/raid1/www/Hosts/bankrupt/TCREUR_Public/180117.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

          Wednesday, January 17, 2018, Vol. 19, No. 012


                            Headlines


C R O A T I A

CROATIA: Fitch Upgrades Long-Term IDR to BB+, Outlook Stable


G E R M A N Y

NIKI LUFTFAHRT: Ryanair Expresses Interest in Buying Some Assets


I R E L A N D

AZZURRO RE I: Fitch Affirms 'BB+sf' Rating on Class A Notes
* IRELAND: 957 Jobs Saved Through Examinership Mechanism in 2017


N E T H E R L A N D S

AMG ADVANCED: Moody's Assigns B1 CFR, Outlook Stable
AMG ADVANCED: S&P Assigns 'BB-' CCR, Outlook Stable


U K R A I N E

LVIV CITY: Fitch Assigns B- Long-Term IDR, Outlook Stable
METINVEST BV: S&P Assigns 'B-' Corp Credit Rating, Outlook Stable


U N I T E D   K I N G D O M

BUSINESS MORTGAGE 5: Fitch Affirms CCC Ratings on 2 Tranches
CARILLION PLC: FRC May Probe KPMG's Audit Following Collapse
CARILLION PLC: High Court Appoints Liquidator, Special Managers
LUDGATE FUNDING 2006-FF1: S&P Raises Class D Notes Rating to BB+
LUNAR FUNDING I: S&P Cuts Credit Rating to 'BB' on Series 6 Notes

MITCHELLS & BUTLERS: S&P Cuts Custodial Receipts Rating to BB(sf)
NEW LOOK: Potential Buyers Mull Bids as Value of Bonds Drops
ZARA UK: S&P Assigns Preliminary 'B' CCR, Outlook Stable


                            *********



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C R O A T I A
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CROATIA: Fitch Upgrades Long-Term IDR to BB+, Outlook Stable
------------------------------------------------------------
Fitch Ratings has upgraded Croatia's Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) to 'BB+' from 'BB'.
The Outlooks are Stable.

KEY RATING DRIVERS

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

High
Strengthening tourism revenues have underpinned a sustained
improvement in Croatia's external position. The current account
moved into surplus in 2013 and is forecast by Fitch to remain in
surplus throughout the forecast period to 2019. A record tourism
season and lower profit remittances from foreign-owned banks is
estimated to have lifted the current account surplus to 3.9% of
GDP in 2017, from 2.7% in 2016. The import-dependence of much
economic activity means the strengthening consumption and
investment projected over the forecast period will narrow the
surplus to 2% of GDP in 2019.

Current account surpluses and solid inflows of non-debt capital
are supporting a marked reduction in net external debt. Fitch
projects net external debt to drop to 16% of GDP at end-2019 from
an estimated 26% at end-2017 and 52% at end-2014, taking it
towards the 'BB' median of 12%. The non-bank private sector is
expected to be the main source of deleveraging in 2018,
reflecting rising corporate profits being used to pay down
external debt and the restructuring of Agrokor. The sovereign's
estimated move to a net external creditor position in 2017 was
supported by exchange rate effects and periodic purchases of FX
to alleviate upwards pressure on the kuna.

Medium
Fiscal outturns have outperformed the budget for the second
consecutive year, with a general government surplus recorded in
2017 (the first under ESA2010 methodology) compared with a
targeted deficit of 1.3% of GDP. A cyclical improvement in
revenues and ongoing spending restraint has been complemented by
reforms that reduce the complexity of the tax system. Fitch
expects a return to deficit in 2018 (a deficit of 0.5% is
budgeted) reflecting modest increases in public-sector pay,
higher co-financing for EU-funded projects and less likelihood of
upside revenues surprises. Nonetheless, fiscal performance will
remain much strong than in recent years. The general government
deficit is projected to average 0.4% between 2016 and 2019
compared to 4.7% in the previous four years.

Primary surpluses and a return to growth have pulled down general
government debt/GDP from a peak of 85.8% at end-2014 to around
78% of GDP at end-2017. Exchange rate moves supported the near
6pp fall during 2017, but are a source of vulnerability, as
around 75% of general government is foreign currency-denominated,
although the government's commitment to a euro adoption strategy
partly mitigates some of this risk. Liability management
operations are reducing debt servicing costs. Re-profiling of
expensive road company debt that falls within the general
government perimeter (totalling 10.5% of GDP) began in 2017.

With primary surpluses expected in 2018 and 2019, debt/GDP will
continue to fall, to a forecast 70.9% of GDP by end-2019,
although this will remain well in excess of the projected 'BB'
median of 45%. In contrast, debt/revenue is now in line with the
peer median, at 166% at end-2017, reflecting the broad and deep
revenue base.

Croatia's 'BB+' IDRs also reflect the following key rating
drivers:-

Economic growth stayed at 3% in 2017 as Croatia benefited from a
strong cyclical position, rising EU fund disbursements, buoyant
tourism and tax reforms. Growth should remain around this level
over the forecast period due to solid labour market dynamics and
higher EU fund disbursements being offset by rising imports.
Signs of overheating are not expected to emerge and inflation
should stay low. Despite the improvement in growth, it remains
sluggish relative to peers (a five-year average of 1.5% compares
with the 'BB' median of 3.5%) reflecting structural economic
weaknesses including high private sector debt, low investment and
adverse demographics. 2017 marks the first year that nominal GDP
exceeded its 2008 peak.

Financial problems at Agrokor, the country's largest private
sector company by revenues and employment, have not had a
significant macroeconomic impact and have been weathered by the
banking sector, although risks remain. Fitch's base case is that
Agrokor restructuring will not cause major disruption to the
economy or financial sector, but challenges remain, including
legal issues.

Bank profits have been hit by Agrokor provisioning. However, the
90% foreign-owned sector has remained profitable and sector-wide
capital adequacy remains strong, at 22.6% at end-September. NPLs
for corporates remain high, at 28.3%, but are falling due to
rising NPL sales; total NPLs were 13.2%. Consumer lending is
rising after a multiyear retrenchment. Lending to corporates
should pick up when Agrokor-related uncertainty diminishes.

Croatia's structural features compare very favourably with 'BB'
medians. GDP per capita is more than twice the median; governance
indicators, human development index and doing business indicators
are also stronger than peers, supported by EU membership. The
coalition government, installed in June 2017, has worked smoothly
despite its small majority.

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

Fitch's proprietary SRM assigns Croatia 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, as follows:
- Macro: -1 notch to reflect weak medium-term growth potential
- Public Finances: -1 notch, to reflect the non-linearity of
   public debt at high levels not captured in the SRM and the
   large related refinancing needs

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 criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main factors that, individually or collectively, could lead
to positive rating action are:
- Continued reduction in public debt/GDP
- Strengthening of growth prospects and competitiveness,
   including through the implementation of structural reforms

The main factors that, individually or collectively, could lead
to negative rating action are:
- A reversal of fiscal consolidation leading to a rise in public
   debt/GDP
- Deterioration in growth prospects

KEY ASSUMPTIONS
Fitch expects Croatia's track record of monetary and exchange
rate policy stability to continue, minimising the risk of
household, corporate and government balance sheets, all of which
are heavily euroised.

Fitch assumes that the eurozone will grow by 2.2% in 2018 and
1.7% in 2019

The full list of rating actions is as follows:

Long-Term Foreign-Currency IDR upgraded to 'BB+' from 'BB';
Outlook Stable
Long-Term Local-Currency IDR upgraded to 'BB+' from 'BB'; Outlook
Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Short-Term Local-Currency IDR affirmed at 'B'
Country Ceiling revised to 'BBB' from 'BBB-'
Issue ratings on long-term senior unsecured foreign-currency
bonds upgraded to 'BB+' from 'BB'
Issue ratings on long-term senior unsecured local-currency bonds
upgraded to 'BB+' from 'BB'
Issue ratings on short-term senior unsecured foreign-currency
bonds affirmed at 'B'
Issue ratings on short-term senior unsecured local-currency bonds
affirmed at 'B'


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G E R M A N Y
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NIKI LUFTFAHRT: Ryanair Expresses Interest in Buying Some Assets
----------------------------------------------------------------
Shadia Nasralla at Reuters reports that Irish airline Ryanair
said on Jan. 15 it had contacted the Austrian administrator of
insolvent holiday airline Niki to express its interest in buying
some of its assets.

Niki's German administrator said earlier on Jan. 15 he still
wanted to sell the leisure carrier to British Airways parent IAG,
despite a battle between Austria and Germany over where
insolvency proceedings should be handled, Reuters relates.

Former Formula 1 world champion Niki Lauda has also re-emerged as
a potential bidder for Niki ahead of a Jan. 19 deadline for fresh
offers the Austrian court has set, Reuters notes.


                        About Air Berlin

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

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

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

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

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


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I R E L A N D
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AZZURRO RE I: Fitch Affirms 'BB+sf' Rating on Class A Notes
-----------------------------------------------------------
Fitch Ratings affirms the rating on the principal-at-risk
variable-rate notes issued by Azzurro Re I DAC, an Irish
designated-activity company limited by shares authorized by the
Central Bank of Ireland as a special purpose vehicle under the
European Union (Insurance and Reinsurance) Regulations 2015 of
Ireland, as follows:

  -- EUR200,000,000 class A notes with an expected maturity date
of Jan. 16, 2019 at 'BB+sf'/ Stable.

KEY RATING DRIVERS
The notes provide reinsurance protection for UnipolSai
Assicurazioni S.p.A. and other group subsidiaries (UnipolSai;
Issuer Default Rating [IDR] BBB-). The notes are exposed to
earthquake peril and ensuing perils such as, but not limited to,
sprinkler leakage, fire, groundshaking, volcanic disturbance or
eruption (including ashfall), and tsunami and flooding due to dam
or levy ruptures. The covered area is predominantly located in
Italy.

There were no reported covered events that caused the ultimate
net loss to exceed the updated attachment level of EUR575 million
for the notes during the second annual risk period from Jan. 1,
2017 through Dec. 31, 2017. As an indemnity bond, the
determination of the ultimate net loss "follows the fortunes" of
the UnipolSai Group in regard to underwriting of new business,
claim loss management and reserve practices.

On Dec. 12, 2017, AIR Worldwide, acting as the reset agent,
determined the updated modeled annual attachment probability to
be 0.40% for the third (and final) annual risk period that
commences on Jan. 1, 2018 through Dec. 31, 2018. These
probabilities correspond to an implied rating of 'BB+', per the
calibration table listed in Fitch's "Insurance-Linked Securities
Rating Criteria." The prior attachment probability was 0.39%. As
a result, the catastrophe risk is considered the "weakest link."

This calculation used updated property exposure data provided by
UnipolSai within the subject business in the covered area
utilizing an escrowed AIR model. The total indemnity limit
increased over 21% since the prior reset report. To maintain the
updated annual modeled expected loss at 0.31%, the updated
attachment and exhaustion levels increased to EUR660 million and
EUR860 million (up from the prior attachment and exhaustion
levels of EUR575 million and EUR775 million, respectively). With
no change to the expected loss, the variable risk interest spread
remained at 2.15%.

Proceeds from this issuance are held in a collateral account for
the benefit of UnipolSai and will be invested in European Bank
for Reconstruction and Development notes (EBRD; IDR AAA).

Fitch believes the notes and indirect counterparties are
performing as required. There have been no reported early
redemption notices or events of default and all agents remain in
place. Fitch is not aware of any document amendments. Thus, there
was no reduction in the original principal amount and all
interest was paid when due.

Additional information regarding the notes can be found in prior
rating action commentaries dated Jan. 18, 2017, June 13, 2016 and
June 18, 2015, available at www.fitchratings.com.

RATING SENSITIVITIES

This rating is sensitive to the occurrence of a qualifying
event(s), the counterparty risk of UnipolSai and the rating on,
and performance of, the assets held in the collateral account.

If qualifying covered events occur that cause the ultimate net
losses to exceed the updated attachment level, Fitch will
downgrade the notes reflecting an effective loss of principal and
impairment of the notes, and issue a Recovery Rating. In
addition, the maturity date of the notes may be extended for
claim settlement purposes without subjecting noteholders to
additional catastrophe events.

The rating on the notes is contingent on UnipolSai maintaining
the proper pre-funded amounts in the premium deposit account, and
if this does not occur, the rating is contingent on the
transaction being successfully unwound with principal and accrued
interest paid in full. Fitch has a stable outlook for UnipolSai.

To a lesser extent, the notes may be downgraded if the EBRD notes
should suffer a serious downgrade, the terms of the notes are
altered, or the assets held in the collateral account perform
significantly worse than expectations for high-quality, short-
term investments. Fitch has a Stable Outlook for EBRD.

The catastrophe risk element is highly model-driven and actual
losses may differ from the results of the simulation analysis.
The escrow model may not reflect future methodology enhancements
by AIR which may have an adverse or beneficial effect on the
implied rating of the notes were such future methodology
considered.


* IRELAND: 957 Jobs Saved Through Examinership Mechanism in 2017
----------------------------------------------------------------
The Irish Times reports that some 957 jobs were saved through the
examinership mechanism in 2017, with 22 companies successfully
emerging from the process, a review by accounting firm Baker
Tilly Hughes Blake has found.

According to The Irish Times, Baker Tilly Hughes Blake said
examinership -- under which struggling companies seek legal
protection from creditors while a court-appointed examiner
searches for new investors -- allowed the State to save more than
EUR3.8 million in averted claims for wage arrears, holiday pay,
minimum notice and statutory redundancy payments.

It said the number of jobs saved through examinership was up 166
per cent on 2016, The Irish Times relates.

A number of high-profile companies used the process as a
corporate recovery mechanism last year, including the Golden
Pages, the Regency (now rebranded as The Bonnington Hotel Dublin)
and Galway companies controlled by developer Gerry Barrett,
including the G hotel, the Meyrick and the Eye Cinema, The Irish
Times discloses.

Dessie Morrow, director of corporate recovery for Baker Tilly
Hughes Blake, said legacy debt issues were still affecting many
companies, The Irish Times notes.


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AMG ADVANCED: Moody's Assigns B1 CFR, Outlook Stable
----------------------------------------------------
Moody's Investors Service assigned a B1 Corporate Family Rating
(CFR) and a B1-PD Probability of Default Rating (PDR) to AMG
Advanced Metallurgical Group N.V. (AMG). In addition, Moody's
assigned a B1 rating to the company's proposed $200 million
senior secured revolving credit facility and its $300 million
senior secured term loan B. These ratings are commensurate with
the corporate family rating since the revolver and the term loan
will have the same collateral securing the borrowings and will
account for almost all of the debt in the company's capital
structure. The proceeds from the term loan will be used to repay
about $150 million of existing term loan debt, to fund the
company's lithium development projects and expand its tantalum
production in Brazil and to cover transaction fees and expenses.
Moody's also assigned a speculative grade liquidity rating of
SGL-2. The ratings outlook is stable. This is the first time
Moody's has rated AMG Advanced Metallurgical Group N.V.

Assignments:

Issuer: AMG Advanced Metallurgical Group N.V.

-- Corporate Family Rating, Assigned B1;

-- Probability of Default Rating, Assigned B1-PD;

-- $200 million senior secured revolving credit facility B1
    (LGD3);

-- $300 million senior secured term loan B1 (LGD3);

-- Speculative Grade Liquidity Rating, Assigned SGL-2.

Outlook Actions:

Issuer: AMG Advanced Metallurgical Group N.V.

-- Outlook, Assigned Stable

RATINGS RATIONALE

AMG's B1 corporate family rating reflects its moderate financial
leverage, ample interest coverage, good liquidity, good
geographic and end market diversity and the importance of its
products in lightweighting, energy efficiency and carbon
emissions reduction which should lead to relatively steady
customer demand. The company also has a strong market position
with only a few major competitors for most of the critical
materials it produces, and sells those materials to a number of
blue chip customers with whom it has established long term
relationships. AMG's rating considers the upside earnings
potential if it successfully produces commercial grade lithium
concentrate from existing and future lithium bearing tailings
generated via tantalum production at its mine in Brazil. The
company's rating is constrained by its modest scale versus higher
rated manufacturers, the risks related to its lithium development
and tantalum expansion projects, which will result in elevated
capital spending and negative free cash flow over the next two
years, as well as its reliance on raw materials from mines
located in some less developed countries and those with potential
geopolitical risks.

Moody's anticipates that AMG will continue to benefit from solid
demand from the transportation, infrastructure, specialty
chemicals and other end markets that it serves since most of the
critical materials it produces are used for lightweighting
products, enhancing their energy efficiency and reducing their
carbon emissions. In addition, the company has a record backlog
of orders in its engineering segment for vacuum furnace systems
used for heat treating, coating turbine blades and producing
titanium powders. The company should also benefit from commercial
sales of lithium concentrate beginning in the second half of
2018. Therefore, Moody's expect it to produce a moderate increase
in adjusted EBITDA versus the level produced in 2017, which
Moody's estimate in the range of $125 million - $130 million
including Moody's standard adjustments. That should result in
credit metrics that support the assigned B1 corporate family
rating, with an adjusted leverage ratio (Debt/EBITDA) modestly
below 4.0x and an interest coverage ratio (EBITA/Interest
Expense) slightly above 2.5x.

Moody's has assigned a speculative grade liquidity rating of SGL-
2 since AMG is expected to maintain good liquidity and will have
no meaningful debt maturities prior to the maturity date of the
proposed revolver in 2023 and the term loan B in 2025. The
company is expected to maintain a sizeable cash balance and full
availability on its $200 million revolver, which is expected to
be undrawn at closing. The company will be producing negative
free cash flow in 2018 and 2019 as it invests in its lithium
development projects in Brazil, and pursues other growth
investments. However, the company will increase its cash balance
by about $150 million with the establishment of the new term loan
and these funds will be used for the lithium and tantalum
projects. The company has generated free cash flow historically
and could return to positive cash flows in 2020 when project
spending is completed.

The stable ratings outlook presumes the company's operating
results will moderately improve over the next 12 to 18 months and
result in credit metrics that support its rating. It also
presumes the company will not experience any significant issues
related to its lithium development and tantalum expansion
projects.

The ratings could be upgraded if the company successfully
completes its lithium development and tantalum expansion projects
and achieves a material improvement in its operating results.
Maintaining a leverage ratio below 4.0x, an interest coverage
ratio above 3.0x and returning to positive cash flow generation
could lead to an upgrade. However, AMG's moderate scale will
limit its upside ratings potential.

Negative rating pressure could develop if the company experiences
any significant issues related to its lithium development and
tantalum expansion projects. Any material disruptions that result
in weaker than expected operating performance, or the pursuit of
other debt financed growth projects that result in weaker than
expected credit metrics would negatively impact the company's
rating. The leverage ratio rising above 5.0x or the interest
coverage ratio persisting below 2.0x could lead to a downgrade. A
significant reduction in borrowing availability or liquidity
could also result in a downgrade.

Advanced Metallurgical Group N.V., headquartered in Wayne,
Pennsylvania, produces engineered specialty metals and mineral
products through its AMG Critical Materials division. This
segment produces aluminum master alloys and powders, titanium
alloys and coatings, ferrovanadium, natural graphite, chromium
metal, antimony, tantalum, niobium and silicon metal. Its AMG
Engineering division designs and produces vacuum furnace
equipment and systems used to produce and upgrade specialty
metals and alloys. The company sells its products to the
transportation, infrastructure, energy, and specialty metals &
chemicals end markets from production facilities in Germany, the
United Kingdom, France, Czech Republic, United States, China,
Mexico, Brazil and Sri Lanka. The company produced revenues of
$1.0 billion during the twelve months ended September 30, 2017
with about 44% generated in Europe, 33% in North America, 19% in
Asia and 4% in the rest of the world.

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


AMG ADVANCED: S&P Assigns 'BB-' CCR, Outlook Stable
---------------------------------------------------
S&P Global Ratings assigned its 'BB-' corporate credit rating to
Amsterdam-based specialty metals producer AMG Advanced
Metallurgical Group N.V. (AMG). The outlook is stable.

S&P said, "At the same time, we assigned our 'BB-' issue-level
rating to the company's proposed $300 million senior secured term
loan B due 2025 and $200 million revolving credit facility due
2023. The recovery rating on both issues is '3', indicating our
expectation of meaningful (50%-70%; rounded estimate: 50%)
recovery in the event of a payment default. Both issues are
borrowed by AMG Advanced Metallurgical Group N.V., AMG Invest
GmbH, and Metallurg, Inc.

"Our 'BB-' corporate credit rating reflects AMG's exposure to the
highly competitive specialty metals market and related price
volatility, somewhat offset by a generally solid position in its
niche markets. A growth-oriented capital investment program
related to the expansion of its lithium production project will
lead to higher debt levels and negative free cash flow metrics in
2018 and 2019. For instance, we expect AMG's adjusted debt
balance to increase to about $380 million by year-end 2018 from
about $220 million as of Sept. 30, 2017, with debt leverage
likely to move to the upper-end of our expected 2x-3x range
during this time from its current level of less than 2x. We also
view AMG's cash flow volatility to be an important factor in our
ratings, especially considering the roughly 50% decline in EBITDA
during the Great Recession.

"The stable outlook reflects our view that AMG's operational
performance will remain steady given improved metals prices and
favorable demand from its end markets; however, completing its
lithium projects on time and on budget with contracts is a key
risk factor. We expect high-single-digit revenue growth driven by
higher prices and demand, in addition to incremental revenues
related to the expansion of its lithium production. We expect
adjusted debt to EBITDA of about 2.5x-3x and adjusted EBITDA
margins of about 12% in 2018 reflecting the performance of the
critical materials segment and solid demand from the aerospace
and automotive market.

"We could lower our ratings on AMG if credit metrics were to
deteriorate due to weak operational performance or additional
capital spending that caused larger free operating cash deficits.
We could also lower the ratings if adjusted debt to EBITDA
approached 4x, which could occur if adjusted EBITDA margins
dropped below 10%. This could be the impact of additional debt-
financed capital expenditures or delays from constructing the
lithium plants, softening metals prices and demand from end
markets, or acquisitions and growth projects that do not
materialize into incremental EBITDA.

"Although an upgrade is unlikely over the next 12 months, we
could raise our ratings on AMG if it were able to execute its
growth strategy and exceed our expectations of operational
performance, with positive free cash flow after the completion of
the lithium project. We could also consider an upgrade if
adjusted debt to EBITDA fell below 2x with sustained adjusted
EBITDA margins about 15%. This could be the result of stronger
pricing and demand and successful execution of the lithium
expansion projects."


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U K R A I N E
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LVIV CITY: Fitch Assigns B- Long-Term IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has assigned the Ukrainian City of Lviv Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) of
'B-'. The Outlooks are Stable.

The ratings reflect a weak institutional framework for
subnationals in Ukraine, leading to unpredictable fiscal changes.
This, together with the overall weakness of sovereign public
finances in Ukraine, results in uncertain growth prospects.

Positively, the ratings also take into account Fitch's
expectations that the city's sound operating results will be
maintained over the medium term. The ratings further take into
account the city's expected low direct debt over the medium term,
as well as moderate contingent liabilities stemming from
guarantees issued to municipal companies.

KEY RATING DRIVERS
The ratings reflect the following key rating drivers and their
relative weights:

HIGH

Fitch views the city's ratings as being constrained by Ukraine's
sovereign ratings (B-/Stable/B) and the weak institutional
framework governing Ukrainian local and regional governments
(LRGs). The framework is characterised by political risks and a
challenging reform agenda arising from the Ukraine's IMF
programme to secure additional external funding. This has
resulted in frequent changes in both the allocation of revenue
sources and expenditure responsibilities, which hampers the
forecasting ability and strategic planning of LRGs in Ukraine.

Fitch projects Lviv's budgetary performance to stabilise over the
medium term. The city's operating balance is likely to remain
close to 20% of operating revenue in 2018-2019, in line with the
preliminary 2017 result, after an exceptionally high average of
26% in 2015-2016. The city's operating performance will be
supported by the expansion of the tax base on the back of a
recovering economy and increased transfers from the national
budget.

Fitch notes that Lviv's financial performance, although
satisfactory, is fragile over the medium term due to financial
decentralisation resulting in numerous amendments to budget and
tax regulations in Ukraine.

Lviv's sound liquidity position in the last two years has enabled
the city to earn interest revenue and finance its budget deficit
(deficit averaged 2.3% of total revenue in 2016-2017 ie. UAH180
million), removing the need for debt.

MEDIUM

The city authorities' main priority is to support the dynamic
growth of the city through the development of an innovative local
economy. This includes attracting investors from sectors
generating higher gross value added such as the IT industry or
congress and exhibition tourism by taking advantage of the city's
historical heritage. The city authorities strive to increase
efficiency in delivering municipal services and to improve their
quality. The city's administration is prudent in its budgetary
policy. It attracts non-returnable grants and debt from
international institutions, such EBRD and NEFCO for major
investment projects implemented by municipal companies.

For 2018 Lviv's direct debt may increase to UAH440 million, or a
still low 4.7% of current revenue (from less than 0.1% in 2014-
2017), if the city is successful in its planned UAH440 million
bond issue (to be issued in two tranches in 2018). The proceeds
from the bonds, together with the UAH55 million of cash
accumulated on the city's accounts, will be used for investments.

Fitch expects that the city's net overall risk, after including
guarantees issued to municipal companies, may almost double in
the medium term to about 30% of current revenue in 2020 from 17%
in 2017. This is in line with the city's policy in supporting
municipal companies that undertake large infrastructural
investments, by issuing guarantees on loans from international
institutions such as EBRD or NEFCO.

The city's issued guarantees totalled UAH1.4 billion (ie. 17% of
current revenue) at end-2017 to support investments in water and
wastewater, the heating and hot water supply system, and the
transport sector, including renewal of vehicle fleet and road
construction. The guaranteed loans were provided by EBRD and
NEFCO in euro and US dollars with final maturity in 2021-2030.
The city injects capital into its municipal companies (UAH1.14
billion in 2016) to fund investments, loans repayments and cover
companies' losses due to low tariffs not covering the costs of
services provided.

LOW

Lviv is the biggest city in the west part of the country, the
capital of the seventh-largest region, which contributed 4.8% to
Ukraine's GDP in 2015. Lviv is one of the country's key
scientific, industrial and cultural centres. Its economy is
diversified across manufacturing and services. In 2016-2017
Ukraine's economy grew about 2%, following a 9.9% contraction in
2015. Fitch expects Ukraine's GDP to grow 3.2%-3.7% per annum in
2017-2019, which should strengthen the city's economic prospects.
However, the wealth indicators of Ukraine and Lviv region are
weak in the international context, with a national GDP per capita
of USD2,193 in 2016.

RATING SENSITIVITIES

The city's ratings are constrained by the sovereign. A positive
rating action of Ukraine's ratings would lead to a corresponding
action on Lviv's ratings, provided the city's credit profile
remains unchanged.

A material increase of the city's net overall risk, combined with
significant deterioration of its financial flexibility, could
lead to a negative rating action.


METINVEST BV: S&P Assigns 'B-' Corp Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term corporate credit
rating to Metinvest B.V., the holding company of a group of
mostly Ukraine-based vertically integrated steel and mining
assets. The outlook is stable.

Metinvest, with operations in Ukraine and abroad, is a midsize
producer with steel capacity of 8.3 million tons (Mt). This
compares with rated peers in Europe, the Middle East, and Africa,
such as Severstal (11.6Mt), Evraz (13.5Mt), and SSAB (8Mt).
Metinvest had revenues of $6.2 billion and S&P Global Ratings-
adjusted EBITDA of $874 million (excluding contributions from
joint ventures) in 2016. The company's iron ore production was
about 30Mt in 2016, and a substantial part of group earnings
derived from third-party sales of iron ore.

Established in 2006, Metinvest is a private company, majority
owned (71.2% as of June 30, 2017) by System Capital Management
(SCM), a large Ukrainian financial and industrial group that had
consolidated 2016 revenues of $11.4 billion. SCM's credit
standing does not currently constrain the ratings on Metinvest,
in our view. S&P notes that a shareholder agreement requires
unanimous decisions by shareholders and a Eurobond and pre-export
finance (PXF) documentation limits dividends. S&P notes the
ongoing legal proceedings between SCM Group and Raga
Establishment Ltd. Metinvest does not expect any impact on its
business from these proceedings. The current rating on Metinvest
assumes that SCM Group will maintain its current shareholding in
the company.

S&P said, "Our assessment of Metinvest's business risk profile as
vulnerable takes into account the very high risk of operating in
Ukraine and high earnings volatility over the past two to three
years, hampered by the loss of assets and receivable impairments
in Ukraine. We also consider the volatile global steel markets,
the company's focus on commodity steel grades, and its relatively
high-cost mining assets." These risks are partly mitigated by
improving steel margins and access to European markets by way of
rolling mills based inside the EU.

The company's vertical integration gives it the flexibility to
alter its product mix and redirect volumes for internal use or
export depending on market prices. The company is self-sufficient
in iron ore (267% during the first nine months of 2017) and coke
(116%), and, to a lesser degree, in coking coal (about 30%) from
its U.S.-based subsidiary United Coal. Metinvest's rolling mills
in Italy, the U.K., and Bulgaria somewhat enhance its competitive
advantage over other exporters, as these are not subject to EU
import duties. That said, the company has a high concentration of
assets in Ukraine, which weighs on its business risk profile, in
S&P's view. This risk materialized in the loss of several of its
production assets in Eastern Ukraine last year and significant
receivable impairments in 2016 (related to receivables that had
been due for over five years).

Of the revenues generated in the first nine months of 2017, 74%
came from international sales, mostly in Europe, where market
conditions improved and steel prices were supportive over the
period. This compares with the Ukrainian steel market, which has
seen crude steel production decrease since 2013, due to
unfavorable market conditions and lower domestic demand, amid the
economic crisis and conflict in the Eastern Ukraine. S&P expects
Metinvest will report stronger profitability in 2017, with an S&P
Global Ratings-adjusted EBITDA margin of 15%-20% (assessment
includes the distribution of third-party production, which
slightly depresses margins) on more supportive steel, iron ore,
and coking coal prices. However, the company's historically
volatile profitability in the steel segment particularly
following the depressed iron ore and steel environment in 2014-
2016, constrains our assessment. S&P sees Metinvest's mining cash
cost in the fourth quartile (CFR China basis) as higher than
levels at rated peers like Ferrexpo PLC and Metalloinvest.

S&P said, "Our assessment of Metinvest's financial risk profile
balances the company's current and expected funds from operations
(FFO) to debt above 30% with the company's typically volatile
earnings, the high levels of catch-up capital expenditures
(capex) we expect in the next few years, and lower price
assumptions for iron ore in 2018 and 2019. The cash sweep
mechanism and the dividend restrictions under the Eurobond and
PXF documentation provide comfort and visibility on financial
policy in terms of expectations of deleveraging and lack of
dividend payments.

"We expect 2017 to be a good year for Metinvest, buoyed by higher
prices, which will likely allow the company to achieve S&P Global
Ratings-adjusted FFO to debt of about 35%, compared with below
20% in 2016, and adjusted debt to EBITDA of around 2.0x, compared
with 3.4x at end-2016 and around 10.0x at end-2015. Under our
forecast of somewhat lower iron ore prices and debt, but higher
pellet premiums and capex, we expect FFO to debt in the 35%-40%
range in 2018."

In March 2017, the company completed its debt restructuring of
its Eurobonds and PXF facilities. Post restructuring, the capital
structure consists of $1.2 billion Eurobonds, $1.1 billion PXF
facilities, trade finance, other debt (leasing and export credit
agency financing), and $0.4 billion shareholder loans (SHL)--
excluded from S&P Global Ratings-adjusted debt. The restructuring
agreement resulted in an improved capital structure, with
maturities extended to 2021, and has strengthened the company's
liquidity position. The new loan has a two-year quasi-grace
period, during which only 30% of interest payments and no
principal repayments are made, unless the cash balance exceeds
$180 million. In addition, the loan documentation restricts
Metinvest from paying dividends unless certain conditions are
met, including consolidated net leverage below 1.5x (defined as
per loan documentation) and at least 55% of bonds and PFX amounts
outstanding as of the restructuring that must have been repaid.

As of June 30, 2017, S&P Global Ratings-adjusted debt for
Metinvest was $2.95 billion. S&P said, "We also include in our
measure of adjusted debt $276 million of defined benefit pension
obligations, $115 million of trade receivables sold, $54 million
of asset retirement obligations, trade finance, and other debt
(leasing and export credit agency financing). We exclude the
shareholder loan of $443 million in our adjusted debt
calculation, since this is subordinated, has no ongoing debt
service requirements, and matures after other debt obligations."

S&P said, "The stable outlook reflects our base-case expectation
that Metinvest will be able to improve and sustain higher margins
in 2017 and thereafter, from a low base in 2015. We expect high
planned capex to constrain free operating cash flow generation
over the same period, however. We also assume that Metinvest will
maintain adequate liquidity. Furthermore, we take into account
that Metinvest's majority shareholder SCM will pose no constraint
on Metinvest and that there will be no further geopolitical risk
escalation in Ukraine. The rating on Metinvest is currently not
constrained by our view of the sovereign's creditworthiness.

"We expect that the company will maintain adjusted FFO to debt of
over 20% under normal market conditions and could withstand a
weakening to 12% under a lower commodity price scenario.

"We could lower our rating on Metinvest if its steel margins fail
to stabilize in 2018, as we expect in our base case, because this
would lead to higher leverage than we currently forecast. A
deterioration in the company's liquidity could also lead us to
review the rating. Moreover, a weakening of the credit profile of
the SCM group could squeeze the current 'B-' rating.

"Given the debt restructuring and changes in the business in
2017, a potential upgrade would hinge on the company
demonstrating, over the next 12-18 months, operating performance
in line with our base case. The credit quality of the controlling
shareholders and maintenance of sufficiently robust liquidity to
withstand a sovereign default are also factors we would consider
before taking a positive rating action."


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


BUSINESS MORTGAGE 5: Fitch Affirms CCC Ratings on 2 Tranches
------------------------------------------------------------
Fitch Ratings has upgraded five tranches of the Business Mortgage
Finance (BMF) series and affirmed 25 tranches.

The BMF transactions are securitisations of mortgages to small
and medium-sized enterprises and to the owner-managed business
community, originated by Commercial First Mortgages Limited
(CFML). Fitch has analysed the performance of the transactions
using its SME Balance Sheet Securitisation Rating Criteria.

KEY RATING DRIVERS

Robust Credit Enhancement (CE)
The five deals have deleveraged substantially and their current
notes' balances are between 12% (BMF 3) and 46% (BMF 7) of the
original issuance. The resulting increase in CE is the main
driver of the upgrades and affirmations of the senior notes of
the series.

Weaker Performance of Later Vintages
The combination of cumulative large period losses and
insufficient excess spread has led to the depletion of reserve
funds and increasing principal deficiency ledgers (PDL), driving
the ratings of the junior notes across series BMF4-7.
Specifically, the outstanding PDLs in BMF 5, 6 and 7 exceed the
balance of the class C notes and have now reached 22%, 78% and
86% of the class B notes' balance, respectively.

Decreasing Arrears
The decreasing trend of late-stage arrears continued in 2017. As
of mid-August 2017, the proportion of collateral in arrears by
more than three months was generally lower when compared with 12
months previously, with the exception of BMF 3 which saw an
increasing trend primarily driven by the declining asset balance.
The positive trend in late-stage arrears is reflected in the
Stable Outlooks across the series. However, Fitch recognises that
a large portion of the reduction is due to the sale of properties
taken into possession by the servicer.

RATING SENSITIVITIES

Further losses and increases in PDLs beyond Fitch's stresses
could lead to negative rating action, particularly on the
mezzanine and junior notes.

A material improvement in BMF 3's performance beyond Fitch's
short-term expectations, could lead to negative rating migration
for the senior and mezzanine notes. This is due to a performance-
based pro-rata amortisation trigger, without provisions for an
automatic switch back to sequential pay-down.

The rating actions are:

BMF3:
Class M notes (XS0223481838): affirmed at 'AAAsf'; Outlook Stable
Class B1 notes (XS0223482307): affirmed at 'BBBsf'; Outlook
Stable
Class B2 notes (XS0223482729): affirmed at 'BBBsf'; Outlook
Stable
Class C notes (XS0223483024): affirmed at 'BBsf'; Outlook Stable

BMF4:
Class M (XS0249508242): upgraded to 'A+sf' from 'BBB+sf'; Outlook
Stable
Class B (XS0249508754): affirmed at 'CCCsf'; Recovery Estimate
(RE) revised to 75% from 45%
Class C (XS0249509133): affirmed at 'CCsf'; RE 0%

BMF5:
Class A1 notes (XS0271320060): affirmed at 'AAAsf'; Outlook
Stable
Detachable A1 coupon (XS0271321035): affirmed at 'AAAsf'; Outlook
Stable
Class A2 notes (XS0271323163): affirmed at 'AAAsf'; Outlook
Stable
Detachable A2 coupon (XS0271323676): affirmed at 'AAAsf'; Outlook
Stable
Class M1 notes (XS0271324724): affirmed at 'CCCsf'; RE 80%
Class M2 notes (XS0271324997): affirmed at 'CCCsf'; RE 80%
Class B1 notes (XS0271325291): affirmed at 'CCsf'; RE 0%
Class B2 notes (XS0271325614): affirmed at 'CCsf'; RE 0%
Class C notes (XS0271326000): affirmed at 'Csf'; RE 0%

BMF6:
Class A1 notes (XS0299445808): upgraded to 'AAsf' from 'A+sf';
Outlook Stable
Detachable A1 coupon (XS0299535384): upgraded to 'AAsf' from
'A+sf'; Outlook Stable
Class A2 notes (XS0299446103): upgraded to 'AAsf' from 'A+sf';
Outlook Stable
Detachable A2 coupon (XS0299536515): upgraded to 'AAsf' from
'A+sf'; Outlook Stable
Class M1 notes (XS0299446442): affirmed at 'CCCsf'; RE 55%
Class M2 notes (XS0299446798): affirmed at 'CCCsf'; RE 55%
Class B2 notes (XS0299447507): affirmed at 'CCsf'; RE 0%
Class C notes (XS0299447846): affirmed at 'Csf'; RE 0%

BMF7:
Class A1 notes (XS0330211359): affirmed at 'Asf'; Outlook Stable
Detachable A1 coupon (XS0330212597): affirmed at 'Asf'; Outlook
Stable
Class M1 notes (XS0330220855): affirmed at 'CCCsf'; RE 45%
Class M2 notes (XS0330222638): affirmed at 'CCCsf'; RE 45%
Class B1 notes (XS0330228320): affirmed at 'CCsf'; RE 0%
Class C notes (XS0330229138): affirmed at 'Csf'; RE 0%


CARILLION PLC: FRC May Probe KPMG's Audit Following Collapse
------------------------------------------------------------
Christopher Williams at The Telegraph reports that KPMG is under
mounting pressure on Jan. 15 to account for its role in the
collapse of Carillion, after it gave the company's financial
statements its seal of approval only 10 months ago.

The Financial Reporting Council (FRC) on Jan. 15 signalled it was
preparing to comb the wreckage of the outsourcer for audit
failings, The Telegraph relates.

According to The Telegraph, the accounting watchdog said it had
not launched a formal investigation but as the political storm
surrounding Carillion intensified it highlighted its power to
"investigate the circumstances relating to the audit of Carillion
as well as the actions of the relevant accounting professionals".

Officials seeking access to documents were making contact with
receivers and the special managers drafted in from KPMG rival PwC
to manage the liquidation of Carillion, The Telegraph discloses.

Carillion plc employs about 43,000 people worldwide and provides
services to half the UK's prisons, as well as hundreds of
hospitals and schools.


CARILLION PLC: High Court Appoints Liquidator, Special Managers
---------------------------------------------------------------
The High Court on Jan. 15 appointed the Official Receiver as
liquidator of the Carillion Plc, Carillion Construction Limited,
Carillion Services Limited, Planned Maintenance Engineering
Limited, Carillion Integrated Services Limited, Carillion
Services 2006 Limited (collectively referred to as "the
Companies") on the petition of the Companies' directors and
simultaneously the Court also appointed Michael John Andrew
Jervis, David James Kelly, David Christian Chubb, Peter Dickens,
David Matthew Hammond and Russell Downs of PwC, as special
managers to support him.

A brief explanation of a compulsory liquidation and the roles of
the Official Receiver and special managers will appear here
shortly.  In particular, it explains that a special manager is an
officer of the court with his/her powers and functions defined by
the court.

This website will be regularly updated to provide more
information as it becomes available.

The Official Receiver's priority is to ensure the continuity of
public services while securing the best outcome for creditors.
Unless told otherwise, all employees, agents and subcontractors
are being asked to continue to work as normal and they will be
paid for the work they do during the liquidations.

Further information for employees, customers, suppliers and other
parties can be found in the sections at the foot of this page.
There will understandably be concerns about the impact of the
liquidations and we are encouraging all parties to contact and
engage with the Companies in the normal way.  Therefore, in the
first instance please contact your usual contact at the
companies.  For matters that require urgent attention from the
Special Managers please use the details below.  The Special
Managers and teams from PwC will be supporting the Companies and
their employees in order to answer questions and minimise any
disruption.

Employees: employees.carillion@uk.pwc.com
Central Government: government.carillion@uk.pwc.com
Infrastructure: infrastructure.carillion@uk.pwc.com
Corporate & Regions: corporate.regions.carillion@uk.pwc.com
Building & construction: building.carillion@uk.pwc.com
Shared Services: sharedservices.carillion@uk.pwc.com

The Special Managers are Michael John Andrew Jervis, David James
Kelly, David Christian Chubb, Peter Dickens, David Matthew
Hammond and Russell Downs.

We will also be exploring any potential sale of the businesses
and assets in whole or part.  Any party wishing to express an
interest can find our contact details in the section below.

Shareholders
Unfortunately, as a result of the liquidation appointments, there
is no prospect of any return to shareholders.

The Special Managers were appointed by the High Court to help
manage the affairs, business and property of the Companies, in
accordance with the powers and duties contained in the order
appointing them. The Special Managers act as agents of the
Companies, without personal liability.  All are licensed in the
United Kingdom to act as Insolvency Practitioners by the
Institute of Chartered Accountants in England and Wales.  The
Special Managers are bound by the Insolvency Code of Ethics.

The Special Managers are Data Controllers of personal data as
defined by the Data Protection Act 1998.  PricewaterhouseCoopers
LLP may act as Data Processor on the Special Managers'
instructions.  Personal data will be kept secure and processed
only for matters relating to the appointment.


LUDGATE FUNDING 2006-FF1: S&P Raises Class D Notes Rating to BB+
----------------------------------------------------------------
S&P Global Ratings took various rating actions on Ludgate Funding
PLC's series 2006-FF1.

Specifically, S&P has:

-- Raised and removed from CreditWatch positive S&P' ratings on
    the class A2a, A2b, Ba, and Bb notes;

-- Raised S&P's ratings on the class C and D notes; and

-- Affirmed S&P's rating on the class E notes.

The rating actions follow S&P's credit and cash flow analysis of
the transaction using information as of the September 2017
payment date and the application of our relevant criteria.

On Oct. 17, 2017, we raised our long- and short-term issuer
credit ratings (ICRs) on Barclays Bank PLC, the collection
account provider, guaranteed investment contract (GIC) account
provider, transaction account provider, liquidity facility
provider, and swap counterparty in this transaction.
Consequently, on Nov. 10, 2017, we placed on CreditWatch positive
our ratings on Ludgate Funding's Series 2006-FF1 class A2a, A2b,
Ba, and Bb notes.

Total delinquencies in this transaction are lower than in our
U.K. residential mortgage-backed securities (RMBS) buy-to-let
index, and 90+ days delinquencies decreased to 1.8% from 2.0% in
September 2016.

S&P said, "Our weighted-average foreclosure frequency (WAFF)
assumptions have increased due to the higher level of total
arrears and the greater proportion of remortgage loans and buy-
to-let loans in the pool.

"Our weighted-average loss severity (WALS) assumptions have
decreased at all rating levels due to a decrease in the weighted-
average current loan-to-value ratio, which results from our
updated valuation figures with respect to the U.K. mortgage
market and from the amortization of the repayment loans."

  Rating        WAFF     WALS
                 (%)      (%)
  AAA          24.80    40.42
  AA           17.63    32.25
  A            13.36    18.81
  BBB           9.43    11.24
  BB            5.49     7.05
  B             4.29     4.68

The notes benefit from a liquidity facility, which was reduced to
GBP5,614,518 from GBP11,384,178 following the June 2017 payment
date, and a reserve fund. These facilities are not amortizing as
the respective cumulative loss triggers have been breached.

The structure started amortizing pro rata in December 2012
because all of the pro rata triggers are currently met. S&P has
considered this in its cash flow analysis.

S&P said, "Our credit and cash flow analysis indicates that the
available credit enhancement for the class E notes is still
commensurate with the currently assigned rating. We have
therefore affirmed our 'B+ (sf)' rating on the class E notes.

"We consider the available credit enhancement for the class C and
D notes to be commensurate with higher ratings than those
currently assigned. We have therefore raised to 'BBB+ (sf)' from
'BBB (sf)' our rating on the class C notes, and to 'BB+ (sf)'
from 'BB (sf)' our rating on the class D notes.

"In our credit and cash flow analysis, we consider the available
credit enhancement for the class A2a, A2b, Ba, and Bb notes to be
commensurate with higher ratings than those currently assigned.
However, the 'A-1+' downgrade trigger specified in the
transaction documents was breached following our Nov. 29, 2011
downgrade of Barclays Bank, acting as bank account provider.
Because no remedy actions were taken following our November 2011
downgrade, our current counterparty criteria cap the maximum
potential rating on the notes in this transaction at our 'A'
long-term ICR on Barclays Bank. We have therefore raised to 'A
(sf)' from 'A- (sf)' and removed from CreditWatch positive our
ratings on the class A2a, A2b, Ba, and Bb notes."

Ludgate Funding's series 2006-FF1 is a U.K. nonconforming RMBS
transaction that closed in November 2006 and securitizes first-
ranking mortgages over freehold and leasehold properties in the
U.K.

  RATINGS LIST

  Class            Rating
            To              From

  Ludgate Funding PLC
  EUR156.4 Million, GBP271.8 Million Mortgage-Backed Floating-
  Rate Notes Series 2006-FF1

  Ratings Raised And Removed From CreditWatch Positive

  A2a       A (sf)          A- (sf)/Watch Pos
  A2b       A (sf)          A- (sf)/Watch Pos
  Ba        A (sf)          A- (sf)/Watch Pos
  Bb        A (sf)          A- (sf)/Watch Pos

  Ratings Raised

  C         BBB+ (sf)       BBB (sf)
  D         BB+ (sf)        BB (sf)

  Ratings Affirmed

  E         B+ (sf)


LUNAR FUNDING I: S&P Cuts Credit Rating to 'BB' on Series 6 Notes
-----------------------------------------------------------------
S&P Global Ratings lowered to 'BB' from 'BBB+' its credit rating
on Lunar Funding I Ltd.'s series 6.

The lowering of S&P's rating on this repackaging tranche follows
its recent downgrade of the underlying collateral.

Under S&P's criteria applicable to transactions such as this, it
would generally reflect changes to the rating on the dependent
counterparties in our rating on the tranche.

On Dec. 15, 2017, we lowered to 'BB (sf)' from 'BBB+ (sf)' S&P's
rating on the underlying collateral, the C1 notes in Mitchells &
Butlers Finance PLC's U.K. corporate securitization.
Following this, S&P has subsequently lowered to 'BB' from 'BBB+'
our rating on the series 6 tranche.

Lunar Funding I's series 6 is a repackaged transaction. The
issuer (Lunar Funding) is bankruptcy remote according to S&P's
legal criteria. The bank account and the custodian can support
the current rating on the repackaged tranche in accordance with
its current counterparty criteria.

RATINGS LIST

  Lunar Funding I Ltd.
  GBP80 mil secured asset-backed deferrable fixed rate instalment
  notes, series 6
                                 Rating
  Class         Identifier       To                 From
                XS0211830160     BB                 BBB+


MITCHELLS & BUTLERS: S&P Cuts Custodial Receipts Rating to BB(sf)
-----------------------------------------------------------------
S&P Global Ratings lowered its ratings on two custodial receipts
related to the class C1 6.469% secured notes due Dec. 15, 2032,
from Mitchells & Butlers Finance PLC to 'BB (sf)' from 'BBB+
(sf)'.

S&P said, "Our rating on the EUR63.993 million custodial receipts
is dependent on the higher of the rating on the insurance
provider, Ambac Assurance Corp. (not rated) and the rating on the
underlying security, Mitchells & Butlers Finance PLC's class C1
6.469% secured notes due Dec. 15, 2032 ('BB (sf)').

"Similarly, our rating on the GBP16.007 million custodial
receipts is dependent on the higher of the rating on the
insurance provider, Ambac Assurance U.K. Ltd. (not rated) and the
rating on the underlying security, also Mitchells & Butlers
Finance PLC's class C1 6.469% secured notes.

"The rating actions reflect the Dec. 15, 2017, lowering of our
rating on the underlying security to 'BB (sf)' from 'BBB+ (sf)'.

"We may take subsequent rating actions on these transactions due
to changes in our rating assigned to the underlying security or
insurance providers."


NEW LOOK: Potential Buyers Mull Bids as Value of Bonds Drops
------------------------------------------------------------
Pui-Guan Man at Drapers reports that prospective buyers are
reportedly mulling bids to take over struggling retailer New
Look, as the value of its bonds declines.

These are understood to include hedge funds and vulture funds,
Drapers discloses.

It emerged last week that New Look was thought to be mulling up
to 60 shop closures, amounting to 10% of its UK estate, and that
a company voluntary arrangement one of several options being
discussed, Drapers relates.

It is understood that Deloitte has been drafted in to advise the
retailer on its options, Drapers notes.

Earlier this month, some credit insurers for New Look suppliers
withdrew their cover amid concerns over its poor performance,
Drapers recounts.

New Look is majority-owned by South African listed investment
firm Brait, which is partly owned by retail tycoon Christo Wiese.


ZARA UK: S&P Assigns Preliminary 'B' CCR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings said that it assigned its preliminary 'B'
long-term corporate credit rating to Zara UK Topco Ltd., the
common holding company of the Flamingo and Afriflora groups,
which supply and distribute flowers and premium vegetables in
Europe.

S&P said, "At the same time, we assigned our preliminary 'B'
issue rating to the proposed senior secured facilities consisting
of a EUR280 million term loan B maturing in 2025 and EUR30
million revolving credit facility (RCF) maturing in 2024. We
assigned a preliminary recovery rating of '3', indicating our
expectation of meaningful recovery (rounded estimate: 50%) in the
event of default.

"The final rating will depend on our receipt and satisfactory
review of all final transaction documentation. Accordingly, the
preliminary rating should not be construed as evidence of the
final rating. If the terms and conditions of the final
transaction depart from the material we have already reviewed, or
if the transaction does not close within what we consider to be a
reasonable time frame, we reserve the right to withdraw or revise
our ratings."

The rating reflects the Flamingo group's position as one of
leading U.K. suppliers and distributors of flowers and premium
vegetables, with about GBP440 million-GBP450 million in pro-forma
revenues in 2017, of which about 80% originate from the U.K.
market. The company's key clients include premium retailers and
supermarkets such as Tesco, M&S, and Sainsbury's. Flamingo runs
more than 670 hectares of farming operations (mainly in Kenya)
representing about 35% of the company's total sourcing
production. The remainder is sourced through long-term agreements
with third-party global suppliers.

Afriflora is a leading producer and wholesaler of cut roses to
European discounter retailers (such as Lidl, Netto, and Aldi)
with a revenue base of about EUR120 million spread across
Germany, Poland, and the Nordic and other European regions. The
company runs more than 450 net hectares of farming operations in
Ethiopia with 100% of flowers self-produced.

Sun Capital, indirectly through its controlled affiliate Blooming
Holding B.V. signed an agreement to acquire Afriflora in November
2017. The Flamingo and Afriflora groups will be consolidated
under a common parent entity, Zara UK Topco Ltd. (ultimate group
parent).

Flamingo and Afriflora together will create a European leader in
the supply of flowers and premium vegetables, supported by a
vertically integrated business model and sound long-term
relationship with its key clients (supermarkets, premium
retailers, and discounters). S&P expects the Flamingo and
Afriflora groups together to have generated about GBP550 million-
GBP560 million and GBP60 million-GBP65 million for 2017, in terms
of revenues and EBITDA, respectively.

S&P said, "Our assessment of Flamingo-Afriflora's business risk
profile reflects the group's concentration on flowers (mainly
roses) representing about 65% of revenues. We believe that flower
products are naturally highly discretionary and are therefore
more vulnerable to potential changes in consumer preferences than
other non-durable consumer products."

Zara UK Topco group also has limited geographical
diversification, with focus on the U.K. market (about 65% of
sales), and it has a relatively high customer concentration with
its top two clients accounting for more than 50% of sales,
whereas its top five clients account for about three-quarters of
sales.

The group' sourcing scheme includes in-house production (60%-65%
of total flower volume) coupled with agreements with third party
global suppliers. S&P notes that the group's owned farming
operations are mainly focused on just two African countries
(Ethiopia and Kenya) and it considers this to represent an
additional operational risk (linked, for example, to sourcing
activities, logistics, currency volatility, and weather
conditions).

S&P said, "Positively, we note that the group's vertical
integration business model creates some protection in terms of
barriers to entry. Additionally, we recognize that operating of
the two businesses under a common parent entity may generate both
revenue synergies (through cross-selling activities, considering
there is no customer overlap between Flamingo and Afriflora) and
cost savings (especially in terms of procurement and farming)."

The group has well established long-term relationships with its
key customers, with its top five clients having an average
relationship of about 15 years, and no loss of any material
customers over the past 10 years.

S&P said, "In our business assessment, we also account for the
positive industry potential over the short-to-medium term. We
expect the flower industry to continue to expand by around 1%-3%
thanks to the generally low entry product price-point, changes in
consumer preference in using flowers not just as gifts but also
for personal use, and the increasing market share of online and
supermarkets as distribution channels (rather than traditional
florist channel). We also expect the expansion in the premium
vegetable sector to continue (about 30% of total group sales),
mainly underpinned by healthier consumer preferences.

"The business risk profile is also supported by our expectation
of a relatively good profitability level within this niche
industry--with an S&P Global Ratings-adjusted EBITDA margin of
about 10.0%-11.0% during 2018-2020.

"Our assessment of the group's financial risk profile reflects
our estimate of adjusted debt to EBITDA sustainably below 5.0x
over the short-to-medium term. Under our base case, we forecast a
moderate deleveraging trend, mainly owing to gradual
strengthening in EBITDA. At the same time, we expect the group to
post positive recurring free operating cash flow (FOCF; after
working capital requirements and capital investments).

"Our assessment of the company's financial risk profile is also
in line with the financial sponsor ownership structure of the
group, with private equity firm Sun Capital holding the
controlling interest."

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

-- About mid-single-digit revenue organic growth for fiscal
    years 2018-2019 mainly supported by vegetables products and
    the Afriflora business. Additionally, the top line in 2018
    will also benefit from Flamingo's September 2017 acquisition
    of Butters Group Ltd. Butters supplies indoor and outdoor
    plants and flowers, focusing on U.K. supermarkets.

-- Modest and gradual improvements in profitability, with
    adjusted EBITDA margins of 10.0%-11.0%, assuming positive
    synergies from the Flamingo and Afriflora transaction and an
    increasing contribution from self-production.

-- Annual capital expenditure (capex) of about GBP15 million-
    GBP20 million to support the increase in internal production
    capacity (in Ethiopia, Kenya, and South Africa).

-- No dividend payment and acquisition.

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

-- Adjusted debt to EBITDA of 4.7x-4.4x over the next two years.
-- Adjusted FOCF to debt of 7%-8% over 2018-2019.

S&P said, "The stable outlook reflects our view that Zara UK
Topco Ltd. will be able to generate positive FOCF of about GBP20
million or higher, and improve its top-line base and
profitability thanks to synergies coming from the Flamingo and
Afriflora transaction. In our base case, we project that the
group will maintain S&P Global Ratings-adjusted debt to EBITDA
sustainably below 5.0x, and sound EBITDA-to-interest-coverage of
around 5.0x.

"We could lower our rating if the group reported integration
issues associated with higher volatility in credit metrics, or in
case its reported FOCF were lower than we currently anticipate.
This could arise if the operating conditions of the company's
relevant markets worsened, for example because of losses through
foreign exchange without the possibility of passing on costs to
customers, or the loss of one of its main customer relationships.

"We could take a positive rating action if the group demonstrated
a track record of recurring and significant positive organic
expansion combined with sustainable improvements in
profitability. This would ultimately translate in a clear
deleveraging trend and healthy cash flow generation. The company
should also demonstrate higher earnings diversification by
product, end-markets, and customers."



                            *********

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

Copyright 2018.  All rights reserved.  ISSN 1529-2754.

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

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

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


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