/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/180206.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 Tuesday, February 6, 2018, Vol. 19, No. 026 Headlines F R A N C E ELIS SA: Moody's Rates EUR3BB Euro Medium Term Note (P)Ba2 ELIS SA: Fitch Rates EUR3BB EMTN Programme 'BB+(EXP)' I R E L A N D CARLYLE GLOBAL 2014-3: Fitch Rates EUR13MM Class E-R Notes 'B-sf' OZLME III: S&P Rates EUR12-Mil. Class F Notes 'B-(sf)' L U X E M B O U R G TI LUXEMBOURG: Moody's Assigns B2 CFR, Outlook Stable TI LUXEMBOURG: S&P Assigns 'B' Long-Term CCR, Outlook Stable N E T H E R L A N D S VODAFONEZIGGO GROUP: S&P Alters Outlook to Neg.; Affirms BB- CCR N O R W A Y NORSKE SKOGINDUSTRIER: Opts to Delist Shares Following Bankruptcy R U S S I A CB INTERNATIONAL: Liabilities Exceed Assets, Assessment Shows DME AIRPORT: Fitch Assigns 'BB+(EXP)' Rating to USD 5-Year Notes * Moody's Takes Rating Actions on 29 Russian RMBS Deals S P A I N IM GBP: Moody's Affirms Caa2(sf) Rating on Class B Notes MBS BANCAJA 2: Fitch Affirms 'CCsf' Rating on Class F Debt T U R K E Y SEKERBANK TAS: Fitch Affirms B+ Long-Term IDR, Outlook Stable U N I T E D K I N G D O M CARILLION PLC: Ex-Finance Chief to Give Testimony to MPs Today CARILLION PLC: Greybull Capital Eyes Asset Acquisition CARILLION PLC: UK Government Announces Another 452 Job Cuts KEMBLE WATER: Fitch Affirms 'BB-' Long-Term Issuer Default Rating ROYAL BANK: Moody's Puts Ba1 Sub. Rating on Review for Downgrade WEST BROMWICH: Moody's Affirms B1 Long-Term Bank Deposit Rating ********* =========== F R A N C E =========== ELIS SA: Moody's Rates EUR3BB Euro Medium Term Note (P)Ba2 ---------------------------------------------------------- Moody's Investors Service has assigned a provisional (P)Ba2 rating to Elis S.A.'s (Elis) EUR3 billion Euro Medium Term Note (EMTN) programme. The outlook on the rating is stable. This is the first EMTN programme established by Elis. Moody's expects that any near term proceeds from drawdowns under the EMTN programme will (1) be used to refinance outstanding amounts under the company's EUR1,920 million bridge term facility raised as part of the acquisition of Berendsen plc (Berendsen), (2) may be used to redeem existing debt, and (3) may be used for general corporate purpose of the group, as described in the prospectus. The EMTN programme will thus contribute to extending Elis' maturity profile because the bridge term facility has an initial 12-month term extendable by a further 6+6 months at the option of the company. As of the date of the announcement of the EMTN programme, Elis had already refinanced EUR875 million under the bridge term facility with proceeds from (1) the EUR200 million capital increase in September 2017 subscribed by the Canada Pension Plan Investment Board (CPPIB), one of Elis' largest shareholders, (2) the issuance of EUR400 million of convertible bonds due 2023, (3) the raising of EUR200 million of syndicated term loan, and (4) the raising of EUR75 million of Shuldschein notes. RATINGS RATIONALE "The (P)Ba2 unsecured rating assigned to the EMTN programme is at the same level as the instrument rating on Elis' EUR800 million senior unsecured notes due 2022 (the high yield bonds) due to their pari passu ranking alongisde Elis' other facilities including those raised prior to the acquisition of Berendsen", says Sebastien Cieniewski, Moody's lead analyst for Elis. While the EMTN programme and Elis' other facilities, except for the EUR400 million commercial paper programme, share the same guarantee (cautionnement solidaire de droit franáais) from M.A.J., a direct subsidiary of Elis, this guarantee is limited to the amount of the proceeds from the debt facilities that are on- lent by Elis to M.A.J. Moody's understands that the relative amount of proceeds being on-lent is limited. The rating also takes into consideration (1) the resilience of Elis' business as demonstrated by the company's performance throughout the last economic cycle, (2) the leading position in its core markets with a large scale of operations considered as a key competitive advantage, (3) the good geographical diversification with presence in 28 countries pro forma for the acquisition of Berendsen plc (Berendsen), and (4) the good visibility on future revenue streams thanks to the long-term nature of contracts. These factors are balanced to an extent by (1) the challenging trading in Elis' and Berendsen's core French and British markets, respectively, (2) the projected weak pro forma free cash flow (FCF) generation of the group projected over the next 24 months due to a moderately higher level of capital expenditures required to upgrade Berendsen's plants and machinery in the United Kingdom, (3) the relatively high pro forma adjusted leverage for the rating category projected by Moody's at around 3.9x-4.0x by the end of 2017, and (3) the higher integration risk related to the acquisition of Berendsen relative to Elis' previous transactions due to its significantly larger scale and geographical span. In fiscal year (FY) 2017, Elis experienced a 2.4% organic revenue growth driven by an improving environment in France, where the company grew at 1.4%, as well as weak comparables in 2016 when the company's hospitality business in the country was negatively impacted by successive terrorist attacks. Growth in France was complemented by the Southern Europe and Latin America regions with organic growth rates of 5.6% and 7.0%, respectively. Alongside the announcement of the 2017 unaudited results, management indicated its target for Elis to reach revenues of above EUR3.2 billion for FY 2018 with an EBITDA margin improvement of c.150bps compared to prior year. Elis' liquidity position has been recently enhanced with the signing in November 2017 of a new EUR400 million revolving credit facility (RCF), undrawn at its closing, to complement Elis' other committed credit lines, including a EUR500 million RCF, which was undrawn as of December 31, 2017. The stable outlook reflects Moody's expectation that Elis' pro forma revenues will continue growing at above 2% on an organic basis over the next 3 years while maintaining the EBITDA margin (as reported by the company) at above 30%. In addition, Moody's expects Elis to maintain a conservative financial policy with net leverage (as reported by the company) at around 3.0x and a good liquidity position by generating a positive FCF from 2018. The stable outlook also assumes that Elis will refinance the bridge facility drawings well in advance of its 2 year maturity (assuming extensions are exercised) with longer-dated facilities significantly extending the group's maturity profile. WHAT COULD CHANGE THE RATING -- UP/DOWN Positive pressure on the Ba2 rating could develop if Elis' operating performance continues to improve, allowing for the company's leverage, measured by Moody's adjusted debt/EBITDA, to move towards 3x with a retained cash flow (RCF)/ Net Debt ratio remaining above 20%. On the other hand, negative pressure could develop if Elis' leverage remains above 4.0x for a sustained period of time or if Moody's becomes concerned about the company's liquidity. The principal methodology used in this rating was Business and Consumer Service Industry published in October 2016. Elis is a France-based multiservice provider of flat linen, garment and washroom appliances, water fountains, coffee machines, dust mats and pest control services. For the financial year ended December 31, 2017 it reported total revenues of EUR2.215 billion and an adjusted EBITDA margin (as reported by the company) expected at around 30%. ELIS SA: Fitch Rates EUR3BB EMTN Programme 'BB+(EXP)' ----------------------------------------------------- Fitch Ratings has assigned Elis S.A's planned EUR3 billion EMTN programme an expected senior unsecured rating of 'BB+(EXP)'. This is the same level as the Issuer Default Rating (IDR) of 'BB+' reflecting average recovery prospects for bondholders in case of default. The final rating is contingent upon the receipt of final documents conforming to information already received by Fitch. The notes issued under the EUR3 billion EMTN programme will be unsecured and guaranteed by M.A.J, the group's main operating subsidiary, owning most of the other operating subsidiaries and acting as head of the group's cash pooling structure (excluding Berendsen). The issued notes will rank pari passu with all other unsubordinated, unsecured indebtedness of the issuer and are subject to a negative pledge (not including private debt). The proceeds will be used for the repayment of some of the group's outstanding debt, including the bridge loan used to partly finance the acquisition of Berendsen, for general corporate purposes or on-lent, or made available to the guarantor. Elis will not have any meaningful debts at its subsidiaries, eliminating the risk of structural subordination for unsecured creditors at Elis SA. The 'BB+' IDR reflects Elis's strong business profile following the transformational acquisition of Berendsen, which improves the group's scale, market position and diversification and will allow for future cost and capex savings. Profitability is strong relative to rated peers, but post transaction leverage will remain high and deleveraging will be contingent on management's ability to generate cost savings from the acquisition as well as other areas of the business. The high leverage reduces the headroom at the current rating; the lack of meaningful deleveraging could put the ratings under pressure over the medium term. KEY RATING DRIVERS Stronger Business Profile: The acquisition of Berendsen by Elis, which completed in September 2017, positions the group quite strongly among its European business service peers, as a leader in rental services of flat linen, work clothes, hygiene, and well-being equipment in most of the markets in which it operates. The combined group's business profile will benefit from a strengthened market position, scale and both segment and geographic diversification outside of its core French market. Overall, Fitch view the group's business profile as commensurate with an investment grade profile. Resilient Income Base: Elis's rating reflects the high proportion of contracted earnings and low churn rate. In their contractual arrangements with the group, customers typically pay for a minimum volume of services covering the initial investments. Elis builds sustainable relationships with its customers, as illustrated by multi-year contracts (the average length of its customer relationship is eight years). Service providers benefit from the ongoing trend for outsourcing and workwear rental and laundry services, in particular given increasingly stringent regulatory and safety requirements. The new group's scale should also lead to improved quality, reliability and pricing, which are key differentiators given the associated reputation risk. Stronger Diversification: Prior to the Berendsen acquisition, Elis was highly oriented towards the French market, which generated 57% of sales and about 75% of EBITDA. These numbers will now fall to about 32% and 35%, respectively. This reduces the group's exposure to the risk of individual economies slowing down. It also opens up the potential for Elis to grow in other markets that are not overly concentrated, providing good opportunities for organic growth and bolt-on acquisitions. The acquisition will also reduce Elis's exposure to the more cyclical hospitality segment, which also brings an element of seasonality, boosting its presence in workwear across different segments, and healthcare. Limited Leverage Headroom: Elis's rating is constrained by its aggressive financial structure with FFO adjusted gross leverage at about 5.6x in 2018. However, the rating assumes that it will deleverage to below 5.0x thereafter. This level is considered high for the current rating, compared with rated peers. As a result, Elis's financial flexibility is very limited and should there be no evidence of a steady deleveraging path within two years, the ratings could come under pressure. Balancing this Fitch expect that the group will be cash generative, which coupled with improving profitability, should lead to sustained deleveraging capacity. Management has stated that net debt/EBITDA (as calculated by Elis) will be around 3.0x by FY18. Moderate Integration Risks: Given the scale of the acquisition of Berendsen, and the different operating environments in the UK and Europe, Fitch believe that there could be some risks with the potential cost savings, especially from the UK where Berendsen was underperforming. However, Fitch expect that Elis should deliver on the EUR40 million per year guided by management. It has a good track record of integrating acquisitions, albeit of much smaller scale, and improving market positions in different regions. These mainly relate to central costs and corporate overheads, while the enlarged group should also see some economy of scale benefits. Fitch have also included some smaller cost savings following the acquisitions of Lavebras and Indusal in 2017. Good FCF Generating Ability: Fitch expect the group will be able to generate strong and improving FCF as a result of improving profitability, coupled with lower capex. Fitch forecast that industrial capex will be somewhat higher in 2018 and 2019 driven by the acquisition but that it will settle at about 6.5% of sales (excluding purchase of linen) from 2020. After considering some further outflows for annual bolt on acquisitions, Fitch expect that the group will continue to generate cash, which should allow for some level of gross debt reduction in the medium term. DERIVATION SUMMARY Elis is one of the leading providers of flat linen globally. Following its acquisition of Berendsen in 2017, the group solidified its market position in Europe, while it also has growing operations in Latin America. Similar to business services peer Elior (BB/Stable), Fitch consider that the group has many characteristics that are commensurate with an investment grade profile. However, the business profiles of both entities are not as strong as Compass Group plc (A-/Stable) and Sodexo S.A (BBB+/Stable), which provide contract catering services globally, and also have stronger financial profiles. Fitch view Elior and Elis's financial profiles as comparable, with slightly higher leverage for Elis but also higher profitability and significantly higher FFO fixed charge coverage. Fitch view diversification as the main differentiating characteristic between Elis and Elior. Elior has a larger concentration in France. This factor has improved considerably after completing the Berendsen acquisition. KEY ASSUMPTIONS Fitch's Key Assumptions Within Fitch Rating Case for the Issuer - Organic growth of roughly 2% per year complemented with some small size bolt-on acquisitions - EBITDA margins (after reclassification of linen investments as operating costs) improving to over 21% by 2019 - Slight annual working capital outflows - Slightly higher capex (excluding linen investments) in 2018 and 2019 following the Berendsen acquisition before stabilising from 2020 - Small annual increases in dividends in line with increased amount of shares and driven by improved profitability - Some annual outflows (EUR70 million) considered for bolt-on acquisitions - Some early debt repayments such that the year-end cash balance remains stable RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Successful integration of Berendsen and realisation of synergies leading to improved operating performance and resulting in FFO adjusted gross leverage falling to below 4.0x or FFO adjusted net leverage below 3.5x on a sustained basis, coupled with: - FFO fixed charge coverage remaining above 4.0x on a sustained basis - FCF margin above 5% on a sustained basis Developments That May, Individually or Collectively, Lead to Negative Rating Action - Lack of visibility related to FFO adjusted gross leverage falling to 5.0x or FFO adjusted net leverage falling to 4.5x over the rating horizon, possibly as a result of lower than expected cost savings following the acquisition or weak organic growth - Weak FCF margin below 2% as a result of operational weakness, other unexpected cash outflows or sustainably increased dividends LIQUIDITY Good Liquidity: Following the issuance of the planned new notes effectively refinancing the 2017 bridge facility, there will be no material maturity until 2022, when the EUR800 million unsecured notes and senior credit facilities come due for repayment. Fitch expect that the group will maintain a year-end cash balance of around EUR250 million per annum, while the group's liquidity is backed up by two undrawn revolving credit facilities totalling EUR900 million (EUR400 million is used as a back-up for commercial paper). ============= I R E L A N D ============= CARLYLE GLOBAL 2014-3: Fitch Rates EUR13MM Class E-R Notes 'B-sf' ----------------------------------------------------------------- Fitch Ratings has assigned Carlyle Global Market Strategies Euro CLO 2014-3 DAC refinancing notes final ratings, as follows: EUR3 million Class X: 'AAAsf'; Outlook Stable EUR265.75 million Class A-1A-R: 'AAAsf'; Outlook Stable EUR5.25 million Class A-1B-R: 'AAAsf'; Outlook Stable EUR22 million Class A-2A-R: 'AAsf'; Outlook Stable EUR20 million Class A-2B-R: 'AAsf'; Outlook Stable EUR26 million Class B-R: 'Asf'; Outlook Stable EUR22.5 million Class C-R: 'BBBsf'; Outlook Stable EUR32.5 million Class D-R: 'BBsf'; Outlook Stable EUR13 million Class E-R: 'B-sf'; Outlook Stable Carlyle Global Market Strategies Euro CLO 2014-3 DAC is a cash flow collateralised loan obligation (CLO). The proceeds of this issuance are being used to redeem the existing notes, with a new identified portfolio comprising the existing portfolio, as modified by sales and purchases conducted by the manager. The portfolio is managed by CELF Advisors LLP. The refinanced CLO envisages a further 4.5 year reinvestment period and an 8.75 year weighted average life (WAL). KEY RATING DRIVERS B' Portfolio Credit Quality Fitch places the average credit quality of obligors in the 'B' range. The Fitch weighted average rating factor (WARF) of the current portfolio is 33.3. High Recovery Expectations At least 90% of the portfolio will comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the current portfolio is 68%. Limited Interest Rate Exposure Fixed-rate liabilities represent 5.8% of the target par, while fixed-rate assets can represent up to 10% of the portfolio. The transaction is therefore partially hedged against rising interest rates. Diversified Asset Portfolio The transaction features two different Fitch test matrices with different allowances for exposure to the 10 largest obligors (maximum 18% and 26.5%). The manager can then interpolate between these two matrices. This covenant ensures that the asset portfolio will not be exposed to excessive obligor concentration. Hedged Non-Euro Assets Exposure The transaction is permitted to invest up to 20% of the portfolio in non-euro assets, provided perfect asset swaps can be entered into. VARIATIONS FROM CRITERIA The "Fitch Rating" definition was amended so that assets that are not expected to be rated by Fitch, but are rated privately by the other rating agency rating the liabilities, can be assumed to be of 'B-' credit quality for up to 10% of the aggregate collateral balance. This is a variation from Fitch's criteria, which require all assets unrated by Fitch and without public ratings to be treated as 'CCC'. The change was motivated by Fitch's policy change of no longer providing credit opinions for EMEA companies over a certain size. Instead Fitch expects to provide private ratings that would remove the need for the manager to treat assets under this leg of the "Fitch Rating" definition. The amendment has only a small impact on the ratings. Fitch has modelled the transaction at the pricing point with 10% of the 'B- ' assets with a 'CCC' rating instead, which resulted in a two- notch downgrade at the 'A' rating level and a one-notch downgrade at other rating levels. TRANSACTION SUMMARY The issuer has amended the capital structure and reset the maturity of the notes as well as the reinvestment period. The transaction features a 4.5-year reinvestment period, which is scheduled to end in 2022. The issuer has introduced the new class X notes, ranking pari passu and pro-rata to the class A-1 notes. Principal on these notes is scheduled to amortise in eight equal instalments starting from the first payment date. Class X notional is excluded from the over-collateralisation tests calculation, but a breach of this test will divert interest and principal proceeds to the repayment of the class X notes. RATING SENSITIVITIES A 125% default multiplier applied to the portfolio's mean default rate, and with this increase added to all rating default levels, would lead to a downgrade of up to two notches for the rated notes. A 25% reduction in recovery rates would lead to a downgrade of up to five notches for the rated notes. OZLME III: S&P Rates EUR12-Mil. Class F Notes 'B-(sf)' ------------------------------------------------------ S&P Global Ratings assigned its credit ratings to OZLME III DAC's class X, A-1, A-2, B-1, B-2, C, D, E, and F fixed- and floating- rate notes. At closing, OZLME III also issued an unrated subordinated class of notes. OZLME III is a European cash flow collateralized loan obligation (CLO) securitizing a portfolio of primarily senior secured euro- denominated leveraged loans and bonds issued by European borrowers. Och-Ziff Europe Loan Management Ltd. is the collateral manager. S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average 'B' rating. We consider that the portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow collateralized debt obligations. "In our cash flow analysis, we used the EUR400 million target par amount, a weighted-average spread (3.65%), a weighted-average coupon (5.00%), and weighted-average recovery rates at each rating level. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category." Citibank N.A., London branch is the bank account provider and custodian. The documented downgrade remedies are in line with our current counterparty criteria. Following the application of its nonsovereign ratings criteria, S&P considers that the transaction's exposure to country risk is sufficiently mitigated at the assigned rating levels. This is because the concentration of the pool comprising assets in countries rated lower than 'A-' is limited to 10% of the aggregate collateral balance. The issuer is bankruptcy remote, in accordance with S&P's legal criteria. Following S&P's analysis of the credit, cash flow, counterparty, operational, and legal risks, S&P believes its ratings are commensurate with the available credit enhancement for each class of notes. RATINGS LIST OZLME III DAC EUR413.90 Million Senior Secured Floating- And Fixed-Rate Notes And Subordinated Notes Class Rating Amount (mil. EUR) X AAA (sf) 2.00 A-1 AAA (sf) 225.00 A-2 AAA (sf) 10.00 B-1 AA (sf) 35.50 B-2 AA (sf) 20.00 C A (sf) 26.50 D BBB (sf) 21.00 E BB (sf) 22.00 F B- (sf) 12.00 Sub NR 39.90 Sub--Subordinated notes. NR--Not rated. =================== L U X E M B O U R G =================== TI LUXEMBOURG: Moody's Assigns B2 CFR, Outlook Stable ----------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating (CFR) and a B2-PD Probability of Default Rating (PDR) to TI Luxembourg S.A. (Tractel). Concurrently, Moody's assigned a B2 rating to the senior secured EUR275 million term loan B with 7 years tenor which includes a USD carve out of approximately EUR50 million equivalent and a B2 rating to the senior secured EUR45 million revolving credit facility with 6 years tenor. The outlook on the ratings is stable. The proceeds of the contemplated transaction will be used to refinance the existing debt, finance the acquisition of Scanclimber and prepay part of the existing shareholder loan. Pro-forma for the transaction, cash on balance sheet will amount to EUR20 million. The ratings are conditional upon the shareholder loan meeting all of Moody's criteria for equity credit. RATINGS RATIONALE Tractel's B2 CFR is primarily supported by (1) its strong market position in small but with meaningful entry barrier niche markets which has supported its long track record of very high profitability for the manufacturing industry, (2) resilient and strong cash flow generation supported by high profitability, low capex and working capital needs, (3) some diversification in terms of products and geographies with no customer concentration and (4) strong liquidity position. At the same time, the CFR is constrained by (1) the company's small size being one of the smallest manufacturing companies in Moody's rated universe (2) its exposure to cyclical end-markets such as construction representing around 50% of its end-markets and overall moderate sales visibility, (3) the elevated leverage for the rating category with Moody's adjusted debt/EBITDA reaching 6.3x as of Dec. 2017 pro-forma for the new capital structure (5.6x when including EBITDA contribution of recently acquired Scanclimber) and expected range of 5.7-5.8x for FY2018 because of upfront investments in sales force, (4) low organic growth historically of 1-2% per annum post financial crisis and (5) its shareholder oriented financial policy as evidenced by the repayment of a large portion of the existing shareholder loan as part of the proposed refinancing transaction and risks of further debt-funded acquisitions. STRUCTURAL CONSIDERATIONS The new EUR275 million term loan B (split into EUR225 million term loan B1 and USD equivalent of EUR50 million term loan B2) and the new EUR45 million revolving credit facility are rated in line with the CFR. The instruments are senior secured, share the same security package, rank pari passu and are guaranteed by a group companies representing at least 80% of the consolidated group's EBITDA. The revolving credit facility is subject to a springing covenant. Borrowers are TI Luxembourg S.A. (Tractel) and other local subsidiaries (TI Expansion S.A., Tractel International SAS, Tractel GmbH and Finnish Bidco). Moody's has considered the security package, consisting of shares, bank accounts and intragroup receivables, as limited. Moreover, Moody's has used a recovery rate of 50% reflecting the agency's view of a covenant-lite structure. LIQUIDITY Tractel's liquidity position will be good at closing of the transaction as illustrated by a cash on balance sheet pro-forma for the refinancing, acquisition and pre-payment of part of the shareholder loan of around EUR20 million and a sizeable new and fully undrawn revolving credit facility of EUR45 million. The liquidity profile will improve over time supported by Tractel's strong funds from operations expected to aggregate to around EUR40 million for the next six quarters. Moody's believes that these sources should comfortably cover the working capital and capex requirements for the period. There are no major debt maturities until 2025 when the new term loan B matures. Liquidity profile is further characterized by the existence of only one springing covenant (net leverage with ample headroom) to be tested only when the revolving credit facility is drawn by more than 30%, which the rating agency does not expect in the next 12- 18 months. OUTLOOK The stable outlook reflects Moody's expectations that in the next 12-18 months, Tractel will be able to successfully integrate Scanclimber and maintain a high level of business efficiency. The stable outlook also balances the rating agency's expectation of a gradual deleveraging towards 5.5x Moody's adjusted debt/EBITDA. WHAT COULD CHANGE THE RATING UP/DOWN Upward pressure on the ratings could develop if Tractel is able to (1) successfully integrate Scanclimber, (2) grow its revenues and further diversify its business profile while maintaining strong profitability, (3) improve its Moody's adjusted debt/EBITDA ratio below 4.5x on a sustainable basis, and (4) maintain a strong cash flow generation with Moody's adjusted free cash flow in excess of EUR20 million. Downward pressure on the ratings could arise if (1) Tractel is not able to successfully integrate Scanclimber or maintain a high level of efficiency within its business (2) Tractel's leverage increases to above 6.0x on a gross basis with Moody's adjustments, (3) its Moody's adjusted free cash flow deteriorates towards break-even or (4) its liquidity position weakens. The principal methodology used in these ratings was Global Manufacturing Companies published in June 2017. PROFILE Headquartered in Luxembourg, TI Luxembourg S.A. (Tractel) is a global specialist provider of working-at-heights and safety products and solutions, which designs, develops, assembles and distributes lifting and handling equipment, load measurement equipment, suspended platforms, various access at height equipment and height safety equipment. The sales split between business segments is the following: Lifting & Handling (22% of 2016 sales), Temporary Access (17%), Permanent Access (26%), Height Safety (22%), and Services (13%). The company operates 13 manufacturing facilities located in Europe, North America and Asia and employs approximately 860 people. Tractel has been owned by funds advised by Cinven since October 2015. TI LUXEMBOURG: S&P Assigns 'B' Long-Term CCR, Outlook Stable ------------------------------------------------------------ S&P Global Ratings assigned its 'B' long-term corporate credit rating to TI Luxembourg S.A. (Tractel), a Luxembourg-based manufacturer and provider of working-at-heights and safety products and solutions. The outlook is stable. S&P said, "In addition we assigned a 'B' issue credit rating to the proposed senior secured term loan B worth EUR275 million (of which the equivalent EUR50 million is to be issued in U.S. dollars) and to the senior secured revolving credit facility (RCF) worth EUR45 million. The recovery rating on these instruments is '4', indicating our expectation of 40% recovery in the event of a payment default." Tractel manufactures and provides working-at-heights and safety products and solutions. Headquartered in Luxembourg, the group operates mostly across Europe and North America, maintaining a wide range of products. Europe accounts for about 45% where France accounts for about 15%; North America represents around 50%; and Asia accounts for the remainder. S&P expects the group's revenues to hover at approximately EUR190 million. S&P said, "We believe Tractel's business profile benefits from its long experience in the highly regulated domain of building safety standards and security at construction sites. Part of the group's business, slightly less than 50% of its revenues, is exposed to the cyclical construction sector, particular as concerns the group's permanent access projects. An equally important share of the group's revenues, however, derives from the need to comply with ever-stricter regulation on security standards at existing buildings and maintenance needs of high installations and elevators, contributing to mitigate exposure to business cycles. The company's end markets are diverse and range from energy to infrastructure to mining, telecoms, and utilities, which in our view mitigates the risk of exposure to the cyclical construction sector. The group's capacity of maintaining comfortable EBITDA margins during times of adverse economic conditions, as observed over 2009-2014, stems, in our view, from the combination of the group's brand recognition and its flexible cost structure." S&P said, "These strengths are mitigated in our view by Tractel's concentration in Europe and the U.S, while it is underrepresented in fast-growing Asia. In addition, the share of noncyclical services in the revenue mix is relatively low, accounting for a mere 13%, although the company plans to increase it over the business plan. Because Tractel operates in relatively small and local regulation-driven markets, it relies on the acquisition of at least equally profitable peers operating in market niches, which would support the group's efforts to increase the penetration of sales, adding technologies and solutions to its offering and strengthening its distribution network. We believe the acquisition of U.S.-based SPG in 2015 and the more recent agreement to acquire Finnish Scanclimber in December 2017 fit well with the group's strategic priorities, in terms of growing its revenues in and outside its core markets and strengthening relationships with distributors, who account for approximately half of the group's sales. In addition, the rapid change of fundamentals in some of its end markets can weigh on revenue growth, as seen by the company's decision to exit business with wind generators in 2010-2014." Tractel plans to refinance its outstanding debt of around EUR215 million and to fund the EUR30 million acquisition of Scanclimber with a new term loan of EUR275 million. After transaction-linked costs, remaining proceeds will be held on balance sheet. In its base-case scenario for Tractel, S&P estimated total adjusted debt of approximately EUR280 million, which includes the targeted term loan of EUR275 million and about EUR6 million of unfunded pension liabilities. S&P's estimate does not include EUR140 million of the shareholder loan. S&P said, "Following the refinancing, we estimate that Tractel's S&P Global Ratings-adjusted debt-to-EBITDA ratio will be close to 5.0x by the group's fiscal year-end, Dec. 31, 2018. This is based on our expectation of slightly lower EBITDA margins in 2018 burdened by the cost linked to the acquisitions and the implementation of the efficiency program (known as TG2). By 2020, we expect the reported EBITDA margin to increase by 1.7 basis points, mainly as a result of higher efficiency. In our base-case scenario, the moderate increase in EBITDA, coupled with a high cash conversion over 2018-2020, will drive develeraging and bring adjusted DEBT/EBITDA below 5x. "While supported by low capital intensity, high cash conversion, and positive free cash flow generation, we believe Tractel's financial risk profile is constrained by the control exercised by Cinven, a private equity firm. Despite our belief that the controlling shareholder will support Tractel by relinquishing dividend payments over 2018-2020 and waiving its rights to call the existing shareholder loan, uncertainty remains on Cinven's investment horizon (it purchased Tractel in 2015). This leads us not to consider Tractel's liquidity generation as primarily available to pay down debt. We thus assess the financial risk profile as aggressive." In its base case, S&P assumes: -- Revenue growth of more than 10% in 2018 (due to the consolidation of Scanclimber), then grow in the low-single-digit area in 2019. -- 2018 EBITDA margin slightly below that of 2017 and increasing only moderately thereafter, mainly thanks to higher efficiencies and cost synergies from the integration of Scanclimber. -- Capital expenditures (capex) of less than EUR4 million in 2018 and slightly increasing thereafter, but not significantly exceeding 1% of revenues. -- No dividends paid over 2018-2020. -- New term loan of EUR275 million at 3.75% interest and a new RCF of EUR45 million at 3.50% in 2018. -- The shareholder loan will remain in place until all the senior secured debt is repaid. Based on these assumptions, S&P arrives at the following credit measures: -- Debt to EBITDA of around 5.0x in 2018 and slightly decreasing thereafter. -- Funds from operations (FFO) cash interest coverage ratio well above 3x. -- Positive free operating cash flow (FOCF) in 2018 and 2019. The stable outlook reflects S&P's expectation that the EBITDA margin will marginally improve and that revenues will grow in the low-single-digit area. S&P expects Tractel's adjusted debt to EBITDA to fall below 5.0x in the next two years. Rating upside is limited, in S&P's view, given the uncertainty around the shareholder investment horizon. S&P said, "We could consider a positive rating action if we believed that the financial sponsor would relinquish control and at the same time Tractel's credit metrics materially strengthened, with debt to EBITDA hovering around 3.5x. This could happen if the company performed far better than we expect in our base-case scenario, with the proviso also that any improvement would need to be sustained by a conservative financial policy. We view such as a development as unlikely over the next two years." S&P related, "We could lower the rating if Tractel's operating performance were worse than we expected, or if Tractel switched to financial policies that were less credit friendly than we currently expect. A downgrade could be triggered by Tractel's FFO cash interest coverage deteriorating below 3.0x, which we view as relatively unlikely at this stage since it exceeds 4x in our estimate, or by failure to generate sustainably positive FOCF. We could also consider a downgrade if Tractel fails to maintain adequate liquidity. These scenarios could materialize from weaker-than-expected market conditions or operating performance." ===================== N E T H E R L A N D S ===================== VODAFONEZIGGO GROUP: S&P Alters Outlook to Neg.; Affirms BB- CCR ---------------------------------------------------------------- S&P Global Ratings revised its outlook on Dutch cable and telecommunications company VodafoneZiggo Group B.V. to negative from stable. S&P affirmed its 'BB-' long-term corporate credit rating on the company. S&P said, "At the same time, we affirmed our 'BB-' issue ratings on VodafoneZiggo's senior secured debt. The recovery rating remains at '3', indicating our expectation of meaningful recovery (55%) in the event of a payment default. "We also affirmed our 'B' issue ratings on VodafoneZiggo's unsecured debt. The recovery rating remains at '6', indicating our expectation of negligible recovery (0%)." The outlook revision to negative follows S&P's now higher estimates of VodafoneZiggo's debt and shareholder returns over 2017-2019, as well as S&P's expectation of weaker pro forma topline performance, despite slightly increasing EBITDA thanks to expected cost synergies from the merger. VodafoneZiggo's further reliance on vendor financing for operational and capital expenditures and increasing shareholder returns has led S&P to anticipate that its S&P Global Ratings- adjusted leverage will stay above 6x over the next three years, versus reducing in line with S&P's previous assumption to about 5.0x-5.5x in the medium term on the back of cash-flow-led deleveraging. Due to the increase in vendor financing arrangements (to EUR775 million in 2017 from EUR275 million at end-2016), S&P expects VodafoneZiggo's reported gross debt to rise to EUR12.5 billion-EUR13.0 billion over 2017-2019 from about EUR12.0 billion (adjusted for the exchange rate effect) at end- 2016. The company has also revised up its shareholder distributions for 2017 last September to EUR750 million from EUR500 million. The ongoing upstreaming of VodafoneZiggo's excess cash to its owners as part of the joint venture's distribution agreement and the trend toward increased vendor financing debt and leverage lead S&P to believe that the parents -- Liberty Global and Vodafone Group -- will continue to pursue aggressive financial policies. S&P said, "We believe that already-high penetration in the mature Dutch market indicates that growth will mainly have to come from price increases rather than subscriber growth. But intense competition and continued regulatory headwinds present major challenges. Combined with a sustained aggressive financial policy, in our opinion, the expected cost synergies from the merger may be insufficient to reduce VodafoneZiggo's adjusted leverage sustainably to 6.0x from an estimated 6.1x-6.2x in 2017. Competition has driven about 50% of VodafoneZiggo's quarterly mobile revenue decline since second-quarter 2017. In the 12 months to Sept. 30, 2017, VodafoneZiggo lost 240,000 mobile (mostly prepaid and non-revenue generating multisims) and 92,000 fixed (mostly basic video subscribers) customers to incumbent KPN (Koninklijke KPN N.V) and smaller competitors T-Mobile and Tele2 on aggressive marketing campaigns and unlimited mobile data plans. The rest of the revenue decline has been due to new roaming regulation across Europe, as well as new consumer credit regulation (which would lower customer switching costs and could increase churn) and MTR (mobile termination rates) cuts." With its acquisition of Vodafone's fixed services and announced merger with No. 4 Dutch mobile operator Tele2, T-Mobile is investing in quad-play service. If priced aggressively, this could translate into elevated churn for customers at KPN and VodafoneZiggo not willing to pay for premium or exclusive content. In addition, S&P expects competition in mobile to remain fierce, with competitors discounting prices while offering larger or even unlimited data plans. S&P believes that this, combined with the focus on convergent packages, could prevent VodafoneZiggo from translating double-digit mobile data volume growth into higher revenues in the medium term. S&P's assessment of VodafoneZiggo's business risk profile still reflects the company's resilience and well-established position as the second-largest fixed broadband and mobile operator in the Netherlands. As of Sept. 30, 2017, the joint venture had over 37% and 29% of fixed and mobile revenue, respectively, and over 27% and 44% of fixed and mobile subscribers. While still behind KPN, the joint venture has strengthened its position as penetration of convergent bundles increases (as of Sept. 30, 2017, about 20% of the company's fixed customer base were taking fixed and mobile services (quad-play); while 64% were taking internet, television, and telephony services (triple-play) [60% for KPN]). VodafoneZiggo also enjoys an entrenched No. 1 pay-TV position with over 50% subscriber share and exclusive premium sport and entertainment channels, such as Ziggo Sport and HBO. As of Sept. 30, 2017, VodafoneZiggo provided fixed services to 3.9 million customers (of which 3.9 million pay-TV RGUs [Revenue Generating Units]), and mobile services to about 5.0 million customers. S&P said, "Our view of VodafoneZiggo's financial risk primarily derives from our expectation of high adjusted leverage, which interest cover ratios and FOCF generation prospects only partly offset. Our estimate of the company's gross debt for fiscal 2017 is EUR12.5 billion, comprising EUR775 million of estimated vendor financing by year-end 2017, EUR4.4 billion of senior secured term loans, EUR3.3 billion of senior secured notes, EUR2.0 billion of senior unsecured notes, and EUR2.0 billion of shareholder loans. We add to VodafoneZiggo's reported debt about EUR237 million of operating lease obligations, about EUR123 million accrued interest, and S&P excludes the EUR2.0 billion of shareholder loans because it meets S&P's conditions for non-common equity financing. In addition, given our view of VodafoneZiggo's financial policy and shareholder returns, and in line with other Liberty Global entities, we calculate its credit metrics on a gross debt basis. "The negative outlook reflects a possible downgrade over the next 12 months if VodafoneZiggo is unable to reduce adjusted leverage to 6x or generate positive cash flows in line with our base-case projection of FOCF to debt of more than 6% in 2017-2018. "We could lower our ratings if adjusted leverage remains sustainably above 6.0x or if FOCF to debt declines to 5%. "This could happen due to a challenging regulatory or competitive environment, for example, if increased competition from the Tele2/T-Mobile merger and KPN translate into lower ARPUs and materially higher net customer losses than our base-case expectation. This, alongside the company's sustained use of vendor financing, could more than offset the merger's expected cost synergies and translate into a sustainably weaker credit profile. "In addition, we could lower the rating if the combined parent ownership were to decline, or if we came to believe that parent support had become less likely. "We could revise the outlook to stable if we expect sustainable deleveraging below 6x. This could result from improved operational performance (driven by more moderate competition/regulation), realization of synergies, and vendor financing plateauing below EUR1 billion." =========== N O R W A Y =========== NORSKE SKOGINDUSTRIER: Opts to Delist Shares Following Bankruptcy ----------------------------------------------------------------- Bankruptcy has been opened in Norske Skogindustrier ASA. Pursuant to Continuing Obligations section 15.1 (1) cf. Stock Exchange Act section 25 (1), Oslo Boers on Feb. 2 passed the following resolution: "The shares of Norske Skogindustrier ASA would be delisted from Oslo Boers from February 5, 2018. The last day of listing would be February 2, 2018." About Norske Skog Norske Skogindustrier ASA or Norske Skog, which translates as Norwegian Forest Industries, is a Norwegian pulp and paper company based in Oslo, Norway and established in 1962. * * * As reported by the Troubled Company Reporter-Europe on December 5, 2017, S&P Global Ratings said it has revised its long- and short-term corporate credit ratings on Norske Skogindustrier ASA (Norske Skog) and its core rated subsidiaries to 'D' (default) from 'SD' (selective default) as the issuer has now defaulted on all of its notes. S&P said, "At the same time, we lowered our issue rating on the unsecured notes due in 2033 and issued by Norske Skog Holding AS to 'D' from 'C'. We also removed the issue ratings from CreditWatch with negative implications, where we had placed them on June 6, 2017. "We also affirmed our 'D' ratings on the senior secured notes due in 2019, and the unsecured notes due in 2021, 2023, and 2026." The downgrade follows the nonpayment of the cash coupon due on Norske Skog's unsecured notes due in 2033 before the expiry of the grace period on Nov. 15, 2017. The 'D' ratings on the secured notes due 2019, and the unsecured notes due in 2021, 2023, 2026, and 2033, reflect the nonpayment of interest payments beyond any contractual grace periods, which S&P considers a default. The TCR-Europe reported on July 24, 2017 that Moody's Investors Service downgraded the probability of default rating (PDR) of Norske Skogindustrier ASA (Norske Skog) to Ca-PD/LD from Caa3-PD. Concurrently, Moody's has affirmed Norske Skog's corporate family rating (CFR) of Caa3. In addition, Moody's also affirmed the C rating of Norske Skog's global notes due 2026 and 2033 and its perpetual notes due 2115, the Caa2 rating of the senior secured notes issued by Norske Skog AS and downgraded the rating of the global notes due 2021 and 2023 issued by Norske Skog Holdings AS to Ca from Caa3. The outlook on the ratings remains stable. The downgrade of the PDR to Ca-PD/LD from Caa3-PD reflects the fact that Norske Skog did not pay the interest payment on its senior secured notes issued by Norske Skog AS, even after the 30 day grace period had elapsed on July 15. This constitutes an event of default based on Moody's definition, in spite of the existence of a standstill agreement with the debt holders securing that an enforcement will not be made under the secured notes due to non- payment of interest. In addition, the likelihood of further events of defaults in the next 12-18 months remains fairly high, as the company is also amidst discussions around an exchange offer that would most likely involve equitisation of debt, which the rating agency would most likely view as a distressed exchange. =========== R U S S I A =========== CB INTERNATIONAL: Liabilities Exceed Assets, Assessment Shows ------------------------------------------------------------- The provisional administration of the credit institution Commercial Bank International Fund Bank LLC (CB IFB LLC) appointed by Bank of Russia Order No. OD-2853, dated October 4, 2017, following the revocation of its banking license, in the course of examination of its financial standing, has revealed evidence that the bank's former management used vested authority for own benefits and advantages counter to the lawful interests of creditors and depositors, including by using customers' funds without their consent. The provisional administration estimates the value of CB IFB LLC assets to be no more than RUR0.9 billion, whereas its liabilities to creditors amount to RUR2.8 billion, including RUR1.9 billion to individuals. On December 25, 2017, the Arbitration Court of the city of Moscow recognized the bank as insolvent (bankrupt). The state corporation Deposit Insurance Agency was appointed as a receiver. The Bank of Russia submitted the information on financial transactions bearing the evidence of the criminal offence conducted by the former management and owners of CB IFB LLC to the Prosecutor General's Office of the Russian Federation, the Ministry of Internal Affairs of the Russian Federation and the Investigative Committee of the Russian Federation for consideration and procedural decision making. The current development of the bank's status has been detailed in a press statement released by the Bank of Russia. DME AIRPORT: Fitch Assigns 'BB+(EXP)' Rating to USD 5-Year Notes ---------------------------------------------------------------- Fitch Ratings has assigned DME Airport Designated Activity Company's (the issuer) USD five-year loan participation notes a 'BB+(EXP)' expected rating. The Outlook is Stable. At closing, the agency expects to affirm both DME Ltd's (DME or the group) Long-Term Issuer Default Rating (IDR) at 'BB+' and the existing notes' rating at 'BB+'. DME benefits from growing, moderately volatile, largely origin & destination (O&D) and leisure-dominated traffic from the large Moscow catchment area. De-regulated tariffs provide pricing flexibility within a competitive airport market. The investment programme is ambitious but modular. Fitch revised leverage forecasts remain low. However, the weak debt structure subject to refinance and FX risk coupled with corporate governance and some political, legal and regulatory uncertainty negatively affect the ratings. The Stable Outlook reflects Fitch opinion that the recovery in traffic following the end of the recession in Russia is underway. This is despite termination of VIM-Avia's flights and evolving competition from other Moscow's airports. KEY RATING DRIVERS Large catchment area with strong traffic growth: Revenue Risk (Volume) - Midrange DME benefits from a large catchment area that generates growing O&D leisure traffic. S7, the main airline operating at DME accounted for more than 30% passengers in 2017. DME experienced a peak-to-trough decline of 12.9% during 2008-09 and 13.9% during 2014-16. DME competes with two other airports in Moscow, namely Sheremetyevo airport, which hosts Russia's national flag carrier Aeroflot, and Vnukovo airport. Competition and limited track record of liberalised tariff: Revenue Risk (Price) - Midrange DME's revenue structure is well-diversified as the airport provides a comprehensive range of services. In early 2016, the regulation of aviation services under a dual-till regime was lifted and DME can now set tariffs freely. However, the track record of operations in the liberalised regime is limited and competition among Moscow airports evolving. Fitch believe the Russian national regulator Federal Antimonopoly Service could re- introduce a regulated tariff if it regards any future price increases as excessive. Ambitious but modular investment programme: Infrastructure Renewal - Midrange DME's runway capacity is sufficient for current operations and growth. However, substantial investment is underway for the expansion of the terminal capacity and related equipment. The expansion programme is ambitious but modular. Most future outlays after 2018 can be scaled down or postponed. DME uses cash flows from operations and the proceeds from debt issuance to fund capex. Limited protection and refinancing risk: Debt Structure - Weaker The notes are structured effectively as corporate unsecured debt. The notes are fixed-rate with bullet maturities and bear foreign- exchange risk. Reasonable leverage, a history of accessing capital markets and established banking relationships mitigate refinancing risk. Natural hedge through a portion of revenue being in US dollars or euros lowers the foreign-exchange risk. Covenants offer some but not comprehensive protection to noteholders. There are no liquidity reserve provisions but DME has historically maintained prudent levels of cash. Financial Profile The projected five-year average Fitch's adjusted net debt/EBITDAR is 2.6x with a maximum of 3.1x at the end of 2018 as the airport undergoes substantial expansion. PEER GROUP DME compares favourably in terms of leverage with 'BBB' category rated airports such as Brussels Airport Company S.A./N.V. (BBB/Positive), Manchester Airport Group Funding PLC (BBB+/Stable) or Copenhagen Airports A/S (BBB+/Stable). However, DME has an inherent volatility associated with emerging markets as well as FX exposure and refinancing risk. GMR Hyderabad International Airport Limited (BB+/Stable) is also a close peer albeit with higher leverage. However, DME has higher perceived traffic risk given recent traffic declines. DME's peers operate in a more stable regulatory, legal and political environment. RATING SENSITIVITIES Future developments that may, individually or collectively, lead to positive rating action include: - A projected five-year average Fitch's adjusted net debt/EBITDAR below 2x under the rating case. - Improvement in the business risk profile due to, among other factors, completion of Terminal 2, a longer track record of operating within a liberalised tariff environment, an improvement in corporate governance, and reduction in political, legal and regulatory uncertainty. Future developments that may, individually or collectively, lead to negative rating action include: - A projected five-year average Fitch's adjusted net debt/EBITDAR above 4x under the rating case, due to, among other factors, high shareholder returns or falling operating cash flows. - Increased refinancing risk, driven by bullet repayment structure, and as expressed in an inability to refinance debt, elevated foreign exchange risk and/or worsened liquidity position. TRANSACTION SUMMARY The proceeds of the issuance will be used to redeem the outstanding USD221.5 million of the USD300 million loan participation notes due in November 2018 with the remainder used for capital expenditure and general corporate purposes. The notes will effectively rank pari passu and will be structurally identical to the existing notes. In addition, the new notes will be callable. CREDIT UPDATE Traffic Recovery Underway Following the end of recession in Russia in 2016 DME's traffic is recovering. In 2017, DME's traffic increased 7.6% to 30.7 million. In particular, international traffic grew strongly by 15%. The ban on flights to Turkey was lifted at end-August 2016 while the ban on flights to Egypt (except regular flights to Cairo) is still in place. Fitch perceive any removal of flight restrictions, together with a strengthening of the Russian economy and currency, as positive for traffic development. VIM-Avia's Bankruptcy VIM-Avia was the third largest airline operating at DME carrying 1.7 million pax in 2017 and representing 5.5% of the overall traffic. The company experienced severe financial difficulties, which resulted in a suspension of its licence in October 2017. Fitch expects the impact of the airline's bankruptcy to be marginally negative. The airline mainly operated chartered flights that can be quickly taken over by other airlines operating out of DME. Fitch understands that majority of the airline's routes has been already replaced. Financial Performance In the first nine months of 2017, revenue reached RUB31.1 billion, an increase of 7.9% yoy. However, EBITDA declined yoy by 1.9% to RUB11.2 billion in the same period. The increase in staff costs partially due to ongoing expansion, the increase in costs of jet fuel purchased as traffic picked up and impairment provisions for VIM-Avia diluted margins. The trailing 12 months EBITDA as of 30 September 2017 was RUB14.2 billion and is in line with Fitch expectations. The covenanted consolidated net debt/EBITDA stood at 1.6x and 2.2x at end-2016 and at the end of September 2017, respectively. Expanding Capacity Construction of Terminal 2 to accommodate international flights and increase the airport's terminal capacity started in 2015. Fitch understand that phase 1, together with a new multi-story car parking facility, will be completed before the soccer World Cup in Russia in 2018. Fitch Cases Fitch's rating case assumes passenger volumes to grow on average by 4.7% between 2017-21, continuing on a recovery path. The addition of new terminal capacity in 2018 and development of other commercial offerings (e.g. multi-story car parking facility) will lift commercial revenues by over 10% in 2018 and 2019. However, Fitch assumed that margins will remain under pressure. Together with other various assumptions, the forecast results in a projected five-year average Fitch's adjusted net debt/EBITDAR of 2.6x and a maximum of 3.1x and projected five- year average net debt/EBITDA of 2.3x and a maximum of 2.8x. Asset Description DME operates Domodedovo Airport, one of the three main airports in Moscow. DME Airport Designated Activity Company, formerly DME Airport Limited, an Irish SPV, is the issuer of the notes, with the proceeds on-lent to the borrower, Hacienda Investments Ltd (Cyprus).The loans are guaranteed by the holding company DME and a majority of DME operational subsidiaries on a joint and several basis. The group owns the terminal buildings and leases the runways and other airfield assets from the Russian government. * Moody's Takes Rating Actions on 29 Russian RMBS Deals ------------------------------------------------------- Moody's Investors Service has upgraded the ratings of 32 notes and affirmed the ratings of 3 notes in 29 Russian RMBS deals, following the increase in Russia's country risk ceiling for local currency- denominated debt ("Local Currency Ceiling"). RATINGS RATIONALE Key Rationale for Action Reduced Country Risk The rating action is prompted by the increase in the Russia's Local Currency Ceiling to Baa2 from Baa3. The rating action follows the decision on January 25, 2018 to change the outlook on Russia's Ba1 long-term issuer and senior unsecured debt ratings to positive from stable, and concurrently to affirm Russia's long-term ratings at Ba1. In a related decision. Moody's also raised the country risk ceilings for local currency-denominated debt and deposits to Baa2 from Baa3 while the country ceilings for foreign currency deposits remain at Ba2/NP. As a result, the maximum rating that Moody's will assign to a domestic Russian issuer including structured finance transactions backed by Russian receivables, is Baa2. The decrease in sovereign risk is also reflected in Moody's quantitative analysis for mezzanine and junior tranches. Moody's Individual Loan Analysis Credit Enhancement (MILAN CE) for RMBS transactions represents the required credit enhancement under the senior tranche for it to achieve the Local Currency Ceiling. Increasing the maximum achievable rating for a given MILAN CE alters the loss distribution curve and implies decreased probability of high loss scenarios which may impact the rating of mezzanine and junior notes as well. The principal methodology used in these ratings was "Moody's Approach to Rating RMBS Using the MILAN Framework" published in September 2017. The analysis undertaken by Moody's at the initial assignment of ratings for RMBS securities may focus on aspects that become less relevant or typically remain unchanged during the surveillance stage. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) deleveraging of the capital structure , (3) improvements in the credit quality of the transaction counterparties and (4) a decrease in sovereign risk. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. A list of the Affected Ratings is available at: http://bit.ly/2E0hSH1 ========= S P A I N ========= IM GBP: Moody's Affirms Caa2(sf) Rating on Class B Notes -------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Class A notes in IM GBP Consumo I, FT . The rating action reflects the upgrade of Banco Popular Espanol, S.A.'s ("Banco Popular") long term deposit rating to Baa3 from Ba1 acting as issuer account bank. Moody's affirmed the ratings of the Class B notes that had sufficient credit enhancement to maintain current rating on the affected notes. -- EUR423.3M Class A Notes, Upgraded to A1 (sf); previously on Mar 30, 2017 Definitive Rating Assigned A2 (sf) -- EUR86.7M Class B Notes, Affirmed Caa2 (sf); previously on Mar 30, 2017 Definitive Rating Assigned Caa2 (sf) RATINGS RATIONALE The rating action is prompted by the upgrade of Banco Popular's long term deposit rating to Baa3 at the end of 2017 from Ba1 at issuance acting as issuer account bank. This upgrade follows the acquisition of Banco Popular by Banco Santander S.A. (Spain) in June 2017. Moody's also assessed the default probability of the transaction's account bank providers by referencing the bank's deposit rating. The ratings of the Class A notes are constrained by the issuer account bank exposure, pursuant to "Moody's Approach to Assessing Counterparty Risks in Structured Finance" (https://www.moodys.com/viewresearchdoc.aspx?docid=PBS_1038135) The principal methodology used in these ratings was "Moody's Approach to Rating Consumer Loan-Backed ABS" published in September 2015. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) deleveraging of the capital structure and (3) improvements in the credit quality of the transaction counterparties and (4) a decrease in sovereign risk. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. MBS BANCAJA 2: Fitch Affirms 'CCsf' Rating on Class F Debt ---------------------------------------------------------- Fitch Ratings has upgraded nine tranches of four MBS Bancaja transactions and affirmed eight tranches. Fourteen tranches have been removed from Rating Watch Evolving (RWE) and the Rating Watch on one tranche has been revised to Positive from Evolving. The transactions are Spanish prime RMBS comprising loans serviced by Bankia S.A. (BBB-/Stable/F3). KEY RATING DRIVERS Stable or Improving Credit Enhancement (CE) Fitch expects structural CE to remain stable over the short to medium term for MBS Bancaja 2, 3 and 4 as they will most likely continue paying pro rata, provided the reserve funds targets are achieved. For MBS Bancaja 8, Fitch expect CE to rise, especially for the senior notes, as it is amortising sequentially. Fitch views the CE trends as sufficient to withstand the rating stresses, leading to the rating actions. Sovereign Upgrade The RWP on MBS Bancaja 2 class A notes reflects the fact that they could be upgraded to 'AAAsf', the maximum achievable rating in Spain following the one-notch upgrade of Spain's Long-Term Issuer Default Rating to 'A-'. Fitch will resolve the RWP following the calibration of Fitch Spanish residential mortgage credit assumptions up to the 'AAAsf' rating scenario. Stable Credit Performance The transactions continue to show sound asset performance. Three- month plus arrears (excluding defaults) as a percentage of the current pool balance stood in range between 0.6% for MBS Bancaja 2 and 1.2% for the other three transactions as of the last reporting period. Fitch expects performance to remain stable especially given the significant seasoning of the securitised portfolios of between nine and 14 years. Commingling Exposure Fitch believes MBS Bancaja 2, 3 and 4 are exposed to a commingling loss of around 50% of monthly collections in the event of a default of the collection account bank. This is based on information regarding borrower payment distribution, which indicates payments are concentrated on a few particular dates of every month. The agency has captured this additional stress in its analysis. MBS Bancaja 8 sufficiently mitigates the commingling risk as a dynamic commingling cash reserve equivalent to 1.5 times monthly estimated collections is maintained within an eligible bank account. Counterparty Cap MBS Bancaja 8's class A notes' rating is capped at 'A+sf' under Fitch's Structured Finance and Covered Bonds Counterparty Rating Criteria, due to the account bank replacement trigger being set at 'BBB+' and 'F2', which is insufficient to support a 'AAsf' or higher rating. RATING SENSITIVITIES Deterioration in asset performance may result from economic factors. A corresponding increase in new defaults and associated pressure on excess spread levels and the reserve funds, beyond those captured in Fitch's analysis, could result in negative rating action. Furthermore, an abrupt shift of the interest rates might jeopardise the underlying borrowers' affordability. MBS Bancaja 2's class A notes could be upgraded to 'AAAsf' if the transaction's CE is sufficient to withstand the credit loss stressed in a 'AAA' rating scenario, the maximum achievable rating for Spanish structured finance transactions. The rating actions are: MBS Bancaja 2, FTA Class A (ES0361795000) 'AA+sf'; Rating Watch revised to Positive from Evolving Class B (ES0361795018) affirmed at 'AA+sf'; off RWE; Outlook Stable Class C (ES0361795026) upgraded to 'AAsf' from 'AA-sf'; off RWE; Outlook Stable Class D (ES0361795034) affirmed at 'A+sf'; off RWE; Outlook Stable Class E (ES0361795042) upgraded to 'BBB+sf' from 'BBBsf'; off RWE; Outlook Stable Class F (ES0361795059) affirmed at 'CCsf'; Recovery Estimate revised to 0% from 90% MBS Bancaja 3, FTA Class A2 (ES0361796016) affirmed at 'AA-sf'; off RWE; Outlook Stable Class B (ES0361796024) affirmed at 'A+sf'; off RWE; Outlook Stable Class C (ES0361796032) upgraded to 'Asf' from 'BBB+sf'; off RWE; Outlook Stable Class D (ES0361796040) upgraded to 'BBB-sf' from 'BBsf'; off RWE; Outlook Stable Class E (ES0361796057) affirmed at 'CCsf'; Recovery Estimate revised to 40% from 90% MBS Bancaja 4, FTA Class A2 (ES0361797014) upgraded to 'AA-sf' from 'A+sf'; off RWE; Outlook Stable Class A3 (ES0361797022) upgraded to 'AA-sf' from 'A+sf'; off RWE; Outlook Stable Class B (ES0361797030) upgraded to 'BBB+sf' from 'BBB-sf'; off RWE; Outlook Stable Class C (ES0361797048) upgraded to 'BBB-sf' from 'BBsf'; off RWE; Outlook Stable Class D (ES0361797055) upgraded to 'BBsf' from 'Bsf' ; off RWE; Outlook Stable Class E (ES0361797063) affirmed at 'CCsf'; Recovery Estimate revised to 40% from 50% MBS Bancaja 8, FTA Class A (ES0361747001) affirmed at 'A+sf''; off RWE; Outlook Stable =========== T U R K E Y =========== SEKERBANK TAS: Fitch Affirms B+ Long-Term IDR, Outlook Stable ------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of Anadolubank A.S. and Fibabanka A.S. (Fiba) at 'BB-' and Sekerbank T.A.S. (Seker) at 'B+'. The Outlooks are Stable. KEY RATING DRIVERS IDRS, VRs, NATIONAL RATINGS, SENIOR DEBT The IDRs and National Ratings of Anadolubank, Fiba and Seker, and the senior debt rating of Fiba, are driven by the banks' standalone creditworthiness, as reflected in their respective Viability Ratings (VR). The VRs reflect the small absolute size of the three banks (combined assets amounted to about 2% of sector assets at end- 3Q17) and their ensuing limited franchises and lack of competitive advantages. The banks provide a mix of services to corporate and commercial customers, and small and medium-sized companies (SMEs, which are most sensitive to swings in the economy). They generally have limited retail loan books. Seker has an established niche as a regional bank providing services to agro customers, including in the micro segment. Loan growth at Anadolubank (21% in 9M17) and Fiba (25%) has been fairly rapid, exceeding the sector average of 15% in 9M17. Seker's loan growth (11%) has been more moderate as the bank has been focusing on the clean-up of its loan book and due to asset quality and capital pressures. All three banks made use of the Credit Guarantee Fund (CGF) stimulus in 9M17, which accounted for a significant share of their overall loan growth; this facility primarily consists of short-term working capital loans to SME customers. The banks have typically reported below-sector-average performance metrics, reflecting a lack of economies of scale, limited pricing power, high funding costs and, with the exception of Anadolubank, fairly high loan impairment charges relative to pre-impairment operating profit. In addition, margins have come under pressure from rising funding costs, due to tighter sector lira liquidity in 9M17. Further increases could weigh on earnings and constrain the banks' growth. To some extent, the banks are working to offset margin pressure through the disbursement of floating-rate loans and funding diversification. The asset quality metrics of all three banks remained under pressure in 2017, reflecting a challenging operating environment and loan seasoning. Non-performing loan (NPL) ratios increased to 3.1% at Anadolubank at end-3Q17 (end-2016: 2.8%) and 2.6% at Fiba (2016: 1.8%) but fell at Seker albeit to a still high 5.3% (end- 2016: 5.7%). Watchlist loans, a high proportion of which are restructured, were a fairly high 5.6% at Anadolubank, 7% at Fiba and 10.8% at Seker, and could result in new NPL growth. The banks have also grown rapidly in recent years, and have exposure, to varying degrees, to some high-risk sectors including agro, construction, tourism and energy. Immediate risks to asset quality metrics have moderated, in Fitch's view, given a supportive economic backdrop (estimated GDP growth: 5.5% for 2017). However, risks remain for Seker given the bank's still high, albeit lower, NPL origination and generation ratios and high share of watchlist and restructured loans. Nevertheless, Seker has focused on the clean-up of its loan portfolio and tightening of underwriting standards, which explains its more cautious approach to loan growth since end- 2015. Foreign currency (FC) lending (including FC-indexed loans) at the banks is below that of foreign-owned peers and the sector average but is nevertheless significant. FC lending amounted to 25% (Anadolubank), 31% (Seker) and 32% (Fibabanka) of the respective banks' performing loans at end-3Q17. Fitch believes FC loans could bring loan losses as the loans season, particularly given the depreciation of the Turkish lira in recent years and borrowers not being fully hedged. This risk is mitigated by some FC borrowers being large Turkish corporates with diversified operations. In addition, FC loans are typically long-term, albeit amortising, meaning any asset-quality problems should feed through gradually. The banks' Fitch Core Capital (FCC)/risk-weighted assets ratios stood at 13% (Anadolubank) 9% (Fiba) and 12% (Seker), respectively at end-3Q17, which is only adequate for their risk profiles given their generally moderate internal capital generation and modest NPL reserve coverage. However, pre- impairment profit - equal to between 2% (Anadolubank) and 2.8% (Fiba and Seker) of average loans in 9M17 - provides an additional buffer to absorb unexpected losses. In addition, Fiba and Seker have issued USD300 million and USD85 million of FC subordinated debt, respectively, qualifying as Tier 2 capital and providing a partial hedge against FC risk-weighted assets. The banks' funding and liquidity profiles are generally reasonable. Seker has a solid regional deposit franchise. Anadolubank sources about 10% of customer deposits from its subsidiary bank in the Netherlands, providing a fairly cheap source of stable funding (average one-year maturity). Fiba has a growing deposit franchise and has diversified its funding profile by tapping international funding markets, the latest being a senior bond issue in January 2018. Anadolubank's loans-to- deposits ratio (end-3Q17: 103%) outperforms most peers but it is higher at Fiba and Seker, albeit not out of line with the sector average, reflecting their greater wholesale funding reliance. FC wholesale funding accounted for 11% of non-equity funding at Anadolubank but was higher at Fiba at Seker (23% and 18%, respectively, at end-3Q17) exposing the banks to changes in investor sentiment. However, market access has been good to date and the banks' available FC liquidity should mean they are well- placed to cope with a short-lived market closure. SUPPORT RATING AND SUPPORT RATING FLOOR The '5' Support ratings and 'No Floor' Support Rating Floors of all three banks reflect Fitch's view that support cannot be relied upon from the Turkish authorities, due to their small size and limited systemic importance, or from shareholders. SUBORDINATED DEBT The subordinated notes of Fiba and Seker are rated one notch below their respective VRs. The notching includes zero notches for incremental non-performance risk and one notch for loss severity. RATING SENSITIVITIES IDRS, VRs, NATIONAL RATINGS AND SENIOR DEBT The banks' Long-Term IDRs and National Ratings and Fiba's senior debt rating are sensitive to changes in their respective VRs. VRs are sensitive to a material weakening in the operating environment or in asset quality, profitability and the sufficiency of the banks' capital and liquidity buffers. Upside for the banks' VRs is limited in the near term, given operating environment pressures and the banks' limited franchises. SUBORDINATED DEBT As the notes of Fiba and Seker are notched down from their respective VRs, their ratings are sensitive to a change in the latter. The ratings are also sensitive to a change in notching due to a revision in Fitch's assessment of the probability of the notes' non-performance risk relative to the risk captured in the banks' respective VRs, or in Fitch assessment of loss severity in case of non-performance. The rating actions are as follows: Anadolubank A.S. Long-Term Foreign and Local Currency IDRs affirmed at 'BB-'; Outlook Stable Short-Term Foreign and Local Currency IDRs affirmed at 'B' Viability Rating affirmed at 'bb-' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-term Rating affirmed at 'AA-(tur)'; Stable Outlook Sekerbank T.A.S. Long-Term Foreign and Local Currency IDRs affirmed at 'B+'; Outlook Stable Short-Term Foreign and Local Currency IDRs affirmed at 'B' Viability Rating affirmed at 'b+' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-term Rating affirmed at 'A(tur)'; Stable Outlook Subordinated debt rating: affirmed at 'B'/'RR5' Fibabanka A.S. Long-Term Foreign and Local Currency IDRs: affirmed at 'BB-'; Outlook Stable Short-Term Foreign and Local Currency IDRs affirmed at 'B' Viability Rating: affirmed at 'bb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-Term Rating: affirmed at 'A+(tur)'; Outlook Stable Senior unsecured debt: affirmed at 'BB-' Subordinated debt rating: affirmed at 'B+' =========================== U N I T E D K I N G D O M =========================== CARILLION PLC: Ex-Finance Chief to Give Testimony to MPs Today -------------------------------------------------------------- Iain Withers and Rhiannon Curry at The Sunday Telegraph report that Zafar Khan, Carillion's former finance chief, is preparing to give explosive testimony to MPs today, Feb. 6, shining a light on how spiralling debts and missed payments by its clients took down the company. Mr. Khan is among six former Carillion bosses -- including ex- boss Richard Howson and chairman Philip Green -- being hauled in front of a joint inquiry by the business and the work and pensions select committees, The Sunday Telegraph notes. According to The Sunday Telegraph, the senior directors are expected to pin some of the blame for the outsourcer's collapse on an outstanding GBP200 million bill for a development project in downtown Doha. Industry sources suggest payments to the company were more than a year late, The Sunday Telegraph states. The money was so desperately needed that Mr. Howson was kept on in a less senior role after he had stepped down with the sole purpose of brokering a deal with the Qatari client Msheireb Properties, which is overseeing a vast regeneration project in the Qatari capital Doha, The Sunday Telegraph discloses. It is understood that the money has not been retrieved, The Telegraph notes. Industry sources told The Sunday Telegraph Mr. Khan's evidence was particularly keenly anticipated. He was seen as an influential financial director who helped lift the lid on the extent of Carillion's problems during his nine months in the role, according to The Sunday Telegraph. As finance director, Mr. Khan ordered a review of Carillion's biggest contracts, carried out by KPMG, The Sunday Telegraph relays. The accountancy firm uncovered huge losses, which led to a dire GBP845 million profit warning in July last year, The Sunday Telegraph recounts. Mr. Khan left the company two months later, The Sunday Telegraph notes. Mr. Khan's role is likely to be probed further, The Sunday Telegraph states. According to The Sunday Telegraph, other former bosses set to give evidence include Keith Cochrane, Carillion's interim boss, and Mr. Khan's predecessor and successor as CFO, Richard Adam and Emma Mercer. Headquartered in Wolverhampton, United Kingdom, Carillion plc -- http://www.carillionplc.com/-- is an integrated support services company. The Company operates through four business segments: Support services, Public Private Partnership projects, Middle East construction services and Construction services (excluding the Middle East). CARILLION PLC: Greybull Capital Eyes Asset Acquisition ------------------------------------------------------ Javier Espinoza and Gill Plimmer at The Financial Times report that the former owner of Monarch Airlines will look to buy parts of Carillion after the British construction and outsourcing company collapsed under large debts last month. According to the FT, people familiar with its plans said Greybull Capital will be among the bidders interested in buying parts of Carillion that might be ringfenced following its liquidation as an auction takes shape. The group, which is backed by the French Meyohas family, could invest in Carillion assets in the UK, Canada, the Middle East or north Africa, the FT relays, citing a person with direct knowledge of the firm's thinking. The government's Insolvency Service, which is handling the liquidation with the help of consultancy PwC, said no date had yet been set for an auction, the FT notes. It remains unclear how many assets the company has as it leased most of its equipment and outsourced most of its construction work, according to the FT. Carillion was liquidated last month with just GBP29 million in cash and more than GBP1.5 billion of debt, leaving creditors and pensioners with steep losses, in the largest financial collapse in UK construction history, the FT recounts. The company ran up debts and sold off assets worth GBP217 million between 2012 and 2016 and paid dividends of GBP376 million over the same period, the FT says, citing a parliamentary research paper. The person said Greybull is hoping to use its ability to move faster than larger institutions to scoop parts of the Carillion, the FT relates. Other private equity groups are also interested in parts of Carillion, including the Canadian fund manager Brookfield and British private equity group Endless, the FT discloses. Headquartered in Wolverhampton, United Kingdom, Carillion plc -- http://www.carillionplc.com/-- is an integrated support services company. The Company operates through four business segments: Support services, Public Private Partnership projects, Middle East construction services and Construction services (excluding the Middle East). CARILLION PLC: UK Government Announces Another 452 Job Cuts ----------------------------------------------------------- Esha Vaish and William James at Reuters report that another 452 jobs are to be cut at Carillion, the British government said on Feb. 5, meaning about 5% of the collapsed construction and support services company's domestic workforce has been put out of a job so far. Carillion, which employed around 18,000 people in the United Kingdom, collapsed on Jan. 15 when its banks halted funding, triggering Britain's biggest corporate failure in a decade and forcing the government to step in to guarantee public services from school meals to roadworks, Reuters recounts. The Official Receiver, which manages insolvencies for the British government, has since been looking through the about 450 contracts that Carillion was managing when it collapsed, seeking alternative contractors to complete the tasks, Reuters discloses. According to Reuters, the organization said the job cuts announced on Feb. 5 were across the country and related to private and public contracts that were being managed by Carillion, as well as some back-office functions. About 16,000 jobs still hang in the balance, Reuters notes. So far, about 1,019 have been saved, while 829 redundancies have been made, Reuters states. A government spokesman, as cited by Reuters, said the jobs saved had been transferred to other contracting companies. He said the Official Receiver did not have an estimated time for when it would finish reviewing the contracts, adding they were being reviewed in the order that most supported the extraction of "business value" for Carillion creditors, Reuters relates. Headquartered in Wolverhampton, United Kingdom, Carillion plc -- http://www.carillionplc.com/-- is an integrated support services company. The Company operates through four business segments: Support services, Public Private Partnership projects, Middle East construction services and Construction services (excluding the Middle East). KEMBLE WATER: Fitch Affirms 'BB-' Long-Term Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed Kemble Water Finance Limited's (Kemble Water) Long-Term Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook and its senior secured rating at 'BB'. The agency also affirmed Thames Water (Kemble) Finance PLC's (TWKF) GBP400 million and GBP175 million senior secured bond issues at 'BB', which are guaranteed by Kemble Water. The affirmation and Stable Outlook reflect the adequate dividend capacity of Thames Water Utilities Limited (Thames Water or OpCo) in comparison with the debt service requirements of Kemble, and its adequate credit metrics for the remainder of the price control from April 2015 to March 2020 (asset management plan 6; AMP6). The ratings also take into account Thames Water's position in the lower half of Fitch's rated peer group in terms of regulatory and operational performance, as the main operating subsidiary of the group, as well as the structurally and contractually subordinated nature of the holding-company financing at the Kemble level. Kemble Water is a holding company of Thames Water Utilities Limited, the regulated monopoly provider for water and wastewater services in London and the surrounding areas. KEY RATING DRIVERS Adequate Dividend Cover: For the remainder of AMP6, Fitch forecasts dividend cover mainly above 2.5x, although for the year ended 31 March 2018 (FY18) dividend cover is projected to be weak as Fitch expect the operating company to only distribute sufficient funds to service holding-company debt and not to pay distributions to shareholders. This is due mainly to materially higher capital expenditure in the early years of the price control and expected underperformance of total expenditure (totex) compared to previous expectations of totex outperformance. If there are any developments that would restrict dividend cover for longer, especially an operational underperfomance, a downgrade would be considered. Adequate Credit Metrics: Fitch forecast Kemble Water will maintain economic gearing below 90% pension-adjusted net debt/regulatory asset value (RAV) over AMP6 and average post- maintenance and post-tax interest cover (PMICR) at around 1.2x. Fitch forecast gearing differs from the company's forecast as Fitch calculate economic gearing taking into account adjustments for totex out/underperformance. For FY17 Fitch calculates Kemble's dividend cover at 2.4x, pension adjusted net debt/RAV at 89.5%, and PMICR at 1.26x. These financial ratios differ from Kemble Water's investor report. Fitch adjusts cash interest to reflect non-cash debt movements resulting from certain index-linked swaps by removing those with pay-down provisions. Incremental Debt at HoldCo: The GBP850 million of debt at the holding level represents around 6% of RAV and incurs an annual finance charge of around GBP58 million on average for FY18 to FY20. Fitch expect the dividend stream from the OpCo for the remainder of the price control to allow servicing of the debt. Fitch see modest refinancing risk from the maturity of the GBP400 million bond in April 2019 due to management's prudent approach in managing liquidity. Fitch expect refinancing plans to be in place well in advance of the bond's maturity. Underperformance Anticipated: Fitch expects Thames Water to underperform totex targets over AMP6. Lower than previously expected outperformance in the fast money allowance of totex (opex) and higher than expected underperformance in the slow money allowance of totex (capex) results in net totex underperformance. The higher spending is driven by the need to improve regulatory performance, especially in leakage and customer services, additional investment in water mains replacement and increasing IT capabilities. Fitch's forecast includes underperformance of GBP100 million and GBP70 million for totex and retail business respectively in nominal terms. Performance Needs Improving: For FY17, Thames Water has reported stable asset health for water non-infrastructure assets and sewerage infrastructure and non-infrastructure assets, but water infrastructure assets continue as marginal. The company did not meet its targets for leakage, security of supply and internal sewage flooding, but met targets for drinking water quality, supply interruptions and pollution incidents. Although the company improved its score on the service incentive mechanism which measures customers' satisfaction, to 77.3 from 76.74 in FY16, the company is still lagging behind peers in customer service. Ratings Pressure From 2019: The new price control methodology which will apply from April 2020 (PR19) is credit-negative for the sector as it will increase both financial and business risks. The regulator's low view on the cost of capital of 2.4% will reduce the water companies' cash-flow generation ability despite the recent rise in UK inflation. Companies that are lagging regulatory and operational performance targets, likely including Thames Water, may struggle to achieve significant additional cash flow from outperformance of totex and Outcome Delivery Incentives to offset pressure on credit metrics. Fitch will reflect that in Fitch ratings once Fitch have better visibility on business plans post 2020. Renewed Management and Shareholders: Fitch view as positive the management changes implemented since 2016 as Fitch expect the new management will take a more proactive, transparent and focused approach and will implement new initiatives and processes in order to improve the company's operational and regulatory performance. There has also been a number of changes to the composition of the group's shareholders, leading to more than two-thirds of the shareholder base being made up of pension funds. Index-Linked Swaps: Thames Water has a portfolio of index-linked swaps with a notional amount of GBP1.5 billion embedded in its capital structure, which do not contain breaks. Around GBP700 million of those swaps contain five-year pay-down provisions of accretion of swap notional and the timing of such payments is spread across each year. In Fitch view these swaps do not have the same cash-enhancing effect as long-dated index-linked bonds. Therefore, Fitch has conservatively removed the benefit of these swaps from the calculation of PMICR. DERIVATION SUMMARY Kemble Water Finance Limited is a holding company of Thames Water Utilities Limited (NR), one of the regulated, monopoly providers for water and wastewater services in England and Wales. The weaker rating compared to peers such as Osprey Acquisitions Limited (BB/Stable) and Kelda Finance (No.2) Limited (BB/Stable) reflects Kemble's weaker operating and regulatory performance as well as weaker credit metrics. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for Thames Water include: Regulated revenues in line with the final determination of tariffs for AMP6, ie assuming no material over- or under- recoveries Combined totex underperformance of around GBP100 million in nominal terms for FY18 to FY20 Underperformance in retail costs of around GBP70 million above allowances for FY18 to FY20 Unregulated EBITDA of around GBP10 million per annum Retail price inflation of 3% from 2018 onwards Limited impact on cash-flow generation from outcome delivery incentives (ODIs), given that financial rewards and penalties will be taken into account as part of the next price review Fitch has included GBP40 million of penalties related to ODIs in FY18 given that the company has agreed to return this to customers earlier. Fitch's key assumptions for Kemble Water include: Incremental debt at the holding-company level based on pension adjusted net/debt to RAV of 90% or below for the whole group Average annual finance charge at holding company level of around GBP58 million from FY18 to FY20 RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Rating upside is limited. A higher rating for the holding company would be contingent on Thames Water materially reducing its regulatory gearing and substantially improving its performance. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - A sustained drop of expected dividend cover below 2.5x, increase of gearing above 90% and/or decrease of post- maintenance and post-tax interest cover below 1.05x - Possibility of a dividend lock-up at Thames Water - A marked deterioration in operational and regulatory performance at Thames Water or a material change in business risk of the UK water sector LIQUIDITY Adequate Liquidity: Kemble mainly relies on upstreamed dividends in order to service its debt payments. As of 31 September 2017, Kemble Water held GBP28.4 million in unrestricted cash and cash equivalents and access to GBP65 million of a committed, undrawn revolving credit facility maturing in 2022, compared with an annual finance charge of around GBP58 million. The next debt maturity is a GBP400 million bond maturing in April 2019. ROYAL BANK: Moody's Puts Ba1 Sub. Rating on Review for Downgrade ---------------------------------------------------------------- Moody's Investors Service placed on review for downgrade the ratings, the baseline credit assessments (BCAs), and the long and short term counterparty risk assessments (CRAs) of The Royal Bank of Scotland plc (RBS plc) and Royal Bank of Scotland N.V. (RBS NV). The agency also placed on review for upgrade the long-term ratings, baseline credit assessments and long-term CRAs of National Westminster Bank PLC (NatWest Bank) and Ulster Bank Limited (UBL). Concurrently, Moody's assigned provisional long-term and short- term deposit ratings of (P)A1/ (P)Prime-1, long and short-term CRAs of Aa3(cr)/Prime-1(cr) respectively and a BCA of baa1 to Adam and Company plc (Adam & Co), one of the future ring-fenced banks of The Royal Bank of Scotland Group plc (RBS Group, LT senior unsecured debt rating Baa3 stable). "The review for downgrade of RBS plc and RBS NV and the review for upgrade of NatWest Bank and UBL reflect Moody's view of the likely impact on the banks of forthcoming ring-fencing regulations", said Alessandro Roccati, Senior Vice President at Moody's. Moody's expects to conclude its review by April 2018 ahead of the legal separation of the group's ring-fenced banks later in the year, and the entry of the legislation into force on January 1, 2019. Adam & Co will be the entity conducting RBS Group's retail and commercial banking business in Scotland and some commercial banking business in England. Following the implementation of ring-fencing, Moody's anticipates that Adam & Co will have moderate asset risk, solid capitalisation, good profitability, a strong funding profile and will benefit from shared liquidity within the ring-fenced sub-group. "We expect Adam & Co to benefit from good and stable profits from retail and business banking activities, underpinned by the bank's strong franchise in Scotland, despite potential profitability challenges deriving from losses on its residual legacy assets and weakening operating conditions in the UK" added Mr Roccati. The assignment of the (P)A1 provisional long-term deposit rating to Adam & Co incorporates a baa1 standalone BCA and a baa1 adjusted BCA, reflecting the bank's fundamentals and a very high probability of support from its UK ring-fenced sister companies. It also incorporates a two-notch uplift resulting from Moody's advanced Loss Given Failure (LGF) analysis and includes one notch of government support, reflecting Moody's assessment of a moderate probability of support for Adam & Co from the government of the United Kingdom (Aa2 stable), should it be required. Moody's will convert the assigned provisional deposit ratings of (P)A1/(P)Prime-1 to definitive ratings in 2018, once there is greater certainty on the financials and liability structures of this entity. RATINGS RATIONALE RBS Group is reorganising its legal structure as a result of the forthcoming requirement to separate its retail and business banking businesses from its other operations, under the UK's "ring-fencing" regulation, aimed at making economically vital banking services more resilient against financial shocks. RBS plc will transfer most of its Personal & Business Banking and Commercial & Private Banking operations to a ring-fenced banking sub-group (under an intermediate holding company, NatWest Holdings Ltd, a direct subsidiary of RBS Group), which will account for around 80% of group risk-weighted assets. This ring- fenced bank sub-group will include NatWest Bank, Ulster Bank Limited (LT deposits A2 Rating under Review), Adam & Co, Coutts & Company and Ulster Bank Ireland DAC (LT deposits Baa2 Positive). The group's capital market activities will remain with RBS plc. At the same time as the legal transfer of assets and liabilities, RBS plc will be renamed NatWest Markets Plc (NatWest Markets), and Adam & Co will be renamed The Royal Bank of Scotland plc. RBS plc, RBS NV, NatWest Bank and UBL Under ring-fencing, RBS plc (to be renamed NatWest Markets) will likely have a significantly weaker credit profile than currently, as it will become the group's principal entity for conducting capital markets and some other wholesale activities, which Moody's considers to be typically riskier than retail and commercial banking. RBS plc will become largely market funded, have a sizeable trading and repo book, and will provide broker- dealer capabilities. Moody's will continue to align the ratings of Dutch entity RBS NV with those of the current RBS plc, based upon the agency's expectation that RBS NV will likely become the main entity for the group's wholesale activities in the European Union outside the UK. Conversely, under ring-fencing, NatWest Bank and its subsidiary UBL will have a stronger credit profile as these two entities will retain mostly retail, SME and large corporate banking activities, will have largely deposit-based funding, and will be more profitable. For this reason, Moody's will likely de-couple the ratings of NatWest Bank and UBL from those of the current RBS plc. During the review period, Moody's will assess the prospective standalone credit profiles of the new and modified group entities, the potential for intra-group support, the expected loss for each instrument class at each entity under its LGF analysis, and the likelihood of government support. Adam & Co The assigned baa1 BCA for Adam & Co reflects Moody's expectation that the ring-fenced bank will benefit from: (1) moderate asset risk, with legacy exposures mitigated by the bank's predominantly retail and small business lending activities; (2) robust capitalisation and modest leverage; (3) the strong funding profile and ample liquidity of the ring-fenced sub-group; (4) good and stable profits from the retail and business banking activities, underpinned by the bank's strong franchise in Scotland, albeit challenged by the weakening operating conditions in the UK and possible further conduct costs. The (P)A1 provisional long-term deposit rating incorporates a two-notch uplift under Moody's LGF analysis, which suggests that Adam & Co's junior depositors will face very low losses in the event of the bank's failure; and an additional one-notch uplift in respect of government support, reflecting Moody's assessment of a moderate probability of support for the bank's junior depositors from the UK government, based upon RBS's ring-fenced sub-group's systemic importance for the country, given its substantial expected balance sheet of more than GBP400 billion. WHAT COULD MOVE THE RATINGS UP/DOWN RBS plc, RBS NV The ratings of RBS plc and RBS NV would be downgraded if, as expected, RBS Group's reorganization results in a concentration of its capital markets activities in these entities. Moody's views these activities as typically riskier than retail and commercial banking. An upgrade of RBS plc's and RBS NV ratings is unlikely, given that these entities are currently under review for downgrade. However, the ratings of RBS plc and RBS NV could be upgraded if RBS plc were not to proceed with the planned reorganisation and if it returns to sustainable profitability, generates capital organically and successfully completes its multi-year restructuring exercise. NatWest Bank and UBL The ratings of NatWest Bank and UBL would be upgraded if, as expected, RBS Group's reorganization results in a concentration of UK retail and commercial banking activities in the ring-fenced subgroup. Moody's views these activities as intrinsically lower risk, being a source of more predictable earnings and benefiting from stable deposit-based funding. A downgrade of NatWest Bank's and UBL's ratings is unlikely, given that these entities are currently under review for upgrade. However, the ratings of NatWest Bank and UBL could be downgraded if RBS plc were not to proceed with the planned reorganisation, and if its asset risk, capital and profitability were to be negatively affected by a significant deterioration in the UK operating environment beyond Moody's base case scenario. Adam & Co Adam & Co's baa1 BCA could be upgraded if the bank's ultimate asset risk profile were likely to be much stronger than Moody's currently expects, and/or if profitability and capitalisation were to be significantly higher. A higher BCA would however only likely lead to a rating upgrade if the agency also expected similar improvements at the ring-fenced sub-group. An upgrade of Adam & Co's long-term deposit rating could also result from a higher-than-expected stock of more junior bail-in-able liabilities at the ring-fenced sub-group that would provide greater protection for the bank's junior depositors. Adam & Co's baa1 BCA could be downgraded in the event of: (1) a deterioration in operating conditions in the UK, beyond Moody's current expectations, leading to higher asset risk and lower profitability; (2) a material weakening of the sub-group's liquidity profile; (3) a decline in capitalisation; or (4) large losses from its book of legacy assets. A lower BCA would lead to a rating downgrade if such weaknesses were also replicated at the ring-fenced sub-group, or if the planned intra-group capital and liquidity support mechanisms were weaker than anticipated. The rating could also be downgraded due to a reduction in the stock of bail-in-able liabilities that would reduce the degree of protection for junior depositors. LIST OF AFFECTED RATINGS Issuer: The Royal Bank of Scotland plc Placed On Review for Downgrade: -- LT Bank Deposits, currently A2, Outlook changed To Rating Under Review From Negative -- ST Bank Deposits, currently P-1 -- Senior Unsecured Regular Bond/Debenture, currently A3, Outlook changed To Rating Under Review From Negative -- BACKED Senior Unsecured Regular Bond/Debenture, currently A3, Outlook changed To Rating Under Review From Negative -- Subordinate, currently Ba1/Ba2 -- Junior Subordinate, currently Ba2 (hyb) -- BACKED Junior Subordinate, currently Ba2 (hyb) -- Senior Unsecured MTN Program, currently (P)A3 -- BACKED Senior Unsecured MTN Program, currently (P)A3 -- Subordinate MTN Program, currently (P)Ba1 -- BACKED Subordinate MTN Program, currently (P)Ba1 -- Junior Subordinate MTN Program, currently (P)Ba2 -- BACKED Junior Subordinate MTN Program, currently (P)Ba2 -- Other Short Term Program, currently (P)P-2 -- BACKED Other Short Term Program, currently (P)P-2 -- BACKED Senior Unsec. Shelf, currently (P)A3 -- BACKED Subordinate Shelf, currently (P)Ba1 -- ST Deposit Note/CD Program, currently P-1 -- Commercial Paper, currently P-2 -- BACKED Commercial Paper, currently P-2 -- Adjusted Baseline Credit Assessment, currently baa3 -- Baseline Credit Assessment, currently baa3 -- LT Counterparty Risk Assessment, currently A2(cr) -- ST Counterparty Risk Assessment, currently P-1(cr) Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative Issuer: Royal Bank of Scotland N.V. Placed On Review for Downgrade: -- LT Issuer Rating, currently A3, Outlook changed To Rating Under Review From Negative -- LT Bank Deposits, currently A2, Outlook changed To Rating Under Review From Negative -- ST Bank Deposits, currently P-1 -- Senior Unsecured Regular Bond/Debenture, currently A3, Outlook changed To Rating Under Review From Negative -- BACKED Senior Unsecured Regular Bond/Debenture, currently A3, Outlook changed To Rating Under Review From Negative -- Subordinate, currently Ba1 -- Senior Unsecured MTN Program, currently (P)A3 -- BACKED Senior Unsecured MTN Program, currently (P)A3 -- Subordinate MTN Program, currently (P)Ba1 -- Junior Subordinate MTN Program, currently (P)Ba2 -- Other Short Term Program, currently (P)P-2 -- ST Deposit Note/CD Program, currently P-1 -- Commercial Paper, currently P-2 -- Adjusted Baseline Credit Assessment, currently baa3 -- Baseline Credit Assessment, currently baa3 -- LT Counterparty Risk Assessment, currently A2(cr) -- ST Counterparty Risk Assessment, currently P-1(cr) Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative Issuer: Adam and Company plc Assignments: -- LT Bank Deposits, Assigned (P)A1 -- ST Bank Deposits, Assigned (P)P-1 -- Adjusted Baseline Credit Assessment, Assigned baa1 -- Baseline Credit Assessment, Assigned baa1 -- LT Counterparty Risk Assessment, Assigned Aa3(cr) -- ST Counterparty Risk Assessment, Assigned P-1(cr) Outlook Actions: -- Outlook, Assigned No Outlook Issuer: Royal Bank of Scotland N.V., London Branch Placed On Review for Downgrade: -- LT Counterparty Risk Assessment, currently A2(cr) -- ST Counterparty Risk Assessment, currently P-1(cr) Outlook Actions: -- Outlook, Changed To Rating Under Review From No Outlook Issuer: Royal Bank of Scotland plc, Tokyo Branch Withdrawals: -- LT Counterparty Risk Assessment, Withdrawn , previously rated A2(cr) -- ST Counterparty Risk Assessment, Withdrawn , previously rated P-1(cr) -- Commercial Paper, Withdrawn , previously rated P-2 Outlook Actions: -- Outlook, Changed To Rating Withdrawn From No Outlook Issuer: National Westminster Bank PLC Placed On Review for Upgrade: -- LT Issuer Rating, currently A3, Outlook changed To Rating Under Review From Positive -- LT Bank Deposits, currently A2, Outlook changed To Rating Under Review From Positive -- Subordinate, currently Ba1 -- Junior Subordinate, currently Ba2 (hyb) -- Pref. Stock Non-cumulative, currently Ba3 (hyb) -- Senior Unsec. Shelf, currently (P)A3 -- Subordinate Shelf, currently (P)Ba1 -- Preference Shelf, currently (P)Ba2 -- Commercial Paper, currently P-2 -- Adjusted Baseline Credit Assessment, currently baa3 -- Baseline Credit Assessment, currently baa3 -- LT Counterparty Risk Assessment, currently A2(cr) Affirmations: -- ST Bank Deposits, Affirmed P-1 -- ST Counterparty Risk Assessment, Affirmed P-1(cr) Outlook Actions: -- Outlook, Changed To Rating Under Review From Positive Issuer: Ulster Bank Limited Placed On Review for Upgrade: -- LT Issuer Rating, currently A3, Outlook changed To Rating Under Review From Positive -- LT Bank Deposits, currently A2, Outlook changed To Rating Under Review From Positive -- Adjusted Baseline Credit Assessment, currently baa3 -- Baseline Credit Assessment, currently baa3 -- LT Counterparty Risk Assessment, currently A2(cr) Affirmations: -- ST Bank Deposits, Affirmed P-1 -- ST Counterparty Risk Assessment, Affirmed P-1(cr) Outlook Actions: -- Outlook, Changed To Rating Under Review From Positive Issuer: Royal Bank of Scotland plc, Australia Branch Withdrawals: -- LT Counterparty Risk Assessment, Withdrawn , previously rated A2(cr) -- ST Counterparty Risk Assessment, Withdrawn , previously rated P-1(cr) Outlook Actions: -- Outlook, Changed To Rating Withdrawn From No Outlook PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in September 2017. WEST BROMWICH: Moody's Affirms B1 Long-Term Bank Deposit Rating --------------------------------------------------------------- Moody's Investors Service affirmed West Bromwich Building Society's (West Brom's) long-term deposit rating of B1 and changed the outlook on this rating to positive from stable. In rating action, Moody's also downgraded West Bromwich Building Society's Permanent Interest Bearing Shares (PIBS) rating to Ca(hyb) on an expected loss basis from Caa1(hyb), affirmed the baseline credit assessment (BCA) and adjusted BCA at b1, affirmed the short-term deposit ratings at Not Prime, and affirmed the long-term and short-term Counterparty Risk Assessment (CR Assessment) at Ba1(cr)/Not Prime(cr) respectively. RATINGS RATIONALE On January 19, 2018, West Brom announced variations to the conditions of its Profit Participating Deferred Shares (PPDS), removing potential legal constraints to complete a planned liability management exercise (LME) which the Society announced in December 2017. The downgrade of the non-cumulative preferred stock rating on West Brom's Permanent Interest Bearing Shares (PIBS) to Ca(hyb) on an expected loss basis reflects Moody's view that the LME will result in a further impairment to the PIBS, resulting in expected recovery below 65%. While the face value of the exchange is close to 70%, a proportion of the exchange offer is in the form of common equity Tier 1 (CET1) eligible Core Capital Deferred Shares (CCDS) and the rating agency expects the CCDS to trade well below their GBP100 issue price after the LME given that the Society does not plan to pay coupons in the near term. Moody's therefore estimates recovery rates for investors accepting the LME between 50%-60%, which corresponds to a Ca(hyb) rating. The rating agency does not consider the LME a new event of default, as the PIBS were already impaired since the Society has not paid interest on these instruments since 2009. The affirmation of West Brom's B1 long-term deposit ratings takes into account (i) its b1 BCA; (ii) the results of Moody's Advanced Loss Given Failure (LGF) analysis; and (iii) a low probability of government support. West Brom's b1 BCA reflects the Society's solid leverage metrics, its retail deposit funding base, and its comfortable liquidity position, which counter-balance its high stock of problem loans, mainly driven by its declining legacy commercial lending portfolio, and its weak profitability. OUTLOOK The positive outlook on the long-term deposit ratings reflects the fact that the LME will remove the current uncertainty related to the Society's capital position, while modernising its capital structure with instruments clearly compliant with the European Union Capital Requirements Regulation (CRR) in the form of CCDS and new Tier 2 debt. If the investors that have already signed a binding commitment participate in the LME, West Brom estimates that its CET1 ratio would decline to 13.7% from 14.1%, based on its capitalisation at the end of September 2017, but full participation should result in a modest CET1 ratio improvement to 14.4%. Because the PPDS exchange has a net negative impact on CET1 capital and the PIBS exchange has a positive impact on CET1 capital, the CET1 ratio will improve for each additional PIBS holder that agrees to participate in the exchange. The positive outlook also reflects further positive developments to West Brom's intrinsic credit strength. Problem loans declined to 5.4% of gross loans at March 31, 2017 from 7.2% a year earlier, its legacy commercial exposures are declining, below GBP500 million at September 30, 2017 compared to over GBP1.5 billion in 2008, and its core residential mortgage book is now growing, with 4% growth during the six months to September 30, 2017. In January 2018, West Brom also accessed the wholesale funding market for the first time since 2013, with a GBP350 million Residential Mortgage-Backed securitisation (RMBS). The RMBS issuance is credit positive as it demonstrates market access, although Moody's continues to view West Brom's access to the unsecured wholesale market as limited. WHAT COULD CHANGE THE RATINGS UP West Brom's BCA could be upgraded as a result of (i) continued improvements in its asset quality metrics combined with successful completion of the LME, removing uncertainties related to the Society's CET1 capital position; or (ii) track record of stable profitability, demonstrating a sustainable business model. A positive change in the Society's BCA would likely lead to an upgrade of its deposit ratings. West Brom's deposit ratings could also be upgraded if, after regaining access to unsecured wholesale markets, the building society were to issue significant amounts of senior unsecured debt and/or subordinated long-term debt, reducing Moody's' expected loss-given-failure for depositors. WHAT COULD CHANGE THE RATINGS DOWN West Brom's BCA could be downgraded in the unlikely event the LME fails and its PPDS no longer qualify as CET1 capital or the Society's funding or liquidity position deteriorated without improvements in its solvency metrics. A downward movement in the BCA of the Society would likely result in a downgrade to its deposit ratings. West Brom's deposit ratings could also be downgraded in response to a reduction in the volume of debt or deposits that could be bailed in, which would increase loss- given-failure for depositors. The probability of default for West Brom's counterparty obligations may increase if the Society were to grow its balance sheet without commensurate increases in bail-in-able debt or deposits. In this event, Moody's may reflect such higher default risk with a downgrade of the CR Assessment. LIST OF AFFECTED RATINGS Issuer: West Bromwich Building Society Downgrades: -- Pref. Stock Non-cumulative, Downgraded to Ca(hyb) from Caa1(hyb) Affirmations: -- LT Bank Deposits, Affirmed B1, Outlook changed To Positive From Stable -- ST Bank Deposits, Affirmed NP -- Adjusted Baseline Credit Assessment, Affirmed b1 -- Baseline Credit Assessment, Affirmed b1 -- LT Counterparty Risk Assessment, Affirmed Ba1(cr) -- ST Counterparty Risk Assessment, Affirmed NP(cr) Outlook Actions: -- Outlook, Changed To Positive From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in September 2017. ********* 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. 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