. Therefore, the
long-term issue rating on DirectRoute (Limerick) Finance's debt
reflects the rating on the monoline insurer, which is one-notch
higher than the SPUR. This rating remains on CreditWatch
positive, where we placed it on Jan. 12, 2017, reflecting our
CreditWatch placement on AG London.

"The debt comprises a EUR146.7 million fixed-rate and index-
linked senior secured loan due 2040 (including a EUR47.8 million
equity bridge loan that was repaid in Oct. 10, 2010), a EUR3.0
million senior secured standby loan due 2040, and a EUR97.6
million senior secured European Investment Bank (EIB) loan due
2038. DirectRoute (Limerick) Finance on-lent the proceeds to
DirectRoute (Limerick) Ltd. (DirectRoute or ProjectCo) to fund
the construction of the Limerick Tunnel and road project, under a
35-year public-private partnership (PPP) agreement with the Irish
government's executive agency, Transport Infrastructure Ireland
(TII). The concession expires in August 2041.

'The 'BB-' SPUR affirmation follows our annual review of the
operational and financial performance of the project and reflects
our view of the project's operations phase stand-alone credit
profile (SACP).

"Operational performance is in line with our expectations, with
the project demonstrating seven years of solid operations.
DirectRoute passes down the contractual operations and
maintenance (O&M) obligations under a five-plus-one year contract
to Egis Lagan Ltd., which took over the role of O&M service
provider in October 2016 following the initial contract
retendering process. No significant performance changes have
resulted. ProjectCo and TII maintain a constructive working
relationship, which further helps to limit performance
deductions. The project has not incurred any performance penalty
points over the last three years and has received only 3.75
performance points since the start of operations in 2010."

Traffic growth year to date has averaged 7.0%, continuing the
strong growth trends of the last four years, driven in part by
the wider economic recovery in the Republic of Ireland. Despite
this growth, traffic volumes remain around 17%--below the
traffic-guarantee threshold level set at financial close--which
obliges TII to support the project through traffic guarantee
payments.

S&P said, "Consequently, DirectRoute continues to receive traffic
guarantee payments and we forecast, under our base case analysis,
that these payments will average 27.5% of total revenues through
2032, only eight years before the full repayment of the senior
debt. In addition to the traffic guarantee payments and the
significant portion of revenues received directly from user tolls
(60% in 2016), the project is supported by the operational
payment also paid by TII, which was set at financial close and is
paid throughout the life of the concession.

"The debt service coverage ratios (DSCR) remain weak under our
base-case assumptions, dipping below 1.0x between December 2034
and December 2036. The weak ratios in this period largely result
from the contractual traffic sharing payments that we forecast
DirectRoute will be required to pay to TII from 2033. The traffic
sharing mechanism kicks in when traffic volumes exceed
contractually defined threshold levels. It requires ProjectCo to
pay TII 90% of the revenues collected for the number of vehicles
exceeding the threshold."

The SACP reflects the project's robust downside performance and
liquidity protection. In addition to standard reserve accounts,
lenders are protected by supportive cash flow covenants,
including a 12-month look-back and 36-month look-forward senior
annual DSCR cash distribution lock-up covenant of 1.10x, which
ensures that cash is accrued to protect lenders during periods of
low ratios. In addition, the project maintains a top-up reserve
designed to maintain the annual DSCR at 1.05x at all times,
although S&P does not model this reserve in its ratio
calculations. The project's strong cash position differentiates
DirectRoute from its peers.

The positive CreditWatch on the long-term issue rating reflects
that assigned to the monoline insurer, AG London, which is in the
process of being acquired by Assured Guaranty Ltd.

S&P said, "(A/Stable/--), subject to receipt of regulatory
approvals and the satisfaction of other customary closing
conditions. If the acquisition is completed, we will likely raise
the long-term issue rating on DirectRoute (Limerick) Finance to
the level of our rating on Assured Guaranty.

"The stable outlook on the SPUR reflects our view that lenders
will continue to be protected by the project's revenue-guarantee
mechanism, which supplements cash flows from toll receipts
throughout the life of the debt for as long as traffic volumes
are below a defined threshold level. Under our base-case
scenario, we expect debt service to be supported by traffic
guarantee payments until 2032. In addition, lenders are protected
during periods of financial stress by robust liquidity in the
form of reserved and trapped cash.

"We could take a negative rating action on the SPUR if the
project's liquidity position were to deteriorate. This could
occur, for example, if the project incurs a sustained increase in
operational or lifecycle costs that cannot be passed down to the
O&M service provider, or if the project were to distribute a
significant portion of its trapped cash, leaving less protection
for lenders if the revenue guarantee mechanism payments fall
away.

"We view the potential for a positive rating action on the SPUR
as limited due to the project's dependence on the revenue
guarantee payments to support debt service. In addition, the
project is likely to be dependent on trapped cash to support debt
payments toward the back end of the concession in the case that
traffic volumes increase to such a level that the traffic
guarantee payments fall away."


STRAWINSKY I: Moody's Affirms C Rating on Class E Sr. Sec. Notes
----------------------------------------------------------------
Moody's Investors Service has upgraded ratings on the following
notes issued by Strawinsky I P.L.C.:

-- EUR19M (Current Outstanding Balance of EUR9.3M) Class C
    Senior Secured Deferrable Floating Rate Notes due 2024,
    Upgraded to Aaa (sf); previously on May 31, 2016 Upgraded to
    Ba1 (sf)

-- EUR12M (Current Outstanding Balance of EUR14.3M) Class D
    Senior Secured Deferrable Floating Rate Notes due 2024,
    Upgraded to Caa3 (sf); previously on May 31, 2016 Affirmed Ca
    (sf)

Moody's has also affirmed the ratings on the following notes:

-- EUR10.27M (Current Outstanding Balance of EUR16M) Class E
    Senior Secured Deferrable Floating Rate Notes due 2024,
    Affirmed C (sf); previously on May 31, 2016 Affirmed C (sf)

Strawinsky I P.L.C., issued in August 2007, is a Collateralised
Loan Obligation ("CLO") backed by a portfolio of mostly high
yield senior secured European loans. The portfolio is managed by
Dynamic Credit Partners Europe B.V.. The transaction's
reinvestment period ended in August 2013.

RATINGS RATIONALE

The rating actions on the notes are primarily a result of the
deleveraging of the Class B and Class C notes following
amortisation of the underlying portfolio since January 2017. The
Class B was fully repaid at the February 2017 payment date and
the Class C notes have paid down by EUR9.7 million (51.07% of
closing balance) since January 2017. As a result of the
deleveraging, over-collateralisation (OC) has increased.
According to the trustee report dated September 2017 the Class C,
Class D and Class E OC ratios are reported at 226.59%, 89.34% and
53.29% compared to January 2017 levels of 132.34%, 84.51% and
60.94%, respectively.

Loss and Cash Flow Analysis:

Moody's notes that the Class C notes are currently fully
collateralized by cash and Moody's expects that tranche to be
fully repaid at the next payment date in February 2018. After the
next payment date the Class D Notes will become the controlling
class. Moody's assumed there will be an increased risk of an
interest shortfall for the Class D which might expose the Class D
notes to market value risk. Moody's has factored this scenario in
rating action.

Methodology Underlying the Rating Action:

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

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

In the case of liquidation of the portfolio, the severity of
losses will depend on the market value that can be realized.
Moody's conducted sensitivity analysis on the possible
liquidation proceeds received pursuant to such sales. The losses
generated outputs that were consistent with rating actions.

Additional uncertainty about performance is due to the following:

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

* Around 25.37% of the collateral pool consists of debt
obligations whose credit quality Moody's has assessed by using
credit estimates. As part of its base case, Moody's has stressed
large concentrations of single obligors bearing a credit estimate
as described in "Updated Approach to the Usage of Credit
Estimates in Rated Transactions," published in October 2009 and
available at
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461.

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

* Lack of portfolio granularity: The performance of the portfolio
depends on the credit conditions of a few large obligors.

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


=========
I T A L Y
=========


GIUSSANO: Asset Sale Scheduled for December 19
-----------------------------------------------
Dott. Mario Carlo Novara, the court-appointed liquidator of
Giussano (MB) Via Superstrada Valassina snc, has put up for sale
the following assets:

   -- "Salvarini" trademark, "Germal", "Firon", "Long Line"
      trademarks;
   -- patents;
   -- industrial machinery and equipment, license for trademark
      use in Australia, furnishings and office machines; and
   -- warehouse.

The sale without auction will be held on December 19, 2017 at
4:00 p.m.

The starting price is set at EUR2,430,000.00

The liquidator can be reached at 0362231411.

Further details are available at www.tribunale.monza.giustizia.it
and www.astelegale.net


MONTE DEI PASCHI: ECB Bad Loan Rules to Hit Turnaround Targets
--------------------------------------------------------------
Rachel Sanderson at The Financial Times reports that
Italy's Banca Monte dei Paschi di Siena has said mooted European
Central Bank rules that would demand higher provisioning against
soured loans risk it failing to meet planned targets for its
turnround.

Shares in Monte Paschi, Italy's third largest bank by assets,
have been suspended since the Italian state rescued the bank
earlier this year after it failed to get private backing for a
capital increase demanded by the European banking authorities,
the FT relates.

According to the FT, in a prospectus issued ahead of Monte Paschi
shares returning to trading this week it said: "it could be
necessary for the bank to increase its level of coverage for
loans that could be considered deteriorated loans from the start
of 2018 with the consequent possibility that it will fail to hit
the targets of its restructuring plan."

The ECB's banking supervisory arm earlier this month issued a
yet-to-be-approved "addendum", indicating it expected to demand
higher coverage for deteriorated loans -- including those
unlikely to pay -- from the first quarter of 2018, the FT
recounts.

Rome has been in a tussle with Frankfurt and Brussels over the
move as it would disproportionately hit Italian banks which are
only just recovering from a crisis triggered by the sovereign
debt crisis, the FT notes.

Banca Monte dei Paschi di Siena SpA -- http://www.mps.it/-- is
an Italy-based company engaged in the banking sector.  It
provides traditional banking services, asset management and
private banking, including life insurance, pension funds and
investment trusts.  In addition, it offers investment banking,
including project finance, merchant banking and financial
advisory services.  The Company comprises more than 3,000
branches, and a structure of channels of distribution.  Banca
Monte dei Paschi di Siena Group has subsidiaries located
throughout Italy, Europe, America, Asia and North Africa.  It has
numerous subsidiaries, including Mps Sim SpA, MPS Capital
Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca
Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA.


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


PINNACLE HOLDCO: S&P Hikes CCR to 'CCC' on Sale to Acquisition
--------------------------------------------------------------
S&P Global Ratings raised its corporate credit rating on
Luxembourg-based Pinnacle Holdco S.ar.l. to 'CCC' from 'D'. S&P
said, "At the same time, we raised the issue-level ratings on
Pinnacle's first-lien term loan to to 'CCC' from 'D' and our
issue ratings on its  second-lien term loan to 'CC' from 'D'. We
placed all ratings on CreditWatch with positive implications."

The upgrade and CreditWatch placement follow the Oct. 16, 2017
announcement of Pinnacle's agreement to be acquired by Emerson
Electric Co. (A/Stable/--) for $510 million. Emerson Electric Co.
is a global provider of electrical components, equipment, and
services to industrial, commercial, and consumer markets
worldwide. The acquisition will expand Emerson's core O&G
software platform by adding seismic imaging and modeling software
capabilities for the E&P market.

S&P said, "We will resolve the CreditWatch placement when the
transaction closes, which is expected in December 2017. We will
subsequently withdraw the ratings when the debt is repaid."


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


CAIRN CLO III: Moody's Hikes Class F Sr. Sec. Notes Rating to B1
----------------------------------------------------------------
Moody's Investors Service has assigned the following definitive
ratings to four classes of refinancing notes and upgrades two
junior classes issued by Cairn CLO III B.V. (the "Issuer"):

-- EUR181,500,000 Refinancing Class A Senior Secured Floating
    Rate Notes due 2028, Definitive Rating Assigned Aaa (sf)

-- EUR28,000,000 Refinancing Class B Senior Secured Floating
    Rate Notes due 2028, Definitive Rating Assigned Aa1 (sf)

-- EUR20,000,000 Refinancing Class C Senior Secured Deferrable
    Floating Rate Notes due 2028, Definitive Rating Assigned A1
    (sf)

-- EUR16,500,000 Refinancing Class D Senior Secured Deferrable
    Floating Rate Notes due 2028, Definitive Rating Assigned Baa1
    (sf)

Additionally, Moody's has upgraded the ratings on the existing
junior notes issued by Cairn CLO III B.V.:

-- EUR22,000,000 Class E Senior Secured Deferrable Floating Rate
    Notes due 2028, Upgraded to Ba1 (sf); previously on Oct 20,
    2015 Definitive Rating Assigned Ba2 (sf)

-- EUR8,000,000 Class F Senior Secured Deferrable Floating Rate
    Notes due 2028, Upgraded to B1 (sf); previously on Oct 20,
    2015 Definitive Rating Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the refinancing notes address the
expected loss posed to noteholders. The ratings reflect the risks
due to defaults on the underlying portfolio of assets, the
transaction's legal structure, and the characteristics of the
underlying assets.

The Issuer will issue the Refinancing Class A Notes, the
Refinancing Class B Notes, the Refinancing Class C Notes and the
Refinancing Class D Notes (the "Refinancing Notes") in connection
with the refinancing of the Class A Senior Secured Floating Rate
Notes due 2028, the Class B Senior Secured Floating Rate Notes
due 2028, the Class C Senior Secured Deferrable Floating Rate
Notes due 2028 and the Class D Senior Secured Deferrable Floating
Rate Notes due 2028 ("the Original Notes") respectively,
previously issued on March 20, 2013 (the "Original Closing
Date"). The Issuer will use the proceeds from the issuance of the
Refinancing Notes to redeem in full the Refinanced Notes. On the
Original Closing Date, the Issuer also issued two classes of
rated notes and one class of subordinated notes, which will
remain outstanding.

The rating action on the Class E and Class F is due primarily to
additional excess spread available in the transaction, post
refinancing of the Original Notes.

Other than the changes to the spreads of the notes, the only
other material modifications occurring in connection to the
refinancing of the CLO is the extension of the Weighted Average
Life Test, which is being extended from 20 October 2023 to 20
April 2025, an extension of 18 months.

Cairn CLO III B.V. is a managed cash flow CLO. The issued notes
will be collateralized primarily by broadly syndicated first lien
senior secured corporate loans. At least 90% of the portfolio
must consist of senior secured loans or senior secured bonds and
up to 10% of the portfolio may consist unsecured senior loans,
second lien loans, mezzanine obligations, high yield bonds and/or
first lien last out loans. The underlying portfolio is expected
to be 100% ramped as of the refinancing date.

Cairn Loan Investments LLP (the "Manager") manages the CLO. It
directs the selection, acquisition, and disposition of collateral
on behalf of the Issuer. After the reinvestment period, which
ends in October 2019, the Manager may reinvest unscheduled
principal payments and proceeds from sales of credit improved and
credit risk obligations, subject to certain restrictions.

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

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

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

Loss and Cash Flow Analysis:

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

The key model inputs Moody's used in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. For modeling
purposes, Moody's used the following base-case assumptions:

Performing par, recoveries and principal proceeds balance:
EUR300,000,000

Diversity Score: 36

Weighted Average Rating Factor (WARF): 2800

Weighted Average Spread (WAS): 3.95%

Weighted Average Coupon (WAC): 5.50%

Weighted Average Recovery Rate (WARR): 43.00%

Weighted Average Life (WAL): 7.5 years

Stress Scenarios:

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

Percentage Change in WARF -- increase of 15% (from 2800 to 3220)

Rating Impact in Rating Notches:

Refinancing Class A Senior Secured Floating Rate Notes: 0

Refinancing Class B Senior Secured Floating Rate Notes: -1

Refinancing Class C Senior Secured Deferrable Floating Rate
Notes: -2

Refinancing Class D Senior Secured Deferrable Floating Rate
Notes: -2

Class E Senior Secured Deferrable Floating Rate Notes: -1

Class F Senior Secured Deferrable Floating Rate Notes: -1

Percentage Change in WARF -- increase of 30% (from 2800 to 3640)

Rating Impact in Rating Notches:

Refinancing Class A Senior Secured Floating Rate Notes : -1

Refinancing Class B Senior Secured Floating Rate Notes: -3

Refinancing Class C Senior Secured Deferrable Floating Rate
Notes: -4

Refinancing Class D Senior Secured Deferrable Floating Rate
Notes: -3

Class E Senior Secured Deferrable Floating Rate Notes: -2

Class F Senior Secured Deferrable Floating Rate Notes: -1

Further details regarding Moody's analysis of this transaction
may be found in the related new issue report, published in May
2013 and available on Moodys.com.

Methodology Underlying the Rating Actions:

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


HALCYON EUROPEAN 2007-1: S&P Cuts Rating on Class E Notes to B-
---------------------------------------------------------------
S&P Global Ratings took various rating actions in Halcyon
Structured Asset Management European CLO 2007-1 B.V.

Specifically, S&P has:

-- Affirmed its 'AAA (sf)' rating on the class B notes;

-- Raised to 'AA- (sf)' from 'A+ (sf)' its rating on the class C
    notes; and

-- Lowered its ratings on the class D and E notes.

The rating actions follow S&P's assessment of the transaction's
performance using data from the July 31, 2017 trustee report.

S&P said, "Upon publishing our updated criteria for analyzing
foreign exchange risk in global structured finance transactions,
we placed those ratings that could potentially be affected under
criteria observation (see "Ratings On European Cash Flow CLOs
Placed Under Criteria Observation Due To Revised Foreign Exchange
Risk Criteria," published on April 21, 2017). Following our
review of this transaction, our ratings that could potentially be
affected by the criteria change are no longer under criteria
observation.

"We subjected the capital structure to a cash flow analysis to
determine the break-even default rate for each rated class of
notes at the respective rating level. In our analysis, we used
the reported portfolio balance that we consider to be performing,
the current weighted-average spread, and the weighted-average
recovery rates that we considered to be appropriate. We applied
various cash flow stress scenarios, using different default
patterns, in conjunction with different interest rate and
sovereign stress scenarios for each liability rating category as
outlined in our criteria (see "Related Criteria").

"In our analysis, we have observed that the portfolio balance has
reduced since our previous review on Nov. 29, 2016 (see "Various
Rating Actions Taken In Halcyon Structured Asset Management
European CLO 2007-1 Following Performance Review"). This is
partly due to the repayment of the senior notes following the
reinvestment period, which has increased the available credit
enhancement for all the rated classes of notes. The class B
notes, which are now the most senior class of notes, have
amortized to a note factor (the current notional amount divided
by the notional amount at closing) of approximately 55.7%.

"We have observed that the assets that we consider to be rated in
the 'CCC' category ('CCC+', 'CCC', and 'CCC-') have increased to
10.52% of the collateral portfolio, compared with 7.74% at our
previous review. Defaulted assets (rated 'CC', 'C', 'SD'
[selective default], or 'D') have decreased to 1.71% from 3.85%
of the collateral balance, over the same period."

The weighted-average spread earned on the portfolio is more or
less unchanged at 3.97%. The par coverage tests continue to be
above the required levels for all classes of notes, including the
class E notes' par coverage test, which was failing at S&P's
previous review.

S&P said, "In our analysis, we have excluded the asset Van
Gansewinkel Group B.V., as it contains an optional conversion to
equity at redemption, the value of which is uncertain.

"In light of our credit and cash flow analysis, we determined
that the available credit enhancement for the class B notes is
commensurate with a 'AAA' rating stress. We have therefore
affirmed our 'AAA (sf)' rating on the class B notes.

"Our ratings on the class C, D, and E notes are capped by the
application of our largest obligor default test, driven by
increased obligor concentration due to portfolio amortization.
The largest obligor default test assesses whether a rated tranche
has sufficient credit enhancement to withstand specified
combinations of underlying asset defaults based on the ratings on
the underlying assets, with a flat recovery of 5%. For example,
for a 'BBB' rating stress we test, among other combinations,
whether the note can withstand the default of four largest
borrowers rated in the 'B+' to 'CCC-' range without defaulting.
The portfolio currently has 21 individual borrowers, reduced from
40 at our previous review, with the largest borrower accounting
for 12.6%, the five largest for 49.8%, and the 10 largest at
77.8% of the portfolio.

"The application of our largest obligor default test indicates
that the class C notes cannot sustain a rating stress higher than
'A+' even though our cash flow analysis indicates a higher
rating. We applied a one-notch qualitative uplift after
considering the position of the class C notes in the capital
structure, the evolution of available credit enhancement, and the
level of the failure of the largest obligor test at a 'AA' rating
stress, which we considered marginal. Consequently, we have
raised to 'AA- (sf)' from 'A+ (sf)' our rating on the class C
notes.

"Similarly, the application of our largest obligor default test
indicates that the class D notes cannot sustain a rating stress
of higher than 'B+' even though our cash flow analysis indicates
a higher rating. We applied a one-notch qualitative uplift to the
result of the obligor test after considering the portfolio's
credit quality and the determination that the available credit
enhancement for the class D notes is commensurate with a rating
stress in the 'BB' rating category. Consequently, we have lowered
to 'BB- (sf)' from 'BB+ (sf)' our rating on the class D notes.

"Finally, the application of our largest obligor default test
indicates that the available credit enhancement for the class E
notes is no longer commensurate with the currently assigned
rating.

"Based on these results, and in conjunction with our criteria for
assigning 'CCC+', 'CCC', 'CCC-', And 'CC' ratings, we have
lowered to 'B- (sf)' from 'B+ (sf)' our rating on the class E
notes (see "General Criteria: Criteria For Assigning 'CCC+',
'CCC', 'CCC-', And 'CC' Ratings," published on Oct. 1, 2012).

Halcyon Structured Asset Management European CLO 2007-1 is a cash
flow collateralized loan obligation transaction that securitizes
loans to U.S. and European speculative-grade corporates, and is
managed by Halcyon Loan Investors LP.

  RATINGS LIST

  Class                 Rating
                  To             From

  Halcyon Structured Asset Management European CLO 2007-1 B.V.
  EUR600 Million Senior Secured Variable Funding Floating-Rate
  Notes

  Rating Affirmed

  B               AAA (sf)
  Rating Raised

  C               AA- (sf)       A+ (sf)

  Ratings Lowered

  D               BB- (sf)       BB+ (sf)
  E               B- (sf)        B+ (sf)


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


SEADRILL LTD: Receives Two Add'l Debt Restructuring Proposals
-------------------------------------------------------------
Nerijus Adomaitis at Reuters reports that court documents show
Seadrill has received two additional non-binding proposals from
bondholders for a debt restructuring after the Norwegian firm
filed for U.S. Chapter 11 bankruptcy protection in September.

According to Reuters, Seadrill said in documents submitted late
on Oct. 20 the two indications of interest came from bondholders
seeking alternatives to the firm's own plan.

The company's own plan is backed by holders of 99% of Seadrill's
bank loans and 40% of its bonds, and was submitted by its main
shareholder, Norwegian-born billionaire John Fredriksen, and a
group of hedge funds, Reuters discloses.

It offered holders of US$2.3 billion of Seadrill's unsecured
bonds a 14.3% stake in the restructured firm after dilution, and
only a 1.9% stake for current shareholders, Reuters notes.

As a way to show the U.S. bankruptcy court that there was no
better plan, Seadrill's advisors have contacted 94 investors,
including 15 oil rig companies, 45 financial investors and seven
bondholders, Reuters relates.

Seadrill, as cited by Reuters, said the two indications of
interest received so far came from bondholders, and still
required substantial impairment of unsecured creditors.

                      About Seadrill Limited

Seadrill Limited is a deepwater drilling contractor, providing
drilling services to the oil and gas industry. It is incorporated
in Bermuda and managed from London. Seadrill and its affiliates
own or lease 51 drilling rigs, which represents more than 6% of
the world fleet.

As of Sept. 12, 2017, Seadrill employs 3,760 highly-skilled
individuals across 22 countries and five continents to operate
their drilling rigs and perform various other corporate
functions.

As of June 30, 2017, Seadrill had $20.71 billion in total assets,
$10.77 billion in total liabilities and $9.94 billion in total
equity.

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

After reaching terms of a reorganization plan that would
restructure $8 billion of funded debt, Seadrill Limited and 85
affiliated debtors each filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead
Case No. 17-60079) on Sept. 12, 2017.

Together with the chapter 11 proceedings, Seadrill, North
Atlantic Drilling Limited ("NADL") and Sevan Drilling Limited
("Sevan") commenced liquidation proceedings in Bermuda to appoint
jointprovisional liquidators and facilitate recognition and
implementation of the transactions contemplated by the RSA and
Investment Agreement.  Simon Edel, Alan Bloom and Roy Bailey of
Ernst & Young serve as the joint and several provisional
liquidators.

In the Chapter 11 cases, the Company has engaged Kirkland & Ellis
LLP as legal counsel, Houlihan Lokey, Inc. as financial advisor,
and Alvarez & Marsal as restructuring advisor. Willkie Farr &
Gallagher LLP, serves as special counsel to the Debtors.
Slaughter and May has been engaged as corporate counsel, and
Morgan Stanley serves as co-financial advisor during the
negotiation of the restructuring agreement. Advokatfirmaet
Thommessen AS serves as Norwegian counsel. Conyers Dill & Pearman
serves as Bermuda counsel. PricewaterhouseCoopers LLP UK, serves
as the Debtors' independent auditor; and Prime Clerk is their
claims and noticing agent.

On September 22, 2017, the U.S. Trustee for the Southern District
of Texas appointed the official committee of unsecured creditors.
The Committee hired Kramer Levin Naftalis & Frankel LLP, as
counsel, Cole Schotz P.C., as local and conflict counsel.


===========
R U S S I A
===========


BRUNSWICK RAIL: Moody's Puts Ca CFR on Review for Upgrade
---------------------------------------------------------
Moody's Investors Service has placed the Ca Corporate Family
Rating (CFR) and the Ca-PD/LD Probability of Default Rating (PDR)
of the Russian railcar operator Brunswick Rail Limited (BRL) on
review for upgrade. The action follows the resolution of the
consent solicitation announced by the company on September 13,
2017 for the purchase of its outstanding 6.5% $600 million backed
senior unsecured bond due November 1, 2017 by the company's
shareholder. Moody's considers the transaction -- which was
completed on October 18, 2017 -- a distressed exchange, which is
an event of default under Moody's default definition. To reflect
this, Moody's has appended the PDR of BRL with a "LD"
designation, indicating a limited default.

All ratings have been put on review for potential upgrade,
signaling Moody's expectations that the recently completed debt
repurchase will improve the company's credit profile, and will
lead to more sustainable capital structure and liquidity.

The "LD" designation will be removed after 3 business days. At
that point Moody's will also withdraw all the BRL's ratings
because it believes it has insufficient or otherwise inadequate
information to support the maintenance of the rating. Please
refer to the Moody's Investors Service's Policy for Withdrawal of
Credit Ratings, available on its website, www.moodys.com.

RATINGS RATIONALE

The action follows the completion of the transaction, as part of
which the holders of BRL's 6.5% $600 million bond due November 1,
2017 approved the "shareholder purchase option", whereby BRL's
sole shareholder, Amalgam Rail Investments Ltd., purchased the
full amount of the bond on October 18, 2017. The cash purchase
price was $887.50 per $1,000 in principal amount of the notes,
including any accrued and unpaid interest.

RATING OUTLOOK

The ratings are on review for upgrade on the back of Moody's
expectations that the recently completed debt repurchase will
improve the company's credit profile, and will lead to more
sustainable capital structure and liquidity.

Brunswick Rail Limited (BRL), incorporated in Bermuda,
specialises in operating leasing of freight railcars to
industrial groups and railcar operators in Russia. BRL is fully
owned by Amalgam Rail Investments Ltd.

LIST OF AFFECTED RATINGS

Ratings Placed on Review for Upgrade:

Issuer: Brunswick Rail Limited

Corporate Family Rating, Placed on Review for Upgrade from Ca

Probability of Default Rating, Placed on Review for Upgrade and
changed to Ca-PD/LD, previously Ca-PD

Ratings Withdrawn:

Issuer: Brunswick Rail Finance Limited

Backed senior unsecured $600m Global Notes, previously Ca

Outlook Actions:

Issuer: Brunswick Rail Limited

Outlook Placed on Rating Under Review from Negative

Issuer: Brunswick Rail Finance Limited

Outlook Withdrawn, previously Negative

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


INGOSSTRAKH INSURANCE: S&P Affirms 'BB+' Long-Term Credit Rating
----------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'BB+' long-term
credit ratings on Russia-based Ingosstrakh Insurance Co. The
outlook is stable.

S&P said, "The affirmation reflects our view of Ingosstrakh's
strong competitive position and sound operating performance, with
greater retained earnings potential thanks to better net profit
prospects and no dividend policy. These factors have led to
stronger capital adequacy amid an adverse operating environment,
and unpredictable business and financial developments in Russia.
We anticipate that Ingosstrakh's strong competitive position will
be supported by sound underwriting performance, which will be
above the market average due to almost flat gross premium growth
in 2017, followed by a premium growth rebound in 2018.
Ingosstrakh ranks in the top five in the Russian motor
(comprehensive), motor third-party liability insurance, voluntary
health, and corporate segments. Its net combined (loss and
expense) ratio was close to 86% in 2016 and is better than those
of Russian peers. This was primarily due to better risk
selection. In our base-case scenario for the coming two years, we
assume Ingosstrakh will demonstrate sound underwriting
performance, with a combined ratio around 98%. This is because of
the market trends that signify a potential increase of the claims
ratio. This is due to the implementation of non-cash
reimbursement for claims introduced in 2017. The returns on
revenue and equity are likely to be at least 9% and 15%,
respectively, reflecting our expectation of an annual net profit
of above Russian ruble (RUB) 5 billion in 2017 and 2018.

"Reflecting sound underwriting performance in 2015-2016,
supportive investment income, and a dividend free policy,
Ingosstrakh accumulated sound buffers, which we expect it will
maintain. This leads us to view capital and earnings more
positively. One of the downsides to Ingosstrakh's balance sheet
is its capital intensive stake in Bank Soyuz. So far, Ingosstrakh
has kept the subsidiary from severely harming the consolidated
capital adequacy, despite recapitalization of the bank in 2015-
2016. In our base-case scenario, we expect the company to retain
100% of its net earnings. However, we still consider the
company's capital to be less than larger international groups,
which are more diversified by geography and business line. This
slightly tempers our overall view of the company's balance sheet
strength. In addition, Ingosstrakh's exposure to the Russian
economy, through heavy investments in local securities, compounds
its dependence on the local credit conditions, which, in our
view, limits Ingosstrakh's ratings upside potential.

The stable outlook indicates that thanks to its disciplined
underwriting, Ingosstrakh will keep its capital unscathed amid
volatile and unpredictable operating and financial environments.
S&P could lower the ratings over the next 12-18 months if:

-- Ingosstrakh's capital adequacy weakened to sub-strong levels.

-- Ingosstrakh's competitive position in the Russian retail
    insurance segment weakened, which would harm its ability to
    post net income of more than RUB5 billion and a net combined
    ratio above 100%.

-- Ingosstrakh unexpectedly injected sizable capital into Bank
    Soyuz.

S&P could raise the ratings on Ingosstrakh if the average credit
quality of its investments improved to the 'BBB'. This could be
the case if we raised the rating on the sovereign.


KEMEROVO REGION: Fitch Affirms BB- Long-Term IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Russian Kemerovo Region's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs)
at 'BB-' with a Stable Outlook and Short-Term Foreign Currency
IDR at 'B'. The region's senior unsecured debt rating has been
affirmed at 'BB-'.

KEY RATING DRIVERS

The ratings reflect the region's modest, though improving, fiscal
performance, which is in line with Fitch's expectation of both a
narrowing budget deficit and consolidation of the region's debt
metrics over the medium-term. This is counterbalanced by
persistent refinancing pressure and the concentrated profile of
the local economy.

Fitch projects Kemerovo's budgetary performance will moderately
recover in 2017 after a period of weak operating balances and
growing direct risk. This will be underpinned by a sharp increase
of corporate income tax (CIT) as a result of an upswing in the
coal mining industry, which has a large presence in the region.
The region's operating balance will likely represent 6%-8% of
operating revenue over the medium-term (2016: 5%). However, a
reversal of the coal market could negatively affect the region's
tax base and undermine operating performance over the medium-
term.

During 8M17 the region collected 76% of its full-year budgeted
revenue and incurred 63% of its full-year budgeted expenditure,
which resulted in a sound interim budget surplus of RUB15
billion. Fitch expects that seasonal acceleration in spending in
4Q17, including those of capital nature, would turn the interim
result into a small full-year deficit of 1%-2% (2015-2016:
average 5.2%).

Fitch expects direct risk will remain below 65% of current
revenue over the medium-term (2016: 64%). During 9M17 the
region's direct risk decreased to RUB56.2 billion from almost
RUB63 billion while its structure and maturity profile improved.
In September 2017, Kemerovo issued a RUB9 billion amortising
domestic bond due in 2024 to refinance costly bank loans and
extend its debt maturity profile. Low-cost budget loans as a
share of direct risk remained material at 32% as of 1 October
2017, which will allow Kemerovo to save on interest expenses.

The region remains exposed to refinancing pressure over the
medium-term. In 2018-2019 it will have to refinance around 50% of
its total debt stock. In Fitch's view this will not present a
problem to the administration due to its strong relationships
with the banks and access to the domestic bond market. Immediate
refinancing needs until end-2017 are low as the region has to
redeem only RUB0.25 billion in debt.

The region's liquidity position improved significantly to RUB10.5
billion in September from just RUB0.7 billion at the beginning of
the year. This was supported by strong tax collection during the
year. Monthly average cash holdings improved to RUB6 billion in
8M17 from RUB1.4 billion in 2016.

The region's economy is characterised by a developed industrial
base dominated by the coal and metal industries, which can result
in volatile tax revenue. According to the administration's
estimates, the regional economy grew 1.4% in 2016, while the
national economy contracted 0.2%. Fitch forecasts the Russian
economy to grow 2% in 2017, and Fitch believes the region's
economy will also follow this trend.

The region's credit profile remains constrained by the weak
institutional framework for Russian local and regional
governments (LRGs). It has a short track record of stable
development compared with many of its international peers. The
frequent reallocation of revenue and expenditure responsibilities
within tiers of government reduces the predictability of LRGs'
budgetary policies and hampers Kemerovo's forecasting ability.

RATING SENSITIVITIES

Improving the operating balance to 6%-8% of operating revenue and
maintaining a debt payback ratio (direct risk-to-current balance)
at around 10 years (2016: 29.9 years) on a sustained base could
lead to an upgrade.

An inability to maintain a positive operating balance on a
sustained basis, along with an increase in direct risk above 90%
of current revenue, could lead to a downgrade.


KHAKASSIA REPUBLIC: Fitch Affirms B+ IDR, Outlook Stable
--------------------------------------------------------
Fitch Ratings has affirmed Russian Republic of Khakassia's Long-
Term Foreign- and Local Currency Issuer Default Ratings (IDRs) at
'B+' with a Stable Outlook. The Short-Term Foreign-Currency IDR
has been affirmed at 'B'. Khakassia's outstanding senior
unsecured domestic bonds have also been affirmed at 'B+'.

The affirmation reflects Fitch's unchanged base-line scenario
regarding the republic's high debt and weaker budgetary
performance over the medium-term. The Stable Outlook reflects
Fitch's expectation that the republic's credit metrics will not
deteriorate further in 2017-2019.

KEY RATING DRIVERS
Khakassia's ratings reflect high direct risk at above 100% of
current revenue, accompanied by persistent refinancing pressure,
a long track record of large double-digit budget deficit and a
concentrated local economy. The ratings also take into account
satisfactory operating performance, which however has been
undermined by high interest expenses, and an evolving
institutional framework for Russian subnationals.

Fitch expects the republic's direct risk will remain high at
between 125% and 145% of current revenue in 2017-2019 (2016:
110.5%). During 9M17 the republic's direct risk further increased
to RUB24.8 billion from RUB22.8 billion. The composition of the
republic's direct risk differs unfavourably from that of its
national peers, most of which rely heavily on subsidised federal
budget loans. The share of budget loans in Khakassia's debt
portfolio, which bear a 0.1% annual interest rate, remained low
at 10% as of 1 September 2017.

Refinancing pressure also remains high as close to 70% of total
debt stock is due in 2017-2019 as of 1 October 2017. Positively,
the republic has refinanced in advance costly bank loans that
were due in December 2017 with new RUB4 billion bank loans. The
new loans are due in 2019 and at lower interest rates, which
limit immediate refinancing needs for 2017 to RUB1.4 billion. In
2018 the republic faces redemption of RUB7.5 billion, which
corresponds to 30% of total direct risk. Fitch expects that the
majority of debt due in 2018 will be refinanced by funding from
the capital market.

The republic will also receive a RUB4.7 billion budget loan in
October-November 2017 from the federal government in return for
some restrictions on the size of the republic's budget deficit
and the volume of debt. The new five-year budget loan will extend
the maturity of its debt profile and with its 0.1% annual
interest rate ease pressure on interest expenses.

Fitch expects the republic's budgetary performance will remain
tight in 2017-2019, with operating balance being just enough to
cover high interest expenses. Budget deficit before debt will
likely remain in double-digits, but lower than the peak of 33% of
total revenue in 2016. The republic plans to control operating
spending and cut capital expenditure to 12%-14% of total spending
in 2017-2019 from a high average 28% in 2015-2016.

During 7M17, the administration recorded an interim deficit of
RUB1.5 billion. Fitch expects that seasonal acceleration of
expenditure in 2H17 will widen the full-year deficit to account
for around 15% of total revenue.

Khakassia's wealth metrics are in line with the national median.
However, the republic's economy is strongly concentrated in the
hydro-power generation, mining and non-ferrous metallurgy
sectors. The top 10 taxpayers contributed 46.1% to the republic's
tax revenue in 2016 (2015: 49.5%). Taxes accounted for 74% of
operating revenue in 2016, which makes the region's budget prone
to volatility. Fitch forecasts Russia's national economy to
recover 2% in 2017 (2016: contracted 0.2%), which in turn should
spill over to Khakassia's economy and tax base.

The republic's credit profile remains constrained by the weak
institutional framework for Russian local and regional
governments (LRGs), which has a shorter record of stable
development than many of its international peers. Weak
institutions lead to lower predictability of Russian LRGs'
budgetary policies, which are subject to the federal government's
continuous reallocation of revenue and expenditure
responsibilities within government tiers.

RATING SENSITIVITIES

Continuous growth of direct risk, accompanied by an increase in
refinancing pressure and a persistently negative current balance,
would lead to a downgrade.

Sustainable narrowing of the budget deficit leading to debt
stabilisation, accompanied by easing refinancing pressure and an
operating balance that is sufficient for interest payments, could
lead to an upgrade.


MARI EL REPUBLIC: Fitch Affirms BB Long-Term IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed the Russian Mari El Republic's Long-
Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB' with Stable Outlooks and Short-Term Foreign-Currency IDR at
'B'. The agency has also affirmed the republic's outstanding
senior debt at 'BB'.

The affirmation reflects Fitch's view regarding the republic's
stable fiscal performance and moderate direct risk with some
refinancing pressure. The ratings also factor in the modest
budget of Mari El, its socio-economic metrics that are below the
national median and a weak institutional framework for Russian
subnationals.

KEY RATING DRIVERS
Fitch expects Mari El to record stable fiscal performance in
2017-2019, with an operating margin of 12%-14% (2016: 14.1%).
This will be underpinned by cost control measures, gradual tax
revenue growth in line with an expected recovery of the Russian
economy and ongoing transfers from the federal government.

Fitch expects that the republic's tax capacity will remain below
the national average and federal transfers will constitute a
significant proportion of Mari El's budget, averaging about 40%
of revenue annually in 2017-2019. The modest size of the
republic's budget and local economy results in a lower self-
financing ability to absorb potential shocks than 'BB' rated
national peers. This makes the republic's budget highly dependent
on financial support from the federal government.

Mari El's 8M17 performance was in line with Fitch's expectations.
The republic has collected 72.7% of its full-year budgeted
revenue and incurred 72% of its full-year budgeted expenditure,
which resulted in a small intra-year surplus of RUB84 million.
Fitch expects moderate acceleration of expenditure in 4Q17, which
should lead to a full-year deficit of about RUB140 million or
0.5% of total revenue. This compares with 2016's RUB320 million
deficit or 1.4% and an even larger average annual deficit of RUB2
billion or 9.3% in 2012-2015.

The narrowing budget deficit is attributed to an improved capital
balance following cuts to capex. The latter accounted for 15.1%
of total expenditure in 2016, and Fitch expects further capex
reduction to 12% in 2017, down from an average of about 20% in
2011-2015. Fitch projects the republic will keep its budget close
to balance in the medium term, given restrictions imposed on its
debt stock and budget deficit by the Ministry of Finance in
return for financial support.

The republic's direct risk has remained almost unchanged since
the beginning of the year and totaled RUB13.5 billion at 1
September 2017. Fitch forecasts direct risk will moderately
increase to RUB13.8 billion or 60.3% of current revenue at end-
2017 (2016: 62.6%). As a share of current revenue it will likely
gradually decline to 58% in 2018-2019.

During 1H17, Mari El tapped the domestic bond market by issuing
RUB2 billion bonds with a final maturity in 2024, which have
lengthened the republic's maturity profile and eased immediate
refinancing risk. As of 1 September 2017, its debt consisted of
medium-term bank loans (48%), followed by low-cost budget loans
from the federal government (38%) and outstanding bonds (16%).

Mari El's immediate refinancing needs -- a RUB670 million budget
loan due in 2017 -- are fully covered by accumulated cash (RUB851
million at 1 September). However, refinancing risk exists over
the medium term. The debt maturity profile stretches to 2034, but
more than 50% of the risk, mostly bank loans, is concentrated in
2018-2019. This results in a weighted average life of its debt of
about four years, which is short by international comparison, and
means the republic may be dependent on capital markets to
refinance its maturing debt.

Mari El's socio-economic profile is historically weaker than the
average Russian region, which restricts the republic's tax base.
Fitch expects a moderate recovery of the national economy of 2%-
2.2% per year in 2017-2018 and that Mari El's economy will follow
this trend.

Russia's institutional framework for subnationals is a constraint
on the republic's ratings. Frequent changes in both the
allocation of revenue sources and the assignment of expenditure
responsibilities between the tiers of government limit Mari El's
forecasting ability and negatively affect the republic's
strategic planning, as well as debt and investment management.

RATING SENSITIVITIES

Maintaining its sound operating performance, coupled with an
extension of the debt repayment profile resulting in the direct
risk payback (direct risk-to-current balance) ratio moving
towards the weighted average life of debt, could lead to an
upgrade.

Conversely, weak budgetary performance with a close to zero
current margin accompanied by direct risk increasing above 70% of
current revenue could lead to a downgrade.


UDMURTIA REPUBLIC: Fitch Affirms B+ LT IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed the Russian Republic of Udmurtia's
Long-Term Foreign- and Local-Currency Issuer Default Ratings
(IDR) at 'B+' with Stable Outlooks and Short-Term Foreign-
Currency IDR at 'B'. The region's senior unsecured debt ratings
have been affirmed at 'B+'.

The affirmation reflects Fitch's unchanged baseline scenario
regarding Udmurtia's weak budgetary performance and high levels
of debt over the medium term. The Stable Outlook assumes no
significant deterioration in the republic's credit metrics in
2017-2019.

KEY RATING DRIVERS

The 'B+' ratings reflect the republic's persistently weak
operating performance, which is insufficient to cover interest
expenses, and a long track record of high deficit, which has led
to high levels of debt. The ratings also take into account a
developed industrial economy and a weak institutional framework
for Russian sub-nationals.

Fitch projects Udmurtia's weak budgetary performance will
stabilise with a moderate recovery from a period of negative
operating balances and large budget deficits. Fitch expects an
operating margin of a low 5% in the medium term (averaged -0.6%
in 2012-2016), which is still insufficient to cover high interest
expenses, reflecting the prolonged structural imbalances of the
republic's budget.

Udmurtia's 8M17 performance was in line with Fitch's
expectations. The republic has collected 66% of its full-year
budgeted revenue and incurred 64% of its budgeted expenditure,
which resulted in an intra-year surplus of RUB0.9 billion. Fitch
expects an acceleration of expenditure in 4Q17, leading to a
full-year deficit of about RUB6.2 billion or 9.8% of total
revenue. This is in line with 2016 actuals (RUB7.2 billion or
11.3%) and an improvement compared with the 2012-2015 average
annual deficit of RUB7.6 billion or 14.6%.

In 1H17, republic's tax revenue increased 9% yoy on 5% growth in
corporate income tax (CIT), 7% growth in personal income tax
(PIT) and 38% growth in excise duties. The CIT and PIT increases
were broadly distributed across sectors. Udmurtia's key tax
contributing oil sector saw a slight decrease in tax revenue, due
to stable production and the negative effect of rouble
appreciation on its finances. Excise duties grew significantly as
a result of increases in rates and production of alcohol
beverages.

Fitch expects direct risk to increase towards 100% of current
revenue by end-2019 (2016: 81%), driven by the expected budget
deficit. Udmurtia's debt portfolio is weighted towards market
debt, which constituted 56% as of 1 September 2017. It includes
four bond issues with five- to 10-year maturity and bank loans.
The rest are budget loans at a subsidised interest rate of 0.1%.

During 8M17 the republic has significantly eased refinancing
pressure by refinancing 65% of its outstanding debt. The
administration contracted a RUB15 billion budget loan with a
five-year tenor and reached agreements with banks (mainly state-
controlled Sberbank) to receive RUB17 billion of bank loans with
maturity in 2020. As a result debt repayment is now concentrated
in 2020-2022 when 69% of debt matures. The weighted average life
of its debt improved to 5.3 years from 3.5 years.

Currently only 17% of total outstanding debt is due in 2017-2019,
which is low compared with other Russian LRGs. As of 1 September
2017, its remaining 2017 maturities totalled RUB5 billion (RUB3.8
billion budget loans and RUB1.2 billion bonds), which will be
rolled over with new bank loans.

The republic's liquidity position is sound with cash totaling
RUB1.8 billion on 1 September 2017 (RUB145 million as of end-
2016). Year-end liquidity will likely be much lower due to year-
end payments under capex contracts. Immediate refinancing risk is
mitigated by RUB4 billion of undrawn bank credit lines and a
stand-by credit line of RUB4.6 billion from The Russian Treasury.

The republic has a developed industrial economy focused on the
oil extraction, metallurgy, machine-building and military
sectors. This helps smooth the impact of business cycles and
keeps Udmurtia's wealth metrics in line with the national median.
In 2016 the republic's GRP grew 3.2%, better than the wider
Russian economy (down 0.2%). According to the republic's
administration, the local economy will grow 1%-2% in 2017-2019.
Fitch projects Russia's GDP will return to growth of 2% in 2017.

Fitch views the republic's credit profile as being constrained by
the weak Russian institutional framework for sub-nationals, which
has a shorter record of stable development than many of its
international peers. The predictability of Russian local and
regional governments' budgetary policy is hampered by the
frequent reallocation of revenue and expenditure responsibilities
within government tiers.

RATING SENSITIVITIES

Stabilisation of direct risk at below 70% of current revenue and
sustainable improvement of the operating balance that is
sufficient to cover interest payments could lead to an upgrade.

Inability to curb continuous growth of total indebtedness,
accompanied by an increase in refinancing pressure and a negative
operating balance, would lead to a downgrade.


=========
S P A I N
=========


SANTANDER HIPOTECARIO 2: S&P Affirms D (sf) Rating on Cl. F Notes
-----------------------------------------------------------------
S&P Global Ratings raised to 'BBB- (sf)' from 'BB- (sf)' its
credit rating on Fondo de Titulizacion de Activos Santander
Hipotecario 2's class B notes. At the same time, S&P has affirmed
its ratings on the class A, C, D, E, and F notes.

S&P said, "The rating actions follow our credit and cash flow
analysis of the most recent transaction information that we have
received as of the July 2017 payment date. We have applied our
European residential loans criteria and our structured finance
ratings above the sovereign (RAS) criteria (see "Methodology And
Assumptions: Assessing Pools Of European Residential Loans,"
published on Aug. 4, 2017, and "Ratings Above The Sovereign -
Structured Finance: Methodology And Assumptions," published on
Aug. 8, 2016).

"Since our previous full review, available credit enhancement,
considering performing collateral only, has increased for all
classes of notes (see "All Ratings Affirmed In Spanish RMBS
Transaction Santander Hipotecario 2 Following Application Of
Updated Criteria," published on Dec. 23, 2014)."

  Class         Available credit
                 enhancement (%)
  A                        24.67
  B                        15.93
  C                        10.48
  D                         2.08
  E                       (1.23)

This transaction features an amortizing reserve fund, which the
class F notes' issuance funded at closing. It has been fully
depleted since January 2009.

Severe delinquencies of more than 90 days at 0.37% are on average
lower for this transaction than our Spanish residential mortgage-
backed securities (RMBS) index (see "Spanish RMBS Index Report Q2
2017," published on Sept. 12, 2017). Defaults are defined as
mortgage loans in arrears for more than 18 months in this
transaction. Additionally, cumulative defaults increased to 3.10%
from 2.64% since our previous review.

After applying S&P's European residential loans criteria to this
transaction, its credit analysis results show a decrease in the
weighted-average foreclosure frequency (WAFF) and a decrease in
the weighted-average loss severity (WALS) for each rating level.

  Rating level    WAFF (%)    WALS (%)
  AAA                23.68       27.05
  AA                 18.00       22.59
  A                  14.83       14.91
  BBB                10.98       11.30
  BB                  7.04        9.06
  B                   5.87        7.26

The decrease in the WAFF is mainly due to pool's high seasoning
and the lower arrears level. The decrease in the WALS is mainly
due to the application of our updated market value decline
assumptions. The overall effect is a decrease in the required
credit coverage for each rating level.

S&P said, "Under our RAS criteria, this transaction's notes can
be rated up to six notches above the sovereign rating, subject to
credit enhancement being sufficient to pass an extreme test. As
our unsolicited foreign currency long-term sovereign rating on
the Kingdom of Spain is 'BBB+', our RAS criteria cap at 'AA+
(sf)' our rating on the class A notes. For all other classes of
notes, the maximum potential rating is 'AA- (sf)'.

"Following the application of our RAS criteria and our European
residential loans criteria, we have determined that our assigned
rating on each class of notes in this transaction should be the
lower of (i) the rating as capped by our RAS criteria and (ii)
the rating that the class of notes can attain under our European
residential loans criteria. In this transaction, the rating on
the class A notes is constrained by the rating on the sovereign.

"Taking into account the results of our updated credit and cash
flow analysis and the application of our RAS criteria, we
consider that the available credit enhancement for the class A
and C notes is commensurate with their currently assigned
ratings. We have therefore affirmed our ratings on these classes
of notes.

"We consider the available credit enhancement for the class B
notes to be commensurate with a higher rating than that currently
assigned. We have therefore raised to 'BBB- (sf)' from 'BB- (sf)'
our rating on the class B notes.

"Given the fact that the cash reserve has been fully depleted
since January 2009 and the low available credit enhancement, the
payment of interest and principal for the class D and E notes is
dependent upon favorable business, financial, and economic
conditions, in our view. We have therefore affirmed our 'CCC+
(sf)' and 'CCC- (sf)' ratings on the class D and E notes,
respectively, in line with our criteria (see "Criteria For
Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings," published on
Oct. 1, 2012).

"The class F notes have been defaulting on their interest
payments since the July 2009 payment date. We have therefore
affirmed our 'D (sf)' rating on this class of notes.

"The transaction features an interest deferral trigger mechanism
for the class B (17%), C (12.5%), D (10%), and E (7%) notes,
based on the level of cumulative defaults over the original
balance of the assets. Given the current level of cumulative
default we do not expect the trigger to be breached in the near
term.

"In our opinion, the outlook for the Spanish residential mortgage
and real estate market is not benign and we have therefore
increased our expected 'B' foreclosure frequency assumption to
3.33% from 2.00%, when we apply our European residential loans
criteria, to reflect this view (see "Updated Outlook Assumptions
For The Spanish Residential Mortgage Market," published on June
24, 2016).

Santander Hipotecario 2 is a Spanish RMBS transaction, which
closed in July 2006 and securitizes first-ranking mortgage loans.
Banco Santander S.A. originated the pool, which comprises loans
granted to prime borrowers, mainly located in Catalonia, Madrid,
and Andalusia.

  RATINGS LIST

  Fondo de Titulizaci¢n de Activos Santander Hipotecario 2
  EUR1.973 Billion Mortgage-Backed Floating-Rate Notes And An
  Overissuance Of Floating-Rate Notes

  Class          Rating
            To             From

  Rating Raised

  B         BBB- (sf)      BB- (sf)

  Ratings Affirmed

  A         A (sf)
  C         B- (sf)
  D         CCC+ (sf)
  E         CCC- (sf)
  F         D (sf)


===================
T A J I K I S T A N
===================


TAJIKISTAN: Moody's Credit Profile Balances Growth Prospects
------------------------------------------------------------
Moody's Investors Service says that Tajikistan's (B3 stable)
credit profile reflects the country's very low per capita income
and institutional strength, as well as its robust growth
prospects.

Low foreign-exchange reserves in relation to short-term public
and private external debt, along with banking sector weaknesses,
represent key credit challenges for the sovereign.

Moody's conclusions were contained in its recently released
annual credit analysis titled "Government of Tajikistan -- B3
stable" and which examines the sovereign in four categories:
economic strength, which is assessed as "low (+)"; institutional
strength "very low"; fiscal strength "moderate (-)"; and
susceptibility to event risk "moderate (+)".

The report constitutes an annual update to investors and is not a
rating action.

Moody's report says that Tajikistan's concessional borrowing
helps maintain low debt-servicing costs, but a high and rising
government debt burden will weaken fiscal strength in the coming
years.

Government borrowing is increasing to finance the construction of
the Rogun Dam hydropower project. Moody's forecasts that
government debt will rise to about 55% of GDP in 2017-18, which
is relatively high to sustain for a small economy with limited
financing sources.

And, a significant proportion of foreign-currency denominated
debt exposes the debt burden and debt servicing costs to currency
depreciation.

As for the country's growth prospects, Tajikistan's robust
medium-term economic growth prospects are supported by hydropower
generation through the Rogun HPP project, despite the inherent
risks related to its construction and operation. Balancing this
strength is the country's very low per capita income and a
narrowly diversified economy. These factors raise the sovereign's
susceptibility to economic and financial shocks.

The stable outlook on the sovereign rating indicates balanced
credit risks.

The report notes that the rating could be upgraded if the Rogun
HPP project is successfully implemented and delivers increasing
tax and export revenues; or banking and fiscal reforms that
support macroeconomic and financial stability are effectively
implemented; and improvements in the rule of law and control of
corruption strengthen institutional quality.

On the other hand, the sovereign rating could be downgraded if a
decline in foreign reserves raises repayment risks on external
debt obligations; or, significant delays or under-delivery of the
Rogun HPP project leads to lower-than-expected economic activity,
tax receipts and foreign currency revenues; or, there are
materially larger fiscal costs than Moody's expects for the
recapitalisation of banks; and progress on reforms to support
macroeconomic stability stalls, hindering potential foreign
direct investment inflows and thereby weakening the economy's
growth potential and balance of payments.


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


AVANTI COMMUNICATIONS: S&P Withdraws 'SD' CCR on Lack of Info
-------------------------------------------------------------
S&P Global Ratings said it withdrew its 'SD' (selective default)
corporate credit rating on Avanti Communications Group PLC due to
a lack of sufficient information.

The action follows S&P's repeated attempts to obtain timely and
satisfactory information from the company to maintain its rating,
in accordance with its applicable criteria and policies.


CARILLION PLC: Lenders Agree to New Debt Facilities, Serco Sale
---------------------------------------------------------------
Rhiannon Bury at The Telegraph reports that Carillion has been
handed a lifeline by its lenders after agreeing new debt
facilities, while selling part of its healthcare division to
rival Serco.

According to The Telegraph, the company has agreed GBP140 million
of debt with two lenders and will defer some pension
contributions and the repayment of other debt, which in total
mean it estimates it is between GBP170 million and GBP190 million
better off in terms of its cash position.

Carillion has suffered a bruising few weeks in which it lost
around GBP800 million of its market capitalization amid heavy
losses and a huge impairment charge linked to troubled contracts,
The Telegraph relates.

Chief executive Keith Cochrane said last month that there needed
to be a "change of culture" if the company was going to come back
from the brink, and outlined GBP75 million of cost-cutting, The
Telegraph recounts.

On Oct. 24 the firm announced that it had agreed a deal to sell a
number of facilities management contracts for its UK healthcare
division to Serco for GBP50.1 million, which will be finalized in
the next few weeks, The Telegraph discloses.

Carillion plc is a construction and support services firm.


JUNO ECLIPSE 2007-2: S&P Cuts Class A Notes Rating to 'BB+ (sf)'
----------------------------------------------------------------
S&P Global Ratings has lowered to 'BB+ (sf)' from 'A (sf)' its
credit rating on JUNO (ECLIPSE 2007-2) Ltd.'s class A notes. At
the same time, S&P has affirmed its ratings on the class B and C
notes and withdrawn its ratings on the class D and E notes.

S&P said, "Given the decrease of the available issuer income in
the transaction (which has ultimately resulted in the issuer
delivering a potential note event of default notice, and the
liquidity event of default), the risk of a payment default on the
class A notes has increased, in our opinion. We no longer
consider the creditworthiness of this class to be akin to an
investment- grade rating.

"While we consider the risk of a payment default to be greater,
we believe this risk to be somewhat mitigated by the zero coupon
rate currently due on the class A notes, as a result of the
current low interest rate environment, together with the short-
term recovery prospects of this class of notes.

"We understand from the servicer that the execution of claims and
final payments relating to the resolution of the Neumarkt loan is
most likely to occur by the end of 2017. As a result, we do not
believe the likelihood of payment default in one year is greater
than one-in-three. We have therefore lowered to 'BB+ (sf)' from
'A (sf)' our rating on the class A notes.

"We have affirmed our 'CCC- (sf)' rating on the class B notes in
accordance with our criteria (see "Criteria For Assigning 'CCC+',
'CCC', 'CCC-', And 'CC' Ratings," published on Oct. 1, 2012). We
believe that the repayment of this class of notes remains
dependent upon favorable business, financial, or economic
conditions, and face at least a one-in-two likelihood of default.

"We have affirmed our 'D (sf)' rating on the class C notes
because this class has experienced principal losses.

"At the same time, we have withdrawn our 'D (sf)' ratings on the
class D and E notes as these classes of notes have been fully
written off."

JUNO (ECLIPSE 2007-2) is a 2007-vintage synthetic transaction
backed by three loans (down from 17 at closing), secured on
mixed-use commercial properties in Belgium and Italy.

  RATINGS LIST

  JUNO (ECLIPSE 2007-2) Ltd.
  EUR867.95 mil commercial mortgage-backed floating-rate notes
                                       Rating
  Class       Identifier            To                   From
  A           48204PAA5             BB+ (sf)             A (sf)
  B           48204PAE7             CCC- (sf)         CCC- (sf)
  C           48204PAB3             D (sf)               D (sf)
  D           48204PAC1             NR                   D (sf)
  E           48204PAD9             NR                   D (sf)
  NR--Not rated


SHOP DIRECT: Moody's Assigns B2 CFR, Outlook Stable
---------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating (CFR) and B1-PD probability of default rating (PDR) to
Shop Direct Limited (Shop Direct or the company). Concurrently,
Moody's has assigned a B2 instrument rating to the proposed
GBP700 million senior secured fixed and floating rate notes due
2022 planned to be issued by the company's subsidiary, Shop
Direct Funding plc. The outlook on the ratings is stable.

Shop Direct will use the proceeds from the notes to repay
existing debt totaling GBP566.4 million, make a distribution to
shareholders of GBP37.6 million and will, after paying
transaction fees, result in an increase of approximately GBP83
million in the company's cash balances. The transaction
documentation will permit a further GBP200 million distribution
to shareholders at any time up to September 30, 2018.

RATINGS RATIONALE

The B2 CFR reflects Shop Direct's (1) long track record of
offering credit to customers to drive purchasing decisions and
loyalty; (2) successful transition to pure-play e-tailer,
benefitting from the ongoing shift of retail spend online; and
(3) diverse product range and wide supplier base which limit
exposure to fashion risk.

The CFR also reflects the company's (1) exposure to a single
country and focus on a specific subset of consumers; (2) reliance
on ongoing access to securitisation facilities (albeit the long
track record and stability of loan book quality is notable); and
(3) leveraged capital structure and modest net cash flow
generation.

In recent years, decisions to switch to a pure online model, and
to focus on a single growth brand, Very (and its sub-brand Very
Exclusive) together with the historically largest brand,
Littlewoods, have proven sound strategic decisions. Shop Direct
has a long track record of providing credit to its customers, and
this features in more than 95% of sales, as the company's
customers value the opportunity of spreading the cost of products
over time.

In common with traditional department stores, the company has a
wide product range, covering apparel, furniture and homewares,
electricals and seasonal products. With an active customer base
totaling around 4 million, the company is considered an important
partner by various well-known brands, as its relatively high
weighting towards lower income customers affords additional
exposure for the brands, but without the discounting often
prevalent with online specialists. The diversity of the product
range limits exposure to fashion and execution risk, and the
credit offering acts as a differentiating factor versus
competitors of all shapes and sizes. Nevertheless, the need to
offer a range which resonates with its customers persists, most
notably in respect of its own brands.

The provision of credit to customers is a key part of Shop
Direct's business model. The debtor book is largely funded via
securitisation facilities, which currently total GBP1.315
billion, and maintaining access to this source of finance is
vital, as without the credit offer the company would lose its
'unique selling point'. The company has a track record in this
regard dating back to at least 2005 with the same core of
relationship banks, and the credit quality of the debtor book has
been relatively stable through cycles.

However, while the securitisation facilities are 'non-recourse'
to Shop Direct any reduction in availability relative to the
company's requirements would leave it needing to secure
alternative debt (and/or equity) funding. Accordingly, while the
company presents credit metrics which exclude the securitisation
funding, Moody's focuses on metrics which include this debt.

Moody's-adjusted gross leverage is high at 8.8x, even after
treating the exceptional expense related to historic customer
redress claims as non-recurring. The rating agency expects the
company to continue to record growth in sales and profitability
and to deleverage towards 7.0x over the next 12-18 months.
Although interest coverage (adjusted EBIT/adjusted interest) is
relatively strong at an initial 2.7x, the continued strong growth
in the business leads to significant working capital absorption.
As such, after capex, tax and expected payments in respect of the
historic customer redress claims, the rating agency anticipates
that free cash flow will be at best moderate in the years ahead,
before taking account of additional funding via the
securitisation programme.

Moody's views Shop Direct's liquidity profile as adequate. It has
been assumed the transaction will leave the group with an initial
pro-forma cash balance of GBP200 million and access to undrawn
revolving credit facilities totalling GBP150 million, comprising
a GBP100 million facility ranking ahead of the senior secured
notes and a GBP50 million facility ranking pari-passu with the
notes. The rating agency notes the company will have flexibility
to pay an additional dividend of up to GBP200 million at any time
during the period to September 30, 2018, although expects that
any such payment would be subject to management believing that
adequate liquidity would be maintained after any such
distribution.

Under Moody's Loss Given Default (LGD) methodology, the
securitisation facilities are considered to be self-liquidating
in the event of a default. As such, a 35% recovery rate has been
used for the remaining financial obligations, which results in a
PDR one notch higher than the CFR. The senior secured notes are
rated B2, in line with the CFR.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's expectations of a
continuation of the strong growth in Very's customer numbers,
revenues and profitability, partially offset by a declining
contribution from Littlewoods, such that overall profitability
increases by more than 5% per annum. The stable outlook also
assumes that the company will retain access to an appropriate
level of securitisation facilities to support continued growth in
the debtor book and will maintain adequate liquidity at all
times.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive rating pressure is not expected in the short to medium
term while free cash flow remains constrained. However, should
growth in profitability exceed Moody's expectations such that
Moody's-adjusted gross leverage is sustainably below 6.5x, and
the company can sustain a positive free cash flow profile, an
upgrade could be considered. Any positive rating action would
also depend on the shareholders demonstrating a commitment to
more conservative financial policies.

Downward pressure on the ratings could arise if any of conditions
underpinning the stable outlook are not met, including if the
company's liquidity profile deteriorates, or if earnings weaken
such that Moody's-adjusted gross leverage would remain
sustainably above 8.0x.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Retail
Industry published in October 2015.

COMPANY PROFILE

Shop Direct has a history dating back over 120 years and
historically operated both physical stores and home shopping, via
mail order catalogues printed and distributed twice a year. The
the company is a pure-play digital retailer, with an integrated
retail and financial services model delivered via two core
brands, Very and Littlewoods. In the fiscal year ended June 30,
2017 the company reported sales of GBP1.9 billion and EBITDA of
GBP236 million. The business has been owned by the family trusts
of entrepreneurs Sir David and Sir Frederick Barclay since 2002.



                            *********

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

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

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


                            *********


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-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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Editors.

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

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                 * * * End of Transmission * * *