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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

           Friday, July 20, 2018, Vol. 19, No. 143


                            Headlines


B E L G I U M

LSF9 BALTA: S&P Alters Outlook To Negative & Affirms 'B+' ICR


C R O A T I A

AGROKOR DD: Files Chapter 15 Petition in New York Court
NAVIOS MIDSTREAM: S&P Puts B Issuer Credit Rating on Watch Neg.


E S T O N I A

ODYSSEY EUROPE: S&P Assigns 'B' Issuer Credit Rating


F R A N C E

SPIE SA: Moody's Cuts Rating on EUR600MM Notes to B1


G E R M A N Y

KAEFER ISOLIERTECHNIK: Fitch Assigns Final 'BB' Long-Term IDR
SCHENCK PROCESS: Moody's Affirms B3 CFR, Outlook Remains Positive


I C E L A N D

HOUSING FINANCING: S&P Affirms BB+ CCR, Outlook Stable


I T A L Y

BORSALINO: Haeres Equita Acquires Business for EUR6.4 Million
CONDOTTE D'ACQUA: Plans to File for Extraordinary Administration
PRIVILEGE YARD: July 30 Deadline Set for Shipyard Complex Bids
SAFILO SPA: Moody's Cuts CFR to B2 & Alters Outlook to Negative
TELECOM ITALIA: Egan-Jones Lowers Sr. Unsecured Ratings to B


L I T H U A N I A

MAXIMA GRUPE: S&P Assigns Preliminary 'BB+' ICR, Outlook Stable


M A C E D O N I A

FENI INDUSTRIES: Exits Bankruptcy After Reorganization Plan OK'd


S W E D E N

ERICSSON: Moody's Alters Outlook to Stable & Affirms Ba2 CFR


S W I T Z E R L A N D

VAT GROUP: Moody's Hikes CFR to Ba2, Outlook Remains Stable


T U R K E Y

ANADOLU ANONIM: Fitch Cuts IFS Rating to BB+, Outlook Negative


U N I T E D   K I N G D O M

JOANNOU & PARASKEVAIDES: Aug. 13 Claims Submission Deadline Set
LOW & BONAR: Egan-Jones Lowers Sr. Unsecured Ratings to BB-
OMNILIFE INSURANCE: S&P Alters Outlook to Pos. & Affirms BB+ ICR


X X X X X X X X

* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles


                            *********



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B E L G I U M
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LSF9 BALTA: S&P Alters Outlook To Negative & Affirms 'B+' ICR
-------------------------------------------------------------
S&P Global Ratings said that it revised its outlook to negative
from stable on Belgium-based LSF9 Balta Issuer S.A. (Balta). S&P
affirmed its 'B+' issuer credit rating on Balta.

S&P said, "At the same time, we affirmed our 'BB' issue rating on
the existing EUR68 million super senior revolving credit facility
(RCF) maturing in 2021. The '1' recovery rating on the debt is
unchanged. We also affirmed our 'B+' issue rating on Balta's
EUR234.9 million outstanding senior secured notes. The recovery
rating on the notes is '3', indicating our expectation of 50%
recovery prospects.

"The negative outlook reflects our view that Balta may continue to
face operational challenges in the next 12 months, mainly due to
high raw material costs and weaker demand in some of its markets.
This could lead to pressure on the group's profitability and on
its cash flow generation."

Balta purchases polypropylene, polyamide plastic, and other raw
materials in order to produce different types of machine-made rugs
and carpets. Polypropylene and polyamide plastic prices have been
subject to significant increases in the past 12 months (of about
15% and 50%, respectively, in 2017), and the group has not been
able to fully adjust its prices in an effective and timely manner.
The raw material price increase -- along with other factors such
as negative currency effects, higher restructuring costs compared
with our base case, and lower volumes sold in the residential
segment -- has pressured the group's margins. S&P believes that
Balta may recover some price increases in the second half of 2018,
mainly thanks to a combination of product innovation and contract
renegotiations with key clients.

The group's residential division (35% of total sales in 2017) is
largely exposed to the U.K. market (constituting about half of the
residential division), which is experiencing reduced consumer
confidence. In April 2018, one of Balta's main U.K. clients,
Carpetright, entered into a company voluntary arrangement due to
negative performance.

S&P said, "We think Balta's relatively small size -- preventing
significant purchasing power -- is constraining the group's
business.

"That said, we note positively that Balta's recent acquisition of
U.S.-based commercial carpet manufacturer Bentley Mills (Bentley)
provides substantial growth opportunities as the U.S. market
experiences ongoing growth in commercial building construction
activities. The Bentley acquisition also provides opportunities to
cross-sell Bentley's premium offer to European markets, and
opportunities for Balta to leverage on Bentley's existing platform
in order to expand into the U.S.

"In our view, Balta's geographic diversification (with the U.S.
representing about 25% of total revenues) and its focus on the
higher-margin commercial and rugs segments support the group's
business model.

"We continue to view positively the group's long-term customer
relationships with large international retailers and furniture
chains. Balta benefits from leading market positions in its niche
markets. It is the largest manufacturer in the residential
broadloom segment and the No. 1 producer of machine-made rugs in
Europe, as well as one of the largest manufacturers in the
commercial broadloom and carpet tiles segment in Western Europe.

"We expect Balta's adjusted leverage will remain below 5x in the
next 12-24 months, while we now expect cash flow generation to be
only marginally positive due to pressure on EBITDA growth, working
capital cash outflows, and continuous capital investments. We
adjusted Balta's gross debt in 2017 by adding factoring lines and
about EUR35 million of operating lease commitments. Balta remains
a private equity-controlled company (Lone Star has 54% of total
stake; 43% is free float). Further bolt-ons could cause additional
leveraging, and we have included this as an event risk in our
overall rating assessment."

S&P's base case assumes:

-- U.K. real GDP growth rate of 1.2% in 2018 and 1.4% in 2019,
    lower than European GDP growth (2.1% and 1.9%) and U.S. GDP
    growth (3.0% and 2.5%).

-- Revenue growth of about 2%-3% in 2018, supported by material
    growth in the Commercial division (+10%) thanks to full year
    contribution of Bentley. This partly offsets expected
    negative organic growth in the residential division due to
    the challenging U.K. environment, and revenue growth of less
    than 5% in the rugs division. Organic revenue growth of about
    5% in 2019-2020 thanks to presence in the U.S. and commercial
    markets, continuous innovation, and digital strategy.

-- Adjusted EBITDA margin slightly improving in 2018 to about
    12%, thanks to lower restructuring costs, partly offset by
    further raw material costs increases.

-- Annual capital expenditure (capex) of about EUR35 million in
    the next two years.

-- Cash dividend payments of about EUR3 million in 2018 and
    about 30% of net income going forward.

-- Limited working capital outflows in 2018 linked to inventory
    build-up.

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

-- S&P Global Ratings-adjusted debt to EBITDA of about 4.5x-5.0x
    over the next two years.

-- Adjusted EBITDA interest coverage above 3x in the next two
    years.

S&P said, "The negative outlook reflects our view that further raw
material price increases and weaker-than-expected trading
conditions in the U.K. (one of Balta's main markets) may damage
Balta's operating recovery. This would reduce the group's ability
to generate positive free operating cash flow (FOCF) and stable
profitability margins, and to maintain adjusted leverage below
5.0x.

"Over the next 12 months, we could take a negative rating action
if Balta's credit metrics weakened such that adjusted debt to
EBITDA exceeded 5.0x or if the group reported recurring negative
FOCF generation. This could result from constraints to the group's
operating performance due to the loss of key customers, continued
upward pressure on raw material prices and inability to pass them
through to customers, and tougher market conditions both in
residential and commercial markets.

"We would likely revise the outlook to stable over the next 12
months if Balta reported positive organic growth, stable
profitability, and positive FOCF generation. For a positive rating
action, we would also require debt to EBITDA to remain sustainably
below 5.0x."



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C R O A T I A
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AGROKOR DD: Files Chapter 15 Petition in New York Court
--------------------------------------------------------
Dawn McCarty at Bloomberg News reports that Agrokor d.d., the
Croatian conglomerate, filed a Chapter  15 petition in the U.S. to
shield U.S. assets from creditors while it reorganizes its
business at home.

The company has been working on a settlement plan that was
approved earlier this month by the Commercial Court of Zagreb,
which is overseeing the Croatian proceedings, Bloomberg relates.
The plan would leave two Russian state-owned banks, Sberbank
PJSC and VTB Bank Group, with a combined holding in the company of
just below 50%, Bloomberg states.

The petition filed in New York is known as a Chapter 15 filing,
and comes because the company and affiliates are looking to ensure
that creditors governed by U.S. law don't interfere with the
Croatian settlement, Bloomberg relays, citing court papers.

Affiliates that also filed Chapter 15 petitions include Zvijezda
d.d., Vupik d.d., PIK-Vinkovci d.d., Jamnica d.d., Konzum d.d.,
Ledo d.d., Belje d.d., and Agrokor Trgovina d.o.o., Bloomberg
discloses.

The case is captioned Agrokor d.d., 18-12104, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).

                         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.


NAVIOS MIDSTREAM: S&P Puts B Issuer Credit Rating on Watch Neg.
---------------------------------------------------------------
S&P Global Ratings placed its 'B' issuer credit rating on
Marshall-Islands-registered owner and operator of crude oil
tankers Navios Maritime Midstream Partners L.P. on CreditWatch
with negative implications.

S&P said, "At the same time, we placed our 'B' issue rating on the
company's senior secured debt on CreditWatch negative. The
recovery rating is unchanged at '3', indicating our expectation of
meaningful recovery (50%-70%; rounded estimate 65%) in the event
of a default.

"The CreditWatch placement indicates that we could downgrade
Navios Midstream after the transaction closes because that would
likely lead to higher financial leverage than is commensurate with
the current 'B' rating. Navios Midstream recently announced that
it had received a proposal from the lower-rated Navios Maritime
Acquisition Corp. to acquire its remaining shares in a stock-for-
unit exchange."

Navios Acquisition, which is listed on the New York Stock
Exchange, owns and operates a fleet of 35 modern crude oil- and
product-tankers. It already owns a 59% stake in Navios Midstream,
which was formed in 2014 and owns and operates a fleet of six very
large crude carriers (VLCCs). S&P forecasts that, as of year-end
2018, the consolidated company would generate EBITDA of about $130
million and report debt of $1.2 billion.

S&P said, "Once the transaction closes, Navios Midstream would
become a 100%-owned subsidiary of Navios Acquisition. This means
we would cap our rating on Navios Midstream at the group credit
profile (GCP), reflecting the combined creditworthiness of Navios
Acquisition and Navios Midstream. We forecast that the combined
entity's funds from operations (FFO) to debt would be 4%-5% in
2018, which is consistent with a 'B-' rating and is significantly
weaker than the 22%-23% we forecast for Navios Midstream on a
stand-alone basis.

"Navios Acquisition's operating performance and credit measures
have been weak over the past year because of subdued tanker rates
and limited capacity to reduce debt. Furthermore, we believe the
pace and magnitude of a rebound of the combined entity's credit
measures would be vulnerable to uncertain industry prospects for
time-charter rates, in particular, a significant rate recovery for
VLCCs, in 2019.

"The acquisition will result in greater scale and diversity for
the combined entity, but this is unlikely to lead us to revise our
view of the business risk profile upward. The enlarged entity will
continue to face the shipping industry's high risk and
fragmentation, and be constrained by its relatively narrow
business scope, focusing on the tanker industry only; its short
time-charter profile; and volatile profitability due to swings in
tanker rates."

The proposed transaction is subject to the negotiation and
execution of a definitive agreement, approval from Navios
Acquisition's board of directors, and the necessary approvals of a
conflicts committee as per Navios Midstream's limited partnership
agreement.

S&P said, "We aim to resolve the CreditWatch once the transaction
is completed, which could be within the next 90 days.
We could lower the ratings on Navios Midstream by one notch upon
completion of the transaction, unless the consolidated entity's
operating performance is better than in our base case in the
meantime, for example, thanks to higher time-charter rates than we
currently forecast, with VLCC rates recovering to $25,000 per day
(from an average of about $21,000 per day so far this year) and
good prospects for a further rate increase toward $30,000 per day
in 2019.

"Alternatively, if the deal does not go through, we would affirm
the rating if we consider that Navios Midstream's credit quality
has not deteriorated in the meantime."



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E S T O N I A
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ODYSSEY EUROPE: S&P Assigns 'B' Issuer Credit Rating
----------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Estonia-based Odyssey Europe Holdco S.a.r.l (Olympic Entertainment
Group AS). The outlook is stable.

At the same time, S&P assigned its 'B' issue ratings to the EUR200
million senior secured notes.

S&P said, "Our ratings on Olympic reflect the company's higher
exposure to high-impact adverse changes (for example, economic,
political, regulatory, or sector trends) given that its revenues
and EBITDA are relatively small compared with peers, it has
limited product diversification, and is owned by a financial
sponsor. The business constraints are offset by the company's
leading positions in its core markets (the Baltics), which
represent around 90% of total EBITDA, significant barriers to
entry given the relatively high initial investment for casino
openings, and an operation which is well-diversified
geographically."

Olympic currently holds the No. 1 position in Estonia and
Lithuania and No. 2 position in Latvia by land-based gross gaming
revenue (GGR) market share and has a strong brand recognition in
all these three countries. The company has a 61% land-based market
share in Estonia, 27% in Lithuania, and 30% in Latvia. Olympic
also benefits from significant barriers to entry in the Baltics,
where fixed gaming tax expenses result in very low margins for
smaller casino operators and so make it more difficult for smaller
competitors to enter the market.

Apart from these markets, the company has a presence in another
three countries; Italy (14% of total 2017 revenues), Slovakia
(8%), and Malta (7%). In the highly competitive and fragmented
Italian market, Olympic operates 14 video lottery terminal (VLT)
gaming halls that have a total of 523 slot machines. It is
currently applying for an online license.

In Slovakia, Olympic operates six casinos and it holds the No. 1
position by casino GGR market share. Last year, the City of
Bratislava announced that it would prohibit gambling in the
future, a change in regulation that could cause the company to
close its casinos in the region. In June 2018, the Slovakian court
overturned the city council's petition to ban gambling due to
technical errors in the way that the council had voted on the
petition. It therefore remains unclear whether or not this new
regulation will come into effect.

In Malta, Olympic enjoys the No. 2 position by GGR market share
based on a single casino that it opened in December 2015. It is
expected to generate EUR2 million of EBITDA by 2018. We view the
geographical diversification as supportive of the business risk,
as it helps Olympic decrease its exposure to adverse regulatory
changes in any one of its markets (as seen in Slovakia, for
example).

S&P said, "We still see regulation as one of the main risks for
companies that operate in this industry. We acknowledge that the
regulatory environment in the Baltic region has historically been
more favorable and stable than other European countries, with a
largely fixed flat tax per gaming machine and limited taxation
changes. The flat tax per machine gives Olympic a significant
advantage because it generates a higher revenue per machine than
its competitors in the Baltics. However, we believe the risk of
future adverse regulatory changes cannot be neglected for any of
these regions or any market where the company operates. Because of
its small scale of operations, Olympic is more vulnerable to high-
impact adverse external changes such as regulation, politics, or
sector trends than other globally rated companies that generate
significantly higher EBITDA and cash flow base, in our view."

Olympic's product offering is quite limited -- it derives around
85% of revenues from land-based gaming, primarily table and slot
revenues within the casinos, and 5% from online gaming. The
company does provide a variety of ancillary services like cocktail
and sport bars, restaurants, and a hotel, which represent around
10% of total revenues. However, S&P considers these ancillary
revenues are strongly linked to the performance of the casinos.

Olympic has had a presence in the online segment since 2010, but
has faced intense competition from the many other online players.
The competitive landscape is more concentrated in Latvia than in
Estonia, where there are four large players. The addressable
market size for online gaming is increasing in the Baltic regions,
but its contribution to Olympic's revenue and EBITDA remains quite
meagre. Because of the volatility and intense competition in both
the online and off-line market, Olympic must spend more on
promotion to maintain its leading positions and further increase
its market share, which currently constrains our business risk
assessment.

The company leases all its venues, which means its fixed costs, at
around 62% of total costs, are higher than those of other rated
peers. Nevertheless, the company's reported EBITDA margins (based
on net revenues before gaming taxes) are strong at approximately
22%, thanks to the lower taxation and license fees in the main
operating countries.

S&P said, "We do not forecast in our base case that Olympic
Entertainment will pursue any acquisitions or casino openings over
the next two to three years. We assume that it will grow
organically, propelled by a greater number of visits and higher
spending per visit. In our base case, we assume the discontinuance
of the operations in Slovakia, which were expected to generate
around EUR10.2 million of net sales and EUR1.9 million of EBITDA
in 2018. As a result of these casino closures, we forecast a
decrease in revenues (net revenues before gaming taxes) of around
2% in 2018 to about EUR210 million and reported EBITDA of around
3% to around EUR46 million. We expect EBITDA margin to be around
22% in fiscal year 2018 (versus 22.3% in fiscal year 2017), mainly
because of the increased personal expenses in Estonia, Latvia, and
Lithuania, coupled with higher online marketing expenses in the
same countries."

Following the recent transaction, Olympic's adjusted debt is now
EUR275 million, which includes the EUR200 million senior secured
notes, the drawn part (EUR13.8 million) of the EUR25 million super
senior revolving credit facility (RCF) and operating lease
obligations of around EUR60 million-EUR65 million. As a result,
S&P forecasts a weighted average adjusted debt to EBITDA of 4.5x
for the next two years.

S&P said, "Our forecast of Olympic's funds from operations (FFO)
to debt at 15.5%-16.0% and free operating cash flows (FOCF) to
debt at around 8.0%-8.5% is supported by our expectation of the
company's strong cash conversion, mainly from 2019 onward,
propelled by limited capital expenditure (capex) consisting of new
slot machines/games expenses and casino renovation costs. Given
that the EUR200 million notes were priced at 8.0% instead of our
preliminary assumption (a coupon of 6.5%), we have revised our
annual interest expense slightly upward--this change does not have
a material impact on our credit metrics. We expect working capital
needs to be very limited. These assumptions are in line with the
company's track record of strong cash flow generation, except for
in fiscal 2016, when the company made significant expansionary
capex, primarily to finance the opening of Hilton Tallinn Park
Hotel (EUR18.2 million)."

S&P's base-case scenario assumes:

-- Improving macroeconomic prospects in the Baltics, with real
    GDP growth of 2%-4% and a decreasing unemployment rate in all
    three countries.

-- Estonian real GDP growth of around 2.7% in 2018 and 2.6% in
    2019 and a decrease in unemployment to 6.6% in 2018 and 2019
    from 7.0% in 2017.

-- A similar trend in the Lithuanian economy, with real GDP
    growth of around 2.9% over the next two years and the
    unemployment rate decreasing to 7.3% by 2019 from the current
    7.8%. Latvian real GDP growth that is slightly stronger at
    3.3% in 2018 and 3.0% in 2019, while unemployment rate is
    around 8.5% over the next two years, down from 9% in 2017.

-- The company will benefit from this supportive macroeconomic
    environment over the next two years, given that casinos are
    considered discretionary leisure activities and therefore are
    exposed to the population's living standards.

-- Consequently, Olympic's like-for-like revenues (net revenues
    before gaming taxes) will grow at around 2%-3% over the next
    two years. That said, S&P's assumption that the casinos in
    Slovakia may be discontinued suggests that revenue will drop
    by 2% in 2018, before recovering by around 3% in 2019.

-- Reported EBITDA margins (excluding operating lease
    adjustments) will decrease to 22.0% in 2018 from 22.3% in
    2017. In 2019, EBITDA margins will improve to about 23%. We
    attribute this to the economies of scale achieved as a result
    of the flat gaming tax rate per machine in Estonia, Latvia,
    and Lithuania, and to increased margins at the Maltese
    casino, where several efficiency measures are now bearing
    fruit.

-- Capex of approximately EUR20 million in 2018, which includes
    about EUR10 million of expansionary capex related to the
    extension/refurbishment of couple of flagship casinos as well
    as the implementation of a new casino management system. From
    2019 onward, the forecasted capex only includes maintenance
    capex of around EUR12 million, as S&P understands that large
    expansion projects will be completed.

-- No merger and acquisitions or dividend distributions.

Based on these assumptions, S&P arrives at the following credit
metrics on a weighted-average basis over 2018-2019:

-- Adjusted debt to EBITDA of around 4.5x;
-- Adjusted FFO to debt of 15.5%-16%; and
-- Adjusted FOCF to debt of 8.0%-8.5%.

S&P said, "Under our scenario analysis, we forecast that leverage
metrics are unlikely to materially change if Olympic's revenues or
EBITDA margin deviates from our base case by up to 400 basis
points in either direction.

"The stable outlook reflects our expectation that Olympic will
maintain its leverage at around 4.7x for the next 12 months, while
continuing to generate positive FOCF. The stable outlook also
reflects our expectation that the financial sponsors will maintain
their commitment to maintain a financial policy that supports
moderate deleveraging through EBITDA growth, along with adequate
liquidity.

"We could lower the rating over the next 12 months if the company
reported revenues materially below our base-case forecast, with an
EBITDA margin below 20%, such that adjusted leverage increases
above 6.5x or FOCF to debt turns negative. This could occur if any
unexpected regulatory changes in the main operating countries
result in closures of casinos, or if potential taxation increases
materially deteriorate the company's profitability. It could also
occur if the company incurred in debt-financed acquisitions or if
capex was materially higher than expected, leading to negative
FOCF generation.

"We could also lower the rating if we saw evidence of a more
aggressive financial policy leading to a sustained weakening of
Olympic's credit metrics, for example, through distribution of
significant dividends.

"We see an upgrade as unlikely in the next 12 months, given our
expectation that leverage will remain above 4.5x, and the lack of
a track record on the financial sponsor and its long-term
financial policy.

"However, we could consider a positive rating action once the
financial sponsor has a longer track record and we have a clear
view on its commitment to maintain a financial policy that
supports lower leverage. In this case, we could upgrade the rating
if Olympic manages to significantly increase revenues and EBITDA
base without incurring material additional debt or if the company
pays down debt, leading to an adjusted debt to EBITDA at 4.0x-4.5x
on a sustainable basis. We consider that Olympic could achieve
operating outperformance if it opened a higher-than-expected
number of casinos, resulting in a significant increase of scale
and gain in market share."



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SPIE SA: Moody's Cuts Rating on EUR600MM Notes to B1
----------------------------------------------------
Moody's Investors Service has downgraded to B1 from Ba3 the rating
of the EUR600 million notes due 2024 issued by SPIE SA (Spie), a
leading independent European multi-technical business services
provider. The rating agency has concurrently affirmed the Ba3
corporate family rating and the Ba3-PD probability of default
rating. The outlook on all ratings is stable.

The downgrade of the outstanding EUR600 million notes to B1
concludes the review for the downgrade of the notes rating,
initiated on March 26, 2018 and follows the company's announcement
that it used the new bank debt facilities, including the EUR1,200
million term loan, and the new EUR600 million RCF to refinance and
replace the outstanding credit facilities, including the EUR1,125
million term loan and the EUR400 million revolving credit
facility.

The rating action reflects the following interrelated drivers:

  -- The downgrade of the outstanding EUR600 million notes to B1,
one notch below the Ba3 CFR, reflects the removal of guarantees
from operating subsidiaries and the resulting structural
subordination of the notes to sizable liabilities of Spie's
operating subsidiaries, including trade payables, pensions and
operating leases. As per provisions in Spie's notes documentation,
the EUR600 million have become unguaranteed (in line with the new
credit facilities) as part of the completed refinancing;

  -- The affirmation of the Ba3 CFR and Ba3-PD PDR reflects
Moody's expectation that leverage, as measured by Moody's-adjusted
debt/EBITDA, will reduce towards 5.0x within 12-18 months from
5.6x pro forma for the refinancing as of December 31, 2017;

  -- Because of high leverage Spie's Ba3 CFR has currently limited
flexibility within the Ba3 category. However, since the
acquisition of SAG the company has notably increased its scale as
measured by revenue to around EUR6.5 billion, diversified its
service offering by adding services for electricity transmission
companies in Germany, rebalanced its geographic diversification,
and continued to generate good free cash flow in 2017. In
addition, the company has a sizable cash balance and it financed
bolt-on acquisitions using internally generated cash rather than
debt in 2017, which is credit positive.

RATINGS RATIONALE

Spie's Ba3 corporate family rating (CFR) reflects: (1) the
positive growth dynamics dominating the technical services
industry; (2) the company's position as a leading independent
multi-technical service provider; (3) its recurring revenues from
a large number of small contracts leading to stable financial
performance in the past; (4) good customer diversification; and
(5) steady cash flow generation underpinned by negative working
capital needs and the business's low capital intensity leading to
expected deleveraging.

Conversely, the rating reflects: (1) the company's high leverage
of 5.6x pro forma for the refinancing; (2) intense competition in
the fragmented multi-technical services market, including larger
providers, leading to pricing pressure; (3) exposure to
construction and renovation demand with some headwinds in its
French market driven by lower public spending and cyclicality of
the Oil & Gas subsegment; (4) ongoing growth strategy through
acquisitions, which may delay deleveraging if the company finances
acquisitions by debt.

RATING OUTLOOK

Spie's rating outlook is stable, reflecting Moody's expectation
that the company's leverage will reduce towards 5.0x in the next
12-18 months.

FACTORS THAT COULD LEAD TO AN UPGRADE

Leverage, as measured by Moody's-adjusted debt/EBITDA, were to
sustainably decrease towards 4.0x; and

RCF/Net debt ratio were to increase above 17%.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Leverage, as measured by Moody's-adjusted debt/EBITDA, were to
increase above 5.5x for a prolonged period;

RCF/Net debt ratio were to decrease below 10%; or

Any significant debt-financed acquisition were to put negative
pressure on credit metrics.

LIQUIDITY

Pro forma for the refinancing, Spie's liquidity is good, supported
by low capex requirements of around 0.6% of revenue and
structurally negative working capital; expected (by Moody's)
positive free cash flow of around EUR200 million in 2018 (after
dividends, but before acquisitions); no scheduled debt
amortizations until 2023; available cash of around EUR520 million
as of December 31, 2017; an undrawn EUR600 million RCF (upsized
from EUR400 million after the refinancing); and good expected
headroom under its net leverage covenant.

STRUCTURAL CONSIDERATIONS

The B1 rating of the EUR600 million unguaranteed notes, one notch
below the Ba3 CFR and Ba3-PD probability of default rating (PDR),
reflects Moody's 50% corporate family rating recovery assumption
and the structural subordination of the notes to sizable
liabilities of Spie's operating subsidiaries, including trade
payables, pensions and operating leases.

LIST OF AFFECTED RATINGS

Issuer: SPIE SA

Affirmations:

Probability of Default Rating, Affirmed Ba3-PD

Corporate Family Rating, Affirmed Ba3

Downgrades (after being on review for downgrade):

Senior Unsecured Regular Bond/Debenture, Downgraded to B1 from
Ba3

Outlook Actions:

Outlook, Changed To Stable From Rating Under Review

PROFILE

Spie, headquartered in Cergy-Pontoise, France, is a leading
independent European multi-technical services provider of
electrical and mechanical services, technical facility management,
information and communications technology services. Spie's pro
forma revenue was around EUR6.5 billion in 2017. The company has
been listed on the Euronext Paris stock exchange since June 11,
2015.



=============
G E R M A N Y
=============


KAEFER ISOLIERTECHNIK: Fitch Assigns Final 'BB' Long-Term IDR
-------------------------------------------------------------
Fitch Ratings has assigned German engineering and construction
(E&C) services provider KAEFER Isoliertechnik GmbH & Co. KG
(KAEFER) a final Long-Term Issuer Default Rating (IDR) of 'BB'
with a Stable Outlook. Fitch has also assigned a final instrument
rating of 'BB'/RR3 to the group's new EUR250 million senior
secured notes.

The IDR reflects the group's defensive and diversified business
risk profile, which is in line with a strong 'BB' category rating.
The main rating constraints are the company's high leverage, small
scale, as well as low, albeit resilient, profitability. Pro forma
for the refinancing, KAEFER's Fitch-adjusted funds from operations
(FFO) gross leverage is likely to exceed 4.0x in 2018. However,
Fitch forecasts de-leveraging over the course of 2019-2021, owing
to increased FFO generation and a normalisation of capex.

The assignment of the final ratings follows a review of the final
documentation, which materially conforms to the information
received when the expected ratings were assigned on July 9, 2018.

KEY RATING DRIVERS

Defensive, Diversified Business Profile: KAEFER's business profile
benefits from i) a wide array of services - with around 200
different offering combinations - and industry combinations,
across new-build (48% of 2017 output) and maintenance services
(52%), ii) good end-market diversification, iii) a strong
geographic mix with a meaningful regional presence, and iv) a
comparatively low-risk contract portfolio, primarily comprising
contracts based on unit rates (2017: 55%) or incurred costs (16%),
which supports strong earnings predictability.

Coupon Higher than Expected: The new five-and-a-half year (until
2024) senior secured notes are priced at a fixed rate of 5.5% per
annum. This is in excess of its interest assumption that
underlined the assignment of expected ratings, adding around EUR2
million-EUR3 million of cash interest to its rating case. As a
result, KAEFER's financial flexibility headroom at current ratings
is somewhat diminished, with FFO fixed charge coverage now
forecast at about 4.0x through to 2020, down from its previous
forecast of improving towards 4.8x.

High, but Improving Leverage: Pro forma for the refinancing,
KAEFER's FFO adjusted gross leverage is likely to exceed 4.0x at
end-2018, which is above its expectations for the current rating.
However, Fitch expects leverage to improve to a level more
commensurate with the rating over the course of 2019-2021, with
FFO gross leverage dropping to around 3.5x. Fitch believes
continued single-digit revenue growth and strong contract
implementation driving FFO generation, and a normalisation of
capex will support de-leveraging.

Scale Constrains Rating: Fitch forecasts revenue to grow towards
EUR2 billion over the next three to five years, which is small for
the sector and constrains the ratings. Nonetheless, Fitch
acknowledges the leading position of KAEFER in its core markets,
comprising insulation, access solutions, surface protection and
passive fire protection (together IASP).

Low but Resilient Profitability: In absolute terms, KAEFER's
EBITDA margins are low, albeit resilient, compared with
conventional, large E&C peers. The low margins are primarily due
to the company's lower complexity and lower-risk contracts.
Together with peers focused on service contracts, its margin
volatility is broadly in line with the industry.
While Fitch does not forecast a structural improvement in margins,
Fitch believes that a continued focus and successful
implementation of operational efficiencies should support modest
margin accretion over the next three to five years.

Conservative Financial Profile: Fitch views as a credit-positive
the company's prudent financial policy that focuses on long-term
growth and financing. Management targets a net leverage (based on
the company's EBITDA) at or below 2.0x and progressive de-
leveraging. Dividend payments have been modest at only 15% of net
income over the past three years and Fitch expects shareholder
remuneration to remain stable. Fitch believes the ownership
structure substantially improves business predictability, as the
likelihood of unforeseen events, such as high-risk ventures
outside of the company's core offerings, overly aggressive
shareholder remuneration, or others, is low.

Small Bolt-on Acquisitions: Fitch understands from management that
the company will continue to pursue its strategy of small bolt-on
acquisitions, acquiring incremental EBITDA on top of organic
growth. Historical acquisitions have had a strong industrial
rationale, which offer supplementary services to existing
offerings or related new services in established regions.
Integration risks are low, given the small size and the company's
high acquisition discipline.

Neutral to Slightly Positive FCF: KAEFER's free cash flow (FCF)
generation has been broadly neutral over the past couple of years,
owing to the asset-light nature of the business, stable working
capital requirements and modest shareholder remuneration.
Nonetheless, FCF exhibited some volatility in 2016 and 2017 with
FCF margins of (-1.5%) and (-1.7%), respectively, primarily
reflecting the impact of a working capital build-up for the
Australian 'Ichthys' project, one-off cash effects and substantial
expansionary capex. Fitch forecasts a normalisation of the FCF
margin to 1%-2% through to 2021.

Competitive, Fragmented Industry: Barriers to entry are
comparatively low in the E&C industry, as evidenced by its
fragmented nature. This reflects low start-up costs and capital
requirements. KAEFER competes globally against a plethora of
small, local, pure-play IASP service providers, but also global
providers. The former group includes France-based Lassarat and
Norwegian Beerenberg. Germany-based Bilfinger, US peer Brand
Safway and French Groupe Altrad through its Cape and Hertel
franchises are globally operating peers.

Low barriers to entry and competitive pressure in the sector are
somewhat mitigated by KAEFER's technological expertise, and
reputation as a niche leader with a solid track-record and the
capacity to operate and implement multiple projects across
different regions.

Good Recoveries for Senior Secured Noteholders: Fitch has applied
the transitional approach under its criteria for the recovery
analysis resulting in a 'BB' rating with a Recovery Rating of
'RR3'. This reflects its expectation of good recovery prospects
for the senior secured notes, within the 51%-to-70% range (mid-
point 60%), primarily owing to a EUR130 million super senior
revolving credit facility, which is prior-ranking debt in case of
enforcement.

DERIVATION SUMMARY

KAEFER's defensive business model shows strong 'BB' category
attributes, with an emphasis on the company's broadly diversified
operations across geographies, end-markets and customers, which
Fitch sees as credit positives balancing the company's lack of
scale in the sector. Its FFO adjusted gross leverage averaging at
4.0x with moderate deleveraging potential is more in line with a
high 'B' category. This is further supported by the company's
conservative financial policies and defensive business development
strategy as a family-owned business.

Fitch benchmarks KAEFER against E&C peers, including Petrofac
Limited, AECOM Corp., McDermott Inc., Zachry Holdings Inc., Salini
Impregilo S.p.A. (BB+, Positive), with many being considerably
larger and on average more profitable with EBITDA margins at
around 5%-10% , KAEFER's modest profitability at 5%-6% should be
considered in the context of the company's overall lower contract
risk, high share of recurring revenues and more diversified
contract portfolio, which historically has led to more resilience
in profitability.

Sufficient financial flexibility expressed in FFO fixed charge
cover of about 4.0x, combined with a FFO adjusted gross leverage
in excess of 4.0x with moderate deleveraging potential, is
adequately supported by KAEFER's less volatile earnings and cash
flows compared with peers'. All this supports the 'BB' rating.

KEY ASSUMPTIONS

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

  - Revenue to decline in 2018, reflecting the phasing out of the
    Ichthys LNG project

  - Around-mid single-digit revenue growth in 2019-2021, supported
    by new project wins on the back of sound global GDP outlook,
    and bolt-on acquisitions

  - Modest EBITDA margin accretion to around 6% by 2020

  - Normalisation of capex (around EUR35 million annually from
    2018 to 2021), following the conclusion of investment
    programme in 2017

  - Working capital reversal of EUR10 million-EUR20 million in
    2018; working capital outlays in 2019-2021 to grow in line
    with revenue

  - Dividends of around 15% of net income

RATING SENSITIVITIES

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

  - Fitch-adjusted FFO gross leverage improving towards 3.0x
    (2018F: 4.6x; 2019F: 4.0x; 2020: 3.6x);

  - FCF sustainably in low-single-digits;

  - FFO fixed charge cover above 5.0x; and

  - Further increase in scale, advancing diversification outside
    Europe on a growing customer base and lower project
    concentration.

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

  - FFO gross leverage above 4.0x on a sustained basis;

  - Evidence of contract or customer losses or weakening project
    implementation leading to declining order backlog and revenue
    with EBITDA margins weakening to 4% or below;

  - Sustainably negative FCF; and

  - FFO fixed charge cover sustainably below 3.0x.

LIQUIDITY

Sound Liquidity: Pro forma for the refinancing, the company's
liquidity profile is supported by around EUR86 million of
unrestricted cash on balance sheet (after deducting EUR32.5
million of restricted cash deemed not readily available for debt
service) and availability of EUR90 million under the new EUR130
million RCF. Liquidity sources provide comfortable headroom for
short-term debt and planned capex.

The completed refinancing extends the company's maturity profile
with the EUR250 million notes maturing in January 2024. However,
KAEFER will be exposed to bullet refinancing risk at that point.
As a mitigant, Fitch believes that KAEFER's first-time bond issue,
coupled with a defensive business model, will allow the company to
build a track record of capital-market viability.


SCHENCK PROCESS: Moody's Affirms B3 CFR, Outlook Remains Positive
-----------------------------------------------------------------
Moody's Investors Service has affirmed the B3 corporate family
rating and the B3-PD probability of default rating of Platin 1425.
GmbH, an intermediate holding company of Schenck Process Holding
GmbH. Moody's also affirmed the B3 -- LGD4 -- rating of the EUR425
million existing senior secured notes issued by Platin 1426. GmbH.
The outlook remains positive.

Moody's's rating action follows the closing of the fully debt
financed acquisition of Raymond Bartlett Snow (RBS) and reflects
the following interrelated drivers:

   - The group's high leverage of 7.5x, as adjusted by Moody's
(6.5x if all management add-backs were to be accepted) as of Dec.
2017 pro-forma for the acquisition. Moody's expects the leverage
to improve towards a 5.7-6.2x range within the next 18 months on
the back of EBITDA growth;

  - The positive impact of the acquisition on Schenck's business
profile since it will strengthen its geographic diversification
and product offerings into size reduction, classification, thermal
processing equipment and increase stable aftermarket sales.

The transaction has been financed with a bank bridge facility.

RATINGS RATIONALE

Schenck's CFR reflects: (1) the small size of the group with total
revenues of around EUR600 million expected for 2018 pro-forma for
the acquisition of RBS, (2) the high cyclicality of the majority
of its end markets with a sizeable exposure to the investment
cycle of customers and capacity utilization levels impacting its
aftermarket and services businesses, and (3) the group's highly
leveraged capital structure, with a pro-forma Moody's-adjusted
debt/EBITDA of 7.5x (6.5x if all management add-backs were to be
accepted) as of Dec. 2017 expected to decrease towards 5.7-6.2x in
the next 18 months.

At the same time, the rating is supported by the company's (1)
good end-customer industry and geographic diversification, (2)
asset-light business model and flexible cost structure
(approximately 75% of total costs are variable) which enabled the
group to protect margins and remain free cash flow generative
historically, even during times of economic stress; and (3) fairly
solid entry barriers owing to its established leadership position,
the size of aftermarket revenues and long-standing customer
relationships, although the low capital intensity of operations
does not create a significant hurdle to replicate its business.

LIQUIDITY

Moody's considers Schenck's liquidity as adequate. The transaction
will not have a material impact on liquidity since it is fully
debt financed and Moody's expects RBS to be free cash flow
generative. The company's liquidity sources include (i) cash on
hand (EUR43 million as of March 2018), (ii) a EUR45 million
revolving credit facility (drawn by EUR15 million as of March 2018
to accommodate seasonal working capital swings) and (iii) funds
from operations of around EUR50-60 million annually. The liquidity
sources are sufficient to cover the company's liquidity needs such
as working cash, moderate working capital outflows and capital
expenditures of around EUR15-20 million annually.

STRUCTURAL CONSIDERATIONS

In its loss-given-default analysis, Moody's ranks first the
group's super senior revolving credit facility and second the
EUR425 million senior secured notes. Given the absence of material
priority as well as junior claims, the senior secured notes are
therefore rated in-line with the CFR at B3.

RATING OUTLOOK

The positive outlook anticipates a successful integration of RBS
as evidenced by an increase in EBITA margin towards 14-15%
(Moody's adjusted) and positive free cash flow of around EUR35-45
million annually (Moody's adjusted) within the next 12-18 months.
The positive outlook further includes Moody's expectation that the
leverage will improve towards 5.7-6.2x Moody's adjusted
debt/EBITDA within the next 18 months on the back of EBITDA
growth.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Positive rating pressure could develop should (1) the leverage
sustainably improve to around 6x Moody's-adjusted debt/EBITDA and
(2) the company consistently generate positive free cash flow.

Downward rating pressure could develop should (1) earnings do not
improve as expected by Moody's base case assumptions, which
assumes a moderate revenue growth of 3-4% and a Moody's EBITA
margin of around 14-15% for 2019-20, (2) the company's Moody's-
adjusted leverage remain sustainably above 7.0x, or (3) the free
cash-flow become sustainably negative.

PRINCIPAL METHODOLOGY

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

PROFILE

Headquartered in Darmstadt, Germany, Schenck Process is one of the
world's largest providers of industrial weighing, screening,
conveying, automation, filtration and loading/transportation
equipment. In December 2017 IK Investment Partners, which held a
majority stake since 2007, sold Schenck Process to Blackstone. In
FY 2017, Schenck generated EUR543 million revenues.



=============
I C E L A N D
=============


HOUSING FINANCING: S&P Affirms BB+ CCR, Outlook Stable
------------------------------------------------------
S&P Global Ratings said that it affirmed its long-term and short-
term issuer credit ratings on Iceland-based Arion Bank,
Islandsbanki hf, Landsbankinn hf., and Housing Financing Fund
Ibudalanasjodur (HFF). At the same time, S&P revised the outlook
on HFF to stable from positive. The outlooks on Arion Bank,
Islandsbanki, and Landsbankinn remain stable.

S&P said, "The rating actions take into account our view that
economic growth in Iceland continues to support the banking
sector, resulting in business growth and low default rates. This
is balanced by our expectation of more challenging competitive and
funding dynamics.

"We now see the trend for industry risk in Iceland as stable,
rather than positive, over our 24-month horizon. As Icelandic
banks have recently regained full access to foreign debt capital
markets and seek to diversify their funding mix, they are
increasing their reliance on external funding. At the same time,
we expect banks' high share of stable equity to decline in the
coming years. This trend, coupled with a relatively low core
customer deposits base of about 35% on systemwide loans,
increasingly exposes banks to wholesale market volatility, both at
home and abroad. We calculate that the net external debt of the
banking sector, as a percentage of domestic loans, increased to
around 9% in 2017 from -2% in 2015. We consider that the domestic
debt market in Iceland is relatively small and concentrated by
product and type of investor, given the dominant presence of local
pension funds.

"We believe that risks could arise from growth in the lending
activities of the pension funds. In our view, pension funds'
growing presence is distorting the competitive landscape for
mortgages, as pension funds are putting pressure on pricing, and
arguably banks' lending underwriting, in the medium-to-long term.
Pension funds enjoy a lower regulatory burden than banks and
already represent about half of newly granted mortgage loans, or
about 18% of the stock compared to 10% two years ago. Over the
next two years, we expect that the regulators will address the
negative effect of this distortion on local banks more actively.

"On the other hand, we also consider that regulators have managed
well the recent lifting of capital controls; the restructuring of
legacy banks; and the implementation of measures to reduce
economic volatility (that is, through high capital requirements
and strict funding and liquidity requirements) and risky
residential mortgages (for example, through a loan-to-value cap of
85%).

"The trend for economic risk in Iceland remains stable. This
reflects our expectation that house prices will continue to grow,
but at a more tempered pace than in 2017. We expect the growth
rate to slow to about 7% on average in 2018-2019, from a double-
digit level in the past two years, because construction is
gradually catching up with demand.

"However, we consider that the banking sector is facing
structurally higher credit risks than peer countries.
Specifically, a large share of loans is linked to the consumer
price index. Although this is a longstanding feature of the
Icelandic market, in our view, it poses risks for the banking
sector if not properly managed in the medium-to-long term, given
that it could inflate borrowers' principal debt. This is another
area where we expect all market participants to step up their
preparations for potentially more negative or volatile markets."

Moreover, commercial real estate prices -- and banks' exposure to
this segment -- have been increasing relative to fundamental
drivers such as building costs and corporate earnings, toward
levels before the financial crisis. Similarly, tourism-related
activities now represent an important part of the domestic
economy, and with around 10% of banks' loan books directly
exposed, the sensitivity of their balance sheets to this
inherently cyclical sector has also increased. S&P believes that
banks' indirect exposure to tourism is markedly higher,
representing an exceptional risk in potential future downturns.

S&P said, "We consider that the three commercial banks -- Arion
Bank, Islandsbanki, and Landsbankinn -- now have similar liquidity
profiles, with a liquidity buffer falling from high levels as they
extend their funding and optimize their capital. Although this
does not result in a rating change, we now consider that the
liquidity of Landsbankinn and Islandsbanki is adequate, rather
than strong, as we no longer consider them outliers compared to
our overall market assessment.

"The revision of our outlook on HFF to stable from positive
reflects our view that HFF's new public policy role is unlikely to
lead to stronger and more stable earnings. We have published an
individual research update on HFF to provide more details
regarding the rationale behind our rating action."

OUTLOOKS

ARION BANK

S&P said, "Our stable outlook on Arion Bank balances our view of
the bank's sustained capital generation and progress in reducing
its equity position. We believe that the bank will materially
reduce its capital over the next two-to-three years as it
recalibrates its capital base, but that it is unlikely to reduce
its risk-adjusted capital (RAC) ratio below 15%.

"We could lower the rating if capital reduced beyond our
expectations (that is, an RAC ratio below 15%). This could also be
the case if we saw signs of a material deterioration of asset
quality as a result of more aggressive underwriting or economic
headwinds in Iceland. Such a development could result in us no
longer viewing the combined capital and risk assessment as a
relative strength for the rating.

"We consider a positive rating action unlikely, as we expect the
bank's regional and sector concentration to remain unchanged,
while its funding and liquidity profile normalizes after the
lifting of capital controls. We also reflect this in our overall
banking market assessment, which includes the rather small and
concentrated nature of the market."

ISLANDSBANKI

S&P said, "The stable outlook on Islandsbanki reflects our
expectation that the bank's RAC ratio will remain sustainably
above 15%, even while the bank prepares for an eventual sale or
IPO over the next two years, and it optimizes its capital base by
paying extraordinary dividends and issuing capital instruments. We
expect the bank's asset quality to improve only marginally from
current levels, remaining in line with that of domestic peers. The
stable outlook further balances our view of the still-supportive
economic development in Iceland with the relatively concentrated
and volatile nature of the economy and increasing credit risks.

"We could take a negative rating action if Islandsbanki's RAC
ratio declined more than we expected, or if its loan asset quality
deteriorated materially, requiring significant and unexpected
additional provisioning. This could follow a quicker sale than we
expect to owners we view as more aggressive. In addition, we could
lower our rating if we saw signs of the economic and banking
industry environment in Iceland weakening.

"We consider a positive rating action unlikely, as we expect the
bank's regional and sector concentration to remain unchanged,
while its funding and liquidity profile normalizes after the
lifting of capital controls. We also reflect this in our overall
banking market assessment, which includes the rather small and
concentrated nature of the market."

LANDSBANKINN

S&P said, "Our stable outlook on Landsbankinn reflects our
expectations that the bank's RAC ratio will remain above 15% over
the next two years, despite high dividend payments and share-
buyback programs. We view the bank's asset quality as in line with
the risks in the Icelandic market and with that of domestic peers.
The stable outlook further balances our view of strong economic
development in Iceland against the relatively concentrated and
volatile nature of the Icelandic economy and increasing economic
imbalances.

"We could lower the rating if Landsbankinn's RAC ratio declined
more than we expected, or if its loan asset quality deteriorated
materially, requiring significant and unexpected additional
provisioning. This could follow a quicker sale than we expect to
owners we view as more aggressive.

"We consider a positive rating action unlikely, as we expect the
bank's regional and sector concentration to remain unchanged,
while its funding and liquidity profile normalizes after the
lifting of capital controls. We also reflect this in our overall
banking market assessment, which includes the rather small and
concentrated nature of the market."

HFF

S&P said, "The stable outlook reflects our expectations that HFF's
profitability will decline in the next 12 months, and that the
benefits stemming from HFF's newly assigned public policy role
will take time to materialize. At the same time, we consider that
HFF will maintain adequate capital levels over our two-year
outlook horizon. Despite the inherent volatility of HFF's balance
sheet, we expect that the RAC ratio will remain around 8.5%-9.0%
in the next 12 months. We anticipate that Iceland's economic and
operating environments will stabilize, and, in turn, support
contained new credit losses and low nonperforming loans, as HFF
continues to work out legacy assets and new lending is limited.

"We could raise the ratings if we expected that HFF's new public
role would result in stronger and more stable earnings, most
likely based on significant and predictable fee income. This
assessment could follow more commitment and clarity from the
Icelandic government on the future role of HFF, including the
scale and scope of its different functions, business model, and
compensation structure.

"We could also raise our ratings if HFF strengthens its RAC ratio
to sustainably above 10%, while our view of its risk profile does
not deteriorate.

"We could lower the ratings if we saw signs of economic trends in
Iceland worsening. Specifically, we could take a negative rating
action if we thought that increasing imbalances in the economy
would lead to weaker asset quality or higher market risks.

"We could downgrade HFF if we concluded that the effects of a
potential default of HFF for the Icelandic government and the
capital markets had diminished, thereby reducing the government's
incentive to provide timely extraordinary support to HFF."

  BICRA SCORE SNAPSHOT*
  Iceland                    To                 From

  BICRA Group                4                  4
   Economic risk             4                  4
    Economic resilience      Intermediate       Intermediate
                             risk               risk
    Economic imbalances      High risk          High risk
    Credit risk in
           the economy       Intermediate risk  Low risk

   Industry risk             5                  5
    Institutional framework  Intermediate risk  Intermediate
                             risk               risk
    Competitive dynamics     Intermediate       Intermediate
                             risk               risk
    Systemwide funding       High risk          High risk

   Trends
    Economic risk trend      Stable             Stable
    Industry risk trend      Stable             Positive

*Banking Industry Country Risk Assessment (BICRA) economic risk
and industry risk scores are on a scale from 1 (lowest risk) to 10
(highest risk).

  Ratings List Ratings Affirmed; Outlook Revised
                                          To              From
  Housing Financing Fund Ibudalanasjodur
   Counterparty Credit Rating      BB+/Stable/B    BB+/Positive/B

  Ratings Affirmed

  Housing Financing Fund Ibudalanasjodur
   Senior Unsecured                       BB+
  Arion Bank
   Counterparty Credit Rating             BBB+/Stable/A-2
   Senior Unsecured                       BBB+
  Islandsbanki hf
   Counterparty Credit Rating             BBB+/Stable/A-2
   Senior Unsecured                       BBB+
   Subordinated                           BBB-
  Landsbankinn hf.
   Counterparty Credit Rating             BBB+/Stable/A-2
   Senior Unsecured                       BBB+



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


BORSALINO: Haeres Equita Acquires Business for EUR6.4 Million
-------------------------------------------------------------
Giulia Segreti at Reuters reports that Italy's Borsalino, one of
the world's most famous hat makers and known for Humphrey Bogart's
fedora in the film "Casablanca", has been rescued by Haeres
Equita, a group of investors led by a Swiss-Italian financier.

The company was put up for sale via an auction after a judge in
the town of Alessandria, where the luxury brand was founded in
1857, refused last year to grant it court protection from
creditors, Reuters recounts.

A court in the city of Turin approved a EUR6.4 million offer, a
source with knowledge of the matter said, the minimum price that
had been fixed for the sale, Reuters relates.

According to Reuters, the offer from Haeres Equita, the investor
group led by businessman Philippe Camperio and which has been
managing the company since the end of 2015, was the only one
submitted.

The assets on sale included the company's offices, its production
site and machinery, the contracts of its 134 workers, and its
network of stores, of which only one is fully-owned, Reuters
discloses.

The troubles at Borsalino, still a favorite of celebrities such as
singer Rihanna and actor Jude Law, started when former majority
owner Marco Marenco was stripped of his powers in 2008 and later
arrested over alleged bankruptcy and fraud, Reuters relays.

Like many small and family-owned companies in the country, it
lacked the funds and managerial skills to reposition itself in the
competitive and fast-moving luxury market, Reuters states.

The proceeds of the auction will be used to pay creditors and the
acquisition procedure will be finalized in 10 days, Reuters notes.


CONDOTTE D'ACQUA: Plans to File for Extraordinary Administration
----------------------------------------------------------------
Luca Casiraghi and Antonio Vanuzzo at Bloomberg News report that
Societa Italiana per Condotte d'Acqua SpA's board of directors
rejected a bid by hedge fund Attestor Capital to take over the
troubled builder and plans to file for extraordinary
administration.

According to Bloomberg, people familiar with the matter said the
Rome-based builder turned down a last-minute bid that would have
helped it partially repay about EUR700 million (US$819 million) of
debt owed mostly to Italian banks.  They said Attestor offered to
buy some of its assets, Bloomberg relates.

Condotte plans to ask the Italian government and a court in Rome
to appoint an administrator to oversee insolvency proceedings,
Bloomberg relays, citing the people familiar with the matter said.

The company filed for creditor protection in January in a process
known as "concordato preventivo", Bloomberg recounts.


PRIVILEGE YARD: July 30 Deadline Set for Shipyard Complex Bids
--------------------------------------------------------------
Privilege Yard (Bankruptcy no. 19/2015 - Court of Civitavecchia)
is putting up for sale its shipyard complex located in
Civitavecchia (Rome), specifically in La Mattonara - Port Area,
with its tangible and intangible assets as follows:

   -- Surface rights on 11 buildings and 3 electrical substations;
      and

   -- Photovoltaic system.

The price of the complex is EUR7,520,000.  Offers not lower than
EUR6,016,000 can be evaluated.

To access the data room of the documents, for more information on
the bidding conditions and to get the bid form, please contact
gobid@pec.it

The submission deadline is Monday, July 30, at 6:00 PM (CET).

For terms and conditions for participation please visit
ww.gobid.it

Contact information:

         Phone: +39 0737 782080
         E-mail: info@gobid.it


SAFILO SPA: Moody's Cuts CFR to B2 & Alters Outlook to Negative
---------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating (CFR) of eyewear manufacturer Safilo S.p.A.'s to B2 from B1
and its probability of default rating (PDR) to B2-PD from B1-PD.
Moody's has also changed Safilo's outlook to negative from stable.

"T[he] rating actions factors in Safilo's difficulties to address
its refinancing need in a timely manner at a time when operating
performances are under pressure," say Vincent Gusdorf, a Moody's
Vice President - Senior Analyst and lead analyst for Safilo. "The
current rating still assumes that Safilo will successfully
refinance its capital structure but further negative pressure
would build if it does not make significant progress in the coming
months," added Mr. Gusdorf.

RATINGS RATIONALE

About all the debt of Safilo will mature over the next 11 months.
The EUR150 million convertible will become due on May 22, 2019 and
its conversion is unlikely because Safilo's share trade currently
at about EUR4, well below the EUR21.9 conversion price. Although
the company has extended the maturity of the EUR150 million
revolving credit facility (RCF) to November 30, 2018 from July 29,
2018, Moody's believes that this date is unlikely to be extended
much further under the current capital structure because banks
intend to be repaid before the convertible.

Failing to refinance existing debt maturities could create a
liquidity shortage when the RCF will mature. The company had EUR76
million of cash at year-end 2017 compared to EUR65 million of
short-term debt. It should also generate about negative EUR35
million of Moody's-adjusted free cash flows in 2018, including the
EUR30 million cash contribution that French luxury group Kering
will pay to Safilo in September 2018 following the termination of
the Gucci license. While Safilo might draw short-term credit
facilities, which amounted to EUR82 million in 2017, to repay the
RCF, Moody's thinks that the company will run out of liquidity in
May 2019, when the convertible will mature, if it does not
refinance.

However, the B2 rating assumes that Safilo will take the necessary
steps to address its upcoming debt maturities in the coming
months. Safilo is a listed company and its reported net debt stood
at only EUR132 million in 2017. Its reference shareholder HAL
Holding N.V., which holds 41.6% of Safilo's shares, has injected
about EUR180 million of equity between 2010 and 2012. Moody's
would view positively any evidence of support from HAL.

Still, Moody's thinks this financial policy creates substantial
risk for credit quality at a time when performances are under
pressure. Safilo's EBITDA declined to EUR60 million in 2017 from
EUR110 million in 2016, on a Moody's-adjusted basis, and should
rise to about EUR80 million in 2018 according to the agency's
forecasts. However, Moody's forecasts a decline to EUR70 million
in 2019 because of the end of Kering's payments.

While credit metrics may subsequently improve, Moody's sees a
significant risk of license loss because French luxury company
LVMH may transfer some of its licenses to the joint venture it has
created with Safilo's competitor Marcolin S.p.A. (B2 stable) from
December 2020 onwards. However, Safilo may acquire new licenses in
the meantime.

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook reflects the uncertainties stemming from
Safilo's refinancing need because short-debt maturities exceed its
current liquidity. Although debt is limited and reference
shareholder HAL may provide some financial support, accessing
financial markets could be difficult in light of the recent
decline in performances and heightened political risk in Italy.
The negative outlook also factors in that Safilo may struggle to
increase its earnings on a sustainable basis if LVMH's licenses
are not renewed.

WHAT COULD CHANGE THE RATING UP/DOWN

Further negative pressure on the rating could materialize if
Safilo fails to bolster its liquidity in the coming months and to
extend its debt maturities. Downward pressure on the rating would
also arise if Moody's gross debt/EBITDA ratio exceeded 5.5x or if
free cash flow generation stayed significantly negative, on a
Moody's-adjusted basis. Such a scenario could unfold if, for
instance, the company failed to mitigate the end of Kering's
contribution with cost savings.

Although an upgrade is currently unlikely, Moody's could upgrade
Safilo's rating if it achieved for a prolonged period of time
meaningfully positive free cash flow generation and a debt/EBITDA
of less than 4x, on a Moody's-adjusted basis. This would imply
that Safilo increases meaningfully its profitability. An upgrade
would also require a successful renewal of LVMH's licenses or good
visibility on alternative sources of earnings.

COMPANY PROFILE

Headquartered in Padua, Italy, Safilo S.p.A. is a global
manufacturer and seller in the premium eyewear sector, offering a
strong portfolio of both owned and licensed brands. The group
sells sunglasses, prescription glasses and sport-specific eyewear
in more than 130 countries. In 2017, Safilo reported sales of
EUR1,047


TELECOM ITALIA: Egan-Jones Lowers Sr. Unsecured Ratings to B
------------------------------------------------------------
Egan-Jones Ratings Company, on July 11, 2018, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Telecom Italia S.p.A. to B from A3.

Telecom Italia S.p.A. was founded in 1908 and is based in Milan,
Italy. The company provides fixed and mobile telecommunications
services in Europe, the Mediterranean Basin, and South America.



=================
L I T H U A N I A
=================


MAXIMA GRUPE: S&P Assigns Preliminary 'BB+' ICR, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' preliminary long-term issuer
credit rating to Baltic retailer Maxima Grupe. The outlook is
stable.

Maxima is a leading Lithuanian retail chain with a focus on food
retail (over 75% of revenues) operating in the Baltics since 1998.
In 2017, pro forma the recent acquisition of Polish retailer
Emperia and the integration of Franchisee Franmax, it generated
EUR3.4 billion of sales, with about EUR221 million of reported
EBITDA. The company is fully owned by Vilniaus Prekyba -- a
holding company with other stakes in retail and real estate -- and
is the group's most important asset, with Maxima expecting to
represent about 75% of the group's overall EBITDA in 2018.

S&P said, "The rating reflects our assessment of Maxima's leading
position in the Baltics region, a market we deem less competitive
than other European retail markets because of its relatively
limited size and demographics. It also incorporates our view that
the group's debt to EBTIDA, in particular on a reported basis, is
somewhat lower than that of some other retail peers of comparable
size, and further supported by a clear financial policy aimed at
gradual deleveraging from the 2018 high point, due to the Emperia
acquisition for EUR285 million, excluding transaction-related
costs. This stems from our anticipation of an increasing EBITDA
margin and positive discretionary cash flow, in spite of a
material dividend distribution.

"Maxima has maintained its leading position (28% market share) in
the Baltics, despite the recent increase in pressures due to the
arrival in Lithuania of large international discount retailer Lidl
in 2016. In our view, this is thanks to Maxima's competitive price
positioning and high brand awarness. We don't expect competition
in the Baltics to escalate further, given the market's overall
modest size, already competitive nature, and what we perceive as
limited remaining growth avenues for new entrants.

"We see the group's Baltic operations as a strength, given our
expectation that Maxima's like-for-like growth in the region will
remain in excess of 1.5%, driven by real GDP growth of about 3%-4%
per year. That said, the Baltics combined GDP for 2018 is about 4x
less than that of Poland, where the group aims to expand following
the Emperia acquisition. We forecast that the supportive
macroeconmics trends, alongside the group's expansion plan in
Poland in particular, but also in the Baltics, will result in
overall growth of about 7% per year. We also believe the
resilience and relative predictability of the food retail
industry, as well as the group's modest exposure to foreign
exchange risk -- in particular in comparison with other Eastern
European peers' thanks to the Baltics' adoption of the euro --
provides the group with some visibility on revenues and earnings.

"The group also benefits from a resilient operating model. In
particular, we note the meaningful sales contribution from private
labels of about 17%, which is in line with that of Western
European peers, as well as its diversified store formats.
Proximity format as of end-2017, as per the company's definition
and without taking into account Emperia's store network, already
represented 45% of sales and about 77% of formats, and we expect
thess shares will rise. Both factors, in our view, support margins
and help maintain Maxima's strong competitive advantage over
peers. We understand that the group has a local sourcing strategy
that provides the group with fairly good bargaining power, despite
its overall limited size. Additionally, we believe the group
benefits from a partly owned real estate network, with a book
value estimated by management at approximatively EUR500 million
and a market value that is likely higher.

"Our view of Maxima's business profile is constrained by its
relatively small size, scale, and EBITDA base compared with other
rated food retailers, as well as its still-substantial, but
declining, geographic concentration (the Baltics represent over
75% of revenues). These factors tend to limit the group's
bargaining power with suppliers, and its relatively narrow EBITDA
base means less flexibility to adapt to potential disruptions,
either from competition or unforseen operating events, without
hurting credit ratios. Additionally, the group's concentration of
revenues exposes it to potential macroeconomic headwinds in the
Baltics, although this is not in our base case. Lastly, while the
expansion into Poland will improve diversification, we see a
degree of execution risk given the presence of several large
competitors in Poland.

"We anticipate a moderate increase in margins, in particular
thanks to the integration of the highly EBITDA-accretive
Franchisee Franmax, and also to synergies from the Emperia
acquisition. Maxima's adjusted EBITDA margin was about 7.2% in
2017, and we forecast it will increase to about 8.0%-8.5% in 2018.
While Maxima's adjusted EBITDA margin is somewhat higher than that
of larger Western European peers, it remains modest, in our view,
given that the group owns 45% of its store network (which should
reduce fixed costs) and is of a much more moderate size, which we
consider facilitates implementation of cost-control initiatives.
Maxima's margins are below what we see for Russian retail peers,
such as X5 and Magnit, who typically have adjusted EBITDA margins
of about 11%-12%.

"The group's debt increased in 2017 and 2018 from the Emperia
acquisition. We understand the group plans to refinance part of
the bank debt raised for that purpose, which could translate into
EUR150 million of new funding from 2017 levels. We estimate that
this will result in adjusted debt to EBITDA of about 2.7x-2.8x in
2018, and 2.4x-2.6x from 2019 as the group's EBITDA base
increases. Our adjusted metrics incorporate our operating lease
adjustment, which in the case of Maxima is significant, pro forma
the Emperia acquisition, with about EUR496 million of operating
lease adjustments for 2018 against EUR282 million based on 2017's
audited figures. Mitigating this, we note the group's confortable
EBITDAR ratio of over 3x and solid free operating cash flow
(FOCF), despite high capital expenditures (capex).

"That said, we expect the reduction of leverage will be slowed by
the group's expansion plans, which entail annual investments of
about EUR90 million-EUR100 million in 2018 and 2019 as well as
planed annual dividends of about EUR90 million-EUR100 million.
That said, excluding the 2018 Emperia acquisition, we expect
discretionary cash flow generation will remain positive throughout
the period, enabling the group to comply with its net leverage
ratio threshold under the current financial policy. We also note
that the business has working-capital-supportive characteristics.

"Importantly, Maxima Grupe is part of a wider group, Vilniaus
Prekyba, whose main consolidated asset is Maxima. Vilniaus Prekyba
also consolidates a pharmacy business Euroapotheca, which we
expect will generate about EUR45 million of reported EBITDA in
2018, and consider has fairly good geographic diversification.
Vilniaus Prekyba also owns a real estate business, Akropolis,
which we expect will generate about EUR22 million of EBITDA.
Vilinius Prekyba is slightly more leveraged than Maxima alone on a
net reported basis, by about 0.2x to 0.3x as per our estimates.
That higher level of leverage results from the acquisition of
ApoteksGrupen in Sweden by Euroapotheca for a EUR334 million cash
consideration. Offsetting this, we understand Vilnius Prekyba is
looking at various alternatives to deleverage the business and to
reduce debt at the holding level. We expect the gross reported
debt at the Vilniaus Prekyba level to stand at around EUR1 billion
for 2018, with about EUR446 million of cash immediately available
and a comparable operating leases adjustment. Thanks to
incremental EBITDA provided by the group's other businesses,
adjusted leverage stands around 2.5x-2.7x, slightly lower than
that of Maxima.

"Given that Maxima contributes the bulk of the overall group
revenues and earnings and also because we consider Maxima is the
largest business of founder Nerijus Numavicius, we believe it is a
core entity to the wider group. We also understand there is no
plan for a partial listing of Maxima and that main shareholders
intend to keep clear control of the company going forward.

"Lastly, we also note that Vilniaus Prekyba services a very modest
dividend to entities sitting on top, which we understand are debt
free on a stand-alone basis. We assess the wider group credit
profile (GCP) at 'bb+', which is driven by and consistent with our
assessment of Maxima's stand-alone credit profile (SACP) at 'bb+'.
Hence, our preliminary rating on Maxima is in line with its SACP
and the GCP.

"The stable outlook reflects our expectation that Maxima will
defend or strengthen its already sound position in the Baltic food
retail markets, and maintain its revenues and earnings,
underpinned by the recent strengthening in operating margins
stemming from the Franchisee Franmax integration and cost-control
efforts.

"We think the group will gain some upside from acquisition-related
synergies, partially offset by the impact of restructuring costs
and inflationary pressures.

"In our base case, we forecast S&P Global Ratings-adjusted FFO to
debt at about 30% and adjusted debt to EBITDA of about 2.7x-2.8x
in 2018 and trending toward 2.5x by end-2019.

"Our stable outlook is also derived from our anticipation of
balanced financial policies, particularly related to capex and
dividends, and comparable credit metrics at the Vilniaus Prekyba
group level, namely FFO to debt of around 30% in 2018 and above
35% in 2019.

"We might consider a negative rating action if the company
increases its adjusted debt to EBITDA to above 2.8x in 2018, or if
FFO to debt is meaningfully lower than 30%.

"We could also consider a downgrade if there was a significant
decline in operating performance, with profitability deteriorating
substantially because of stiff market competition, or a weaker
market environment in the Baltics or Poland, or because of a
difficult integration of Emperia weighing on margins. Deviations
from the company's current financial policy in the form of
increased dividend distribution or large-scale, debt-funded
acquisitions might also put pressure on the rating, but we don't
see this as a near-term risk.

"A downgrade could also result from a weakening in credit metrics
from what we currently anticipate at the group level, in
particular FFO to debt dropping below 30%, stemming from either
weaker profitability or higher dividend distributions resulting in
increased debt.

"An upgrade is remote at this stage, since we see Maxima's overall
size and narrow EBITDA base as a constraining factor to our
overall assessment of its credit quality.

"Over the next 18-24 months, our 'bb+' assessment of Maxima's SACP
might benefit from a marked improvement in trading, resulting in
an EBITDA margin in excess of 10%. This could translate into
improved credit metrics stemming from stronger free cash flow
generation, causing adjusted FFO to debt to move closer to 45%,
with adjusted debt to EBITDA decreasing toward 2x on a consistent
basis. Even if we would revised upward our assessment of Maxima's
SACP, an upgrade would then still hinge on our view of there being
low risk of releveraging at both Maxima and the Vilniaus Prekyba
group level, based on our assessment of the group's financial
policy. Additionally, we would need to see similar improvement in
the group's credit metrics, and the financial policy remaining
supportive."



=================
M A C E D O N I A
=================


FENI INDUSTRIES: Exits Bankruptcy After Reorganization Plan OK'd
----------------------------------------------------------------
MIA reports that Judge Valentina Gjorgjievska has confirmed the
July 4 decision of the assembly of creditors of the reorganization
plan of Feni Industries, thus ending the nine-month bankruptcy
proceedings of the Kavadarci, Macedonia-based ferro-nickel plant.

The plan submitted by GSOL/Euronickel, includes large investments
in the coming years, MIA discloses.  GSOL/Euronickel has invested
more than EUR80 million in Feni thus far, MIA notes.

According to MIA, the plant had debts in the amount of EUR67
million and more than 250 creditors.  GSOL has paid of Feni's
debts, becoming its largest creditor, MIA relates.

Following the decision of the assembly of creditors and the court,
GSOL is now Feni's new owner, MIA states.



===========
S W E D E N
===========


ERICSSON: Moody's Alters Outlook to Stable & Affirms Ba2 CFR
------------------------------------------------------------
Moody's Investors Service has changed the outlook on the ratings
of Telefonaktiebolaget LM Ericsson (Ericsson), a leading global
provider of telecommunications equipment and related services to
mobile and fixed network operators, to stable from negative.
Concurrently, Moody's has affirmed the company's Ba2 corporate
family rating (CFR), its Ba2-PD probability of default rating
(PDR), the senior unsecured long-term ratings of Ba2, and the
senior unsecured medium term note (MTN) program rating of (P)Ba2.

"The outlook change to stable from negative reflects our
expectation that the company's operating profit and cash flow
trends in 2018 and 2019 will continue improving relative to 2017
and with a declining level of restructuring charges," says
Alejandro N£§ez, a Moody's Vice President -- Senior Analyst and
lead analyst for Ericsson. "Although the company's restructuring
efforts will continue over the next year, Moody's believes the
worst is behind it and that 2018 is an inflection year in their
turnaround."

RATINGS RATIONALE

The change in outlook to stable from negative reflects Moody's
expectations that the company's operating earnings will be
positive and rising, free cash flow will also progressively
increase over the course of the next 12 to 18 months, and that
cash restructuring charges will decline relative to 2017. The
stable outlook also incorporates an expectation that Ericsson will
maintain stable debt and liquidity levels, relative to mid-2018,
and financial policies that continue to balance shareholders' and
creditors' interests.

In Q1 and Q2 2018, Ericsson announced a better than expected set
of quarterly results which indicate the company's initial, yet
consistent, signs of tangible progress on its cost savings and
restructuring programs. Given the progress the company has made
to-date with its cost savings program, a reduction in expected
restructuring charges and provisions, and a slightly improved
market outlook relative to the prior year, Moody's estimates that
Ericsson's operating earnings and cash flow generation
trajectories over the next twelve months will stabilize as they
trend positively, admittedly from a low 2017 base.

As such, Moody's believes that just as 2017 represented the low
point of Ericsson's recent downturn as well as that of its core
networking end market's cycle, 2018 represents the company's and
its core end market's inflection point. Moody's expects the
company to continue along a gradually improving operating
trajectory toward a sustainably higher profitability level and
improving revenue trends from the second half of 2018 onwards.
Moody's continues to project that revenue trends for Ericsson's
core market will continue to be slightly negative (on a constant
currency basis) through 2019 -- although in 2018 they are likely
to be marginally supported, on a reported basis, by USD/SEK
tailwinds -- but could be bolstered into positive revenue growth
territory from late 2019 onward, depending on the scope and pace
of 5G investments ramp-up.

Most notable in the company's quarterly results in the first half
of 2018 were positive revenue growth (+2%) in the Networks
segment, a marked increase in the company's reported gross margin
to 34.5% from 22.6% in H1 2017 (including restructuring charges)
and reported free cash flow (excluding restructuring charges and
pre-dividends) approaching a breakeven level (negative SEK0.3
billion in H1 2018 contrasted with negative SEK4.6 billion free
cash flow in H1 2017).

Against a 2018-2019 revenue trajectory that Moody's projects will
decline but at a much lower level than in 2016 and 2017, the
realized reductions in Ericsson's cost base and the business'
operational gearing should continue to support gradually rising
gross and operating margins as revenue trends gradually improve
beyond 2018. Based on Moody's expectation of a (reported) revenue
contraction of approximately 2% in 2018 and a constant debt level,
the rating agency expects the company's gross debt/EBITDA to
improve significantly in 2018 to around 4x (Moody's-adjusted,
including restructuring charges) from negative 13x in 2017 (due to
negative Moody's-adjusted EBITDA). Ericsson's good liquidity, with
a cash balance of SEK66.9 billion (as at June 30, 2018, including
current and non-current interest bearing securities) and no debt
maturities until November 2020, remains a supportive factor for
the rating and Moody's expect the company to sustain at least a
similar liquidity level over the next eighteen months.

The Ba2 ratings continue to reflect: (1) Moody's expectation that
the company's revenue growth will remain modestly negative in
2018, driven by soft market demand during a cyclical trough, as
well as intense competition amid gradual structural shifts in the
telecom networking equipment market's competitive and
technological landscape; (2) the revenue and earnings drag from
the company's subscale and underperforming Digital Services and
'Emerging Business and Other' divisions; (3) the structural
challenge that Ericsson faces because of its high exposure to the
wireless telecommunications networking equipment market which is
unlikely to see material growth before 2020 as the next technology
investment cycle (5G) is expected to ramp up more significantly
around 2020; and (4) the company's weakened (relative to historic
levels) but stabilizing financial profile, due to a relatively
high albeit improving cost base and declining revenue, leading to
low operating earnings and weak yet improving free cash flow
generation. Furthermore, the unpredictable development of pending
questions from US authorities regarding Ericsson's anti-corruption
program and specific cases represents an event risk that further
constrains the rating in the short to medium term.

These negative considerations are offset by: (1) Moody's
expectation that the company's cost saving activities will help
stabilize its operating earnings by the end of 2018; (2) the
company's good liquidity position; (3) financial policies
(including dividend payments) within the limits of the company's
free cash flow generation and liquidity resources; and (4) a track
record of shareholder support. Moody's considers Ericsson's good
liquidity and main shareholders' support to be the company's two
principal supportive credit factors during this period of cyclical
and structural challenges.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's views and expectations that:

(1) Ericsson's core radio access networking (RAN) end market
     weakness is likely to taper significantly in 2018-2019
     following a 10% (reported) revenue contraction in 2017;

(2) Reduced restructuring charges and no further provisions
     leading to lower restructuring cash outflows over 2018-2019
     compared with 2016-2017;

(3) Gross leverage (Moody's-adjusted) for full-year 2018 to be
     high at around 4x yet is expected to decline in 2019 toward
     the 3.25x area;

(4) Operating margins (Moody's-adj., including restructuring
     charges) will be positive and materially rise in 2019 with
     free cash flow generation improving through year-end 2019;

(5) Ericsson will maintain broadly stable debt and liquidity
     levels (relative to 2018).

WHAT COULD CHANGE THE RATING UP/DOWN

Upward ratings momentum could develop if: (1) the company's
restructuring program were to continue yielding tangible financial
results, leading to a sustained recovery in operating margins into
the high single-digit percentage range; (2) Ericsson demonstrated
a sustainably robust competitive position and technological
leadership; (3) end-market demand were to rebound quicker than
currently anticipated, into the positive revenue growth territory
over a 12-month horizon; (4) free cash flow were to be materially
and sustainably positive; and (5) Ericsson's own liquidity sources
were to improve such that the company reported a higher net cash
position (including the pension deficit) and reduced gross
leverage from its currently high level.

Negative ratings momentum could develop if: (1) the company
reported a negative operating margin (Moody's-adjusted, including
restructuring charges) similar to or worse than the 2017 level (-
8%); and/or (2) there were no material improvement in gross
leverage from the 2017 level; and/or (3) the company's competitive
position diminished, particularly in its core Networks division,
as the 5G investment cycle approaches; and/or (4) the company
registered a further material decline in its internal liquidity
sources; and/or (5) a material fine were to be imposed as a result
of pending questions from US authorities.

LIST OF AFFECTED RATINGS

Affirmations:

Issuer: Telefonaktiebolaget LM Ericsson

LT Corporate Family Rating, Affirmed Ba2

Probability of Default Rating, Affirmed Ba2-PD

Senior Unsecured Medium-Term Note Program, Affirmed (P)Ba2

Senior Unsecured Regular Bond/Debenture, Affirmed Ba2

Outlook Actions:

Issuer: Telefonaktiebolaget LM Ericsson

Outlook, Changed To Stable From Negative

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Diversified
Technology Rating Methodology published in December 2015.

With reported net sales of SEK198.2 billion for the twelve months
ended June 30, 2018, Telefonaktiebolaget LM Ericsson (Ericsson) is
a leading provider of telecommunications equipment and related
services to mobile and fixed network operators globally. Its
equipment is used by over 1,000 networks in more than 180
countries and around 40% of the global mobile traffic passes
through its systems. In the six months ended June 30, 2018,
Ericsson's Networks division contributed 66% of the group's net
sales, followed by Digital Services at 17%, Managed Services at
13% and its 'Emerging Business and Other' segment at 4%. The
company's net sales are well diversified geographically across all
major regions, with North America, Europe and Latin America, Asia
and Rest of the World each representing approximately one-quarter
of the company's net sales. The company's largest shareholders (as
of December 31, 2017) are Investor AB (Aa3 stable) and AB
Industrivarden, with voting rights of 22% and 15%, respectively.



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


VAT GROUP: Moody's Hikes CFR to Ba2, Outlook Remains Stable
-----------------------------------------------------------
Moody's Investors Service upgraded VAT Group AG's Corporate Family
Rating to Ba2 from Ba3 and Probability of Default Rating to Ba2-PD
from Ba3-PD. The outlook remains stable.

The upgrade of VAT's ratings reflects the ongoing improvement in
VAT's operating performance as the company continues to capitalize
on growing demand for vacuum valves, in particular from the
semiconductor sector, and to strengthen its market share, while
sustaining a conservative financial profile, despite high
dividends paid out. Moody's expects that leverage measured as
adjusted Debt/EBITDA will remain below 2.0x on a sustainable basis
(FYE17: 1.2x).

RATINGS RATIONALE

The Ba2 CFR reflects VAT's strong position in the niche market for
high-end vacuum valves serving mainly semiconductor and flat panel
display (FPD) equipment markets with long-term sustainable growth
fundamentals. The rating also reflects high and resilient
profitability (adjusted EBITDA margin at 31.1% in FY17) and a
strong cash flow generation, supported by a flexible cost
structure with two-thirds of cost being variable. This cost
structure is key for VAT to manage the inherent volatility in the
capex cycle of the semiconductor industry. In addition, Moody's
recognizes VAT's commitment to a conservative capital structure
(company defined net debt/EBITDA target of 1.0x) which is expected
to support strong credit metrics, which involves Moody's
expectation that the company will be willing to reduce its
currently high dividend payout in case of a cyclical downturn.

As a supplier to the semiconductor industry, demand can be
volatile but less so than historically due to the broadened end
market demand for semiconductors (such as data center, mobile
devices, artificial intelligence, autonomous driving, internet of
things).

VAT's rating is furthermore constrained by the company's small
scale (Moody's projects VAT's revenues will approach $0.8 billion
in FY18), limited product diversification as well as concentrated
customer base (top 10 customers accounted for around 60% of sales
in FY17), reflecting its rather small addressable market where it
holds strong market positions but faces significantly larger OEM
customers. This is to some extent mitigated by VAT's high quality
product offering, high market share and long customer
relationships, which also serve as a barrier to entry.

VAT's liquidity is good supported by CHF72 million of cash on
balance sheet as at end of December 2017. In addition, the company
has access to a fully available USD300m revolving credit facility
due 2023 (part of the RCF drawings were repaid with the proceeds
from CHF200 million bond issuance in May 2018). These liquidity
sources in combination with expected FFO generation are more than
sufficient to accommodate dividend payments, working capital and
capital expenditure needs (in line with company's guidance of 7%
of sales in 2018) for the next 12-18 months period.

The revolving credit facility is subject to a financial
maintenance covenant under which VAT currently has substantial
headroom.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects its expectation that revenues will
grow at least mid-single digits in the 12-18 months and EBITDA
margins improve gradually towards 33% mid-term (company target by
2020) target. Based on these forecasts, debt/EBITDA should be
sustained at low 1.0x level.

What could change the rating -- Up

  - Revenues above $1.0 billion

  - EBITDA margin (Moody's adjusted) is sustained above 30 percent
    and

  - Moody's-adjusted debt/EBITDA remains below 1.5x and not to
    materially exceed 2.5x through the cycle, while maintaining a
    good liquidity profile

  - Higher proportion of net recurring service and aftermarket
    revenues, which could help to offset demand volatility.

What could change the rating -- Down

  - Evidence that the company is losing market share

  - EBITDA margin is sustained below the mid-20s percent level
    (Moody's adjusted) or

  - The company relaxes its cost discipline and capital investment
    and/or if successive material negative free cash flows
    (including dividend payments) lead to a deterioration of the
    company liquidity profile or of adjusted gross leverage,
    sustainably in excess of 2.5x.

The principal methodology used in these ratings was Semiconductor
Industry Methodology published in December 2015.

VAT, headquartered in Haag, Switzerland, is a specialized
manufacturer of vacuum valves serving a range of customers in the
semiconductor, flat panel display (FPD), industrial vacuum and
photovoltaic industries. VAT's products are also used for research
and development purposes and are often a vital component of its
customers' production process. Additionally, the company also
produces multi-valve modules, provides aftermarket sales and
related services. In 2017 VAT reported revenues of CHF692 million.



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


ANADOLU ANONIM: Fitch Cuts IFS Rating to BB+, Outlook Negative
--------------------------------------------------------------
Fitch Ratings has downgraded Anadolu Anonim Turk Sigorta Sirketi's
(Anadolu Sigorta) Insurer Financial Strength (IFS) Rating to 'BB+'
(Moderately Weak) from 'BBB-'. The Outlook is Negative. The
National IFS Rating has been affirmed at 'AA+(tur)' with a Stable
Outlook.

KEY RATING DRIVERS

The downgrade of Anadolu Sigorta's rating follows the downgrade of
Turkey's Long-Term Local-Currency Issuer Default Rating (LTLC IDR)
to 'BB+' from 'BBB-' on July 13, 2018. This reflects Anadolu
Sigorta's substantial exposure to Turkish assets (government bonds
and local banks deposits) and to the wider Turkish economy. The
Negative Outlook mirrors that on Turkey's LTLC IDR.

The main asset risk to the insurer's balance sheet stems from the
credit quality of local banks, as 65% of Anadolu Sigorta's
investment portfolio is placed in bank deposits. These are in turn
influenced by Turkey's sovereign credit rating, which has
continued to worsen. Turkey's Long-Term Foreign-Currency IDR was
downgraded by Fitch on July 13, 2018 to 'BB' from 'BB+'.

Fitch views Anadolu Sigorta's capital position as supportive of
the rating, reflected in the Prism factor-based model (FBM) score
of 'Adequate'. The capital position slightly improved in 2017, as
a result of lower premium volumes and lower reserves due to
mandatory reserve discounting introduced in 2017. The capital
position was also helped by an increase in total equity to TRY1.8
billion in 2017 (2016: TRY1.3 billion) supported by retained
earnings. The insurer's regulatory solvency also improved in 2017.

Anadolu Sigorta maintained good profitability in 2017 (net income
improved to TRY184 million from TRY88 million in 2016) supported
by strong investment income, although the return on equity was
12%, the same level as the rate of inflation. The insurer's
earnings are largely dependent on investment income as combined
ratios remain above 100%. With interest rates remaining high,
Fitch expects investment income to continue supporting the overall
profitability and to some extent offset the losses on the motor
third party liability (MTPL) line.

Anadolu Sigorta's Fitch-calculated combined ratio remained broadly
stable at 107% in 2017 and the five-year average combined ratio
was 104%. The MTPL line, which represented 29% of Anadolu
Sigorta's total net written premium (NWP) in 2017, was the major
contributor to technical losses in 2013-2017. In 2017, MTPL
performance slightly improved supported by higher premiums written
during 2016, but Fitch expects its performance to deteriorate
substantially in 2018, as the full impact of the MTPL premium cap
will be visible in 2018 results. As a result of the premium cap,
Anadolu Sigorta's MTPL NWP was 33% lower in 2017 than in 2016.

Anadolu Sigorta is the second-largest non-life insurer in Turkey
(gross written premiums of TRY4.7 billion) equating to a market
share of 12% at end-2017. The majority of its portfolio comprises
motor lines, which account for 49% of premiums, in line with the
Turkish non-life insurance sector.

RATING SENSITIVITIES

Anadolu Sigorta's ratings will be downgraded if Turkey's LTLC IDR
is downgraded.

The ratings could be downgraded if the insurer's capital position
deteriorates as measured by a regulatory solvency ratio below 100%
or a Prism FBM score of 'Somewhat Weak', possibly caused by a
substantial underwriting or investment loss.

Fitch may revise the Outlook to Stable if the Outlook on Turkey's
LTLC IDR is revised to Stable.



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


JOANNOU & PARASKEVAIDES: Aug. 13 Claims Submission Deadline Set
---------------------------------------------------------------
In the matter of an application under Part XXI of the Companies
(Guernsey) Law, 2008 and pursuant to section 374 of the Companies
(Guernsey) Law, 2008, the affairs, business and property of
Joannou & Paraskevaides (Aviation) Limited (In Administration)
("the Company") has been ordered to be managed jointly and
severally by Alan John Roberts -- alan.roberts@gt-ci.com -- and
James Robert Toynton -- jamie.toynton@gt-ci.com -- of Grant
Thornton Limited, Lefebvre House, Lefebvre Street, St. Peter Port,
Guernsey, GY1 3TF ("the Joint Administrators") for the purpose of
achieving a more advantageous realisation of the Company's assets
than would be affected on a winding up.  The order took effect as
of July 4, 2018.

All persons having claims against the Company are required to
submit details to the Joint Administrators before August 13, 2018,
and all persons indebted to the Company are required to settle
their debt with the Joint Administrators by the above debt.


LOW & BONAR: Egan-Jones Lowers Sr. Unsecured Ratings to BB-
-----------------------------------------------------------
Egan-Jones Ratings Company, on July 13, 2018, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Low & Bonar PLC to BB- from BB.

Low & Bonar PLC was founded in 1903 and is headquartered in
London, the United Kingdom. The company manufactures and supplies
technical textiles worldwide.


OMNILIFE INSURANCE: S&P Alters Outlook to Pos. & Affirms BB+ ICR
----------------------------------------------------------------
S&P Global Ratings said that it revised the outlook to positive
from stable and affirmed its 'BB+' issuer credit and insurer
financial strength ratings on Omnilife Insurance Co. Ltd.

S&P said, "The outlook revision reflects that since the
appointment of the new CEO in November 2017, we have seen
extensive progress in the development and implementation of
Omnilife's enterprise risk management (ERM) framework and overall
management and governance. We believe this will build the
foundation for future profitable growth. The company appointed a
chief risk officer and brought in clearly defined and measurable
risk controls and limits. We have therefore revised our assessment
of Omnilife's ERM to adequate from weak. In addition, management
has been strengthened by the hire of a new chief finance officer
and a marketing and compliance manager. Furthermore, overall
management responsibilities have been delegated across a wider
team, reducing the key man risk, which previously weighed on the
rating on Omnilife.

"We expect a more focused strategy to support Omnilife's growth
plans, which in our view could result in sustainable profitable
results -- with net income of ú0.5 million in 2019 -- while
capital adequacy level will remain extremely strong based on our
risk-based capital model. However, the level of capital is small
in absolute terms.

"Our ratings on Omnilife remain constrained by its high reliance
on a single reinsurer, small share of the market, and limited
product diversification.

"In a group context, we view Omnilife as non-strategic to its
parent Mediterranean & Gulf Insurance & Reinsurance Company B.S.C.
(Medgulf Bahrain) and the ratings on the company do not benefit
from any group support.

"The positive outlook reflects that we expect Omnilife to convert
its ambitious growth strategy of providing tailor-made employee
benefit solutions to small-to-medium-sized businesses while
focusing on profitability. We expect gross premiums written to
increase materially by about 20% annually to about ú20 million in
2019, and net income to rise to ú0.5 million in the same period,
with less volatility in its investment performance following the
reduction of its U.S. dollar exposure. We also expect Omnilife to
maintain extremely strong capital adequacy and its current
dividend policy.

"We will consider upgrading Omnilife if it continues to operate in
line with our outlined expectations in terms of profitability and
capitalization. However, the ratings are capped at the level of
the rating on its parent, Medgulf Bahrain (BBB-/Negative/--) in
line with our group rating methodology.

"We could revise the outlook to stable if we have concerns over
the effectiveness of Omnilife's newly introduced risk limits and
controls; if the operational support from its reinsurer General
Reinsurance AG (AA+/Negative/--) lessens and Omnilife is unable to
replace this support quickly; or if profitability weakens. We
could also take a negative rating action if we downgrade its
parent, Medgulf Bahrain."



===============
X X X X X X X X
===============


* BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
-----------------------------------------------------------
Author: Sallie Tisdale
Publisher: BeardBooks
Softcover: 270 pages
List Price: $34.95
Review by Henry Berry

Order your own personal copy at https://is.gd/9SAfJR

An earlier edition of "The Sorcerer's Apprentice" won an American
Health Book Award in 1986. The book has been recognized as an
outstanding book on popular science. Tisdale brings to her subject
of the wide and engrossing field of health and illness the
perspective, as well as the special sympathies and sensitivities,
of a registered nurse. She is an exceptionally skilled writer.
Again and again, her descriptions of ill individuals and images of
illnesses such as cancer and meningitis make a lasting impression.
Tisdale accomplishes the tricky business of bringing the reader to
an understanding of what persons experience when they are ill; and
in doing this, to understand more about the nature of illness as
well. Her style and aim as a writer are like that of a medical or
science journalist for leading major newspaper, say the "New York
Times" or "Los Angeles Times." To this informative, readable style
is added the probing interest and concern of the philosopher
trying to shed some light on one of the central and most
unsettling aspects of human existence. In this insightful,
illuminating other health-care workers come away with. For them,
sick persons are like something that has to be "fixed." They're
focused on the practical, physical matter of treating a malady.
Unlike this author, they're not focused consciously on the nature
of pain and what the patient is experiencing. The pragmatic,
results-oriented medical profession is focused on the effects of
treatment. Tisdale brings into the picture of health care and
seriously-ill patients all of what the medical profession in its
amnesia, as she called it, overlooks.

Simply in describing what she observes, Tisdale leads those in the
medical profession as well as other interested readers to see what
they normally overlook, what they normally do not see in the
business and pressures of their work. She describes the beginning
of a hip-replacement operation, the surgeon "takes the scalpel and
cuts -- the top of the hip to a third of the way down the thigh --
and cuts again through the globular yellow fat, and deeper. The
resident follows with a cautery, holding tiny spraying blood
vessels and burning them shut with an electric current. One small,
throbbing arteriole escapes, and his glasses and cheek are
splattered." One learns more about what is actually going on in an
operation from this and following passages than from seeing one of
those glimpses of operations commonly shown on TV. The author
explains the illness of meningitis, "The brain becomes swollen
with blood and tissue fluid, its entire surface layered with pus .
. . The pressure in the skull increases until the winding
convolutions of the brain are flattened out . . . The spreading
infection and pressure from the growing turbulent ocean sitting on
top of the brain cause permanent weakness and paralysis,
blindness, deafness.

. . ." This dramatic depiction of meningitis brings together
medical facts, symptoms, and effects on the patient. Tisdale does
this repeatedly to present illness and the persons whose lives
revolve around it from patients and relatives to doctors and
nurses in a light readers could never imagine, even those who are
immersed in this world.

Tisdale's main point is that the miracles of modern medicine do
not unquestionably end the miseries of illness, or even
unquestionably alleviate them. As much as they bring some relief
to ill individuals and sometimes cure illness, in many cases they
bring on other kinds of pains and sorrows. Tisdale reminds readers
that the mystery of illness does, and always will, elude the
miracle of medical technology, drugs, and practices. Part of the
mystery of the paradoxes of treatment and the elusiveness of
restored health for ill persons she focuses on is "simply the
mystery of illness.

Erosion, obviously, is natural. Our bodies are essentially
entropic." This is what many persons, both among the public and
medical professionals, tend to forget. "The Sorcerer's Apprentice"
serves as a reminder that the faith and hope placed in modern
medicine need to be balanced with an awareness of the mystery of
illness which will always be a part of human life.



                            *********

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
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written permission of the publishers.

Information contained herein is obtained from sources believed to
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of the same firm for the term of the initial subscription or
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                 * * * End of Transmission * * *