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

                           E U R O P E

           Thursday, June 7, 2018, Vol. 19, No. 112


                            Headlines


C R O A T I A

AGROKOR DD: Sberbank Opposes Request for Rescue Loan Rate Hike


G E R M A N Y

MINIMAX VIKING: S&P Lowers Long-Term ICR to 'B+, Outlook Stable


I R E L A N D

CONTEGO CLO V: Fitch Assigns 'B-(EXP)sf' Rating to Class F Notes
EUROMAX V ABS: Fitch Hikes Rating on Class A1 Notes to 'BBsf'
EUROMAX VI ABS: Fitch Raises Rating on Class A Notes to 'BBsf'


L U X E M B O U R G

ARCELORMITTAL SA: Fitch Rates EUR1.5-Bil. NEU CP Programme 'B'


N E T H E R L A N D S

SAPPHIRE MIDCO: S&P Assigns 'B' Long-Term Issuer Credit Rating


N O R W A Y

PETROLEUM GEO-SERVICES: S&P Withdraws 'CCC+' Issuer Credit Rating


P O R T U G A L

ELECTRICIDADE DOS ACORES: Moody's Raises Long-Term CFR to Ba2


R U S S I A

METALLINVESTBANK JSCB: Moody's Hikes Deposit Ratings to B1
SAMARA OBLAST: S&P Rates New RUB8MM Senior Unsecured Bond 'BB'


S P A I N

BANCAJA 5: S&P Affirms BB+ (sf) Rating on Class B Notes
BANCAJA 7: S&P Raises Class D Notes Rating to B (sf)


S W I T Z E R L A N D

MATTERHORN TELECOM: Moody's Rates CHF2,085MM Sr. Sec. Notes 'B2'
MATTERHORN TELECOM: S&P Rates New Senior Secured Notes 'B+'


T U R K E Y

DENIZBANK AS: Fitch Alters Outlook on 'BB+' LT IDR to Stable
ISTANBUL: Moody's Reviews Ba2 Issuer Rating for Downgrade
ISTANBUL TAKAS: Fitch Places 'bb+' Viability Rating on Watch Neg.


U N I T E D   K I N G D O M

HEATHROW FINANCE: Fitch Affirms 'BB+' Rating on High-Yield Bonds
IKON CONSTRUCTION: Enters Administration, 50 Jobs Affected
JOHNSTON PRESS: In Talks to Offload Pension Scheme to PPF
LAMBERT CONTRACTS: Enters Administration, 77 Jobs Affected
NOMAD FOODS: S&P Alters Outlook to Negative & Affirms 'BB-' ICR

SHOP DIRECT: Fitch Cuts Long-Term IDR to B, Outlook Negative
TOYS R US: Three Northern Ireland Shops Set to Be Occupied
ZEPHYR MIDCO: S&P Assigns Preliminary 'B' ICR, Outlook Stable


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C R O A T I A
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AGROKOR DD: Sberbank Opposes Request for Rescue Loan Rate Hike
--------------------------------------------------------------
Anna Baraulina, Jasmina Kuzmanovic and Jake Rudnitsky at
Bloomberg News report that Sberbank PJSC, which is poised to
become the biggest shareholder of Agrokor d.d. after its
restructuring, said it opposes a request by other creditors to
significantly raise the rate on a rescue loan for the Croatian
retailer.

According to Bloomberg, Sberbank's First Deputy Chief Executive
Officer Maxim Poletaev said in an interview on June 6 Russia's
largest lender wants to cap the roll-up loan's rate at LIBOR plus
5.5 percentage points, rather than as much as 15% that the other
creditors are asking for in a restructuring deal.

"It's not a market rate and it would be bad for the company's
capitalization," Bloomberg quotes Mr. Poletaev as saying.  "We
very much hope for a reasonable approach from our partners."

While Sberbank isn't involved in the roll-up loan, its opposition
to a higher rate could complicate the agreement on a deal,
Bloomberg notes.  The lenders who are participating in the rescue
loan are in talks with Agrokor to extend the term of the facility
and raise the interest rate, Bloomberg relays, citing people
familiar with the negotiations.

Sberbank instead stands to receive a 40% stake in Agrokor,
Bloomberg states.

                         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.


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G E R M A N Y
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MINIMAX VIKING: S&P Lowers Long-Term ICR to 'B+, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Minimax to 'B+' from 'BB-'. The outlook is stable.

S&P said, "At the same time, we lowered to 'B+' from 'BB-' the
issue ratings on the proposed upsized senior secured term loans.
The recovery rating on this debt remains '3', indicating our
expectation of meaningful recovery prospects for lenders in the
event of a payment default (50%-70%; rounded estimate 50%)."

The rating action follows Minimax's announcement that it will
upsize its term loans to fund a repurchase of shares from
minority shareholder Kirkbi Invest A/S. Minimax intends to raise
an additional EUR213 million in euro equivalent and EUR210
million U.S. dollar equivalent. Consequently, proceeds of EUR552
million along with EUR129 million cash on balance sheet will be
distributed as a dividend from Minimax Viking GmbH to MV Holding
GmbH to use to buy back shares from its existing shareholders, in
particular from Kirkbi Invest A/S.

S&P said, "The transaction will lead to increased debt and
temporarily weaken Minimax's credit ratios more than we
anticipated under our previous base case. Upon the closing of the
transaction (which we anticipate for July 1, 2018), we expect
debt to EBITDA to increase to around 5.0x in 2018 before
gradually decreasing to below 5.0x thereafter, and we anticipate
FFO cash interest to remain above 3.0x in 2018 and 2019."

Following changes in the ownership structure, Minimax's
shareholders will include Intermediate Capital Group PLC (about
90% ownership), a U.K.-based mid-market private equity and
mezzanine finance-focused investment and fund manager; Klister
(former Viking owners, about 2%); and Minimax's management the
remaining share. S&P said, "Despite more private-equity oriented
ownership, we anticipate that the shareholders will likely
support a financial policy focusing on gradual deleveraging. We
therefore anticipate that Minimax will return to comfortable
aggressive financial risk profile measures in the next 24 months
provided there are no deviations from our base case."

S&P said, "We expect capital spending will increase in the next
two years as Minimax expands its facilities related to the
production of non-corrosive pipes in the U.S. However, we think
that Minimax will continue to generate significant positive free
operating cash flow (FOCF) of about EUR85 million-EUR90 million
in 2018-2019 on the back of cautious capital allocation and
moderate working capital requirements.

"Although we do not anticipate material acquisitions under our
base case for Minimax, we currently factor in only about EUR50
million for leverage calculations (out of EUR262 million on the
balance sheet as of Dec. 31, 2017). This is owing to Minimax's
status as a financial-sponsor-controlled company. In our view,
this cash should provide Minimax with sufficient flexibility to
pursue potential small-to-midsize strategic investments."

Minimax's business risk profile is constrained by the group's
limited business diversification and scope, as well as it having
to compete with large international companies that have much more
comprehensive product offerings and significant financial
resources.

However, the group is strongly positioned within the fire
protection market in Germany and has a solid position in the U.S.
following the acquisition of Viking Group, Inc. in 2009.
Favorable regulatory requirements and certification processes
represent barriers to entry in Minimax's mature markets, where
only providers with necessary certification can compete. The
installed base of equipment and increasing electrification of
systems provide meaningful barriers to entry and allow Minimax to
benefit from a significant portion of recurring revenues.

This operating environment has allowed the group to show
operating resilience, through the cycle, including in the
economic downturn in 2009, when its adjusted EBITDA margin stayed
firmly between 9%-10%, although its organic revenue declined by
about 11%. S&P anticipates that Minimax will continue to benefit
from favorable industry fundamentals and currently strong
markets. This should enable Minimax to maintain an EBITDA margin
of above 13% for 2018 and 2019, which we consider average
profitability compared with the industry average of 11%-18%.

The company is investing in manufacturing facilities to support
the production of noncorrosive pipes in the U.S. The product has
been patented by Minimax and should prolong the useful life of
pipes used in the fire protection systems. S&P thinks that this
new technology will see the company enhance its competitive edge
and complement its current product range, translating into
additional growth for the business in the medium term.

S&P's base case assumes:

-- GDP growth of 2.3% in 2018 and 1.9% in 2019 in the eurozone
    and about 2.9% and 2.6% in the U.S. The construction sector
    is showing robust performance, even in mature markets such as
    Europe.

-- Construction output to increase by about 2%-3%, on average,
    in the region.

-- S&P said, "Our forecasts suggest that in 2018 the North
    American construction sector will continue to follow a rather
    modest recovery path. We further expect mid-to-high single-
    digit growth in repair and remodeling activity, sub 5% growth
    in nonresidential construction, and infrastructure spending
    to be steady to slightly elevated due to stronger state
    budgets."

-- Low single-digit organic revenue growth of 3%-4% in 2018
    (EUR1.6 billion of sales) in line with GDP but also supported
    by new product sales.

-- Broadly stable adjusted EBITDA margins of slightly above 13%
    in 2018, reaching circa EUR215 million.

-- Capex of about EUR70 million-EUR72 million as the company is
    planning to invest in new manufacturing plants in North
    America.

-- Significant positive FOCF of above EUR50 million annually.

-- S&P does not anticipate any material dividend payments after
    the buyout.

-- S&P does not factor in any payouts for acquisitions.

-- S&P assumes about EUR50 million of excess cash that is
    attributed to debt repayment.

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

-- Adjusted EBITDA margin of above 13% in 2018 and 2019.
-- FFO cash interest cover of about 3.5x-4.0x in 2018-2019.
-- Debt to EBITDA of about 5.0x-5.3x in 2018-2019.
-- FFO to debt of about 10%-12% in 2018-2019.

S&P said, "The stable outlook reflects that Minimax will pursue
gradual deleveraging below 5.0x in the next two years. We also
anticipate the company will maintain FFO cash interest cover of
comfortably above 3.0x.

"Minimax will sustain its resilient operating performance,
underpinned by a high share of recurring business. It also
incorporates our view that the high cash balances provide some
room for the group to step up organic and inorganic growth
opportunities without deteriorating credit metrics.

"We could raise the rating on Minimax if its adjusted debt to
EBITDA falls below 4.5x. Furthermore, an upgrade would depend on
the ownership relationship of the private equity sponsors with
the company, and, specifically, whether or not we view the
shareholders taking a credit-negative action as likely.

"Although currently unlikely, we could consider a negative rating
action if unexpected adverse operating developments occur.
Pressure on the ratings would arise if debt to EBITDA rose above
5.5x or FFO cash interest falls below 3.0x. Such a scenario could
result from a sharp economic downturn in the global economy,
affecting Minimax's end markets and leading to a significant
deterioration of the group's profitability and negative FOCF
generation. We could also consider a downgrade if the group
engages in large debt-funded acquisitions."


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I R E L A N D
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CONTEGO CLO V: Fitch Assigns 'B-(EXP)sf' Rating to Class F Notes
----------------------------------------------------------------
Fitch Ratings has assigned Contego CLO V DAC expected ratings, as
follows:

Class A: 'AAA(EXP)sf'; Outlook Stable

Class B-1: 'AA(EXP)sf'; Outlook Stable

Class B-2: 'AA(EXP)sf'; Outlook Stable

Class C: 'A(EXP)sf'; Outlook Stable

Class D: 'BBB(EXP)sf'; Outlook Stable

Class E: 'BB(EXP)sf'; Outlook Stable

Class F: 'B-(EXP)sf'; Outlook Stable

Subordinated notes: not rated

The assignment of the final ratings is contingent on the receipt
of final documents conforming to information already reviewed.

Contego 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
EUR411.4 million will be used to fund a portfolio with a target
par of EUR400 million. The portfolio will be actively managed by
Five Arrows Management LLP. The CLO envisages a further four-year
reinvestment period and an 8.5-year weighted average life.

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 30.75, below the indicative maximum
covenanted WARF of 33 for assigning the expected 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 favorable than for second-lien, unsecured and mezzanine
assets. The Fitch-weighted average recovery rate (WARR) of the
current portfolio is 68.5%, above the minimum covenant of 63.2%,
and corresponding to the matrix point of WARF 33 and a weighted
average spread (WAS) of 3.4%.

Limited Interest Rate Exposure

Up to 7.5% of the portfolio can be invested in fixed-rate assets,
while there are 2.5% fixed-rate liabilities. Fitch modelled both
0% and 7.5% fixed-rate buckets and found that the rated notes can
withstand the interest rate mismatch associated with each
scenario.

Diversified Asset Portfolio

The covenanted maximum exposure to the top 10 obligors for
assigning the expected ratings is 20% of the portfolio balance.
This covenant 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 four notches at the 'BB' 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 Recognised Statistical Rating Organisations 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.


EUROMAX V ABS: Fitch Hikes Rating on Class A1 Notes to 'BBsf'
-------------------------------------------------------------
Fitch Ratings has upgraded Euromax V ABS PLC's class A1 notes and
affirmed the others, as follows:

Class A1: upgraded to 'BBsf' from 'Bsf', Outlook Stable

Class A2: affirmed at 'CCCsf'

Class A3: affirmed at 'CCsf'

Class A4: affirmed at 'Csf'

Class B1: affirmed at 'Csf'

Class B2: affirmed at 'Csf'

Class D1 combination notes: affirmed at 'Csf'

Class D2 combination notes: affirmed at 'Csf'

Euromax V is a securitisation of mainly European structured
finance securities that closed in 2006.

KEY RATING DRIVERS

Portfolio Amortisation: The upgrade of the class A1 notes
reflects increased credit protection available for the senior
notes as a result of portfolio amortisation. The class A1 notes
have amortised by EUR8.3 million over the last 12 months,
increasing the credit enhancement.

Structure and Cash Flow Analysis: All the OC tests are failing
and class A4, B1 and B2 continue to defer interest, as such
credit enhancement has decreased for these notes.

Portfolio Credit Quality: The average credit quality of the
performing portfolio is 'BB'/'BB+'. Defaulted assets represent
47.5% of the total portfolio and increase to EUR41.1 million from
EUR39.4 million over the last 12 months.

Highly Correlated Portfolio: The portfolio is concentrated in
German CMBS and Italian RMBS. All the performing assets are
within the RMBS sector. Obligor concentration continues to
increase and there are only 11 performing issuers in the
transaction.

Low Recovery Expectation: Most of the assets within the portfolio
are subordinated tranches. Consequently, Fitch's recovery
expectation for the portfolio is near 0%.

RATING SENSITIVITIES

Fitch tested the ratings' sensitivity to a 25% increase in the
obligor default probability and a 25% reduction in expected
recovery rates and in both cases found no rating impact on the
notes.

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

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that were
material to this analysis. Fitch has not reviewed the results of
any third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.

The majority of the underlying assets have ratings or credit
opinions from Fitch and/or other Nationally Recognised
Statistical Rating Organisations and/or European Securities and
Markets Authority registered rating agencies. Fitch has relied on
the practices of the relevant Fitch groups and/or other rating
agencies to assess the asset portfolio information.

Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.


EUROMAX VI ABS: Fitch Raises Rating on Class A Notes to 'BBsf'
--------------------------------------------------------------
Fitch Ratings has upgraded Euromax VI ABS Limited's class A notes
and affirmed the others, as follows:

Class A: upgraded to 'BBsf' from 'Bsf', Outlook Stable

Class B: affirmed at 'CCsf'

Class C: affirmed at 'Csf'

Class D: affirmed at 'Csf'

Class E: affirmed at 'Csf'

Class G combination notes: affirmed at 'CCsf'

Class H combination notes: affirmed at 'Csf'

Euromax VI is a securitisation of mainly European structured
finance securities that closed in 2007.

KEY RATING DRIVERS

Portfolio Amortisation: The upgrade of the class A notes reflects
increased credit protection available for the senior notes as a
result of portfolio amortisation. The class A notes have paid
down by EUR40 million over the last 12 months, increasing the
credit enhancement.

Structure and Cash Flow Analysis: All the OC tests are failing
and class C, D and E continue to defer interest.

Portfolio Credit Quality: The average credit quality of the
performing portfolio is 'BB'/'BB-'. Defaulted assets represent
42% of the total portfolio.

Highly Correlated Portfolio: The portfolio is concentrated in
RMBS and CMBS in Germany and Netherland. Around 90% of the
performing assets are within the RMBS sector. Obligor
concentration continues to increase and there are only 15
performing issuers in the transaction.

Low Recovery Expectation: Most of the assets within the portfolio
are subordinated tranches. Consequently, Fitch's recovery
expectation for the portfolio is near 0%.

RATING SENSITIVITIES

Fitch tested the ratings' sensitivity to a 25% increase in the
obligor default probability and a 25% reduction in expected
recovery rates and in both cases found no rating impact on the
notes.

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

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that were
material to this analysis. Fitch has not reviewed the results of
any third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.

The majority of the underlying assets have ratings or credit
opinions from Fitch and/or other Nationally Recognised
Statistical Rating Organisations and/or European Securities and
Markets Authority registered rating agencies. Fitch has relied on
the practices of the relevant Fitch groups and/or other rating
agencies to assess the asset portfolio information.

Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.


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


ARCELORMITTAL SA: Fitch Rates EUR1.5-Bil. NEU CP Programme 'B'
--------------------------------------------------------------
Fitch Ratings has assigned ArcelorMittal SA's (AM; BB+/Positive)
unsecured EUR1.5 billion negotiable European commercial paper
(NEU CP) programme a short-term 'B' rating. The obligations will
rank pari passu with all other senior unsecured indebtedness of
the company. The rating assigned to the NEU CP programme is the
same as the Short-Term Issuer Default Rating of the company.

KEY RATING DRIVERS

On-going Debt Reduction: AM has publicly announced its commitment
to reduce net debt to USD6 billion (before Fitch adjustments) to
sustain healthy financial metrics through the steel industry
cycles. Since 2016 the company has paid down a substantial USD7.5
billion and is set to prioritise debt repayment over shareholder
returns until the net debt target is reached. If AM adheres to
this policy, Fitch expects it to reduce net debt by another USD3
billion or more by end-2020, underpinned by robust cash flow
generation. This would mean that AM may achieve investment-grade
credit metrics, including funds from operations (FFO) adjusted
gross leverage below 3x. However, corporate activity could delay
or restrain the expected deleveraging path.

Essar Impact on Leverage Unclear: The possible acquisition of the
fourth-largest Indian steel player Essar Steel would moderately
enhance AM's operating profile, giving AM a foothold in the
market with promising growth prospects. Fitch estimates the total
transaction value at around USD6 billion-USD7 billion. AM has
announced a joint venture with Nippon Steel & Sumitomo Metal to
acquire and manage Essar. However, there is no information
available yet with regard to the financing structure for the
potential transaction. If AM completes the acquisition on a non-
recourse basis/without raising debt at AM level and/or providing
financial guarantees, it could be mostly leverage-neutral.
Otherwise, Fitch will have to update its rating forecast and FFO
adjusted gross leverage could remain above its positive rating
sensitivity of 3.0x over the next three years.

Steel Sector Outlook Positive: Fitch expects that apparent steel
consumption will grow across all AM's markets with Brazil and CIS
being the strongest. Fitch projects that steel shipments in 2018
will rise to 88 million tonnes (mt). Fitch changed its sector
outlook for steel to positive in 2018 as capacity closures in
China (15%-20% capacities were taken out from the market) will
continue to have a positive impact on the global steel market
through improved market balance and product prices.

Steel Price Moderation: Apart from the supply and demand balance
for steel, raw materials will be the main driver of prices. Fitch
expects moderation in iron ore and coking coal prices over the
medium-term as new capacities come on-stream. Therefore, Fitch
expects some softening in steel prices towards 2019. At the same
time, protectionist tariffs in the US and anti-dumping measures
in Europe could provide support for domestic steel prices.

Ilva Deal a Priority in Europe: Fitch believes the recent
acquisition of Ilva will provide additional strength to AM's
European franchise, even though antitrust concerns led to the
requirement to dispose of various flat steel assets, mostly
located in Eastern Europe. The transaction will have little
impact on the company's balance sheet due to an extended payment
schedule for the asset. However, with investment in a new Mexican
hot-strip mill AM's capital expenditure will peak at USD3.8
billion-USD3.9 billion over the next two years.

Significant Scale and Diversification: The ratings reflect AM's
position as the world's largest steel producer. AM is also the
world's most diversified steel producer by product and geography,
and benefits from a solid and increasing level of vertical
integration into iron ore.

Mid-Point Cost Position: Fitch estimates that AM has an average
cost position (higher second quartile) overall, varying across
the key regions in which it operates. The cost positions of
individual plants differ significantly, with those in Europe
generally operating at higher cost. Management has various cost
initiatives, but Fitch does not expect any material shift in the
company's cost position over the short-term.

DERIVATION SUMMARY

AM is the largest global steel producer with total output in 2017
of 93mt, taking the top position in Europe, the Americas and
Africa.

Comparing AM with European peers: ThyssenKruppAG (TK: BB+/RWP),
like AM has a strong market position in many of its segments and
also a relatively higher value added product mix. TK is however
more diversified in its business profile with several capital
goods businesses, which provide relative stability. AM is more
geographically diversified and has higher integration into raw
materials, particularly iron ore.

Comparing AM with Russian peers: The Russian steel companies, PAO
Severstal (BBB-/Stable), PJSC Novolipetsk Steel (NLMK) (BBB-
/Stable) and OJSC Magnitogorsk Iron & Steel Works (BBB-/Stable)
are less diversified with a lower value-added product mix in
comparison to AM. However, the Russian steel companies have lower
leverage and are industry cost leaders as they also benefited
from the weakening of the rouble relative to the dollar and
higher raw material self-sufficiency.

KEY ASSUMPTIONS

Fitch's Key Assumptions within its Rating Case for the Issuer

  - Incremental expansion of steel prices in 2018, followed by
low-single digit declines in 2019 and 2020;

  - Up to 2% growth in steel product shipments in 2018 and around
1% thereafter;

  - Continued reduction in cash costs to support future
profitability;

  - Iron ore price declining to USD60/t in 2018 and USD55/t
thereafter;

  - Capital expenditure at around USD3.8 billion-USD3.9 billion
for 2018 and 2019;

  - Common dividend to be reinstated in 2018 at around USD100
million per annum until management's net debt target of USD6
billion is reached.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  -EBIT margin above 8%

  -FFO gross leverage sustained below 3x

  -Free cash flow (FCF) post-dividend margin above 2%

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -EBIT margin below 6%

  -FFO gross leverage sustained above 3x

  -FCF (post dividends) margin below 1.5%

  -Failure to use FCF to decrease debt (which would not be in
line with management's stated intention)

LIQUIDITY

Comfortable Liquidity: At March 31, 2018, AM had cash of USD2.3
billion and undrawn, committed long-term credit lines of USD5.5
billion (USD2.3 billion maturing in December 2019, USD3.2 billion
maturing in December 2021). In comparison, AM had short-term debt
of USD3 billion. Under Fitch's rating case FCF is expected to be
positive over the next three to four years. AM's debt reduction
target implies that a material portion of its FCF - which Fitch
estimates in excess of USD3 billion - will be used for debt
service over 2018 to 2020.


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


SAPPHIRE MIDCO: S&P Assigns 'B' Long-Term Issuer Credit Rating
--------------------------------------------------------------
S&P Global Ratings said that it assigned its 'B' long-term issuer
credit rating to Sapphire Midco B.V., the parent of Netherlands-
based corporate services provider TMF Group, and its financing
subsidiary Sapphire Bidco B.V. The outlook is stable.

S&P said, "At the same time, we assigned our 'B' issue rating and
'4' recovery rating to the EUR950 million senior secured first-
lien term loan and EUR150 million senior secured first-lien
revolving credit facility (RCF). We also assigned our 'CCC+'
issue rating and '6' recovery rating to the EUR200 million senior
secured second-lien term loan.

"The ratings are in line with the preliminary ratings we assigned
on Dec. 6, 2017.

"We are assigning our 'B' ratings to the new parent and financial
subsidiary of TMF Group as the acquisition of the group by
private equity firm CVC Capital Partners has now closed.

"Our assessment of the group's business risk profile as fair is
supported by its global presence, well-diversified client base,
moderate barriers to entry, and flexible cost structure that
underpins profitability. These are counterbalanced by the
fragmented nature of the corporate services market, weaker brand
recognition compared with larger professional services firms, and
potential exposure to litigation and reputation risk.

"Our assessment of the group's financial risk profile as highly
leveraged takes into account its aggressive financial policy and
tolerance for high leverage. Following the acquisition, total
cash-pay debt has materially increased. S&P Global Ratings-
adjusted debt to EBITDA stands at about 8.3x at the transaction
close. That said, this is down from the level we had previously
expected in 2017 (about 10x). Total leverage at the time included
about EUR552 million in shareholder loans under the group's old
capital structure, which carried a high payment-in-kind interest
of around 13.7%."

S&P's base case assumes:

-- Global economic expansion to remain supportive of the group's
    growth plans. In particular, S&P expects 2.0%-2.3% GDP growth
    in the EU over the next 12-24 months, 1.4%-2.3% in Latin
    America, and 5.5%-5.6% in Asia-Pacific;

-- Revenue growth of about 5% over the next 12-24 months,
    leading to total revenues of about EUR580 million-EUR590
    million in 2018 and about EUR605 million-EUR615 million in
    2019;

-- Slight improvement in reported EBITDA margins to about 22.5%-
    23.5% over the next 12-24 months, following the dip in 2016
    (22%);

-- Capital expenditure (capex) in the range 4%-5% of total
    revenues;

-- About EUR25 million-EUR30 million of small bolt-on
    acquisitions;

-- Minor working capital requirements of about EUR4 million; and

-- No dividends.

Based on these assumptions, we arrive at the following credit
measures:

-- Adjusted EBITDA margin of about 28.5%-29.0% in 2018 and 2019;

-- Debt to EBITDA of about 7.8x-8.0x in 2018 and 7.4x-7.8x in
    2019;

-- Funds from operations (FFO) to debt of about 6.0%-7.0% in
    2018 and 2019; and

-- FFO cash interest coverage of about 2.5x-3.0x in 2018 and
    2019.

S&P said, "The stable outlook on Sapphire Midco reflects our view
that demand for the group's services will remain steady and that
it will be able to maintain robust EBITDA margins over the next
12 months. We also anticipate that the group will be able to
maintain FFO cash interest coverage of above 2.0x over the next
12-24 months.

"We could lower the ratings on Sapphire Midco if we were to
observe material deterioration in EBITDA margins, resulting in a
weakening of credit metrics, with no sign of a rapid recovery.
Under such a scenario, we would likely observe FFO cash interest
coverage falling below 2.0x on a sustained basis. We would also
consider lowering the ratings on Sapphire Midco if we observed a
decline in the group's cash conversion rate, resulting in weaker
liquidity, or any material litigation or reputational issues
arose.

"Although we see limited near-term upside potential to the
ratings given the group's high leverage, we could take a positive
rating action if Sapphire Midco were to materially outperform our
forecasts, such that debt to EBITDA fell below 5.0x on a
sustained basis. Under such a scenario, we would also expect a
strong commitment from the sponsor, CVC, to maintain the credit
metrics at those levels."


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


PETROLEUM GEO-SERVICES: S&P Withdraws 'CCC+' Issuer Credit Rating
-----------------------------------------------------------------
S&P Global Ratings said that it had withdrawn its 'CCC+' long-
term issuer credit rating on Norway-based seismic company
Petroleum Geo-Services ASA (PGS) at the company's request. The
outlook was positive at the time of the withdrawal. S&P also
withdrew its 'CCC+' issue ratings on PGS' US$400 million seven-
year term loan.


===============
P O R T U G A L
===============


ELECTRICIDADE DOS ACORES: Moody's Raises Long-Term CFR to Ba2
-------------------------------------------------------------
Moody's Investors Service has upgraded to Ba2 from Ba3 the
long-term corporate family rating (CFR) of EDA - Electricidade
dos Acores, S.A. (EDA). The outlook was changed to stable from
positive.

RATINGS RATIONALE

The upgrade of EDA's rating to Ba2 reflects Moody's view that the
company should be able to sustain a solid financial profile
supported by the latest settlement that reinforces the regulatory
framework's track record of continuity and transparency.
Additionally, Moody's factors in the gradual improvement of the
economy in the Autonomous Region of the Azores (Regiao Autonoma
dos Acores, or RAA, rated Ba2 Positive), which is a supportive
factor for EDA's rating. This would allow the group to fund the
majority of its ambitious capital investment from internal cash
generation, while also maintaining a financial profile consistent
with guidance for a Ba2 rating.

The upgrade factors in the gradual improvement of the regional
economy and a modest increase in power consumption. The RAA's GDP
grew by 1.8% in 2017, and electricity demand rose by 0.3% to
735GWh. Moody's forecast is for GDP growth in Portugal of 2.1% in
2018, which should be reflected in a further strengthening of the
economy of RAA. Moody's expects this will be supportive of
regional power demand in the medium-term, although moderated by
the gradual adoption of energy efficiency measures.

The updated regulatory framework for 2018-20 reflects a
consistent and transparent approach. Although regulatory
parameters applicable over the period include a tighter
efficiency factor for EDA's distribution activities, up to 3%
from 2% during 2015-17, these are partially offset by an easing
of the factors for generation and commercialization, down from
3.5% to 1.5% and from 3.5% to 2.5% respectively. Overall
unrecovered costs for EDA are set to rise over the three year
period, although Moody's estimates that the company has the
capacity to absorb the credit impact while sustaining FFO/debt
comfortably in the mid-teens.

The Ba2 rating factors in EDA's sound financial profile, which
has benefited from positive free cash flow generation overall in
the preceding regulatory period, thanks in part to slower than
planned capital investment, and notwithstanding adverse movements
in working capital and an increased dividend payout to EUR18
million in 2017. The group cut reported net debt to EUR226
million at end-2017 from EUR242 million at end-2014, and achieved
funds from operations (FFO)/debt of over 20% in 2017, and
approximately 19% on a three year average basis. However, the
rating takes account that EDA's cash flow is exposed to working
capital swings, and that oil price movements can cause volatility
in financial metrics.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's (1) estimate that EDA's cash
flow generation during the current regulatory period should be
able to accommodate its capital investment plan and dividend
payments, and (2) expectation that its dividend policy will be
calibrated such as to maintain a financial profile which is
consistent with ratio guidance for a Ba2 rating, including
FFO/debt sustainably in the mid-teens, in percentage terms.

WHAT COULD MOVE THE RATING UP/DOWN

The rating could be upgraded if the company demonstrated a
stronger financial profile, evidenced by FFO/debt above 20% on a
sustainable basis. Any upward movement in EDA's rating will also
be considered in the context of the evolution of the
macroeconomic environment in the Azores and in Portugal.

The rating could be downgraded if (1) deleveraging momentum were
to be reversed -- whether because of failure to reach efficiency
targets, faster than expected capital investment, or high
dividend distributions resulted in a deterioration in the group's
financial profile -- such that FFO/debt was likely to be
consistently below mid-teens; and/or (2) if the company was
unable to raise debt in the domestic or international markets
leading to a deterioration in EDA's liquidity position.

The methodologies used in this were Regulated Electric and Gas
Utilities published in June 2017, and Government-Related Issuers
published in August 2017.

EDA is the dominant vertically integrated utility in Azores,
50.01% owned by the Autonomous Region of Azores. In the year to
December 2017, the company reported consolidated revenues of
EUR187 million and EBITDA of EUR71 million.


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


METALLINVESTBANK JSCB: Moody's Hikes Deposit Ratings to B1
----------------------------------------------------------
Moody's Investors Service has upgraded to B1 from B2 long-term
local- and foreign-currency deposit ratings of Metallinvestbank
JSCB (Metallinvestbank). The outlook on the bank's deposit
ratings has been changed to stable from positive. Concurrently,
Moody's upgraded the bank's Baseline Credit Assessment (BCA) and
adjusted BCA to b1 from b2. Metallinvestbank's Not Prime short-
term local- and foreign-currency deposit ratings were affirmed.

Moody's has also upgraded Metallinvestbank's long-term
Counterparty Risk Assessment (CR Assessment) to Ba3(cr) from
B1(cr) and affirmed the bank's short-term CR Assessment of Not
Prime(cr).

RATINGS RATIONALE

Moody's upgrade of Metallinvestbank's ratings reflects (1) the
demonstrated resilience of the bank's solvency metrics to the low
economic cycles in Russia; (2) its consistently improving asset
quality metrics, which support the bank's profitability and
capital adequacy; and (3) Metallinvestbank's stable funding
profile and conservative liquidity management.

At year-end 2017, the proportion of Metallinvestbank's loans
overdue by more than 90 days reduced to 4.8% of total gross loans
from 5.8% reported a year earlier, whereas the share of impaired
but not overdue loans dropped to 2.8% from 7.3% over the same
period. Simultaneously, the bank maintains a conservative
coverage of problem loans by loan loss reserves - 110% as of the
above reporting date. Moody's expects that the improving trends
in Metallinvestbank's asset quality will protract into 2018,
driven by continuing stabilisation of Russia's macroeconomic
environment. The good and predictable performance of
Metallinvestbank's loan book is also supported by its focus on
low-risk lending segments, in particular mortgages and factoring
loans (30% and 18%, respectively, of total loans as of year-end
2017).

Moody's expects that Metallinvestbank will continue to report
sustainable solid profitability metrics over the next 12 to 18
months, as it had been the case in the past years. In 2017, the
bank's return-on-average assets (ROAA) was strong at 2.0%,
supported by wide net interest margin of 4.7% and relatively low
credit costs of 1.6% (credit costs defined as provisioning
charges as percentage of average gross loans). The strong
financial performance helps Metallinvestbank maintain good
capital adequacy, despite its annual dividend payouts to
shareholders. As of 1 May 2018, the bank's regulatory Common
Equity Tier 1 and total capital adequacy ratios stood at 9.5% and
12.1%, respectively, suggesting sufficient buffers over the
regulatory minima of 4.5% and 8%, as well as over the regulatory
Basel III fully loaded ratios of 7% and 10.5% applicable starting
1 January 2019.

Metallinvestbank's funding and liquidity profiles have been
historically strong. As of March 31, 2018, 73% of the bank's
total funding came from core customer deposits. This funding
profile is matched by a comfortable liquidity cushion exceeding
20% of total assets as of the same reporting date.

WHAT COULD MOVE THE RATINGS UP / DOWN

Moody's could consider an upgrade of Metallinvestbank's deposit
ratings if the bank further diversifies its customer base on both
asset and liability sides while simultaneously preserving
sustainable good financial fundamentals.

The rating agency does not currently anticipate any negative
rating action on Metallinvestbank, however, the ratings could be
downgraded if the bank's performance proves to be significantly
weaker than Moody's current expectations.

LIST OF AFFECTED RATINGS

Upgrades:

LT Bank Deposits, Upgraded to B1 from B2, Outlook changed To
Stable From Positive

Adjusted Baseline Credit Assessment, Upgraded to b1 from b2

Baseline Credit Assessment, Upgraded to b1 from b2

LT Counterparty Risk Assessment, Upgraded to Ba3(cr) from B1(cr)

Affirmations:

ST Bank Deposits, Affirmed NP

ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

Outlook, Changed To Stable From Positive

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks
published in April 2018.

Headquartered in Moscow, Russia, Metallinvestbank reported -- at
year-end 2017 - total assets of RUB74.6 billion and total
shareholder equity of RUB9.3 billion, according to its audited
financial statements prepared under International Financial
Reporting Standards (IFRS). The bank's IFRS net profits for 2017
was RUB1.4 billion.


SAMARA OBLAST: S&P Rates New RUB8MM Senior Unsecured Bond 'BB'
--------------------------------------------------------------
S&P Global Ratings said that it had assigned its 'BB' long-term
global scale issue rating to Samara Oblast's proposed Russian
ruble (RUB) 8 billion (about $129 million) eight-year senior
unsecured bond. S&P understands that Samara Oblast (BB/Positive/-
-) plans to issue the bond on June 14, 2018.

The bond will have 32 quarterly fixed-rate coupons and an
amortizing repayment schedule. The coupon rate will be disclosed
at the time of issuance. According to the redemption schedule,
20% of the bond is to be repaid in September 2020, 20% in June
2022, 15% in December 2023, 10% in September 2024, 20% in June
2025, and the remaining 15% in June 2026.

  RATINGS LISTS
  Samara Oblast
   Senior Unsecured
   RUB8 bil bnds
   Local Currency             BB


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


BANCAJA 5: S&P Affirms BB+ (sf) Rating on Class B Notes
-------------------------------------------------------
S&P Global Ratings raised and removed from CreditWatch positive
its credit rating on Bancaja 5 Fondo de Titulizacion de Activos'
class A notes. At the same time, S&P has affirmed its 'BB+ (sf)'
rating on the class B notes and its 'B- (sf)' rating on the class
C notes.

S&P said, "The rating actions follow the application of our
relevant criteria and our full analysis of the most recent
transaction information that we have received, and reflect the
transaction's current structural features. We have also
considered our updated outlook assumptions for the Spanish
residential mortgage market.

"Our structured finance ratings above the sovereign (RAS)
criteria classify the sensitivity of this transaction as
moderate. Therefore, after our March 23, 2018 upgrade of Spain to
'A-' from 'BBB+', the highest rating that we can assign to the
senior-most tranche in this transaction is six notches above the
Spanish sovereign rating, or 'AAA (sf)', if certain conditions
are met. For all the other tranches, the highest rating that we
can assign is four notches above the sovereign rating.

"Credit Suisse International (A/Stable/A-1) is the swap
counterparty in the deal. We do not consider the replacement
language in the swap agreement to be in line with our current
counterparty criteria, although it does feature a replacement
framework that we give some credit to in our analysis. Under our
current counterparty criteria, our ratings are capped at our
long-term issuer credit rating (ICR) on the corresponding swap
counterparty, plus one notch, 'A+'. We have therefore analyzed
the transaction without giving benefit to the swap agreement. Our
ratings on all of the notes are subsequently delinked from the
long-term ICR on the swap counterparty.

"Our European residential loans criteria, as applicable to
Spanish residential loans, establish how our loan-level analysis
incorporates our current opinion of the local market outlook. Our
current outlook for the Spanish housing and mortgage markets, as
well as for the overall economy in Spain, is benign. Therefore,
we revised our expected level of losses for an archetypal Spanish
residential pool at the 'B' rating level to 0.9% from 1.6%, in
line with table 87 of our European residential loans criteria, by
lowering our foreclosure frequency assumption to 2.00% from 3.33%
for the archetypal pool at the 'B' rating level.

"After applying our European residential loans criteria to this
transaction, the overall effect in our credit analysis results is
a decrease in the required credit coverage for each rating level
compared with our previous review, mainly driven by our revised
foreclosure frequency assumptions. Additionally, our weighted-
average loss severity (WALS) assumptions have increased at all
rating levels compared with our previous review, mainly driven by
the increment of the projected loss that we modelled to meet the
minimum floor under our criteria, as the pool's attributes
indicate better credit quality than the archetype."

  Rating level     WAFF (%)    WALS (%)
  AAA                 12.32       19.95
  AA                   8.47       15.93
  A                    6.49        7.61
  BBB                  4.83        2.00
  BB                   3.26        2.00
  B                    2.07        2.00

WAFF--Weighted-average foreclosure frequency. WALS--Weighted-
average loss severity.

S&P said, "Since our previous review, the class A, B, and C
notes' credit enhancement has increased to 14.9%, 9.2%, and 5.6%,
respectively, from 13.6%, 8.5%, and 5.3%. The amortization of the
notes will remain sequential as the pool factor is now below 10%.

"Following the application of our criteria, we have determined
that our assigned ratings on the classes of notes in this
transaction should be the lower of (i) the rating as capped by
our RAS criteria, (ii) the rating as capped by our counterparty
criteria, or (iii) the rating that the class of notes can attain
under our European residential loans criteria.

"Our European residential loans criteria, reflecting our updated
credit figures, indicates that the available credit enhancement
for the class A notes is commensurate with a 'AAA (sf)' rating.
Furthermore, under our RAS criteria, this class of notes can be
rated up to six notches above our unsolicited 'A-' long-term
sovereign rating on Spain. We have therefore raised to 'AAA (sf)'
from 'AA (sf)' and removed from CreditWatch positive our rating
on the class A notes."

The transaction structure features an interest deferral trigger
for the class B and C notes, which is based on the outstanding
balance of 90+ day arrears plus defaults over the outstanding
collateral balance, rather than the closing collateral balance.
The risk of a trigger breach, given the transaction's current
performance is most likely to manifest itself at the end of the
transaction's life when the collateral balance is low. If
triggered, the interest payments are subordinated below principal
and cash reserve replenishment in the priority of payments, which
would lead to a deferral of interest on the respective class of
notes. These triggers are at 8.00% and 5.00% for the class B and
C notes, respectively. At the January 2018 interest payment date
the trigger level was 2.35%.

S&P said, "In our opinion, the class B and C notes are unlikely
to default over a three-year horizon based on the current
constant prepayment rate (CPR) levels and pool performance.
Whether, and at what point in time, the triggers are ultimately
reached, will depend on how a number of factors develop,
including CPR levels, the level of 90+ day arrears plus defaults,
recovery timings, and which classes of notes are then
outstanding. We will closely monitor the evolution of these
factors.

"Considering the aforementioned factors, we have affirmed our
'BB+ (sf)' rating on the class B notes. In our opinion, the class
C notes are currently not vulnerable to nonpayment and therefore,
in line with our criteria for assigning 'CCC' category ratings,
we have affirmed our 'B- (sf)' rating on the class C notes. Our
opinion is based on the current credit enhancement level of 5.63%
stemming from the fully funded cash reserve, compared with only
2.35% of 90+ day arrears (including defaults). Considering the
positive macroeconomic conditions for the Spanish economy and the
high seasoning of the assets, we do not expect the underlying
collateral's performance to deteriorate."

Bancaja 5 is a Spanish residential mortgage-backed securities
(RMBS) transaction that closed in April 2003 and securitizes
first-ranking mortgage loans, originated between 1999 and 2002.
Caja de Ahorros de Valencia Castell¢n y Alicante (now Bankia)
originated the underlying collateral, mainly in the Valencia
region.

  RATINGS LIST

  Class             Rating
              To               From

  Bancaja 5, Fondo de Titulizacion de Activos EUR1 Billion
  Mortgage-Backed Floating-Rate Notes

  Rating Raised And Removed From CreditWatch Positive

  A           AAA (sf)       AA (sf) Watch Pos

  Ratings Affirmed

  B           BB+ (sf)
  C           B- (sf)


BANCAJA 7: S&P Raises Class D Notes Rating to B (sf)
----------------------------------------------------
S&P Global Ratings raised and removed from CreditWatch positive
its credit ratings on Bancaja 7 Fondo de Titulizacion de Activos'
class A2, B, C, and D notes.

S&P said, "The rating actions follow the application of our
relevant criteria and our full analysis of the most recent
transaction information that we have received, and reflect the
transaction's current structural features. We have also
considered our updated outlook assumptions for the Spanish
residential mortgage market.

"Our structured finance ratings above the sovereign (RAS)
criteria classify the sensitivity of this transaction as
moderate. Therefore, after our March 23, 2018 upgrade of Spain to
'A-' from 'BBB+', the highest rating that we can assign to the
senior-most tranche in this transaction is six notches above the
Spanish sovereign rating, or 'AAA (sf)', if certain conditions
are met. For all the other tranches, the highest rating that we
can assign is four notches above the sovereign rating.

"Credit Suisse International (A/Stable/A-1) is the swap
counterparty in the deal. We do not consider the replacement
language in the swap agreement to be in line with our current
counterparty criteria, although it does feature a replacement
framework that we give some credit to in our analysis. Under our
current counterparty criteria, our ratings are capped at our
long-term issuer credit rating (ICR) on the corresponding swap
counterparty, plus one notch, 'A+'. We have therefore analyzed
the transaction without giving benefit to the swap agreement. Our
ratings on all of the notes are subsequently delinked from the
long-term ICR on the swap counterparty.

"Our European residential loans criteria, as applicable to
Spanish residential loans, establish how our loan-level analysis
incorporates our current opinion of the local market outlook. Our
current outlook for the Spanish housing and mortgage markets, as
well as for the overall economy in Spain, is benign. Therefore,
we revised our expected level of losses for an archetypal Spanish
residential pool at the 'B' rating level to 0.9% from 1.6%, in
line with table 87 of our European residential loans criteria, by
lowering our foreclosure frequency assumption to 2.00% from 3.33%
for the archetypal pool at the 'B' rating level.

"After applying our European residential loans criteria to this
transaction, the overall effect in our credit analysis results is
a decrease in the required credit coverage for each rating level
compared with our previous review, mainly driven by our revised
foreclosure frequency assumptions. Additionally, our weighted-
average loss severity (WALS) assumptions have increased at all
rating levels compared with our previous review, mainly driven by
the increment of the projected loss that we modelled to meet the
minimum floor under our criteria, as the pool's attributes
indicate better credit quality than the archetype."

  Rating level     WAFF (%)    WALS (%)
  AAA                 11.07       22.87
  AA                   7.64       17.59
  A                    5.79        8.03
  BBB                  4.32        2.00
  BB                   2.90        2.00
  B                    1.80        2.00

WAFF--Weighted-average foreclosure frequency. WALS--Weighted-
average loss severity.

S&P said, "Since our previous review Bancaja 7's class A, B, and
C notes' credit enhancement decreased to 10.8%, 6.7%, and 4.2%,
respectively, from 12.2%, 8.0%, and 4.2% due to the pro rata
conditions which affect the amortization of the notes. The class
D notes' credit enhancement increased to 2.5% from 1.7% in the
same period.

"Following the application of our criteria, we have determined
that our assigned ratings on the classes of notes in this
transaction should be the lower of (i) the rating as capped by
our RAS criteria, (ii) the rating as capped by our counterparty
criteria, or (iii) the rating that the class of notes can attain
under our European residential loans criteria.

"The application of our European residential loans criteria and
related credit and cash flow analysis indicates that the
available credit enhancement for the class A2 notes is
commensurate with a 'AAA (sf)' rating. Furthermore, under our RAS
criteria, this class of notes can be rated up to six notches
above our unsolicited 'A-' long-term sovereign rating on Spain.
We have therefore raised to 'AAA (sf)' from 'AA+ (sf)' and
removed from CreditWatch positive our rating on the class A2
notes.

"The application of our European residential loans criteria and
related credit and cash flow analysis indicate that the class B
notes can achieve a 'AA- (sf)' rating. Additionally, the
application of our RAS criteria caps our rating on this class of
notes at four notches above our unsolicited 'A-' long-term
sovereign rating on Spain. We have therefore raised to 'AA- (sf)'
from 'A+ (sf)' and removed from CreditWatch positive our rating
on the class B notes.

"Our credit and cash flow analysis indicates that the class C and
class D notes achieve 'BBB- (sf)' and 'B (sf)' ratings,
respectively. We have therefore raised to 'BBB- (sf)' from 'BB+
(sf)' and removed from CreditWatch positive our rating on the
class C notes and raised to 'B (sf)' from 'B- (sf)' and removed
from CreditWatch positive our rating on the class C notes."

Bancaja 7 is a Spanish residential mortgage-backed securities
(RMBS) transaction that closed in July 2004 and securitizes
first-ranking mortgage loans. Caja de Ahorros de Valencia
Castell¢n y Alicante (Bancaja; now Bankia) originated the
underlying collateral, mainly in the Valencia region.

  RATINGS LIST

  Class             Rating
              To               From

  Bancaja 7, Fondo de Titulizacion de Activos EUR1.9 Billion
  Mortgage-Backed Floating-Rate Notes

  Ratings Raised And Removed From CreditWatch Positive

  A2          AAA (sf)         AA+ (sf) Watch Pos
  B           AA- (sf)         A+  (sf) Watch Pos
  C           BBB- (sf)        BB+ (sf) Watch Pos
  D           B (sf)           B- (sf) Watch Pos


=====================
S W I T Z E R L A N D
=====================


MATTERHORN TELECOM: Moody's Rates CHF2,085MM Sr. Sec. Notes 'B2'
----------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the
CHF2,085 million equivalent senior secured notes due 2025 and
2026 to be issued by Matterhorn Telecom SA ("MT"), a wholly-owned
subsidiary of Matterhorn Telecom Holding SA ("MTH"). MTH and MT
are the ultimate holding company and intermediate holding company
of Salt Mobile SA, respectively. The outlook on the ratings is
stable.

All other ratings remain unchanged, including the B2 corporate
family rating ("CFR") and B2-PD probability of default rating
("PDR") of Matterhorn Telecom Holding SA, as well as the existing
instrument ratings.

The company is refinancing, with proceeds from the new notes,
MTH's outstanding EUR299 million senior unsecured notes due 2023,
the outstanding EUR1,000 million and CHF411 million senior
secured notes due 2022, and the outstanding EUR75 million senior
secured notes due 2023 issued by MT. Moody's expects to withdraw
the ratings on the existing debt instruments once they are
repaid. As part of the refinancing exercise, the existing CHF100
million super senior Revolving Credit Facility (RCF) will be
replaced with a new CHF75 million super senior RCF maturing in
2023.

"While the transaction is leverage neutral, the refinancing is
credit positive given that Salt will lock-in low interest rates
for the long term and extend its debt maturity profile," says
Laura Perez, a Moody's Vice President -- Senior Credit Officer
and lead analyst for Salt.

RATINGS RATIONALE

The refinancing is credit positive as it will extend Salt's
average debt maturity profile to 7-8 years and will push the debt
maturity wall to 2025-2026, from 2022. In addition, the company
will lock-in low interest rates for the long term. It will also
simplify its capital structure by shifting to an all senior
secured structure and aligning the covenants to those of the
existing EUR400 million senior secured notes due 2027. However,
the refinancing is broadly leverage neutral and does not have an
impact on the company's rating or its stable outlook.

The B2 rating assigned to the new senior secured notes is in line
with the rating on the existing senior secured notes and the
company's CFR given that these notes are the largest share of
financial debt in the company's capital structure. The notes rank
behind the CHF75 million super senior RCF.

Salt's revenue and EBITDA continued to improve in the quarter
ended March 2018 with top-line revenue stabilising and underlying
EBITDA growth slightly above 10%. Including the impact of IFRS
15, EBITDA grew by around 13%.

Salt recently declared a CHF90 million dividend, which will lead
to a moderately slower deleveraging profile than initially
expected with adjusted debt to EBITDA expected to increase by
0.2x to 4.8x by year-end 2019. Nevertheless, Moody's continues to
expect Salt's debt to EBITDA to be below 5x (including
Indefeasible Right of Use commitments) and free cash flow to debt
to be above 5% in the next 18 months. In addition, Moody's views
the CHF25 million reduction in Salt's RCF to CHF75 million as
credit negative, although not material in respect of the company
liquidity's profile, which remains strong.

The B2 CFR reflects (1) Salt's position as a market challenger
and the third-largest player in the Swiss mobile market; (2) its
mobile centric business profile; (3) increased competitive
pressures in Switzerland; (4) its strong cash generation and high
EBITDA margins driven by cost efficiency actions, despite
sustained pressure on revenues; (5) the company's target leverage
ratio between 3.5x-4x; notwithstanding temporary deviations in
leverage due to potential dividend re-capitalisation exercises to
fund M&A opportunities at NJJ Capital (NJJ); and (6) Salt's
strong liquidity profile supported by its strong cash flow
generation and its long dated debt maturity profile.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook on the ratings reflects Moody's expectation of
gradual stabilisation of Salt's operating revenues and improving
churn trends, with sustained growth in EBITDA and cash flow
generation. As a result, Moody's expects that the company's
adjusted debt to EBITDA will improve below 5x over the next 18
months, down from 5.3x at FYE 2017.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward pressure on the B2 rating could develop if the company's
operating performance significantly improves, including sustained
revenue growth and improving KPI trends (ARPU, churn), such that
its (1) adjusted debt/EBITDA ratio decreases to below 4.0x on a
sustained basis; and (2) retained cash flow (RCF)/adjusted debt
ratio increases well above 15%. Upward pressure on the rating
would require a track record of deleveraging, with indications of
a more conservative financial strategy to be implemented by the
shareholders.

Downward pressure could be exerted on the rating if the company's
operating performance deteriorates, with sustained declines in
revenues and increasing churn rates, leading to pressure on
margins, such that its adjusted debt/EBITDA rises above 5.0x and
its RCF/adjusted debt falls below 10% on a sustained basis. In
addition, downward pressure could be exerted on the rating if the
group's liquidity deteriorates -- including, but not limited to,
a reduction in covenant headroom.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was
Telecommunications Service Providers published in January 2017..

COMPANY PROFILE

Matterhorn Telecom Holding SA is the ultimate parent of
Matterhorn Telecom SA and Salt Mobile SA. Salt is the third-
largest mobile network operator in Switzerland, with a subscriber
market share of around 17% and about 1.9 million mobile customers
as of December 2017. In 2017, Salt reported revenue of CHF1.1
billion and EBITDA (including installment accounting) of CHF471.8
million.

The company is owned by NJJ Capital, Xavier Niel's private
holding company, which holds various stakes in a broad range of
companies in Europe, including Monaco Telecom and recently
completed the acquisition of a combined 65% stake in eircom
Holdings (Ireland) Limited (eir, B1 stable) with Iliad S.A.
Xavier Niel is the founder and majority shareholder of the French
integrated telecoms operator Iliad, which trades under the Free
brand.

LIST OF AFFECTED RATINGS

Assignments:

Issuer: Matterhorn Telecom SA

Backed Senior Secured Regular Bonds/Debentures, Assigned B2


MATTERHORN TELECOM: S&P Rates New Senior Secured Notes 'B+'
-----------------------------------------------------------
S&P Global Ratings said that it has assigned its 'B+' issue
rating to the senior secured notes equivalent to Swiss franc
(CHF)2,085 million to be issued by Matterhorn Telecom S.A.
(B+/Stable/--), the financing subsidiary of Swiss mobile operator
Matterhorn Telecom. The recovery rating on the notes is '3',
indicating S&P's expectation of meaningful recovery (50%-70%;
rounded estimate: 50%) in the event of default.

S&P said, "We also affirmed our 'B+' issue rating on the group's
EUR400 million senior secured notes issued by Matterhorn Telecom
S.A. in November 2017 and that will remain post-refinancing. The
recovery ratings remain unchanged at '3', indicating our
expectation of meaningful (50%-70%; rounded estimate: 50%)
recovery.

"Our rating actions follow the group's proposed refinancing of
its floating- and fixed-rate senior secured notes (except for the
one maturing in 2027) and of its unsecured notes, with the
issuance of CHF-equivalent 2,085 million senior secured notes
maturing in 2025-2026. The recovery rating on the existing and
proposed senior secured debt instruments is supported by our
valuation of the company as a going concern. It is constrained,
however, by the notes' structural subordination to the super
senior revolving credit facility (RCF) and the substantial amount
of equally ranked secured debt."

The terms of the proposed debt's documentation are more issuer-
friendly than the stricter terms of the documentation of the
refinanced debts. This is supported by the broadening of the
incurrence test under the notes from a maximum 4.5x to 5.0x
consolidated net leverage ratio and increases of other permitted
baskets.

S&P said, "In our hypothetical default scenario, we assume a
severe decline in mobile revenues caused by higher subscriber
turnover, declining average revenue per user, and a loss of
market share from fierce competition and Matterhorn's slower-
than-expected service diversification in fixed line. We believe
that this, combined with the fixed-line investments, would reduce
cash flow, leading to a hypothetical payment default in 2020.

"We value the group as a going concern because we believe the
business would likely reorganize in a default scenario. This is
underpinned by its established market position in a stable
regulatory environment, valuable mobile network and customer
base, and the fairly high barriers to enter the industry."

SIMULATED DEFAULT ASSUMPTIONS

-- Year of default: 2022
-- Minimum capital expenditure (share of the past three years'
    average sales): 6.0% [1]
-- Cyclicality adjustment factor: +0% (standard sector
    assumption for the telecom and cable sector)
-- Operational adjustment: +30% (for further capital expenditure
    needs in excess of 6% of historical sales)
-- Emergence EBITDA after recovery adjustments: About CHF238
    million
-- Implied enterprise value multiple: 6.0x
-- Jurisdiction: Switzerland

SIMPLIFIED WATERFALL

-- Gross enterprise value at default: about CHF1.455 billion
-- Administrative costs: 5%
-- Net value available to debtors: CHF1.38 billion
-- Priority claims [2]: About CHF66 million
-- Secured debt claims [2]: About CHF2.6 billion
-- Recovery expectation [3]: 50%-70% (rounded estimate 50%;
    recovery rating '3')
-- Unsecured debt claims[2]: nil

[1]Average sales exclude future fixed-line revenues.
[2]All debt amounts include six months of prepetition interest.
RCF assumed 85% drawn on the path to default.


===========
T U R K E Y
===========


DENIZBANK AS: Fitch Alters Outlook on 'BB+' LT IDR to Stable
------------------------------------------------------------
Fitch Ratings has revised the Outlooks on the Long-Term Foreign
Currency Issuer Default Ratings (IDRs) of Denizbank A.S., its
domestic subsidiary Deniz Finansal Kiralama A.S. and its Moscow
subsidiary Joint-Stock Company Denizbank Moscow (Denizbank
Moscow) to Stable from Positive.

At the same time Emirates NBD's (ENBD) IDRs and Viability Rating
(VR) of 'A+' and 'bb+', respectively, have been affirmed. This
follows an announcement made by Emirates NBD on May 22, 2018 that
it has agreed to buy Sberbank's 99.85% stake in Denizbank and
Fitch's recent rating actions on Turkish banks' IDRs. The
acquisition is subject to regulatory approvals.

The agency has also placed Denizbank's, Deniz Finansal Kiralama's
and Denizbank Moscow's Long- and Short-Term Local Currency IDRs
on Rating Watch Positive, and Denizbank's and Deniz Finansal
Kiralama's National Long-Term ratings on Rating Watch Positive.

KEY RATING DRIVERS

Denizbank, Deniz Finansal Kiralama and Denizbank Moscow
Denizbank's ratings reflect Fitch's view that once the
acquisition is complete, Denizbank will benefit from support from
ENBD, should this be required, based on its ownership and role in
group.

However, the Outlook change on the Long-Term Foreign Currency
IDRs reflects Fitch's intention to reassess whether it remains
appropriate to rate Turkish foreign-owned banks above the
sovereign (BB+/Stable). This is due to potential intervention in
the banking system in case of marked deterioration in Turkey's
external finances and in light of the Rating Watch Negative
placed on the 'BBB-' IDRs of other Turkish foreign-owned banks.

In Fitch's view, the risk of capital controls being imposed in
Turkey remains remote given Turkey's high dependence on foreign
capital and strong incentive to retain market access, the
eventually orthodox policy response to recent market pressures,
statements by senior Turkish officials (including Deputy Prime
Minister Mehmet Simsek) that such controls would not be
introduced and reduced immediate risks to macroeconomic and
financial stability.

However, in case of marked deterioration in Turkey's external
finances, some form of intervention in the banking system that
might impede banks' ability to service their foreign currency
obligations cannot be completely ruled out, in Fitch's view.
While such intervention is a remote risk, the agency will
reconsider whether it is sufficiently remote to be regarded as
less likely than a sovereign default.

The RWPs on the Local Currency IDRs and National Ratings of
Denizbank reflect Fitch's view of a lower likelihood of any form
of government intervention that would impede the bank's ability
to service obligations in local currency.

The ratings of Deniz Finansal Kiralama and Deniz Moscow are
equalised with Denizbank's, reflecting their strategic importance
to, and integration with Denizbank.

ENBD

The affirmation of ENBD's IDRs, Support Rating and Support Rating
Floor reflects Fitch's expectation that ENBD will retain its D-
SIB status in the UAE and its specific flagship status in Dubai
post acquisition of Denizbank, and that probability of support
from the UAE authorities will therefore remain unchanged.

Fitch's view of support reflects the sovereign's strong capacity
to support the banking system, sustained by sovereign wealth
funds and recurring revenue mostly from hydrocarbon production
despite lower oil prices, and the moderate size of the UAE
banking sector in relation to the country's GDP. Fitch also
expects high willingness from the authorities to support the
banking sector, which has been demonstrated by the UAE
authorities' long track record of supporting domestic banks, as
well as close ties with and part government ownership links to a
number of banks.

ENBD's Support Rating Floor of 'A+' is one notch above the UAE D-
SIB Support Rating Floor of 'A', reflecting the bank's systemic
importance in the UAE and flagship status in Dubai. Fitch
believes the status will be maintained after the acquisition of
Denizbank.

ENBD's VR reflects the bank's high impaired loans ratio, moderate
share of restructured loans and high loan concentration, which
have not changed significantly since the last affirmation in
February 2018 and also potentially increasing risk appetite to a
more vulnerable Turkish market. Fitch believes the expected
acquisition of a weaker Denizbank (as reflected by lower VR of
bb/RWN) will be neutral for ENBD's VR. This is because the agency
forecasts ENBD's pro-forma consolidated Fitch Core Capital (FCC)
ratio at end-2017 to be around 12%, which corresponds to a 'bb+'
VR.

Fitch estimates ENBD's consolidated non-performing loan (NPL)
ratio should improve to around 7% from 8% post-acquisition and
the share of the Dubai sovereign exposure will decrease to around
31% of total loans from 42%. However the agency still views asset
quality and concentration as constraints on the VR.

Fitch estimates Denizbank's assets would account for 25% of
ENBD's consolidated assets post-merger (based on end-2017
figures).

RATING SENSITIVITIES

Denizbank, Deniz Finansal Kiralama and Denizbank Moscow

The Foreign Currency IDR and Support Rating of Denizbank are
sensitive to Fitch's assessment of whether it is appropriate to
rate Denizbank above the Turkish sovereign given potential
intervention in the banking system in case of a marked
deterioration in Turkey's external finances.

The RWP on the bank's Local Currency IDRs and National rating
will be resolved once regulatory approvals for the acquisition is
received and ownership changes. Should ENBD acquire the 99.85%
stake in Denizbank as planned, Fitch's expectation is that
Denizbank's Long-Term Local Currency IDR would be upgraded to
'BBB-', Short-Term Local Currency IDR to 'F3' and Long-Term
National Rating to 'AAA(tur)' based on support from ENDB.

The ratings of Deniz Finansal Kiralama and Deniz Moscow are
sensitive to changes in their parent rating.

ENBD

ENBD's IDRs, Support Rating and Support Rating Floor are
sensitive to a change in Fitch's view of the ability or
willingness of the authorities to provide support, or a change in
Fitch's view of support in the UAE.

An upgrade of ENBD's VR could be possible if the bank works out
its impaired and restructured loans, and reduces its high
concentration risk. Downward pressure could stem from weakening
asset quality, profitability or capital metrics post acquisition.

The rating actions are as follows:

Denizbank A.S.:

Long-Term Foreign-Currency IDR 'BB+'; Outlook revised to Stable
from Positive
Short-Term Foreign-Currency IDR affirmed at 'B'
Support Ratings affirmed at '3'
Viability Rating 'bb'/RWN; unaffected
Long-Term Local-Currency IDR 'BB+'; placed on RWP
Short-Term Local-Currency IDR 'B'; placed on RWP
National Long-Term Rating 'AA(tur)'; placed on RWP

Deniz Finansal Kiralama A.S.:

Long-Term Foreign-Currency IDR 'BB+'; Outlook revised to Stable
from Positive
Short-Term Foreign-Currency IDR affirmed at 'B'
Support Rating affirmed at '3'
Long-Term Local-Currency IDR 'BB+'; placed on RWP
Short-Term Local-Currency IDRs 'B'; placed on RWP
National Long-Term Rating 'AA(tur)'; placed RWP

Joint-Stock Company Denizbank Moscow.:

Long-Term Foreign-Currency IDR 'BB+'; Outlook revised to Stable
from Positive
Short-Term Foreign-Currency IDR affirmed at 'B'
Support Rating affirmed at '3'
Long-Term Local-Currency IDR 'BB+'; placed on RWP
Short-Term Local-Currency IDR 'B'; placed on RWP

Emirates NBD:

Long-Term IDR: affirmed at 'A+'; Stable Outlook
Short-Term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'bb+'
Support Rating: affirmed at '1'
Support Rating Floor: affirmed at 'A+'
ECP programme: affirmed at 'F1'
Senior unsecured notes: affirmed at 'A+'/'F1'
Subordinated notes: affirmed at 'A'
Senior unsecured programme: affirmed at 'A+'/'F1'


ISTANBUL: Moody's Reviews Ba2 Issuer Rating for Downgrade
---------------------------------------------------------
Moody's Public Sector Europe has placed under review for
downgrade the Ba2 long-term issuer ratings of the Metropolitan
Municipalities of Istanbul and Izmir, as well as the Ba2 long-
term issuer rating of Turkey's Housing Development Administration
(Toplu Konut Idaresi Baskanligi, (TOKI) ). Moody's has also
placed under review for downgrade the existing National Scale
Ratings (NSRs) of Aaa.tr on Izmir and TOKI.

The action follows Moody's decision to place under review for
downgrade the Turkish government bond rating of Ba2 on 1 June
2018.

The rating action reflects Moody's assessment of the heightened
systemic risk for Turkish sub-sovereigns due to their close
operational and financial linkages with the Turkish government.
In addition, institutional linkages intensify the close ties
between the two levels of government through the sovereign's
ability to change the institutional framework under which
Turkey's sub-sovereigns operate.

The direct implications for the ratings of the Metropolitan
Municipalities of Istanbul and Izmir also reflect their lack of
special status, which prevents them from being rated above the
sovereign. Metropolitan Municipalities in Turkey, including
Istanbul and Izmir, cannot act independently of the sovereign and
do not have enough financial flexibility to permit their credit
quality to be stronger than that of the sovereign.

RATINGS RATIONALE

RATIONALE FOR THE DECISION TO PLACE RATINGS UNDER REVIEW FOR
DOWNGRADE

ISTANBUL AND IZMIR

The decision to place under review for downgrade the issuer
ratings of Istanbul and Izmir takes into account the fact that
they: (1) Are highly reliant on central government shared taxes
and are subject to potential changes in legislation, such as tax
redistribution. The Metropolitan Municipalities of Istanbul and
Izmir derive between 75%-80% of their operating revenues from
central government shared taxes, (2) Are strongly dependent on
the sovereign's macroeconomic and operating environment. Istanbul
and Izmir's local economic bases are heavily integrated with that
of the national economy, and (3) Are exposed to increased debt
service costs arising from the depreciation of the Turkish lira,
especially for Istanbul, which has a high proportion of FX-
denominated debt. This could exert additional pressure on both
cities' debt service.

TOPLU KONUT IDARESI BASKANLIGI (TOKI)

The decision to place under review for downgrade the Ba2 issuer
rating of TOKI reflects the very strong linkages between TOKI and
its support provider, the Government of Turkey. It also takes
into account (1) the credit profile of TOKI, which in Moody's
view, is closely linked to that of its owner, (2) its clear
public policy mandate and its key role in the development of the
National Urbanization and Social Housing Production Plan, and (3)
Moody's assessment of the very high likelihood that the central
government would provide timely support should the entity face
acute liquidity stress.

In addition to the outcome of the review of the Turkish sovereign
rating, Moody's will use the review period to examine in detail
the liquidity situation of the two Turkish Metropolitan
Municipalities, Istanbul and Izmir.

WHAT COULD MOVE THE RATINGS UP/DOWN

A downgrade of Turkey's sovereign rating would lead to a
downgrade of the sub-sovereigns' ratings, given their close
institutional, operational and financial linkages. For both
Istanbul and Izmir, a strained liquidity situation could trigger
a downgrade. In addition, for Istanbul, downward ratings pressure
may also arise from a sustained growth in debt and debt servicing
costs.

An upgrade of the sub-sovereigns' ratings is unlikely given the
review for downgrade and would require an upgrade to Turkey's
sovereign rating.

The sovereign action on Turkey published on June 1 required the
publication of these credit rating actions on a date that
deviates from the previously scheduled release date in the
sovereign release calendar.

The specific economic indicators, as required by EU regulation,
are not available for these entities. The following national
economic indicators are relevant to the sovereign rating, which
was used as an input to this credit rating action.

Sovereign Issuer: Turkey, Government of

GDP per capita (PPP basis, US$): 24,986 (2016 Actual) (also known
as Per Capita Income)

Real GDP growth (% change): 3.2% (2016 Actual) (also known as GDP
Growth)

Inflation Rate (CPI, % change Dec/Dec): 8.5% (2016 Actual)

Gen. Gov. Financial Balance/GDP: -1.7% (2016 Actual) (also known
as Fiscal Balance)

Current Account Balance/GDP: -3.8% (2016 Actual) (also known as
External Balance)

External debt/GDP: [not available]

Level of economic development: Moderate level of economic
resilience

Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.

On June 1, 2018, a rating committee was called to discuss the
rating of Istanbul, Metropolitan Municipality of; Izmir,
Metropolitan Municipality of; and Toplu Konut Idaresi Baskanligi.
The main points raised during the discussion were: The systemic
risk in which the issuer operates has materially increased.

The principal methodology used in rating Izmir, Metropolitan
Municipality of and Istanbul, Metropolitan Municipality of was
Regional and Local Governments published in January 2018. The
principal methodology used in rating Toplu Konut Idaresi
Baskanligi was Government-Related Issuers published in August
2017.


ISTANBUL TAKAS: Fitch Places 'bb+' Viability Rating on Watch Neg.
-----------------------------------------------------------------
Fitch Ratings has placed Istanbul Takas ve Saklama Bankasi A.S.'s
(Takasbank) Viability Rating (VR) of 'bb+' on Rating Watch
Negative (RWN). At the same time Fitch has affirmed Takasbank's
Long- and Short-Term Foreign-Currency (FC) Issuer Default Ratings
(IDRs) at 'BB+' and 'B', respectively. The Outlook on the Long-
Term FC IDR is Stable.

The rating action follows Fitch placing a number of large Turkish
commercial banks' VRs and IDRs on RWN. Takasbank's credit profile
is sensitive to a deterioration of commercial banks' risk
profiles as they are Takasbank's largest clearing members and key
counterparties in its ancillary treasury operations.

KEY RATING DRIVERS

Takasbank's Long-Term IDRs are driven by Fitch's view of a high
probability of support from the Turkish authorities in case of
need. Prior to Fitch's rating action, Takasbank's Long-Term FC
IDR was also underpinned by the bank's individual credit profile,
as expressed by its VR.

VR

The RWN on Takasbank's VR primarily reflects increased downside
risks to its asset quality and capitalisation, given heightened
operating environment pressures resulting from ongoing currency
and interest rate volatility. In particular, following the rating
actions on Turkey's commercial banks, the Long-Term IDRs of the
majority of Takasbank's clearing members and treasury
counterparties are now on RWN, which indicates increasing credit
risk exposure and potential impact on regulatory capitalisation.

Fitch believes that immediate risks to Turkey's macroeconomic and
financial stability have reduced following the increase in the
policy rate, the announced simplification of the monetary policy
framework and the resulting moderate recovery of the exchange
rate. However, the still significant fall in the exchange rate,
the hike in the interest rate (and the stated readiness of the
Turkish authorities to raise this further in case of need) and
the negative impact of both of these on economic growth are
likely to result in a deterioration of Takasbank's financial
metrics. In addition, risks to financial stability remain
significant, given the possibility that policy predictability
will come under pressure after June's presidential elections, and
in view of Turkey's need to meet a large external financing
requirement in tougher global financial conditions.

IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR

Takasbank's Support Rating of '3' and Support Rating Floor (SRF)
of 'BB+' reflect Fitch's view of a moderate probability of
support from the Turkish sovereign in case of need. The SRF,
which underpins Takasbank's Long-Term FC IDR, is aligned with the
sovereign's Long-Term FC IDR. The bank's Long-Term Local Currency
IDR of 'BBB-' is also aligned with that of the sovereign,
reflecting its high support expectations and Turkey's ability to
provide support in local currency.

In Fitch's opinion, Takasbank has exceptionally high systemic
importance for the Turkish financial sector and contagion risk
from its default would be considerable given its
interconnectedness. The state's ability to provide extraordinary
FC support to the banking sector, if required, may be constrained
by limited central bank reserves (net of placements from banks)
and the sector's sizable external debt. However, in Fitch's view,
the FC support needs of Takasbank in even quite extreme scenarios
should be manageable for the sovereign given Takasbank's business
model, short-term and largely matched balance sheet as well as
its adequate liquidity position.

The affirmation of Takasbank's National Rating reflects Fitch's
view that there is unlikely to be any material weakening in the
ability or propensity of the authorities to support the bank in
local currency.

RATING SENSITIVITIES

VR

Fitch will resolve the RWN on Takasbank's VR based on (i) an
analysis of the impact on the bank's credit profile of the
deterioration in the operating environment that has already taken
place; and (ii) the extent to which the operating environment
deteriorates further or stabilises in the near term. The
magnitude of the downgrade will depend on the combined impact on
Takasbank's credit profile but in the absence of any further
marked worsening of economic conditions it will likely be limited
to one notch.

In addition, Takasbank's VR remains sensitive to a material
operational loss, or a materially increased risk appetite, for
example, by growing rapidly in untested asset classes. Increasing
risk appetite in the bank's treasury activities could also be
rating negative.

IDRs, SUPPORT RATING AND SRF

Rating actions on Turkey are likely to be mirrored in Takasbank's
ratings given the strong correlation of the bank's credit profile
with sovereign, country and banking sector risks. Additionally,
an indication that resources, in particular in FC, required to
support Takasbank in a stress scenario are materially larger than
currently estimated by Fitch, for instance as a result of a
higher risk appetite in FC treasury activities, could put
pressure on Takasbank's SRF and on its FC Long-Term IDR.

Takasbank is Turkey's only central counterparty clearing (CCP)
institution and is majority-owned by Borsa Istanbul, Turkey's
main stock exchange. Borsa Istanbul in turn is majority-owned by
the Turkish government (via the Turkish Wealth Fund). Takasbank
is operating under a limited banking licence, and is regulated by
three Turkish regulatory bodies: the Central Bank of Turkey, the
Banking Regulation and Supervision Agency and the Capital Markets
Board

The rating actions are as follows:

Long-Term Foreign-Currency IDR: affirmed at 'BB+'; Outlook Stable

Short-Term Foreign-Currency IDR: affirmed at 'B'

Long-Term Local-Currency IDR: affirmed at 'BBB-'; Outlook Stable

Short-Term Local-Currency IDR: affirmed at 'F3'

Viability Rating: 'bb+' placed on RWN

Support Rating: affirmed at '3'

Support Rating Floor: affirmed at 'BB+'

National Long-Term Rating: affirmed at 'AAA(tur)'; Outlook Stable


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


HEATHROW FINANCE: Fitch Affirms 'BB+' Rating on High-Yield Bonds
----------------------------------------------------------------
Fitch Ratings has revised the Outlook on Heathrow Funding
Limited's class A and B bonds to Stable from Positive and
affirmed the ratings, as follows:

Heathrow Funding Limited:

Class A bonds: affirmed at 'A-', Outlook revised to Stable from
Positive

Class B bonds: affirmed at 'BBB', Outlook revised to Stable from
Positive

Heathrow Finance plc:

High-yield (HY) bonds: affirmed at 'BB+', Outlook Stable

KEY RATING DRIVERS

Heathrow is a large hub/gateway airport serving a strong origin
and destination market that experienced a small peak to trough
decline of 4.4% in 2008-09. Heathrow benefits from regulated and
inflation-linked revenues. The airport is well maintained but
capacity constrained. Heathrow's debt structure is protective,
secured and ring-fenced. Proven access to capital markets
mitigates refinance risk. The Fitch rating case forecast now
includes some capital expenditure related to the third runway
project, particularly in 2021-22, resulting in class A net debt
to EBITDA increasing to 8.6x in 2022 from 6.3x in 2018. The five-
year average remains below 7x.

Fitch hasrevised the Outlooks on the class A and B notes to
Stable as it expects continuing short term uncertainty around the
planning, pricing and execution of the third runway as well as
ongoing Brexit concerns. Fitch now expects the planning process
for the third runway to extend to 2021, in line with the expected
extension of the current regulatory period Q6. The deeply
structural and contractual subordinated nature of the HY bonds
prevents any foreseeable upgrades.

Large Hub with Resilient Traffic: Volume Risk - Stronger
LHR is a large hub/gateway airport serving a strong origin and
destination market. Traffic has remained resilient, growing by
2.6% in 2017. LHR's peak to trough fall in traffic of just 4.4%
through the 2008-09 economic crisis was due to the attractiveness
of London as a world business centre; the role of LHR as a hub
offering strong yield for airlines; the location and connectivity
of LHR with the well-off western and central districts of the
city; and unsatisfied demand as underlined by the capacity
constraint, which also helps absorb shocks.

Regulated and Inflation-Linked: Price Risk - Midrange
LHR is subject to economic regulation, with a price cap
calculated under a single till methodology based on RPI+X, and is
currently set at RPI-1.5% for the Q6 regulatory period, which
started in April 2014 and will be extended to 2020 and perhaps
2021. The cap is set by an independent regulator, the CAA, whose
duties include ensuring that airports' operations and investments
remain financeable and affordable.

The regulatory process that leads to the cap determination is
transparent but creates material uncertainty each time it is
reset (usually every five years, although this regulatory period
has been extended). Heathrow expects to outperform its 2014-18
forecast.

Well-maintained but Capacity Constrained: Infrastructure
Development/Renewal - Stronger

LHR implements a detailed capital investment plan, agreed by the
regulator. The original plan for Q6 was around GBP3.5 billion of
investment, more modest than Q5 at over GBP5 billion. Heathrow's
new forecast to 2020 includes some expenditure relating to the
runway expansion project. Fitch's forecast to 2022 includes
significantly higher capex compared with previous reviews. Fitch
believes that Heathrow's track record of successfully accessing
funding and delivering capex projects, and the regulator's
mandate to ensure financeability support the stronger assessment
overall, although some uncertainty remains regarding timing and
price-recovery of the investment.

Refinancing Risk Mitigated: Debt Structure - Midrange (Class A);
Midrange (Class B); Weaker (HY)

Class A debt benefits from its seniority, security, and
protective debt structure including ring-fencing of all cash
flows from LHR and a set of covenants limiting leverage. It is
exposed to some hedging and refinancing risk, mitigated by the
issuer's strong capital market access based on an established
multi-currency debt platform and the use of diverse maturities.
The class B notes assessment remains at 'midrange', as they
benefit from many of the strong structural features of the class
A notes. HY notes have a weaker debt structure due to their deep
structural subordination.

Financial Profile

Fitch's calculated five-year (2018-22) average post maintenance
interest cover ratio (PMICR)for the 'A-' rated class A bonds is
2.1x (up from 2.0x in Fitch's previous forecast), for the 'BBB'
rated class B bonds 1.7x (1.6x) and the 'BB+' rated HY bonds 1.5x
(1.4x). This is partly due to the lower cost of debt and traffic
outperformance in 2017. However, Fitch-calculated rating case net
senior debt to EBITDA increases to 8.6x in 2022 from 6.3x in
2018, largely due to anticipated debt-funded capex spending,
although the five-year average remains at 6.7x. Fitch notes that
significant uncertainty remains regarding the pricing regime post
2020 and part of the expected capex could be funded by additional
shareholder contributions.

PEER GROUP

Heathrow is one of the most robust assets in the global sector.
It has higher leverage than its European peers (Aeroports de
Paris; A+/Stable), albeit with a better debt structure for senior
debt. Compared with Gatwick (BBB+/Stable), Heathrow's bonds
benefit from a stronger revenue risk profile.

RATING SENSITIVITIES

Future developments that may, individually or collectively, lead
to positive rating action include:

Class A bonds: net debt-to-EBITDA below 7x and average PMICR
above 1.8x.

Class B bonds: net debt-to-EBITDA below 8x and average PMICR
above 1.5x.

HY bonds: An upgrade is unlikely given Heathrow's management of
its capital structure and subsequent targeting of HY investors.

Future developments that may, individually or collectively, lead
to negative rating action include:

Class A bonds: net debt-to-EBITDA consistently above 8x and
average PMICR below 1.6x.

Class B bonds: net debt-to-EBITDA consistently above 9x and
average PMICR below 1.3x.

HY notes: net debt-to-EBITDA above 10x, PMICR below 1.15x and
dividend cover below 3.0x.

Exposure to Aviation Downturn

A marked and durable degradation of the British economy as a
result of uncertainties regarding Brexit negotiations, among
others, could derail Heathrow's resilience. Evidence of
recessionary prospects over two years could prompt a revision of
the Outlook.

CREDIT UPDATE

Heathrow's performance remained strong in the three months to
March 31, 2018. Revenue grew by 3.8% over the same period in 2017
and adjusted EBITDA grew by 5.2%. This was due to passenger
growth of 3.1%, lower operating costs and higher retail spending.
Revenue grew by 2.3% in 2017 vs 2016 and opex fell by 1%,
resulting in EBITDA growth of 4.5% to GBP1.76 billion from
GBP1.68 billion. Heathrow's RAB also increased to GBP15.8 billion
from GBP15.2 billion. Several recent refinancings have also
pushed out debt maturities at attractive rates.

Heathrow and the CAA have continued progress against milestones
in the planning process for the third runway project.

Fitch Cases

Fitch's rating case from 2018-22 assumes traffic five-year CAGR
of 0.5%, regulatory price reductions, fewer efficiency savings
and higher cost of new debt (by 200bp) in 2019 and 2021. CAA's
original forecast for Q6 for traffic, which assumes potential
traffic shocks, is largely outperformed.

Fitch's rating case projects EBITDA to be flat between 2018 and
2022 Fitch calculated a five-year average PMICR for the 'A-'
rated class A bonds to be 2.1x (up from 2.0x), for the 'BBB'
rated class B bonds 1.7x (1.6x) and the 'BB+' rated HY bonds 1.5x
(1.4x). Fitch-calculated net senior debt to EBITDA increases to
8.6x in 2022 from 6.3x in 2018, largely driven by debt-funded
capex.

Asset Description

Heathrow is a major global hub airport with significant origin
and destination traffic and resilience due to its status as the
preferred London airport and capacity constraints. Peers include
Aeroports de Paris in terms of size and Gatwick in terms of
location and debt structure.

Revenues are regulated and subject to an inflation price cap on a
single till basis. Fitch views the structured, secured and
covenanted senior debt as offsetting some of the higher expected
five-year average leverage under FRC for the class A and B bonds
compared with peers. The HY bonds are, by nature, structurally
subordinated.


IKON CONSTRUCTION: Enters Administration, 50 Jobs Affected
----------------------------------------------------------
Paul Bisping at Business-Sale reports that Bristol building firm
Ikon Construction, which has recently been fined GBP145,000 for
health and safety breaches, has gone into administration.

According to Business-Sale, reports said Ikon Construction has
now appointed Andrew Sheridan -- andrew.sheridan@frpadvisory.com
-- and Gareth Morris -- gareth.morris@frpadvisory.com -- partners
at business advisory firm FRP Advisory, as administrators and has
made all of its 50 staff members redundant.

Ikon Construction was ordered to pay a large fine by North
Somerset Magistrates' Court in 2018 after a complaint was filed
by a member of the public regarding suspected safety failures,
Business-Sale discloses.

Additionally, the firm has faced a number of financial issues in
recent years, most recently recording a pre-tax loss of GBP79,186
for the year to March 2017, despite registering turnover of
GBP36.9 million, Business-Sale relays.

Commenting on the company's situation, Andrew Sheridan of FRP
Advisory confirmed that all of the firm's live construction sites
have been secured and that the administrators are now reviewing
all of the available options, including business sale,
Business-Sale relates.

Mr. Sheridan, as cited by Business-Sale, said: "Ikon Construction
has been a strong performing business over the years."

"Unfortunately difficulties with a few projects and tighter
margins in the industry have led to a persistent cash liquidity
issue, resulting in the company entering administration."


JOHNSTON PRESS: In Talks to Offload Pension Scheme to PPF
---------------------------------------------------------
Christopher Williams at The Daily Telegraph reports that Johnston
Press warned of "extremely challenging" trading, amid an attempt
to offload pension liabilities and stave off a debt crisis.

Following its AGM in Edinburgh, Johnston Press confirmed a report
on June by The Daily Telegraph revealing it was in talks over a
Regulated Apportionment Arrangement (RAA) to transfer its pension
scheme to the Pension Protection Fund.

Control of the publisher of the i, the Scotsman and more than 200
local titles would be handed to the main owner of its GBP220
million bond debt, the US hedge fund GoldenTree, The Daily
Telegraph discloses.


Johnston Press -- http://www.johnstonpress.co.uk/-- is one of
the largest local and regional multimedia organisations in the
UK.  The company provides news and information services to local
and regional communities through its extensive portfolio of
hundreds of publications and websites.  Its titles span Scotland,
the North East, West Yorkshire, the North West & Isle of Man,
South Yorkshire, the South, Midlands and Northern Ireland --
delivering extensive coverage of local news, events and
information.

                          *     *     *


As reported by the Troubled Company Reporter on March 27, 2018,
S&P Global Ratingslowered its long-term issuer credit rating on
U.K.-based Johnston Press PLC to 'CCC-' from 'CCC+'.  S&P said
the outlook is negative.  The rating agency forecasts that U.K.-
based newspaper publisher Johnston Press PLC's revenues and
adjusted EBITDA will continue to decline in 2018, against
continued structural declines in the industry and restructuring
and other exceptional items incurred by the group.


LAMBERT CONTRACTS: Enters Administration, 77 Jobs Affected
----------------------------------------------------------
Ana Da Silva at Evening Express reports that construction firm
Lambert Contracts Ltd. has gone into administration.

The company, which has offices in Paisley and Aberdeen,
specializes in building and construction work and employed 85
people, Evening Express discloses.

According to Evening Express, as a result of being placed into
administration, 77 staff have been made redundant -- including
all six at the Aberdeen office.

"Although the company has a large turnover it had been suffering
from cash-flow problems, and despite best efforts to raise
additional funding, administration was the only option," Evening
Express quotes head of recovery Derek Forsyth as saying.


NOMAD FOODS: S&P Alters Outlook to Negative & Affirms 'BB-' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook to negative from stable
and affirmed its 'BB-' long-term issuer credit rating on U.K.-
based frozen food manufacturer Nomad Foods Ltd.

S&P said, "At the same time, we affirmed our issue rating on
Nomad Foods' existing EUR558 million term loan, EUR400 million
fixed-rate senior secured notes, EUR80 million revolving credit
facility (RCF), and the $660 million term loan. The U.S. dollar-
denominated term loan will be increased by an amount equivalent
the price paid for the planned acquisition. The recovery rating
is '3', indicating our expectation of average recovery (rounded
estimate: 50%) in the event of default."

The outlook revision follows the announcement of a new EUR240
million debt-funded acquisition of U.K.-based frozen food
manufacturer Aunt Bessie's just a few months after Nomad Foods
had announced the acquisition of Irish frozen pizza manufacturer
Goodfella's Pizza (Goodfella's). The Goodfella's acquisition was
funded with EUR100 million of incremental debt and EUR125 million
of cash.

S&P said, "In our view, after the Aunt Bessie's acquisition, the
financial metrics will be stretched for the current rating. In
our base-case scenario, at year-end 2018, we expect the S&P
Global Ratings-adjusted debt-to-EBITDA ratio to be about 6x (5.5x
pro forma a full-year contribution from the acquired companies).
This is well above our guideline of 4.5x-5.0x for the current
rating.

"We expect adjusted debt to EBITDA to fall to 5x in 2019 after
full-year EBITDA contributions from the acquired companies and
assuming lower restructuring costs in that year. We also note
that free operating cash flow for the current year is still
expected to be above EUR100 million, which we consider
significant. Similarly, free operating cash flow (FOCF) to debt
is expected to be about 7% in the current year; both these
metrics are consistent with the current rating.

"We understand that both the acquisitions announced in 2018 will
strengthen Nomad Foods' positioning in the U.K. frozen food
market, expanding the product offering to frozen pizza
(Goodfella's) and to frozen Yorkshire puddings and potato
products (Aunt Bessie's), but we note that they take place when
the group is still processing the Findus integration. Our
assumptions for our adjusted EBITDA include about EUR80 million
of restructuring costs for the current year and EUR50 million for
2019. These integration costs relate not only to the two new
acquisitions but also to the legacy restructuring costs linked to
the Findus acquisition.

"In our base-case scenario, we assume that Nomad Foods will be
able to reduce its leverage and that its financial metrics will
be in line with the current rating in 2019. We also assume that
the company will not announce any new debt-funded acquisitions in
the next few quarters and that restructuring costs will be in
line with current expectations.

"Our assessment of Nomad Foods' business risk profile is
supported by its leading position in the European frozen food
market, its resilient profitability, and its record of positive
revenue growth despite a tough environment in the eurozone and
especially in the U.K. in the past couple of years. It is
constrained by the low underlying growth of the frozen food
market. We do not expect the savory frozen food category to grow
organically by more than 1% per year. As a result, we believe
that the company's growth prospects rely on gaining market share
and external consolidation.

Nomad Foods' recent acquisitions will increase its exposure to
the U.K. market, which is expected to represent about 30% of the
group's sales in 2019. Although reinforcing its position in a
market where Nomad Foods is already strong increases efficiencies
and allows it to allocate costs more effectively, we also
anticipate that the U.K. could experience some currency
volatility over the next few years due to Brexit.

"Our assessment of Nomad Foods' financial profile is constrained
by its aggressive leverage -- adjusted debt to EBITDA metrics is
now expected to approach 6x at year-end 2018 (5.5x on a pro forma
basis). It will likely return below 5x in 2019, provided that no
new significant debt-funded acquisitions are concluded. We
estimate that Nomad Foods can generate sizable and stable free
cash flow of above EUR100 million each year, even including all
cash restructuring costs. Its cash flow generation is supported
by low capital expenditure (capex) intensity, a lean operating
cost structure, and positive organic growth. That said, there is
some volatility in working capital linked to the seasonality of
the supply of raw materials; the volatility of the British pound
sterling, which could lower earnings from the U.K.; and some
cyclicality in demand for frozen food, typically highest in cold
months.

"We see some transaction risks, especially in the U.K., as most
raw materials (fish and vegetables) are paid for in U.S. dollars,
Swedish krona, or Norwegian krone, against which sterling has
been volatile. However, we understand that Nomad Foods uses
commodity forward contracts to offset the volatility of commodity
prices and pass on price increases to consumers."

S&P's base case assumes:

-- A benign economic environment in the eurozone, with real GDP
    growth in the range of 2.0%-2.3% in 2018 and 2019, and
    inflation of 1.4%. S&P expects a more difficult environment
    in the U.K., with relatively low real GDP growth of 1.3%-
    1.5%, and consumer price index (CPI) inflation above 2%.

-- The European frozen food category to grow modestly, as
    slightly below 1% in 2018 and 2019, supported by its ability
    to address some of the global food consumption trends, such
    as demand for convenient meals (less preparation time),
    health benefits, and awareness of sourcing sustainability.

-- Total revenue growth in the range of 7%-8% for Nomad Foods in
    2018 and 2019, supported by the acquisition of Goodfella's
    and Aunt Bessie's in the second and third quarters of 2018.

-- An organic and currency like-for-like revenue growth of 1.0%-
    1.2% in 2018 and 2019, supported by the mild economic
    environment in the eurozone. Despite more mitigated
    conditions in the U.K., the eurozone is expected to represent
    about 30% of the group's sales in 2018.

-- Nomad Foods to grow organically at a rate slightly above the
    underlying frozen food market thanks to market share gains
    supported by its investment in well-known brands Findus,
    Iglo, and Birds Eye, and thanks to continued product
    innovation in line with market trends.

-- The group's adjusted EBITDA margins to decline to about
    14.0%-14.5% in 2018 due to the peak of restructuring costs,
    and then will increase to 15.5%-16.0% in 2019 thanks to
    positive contributions from the Aunt Bessie's acquisition and
    rationalized spending on marketing and investment.

-- In 2018, the group will likely continue incurring costs
    related to the integration of Findus, the supply chain
    reconfiguration, the implementation of the organization
    strategy, and the rollout of an enterprise resource planning
    system. In addition, S&P expects the group will incur
    additional integration costs for Goodfella's and Aunt
    Bessie's. S&P expects total restructuring costs to be about
    EUR80 million in 2018 and EUR50 million in 2019.

-- About EUR100 million of annual acquisitions not funded with
    debt.

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

-- Adjusted EBITDA interest coverage of 5.4x-5.8x in 2018, and
    5.6x-6.0x in 2019, compared with 4.4x in 2017, improving
    thanks to the debt refinancing and repricing in 2017;

-- Adjusted debt to EBITDA of about 6.0x in 2018, and about 5.0x
    in 2019, compared with 5.0x in 2017; and

-- Adjusted FOCF to debt of about 7% in 2018, and about 10% in
    2019, compared with 7.5% in 2017.

S&P said, "The negative outlook reflects our view that if Nomad
Foods announces more sizable debt-funded acquisitions in the next
few quarters, or if it incurs higher-than-expected costs
associated with the integration of Goodfella's and Aunt Bessie's,
its financial metrics could fall sustainably below the level we
expect at the current rating level. We currently expect that
adjusted debt to EBITDA will reach 6x at the end of 2018, as a
result of the additional EUR350 million debt raised for the two
acquisitions of Goodfella's and Aunt Bessie's in the first half
of 2018, and about EUR80 million restructuring costs linked to
the two recent acquisitions and some legacy restructuring costs.

"The expected adjusted debt to EBITDA, at 6x in 2018 (5.5x pro
forma the full-year contribution of acquisitions) is well above
our guideline of 4.5x-5.0x for the rating level. However, we
expect adjusted debt to EBITDA to return to 5x by 2019.
The group continues to generate significant FOCF, which is likely
to remain above EUR100 million in 2018. We expect the adjusted
FOCF to debt will still be about 7% in 2018, in line with the
current rating.

"We could lower the rating if financial metrics do not improve in
the coming 12-18 months, for example, if the company embarks on
new debt-financed acquisitions, or is exposed to higher-than-
expected restructuring costs that reduce its profits and cash
generation. We could lower the rating if debt-to-EBITDA ratios
remain sustainably above 5x. In addition, we could lower the
rating if FOCF to debt falls below 5%.

"We would revise the outlook to stable if we see evidence that
the company's adjusted leverage will fall below 5x in the next
12-18 months. We consider debt to EBITDA of 4.5x-5.0x is
commensurate with our current ratings. In our view, EBITDA would
likely improve if Nomad Foods successfully integrates the
recently acquired businesses and incurs lower legacy
restructuring costs."


SHOP DIRECT: Fitch Cuts Long-Term IDR to B, Outlook Negative
------------------------------------------------------------
Fitch Ratings has downgraded Shop Direct Limited's (SDL) Long-
Term Issuer Default Rating (IDR) to 'B' from 'B+'. The Outlook is
Negative. Fitch has also downgraded Shop Direct Funding plc's
senior secured notes' rating to 'B' from 'B+' with a Recovery
Rating of 'RR4' (38%).

The downgrade reflects the higher credit risk profile arising
from unexpected additional PPI provisioning, which could lead to
higher cash payments if materialised over the next 18 months.
This comes at a time of high shareholder distributions as
revealed in incremental cash outflows to outside the restricted
group in year-to-date March 2018 (9 months), albeit permitted by
the terms of the bond documentation.

Fitch still views SDL's business model as fundamentally solid,
benefiting from a competitive advantage with its target
customers. Fitch does not rule out other shareholder
distributions with debt and, together with limited visibility
over future PPI provisioning and claims, this creates uncertainty
over the group's intention to reduce debt and leverage over time
to levels compatible with a 'B' IDR, hence the Negative Outlook.
If this persists in a challenging UK consumer environment during
the Brexit process, eroding the group's liquidity headroom, this
could lead to further negative rating action. Since the
shareholders have stated their commitment to provide support
should it be needed, a permanent cash injection into the
restricted group supporting the liquidity or satisfying the PPI
claims, along with the commitment to reduce debt over the medium
term could result in a revision of the Outlook to Stable.

KEY RATING DRIVERS

Higher PPI Claims: SDL reported an increase in provisions of
GBP100 million in 9M FY18 to cover customer redress claims
related to historical insurance sales (PPI) in addition to over
GBP88 million provisioned for in FY17. While there is a deadline
of August 2019 for claimants, Fitch currently has limited
visibility as to whether there may be further provisioning. Fitch
views PPI-related payments, if they materialise, as exceptional
cash outflows in its forecasts spreading through to potentially
December 2019. This could place permanent pressure on the group's
liquidity cushion at a time when the GBP100 million super-senior
RCF is fully drawn (as of end-March 2018) even if it acknowledges
there is some seasonality in sales and working capital which may
unwind in Q4.

Negative Free Cash Flow Forecast: Fitch understands from
management that it intends to leave the income contributions from
consumer finance to fund marketing expenses in retail unchanged.
Therefore Fitch only factors mild profit margin attrition over
time with funds from operations (FFO) margin falling to 7% in
FY19 from 8.7% in FY17. However, weaker profits and higher
interest costs due to higher debt levels, and payments related to
PPI, will lead to negative free cash flow (FCF) (-2% of revenues
in FY18) before any progressive improvement can be seen. In the
absence of cash preservation measures a more permanent negative
FCF margin profile could diminish available liquidity and
increase refinancing risks, leading to further negative rating
action.

Rising Leverage: As a result of increased PPI claims, larger-
than-expected dividends and cash outflows to shareholders outside
the restricted group, Fitch has revised higher its forecast of
FFO adjusted gross leverage (incorporating a proxy of retail-only
cash flows and Fitch-adjusted debt). Fitch projects leverage
could permanently grow to above 6.0x (FY17: 5.7x) over FY18-FY21
against its previous projections of leverage trending down
towards 5.0x by FY21. However, this could be mitigated by
shareholder support in the form of cash contributions, enabling
leverage to remain below 6.0x, which is aligned with a 'B' rating
profile and sustainable for SDL, given its robust commercial
business.

Cash Transfers Outside Restricted Group: SDL has increased its
amount of "other receivables" with SDHL, its immediate topco
outside the restricted group, by GBP123 million in 9M FY18 to
GBP576 million outstanding. Fitch views such intercompany loans
through which SDL provides funds to SDHL on an on-demand and
interest-free basis as consistent with a dividend payment. The
bond indenture allows for such payments because of loose
covenants in the form of net debt/EBITDA (as defined in the
indenture) below 2.75x, and in EBITDA definition (which allows
for the inclusion of unrealised cost savings for example).

A permanent injection of cash from SDHL central treasury allowing
SDL to satisfy PPI claim payments smoothly, and support for the
business in a more challenging UK consumer environment during
Brexit would be deemed credit-positive and could lead to the
Rating Outlook being revised to Stable.

Weak Governance and Aggressive Financial Policy: SDL's governance
structures are weaker than those of its listed peers with
ownership concentration and some lack of transparency or
independent oversight considering intra-group related-party
transactions. While management and the group's owners could
remain opportunistic about further shareholder distributions in
the future, Fitch expects these will be subject to future
financial performance. However, the group needs to demonstrate a
more complete alignment of shareholder interests with creditor
interests over time.

Captive Client Base, Online Retail: SDL provides consumer
financing as a complementary core offering to its online general
merchandise retail operations. Its profitable consumer finance
operations (from loans given to the group's own retail customers)
should continue to allow spending on operating, IT and marketing
costs to support retail sales volume growth. Fitch continues to
view this feature as supportive of the group's solid business
model but it exposes SDL to non-bank financial institution-type
risks, such as receivable asset quality through the economic
cycle, and funding/liquidity.

In addition, based on a preliminary review of the FCA proposals
to protect consumers from high-cost credit, Fitch does not expect
SDL to be materially hit by the regulation changes to be
implemented in early 2019, given SDL's discipline in granting
credit applications based on affordability.

DERIVATION SUMMARY

With over 50% of the group's consolidated total assets related to
trade receivables - relative to 4% equivalent figure for Marks
and Spencer Group plc (M&S, BBB-/Stable) or 6% for New Look
Retail Group Ltd (CC) - SDL's asset base is inherently different
to other traditional retailers'. Financial services (FS) income
is driven by the retail customer base with over 95% of retail
purchases by customers using their credit account.

With the key focus on online retail operations and client base,
the cost base is also different to traditional retailers' without
any meaningful fixed assets or operating leases. This is
reflected in stronger EBITDAR-based profit margin conversion into
FCF pre-financing costs. SDL's dedicated online retail activities
are enabled by consumer finance operations via intra-group loans.
This is an unusual business arrangement but helps to support
SDL's commercial operations. Fitch therefore acknowledges SDL's
product and service offering to clients is compelling relative to
key competitor Amazon, Inc. (A+/Stable) or pure online start-ups
such as Boohoo or ASOS.

SDL also benefits from an efficient distribution infrastructure
with the lowest picking costs and established online platform
without duplication of costs/capex compared with M&S, New Look or
other brick-and-mortar retailers with an expanding online
presence.

Adjusted for FS activities, SDL's FFO adjusted leverage forecast
(reflective of its proxy for retail-only activities) above 6.0x
for the next two-to-three years is lower than the median of
Fitch's low 'B' category credit opinions in the retail sector.

KEY ASSUMPTIONS

Fitch's Key Assumptions within its Rating Case for the Issuer

  - Annual retail revenue growth averaging 3.2% by FY20,
reflecting ongoing growth at Very.co.uk compensated by a decline
in Littlewoods;

  - Retail-only EBITDA margin reaching 11.5% in FY18, before
gradually falling, reflecting a weaker gross margin as SDL seeks
to attract customers in a more subdued macroeconomic environment;

  - Capex/revenue ratio of around 4%;

  - Pension contribution of GBP15 million p.a. from 2019 to 2021
recorded as other items before FFO;

  - Non-operating/non-recurring cash outflows mainly related to
fulfilment centres, debt refinancing and payments for PPI claims;
and

  - GBP123 million shareholder distributions related to dividend
payments and cash payments to central treasury at SDHL (for FY18
only).

KEY RECOVERY RATING ASSUMPTIONS

The recovery analysis assumes that SDL would be considered a
going concern in bankruptcy and that the group would be
reorganised rather than liquidated. Fitch has assumed a 10%
administrative claim.

Going-Concern Approach

Fitch follows a going-concern approach for its recovery analysis
as it expects a better valuation in distress than liquidating the
assets (and extinguishing the securitisation debt) after
satisfying trade payables. Fitch's analysis focuses on a
surviving online retailer with consumer finance structured
differently (joint venture or owned by a third-party bank), and
it is therefore viewed as a corporate.

Fitch uses its proxy retail-only EBITDA of GBP80.8 million, which
excludes marketing contribution from SDFC. Fitch applies an 8%
discount to EBITDA, which results in stabilised post-
restructuring EBITDA of GBP74 million. Fitch also takes out the
GBP1.3 billion non-recourse securitisation financing outside the
group under SDFC, as it assumes that consumer finance can be
arranged or structured by a third-party bank or in a joint
venture after restructuring.

Fitch uses a 5.0x distressed enterprise value/EBITDA multiple,
reflecting a growing online retail and technology platform and
competitive position enabled by consumer finance, which mitigates
the lack of tangible asset support. Retail peers such as M&S
conduct consumer finance activities in a JV where financing is
provided by an external party bank. Therefore in a distressed
scenario a relatively undamaged asset-light online retail brand
with (instead of core) consumer financing could realise 5.0x
post-restructuring EBITDA, in Fitch's view.

For the debt waterfall, Fitch assumes a fully drawn super senior
revolving credit facility of GBP100 million and GBP4.3 million of
debt located in non-guarantor entities. This debt ranks ahead of
the bonds. After satisfaction of these claims in full, any value
remaining would be available for noteholders (GBP550 million) and
a GBP50 million pari passu revolving credit facility issued by
Shop Direct Funding plc. This translates into an instrument
rating for the bonds of 'B'/'RR4'/38%.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action (Stable Outlook)

  -Visibility on PPI claims resolution leading to enhanced cash
flow generation

  -The rebuilding of a comfortable liquidity position thanks to
cash flow generation and/or shareholder contributions

  -Ability and commitment to bring retail-only FFO adjusted
(gross) leverage below 6x, for example, driven by steady
profitability and more creditor friendly financial policies

  -Steady business growth (at least mildly positive sales growth)
and profitability reflected in FFO margin staying above 7%

-Neutral to positive FCF (post exceptionals) along with FFO
fixed charge cover above 3.0x

  -Maintenance of adequate asset quality not affecting FS
profitability and cash flows, and ultimately continuing to
support SDL's retail activities

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -Inability or lack of commitment to keep retail-only FFO
adjusted (gross) leverage below 7x prompted by additional
dividend payments, or further material PPI claims not yet
provisioned for, which are not offset by material improvements in
profitability

   - Liquidity position remaining tight due to negative cash flow
and/or insufficient shareholder support-Weak business growth
(neutral to mildly positive sales growth) and profitability under
more challenging market conditions in the UK reflected in FFO
margin below 5%

  -Consistently negative FCF (post exceptionals) over the rating
horizon along with FFO fixed charge cover below 2.5x

  -Weaker asset quality: deterioration in SDL's asset quality
negatively affecting FS profitability and cash flows, and
ultimately its ability to support retail activities through FS
profitability would be rating negative

LIQUIDITY

Weakening Liquidity: By end-3Q FY18, SDL had a cash balance of
GBP12 million with an available GBP50 million pari-passu RCF. Its
other GBP100 million super senior RCF has been fully drawn and
Fitch sees little appetite to repay this debt before maturity
even though it expects 4Q will see some unwinding of working
capital requirements. Considering the increased provision on PPI
claims and high shareholder remuneration (despite SDL's
communicated intention to support the business), it views the
liquidity profile as weakening at SDL (restricted group) level.


TOYS R US: Three Northern Ireland Shops Set to Be Occupied
----------------------------------------------------------
Emma Deighan and Margaret Canning at Belfast Telegraph report
that three of the four former Toys R Us shops in Northern Ireland
are close to being occupied again in a glimmer of hope for the
beleaguered retail sector.

The sites at Abbey Retail Park, CastleCourt Shopping Centre,
Sprucefield Park in Lisburn and Crescent Link in Londonderry have
been vacant since the firm went into administration earlier this
year, Belfast Telegraph notes.

But the Belfast Telegraph can reveal that the Abbey Retail Park
site is now under offer after going on the market for sale.  It
had been run within a separate Toys R Us property company and was
being marketed for sale by UK property agency Morgan Williams,
Belfast Telegraph discloses.

It's understood the store is now under offer, according to
Belfast Telegraph.

The other three stores are being let out by DIY giant B&Q,
Wirefox and Lotus Group respectively, Belfast Telegraph states.

Savills said they were in negotiations with a number of retailers
for the Toys R Us premises in CastleCourt, Belfast Telegraph
relates.

And Lotus Group last month confirmed that it had secured a
letting of the former Toys R Us in Crescent Link to B&M Bargains,
Belfast Telegraph recounts.

Meanwhile, Irish toy retailer Smyths is seeking to snap up eight
former Toys R Us stores in the UK but has not responded to
questions on whether it could acquire NI stores, Belfast
Telegraph relays.

                     About Toys R Us, Inc.

Toys "R" Us, Inc., was an American toy and juvenile-products
retailer founded in 1948 and headquartered in Wayne, New Jersey,
in the New York City metropolitan area.  Merchandise was sold in
880 Toys "R" Us and Babies "R" Us stores in the United States,
Puerto Rico and Guam, and in more than 780 international stores
and more than 245 licensed stores in 37 countries and
jurisdictions.  Merchandise was also sold at e-commerce sites
including Toysrus.com and Babiesrus.com.

On July 21, 2005, a consortium of Bain Capital Partners LLC,
Kohlberg Kravis Roberts, and Vornado Realty Trust invested $1.3
billion to complete a $6.6 billion leveraged buyout of the
company.

Toys "R" Us is a privately owned entity but still files with the
Securities and Exchange Commission as required by its debt
agreements.

The Company's consolidated balance sheet showed $6.572 billion in
assets, $7.891 billion in liabilities, and a stockholders'
deficit of $1.319 billion as of April 29, 2017.

Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its
Canadian subsidiary voluntarily filed for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No.
17-34665) on Sept. 19, 2017.  In addition, the Company's Canadian
subsidiary voluntarily commenced parallel proceedings under the
Companies' Creditors Arrangement Act ("CCAA") in Canada in the
Ontario Superior Court of Justice.  The Company's operations
outside of the U.S. and Canada, including its 255 licensed stores
and joint venture partnership in Asia, which are separate
entities, were not part of the Chapter 11 filing and CCAA
proceedings.

Grant Thornton is the monitor appointed in the CCAA case.

Judge Keith L. Phillips presides over the Chapter 11 cases.

In the Chapter 11 cases, Kirkland & Ellis LLP and Kirkland &
Ellis International LLP serve as the Debtors' legal counsel.
Kutak Rock LLP serves as co-counsel.  Toys "R" Us employed
Alvarez & Marsal North America, LLC as its restructuring advisor;
and Lazard Freres & Co. LLC as its investment banker.  It hired
Prime Clerk LLC as claims and noticing agent. Consensus Advisory
Services LLC and Consensus Securities LLC, as sale process
investment banker.  A&G Realty Partners, LLC, serves as its real
estate advisor.

On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an
official committee of unsecured creditors.  The Committee
retained Kramer Levin Naftalis & Frankel LLP as its legal
counsel; Wolcott Rivers, P.C. as local counsel; FTI Consulting,
Inc. as financial advisor; and Moelis & Company LLC as investment
banker.

                        Toys "R" Us UK

Toys "R" Us Limited, Toys "R" Us, Inc.'s UK arm with 105 stores
and 3,000 employees, was sent into administration in the United
Kingdom in February 2018.

Arron Kendall and Simon Thomas of Moorfields Advisory Limited, 88
Wood Street, London, EC2V 7QF were appointed Joint Administrators
on Feb. 28, 2018. The Administrators now manage the affairs,
business and property of the Company.  The Administrators act as
agents only and without personal liability.

The Administrators said they will make every effort to secure a
buyer for all or part of the business.

                   Liquidation of U.S. Stores

Toys "R" Us, Inc., on March 15, 2018, filed with the U.S.
Bankruptcy Court a motion seeking Bankruptcy Court approval to
start the process of conducting an orderly wind-down of its U.S.
business and liquidation of inventory in all 735 of the Company's
U.S. stores, including stores in Puerto Rico.

                About Toys R Us Property Company I

Toys "R" Us Property Company I, LLC and its subsidiaries own fee
and leasehold interests in more than 300 properties in the United
States.  The Debtors lease the properties on a triple-net basis
under a master lease to Toys-Delaware, the operating entity for
all of TRU's North American businesses, which operates the
majority of the properties as Toys "R" Us stores, Babies "R" Us
stores or side-by-side stores, or subleases them to alternative
retailers.

Toys "R" Us Property was founded in 2005 and is headquartered in
Wayne, New Jersey.  Toys 'R' Us Property operates as a subsidiary
of Toys "R" Us Inc.

Toys "R" Us Property and affiliates Wayne Real Estate Holding
Company LLC, MAP Real Estate LLC, TRU 2005 RE I LLC, TRU 2005 RE
II Trust, and Wayne Real Estate Company LLC sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead
Case No. 18-31429) on March 20, 2018.  The Propco I Debtors
sought and obtained procedural consolidation and joint
administration of their Chapter 11 cases, separate from the Toys
"R" Us Debtors' Chapter 11 cases.

The Propco I Debtors disclosed that they had estimated assets of
$500 million to $1 billion and liabilities of $500 million to $1
billion.

Judge Keith L. Phillips presides over the Propco I Debtors'
cases.

The Propco I Debtors hired Klehr Harrison Harvey Branzburg, LLP;
and Crowley, Liberatore, Ryan & Brogan, P.C., as co-counsel.
According to the petition, the Debtors also tapped Kutak Rock
LLP.  They hired Goldin Associates, LLC as financial advisors.

An official committee of unsecured creditors has been appointed
in the Propco I Debtors' cases.


ZEPHYR MIDCO: S&P Assigns Preliminary 'B' ICR, Outlook Stable
-------------------------------------------------------------
On June 4, 2018, S&P Global Ratings assigned its preliminary 'B'
long-term issuer credit rating to Zephyr Midco 2 Ltd. (Zephyr), a
wholly owned indirect subsidiary of funds managed by Silver Lake.
The outlook is stable.

S&P also assigned its preliminary 'B' issue rating to the group's
proposed GBP150 million revolving credit facility (RCF) and the
GBP740 million term loan B issued by Zephyr Bidco Ltd., a
subsidiary of Zephyr Midco 2 Ltd. The recovery rating is '3',
indicating its expectations of average recovery (50%-70%; rounded
estimate 60%) in the event of a payment default.

S&P said, "The preliminary ratings are subject to the successful
completion of the transaction, and to our review of the final
documentation. If S&P Global Ratings does not receive the final
documentation within a reasonable timeframe, or if the final
documentation materially departs from the information we have
already reviewed, we reserve the right to revise or withdraw our
ratings.

"Our ratings on Zephyr primarily reflects the very high leverage
it would incur as a result of acquiring ZPG PLC, its strong
positions in the U.K.'s property search segment (Zoopla) and
household service comparison segment (uSwitch), subscription-
based revenue from the property segment, as well as high EBITDA
growth prospects and strong free operating cash flows (FOCF)
generation.

Zephyr Bidco Ltd., a wholly owned indirect subsidiary of funds
managed by Silver Lake, proposes to acquire ZPG for GBP2.2
billion in a public-to-private leveraged buyout transaction with
a premium of approximately 30%. Financing the proposed
acquisition will involve high levels of cash interest paying
debt, including a GBP150 million RCF, a GBP740 million term loan
B, and a GBP180 million second-lien loan. In addition, it
involves an equity contribution of about GBP1.7 billion, mostly
comprising preference shares that are situated multiple levels
above the banking group.

"Although we view the preference shares as equity-like based on
the documentation that we've reviewed, they could be partially
redeemed at any time as long as Zephyr's net leverage decreases
to and stays below 4x (pro forma for such redemption). While this
encourages Zephyr to focus on reducing leverage over the next
three years, we see a risk that the preference shares could be
redeemed ahead of the term loan B maturity in 2025. However, we
understand that Silver Lake does not intend to materially
increase leverage at any time.

"After the transaction, we forecast that S&P Global Ratings-
adjusted debt to EBITDA will reach around 8.5x in the financial
year (FY) ending in September 2018, before improving to 8x in
FY2019. Any further prospect for a reduction in leverage will
depend on the execution of Silver Lake's financial policy
regarding acquisition and shareholder returns."

The proposed acquisition requires at least 75% shareholder
consent and approval from the European Commission and Financial
Conduct Authority. Daily Mail & General Trust PLC and ZPG
directors, which together own 31% of ZPG's issued share capital,
have given an irrevocable undertaking to accept the offer with
respect to the entire holding. If the acquisition materializes,
it is expected that all ZPG's existing debt will be redeemed,
including the GBP200 million unsecured notes due 2023, priced at
3.75%.

ZPG, the underlying business of Zephyr, is a well-established
leading player in two business segments in the U.K.: online
property search and household service comparison.

In the property segment, websites such as Zoopla and
PrimeLocation enable consumers to search for properties listed by
estate agents. In the household service comparison segment, ZPG's
uSwitch and Money platforms provide consumers with deals on
services such as utilities, broadband, TV, mobile, credit cards,
and loans. S&P expects ZPG's revenue to exceed GBP300 million and
reported EBITDA before exceptional costs to achieve GBP120
million in FY2018.

ZPG was publicly listed in 2014. Since then, it has been actively
reinvesting its cash flow and raising debt for a series of
acquisitions, which have helped extend the group's service
offerings. It aims to become a one-stop shop for prospective
property buyers, estate agents, and households. Major
acquisitions include Money and Hometrack in 2017, Property
Software Group in 2016, and uSwitch in 2015. Nevertheless, the
Australian business of Hometrack was sold to REA Group on June 1,
2018. In S&P's view, ZPG's business is highly scalable,
particularly in Western Europe, where it sees potential for
bringing some of ZPG's online capabilities to a wider market
through small bolt-on acquisitions.

ZPG also achieved 10% organic growth in FY2017 on the back of
consumers' increasing demand for convenient digital platforms.
S&P expects online traffic to grow over the next several years.
There are also significant market penetration opportunities in
mobile technology, where ZPG has already established a position
with its well-received mobile applications.

S&P considers that ZPG's business is constrained by its
relatively small scale and geographical concentration in the
U.K., where it generates over 95% of its revenue. About 40% of
the group's revenue is subscription-based, thanks to its property
segment. This provides some earnings visibility. However, its
primary property portal, Zoopla, is second to local competitor
Rightmove. Rightmove has a long-standing dominant market
position, covers about 95% of the property agents in the market
(compared with ZPG's 87%), and enjoys exceptional profitability.

ZPG's comparison segment, which represents about 50% of the
group's revenue, provides product diversification and cross-
selling opportunities that many competitors do not offer. uSwitch
has the leading market position in energy switching and telecoms
switching (broadband,mobiles, pay TV, and fixed telephone line),
while Money has the No. 2 position in switching credit cards and
loans.

The comparison segment is highly competitive, however--uSwitch
and Money's main rival is Moneysupermarket.com Group PLC. Because
each comparison provider has a strong market position, depending
on the services it offers, S&P expects the segment to see some
market consolidation in the next few years. This could change the
competitive landscape.

S&P recognizes that, in the event of an economic downturn, the
comparison segment would provide some diversification benefits to
ZPG's financial performance because consumers would seek more
savings opportunities. Conversely, as an online business, ZPG is
exposed to the inherent event risk of an unexpected cyberattack
or a rival technological breakthrough that could disrupt the
group's expansion plan and operating performance.

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

-- In anticipation of the U.K. leaving the EU, we forecast U.K.
    real GDP growth falling to 1.3% in 2018 and 1.5% in 2019 from
    1.7% in 2017. S&P also forecasts that consumer price index
    inflation will rise to 2.3% in 2018 and 1.9% in 2019 from
    2.7% in 2017. Overall, growing consumer price sensitivity
    provides a generally supportive trading environment in the
    comparison segment.

-- S&P forecasts that ZPG's revenue will experience significant
    growth of about 25% in FY2018 (from GBP244.5 million in
    FY2017) mostly stemming from the acquisition of Money, a
    former competitor that specializes in consumer financial
    service comparison; the acquisition of Calcasa, the major
    residential property valuation provider in the Netherlands;
    and the disposal of Hometrack to Australian REA Group.

-- Unless there are further acquisitions, S&P expects revenue
    growth to be 6%-7% in FY2019, which reflects increasing
    traffic in Zoopla, PrimeLocation, uSwitch, and Money, as well
    as cross-advertising and cross-selling opportunities.

-- S&P said, "We also expect that the group will benefit from
    its growing economies of scale, resulting in our adjusted
    EBITDA margin improving to around 36%-37% in FY2018 and
    FY2019, from 31% in FY2017. Excluding our adjustment on
    operating leases as well as capitalized website and software
    development costs, this would translate into our reported
    EBITDA margin of around 34% in FY2018 and 36% in FY2019, from
    30% in FY2017 after deducting exceptional costs and share-
    based payments."

-- Low capital expenditure (capex) of around GBP8 million in
    FY2018 and FY2019, increasing from GBP7 million in FY2017,
    based on ZPG's tendency to acquire competitors rather than
    invest heavily in technological developments.

-- Limited working capital needs due to the well-established
    technological platforms.

-- Sufficient cash balance to cover deferred and earn-out
    consideration for previous acquisitions in FY2019 and FY2020.

-- S&P said, "Sizable preference shares, which we view as
    equity-like, subject to our review of final documentation. If
    the final documentation materially differs from the
    information we have already reviewed, we reserve the right to
    reassess the treatment of the preference shares."

-- No further dividends after acquisition of ZPG.

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

-- After the acquisition of ZPG, S&P forecasts its adjusted debt
    to EBITDA will reach around 8.5x in FY2018 based on cash
    interest paying debt. After full-year consolidation of Money
    and Calcasa, leverage could improve to around 8x in FY2019.
    Any prospects for further deleveraging will depend on the
    execution of Silver Lake's financial policy regarding
    acquisition and shareholder returns.

-- Adjusted funds from operations (FFO) cash interest coverage
    of around 2.8x in FY2018 and reduces to 2.1x in FY2019.

-- Positive reported FOCF of around GBP50 million-GBP60 million
    in FY2018 and FY2019, and RCF to remain undrawn.

S&P said, "Pro forma the acquisition of ZPG, we assess Zephyr's
liquidity as adequate, reflecting the group's high cash balance,
full RCF availability, low capex, and working capital
requirements. if there are no further acquisitions, we expect the
group's available liquidity sources to cover liquidity uses by
more than 4x for the next 24 months. We forecast liquidity
sources will exceed uses by over GBP150 million, even if forecast
EBITDA declines by 30%.

"We do not assess liquidity as strong in recognition of the
inherent risk of opportunistic acquisitions in the markets that
Zephyr operates in, and the absence of traded equity and bonds
after the privatization of ZPG."

Zephyr is governed by a financial covenant under its RCF, based
on senior secured first-lien leverage. This is tested when the
RCF is at least 40% drawn, and is calculated differently to S&P
Global Ratings-adjusted debt to EBITDA. Overall, we expect that
the group will maintain over 35% headroom on its financial
covenant.

S&P forecasts the following principal liquidity sources over the
next 12 months:

-- Cash on balance sheet of about GBP60 million;
-- Full availability of committed RCF of GBP150 million; and
-- Cash FFO of about GBP60 million-GBP70 million.

S&P anticipates the following principal liquidity uses over the
same period:

-- Deferred consideration and earn-out of up to GBP45 million
    with respect to the Money acquisition;
-- Low capex of about GBP8 million; and
-- Working capital requirements of up to GBP10 million.

S&P said, "The stable outlook reflects our view that after
acquiring ZPG, Zephyr will achieve sound EBITDA growth and strong
FOCF generation, supported by organic growth through cross-
selling opportunities. High debt after the transaction will leave
little leeway under the current ratings should the group
encounter softening performance or incur additional debt.

"Due to the high level of debt after the refinancing, we could
lower the ratings if management's growth plan does not translate
into sufficient profit growth and cash flow generation, resulting
in a failure to reduce leverage, as measured by our adjusted debt
to EBITDA; adjusted FFO cash interest coverage approaching 2x; or
adjusted FOCF to debt falling below 5% over the next 12 months.
Any further debt-funded acquisition or shareholder returns could
also weigh on our ratings.

"We currently consider an upgrade as remote due to very high
leverage. We could raise the ratings if Zephyr proactively
reduces debt such that we forecast that it will sustain adjusted
debt to EBITDA below 5x while maintaining strong FOCF generation.
Prospects for a higher rating also depend on the group adopting a
conservative financial policy regarding debt-funded acquisitions
and shareholder returns."



                            *********

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,
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