/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/180515.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, May 15, 2018, Vol. 19, No. 095 Headlines C R O A T I A AGROKOR DD: Coalition Discusses Conflict of Interest Claims D E N M A R K TDC A/S: S&P Cuts Issuer Credit Ratings to 'B+/B', Outlook Stable G E R M A N Y UNITYMEDIA GMBH: Moody's Places B1 CFR Under Review for Upgrade I R E L A N D BLACKROCK CLO V: Moody's Assigns B2 Rating to Class F Notes BLACKROCK CLO V: Fitch Assigns 'B-sf' Rating to Class F Debt WILLOW NO. 2: S&P Places Series 31/32 Notes Rating on Watch Pos. I T A L Y MONTE DEI PASCHI: Reports First Quarter Net Income of EUR188MM L U X E M B O U R G COLOUROZ MIDCO: Moody's Downgrades CFR to B3, Outlook Stable N E T H E R L A N D S CADOGAN CLO VII: Moody's Assigns (P)B2 Rating to Class F Notes INTERNATIONAL SEAWAYS: S&P Lowers Corp Credit Rating to 'B-' R U S S I A DERZHAVA: Moody's Withdraws B3 Long-Term Deposit Ratings S P A I N FCC AQUALIA: Fitch Affirms LT IDR at 'BB+', Outlook Stable NH HOTEL: Moody's Raises CFR to B1, Outlook Stable U N I T E D K I N G D O M BRIGHTHOUSE GROUP: S&P Withdraws 'D' Issuer Credit Rating HUMBERTS: Enters Voluntary Administration for Second Time MADE BY BOB: Enters Administration as Debts Pile Up MARLBOROUGH NOW VAUXHALL: Goes Into Administration RIBBON FINANCE 2018: S&P Assigns Prelim BB- Rating to Cl. G Notes ********* ============= C R O A T I A ============= AGROKOR DD: Coalition Discusses Conflict of Interest Claims ----------------------------------------------------------- Igor Ilic at Reuters reports that leaders of Croatia's ruling coalition met on May 11 to discuss opposition demands that Deputy Prime Minister Martina Dalic resign over conflict of interest allegations linked to the restructuring of the country's largest private firm. Ms. Dalic, who is also economy minister, led efforts to save food producer and retailer Agrokor after it was put under state-run administration in April 2017, weighed down by debt accrued during an ambitious expansion drive, Reuters recounts. On May 9, local news portal Index.hr published what it said was one-year-old email correspondence between Ms. Dalic and financial and legal experts she consulted while preparing an emergency law to save the firm -- the Balkans' biggest employer -- from bankruptcy, Reuters relates. Some of the experts were later engaged as consultants in the restructuring process for hefty fees, prompting the opposition's conflict-of-interest claim, Reuters relays. Ms. Dalic denied the allegation on May 11, saying that the emails had been taken out of context and that she would not resign, Reuters notes. "When preparing the (emergency) law we had little time and many experts were consulted," Ms. Dalic, as cited by Reuters, said, portraying the email leak as "an attempt to prevent the settlement over Agrokor debt". According to Reuters, Prime Minister Andrej Plenkovic, whose conservative HDZ party heads the coalition, said on May 10 he saw no wrongdoing on Dalic's part. But some of its smaller partners pushed for a meeting to discuss Ms. Dalic's situation, to which the HDZ agreed, Reuters notes. The coalition agreed to meet again today, May 15, Reuters discloses. "We will talk about how the settlement process is going. The key thing now is to save jobs and reach settlement. Political responsibility will remain the topic in the coming days and also once the settlement has been reached," Reuters quotes Ivan Vrdoljak, head of the junior coalition partner HNS, as saying after the meeting. Agrokor's creditors, which include foreign and local banks, agreed on debt settlement terms last month, which they must approve in a vote before July 10 to prevent the firm from going bankrupt, Reuters relays. About Agrokor DD Founded in 1976 and based in Zagreb, Crotia, Agrokor DD is the biggest food producer and retailer in the Balkans, employing almost 60,000 people across the region with annual revenue of some HRK50 billion (US$7 billion). On April 10, 2017, the Zagreb Commercial Court allowed the initiation of the procedure for extraordinary administration over Agrokor and some of its affiliated or subsidiary companies. This comes on the heels of an April 7, 2017 proposal submitted by the management board of Agrokor Group for the administration proceedings for the Company pursuant to the Law of Extraordinary Administration for Companies with Systemic Importance for the Republic of Croatia. Mr. Ante Ramljak was simultaneously appointed extraordinary commissioner/trustee for Agrokor on April 10. In May 2017, Agrokor dd, in close cooperation with its advisors, established that as of March 31, 2017, it had total liabilities of HRK40.409 billion. The company racked up debts during a rapid expansion, notably in Croatia, Slovenia, Bosnia and Serbia, a Reuters report noted. On June 2, 2017, Moody's Investors Service downgraded Agrokor D.D.'s corporate family rating (CFR) to Ca from Caa2 and the probability of default rating (PDR) to D-PD from Ca-PD. The outlook on the company's ratings remains negative. Moody's also downgraded the senior unsecured rating assigned to the notes issued by Agrokor due in 2019 and 2020 to C from Caa2. The rating actions reflect Agrokor's decision not to pay the coupon scheduled on May 1, 2017 on its EUR300 million notes due May 2019 at the end of the 30-day grace period. It also factors in Moody's understanding that the company is not paying interest on any of the debt in place prior to Agrokor's decision in April 2017 to file for restructuring under Croatia's law for the Extraordinary Administration for Companies with Systemic Importance. On June 8, 2017, Agrokor's Agrarian Administration signed an agreement on a financial arrangement agreement worth EUR480 million, including EUR80 million of loans granted to Agrokor by domestic banks in April. In addition to this amount, additional buffers are also provided with additional EUR50 million of potential refinancing credit. The total loan arrangement amounts to EUR1,060 million, of which a new debt totaling EUR530 million and the remainder is intended to refinance old debt. ============= D E N M A R K ============= TDC A/S: S&P Cuts Issuer Credit Ratings to 'B+/B', Outlook Stable ----------------------------------------------------------------- S&P Global Ratings lowered its long- and short-term issuer credit ratings on Danish telecommunications network operator TDC A/S to 'B+/B' from 'BBB-/A-3'. The outlook on TDC is stable. S&P said, "At the same time, we lowered our long-term issue credit rating on TDC's senior unsecured debt to 'B+' from 'BBB-'. We assigned our '3' recovery rating, reflecting our expectation of recovery of about 55% in the event of a payment default. "We removed all the ratings, except the hybrid debt, from CreditWatch where we placed them with negative implications on Feb. 13, 2018. "We kept our 'BB' issue ratings on TDC's hybrid debt on CreditWatch with negative implications. "The downgrade reflects our assessment that TDC is a core subsidiary of its ultimate parent DKT Holdings ApS (B+/Stable/-- ), given that it essentially encompasses the group's entire operations. S&P therefore equalizes its rating on TDC with that on DKT Holdings." The stable outlook on TDC mirrors the stable outlook on the ultimate parent, DKT Holdings. S&P expects the outlook on TDC to move in line with the outlook on DKT Holdings. ============= G E R M A N Y ============= UNITYMEDIA GMBH: Moody's Places B1 CFR Under Review for Upgrade --------------------------------------------------------------- Moody's Investors Service has placed under review for upgrade the B1 corporate family rating (CFR), B1-PD probability of default rating (PDR) and the B3 senior unsecured debt ratings at Unitymedia GmbH ("UM"; the top-most entity of the ring-fenced group) as well as the Ba3 senior secured debt ratings at its 100% owned subsidiaries, Unitymedia Finance LLC and Unitymedia Hessen GmbH & Co. KG. The review follows the announcement by Liberty Global plc ("Liberty", Ba3 stable), parent of UM, regarding the proposed disposal of UM, and the Central and Eastern European assets of Liberty's subsidiary, UPC Holding BV (Ba3, negative) to Vodafone Group plc for a combined enterprise value of EUR18.4 billion at an EV/adjusted segment operating cash flow (OCF) multiple of around 11.5x on an EU-IFRS basis. "We are placing UM's ratings on review for upgrade because, if the disposal concludes as planned, UM will become part of Vodafone, a larger integrated telecoms group. In addition, part of its existing debt is expected to be repaid, leading to a reduction in UM's leverage," says Gunjan Dixit, a Moody's Vice President -- Senior Credit Officer and lead analyst for UM. RATINGS RATIONALE The review for upgrade acknowledges that Unitymedia will become part of Vodafone, which is much larger (revenues of EUR46 billion) and has a higher rating. In addition, the combination of Unitymedia with Vodafone's assets in Germany will bring significant cost saving opportunities and improve Vodafone's geographical coverage in the country. While Moody's expects that Vodafone will not provide explicit credit support for the rated Unitymedia debt, the agency believes that Unitymedia will become an integral part of Vodafone's operations in Germany, one of Vodafone's key markets. Vodafone will be acquiring Unitymedia inclusive of its debt. Upon closing, a change of control will be triggered with respect to Unitymedia's debt, and lenders and bond holders will have an option to put their debt to Vodafone. However, Vodafone currently expects to retain Unitymedia's existing bond structure (EUR4.5 billion outstanding) and re-finance it only over time. Nevertheless, it plans to repay EUR2.2 billion of Unitymedia's term loans shortly after completion of the transaction. Thus upon transaction closing, Unitymedia's Moody's adjusted gross leverage could potentially reduce to around 4.2x (compared to 5.6x as of 31 March 2018), provided the repayment of the bank debt at Unitymedia is executed via an equity injection from Vodafone. The ratings review will assess the degree of improvement in UM's business profile, its credit metrics, final capital structure and future financial policies, as well as any implicit support from Vodafone. Its resolution could result in a multi-notch upgrade of Unitymedia's secured and unsecured debt ratings. UM's B1 CFR takes into account (1) its solid operating performance, evidenced by strong revenue and EBITDA growth; (2) Moody's expectation that the company's strategic focus on integrated offerings, transitioning of customers from analogue to digital TV, network expansion and regular price increases should yield continued growth in revenue generating units ("RGU") and Average Revenue Per User ("ARPU"); (3) the competitive advantages from the company's high capacity network; and (4) the benefits for UM of operating in some of the more affluent areas of Germany Europe's largest cable market. The rating also factors in (1) the company's significant leverage (UM's Debt/EBITDA ratio -- as calculated by Moody's stands at around 5.6x for the last twelve months ("LTM") ending March 30, 2018); (2) its high capex requirements (PPE additions of 29.5% of revenues for the first three months to 31st March 2018); (3) the strong competition in the multi-dwelling units ("MDU") business, in particular for larger housing association contracts; (4) the absorption of the company's free cash flow ("FCF") via distributions to Liberty; and (5) continued net video subscriber losses, albeit at a moderate rate. WHAT COULD CHANGE THE RATING UP/DOWN A near-term upgrade of UM's ratings is dependent on the successful conclusion of its disposal to Vodafone, which is subject to regulatory approval and is expected to complete in the middle of calendar 2019. The ratings could be confirmed at the existing level should the deal fail to conclude at the agreed terms. As Moody's had noted prior to the review process, upward ratings pressure could develop if (1) the company's operating performance remains solid; (2) Moody's adjusted Gross Debt/ EBITDA ratio improves towards 5.25x (as calculated by Moody's); and (3) Moody's adjusted cash flow from operations ("CFO")/ Debt ratio is sustained above 14%. Downward ratings pressure could ensue if: (1) the company experiences a marked deterioration in operating performance; (2) leverage rises above 6.0x Gross Debt/ EBITDA (as adjusted by Moody's); and (3) Moody's adjusted CFO/ Debt falls below 8% for a sustained period of time. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Global Pay Television -- Cable and Direct-to-Home Satellite Operators published in January 2017. COMPANY PROFILE UM, an indirectly wholly-owned subsidiary of Liberty Global plc ("Liberty Global", rated Ba3/Stable), is the second largest cable operator (provider of basic and enhanced video, Internet and telephony services) in Germany by number of customers. For the year ended December 31, 2017, the company generated EUR2.4 billion in revenues and EUR1.5 billion in EBITDA as adjusted by the company. LIST OF AFFECTED RATINGS Placed On Review For Upgrade: Issuer: Unitymedia GmbH Corporate Family Rating, Currently B1 Probability Of Default, Currently B1-PD Senior Unsecured Regular Bond/Debenture, Currently B3 Issuer: Unitymedia Hessen GmbH & Co. KG Backed Senior Secured Regular Bond/Debenture, Currently Ba3 Backed Senior Secured Bank Credit Facility, Currently Ba3 Issuer: Unitymedia Finance LLC Backed Senior Secured Bank Credit Facility, Currently Ba3 Outlook Actions: Issuer: Unitymedia GmbH Outlook, Changed To Rating Under Review From Stable Issuer: Unitymedia Hessen GmbH & Co. KG Outlook, Changed To Rating Under Review From Stable Issuer: Unitymedia Finance LLC Outlook, Changed To Rating Under Review From Stable ============= I R E L A N D ============= BLACKROCK CLO V: Moody's Assigns B2 Rating to Class F Notes ----------------------------------------------------------- Moody's Investors Service has assigned definitive ratings to seven classes of notes issued by BlackRock European CLO V Designated Activity Company: EUR 216,000,000 Class A-1 Senior Secured Floating Rate Notes due 2031, Definitive Rating Assigned Aaa (sf) EUR 32,000,000 Class A-2 Senior Secured Fixed Rate Notes due 2031, Definitive Rating Assigned Aaa (sf) EUR 42,000,000 Class B Senior Secured Floating Rate Notes due 2031, Definitive Rating Assigned Aa2 (sf) EUR 24,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned A2 (sf) EUR 21,000,000 Class D Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned Baa2 (sf) EUR 25,000,000 Class E Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned Ba2 (sf) EUR 12,000,000 Class F Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned B2 (sf) RATINGS RATIONALE Moody's definitive ratings of the rated notes address the expected loss posed to noteholders by the legal final maturity of the notes in July 2031. The definitive ratings reflect the risks due to defaults on the underlying portfolio of assets, the transaction's legal structure, and the characteristics of the underlying assets. Furthermore, Moody's is of the opinion that the Collateral Manager, BlackRock Investment Management (UK) Limited, has sufficient experience and operational capacity and is capable of managing this CLO. BlackRock Euro V is a managed cash flow CLO. At least 90% of the portfolio must consist of secured senior obligations and up to 10% of the portfolio may consist of unsecured senior loans, unsecured senior bonds, second lien loans, mezzanine obligations, high yield bonds and/or first lien last out loans. At closing, the portfolio is expected to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the six month ramp-up period in compliance with the portfolio guidelines. BlackRock will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit improved and credit risk obligations, and are subject to certain restrictions. In addition to the seven classes of notes rated by Moody's, the Issuer issued EUR41,500,000 of subordinated notes. Moody's will not assign a rating to this class of notes. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in August 2017. Factors that would lead to an upgrade or downgrade of the ratings: The performance of the notes is subject to uncertainty. The performance of the notes is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Manager's investment decisions and management of the transaction will also affect the performance of the notes. Loss and Cash Flow Analysis: Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3.2.1 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in August 2017. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's encompasses the assessment of stressed scenarios. The key model inputs Moody's used in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. For modeling purposes, Moody's used the following base-case assumptions: Target Par Amount: EUR400,000,000 Diversity Score: 38 Weighted Average Rating Factor (WARF): 2780 Weighted Average Spread (WAS): 3.50% Weighted Average Recovery Rate (WARR): 42.00% Weighted Average Life (WAL): 8.50 years As part of the base case, Moody's has addressed the potential exposure to obligors domiciled in countries with local currency country risk ceiling (LCC) of A1 or below. As per the portfolio constraints, eligible countries do not have an LCC below A3 and exposures to countries with LCC of between A1 to A3 cannot exceed 10%. Following the effective date, and given these portfolio constraints and the current sovereign ratings of eligible countries, the total exposure to countries with a LCC of A1 or below may not exceed 10% of the total portfolio. The remainder of the pool will be domiciled in countries which currently have a LCC of Aa3 and above. Given this portfolio composition, the model was run without the need to apply portfolio haircuts as further described in the methodology. Stress Scenarios: Together with the set of modeling assumptions above, Moody's conducted an additional sensitivity analysis, which was a component in determining the definitive ratings assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Here is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on the notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), assuming that all other factors are held equal. Percentage Change in WARF -- increase of 15% (from 2780 to 3197) Rating Impact in Rating Notches: Class A-1 Senior Secured Floating Rate Notes: -1 Class A-2 Senior Secured Fixed Rate Notes: -1 Class B Senior Secured Floating Rate Notes: -2 Class C Senior Secured Deferrable Floating Rate Notes: -2 Class D Senior Secured Deferrable Floating Rate Notes: -2 Class E Senior Secured Deferrable Floating Rate Notes: -1 Class F Senior Secured Deferrable Floating Rate Notes: 0 Percentage Change in WARF -- increase of 30% (from 2780 to 3614) Class A-1 Senior Secured Floating Rate Notes: -1 Class A-2 Senior Secured Fixed Rate Notes: -1 Class B Senior Secured Floating Rate Notes: -4 Class C Senior Secured Deferrable Floating Rate Notes: -4 Class D Senior Secured Deferrable Floating Rate Notes: -3 Class E Senior Secured Deferrable Floating Rate Notes: -1 Class F Senior Secured Deferrable Floating Rate Notes: -2 BLACKROCK CLO V: Fitch Assigns 'B-sf' Rating to Class F Debt ------------------------------------------------------------ Fitch Ratings has assigned BlackRock European CLO V DAC final ratings, as follows: Class A-1: 'AAAsf'; Outlook Stable Class A-2: 'AAAsf'; Outlook Stable Class B: 'AAsf'; Outlook Stable Class C: 'Asf'; Outlook Stable Class D: 'BBBsf'; Outlook Stable Class E: 'BBsf'; Outlook Stable Class F: 'B-sf'; Outlook Stable Subordinated notes: not rated BlackRock European CLO V DAC. is a securitisation of mainly senior secured loans (at least 90%) with a component of senior unsecured, mezzanine, and second-lien loans. A total note issuance of EUR413.5 million was used to fund a portfolio with a target par of EUR400 million. The portfolio will be actively managed by BlackRock Investment Management (UK) Limited. 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 of the identified portfolio is 32.1, below the indicative maximum covenant of 33 for assigning the final ratings. 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 identified portfolio is 67.41%, above the minimum covenant of 61.6% corresponding to the matrix point 33 and weighted average spread of 3.5%. Limited Interest Rate Exposure: Up to 12.5% of the portfolio can be invested in fixed-rate assets, while there are 8% fixed-rate liabilities. Fitch modelled both 0% and 12.5% fixed-rate buckets and found that the rated notes can withstand the interest rate mismatch associated with each scenario. Diversified Asset Portfolio: The transaction contains a covenant that limits the top 10 obligors in the portfolio between 18% and 21% of the portfolio balance, depending on the matrix chosen by the asset manager. This ensures that the asset portfolio will not be exposed to excessive obligor concentration. 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 three notches at the 'BB' rating level and two notches for all other rating levels USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. WILLOW NO. 2: S&P Places Series 31/32 Notes Rating on Watch Pos. --------------------------------------------------------------- S&P Global Ratings placed on CreditWatch positive its ratings on Willow No.2 (Ireland) PLC's series 31 and series 32 notes. S&P said, "The CreditWatch positive placements follow our recent rating actions on the underlying collateral. Under our criteria applicable to transactions such as these, we would generally reflect changes to the rating on the collateral in our rating on the tranche. "We expect to resolve the CreditWatch placements within the next 90 days, and we will take any further rating actions that we consider appropriate." RATINGS LIST Class Rating To From Ratings Placed On CreditWatch Positive Willow No.2 (Ireland) PLC EUR7.2 Million Secured Limited-Recourse Floating-Rate Notes Series 31 Series 31 BB-/Watch Pos BB- Willow No.2 (Ireland) PLC EUR6.2 Million Secured Limited-Recourse Notes Series 32 Series 32 BB-/Watch Pos BB- ========= I T A L Y ========= MONTE DEI PASCHI: Reports First Quarter Net Income of EUR188MM -------------------------------------------------------------- Sonia Sirletti and Chiara Remondini at Bloomberg News report that Banca Monte dei Paschi di Siena SpA made progress toward a turnaround after its Italian state rescue, relying on cost cuts and lower bad-debt provisions to swing to an unexpected profit. First quarter net income at the Siena-based lender totaled EUR188 million (US$224 million) compared with a EUR169 million loss a year earlier, Bloomberg discloses. "Monte Paschi's results mark a step ahead in the banks' revamp " Bloomberg quotes Stefano Girola, a portfolio manager at Fiduciaria Orefici Sim SpA, as saying. "They have to keep on working to clean the books and maintain a healthy commercial network to generate revenues." Chief Executive Officer Marco Morelli is seeking to restore the lender to long-term profitability by cutting jobs and branches and improving asset quality, Bloomberg relays. The CEO, as cited by Bloomberg, said he expects earnings to stabilize in 2018, after two years of losses due to restructuring. Loan-loss provisions declined to EUR138 million in the quarter from EUR309 million a year earlier as Monte Paschi accelerates the reduction of deteriorated debt, Bloomberg notes. According to Bloomberg, Mr. Morelli announced on May 10 the completion of the securitization of EUR24.1 billion of non- performing loans, wrapping up 19 months of negotiations to finalize the biggest disposal of Italian soured debt. The transaction is helping bolster confidence in the bank's effort to tackle its legacy of soured debt, Bloomberg states. Burdened by mounting bad loans and losses on derivatives bets made by previous management that have since gone wrong, the bank was forced to ask state rescue last year, Bloomberg recounts. Banca Monte dei Paschi di Siena SpA -- http://www.mps.it/-- is an Italy-based company engaged in the banking sector. It provides traditional banking services, asset management and private banking, including life insurance, pension funds and investment trusts. In addition, it offers investment banking, including project finance, merchant banking and financial advisory services. The Company comprises more than 3,000 branches, and a structure of channels of distribution. Banca Monte dei Paschi di Siena Group has subsidiaries located throughout Italy, Europe, America, Asia and North Africa. It has numerous subsidiaries, including Mps Sim SpA, MPS Capital Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA. In February 2017, Italy's lower house of parliament approved a government bid to increase public debt by up to EUR20 billion (about US$21.3 billion) to fund a rescue package for Monte dei Paschi di Siena (MPS) and other ailing banks. The move comes after the European Union approved in December 2016 the Italian government's move to rescue MPS, the country's third- largest lender and the world's oldest bank. =================== L U X E M B O U R G =================== COLOUROZ MIDCO: Moody's Downgrades CFR to B3, Outlook Stable ------------------------------------------------------------ Moody's Investors Service has downgraded ColourOz MidCo ('Flint') Corporate Family Rating (CFR) to B3 from B2 and probability of default rating (PDR) to B3-PD from B2-PD. Concurrently the rating agency has downgraded to B3 from B2 the rating on COLOUROZ INVESTMENT 1 GMBH & FDS Holdings BV First Lien term loans and the revolving credit facility (RCF), and downgraded to Caa2 from Caa1 the ratings on COLOUROZ INVESTMENT 1 GMBH Second Lien facility. The outlook on all ratings is stable. RATINGS RATIONALE The downgrade of Flint's CFR to B3 reflects the deterioration of the company's financial metrics over the last year and the company's underperformance compared to Moody's expectations. Flint's Moody's adjusted leverage materially increased to 7.3x at the end of 2017 from 6.5x two years ago. Moody's does not expect that Flint's leverage will decrease over the next two years to level commensurate with a B2 rating. The rating agency expects Flint's Moody's adjusted leverage to remain close to 7x in the next 12-18 months. The company's Moody's adjusted EBITDA declined to EUR282.4 million at the end of 2017 from EUR328 million in 2016. The loss of volume in the Print Media business (renamed "CPS" for Commercial, Publication and Sheetfed), which represented about 20% of the company's normalized EBITDA at the end of 2017, together with the higher raw material costs not fully compensated by the increase in prices resulted in a declining profitability. Moody's expects that the print media market will continue its structural decline, which should weigh on the company's profitability despite the solid performance of Flint's other business of packaging ink. Moody's adjusted EBITDA margin also declined to 12.6% in 2017 from 14.3% in 2015 and 2016. Despite the management focus on extracting synergies from the acquisitions made over the last 18 months and management vital action program that should result in additional savings of about EUR27 million over the next 18 months, Moody's expects that the company's adjusted EBITDA margin will not recover to historical levels of above 14% but rather be comprised between 12% to 11.5%. In addition to the high Moody's adjusted leverage, the B3 CFR reflects (1) the company's exposure to the print media market, a sector in structural decline and affected high competition level and low pricing power; (2) acquisitive business model which has affected cash flow and debt level over the last two years; and (3) short maturity profile with Flint's first maturity date being September 2019 when the EUR150 million revolving credit facility matures, although given the expected positive free cash flow (FCF) and no planned acquisitions, this should remain mostly undrawn. More positively, the CFR is supported by (1) the company's global leading market share in printing consumables and services. Flint is one of largest integrated suppliers of ink and other consumables for the printing and packaging industries. While CPS market is declining, Flint can rely on its strong position in the growing packaging segment (conventional and digital printing). Packaging represented about 80% of the company's normalized EBITDA at the end of 2017 and its expected growth should support Flint's business profile; (2) the well diversified product offering, geographies and customer base with Flint regarded as a long standing supplier by its major customers relationships; and (3) the low capital intensive model and backward integration into pigments, chips and resins, which is a competitive advantage versus its peers. LIQUIDITY Moody's considers Flint's liquidity as adequate. The company's liquidity is based on cash on the balance sheet of EUR82.1 million at the end of 2017; Moody's expectation that free cash flow will be of around EUR25 million in 2018; adequately sized RCF of EUR150 million, mostly undrawn at year end, and a EUR100 million securitization program. However, Moody's notes that the RCF matures in September 2019. While there is no immediate liquidity pressure, there could be a refinancing risk on the company when it will start the discussion with its lenders. The next maturity is the first lien term facility in 2021. OUTLOOK The stable outlook reflects Moody's expectation that the company will be able to stabilise its operating performance. The announced implementation of a program that will focus on the development of packaging and realization of synergies from the acquisitions made should help the company to mitigate the declining CPS volumes effect. Moody's expects the stabilisation of the company's gross leverage. The stable outlook also reflects Moody's expectation that Flint will maintain an adequate liquidity position. What Could Change the Rating -- Up Although unlikely in the near term, upward pressure on the rating could materialise if (1) Flint successfully delivers its profitability growth through its synergies extraction strategy and manages the CPS decline so that it does not erode EBITDA margin; and (2) Moody's adjusted gross debt/EBITDA falls sustainably below 6x. What Could Change the Rating - Down Downward pressure on the ratings could materialise if (1) liquidity weakens substantially with the company becoming free cash flow negative on a sustainable basis; and (2) Moody's adjusted gross debt/EBITDA ratio remains above 7.5x on a sustained basis. LIST OF AFFECTED RATINGS Issuer: COLOUROZ INVESTMENT 1 GMBH Downgrades: Senior Secured First Lien Bank Credit Facility, Downgraded to B3 from B2 Senior Secured Second Lien Bank Credit Facility, Downgraded to Caa2 from Caa1 Outlook Actions: Outlook, Remains Stable Issuer: ColourOz MidCo Downgrades: Probability of Default Rating, Downgraded to B3-PD from B2-PD LT Corporate Family Rating, Downgraded to B3 from B2 Outlook Actions: Outlook, Remains Stable Issuer: FDS Holdings BV Downgrades: Senior Secured First Lien Bank Credit Facility, Downgraded to B3 from B2 Outlook Actions: Outlook, Remains Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Chemical Industry published in January 2018. Headquartered in Luxembourg, Flint is one of the largest global producers and integrated suppliers of ink and other print consumables, with a wide range of support services for the printing industry, along with leading positions in most of its key markets. In 2017 the company reported revenues of EUR 2,248 million, split 50% in EMEA, 30% in North America, 10% in Latin America and 10% in Asia Pacific. Flint has two segments, namely Packaging and Commercial, Publication and Sheetfed (CPS), accounting for 64% and 36% of 2017 revenue respectively. On September 5, 2014, Goldman Sachs Merchant Banking Division and Koch Equity Development LLC completed their acquisition of Flint Group from CVC Partners, becoming the new shareholders with a 50% stake each. ===================== N E T H E R L A N D S ===================== CADOGAN CLO VII: Moody's Assigns (P)B2 Rating to Class F Notes -------------------------------------------------------------- Moody's Investors Service has assigned provisional ratings to seven classes of notes to be issued by Cadogan Square CLO VII B.V.: EUR 272,000,000 Class A Senior Secured Floating Rate Notes due 2031, Assigned (P)Aaa (sf) EUR 29,500,000 Class B-1 Senior Secured Floating Rate Notes due 2031, Assigned (P)Aa2 (sf) EUR 20,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2031, Assigned (P)Aa2 (sf) EUR 30,500,000 Class C Senior Secured Deferrable Floating Rate Notes due 2031, Assigned (P)A2 (sf) EUR 25,500,000 Class D Senior Secured Deferrable Floating Rate Notes due 2031, Assigned (P)Baa2 (sf) EUR 27,500,000 Class E Senior Secured Deferrable Floating Rate Notes due 2031, Assigned (P)Ba2 (sf) EUR 13,500,000 Class F Senior Secured Deferrable Floating Rate Notes due 2031, Assigned (P)B2 (sf) Moody's issues provisional ratings in advance of the final sale of financial instruments, but these ratings only represent Moody's preliminary credit opinions. Upon a conclusive review of a transaction and associated documentation, Moody's will endeavour to assign definitive ratings. A definitive rating (if any) may differ from a provisional rating. RATINGS RATIONALE Moody's provisional ratings of the rated notes address the expected loss posed to noteholders by the legal final maturity of the notes in May 2031. The provisional ratings reflect the risks due to defaults on the underlying portfolio of assets, the transaction's legal structure, and the characteristics of the underlying assets. Furthermore, Moody's is of the opinion that the Collateral Manager, Credit Suisse Asset Management Limited ("CSAM", the "Manager"), has sufficient experience and operational capacity and is capable of managing this CLO. The Issuer will issue the Class A Notes, the Class B-1 Notes, the Class B-2 Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes in connection with the refinancing of the Class A Senior Secured Floating Rate Notes due 2029, the Class B Senior Secured Floating Rate Notes due 2029, the Class C Senior Secured Deferrable Floating Rate Notes due 2029, the Class D Senior Secured Deferrable Floating Rate Notes due 2029 and the Class E Senior Secured Deferrable Floating Rate Notes due 2029, previously issued on May 19, 2016. The Issuer will use the proceeds from the issuance of the Refinancing Notes to redeem in full the Original Notes that will be refinanced. On the Original Issue Date, the Issuer also issued EUR53,650,000 of unrated Subordinated Notes, which will remain outstanding. Cadogan VII is a managed cash flow CLO. At least 96% of the portfolio must consist of secured senior obligations and up to 4% of the portfolio may consist of unsecured senior loans, unsecured senior bonds, second lien loans, mezzanine obligations and high yield bonds. At closing, the portfolio is expected to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. CSAM will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit improved and credit risk obligations, and are subject to certain restrictions. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in August 2017. Factors that would lead to an upgrade or downgrade of the ratings: The performance of the notes is subject to uncertainty. The performance of the notes is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Manager's investment decisions and management of the transaction will also affect the performance of the notes. Loss and Cash Flow Analysis: Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3.2.1 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in August 2017. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's encompasses the assessment of stressed scenarios. The key model inputs Moody's used in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. For modeling purposes, Moody's used the following base-case assumptions: Target Par Amount: EUR450,000,000 Diversity Score: 52 Weighted Average Rating Factor (WARF): 2850 Weighted Average Spread (WAS): 3.40% Weighted Average Coupon (WAC): 4.00% Weighted Average Recovery Rate (WARR): 43.50% Weighted Average Life (WAL): 8.50 years As part of its analysis, Moody's has addressed the potential exposure to obligors domiciled in countries with local currency government bond ratings of A1 or below. According to the portfolio eligibility criteria, obligors must be domiciled in a jurisdiction the Moody's foreign currency government bond rating of which is "Baa3" or above. In addition, according to the portfolio constraints, the total exposure to countries with a local currency country bond ceiling ("LCC") between "A1" and "A3" shall not exceed 10.0%. As a result, in accordance with its methodology, Moody's did not adjust the target par amount depending on the target rating of each class of notes. Stress Scenarios: Together with the set of modeling assumptions above, Moody's conducted an additional sensitivity analysis, which was a component in determining the provisional ratings assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Here is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on the notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), assuming that all other factors are held equal. Percentage Change in WARF -- increase of 15% (from 2850 to 3278) Rating Impact in Rating Notches: Class A Senior Secured Floating Rate Notes: 0 Class B-1 Senior Secured Floating Rate Notes: -1 Class B-2 Senior Secured Fixed Rate Notes: -1 Class C Senior Secured Deferrable Floating Rate Notes: -2 Class D Senior Secured Deferrable Floating Rate Notes: -2 Class E Senior Secured Deferrable Floating Rate Notes: -1 Class F Senior Secured Deferrable Floating Rate Notes: -1 Percentage Change in WARF -- increase of 30% (from 2850 to 3705) Rating Impact in Rating Notches: Class A Senior Secured Floating Rate Notes: -1 Class B-1 Senior Secured Floating Rate Notes: -3 Class B-2 Senior Secured Fixed Rate Notes: -3 Class C Senior Secured Deferrable Floating Rate Notes: -4 Class D Senior Secured Deferrable Floating Rate Notes: -3 Class E Senior Secured Deferrable Floating Rate Notes: -2 Class F Senior Secured Deferrable Floating Rate Notes: -4 INTERNATIONAL SEAWAYS: S&P Lowers Corp Credit Rating to 'B-' ------------------------------------------------------------ S&P Global Ratings lowered its corporate credit rating on International Seaways Inc. to 'B-' from 'B' and removed the rating from CreditWatch, where S&P placed it with negative implications on Dec. 22, 2017. The outlook is negative. Marshall Islands-based International Seaways Inc. has announced the pro forma capital structure for its pending acquisitions of the holding companies of six very large crude carriers (VLCCs) from Euronav N.V. S&P said, "At the same time, we lowered our issue-level rating on the company's $50 million superpriority senior secured revolver and the proposed and amended $480 million senior secured first- lien term loan issued by OIN Delaware LLC and International Seaways Operating Corp. to 'B+' from 'BB-' and removed the rating from CreditWatch, where we placed it with negative implications on Dec. 22, 2017. The '1' recovery rating remains unchanged, indicating our expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a default. "The downgrade reflects International Seaways' increased debt leverage pro forma for its acquisition of six VLCCs and its underperformance relative to our previous expectations over the past year. The company has faced challenging operating conditions in the international shipping market as industry overcapacity reduced its spot shipping rates. Although we expect the overcapacity issues to abate somewhat over the next 12 months as shippers scrap older vessels, the volatility in the international shipping market could cause International Seaways to sustain elevated leverage. "Although we expect the conditions in the international tanker market to improve in the second half of 2018, the negative outlook on International Seaways reflects that we could lower our ratings on the company in the next 12 months if it continues to encounter challenging operating conditions or has trouble integrating the new vessels into its operations. Specifically, we would lower our ratings if these factors caused the company's credit measures to deteriorate or its liquidity to weaken. In our base-case scenario, we expect International Seaways' adjusted debt leverage to improve from 9.0x in 2018 to 6.5x in 2019 as international shippers scrap their older vessels to reduce the overcapacity in the market. "We could revise our outlook on International Seaways to stable over the next 12 months if its credit measures improve, including reducing its debt leverage to around 6x on a sustained basis. This could occur if, for example, the conditions in the company's end-markets improve, its spot rates increase, and it is able to successfully integrate its recently acquired vessels. "We could lower our ratings on International Seaways in the next 12 months if the company's earnings decline because of poor asset integration or continued weakness in TCE rates due to industry overcapacity. We could also lower our ratings if we come to believe that the company is dependent upon favorable business, financial, and economic conditions to meet its financial commitments, or if we view the company's financial obligations as unsustainable over the long term (even if the company does not face a credit or payment crisis in the next 12 months)." =========== R U S S I A =========== DERZHAVA: Moody's Withdraws B3 Long-Term Deposit Ratings -------------------------------------------------------- Moody's Investors Service has withdrawn the following ratings of bank Derzhava: - Long-term local- and foreign-currency deposit rating of B3 - Short-term local and foreign-currency deposit ratings of Not Prime - Long-term Counterparty Risk Assessment of B2(cr) - Short-term Counterparty Risk Assessment of Not Prime(cr) - Baseline Credit Assessment (BCA) and adjusted BCA of b3 At the time of the withdrawal, all the bank's long-term deposit ratings carried a stable outlook. RATINGS RATIONALE Moody's has withdrawn the ratings for its own business reasons. Derzhava is a small, privately owned Russian bank that was ranked 159 domestically by total assets as of April 1, 2018, according to Interfax. The bank operates from a single office in Moscow. Derzhava reported total assets of RUB19.1 billion and total shareholder equity of RUB4.1 billion under audited IFRS financial statements as of December 31, 2017. The bank's IFRS profits for 2017 were RUB1.0 billion. ========= S P A I N ========= FCC AQUALIA: Fitch Affirms LT IDR at 'BB+', Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed FCC Aqualia, S.A. (Aqualia)'s Long- Term Issuer Default Rating (IDR) at 'BB+' and senior secured ratings at 'BBB-'. The Outlook on the IDR is Stable. Aqualia's IDR reflects its low business risk as a water and wastewater networks operator in Spain with long-term concession agreements operated under a regime of local natural monopoly and limited water-related engineering procurement and construction (EPC) activity. Fitch's ratings also reflect the aggressive leverage following the refinancing in June 2017 and its expectations of gradual deleveraging until 2022, supported by steady cash-flow generation and the covenanted structure in place. The Stable Outlook also takes into account the acquisition of the remaining stake in Severomoravske vodovody a kanalizace Ostrava a.s.'s (SmVaK) (BB+/Stable) and the limited impact from the new public service contracts law in Spain. Finally, Fitch views the ring-fencing of Aqualia from its parent as strengthened by the potential entrance of IFM Global Infrastructure investment fund (IFM) as a minority shareholder of the company. KEY RATING DRIVERS Agreement to Sell Minority Stake: Fomento Construcciones y Contratas S.A. (FCC) reached an agreement to sell 49% of Aqualia to IFM for EUR1.02 billion in March 2018. Fitch sees this potential transaction as credit-neutral for Aqualia's ratings based on its standalone approach for the company's rating and the supportive attitude expected from IFM for Aqualia's business plan and financial policy. Aqualia is adequately ring-fenced from its parent FCC, but a significant new shareholder strengthens its view of the operational separation of the two entities. The closing of the sale is expected in September 2018. SmVak Buy-Back From Mitsui: In January 2018 Aqualia bought back from Mitsui a 49% stake in its non-recourse water business in the Czech Republic for EUR93 million, indirectly recovering the 100% control of its subsidiary SmVaK. Fitch would expect FCC, the current sole parent, to fund the acquisition of this stake, given Aqualia's limitations on incurring new indebtedness if the leverage test under its bond documentation is not passed. The Czech water business is not included in Aqualia's rating perimeter. The transaction does not carry any execution risk, in Fitch's view. Healthy Cash Generation: The company has generated healthy free cash flow before dividends in 2017 in line with Fitch's expectations, due to new water contracts and increased volumes billed, resulting in a readily available (Fitch adjusted) cash balance of EUR215 million by end-2017. Fitch expects significant cash to be accrued and retained on balance sheet until 2022, when the first bond matures. Water concessions contributed 88% of total recourse EBITDA, operation and maintenance (O&M) 5%, and engineering procurement and construction (EPC) 7%. Fitch expects EPC to increase its share of the business mix to around 11% from 2018 due to the accounting of two new large projects in Egypt (a desalinisation and a waste-water plant), which begin construction in 2018. Higher Leverage Than Peers: Aqualia's leverage is high compared to its rated peers with similar business risk, thus constraining the final ratings. Aqualia's recourse FFO (funds flow from operations) adjusted net leverage will fall gradually from 7.9x (excluding the EUR15.6 million of anticipated cash tax payments) in 2017 to around 5.5x by end-2021 on the back of steady cash- flow generation, limited capex, covenanted capital structure and shareholders commitment to maintain the current ratings. Non-recourse Potential Growth: The company could explore non- recourse opportunities in water-related projects like public- private partnerships in Latin America and MENA. Equity contributions to non-recourse special purpose vehicles (SPVs) would fall within the recourse perimeter and could delay forecast deleveraging. There was no non-recourse expansion capex in 2017. Approved Public Contracts Act: A new law governing public-sector contracts came into effect in January 2018. The law introduces changes to the contract for services provision with the aim of transferring operational risks (i.e. demand and service provision risk) from the public authorities to the concessionaire. Existing contracts and their allowed extensions are not affected. The main innovations are the exclusion of demand deviations as a reason to restore the economic and financial equilibrium of the contract, the linkage of the duration of the contract to the investment payback period (maximum of 25 years or 40 years, if service contracts include a construction period), and the inclusion of water services re-municipalisation as an event of contract termination. On the positive side, the margin earned by the concessionaire is considered legally a tariff (as opposed to a fee previously), which adds transparency and legal enforcement, and there will be a new independent body to ensure the proper application of the law. Limited Impact for Aqualia: Some of the new provisions are negative from a credit perspective, but Fitch foresees limited impact for Aqualia. This is mainly due to the fact that Aqualia was already facing demand risk, and that a demand deviation has been invoked only on rare occasions to restore financial equilibrium. In addition, the law introduces some challenging requirements for the entities taking over water services (ie. existing staff subrogation or the need to prove higher efficiency under the public management) that could discourage them from following this path. Few Remunicipalisation Initiatives: Political initiatives advocating the taking over of water services by local authorities have not had major implications, with only a very small number of remunicipalisations in 2017, and none for Aqualia. In addition, contracts have been moved to the public sector only after the expiration of the concessions agreement. In Fitch's view, municipalities will continue to opt for concession schemes due to the budget constraints and lack of regional, state or EU support. Aqualia had a success rate in contract renewals of 94% in 2017. DERIVATION SUMMARY Aqualia is a water and sewerage network operator, which in contrast to some of its European peers does not own the asset base. However, its investments are supported by the value of the concessions. The company is fairly positioned relative to peers when considering water-cycle management activities, but the activity related to water infrastructure construction adds some volatility to cash flows compared with pure water assets operators (such as Canal de Isabel II, S.A. (BBB+/Stable). Moreover, the company operates in a decentralised and less developed regulatory environment than other European countries, with slightly higher business risk if compared with the Italian and UK players. Aqualia's leverage is the highest in its peer group resulting in a lower rating. No Country Ceiling, parent/subsidiary or operating environment aspects affect the rating. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer - Recourse revenue growth at 2.5% on average for 2018-2022 reflecting the stable operating environment (stable water consumption, limited population growth in service areas, and tariff increases mainly reflecting CPI). - EBITDA forecast does not incorporate any business expansion and EBITDA margin is assumed to be maintained at a flat level (around 19%), lower than the most recent historical levels at 20%. - Average recourse capex of EUR70 million over 2018-2022, slightly higher than historically. - No dividend payments between 2018 and 2020 due to leverage test covenant restriction, dividend is subject to compliance of the maximum dividend covenant from 2021. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Stronger recourse cash-flow generation leading to recourse FFO adjusted net leverage by 2021 below 5.0x and recourse FFO fixed charge coverage by 2021 above 5.0x on a sustained basis. - In addition, lower business risk, such as an independent and centralised water regulator or increased transparency in the regulatory framework could be credit-positive. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Weaker cash-flow generation leading to recourse FFO adjusted net leverage above 5.5x by 2021 and recourse FFO fixed charge coverage below 3.5x by 2021 on a sustained basis. - In addition, higher business risk such as a lower share of regulated activities in the business mix in favour of riskier ones (EPC, or operation and maintenance), a material increase in non-recourse funding, or financial stress at the parent level would lead to negative rating action. - Fitch expects leverage to be above the negative guideline for most years before 2021, but a slower than expected reduction in leverage could have negative rating implications. LIQUIDITY Sufficient Liquidity: As of December 2017 the company had readily available cash and cash equivalents of EUR215 million and it has limited undrawn credit facilities (EUR0.2 million maturing in 2018, although rolled over annually). There are no contractual debt repayments until 2022 and the operating cash requirements are low. Aqualia's liquidity is supported by a stable and predictable operating environment as well as by a highly cash- generative business. NH HOTEL: Moody's Raises CFR to B1, Outlook Stable -------------------------------------------------- Moody's Investors Service upgraded the corporate family rating of NH Hotel Group S.A. ("NH") to B1 from B2 and the probability of default rating to B1-PD from B2-PD. The rating of NH's senior secured notes was affirmed at Ba3. The rating outlook is stable. "Our decision to upgrade NH Hotels reflects the company's strong record of performance and resulting significant deleveraging, as well as improved liquidity," says Maria Maslovsky, a Moody's Vice President -- Senior Analyst and the lead analyst for NH. The affirmation of the senior secured notes rating at Ba3 reflects its low current loan-to-value (LTV) of 36% against collateral of real property assets and shares pledge of NH Italia, a wholly owned subsidiary, and the company's current plans not to intensively reduce collateral coverage outside of asset rotation transactions. It is also supported by the outcome of Moody's loss given default (LGD) model where one notch support for the senior secured rating is provided by large lease rejection claims. RATINGS RATIONALE Today's rating action reflects NH Hotels' strong performance in 2017 following its repositioning program with 8.5% growth in revenue per available room (RevPAR) driven in large part by a 4.9% increase in average daily rate (ADR). This improvement in hotel fundamentals drove a 6.5% increase in revenues and a 29% increase in EBITDA reported by the company in 2017. Further, Moody's expects NH to extend its track record of positive operating performance into 2018 with support from its newly renovated portfolio and favourable industry fundamentals. In line with its strengthening operating result, NH reduced its leverage with a EUR100 million repayment in full of the bond due 2019. As a result of both improved performance and debt reduction, NH's debt/EBITDA declined to 4.5x in 2017 from 5.3x in 2016 while its EBITA/interest increased to 1.4x from 1.1x. All metrics include Moody's standard adjustments. Also positively, NH generated positive free cash flow in 2017 (after capex and dividends), for the first time since 2012. Moody's expects NH to continue deleveraging towards 4.0x on a debt/EBITDA basis through additional EBITDA improvement in the next 12-18 months. The deleveraging trajectory is accelerated by NH's announcement on 9 May 2018 of its election to exercise the early redemption at the option of the issuer, effectively converting the note into equity. The requirements for optional redemption haev been fulfilled on 30 April 2018 when the stock traded at or above 130% of the strike price of EUR4.919 per share (EUR6.395) for 20 trading sessions out of 30 consecutive trading sessions. These positives are counterbalanced to an extent by potential adverse impact of IFRS 16 on NH's adjusted leverage metric. While Moody's acknowledges that IFRS 16 could materially increase NH's debt/EBITDA figure, it is likely to be at least partially offset by potential EBITDA growth. NH Hotels' B1 corporate family rating reflects its (1) established European platform focussed on midscale, upscale and upper upscale urban business hotels; (2) successful portfolio turnaround resulting in RevPAR improvements of 8.5% in 2017 following a 5.8% increase in 2016 and a 5.2% CAGR since 2009; (3) reduced leverage (measured as debt/EBITDA) to 4.5x in 2017 from 5.3x in 2016 and 5.6x in 2015, strengthened coverage (measured as EBITA/interest) to 1.4x in 2017 from 1.1x in 2016 and positive free cash flow in 2017; as well as (4) improved liquidity. These positives are to a degree offset by the risks associated with NH's growth initiatives in Latin America and unstable ownership with HNA having announced a sale of its 29% stake in the company. While limited in scope, growth initiatives in Latin America carry a measure of risk primarily related to some countries facing challenging macroeconomic environments (Argentina, Mexico), in addition to currency exchange and repatriation issues. NH's liquidity is good with cash of EUR227 million at 31 March 2018, as well as a EUR250 million revolving credit facility (RCF) which is currently undrawn and approximately EUR63.3 million of other available credit lines. We further expect the company to generate positive operating cash flow. The company has no maturities of size until 2023. In 2016, NH reintroduced a dividend which in 2018 will be EUR0.10/share or EUR39.2 million. The stable rating outlook reflects Moody's expectation that NH will continue to grow its RevPAR at least in line with the market. Moody's further expects the company to sustain its good profitability of Moody's adjusted EBITDA margin of over 33%, continue deleveraging the business and generating positive free cash flow (after disposals), as well as maintaining a consistent financial policy. WHAT COULD CHANGE THE RATING UP/DOWN Upward momentum for NH's rating would result from further improvement in credit metrics: debt/EBITDA closer to 4.0x, coverage (EBITA/interest) approaching 2.5x and cash flow (RCF/net debt) above 15%, all on a sustained basis and including Moody's standard adjustments. Adequate liquidity and positive free cash flow (after capex and dividends) at all times would also be needed. Negative pressure on NH's rating could occur from the deterioration in the credit profile such that leverage rises to above 5.0x, coverage reverts to below 1.5x and retained cash flow (RCF) to net debt drops to below 10%. Any liquidity challenges would also be viewed negatively and a material deterioration in the LTV coverage of the secured notes could put pressure on the instrument rating. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. NH Hotel Group is the sixth largest European hotel company focussing on urban hotels primarily in Europe, as well as in some Latin American countries, with a portfolio of 380 hotels and over 59,000 rooms. In 2017, it generated revenues of EUR1.5 billion and EBITDA of EUR233 million. =========================== U N I T E D K I N G D O M =========================== BRIGHTHOUSE GROUP: S&P Withdraws 'D' Issuer Credit Rating ---------------------------------------------------------- S&P Global Ratings withdrew its 'D' issuer credit rating on U.K.- based rent-to-own provider BrightHouse Group PLC at the issuer's request. HUMBERTS: Enters Voluntary Administration for Second Time --------------------------------------------------------- Gazette & Herald reports that redundancies have been announced in Marlborough at Humberts Estate Agents. Humberts estate agents in Marlborough told staff about the job losses on April 30 after the company went into voluntary administration for the second time in ten years, Gazette & Herald relates. Staff at the High Street shop, who still have outstanding wages and commission, were told on April 30 that the shop must make "immediate cost cutting" measures, resulting in some job losses at the chain, Gazette & Herald recounts. According to Gazette & Herald, Ian Westerling managing director of Humberts said: "Due to turbulent market conditions and pressures on the industry as whole, Humberts is currently in talks with proposed administrators with a view to finding a buyer for the profitable parts of the business and the discussions with interested parties is on-going." Humbert's is a nationwide company with 22 offices throughout the country. It currently has accounts overdue from 2015, according to Company's House website and briefly went into voluntary administration in 2008, Gazette & Herald notes. MADE BY BOB: Enters Administration as Debts Pile Up --------------------------------------------------- Wilts and Gloucestershire Standard reports that popular business Made By Bob has entered administration after building up debts of hundreds of thousands of pounds, it has been revealed. However, chef James 'Bob' Parkinson, who gave his name to the award-winning restaurant, said the restaurant in the Corn Hall Arcade, Cirencester, remains open for business, Wilts and Gloucestershire Standard relates. Two administrators from Elwell Watchorn and Saxton LLP were appointed to Made By Bob Ltd on April 3 after debts amounted to more than GBP339,800, according to documents lodged with Companies House, Wilts and Gloucestershire Standard recounts. The restaurant and deli was opened in 2008 by directors James Parkinson and Mark Booth, but although turnover steadily increased from the beginning, the business has always been plagued by cash flow problems, Wilts and Gloucestershire Standard relays. According to Wilts and Gloucestershire Standard, despite agreements being put into place with the eatery's landlords, Corn Hall Cirencester Ltd, and a loan from director Mark Booth, it is believed that unsustainable levels of creditors' liabilities have made the business unsustainable. While the reputation of the business flourished administrator Liam Short's report says that it never fully recovered from being forced to close in 2016 due to issues with leaking drains, Wilts and Gloucestershire Standard notes. Additional debts accrued when more money was borrowed to refurbish the business while the essential work to repair the drains was being completed, Wilts and Gloucestershire Standard states. MARLBOROUGH NOW VAUXHALL: Goes Into Administration -------------------------------------------------- Gazette & Herald reports that following the shock closure of Marlborough Now Vauxhall, known locally as Skurries on George Lane, the chain of dealerships has confirmed it has gone into administration. Existing Marlborough customers had been told to contact the Swindon branch but were angered to find that this dealership had also closed, Gazette & Herald relates. However, now purchaser Eden Vauxhall has stepped in to buy the Swindon location, saving the shop from a similar fate to Marlborough, Gazette & Herald notes. RIBBON FINANCE 2018: S&P Assigns Prelim BB- Rating to Cl. G Notes ----------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Ribbon Finance 2018 PLC's class A to G notes. At closing, Ribbon Finance 2018 will also issue unrated class X1 and X2 certificates. The transaction is backed by one senior loan, which Goldman Sachs Bank USA (Goldman Sachs) originated in April 2018 to facilitate the acquisition by the borrower sponsor of 20 full-service hotel properties in the U.K. The senior loan backing this true sale transaction equals GBP449.8 million and is secured by 17 Holiday Inn and three Crowne Plaza hotels located throughout the U.K. As part of EU and U.S. risk retention requirements, the issuer and the issuer lender (Goldman Sachs), will enter into a GBP22.5 million (representing 5% of the senior loan) issuer loan agreement which ranks pari passu to the notes of each class and the class X1 and X2 certificates. The issuer lender will advance the issuer loan to the issuer on the closing date. The proceeds of the issuer loan will be applied by the issuer as partial consideration for the purchase of the senior loan from the senior loan seller. The market value of the portfolio of 20 full service hotels is GBP692.0 million, which equates to a loan-to-value (LTV) ratio of 65.0%. The five-year loan will have scheduled amortization. CREDIT EVALUATION S&P said, "We consider that the portfolio can sustain a net cash flow of GBP42.5 million, which would imply a debt yield of 9.4%. Our net recovery value for the portfolio is GBP521 million, which represents a 24.7% haircut (discount) to the open market valuation. "We evaluated the underlying real estate collateral securing the loan to generate this expected case value. Our analysis focused on sustainable property cash flows and capitalization rates. We assumed that a real estate workout would be required throughout the five-year tail period needed to repay noteholders if the borrower were to default. The tail period is the period between the maturity date of the loan and the transaction's final maturity date. We then determined the recovery proceeds for the loan by applying a recovery proceeds rate at each rating category. This analysis begins with the adoption of base market value declines and recovery rate assumptions for different rating levels. At each rating category, we adjusted the base recovery rates to reflect specific property, loan, and transaction characteristics. "We compared the derived recovery proceeds with the proposed capital structure. "Following our credit analysis, we consider the available credit enhancement for each class of notes to be commensurate with our preliminary ratings on the notes." RATINGS LIST Ribbon Finance 2018 PLC GBP427.31 mil commercial mortgage-backed floating-rate notes Prelim Amount Class Prelim Rating (mil, GBP) A AAA (sf) 153.900 B AA (sf) 48.070 C AA- (sf) 27.930 D A (sf) 49.020 E BBB- (sf) 81.700 F BB (sf) 54.815 G BB- (sf) 11.875 X1 NR 0.000 X2 NR 0.000 NR--Not rated ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2018. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *