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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, October 26, 2018, Vol. 19, No. 213


                            Headlines


A Z E R B A I J A N

KAPITAL BANK: Moody's Affirms Ba3 Deposit Ratings, Outlook Stable


G R E E C E

NAVIOS MIDSTREAM: S&P Cuts Long-Term ICR to 'B-', Outlook Stable


H U N G A R Y

OTP BANK: Fitch Affirms BB LT Issuer Default Ratings


I C E L A N D

KAUPTHING: Robert Tchenguiz Drops Suit Against Grant Thornton


I R E L A N D

CLAVIS SECURITIES 2006-01: Fitch Affirms B Ratings on 8 Tranches


I T A L Y

ITALY: European Commission Rejects Draft Budget


L U X E M B O U R G

GILEX HOLDING: Moody's Affirms B2 Issuer Rating, Outlook Stable


N O R W A Y

NG BIDCO: Fitch Withdraws 'B(EXP)' LT Issuer Default Rating


R U S S I A

HOME CREDIT: Fitch Affirms BB- Long-Term IDRs, Outlook Stable
NATIONAL STANDARD: S&P Affirms 'B/B' ICRs, Outlook Negative
TINKOFF BANK: Fitch Alters Outlook of BB- LT IDR to Positive


S P A I N

PRONOVIAS GROUP: S&P Alters Outlook to Negative & Affirms 'B' ICR


T U R K E Y

ALTERNATIFBANK AS: Fitch Affirms BB- LT Issuer Default Rating
DOGUS OTOMOTIV: Fitch Cuts National LT Rating to BB+, Outlook Neg
GARANTI BANK: Fitch Lowers Long-Term IDR to BB-, Outlook Stable
KUVEYT TURK: Moody's Affirms BB- Long-Term Issuer Default Rating


U N I T E D   K I N G D O M

AFREN PLC: Two Former Execs Convicted of Fraud, Money Laundering
DEBENHAMS PLC: To Close 50 Stores, Posts Almost GBP500MM Loss
GOURMET BURGER: Board Initiates Company Voluntary Arrangement
HOUSE OF FRASER: ScS Abandons Partnership After Ashley Buyout
MITCHELLS & BUTLERS: S&P Cuts Rating on Cl. D1 Notes to BB-

NEWDAY FUNDING 2018-2: Fitch Rates Class F Debt 'B(EXP)sf'


X X X X X X X X

* BOOK REVIEW: Macy's for Sale


                            *********



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A Z E R B A I J A N
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KAPITAL BANK: Moody's Affirms Ba3 Deposit Ratings, Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed the Ba3 long-term local- and
foreign currency deposit ratings of Azerbaijan-based Kapital Bank
OJSC and changed the outlook to stable from negative.
Concurrently, the rating agency affirmed the bank's Baseline
Credit Assessment and adjusted BCA of b1, the bank's long-term
and short-term local- and foreign currency Counterparty Risk
Ratings of Ba2/Not Prime, as well as its Not Prime short-term
local- and foreign currency bank deposit ratings. Kapital Bank's
long-term and short-term Counterparty Risk Assessments of
Ba2(cr)/Not Prime(cr) were also affirmed.

RATINGS RATIONALE

The affirmation of the bank's ratings and outlook change to
stable reflect both an improved operating environment in
Azerbaijan as well as evidenced resilience of the bank's solvency
to external shocks through the cycle.

Despite the challenging economic conditions over recent years,
the bank maintained better-than-sector-average asset quality with
a problem loan ratio of 6-7% and provisioning coverage close to
90-100% in 2015-2017. The better-than-average loan book quality
was due to the bank's limited exposure to foreign-currency
denominated loans and focus on government-related entities,
payroll customers, budget recipients and pensioners with reliable
cash inflows.

Resumed economic growth in Azerbaijan, projected at 2% in 2018
and 3% in 2019 together with declined inflation and stability in
the exchange rate, should bolster the real disposable income and
creditworthiness of the bank's borrowers, in particular
households, which accounted for 67% of gross loans at mid-2018.

Kapital Bank's reported net income for the first half of 2018 of
AZN64.8 million, equivalent to an annualized return on average
assets of 3.8%, compared well with that of its global peers rated
by Moody's and was higher than that of its domestic competitors.
The bank's performance is supported by its solid net interest
margin (6.6% in H1 2018) and very good operating efficiency
(40.9%). The rating agency expects that the bank's profitability
metrics will remain robust in the next 12-18 months amid a stable
operating environment.

With tangible common equity at 22.5% of its risk-weighted assets
as of December 31, 2017, the bank's capital adequacy remains a
key credit strength. Despite a material dividend payout of
AZN94.8 million this year, Moody's expects that the bank's
capital adequacy will remain robust thanks to (1) healthy
profitability; (2) an expected AZN40 million additional share
issue by the end of 2018, of which half was already completed;
and (3) moderate RWA growth in the next 12-18 months. In
addition, next year Kapital Bank plans to decrease its dividend
pay-out ratio to 60% of net profit from about 100% previously.

Kapital Bank's funding and liquidity positions will remain
stable, supported by its customer deposit base which accounted
for 90% of non-equity funding, as well as its ample liquidity
cushion of about 60% of total assets as of mid-2018.

GOVERNMENT SUPPORT

Moody's has revised its assessment of the likelihood of the
Azerbaijani government's support to Kapital Bank to high from
moderate, resulting in one notch of uplift from the bank's BCA of
b1. This assumption is based on the bank's (1) systemic
importance for the national payment system, aided by its largest
countrywide coverage, wide customer base and market share
exceeding 11% of banking sector assets at the end of 2017
compared with about 6% two years earlier; and (2) historical
close ties to the government, which enable the bank to
participate in large-scale government projects, thus conferring
good access to state funding.

WHAT COULD MOVE THE RATINGS UP / DOWN

Kapital Bank's deposit ratings now incorporate a high probability
of government support and are positioned at a relatively high
level in local context, just one notch below Azerbaijan's Ba2
sovereign debt rating. In the long-term, upward rating pressure
could arise from a sustained improvement in Kapital Bank's asset
quality and lower single-name concentrations in its loan
portfolio and deposit base.

Kapital Bank's BCA and long-term deposit ratings could be
downgraded, or the outlook on its long-term deposit ratings might
be revised to negative from stable, if Moody's observed a
material weakening in asset quality, requiring higher provisions
and leading to bottom-line losses and capital erosion.

LIST OF AFFECTED RATINGS

Issuer: Kapital Bank OJSC

Affirmations:

Long-term Counterparty Risk Ratings, Affirmed Ba2

Short-term Counterparty Risk Ratings, Affirmed NP

Long-term Bank Deposit, Affirmed Ba3 Outlook Changed to Stable
From Negative

Short-term Bank Deposits, Affirmed NP

Long-term Counterparty Risk Assessment, Affirmed Ba2(cr)

Short-term Counterparty Risk Assessment, Affirmed NP(cr)

Baseline Credit Assessment, Affirmed b1

Adjusted Baseline Credit Assessment, Affirmed b1

Outlook Action:

Outlook Changed To Stable From Negative

PRINCIPAL METHODOLOGY

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



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G R E E C E
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NAVIOS MIDSTREAM: S&P Cuts Long-Term ICR to 'B-', Outlook Stable
----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Marshall-Islands-registered owner and operator of crude oil
tankers Navios Maritime Midstream Partners L.P. (Navios
Midstream) to 'B-' from 'B' and removed it from CreditWatch with
negative implications. The outlook is stable.

S&P said, "We also lowered our issue rating on Navios Midstream's
senior secured debt to 'B-'. The recovery rating remains at '3',
indicating our expectation of meaningful recovery (50%-70%;
rounded estimate 65%) in the event of a default."

The downgrade follows a definitive merger agreement under which
Navios Maritime Acquisition Corp. will acquire all of the
publicly held units of Navios Midstream that it doesn't already
own in exchange for shares of Navios Acquisition. The transaction
is subject to customary closing conditions.

Once the transaction closes, Navios Midstream will become a 100%-
owned core subsidiary of the lower-rated Navios Acquisition. As a
result, S&P caps its rating on Navios Midstream at the group
credit profile, which it assesses as 'b-', combining the
creditworthiness of Navios Acquisition and Navios Midstream.

Navios Acquisition, which is listed on the New York Stock
Exchange, owns and operates a fleet of 35 modern crude oil- and
product-tankers (excluding two bareboat chartered-in newbuild
very large crude carriers; VLCCs) and Navios Midstream, formed in
2014, owns and operates a fleet of six VLCCs. We forecast that
the consolidated company will generate EBITDA of $115 million-
$120 million in 2018 and report debt of about $1.2 billion as of
2018-end.

Navios Acquisition's operating performance and credit measures
have been weak over the past several quarters because of subdued
tanker rate conditions and the company's limited capacity to
reduce debt. This constrains the overall group credit profile.
S&P said, "We also believe that the pace and magnitude of a
rebound of the combined entity's credit measures after the
transaction is vulnerable to uncertain industry prospects for a
significant recovery in charter rates, in particular, for VLCCs
in 2019. We forecast that the combined entity's S&P Global
Ratings-adjusted funds from operations (FFO) to debt will be
about 3% and adjusted debt to EBITDA about 10x in 2018 (pro forma
the transaction), improving somewhat to 4%-5% and about 9x
respectively in 2019, which are consistent with a highly
leveraged financial profile."

S&P said, "We assess each entity's business risk profile as weak.
Although the combined entity will have a fleet of 41 tankers, we
also assess its business risk profile as weak because we don't
consider that the enlargement of the fleet and customer base
sufficiently enhances the combined entity's scale and diversity
to revise our view of the business profile upward. In our view,
the business remains constrained by the shipping industry's high
risk and fragmentation, and the consolidated company's relatively
narrow business scope, with a focus on the tanker industry only,
its short time-charter profile, and profitability's exposure to
swings in tanker rates. We consider the risks to be partly offset
by the combined entity's competitive position, which incorporates
its conservative chartering policy, competitive break-even
operating rates, high fleet utilization, and attractive fleet
profile, composed of modern and high-quality tankers with an
average age of eight years, which is below the 10-year average of
the global tanker fleet.

"The stable outlook reflects our view that the combined group
will generate moderately positive free operating cash flow and
maintain sufficient liquidity sources to cover uses within the
next 12 months. We expect Navios Acquisition will enjoy
uninterrupted access to secured bank funding necessary for
refinancing of maturing bullet loans and its operating
performance will recover from 2019, which support our view.

"Rating pressure would arise if tanker rates, in particular for
VLCCs, perform significantly below our base-case forecast,
resulting in negative free operating cash flow, with limited
prospects for an immediate recovery. Furthermore, we could
downgrade Navios Midstream if we consider it likely that the
combined entity's liquidity sources-to-uses ratio would fall
below 1.0x.

"An upgrade could follow if the combined entity's financial
performance improved significantly. This would mean a rebound of
adjusted FFO to debt to more than 6% on a sustainable basis,
which could stem, for example, from VLCC rates recovering to
about $40,000/day, all else remaining equal.

"Because our rating on the combined entity is linked to the
creditworthiness of the wider Navios group, including Navios
Maritime Holdings Inc., an upgrade would also depend on our view
of whether Navios Holdings' credit quality supported a higher
rating on Navios Midstream at that time."



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H U N G A R Y
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OTP BANK: Fitch Affirms BB LT Issuer Default Ratings
----------------------------------------------------
Fitch Ratings has affirmed OTP Bank's Long-Term IDRs at 'BB' with
Stable Outlooks.

KEY RATING DRIVERS

IDRS, VIABILITY RATING AND SUPPORT RATING

OTP's Long-Term IDRs of 'BB' and Support Rating of '3' reflect
its assessment of potential support the bank may receive, if
needed, from its parent bank, Hungary-based OTP Bank Plc. Fitch
believes that the parent bank would have a high propensity to
support OTP in light of its majority ownership (98%), high level
of integration, common branding and reputational damage for the
parent from a potential default of OTP.

The affirmation of OTP's VR at 'bb-' reflects a solid capital
position and improving financial results driven by currently
lower funding and credit costs, following an overall improvement
of the operating environment. At the same time, the rating
factors in the volatile nature of the bank's core consumer
lending business with asset quality risk within borrowers'
increasing debt burdens (after several years of deleveraging), as
overall retail loan growth in Russia outpaces that of personal
income.

OTP's retail loan book contracted 3.4% in 1H18 after a 0.9%
decline in 2017, although this is not indicative of a loss of
market share, as the loan book of OTP's sister microfinance
entity has been growing rapidly in recent years (28% and 75% in
1H18 and 2017, respectively) to tap a more relaxed regulatory
regime (particularly due to the absence of higher risk weights
for high margin loans applicable to banks). Fitch understands the
bank and its sister microfinance company are viewed by OTP Bank
Plc as being part of a single retail business.

At end-1H18, OTP's impaired loans (defined as Stage 3 loans) made
up a high 21% of total retail loans at the bank. These mostly
comprised legacy exposures due to a slow rate of write-offs and
were adequately covered by specific reserves (91%). The bank's
average non-performing loan (NPL) generation in retail loans
(defined as increase in 90 days overdue loans plus write-offs
divided by average performing loans), stabilised at around 6% in
2017-1H18 (annualised) after a more significant 9% in 2016 and
20% in 2015.

Pre-impairment profitability was 7.9% (annualised) of average
loans in 1H18, offering a moderate safety buffer given the total
loans' NPL generation rate of 4.5% (lower than retail NPL
generation due to a healthy corporate loan book making up around
21% of loans). OTP's return on average equity (ROAE) was still
modest at 12% (2017: 8.7%), mostly due to heightened operating
expenses.

Capitalisation is strong at OTP with a Fitch Core Capital (FCC)
ratio of 23% at end-1H18. Regulatory capital ratios were lower
(end-8M18 Tier 1 capital ratio of 13%; compared with a minimum of
8.5% including capital buffers applicable from 2019) due to
higher regulatory risk weights for high-yielding unsecured retail
loans and a larger operational risk component.

OTP's capital position is somewhat undermined by a sizeable
RUB5.5 billion (0.22x FCC) unsecured exposure to the sister
microfinance company. Fitch also takes into consideration the
contingent risk of capital being upstreamed from the bank to
support the microfinance company should its capital position
deteriorate, as OTP Bank Plc sees both entities as a single
business.

OTP's funding and liquidity position are reasonable, underpinned
by a low reliance on wholesale debt, comfortable liquidity, a
strong deposit collection capacity and the benefit of ordinary
support. The bank is funded mainly by retail deposits (60% of
liabilities at end-1H18), which are price-sensitive, but have
proven to be relatively sticky through the cycle, as the majority
of these are secured by the deposit insurance system.

The bank's liquidity buffer is reasonable, covering around 22% of
customer accounts. OTP's liquidity position is additionally
supported by an unused credit line from its parent (RUB8 billion
at end-1H18, 9% of total customer accounts).

RATING SENSITIVITIES

IDRS, VR and SUPPORT RATING

OTP's IDRs are sensitive to changes in Fitch's assessment of OTP
Bank Plc's propensity and ability to provide support to the
Russian subsidiary.

Upside for OTP's VR is limited and would require a significant
diversification of the bank's business model and earnings
structure leading to a material decrease in exposure to the
Russian consumer finance market. OTP's VR may be downgraded on
renewed pressure on the bank's asset quality and profitability
leading to capital erosion, but Fitch views this as unlikely in
the near term.

The rating actions are as follows:

  Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BB',
  Outlooks Stable

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

  Viability Rating: affirmed at 'bb-'

  Support Rating: affirmed at '3'



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I C E L A N D
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KAUPTHING: Robert Tchenguiz Drops Suit Against Grant Thornton
-------------------------------------------------------------
Barney Thompson at The Financial Times reports that the property
entrepreneur Robert Tchenguiz dropped his multimillion-pound
lawsuit against accountancy firm Grant Thornton and several other
defendants, hours before he was due to give evidence in the case.

Mr. Tchenguiz had accused Grant Thornton, two of its partners and
a lawyer who worked for the failed Icelandic bank Kaupthing of
conspiring to get the UK's Serious Fraud Office to open an
investigation against him by feeding it dishonest allegations,
the FT discloses.

All the defendants vigorously denied the claims, the FT notes.

Mr. Tchenguiz and his brother Vincent were arrested in 2011 and
had their homes and business premises searched as part of an SFO
investigation into Kaupthing, which collapsed in 2008, the FT
recounts.  Grant Thornton acted as the bank's liquidator, the FT
states.

But the SFO shut down its probe into the brothers in 2012, with a
judge severely criticizing the way the agency had gone about
preparing search warrants, and in 2014, the pair received GBP4.5
million in damages and an apology, the FT relays.

Years of civil litigation followed and in the current lawsuit,
which was brought in 2015, Mr. Tchenguiz was seeking hundreds of
millions of pounds in damages, the FT says.

But in a packed courtroom in London's Commercial Court,
proceedings were delayed by several minutes before the
businessman's lawyers presented a draft order withdrawing the
claim, the FT relates.

Stephen Rubin QC, for Mr. Tchenguiz, told the judge that his
client and Kaupthing had reached an agreement during the course
of the morning, as a result of which "the claimants in this
action shall withdraw all allegations and release all claims in
this action", according to the FT.

The agreement is between the entrepreneur and the bank, rather
than the defendants, the FT notes.  Mr. Tchenguiz has also agreed
to pay the defendants' costs, with the amounts yet to be agreed,
the FT relays.  Other terms of the settlement were confidential,
the FT states.



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I R E L A N D
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CLAVIS SECURITIES 2006-01: Fitch Affirms B Ratings on 8 Tranches
----------------------------------------------------------------
Fitch Ratings has affirmed all tranches of Clavis Securities plc
Series 2006-01 and Clavis Securities plc Series 2007-01.

Clavis Securities plc Series 2006-01

Class A3a ISIN(XS0255457706); affirmed at 'Bsf'; Outlook Stable

Class A3b ISIN(XS0255438748); affirmed at 'Bsf'; Outlook Stable

Class M1a ISIN(XS0255424441); affirmed at 'Bsf'; Outlook Stable

Class M1b ISIN(XS0255439043); affirmed at 'Bsf'; Outlook Stable

Class M2a ISIN(XS0255425414); affirmed at 'Bsf'; Outlook Stable

Class B1a ISIN(XS0255425927); affirmed at 'Bsf'; Outlook Stable

Class B1b ISIN(XS0255440728); affirmed at 'Bsf'; Outlook Stable

Class B2a ISIN(XS0255426818); affirmed at 'Bsf'; Outlook Stable

Clavis Securities plc Series 2007-01

Class A3a ISIN(XS0302268361); affirmed at 'AAAsf'; Outlook Stable

Class A3b ISIN(XS0302269096); affirmed at 'AAAsf'; Outlook Stable

Class Aza ISIN(XS0302268445); affirmed at 'AAAsf'; Outlook Stable

Class M1a ISIN(XS0302269682); affirmed at 'AAsf'; Outlook Stable

Class M1b ISIN(XS0302270854); affirmed at 'AAsf'; Outlook Stable

Class M2a ISIN(XS0302270185); affirmed at 'Asf'; Outlook Stable

Class M2b ISIN(XS0302271662); affirmed at 'Asf'; Outlook Stable

Class B1a ISIN(XS0302270268); affirmed at 'BBB+sf'; Outlook
Stable

Class B1b ISIN(XS0302271829); affirmed at 'BBB+sf'; Outlook
Stable

Class B2 ISIN(XS0302270342); affirmed at 'BBB-sf'; Outlook Stable

Class A3b currency swap obligation; affirmed at 'AAAsf'; Outlook
Stable

Class M2b currency swap obligation; affirmed at 'Asf'; Outlook
Stable

Class B1b currency swap obligation; affirmed at 'BBB+sf'; Outlook
Stable

The transactions contain pools of residential mortgages
originated by GMAC-RFC Limited, a non-conforming mortgage lender

KEY RATING DRIVERS

Consistent Asset Performance

The affirmations reflect the consistent performance of both
transactions, with loans that are in arrears being at a similar
level currently to where they were 12 months ago in both
transactions; there have also been no repossessions in either
pool over that period.

Stable Credit Enhancement

Due to the consistent performance, the pro-rata conditions are
currently being met in both transactions. As such credit
enhancement (CE) build-up has been limited.

Short-Dated Note Maturity

The Clavis 2006 pool includes loans with a maturity date later
than the legal final maturity date of the Class A3a and A3b
notes.

In Fitch's analysis the ability of the transaction to make
repayments to the class A3a and A3b notes by the legal final
maturity date is primarily constrained by its low prepayment rate
assumption. This assumption is not usually a key rating driver
because the notes' legal final maturity dates extend beyond the
scheduled loan maturity dates. Under Fitch's standard low
prepayment rate assumption, the class A3a and A3b notes are not
fully repaid by legal final maturity.

In its analysis, for the 'Bsf' rating scenario Fitch instead
applied a low prepayment rate assumption of 11.5% (compared with
the standard 2%-5%) based on observed performance. In such a
scenario the class A3a and A3b notes are expected to be repaid by
the legal final maturity date. The application of an alternative
low prepayment rate assumption is a variation to the criteria.

The ability of the transaction to make repayment on the class A3a
and A3b notes by the legal final maturity date will also depend
on the extent to which the small number of loans scheduled to
mature after the legal final maturity date are subject to default
and prepayment relative to the loans in the pool that are
scheduled to mature prior to the legal final maturity date.

VARIATIONS FROM CRITERIA

For Clavis 2006 Fitch applied a low prepayment rate assumption of
11.5% (compared with the standard 2%-5%) based on observed
performance. In this scenario the class A3a and A3b notes are
expected to be repaid by the legal final maturity date.

RATING SENSITIVITIES

If the proportion of the pool scheduled to amortise after 2031 in
Clavis 2006 falls to 0%, the notes may be upgraded beyond the
current ratings

DATA ADEQUACY

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

Fitch did not undertake a review of the information provided
about the underlying asset pools ahead of the transactions'
initial closing. The subsequent performance of the transactions
over the years is consistent with the agency's expectations given
the operating environment and Fitch is therefore satisfied that
the asset pool information relied upon for its initial rating
analysis was adequately reliable.

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



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I T A L Y
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ITALY: European Commission Rejects Draft Budget
-----------------------------------------------
Jim Brunsden and Mehreen Khan at The Financial Times report that
Brussels has rejected Italy's draft budget in an unprecedented
move that threatens to deepen rifts between the European
Commission and the populist government in Rome.

Valdis Dombrovskis, the commission's vice-president responsible
for the euro, said Brussels had "no alternative" but to demand
changes, after Rome defied warnings that its plans for a wider
deficit would smash EU fiscal rules and flout the country's
previous commitments, the FT relates.

Rome now has three weeks to submit a fresh plan, the FT
discloses.  According to the FT, Mr. Dombrovskis and
Pierre Moscovici, economics commissioner, urged Italy to
immediately enter intensive negotiations.

But Italian leaders said the government would "not give up" on
its plans, the FT notes.

Rome had said on Oct. 22 it would ignore commission demands for a
rethink, triggering the Oct. 23 formal rejection by Brussels, the
FT recounts.  If Italy still fails to comply, it could ultimately
face fines under the EU's excessive deficit rules, the FT says.

Rome's debt is second only to Greece's in the eurozone relative
to the size of the economy and if debt service costs were to
balloon it would raise fears of a fresh financial crisis for the
single currency area, the FT states.

Giovanni Tria, Rome's technocratic finance minister, has defended
the measures as ways to revive a dormant economy, alleviate
poverty and eventually start bringing down Italy's debt levels
from 2020, the FT relates.

Mr. Dombrovskis, as cited by the FT, said attempts by Rome to
justify increasing its deficit were "not convincing" and had not
changed "our earlier conclusions of a particularly serious non-
compliance" with EU rules.



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


GILEX HOLDING: Moody's Affirms B2 Issuer Rating, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service has affirmed the B2 long-term local
currency issuer and long-term foreign currency senior secured
ratings of Gilex Holding S.a.r.l.

The following ratings were affirmed:

  - Long-term global local currency issuer rating of B2, stable

  - Long-term global foreign currency senior secured rating of
    B2, stable

  - Outlook, Stable

RATINGS RATIONALE

The affirmation of Gilex's ratings reflects Moody's expectation
that the company's double leverage, which is an indication of how
heavily it relies on debt to finance its investments, will remain
manageable following the recently announced reopening of its
senior secure notes. The notes are expected to be issued in an
amount not to exceed $75 million.

If all the proceeds of the current issuance and all of the
company's $300 million in cash on hand, except its $25 million
minimum liquidity requirement, were used to finance new
investments, double leverage, which is measured by investments in
subsidiaries divided by shareholders' equity, could potentially
rise to as high as 151%. Moody's considers double leverage in
excess of 115% to be high and previously indicated the rating
would face downward pressure if it substantially rose above 140%.
However, Moody's expects the company will raise additional equity
if necessary in an amount sufficient to ensure that double
leverage will not significantly exceed 140%.

As a holding company, Gilex depends on its primary operating
subsidiary Banco GNB Sudameris S.A. (GNB, deposits Ba2 stable,
BCA ba3) dividends to service its debt and repay principal. As
such, Gilex's senior secured debt is structurally subordinated to
the obligations of GNB. Moreover, the rating already incorporates
an expectation that once an acquisition target is identified,
double leverage will rise to levels in excess of 115%. This leads
to a rating two notches below GNB's baseline credit assessment
(BCA) of ba3, one notch wider than Moody's typical notching for
financial holding companies.

The affirmation also incorporates an expectation that Gilex's
interest coverage will continue to exceed 1.5x. In order for this
to occur, Moody's estimates that dividend receipts from GNB,
would need to increase to 54% of GNB's expected 2018 net earnings
(annualizing June 2018 earnings) from 43% currently, assuming no
dividends from any acquisition and an issuance of $75 million.
While this should be manageable for GNB, it would reduce the
level of earnings remaining available to GNB to reinvest in the
business, which could put downward pressure on its own capital
ratio, particularly if loan growth accelerates.

Moody's notes that GNB's earnings generation is subject to
volatility given its relatively narrow earnings diversification.
In addition, the bank is concentrated in just a few lending
segments and exhibits heavy reliance on wholesale funding, with
market funds equal to 27% of tangible banking assets, as of June
2018.

WHAT COULD CHANGE THE RATING UPGRADE OR DOWNGRADE

Gilex's ratings could face downward pressure if its double
leverage ratio significantly exceeds 140%, if GNB's dividends
fall below 1.5-times interest expenses, and/or if Gilex faces
unexpected operating expenses, which have historically been
minimal. The ratings will also face downward pressure if GNB's
BCA is lowered, which could be driven by (i) increasing reliance
on wholesale funding and/or declining liquidity position; (ii)
engagement in further large scale acquisitions, leading to a
significant reduction in capitalization, and/or (iii) rising
asset risks.

Gilex's ratings will face upward rating pressures if GNB's BCA is
raised, supported by a substantial improvement in capitalization,
a significant and sustainable increase in core earnings, and/or
an improvement in the bank's funding structure. Upward pressures
could also derive from a reduction in the company's indebtedness
and/or if double leverage looks likely to remain below 115%, or
revenues from dividend inflows significantly exceed expectations,
provided this does not impair GNB's ability to reinvest in itself
and support growth.

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



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N O R W A Y
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NG BIDCO: Fitch Withdraws 'B(EXP)' LT Issuer Default Rating
-----------------------------------------------------------
Fitch Ratings has withdrawn Norway's waste management group NG
BidCo AS.'s 'B(EXP)' expected Long-Term Issuer Default Rating
(IDR). Fitch has also withdrawn the expected instrument rating of
'B+(EXP)' on the group's proposed senior secured bonds. The IDR
was on Stable Outlook prior to withdrawal.

KEY RATING DRIVERS

Fitch is withdrawing the expected ratings assigned to NG BidCo
AS, as the group does not intend to proceed with the proposed
bond issue at this time. The expected ratings were assigned on
June 18, 2018.

DERIVATION SUMMARY

NG's credit profile is supported by growth expectations driven by
volumes and efficiencies, which in the medium term should lead to
significant de-leveraging, at a faster pace than most 'B' peers.
Compared with other waste management peers NG is only active in
waste collection, sorting and disposal of waste but not in the
energy from the waste segment, which generates more visible
revenue and higher margins. Compared with Veolia Environnement
S.A. (BBB/Positive) NG is a smaller domestic player with a
different scale of operations as reflected in the two rating
category differential.

KEY ASSUMPTIONS

NA

RATING SENSITIVITIES

NA

LIQUIDITY

NA



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


HOME CREDIT: Fitch Affirms BB- Long-Term IDRs, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed Home Credit and Finance Bank's (HCFB)
Long-Term IDRs at 'BB-' with a Stable Outlook.

KEY RATING DRIVERS

IDRS and VR

The IDRs of HCFB are driven by its standalone creditworthiness,
which is reflected in its Viability Rating (VR) of 'bb-'. The
affirmation of the ratings reflects adequate and stable metrics,
including a solid capital position and healthy performance driven
by currently low funding and credit costs, following the overall
improvement of the operating environment. At the same time the
ratings continue to capture the segment's volatile nature with
risks of overheating if overall retail loan growth in Russia
continues to outpace that of personal incomes increasing
households' already high leverage.

Fitch sees HCFB's high exposure to volatile unsecured consumer
lending (retail loans net of allowances made up 73% of total
assets at end-1H18) as a rating constraint. Asset quality metrics
in the retail portfolio remained broadly stable as reflected by
non-performing loan (NPL) generation (defined as increase in
loans overdue by more than 90 days, plus write-offs, divided by
average performing loans) of 4.5% in 1H18 compared with 5.2% in
2017. Credit losses may widen gradually with the credit cycle.

At end-1H18, impaired retail loans (defined as Stage 3 loans
starting from beginning of 2018, before NPLs) made up 3.5% of
gross loans (3.8% at end-2017) and were reasonably covered at 75%
by specific loan loss allowances.

HCFB's healthy net interest margin of 13% and stable funding
costs of 8% supported pre-impairment profitability (9.2% of
average loans in 1H18), which would have allowed the bank to
absorb a reasonable 7pp increase in risk cost before becoming
loss-making. Low loan impairment charges (2% of average loans in
1H18) helped the bank report a strong annualised return on
average equity (ROAE) of 24% in 1H18 and 30% in 2017.

Fitch views HCFB's capitalisation as strong, which is reflected
in a Fitch Core Capital (FCC) ratio of 19% at end-1H18.
Regulatory Tier 1 capital ratio is lower (10% on consolidated
basis at end-1H18) due to higher regulatory risk weights on high-
yield unsecured retail loans, an operational risk component and
regulatory capital deductions. However, the ratio is reasonably
above the minimum of 8.5%, including capital buffers applicable
from 2019.

The bank's funding is mainly sourced from retail deposits (82% of
liabilities at end-1H18), which are price-sensitive, but have
proven to be sticky through the cycle, as the majority of these
are secured by the deposit insurance system. The liquidity buffer
(cash, interbank placements and unpledged securities net of
wholesale debt repayments in the upcoming 12 months) was
reasonable, covering 29% customer accounts at end-8M18.

Some contingent risks stem from a sizeable 1.5x double leverage
at the holding company level at end-1H18 (defined as equity
investments in subsidiaries divided by holdco equity). However,
Fitch believes the risks are moderate as HCFB's holdco seems to
have good market access and is likely to be able to refinance its
debt without needing to upstream liquidity/capital from the bank.

SUPPORT RATING AND SUPPORT RATING FLOOR

HCFB's Support Rating of '5' reflects Fitch's view that support
from the bank's shareholders, although possible, cannot be relied
upon. The Support Rating and Support Rating Floor of 'No Floor'
also reflect that support from the Russian authorities, while
possible given the bank's reliance on retail deposits, is not
factored in the ratings due to the bank's small size and lack of
overall systemic importance.

SUBORDINATED DEBT RATING

Fitch has affirmed HCFB's subordinated debt at 'B+'. The rating
of the issue is notched down once from the VR of HCFB (the bank's
VR is in line with its IDR), including (i) zero notches for
additional non-performance risk relative to the VR, as Fitch
believes these instruments should only absorb losses once a bank
reaches, or is very close to, the point of non-viability; and
(ii) one notch for loss severity, reflecting below-average
recoveries in case of default.

RATING SENSITIVITIES

Upside for HCFB's ratings is limited and would require a
significant diversification of the bank's business model and
earnings structure leading to a material decrease in exposure to
the Russian consumer finance market. The bank's ratings may come
under pressure if there is renewed pressure on the bank's asset
quality and profitability, leading to capital erosion, but Fitch
views this as unlikely in the near term. The rating of HCFB's
subordinated debt will move in tandem with the bank's VR.

The rating actions are as follows:

  Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BB-';
  Outlooks Stable

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

  Viability Rating: affirmed at 'bb-'

  Support Rating: affirmed at '5'

  Support Rating Floor: affirmed at 'No Floor'

  Subordinated debt (issued by Eurasia Capital SA) long-term
  rating affirmed at 'B+'


NATIONAL STANDARD: S&P Affirms 'B/B' ICRs, Outlook Negative
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B/B' long- and short-term issuer
credit ratings on Russia-based Commercial Bank National Standard
JSC (NSB). The outlook remains negative.

NSB's clientele still mostly consists of large and midsize
Russian corporations, though the bank aims to diversify its
business by focusing on small and midsize enterprises (SMEs) in
regions where it operates, instead of large corporate entities,
as was previously the case. S&P said, "We understand that it will
likely take time for NSB to improve the diversity of its business
activity and restore its earnings power. At the same time, we
believe that the bank is in a transition period and we have
observed some improvement in its financial performance from the
bank's continued shift in its strategy and business model. As
such, we have included in the long-term rating a one-notch
positive adjustment for additional factors."

Nevertheless, S&P still believes that sustainability of the
bank's major financial metrics is vulnerable because of
competition and the difficult operating conditions in Russia.

Over July 2017-July 2018, the bank's loan portfolio contued
contracted by about 9%, as the bank continued to targeted shift
from bigger tickets to SME segment in its loan book, which in
turn which supported the bank's capital metrics. At the same
time, the bank reported marginally positive net profit of Russian
ruble (RUB) 30 million in 2017 and RUB5 million in the first half
of 2018, compared with RUB717 million of net losses in 2016. In
S&P's forecasts, it assumes NSB's net profit will likely be
marginally positive for 2018, with profitability improving in
2019 thanks to recovery in the economy and the bank's business
dynamism.

While the bank has managed to reduce its lending concentration,
S&P still sees its risk profile as a negative rating factor. The
20-largest borrowers accounted for a still-high 52% of the bank's
overall loan portfolio at midyear 2018, compared with 70% in
2016.

NSB's loan portfolio quality is largely in line with the sector
average for its closest peers in Russia. On June 30, 2018, Stage
3 and renegotiated loans according to International Financial
Reporting Standard 9 totaled about 27% of the total loan book
(down from 43% in 2016). At the same time, loans 90 days past due
represented about 2% of total loans. Annualized credit costs for
the first half of 2018 represented 0.74%. S&P expects the level
of problematic assets to remain largely stable in the next 12-18
months, even though the bank is keen to move to the more risky
SME segment, owing to the bank's generally more conservative
underwriting policies than peers'. The bank's securities
portfolio made up about one-third of its balance sheet on June
30, 2018, and consisted primarily of bonds and Eurobonds of the
largest Russian companies and banks, as well as Russian sovereign
bonds. The average duration of NSB's bond portfolio is relatively
short, about one year as of June 30, 2018, and this allows some
flexibility during periods of significant market turbulence.

S&P said, "We believe that the bank's risk-adjusted capital (RAC)
ratio is likely to remain above 7% over our 12-18 month outlook
horizon. At the same time, we note that the bank's total
regulatory capital adequacy ratio was a high 26% on Oct. 1, 2018,
comfortably above the 8% regulatory minimum because of an
additional buffer from Tier 2 subordinated issues.

"We consider NSB's funding to be average and its liquidity
position adequate. Customer deposits made up 70% of NSB's total
liabilities on June 30, 2018. As of Oct. 1, 2018, cash and
equivalents, including interbank placements, accounted for about
6.5% of NSB's total assets under Russian generally accepted
accounting principles. On the same date, NSB's unpledged
portfolio of liquid bonds amounted to about RUB7.6 billion (25%
of the bank's total assets).

"The negative outlook on NSB reflects our view that the bank's
earnings capacity and asset quality will likely remain under
pressure in the next 12 months, putting the sustainability of
recent improvements at risk.

"We might downgrade NSB if it is unable to curb credit costs and
restore its earnings capacity long term, while further improving
its asset quality metrics and single-name concentrations.

"We could revise the outlook on NSB to stable in the coming 12
months if the bank demonstrates sustainable operating performance
and if its loan portfolio quality remains at least stable, with
controlled credit costs."


TINKOFF BANK: Fitch Alters Outlook of BB- LT IDR to Positive
------------------------------------------------------------
Fitch Ratings has revised the Outlook on Tinkoff Bank's Long-Term
Issuer Default Ratings of 'BB-' to Positive from Stable and
affirmed all ratings.

KEY RATING DRIVERS

IDRS AND VIABILITY RATING

The revision of the Outlook on Tinkoff's ratings to Positive from
Stable reflects Fitch's expectation that continued business model
diversification should result in even stronger profitability and
less volatility through the credit cycle. The likely core
capitalisation improvement, as the bank will need to hold more
capital due to higher risk weights applied in regulatory
accounts, also supports the Positive Outlook.

Tinkoff's 'BB-' Long-Term IDRs are driven by its standalone
creditworthiness, which is reflected in its Viability Rating (VR)
of 'bb-'. The affirmation of the ratings reflects strong
financial metrics, including a robust performance driven by
current low funding and credit costs (for a consumer finance
bank) and comfortable liquidity position, following the overall
improvement of the operating environment. At the same time, the
ratings continue to capture the segment's volatile nature with
risks of overheating if overall retail loan growth in Russia
continues to outpace that of personal incomes, increasing
households' already high leverage.

Retail loan growth moderated to 14% in 1H18 (not annualised) and
the bank expects its portfolio to increase by about 25% in 2018.
This is manageable given the bank's strong internal capital
generation capacity (Return on average equity (ROAE) of over 60%
in 1H18 at the same time as a 50% dividend payout).

Asset quality remains vulnerable, despite improvements after the
2014-2015 crisis, as Tinkoff is exposed to the volatile unsecured
consumer lending (retail loans net of allowance made up 53% of
total assets). Impaired retail loans (defined as Stage 3 loans
starting from 2018) made up 14% of the retail book at end-1H18,
but were reasonably covered at 80% by specific loan loss
allowances. Average non-performing loans (NPLs) generation
(calculated as increase in NPLs, plus write-offs, divided by
average performing loans) increased moderately to 11.9% in 1H18
from 8.8% in 2017. However, this increase was of technical
nature, as NPLs have been slightly inflated in 1H18 due to IFRS 9
implementation, which requires interest to be accrued on net
carrying amount of impaired loans (as opposed to the bank's
previous policy of non-accruing it).

Asset quality should also be considered in light of robust
profitability (Return on average assets of 8.7% and ROAE of 64%
in 1H18, according to Fitch), offering significant resilience to
potential stress. Fitch estimates that NPL generation would need
to increase to 28% for the bank to have break-even profits. This
scenario is deemed unlikely in the medium term. The bank's
profitability has been recently underpinned by a growing share of
low volatile non-credit-related income (20% of 1H18 operating
revenues), such as fees from individual debit cards services, SME
services, merchant acquiring and brokerage, non-credit-related
insurance premiums earned, etc. Fitch expects this to grow
further, which could warrant the upgrade of the bank's ratings.

The Fitch Core Capital (FCC) ratio was moderate at 10% of end-
1H18 risk-weighted assets (RWAs), according to consolidated
financial accounts of TCS Group Holding. The 5% decline from 15%
at end-2017 was mostly due to the one-off impact from IFRS 9
implementation, as the bank had to create over RUB10 billion (27%
of end-2017 FCC) of additional loan loss allowances, including
for Stage 1 and Stage 2 exposures, which Fitch considers
conservative. Fitch expects the FCC ratio to improve to about 13%
over the next two years, as the bank will be required to hold
more capital due to higher risk weights applied in its regulatory
accounts.

Regulatory capital ratios are currently comfortable with core
Tier 1 and Tier 1 capital ratios of 11% and 15%, respectively, at
end-8M18, according to the bank's standalone regulatory accounts.
However, the bank's standalone capital ratios should be viewed in
light of the intergroup loan of RUB8.4 billion (net of reserves)
extended by the bank to its Cyprus-based holding company (TCS
Group Holding) to finance the latter's own operations, including
dividend payments. Fitch estimated the adjusted core Tier 1
capital ratio, net of this debt (which will be partially repaid
from future dividends by the bank), to be a still reasonable 10%.

The bank's regulatory RWAs will increase by 20%-25% within the
next two years (assuming zero growth), as a result of the
increase of risk weights on unsecured loans extended after
September 1, 2018. However, this should be manageable given the
robust earnings generation.

In assessing Tinkoff's capital position, Fitch views positively
the Tier 1 eligible perpetual Eurobond of USD300 million
(equivalent to RUB20 billion t), which bolsters the bank's total
loss absorbing capital by a further 6.8% of consolidated RWAs.
This has a relatively high write-down trigger of 5.125%
(regulatory core Tier 1 capital ratio), which should support
viability in a stress scenario.

Funding and liquidity positions are comfortable, underpinned by
low reliance on wholesale debt, comfortable liquidity cushion and
strong deposit collection capacity. Tinkoff is funded mainly by
retail deposits (73% of end-1H18 liabilities), which, albeit
price-sensitive, have proven to be relatively stable, as the
majority of these are insured. Liquidity risks are additionally
mitigated by strong liquidity buffer, covering over 50% of the
bank's customer accounts.

SUPPORT RATING AND SUPPORT RATING FLOOR

The '5' Support Rating and 'No Floor' Support Rating Floor
reflect Fitch's view that support from either the bank's
shareholders or the Russian authorities, although possible, could
not be relied upon, in all circumstances, due to the bank's small
size and lack of overall systemic importance.

SENIOR UNSECURED AND SUBORDINATED DEBT RATINGS

Fitch has affirmed Tinkoff's senior unsecured debt rating at 'BB-
', in line with its Long-Term Local-Currency IDR, reflecting
Fitch's view of average recovery prospects, in case of default.

Fitch has also affirmed the rating of Tinkoff's perpetual
additional Tier 1 notes at 'B-', three notches below the bank's
VR. The notching reflects higher loss severity relative to senior
unsecured creditors, and non-performance risk due to the option
to cancel coupon payments at the bank's discretion. The latter is
more likely if the capital ratios fall in the capital buffer
zone, although this risk is reasonably mitigated by Tinkoff's
stable financial profile and general policy of maintaining decent
headroom over minimum capital ratios.

RATING SENSITIVITIES

Tinkoff's Long-Term IDRs and its VR could be upgraded in the next
12-18 months, provided that the bank further improves non-credit-
related profitability through diversification, while beefing up
capital buffers and maintaining adequate asset quality.

Tinkoff's ratings may come under pressure if credit losses
increase significantly eroding profitability or capital, but
Fitch views this as unlikely in the near term.

Tinkoff's senior unsecured debt rating will move in tandem with
the bank's Long-Term Local-Currency IDR. The bank's hybrid
capital rating will not be upgraded after a one-notch upgrade of
the bank's VR.

The rating actions are as follows:

Tinkoff Bank

Long-Term Foreign- and Local-Currency IDRs: affirmed at 'BB-';
Outlooks revised to Positive from Stable

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

Viability Rating: affirmed at 'bb-'

Support Rating: affirmed at '5'

Support Rating Floor: affirmed at 'No Floor'

Senior unsecured debt long-term rating: affirmed at 'BB-'

Hybrid capital instrument (issued by TCS Finance DAC) long-term
rating: affirmed at 'B-'



=========
S P A I N
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PRONOVIAS GROUP: S&P Alters Outlook to Negative & Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on Spain-based bridal wear
designer Pronovias Group to negative from stable. At the same
time, S&P affirmed its 'B' long-term issuer credit rating. S&P
now rates the group entity CatLuxe Sarl, rather than CatLuxe
Acqusition Sarl.

S&P said, "We also affirmed our 'B' issue rating on the existing
senior secured loans comprising a EUR215 million term loan due
2024 and a EUR45 million senior secured revolving credit facility
(RCF) due 2023. The recovery rating is '3' reflecting our
expectation of 55% recovery in the event of a payment default."

The outlook revision on Pronovias reflects the deterioration of
the group's performance on the back of an unsuccessful 2018
collection in the occasion wear segment, strong overstock at
franchisees preventing new orders and cancellation of the mid-
season sales decided during the sale process. S&P said, "These
operational headwinds have led the new management team to revise
the business plan communicated last year by the former management
when we initially assigned the rating. The new strategy
contemplates accelerating investments, which would significantly
reduce the group's ability to generate free operating cash flow
(FOCF) in 2018. We also anticipate that these greater investments
will translate into a higher level of debt, with adjusted pro
forma debt to EBITDA (including the full impact of the Nicole
acquisition) at about 9.0x at year-end 2018--higher than the 6.4x
estimated at year-end 2017."

Earlier this year, BC Partners appointed a completely new
management team to cope with these operational challenges. As
part of the new management's strategy, significant marketing
initiatives are now dedicated to defining a new brand
architecture, improving product appeal via a new design process,
and increasing brand awareness. Traffic at wholesalers and at its
own retail network is expected to improve thanks to the stronger
retail management, as well as the new commercial model in the
wholesale channel, which focuses on sell-outs and reorders.
Pronovias is also prioritizing international expansion, as
testified by its recent partnership with Kleinfeld, one of the
largest bridal gown designers and distributors in the U.S.

S&P said, "While we acknowledge the potential benefits of these
actions, we are cautious in our estimates of the group's future
performance given the recent results, with year-to-date August
2018 sales of EUR93.1 million, down 12.8% at current foreign
exchange rates versus year-to-date August 2017. We believe that
in the short term the group's strategy brings additional costs in
terms of marketing expenses, research and development (R&D)
investments, withdrawal of old collections, and costs from the
management changes at different levels. For these reasons, we
anticipate shrinking profitability in 2018, with adjusted EBITDA
margin dropping to 23%, which is below the historical margin of
approximately 27%.

For fiscal year 2018, we expect Pronovias' results to be
partially supported by the consolidation of the recent
acquisition of Italy-based Nicole Fashion Group completed in
July. With this acquisition, Pronovias will consolidate its
leading position in the Italian market. S&P also expects Nicole
to leverage Pronovias' marketing expertise and international
presence to grow internationally. S&P sees limited integration
risks from the transaction because Nicole will continue to
operate as a stand-alone brand, while synergies will be generated
from sourcing and commercial efficiencies. The acquisition has
been entirely equity-financed.

As part of the revised strategy, Pronovias aims to selectively
open new stores to strengthen its position in the U.S. -- the
largest bridal market -- and target further expansion in other
European countries and emerging markets. S&P said, "This will
require higher-than-expected capital expenditures to support
store expansion and refurbish existing stores, creating some
pressure on FOCF generation, which we expect to be flat to
slightly positive in 2018 and in the EUR5 million-EUR10 million
range going forward. Our financial risk profile assessment also
reflects higher leverage, as adjusted debt to EBITDA pro forma
for the Nicole acquisition is estimated at about 9.0x in 2018 due
to the higher usage of credit lines to support the revised
strategy. We project the EBITDA interest coverage will remain in
the 2.0x-2.5x range over the coming 12 months, which is lower
than our previous forecast of 3.0x."

S&P said, "While we expect some improvements starting in 2019 due
to the early effects of management's initiatives, we believe that
the group has limited headroom under the current financial
metrics to absorb any further headwinds."

The negative outlook on Pronovias reflects the possibility that
the rating could be lowered in the next 12 months if the expected
improvements in operating performance and cash generation do not
start to materialize during 2019. S&P said, "In our base case, we
assume that 2018 credit metrics will deteriorate due to the
combined effect of weak operating results and restructuring
measures, including one-off costs and greater investments. As a
result, we assume that for the current year the adjusted pro
forma debt to EBITDA (pro forma for the Nicole acquisition) will
increase to about 9x and that interest coverage will weaken,
remaining in the 2.0x-2.5x range. We assume that starting from
the last quarter of 2018 and in 2019 the reinvestment initiatives
will start to pay off and, as a result, credit metrics will
gradually strengthen."

S&P said, "We may lower the rating in the next 12 months if we
believe that the initiatives implemented by the new management
team to cope with the recent operational headwinds will not
deliver the expected results in 2019, translating into further
deterioration in FOCF generation and adjusted EBITDA interest
coverage moving to or below 2.0x. Furthermore, deterioration in
the group's liquidity position could also trigger a downgrade
over the next 12 months.

"We could revise the outlook to stable over the next 12 months if
the group's EBITDA improved such that the EBITDA interest
coverage successfully rose above 2.5x and the reported FOCF
generation remained sustainably in positive territory. We also
expect adjusted debt to EBITDA to move close to 7.0x. In our
view, this is linked to the group's successful implementation of
the planned initiatives, positive demand for the new collections,
and fewer one-off costs."



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T U R K E Y
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ALTERNATIFBANK AS: Fitch Affirms BB- LT Issuer Default Rating
-------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign Currency IDRs of
five foreign-owned, small Turkish banks. They are Alternatifbank
A.S., BankPozitif Kredi ve Kalkinma Bankasi A.S., ICBC Turkey
Bank A.S., and Burgan Bank A.S. at 'BB-', and Turkland Bank A.S
at 'B+'. The Outlooks on the banks are Negative, except for T-
Bank, which is Stable.

At the same time, Fitch has downgraded the Viability Ratings
(VRs) of Burgan Bank Turkey, and BankPozitif to 'b' from 'b+',
Alternatifbank to 'b-' from 'b+', T-Bank to 'b-' from 'b' and
affirmed ICBC Turkey at 'b+'. The banks' VRs have been removed
from Rating Watch Negative (RWN).

The downgrades of the VRs of Burgan Bank Turkey, Alternatifbank,
T-Bank and BankPozitif reflect increased risks to their
standalone credit profiles since Fitch placed the VRs on RWN on
June 1, 2018. In Fitch's view, the banks' performance, asset
quality, capitalisation, liquidity and funding profiles are now
more likely to come under pressure following the recent period of
market volatility, and given the increased risk of a hard landing
for the economy and deterioration in investor sentiment.
Significant depreciation of the Turkish lira (by about 25%
against the US dollar since June 1, 2018), the hike in interest
rates, and the weaker growth outlook have materially increased
risks to the banks' VRs.

The affirmation of ICBC Turkey's 'b+' VR reflects the bank's
improved ability to implement its strategy in financing Chinese
and Turkish corporates despite a tough operating environment. The
VR at its current level also captures the bank's reasonable
financial metrics, which have improved in recent years and a
growing franchise. ICBC Turkey has grown rapidly since its
acquisition in 2015 by Industrial and Commercial Bank of China
(ICBC) and should continue to benefit from the availability of
cheap, long-term funding from its parent.

KEY RATING DRIVERS

IDRS, SUPPORT RATINGS AND NATIONAL RATINGS

The IDRs and National Ratings of these five, small Turkish banks
are driven by their Support Ratings reflecting Fitch's view of
potential institutional support, in case of need, from their
higher-rated foreign parents; namely, Alternatifbank (100%-owned
by The Commercial Bank (P.S.Q.C.), A/Stable) and its leasing
subsidiary Alternatif Finansal Kiralama (Alternatif Lease; 100%-
owned by Alternatifbank), BankPozitif (69.8%-owned by Bank
Hapoalim, A/Stable), T-Bank (50% owned by Arab Bank Group,
BB/Stable), ICBC Turkey (92.8%-owned by ICBC, A/Stable) and
Burgan Bank Turkey A.S. (99%-owned by Burgan Bank Kuwait,
A+/Stable).

Fitch views Alternatifbank, Burgan Bank Turkey and ICBC Turkey as
strategically important subsidiaries for their respective parents
and believes there is a high probability of parental support, in
case of need. As a result, the banks' Support Ratings have been
affirmed at '3'. The Support Ratings also reflect their majority
ownership, integration and roles within their respective groups,
and common branding (Burgan Bank Turkey and ICBC Turkey).

Unlike Alternatifbank, Burgan Bank Turkey and ICBC Turkey, Fitch
views BankPozitif to be of limited importance to its parent given
its narrow franchise and lack of strategic fit. Nevertheless, a
high level of integration within and the bank's small size
compared with the parent contribute positively to its assessment
of support, leading to the affirmation of the bank's Support
Rating at '3'.

Nevertheless, the four banks' LTFC IDRs are constrained by Turkey
country risks. Their 'BB-' LTFC IDRs, one notch below the
sovereign 'BB' rating, reflect Fitch's assessment of the risk of
marked deterioration in Turkey's external finances, and therefore
of the risk of government intervention in the banking sector.
Fitch views the risk of restrictions that would prevent banks
from servicing their obligations to be slightly higher than that
of a sovereign default. This is in line with its rating action on
October 1, 2018. The Negative Outlooks on the four banks mirror
those on the sovereign ratings.

T-Bank's 'B+' support-driven IDRs are notched twice from parent
Arab Bank Plc (BB/Stable). The Stable Outlook on the bank's IDRs
mirrors that on its parent. The bank's '4' Support Rating is
based on Arab Bank Group's only 50% ownership, which may
complicate the prompt provision of solvency support, if required.
It also reflects T-Bank's weak performance in recent years and
non-core jurisdiction relative to Arab Bank's other strategically
important subsidiaries. Nevertheless, the bank's Support Rating
also takes into account a record of timely and sufficient
provision of capital and liquidity support from both Arab Bank
Plc and its other 50% shareholder, Lebanon's BankMed Sal.

The affirmation of the banks' National Ratings reflects Fitch's
view that their creditworthiness relative to one another and to
other Turkish issuers is unchanged.

VRs

The five banks' VRs reflect exposure to the high-risk Turkish
operating environment. Their risk profiles, like those of other
Turkish banks, have deteriorated significantly as a result of
material local currency depreciation and higher interest rates,
which put pressure on margins, asset quality and capitalisation.
The risk of reduced access to foreign funding markets - albeit
these banks have a lower reliance on external debt - and deposit
instability has also increased, raising refinancing and liquidity
pressures. The VRs also reflect the banks' limited franchises in
the Turkish banking sector, and in most cases, weaker financial
metrics than larger Turkish banks.

For ICBC Turkey, Fitch believes the improving franchise, where it
has carved out a niche in financing Turkish and Chinese
corporates, could alleviate the pressure on its standalone credit
profile from the operating environment. The affirmation of its VR
also reflects the bank's generally more reasonable financial
metrics compared with peers'.

Asset quality risks for all five banks have increased
significantly, as for the sector, given the weakening growth
outlook (Fitch has revised downwards its GDP forecasts to 3.8%
and 1.2% in 2018 and 2019, from 4.5% and 3.6%, respectively),
high FC lending and the potential impact of local currency
depreciation on often weakly hedged borrowers' ability to service
their debt. Significantly higher interest rates following the
increase in the policy rate are likely to negatively affect lira
borrowers' debt service capacity, and also weigh on loan
performance.

At end-1H18, FC lending (including FC-indexed loans) ranged from
a moderate 20% at Turkland, to a high 59% (Alternatifbank), 58%
(ICBC Turkey), 63% (Burgan Bank Turkey) and 80% (BankPozitif),
levels that will have increased further given lira depreciation
since June 2018.

The banks have exposure, to varying degrees, to small and medium-
sized companies (SMEs) (albeit limited at Burgan Bank Turkey),
which are likely to be among the most sensitive to the weaker
growth environment and to higher interest rates, putting pressure
on their debt servicing capacity.

Asset quality metrics are mixed at the five banks but the
impaired loans ratio (loans overdue by 90+ days/gross loans) at
all five is above the sector average, except for ICBC Turkey.
Impaired loans at T-Bank (19% of gross loans at end-1H18) are
significantly higher than peers' reflecting the bank's weak asset
quality, and this has been exacerbated by the bank's focus on
cleaning up its portfolio and a significant reduction in the loan
book since 2016. BankPozitif's impaired loans ratio (15% at end-
1H18) has been inflated by deleveraging as the bank has been
selectively winding down the loan book in recent years. Impaired
loan ratios at the remaining banks were a more reasonable 1.1%
(ICBC Turkey), 3.3% (Alternatifbank) and 3.4% (Burgan Bank
Turkey). ICBC Turkey's asset quality ratios should be viewed in
light of the bank's recent years of rapid loan growth under new
ownership.

Growth in reported stage 2 loans (partly explained by banks'
transition to IFRS9 in 1Q18), except at ICBC Turkey, also
suggests the potential for increases in non-performing loans
(NPL) ratios. These ranged from a high 23% (BankPozitif) and 21%
(Turkland) to a more moderate 12% (Alternatifbank), 9% (Burgan
Bank Turkey) and 4% (ICBC Turkey) at end-1H18. Loan migration to
the non-performing category could also be influenced by a new
framework to facilitate loan restructuring in Turkey, potentially
delaying recognition of asset-quality problems by banks.

The banks typically report below-sector-average profitability
metrics, reflecting a lack of economies of scale, limited pricing
power and high impairment charges (except for ICBC Turkey).
Profitability is set to weaken at the banks given higher funding
costs, slower credit growth and higher impairment charges from
asset quality deterioration. Operating profit to risk-weighted
assets (RWAs) at the five banks ranged from a weak -8.2% (T-Bank)
to a more reasonable 1.3% (BankPozitif), 1.4% (Alternatifbank),
1.5% (Burgan Bank Turkey) to a stronger 2.2% (ICBC Turkey). Fitch
expects T-Bank's weak profitability to continue over the rating
horizon as a result of high impairment charges arising from the
bank's focus on cleaning up the loan portfolio.

Capital ratios have come under pressure from lira depreciation
(which inflates FC RWAs) and, to a lesser extent, higher interest
rates (which result in negative revaluations of the banks'
generally small government bond portfolios). Potential asset-
quality deterioration also represents a risk to capital
positions. The Fitch Core Capital (FCC)-to-RWAs ratio of
Alternatifbank stood at a low 5% at end-1H18, significantly
weaker than peers', reflecting weak core capitalisation, which
constrains its VR. The FCC ratios of other banks were more
reasonable at 9.6% (Burgan Bank Turkey), 11.3% (Turkland), 12.1%
(ICBC Turkey) and a high 32% (BankPozitif) at end-1H18.

Total capital adequacy ratios across the banks were above the 12%
recommended regulatory minimum although they currently benefit
from capital relief from regulatory measures, as at other Turkish
banks, and therefore limits the risk of regulatory breaches, in
its view. Total capital ratios at Alternatifbank and Burgan Bank
Turkey are significantly higher than their FCC ratios due to
issued FC tier 2 subordinated debt, which also is somewhat of a
hedge against lira depreciation.

Refinancing risks for the banks have also increased as a result
of their weakening credit profiles, recent market volatility and
tightening global conditions driven mainly by an increase in USD
interest rates. However, excluding related-party funding, the
banks typically have lower wholesale funding reliance than large
bank peers and reasonably diversified funding maturities.
Refinancing risks are less pronounced at these foreign-owned
banks, given potential FC liquidity support from shareholders.
Nevertheless, liquidity profiles of the banks could come under
pressure if there were to be a prolonged market closure or
material deposit outflows, given the banks' limited franchises
and less flexible pricing powers.

SUBORDINATED DEBT RATING

The subordinated notes rating of Alternatifbank - which is
notched down once from the support-driven LTFC IDR - has been
affirmed in line with the affirmation of the anchor rating.

GUARANTEED DEBT RATING

Alternatifbank's guaranteed debt rating of 'A' is equalised with
the rating of the bank's Qatari guarantor, The Commercial Bank
(P.Q.S.C.).

BANK SUBSIDIARY - ALTERNATIF FINANSAL KIRALAMA

Alternatif Lease's ratings are equalised with those of
Alternatifbank, reflecting Fitch's view that it is a highly
integrated, core subsidiary of the parent. Alternatif Lease is
100% owned by Alternatifbank and offers core products and
services (leasing) in the parent's core market, which reflects
its key role in the group.

RATING SENSITIVITIES

IDRS, SUPPORT RATINGS, AND NATIONAL RATINGS

[The LT IDRs and Support Ratings could be downgraded if the
Turkish sovereign is downgraded, or if there is a sharp reduction
in the ability or propensity of a parent bank to support its
Turkish subsidiary. The IDRs are also sensitive to Fitch's view
of the risk of government intervention in the banking sector.

T-Bank's support-driven ratings could be downgraded if the bank
does not receive sufficient and timely support to offset the
impact of the bank's weak asset quality and ensuing weak
performance.

VRs

Further VR downgrades could result from i) a continued marked
deterioration in the operating environment, as reflected in
further adverse changes to the lira exchange rate, domestic
interest rates, economic growth prospects, and external funding
market access; ii) a weakening of the banks' FC liquidity
positions due to deposit outflows or an inability to refinance
maturing external obligations; or iii) bank-specific
deterioration of asset quality leading to significant pressure on
capital positions.

Further deterioration in T-Bank's asset quality or the inability
to effectively improve the bank's weak performance that exposes
the bank's capital position could lead to further downgrades of
the VR.

Further weakening of Alternatifbank's core capital ratios,
without timely and sufficient support from the bank's parent,
could lead to a downgrade of the subsidiary's VR.

Upside for the banks' VRs is limited in the near term, given
current pressures on the operating environment, asset quality and
capitalisation.

SUBORDINATED DEBT RATINGS

Alternatifbank's subordinated debt rating is primarily sensitive
to changes in the anchor rating LTFC IDR.

GUARANTEED DEBT RATING

Alternatifbank's guaranteed debt rating of 'A' is sensitive to a
change in The Commercial Bank (P.Q.S.C)'s Long-Term IDR.

BANK SUBSIDIARY - ALTERNATIF FINANSAL KIRALAMA

The ratings of Alternatif Lease are sensitive to changes in its
parent's ratings.

The rating actions are as follows:

Alternatifbank A.S.

Long-Term FC IDR affirmed at 'BB-'; Negative Outlook

Long-Term LC IDR affirmed at 'BB'; Negative Outlook

Short-Term FC and LC IDR affirmed at 'B'

Viability Rating: downgraded to 'b-' from 'b+'; off RWN

Support Rating affirmed at '3'

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

USD250 million senior notes guaranteed by Commercial Bank of
Qatar affirmed at 'A'

Subordinated debt rating affirmed at 'B+'

Alternatif Finansal Kiralama A.S.

Long-Term FC IDR affirmed at 'BB-'; Negative Outlook

Long-Term LC IDR affirmed at 'BB'; Negative Outlook

Short-Term FC and LC IDR affirmed at 'B'

Support Rating affirmed at '3'

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

BankPozitif Kredi ve Kalkinma Bankasi A.S

Long-Term FC IDR: affirmed at 'BB-'; Negative Outlook

Long-Term LC IDR affirmed at 'BB'; Negative Outlook

Short-Term FC and LC IDRs affirmed at 'B'

Viability Rating: downgraded to 'b' from 'b+'; off RWN

Support Rating affirmed at '3'

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

Senior unsecured debt: affirmed at 'BB-'

ICBC Turkey A.S.

Long-Term FC IDR affirmed at 'BB-'; Negative Outlook

Long-Term LC IDR affirmed at 'BB'; Negative Outlook

Short-Term FC and LC IDRs affirmed at 'B'

Viability Rating affirmed at 'b+'; off RWN

Support Rating affirmed at '3'

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

Turkland Bank A.S.

Long-Term FC and LC IDRs affirmed at 'B+'; Stable Outlook

Short-Term FC and LC IDRs affirmed at 'B'

Viability Rating downgraded to 'b-' from 'b'; off RWN

Support Rating affirmed at '4'

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

Burgan Bank A.S.

Long-Term FC IDR affirmed at 'BB-'; Negative Outlook

Long-Term LC IDR affirmed at 'BB'; Negative Outlook

Short-Term FC and LC IDRs affirmed at 'B'

Viability Rating downgraded to 'b' from 'b+'; off RWN

Support Rating affirmed at '3'

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


DOGUS OTOMOTIV: Fitch Cuts National LT Rating to BB+, Outlook Neg
-----------------------------------------------------------------
Fitch Ratings has downgraded Turkish car importer and distributor
Dogus Otomotiv Servis ve Ticaret A.S.'s National Long-Term Rating
to 'BB+(tur)' from 'BBB+(tur)'. The Outlook is Negative.

The downgrade reflects Dogus's heightened liquidity and medium-
term refinancing risks amid ongoing market volatility and
currency weakness, coupled with its expectation that the
operating environment in Turkey will not improve in the near
term. Further, Dogus is facing sharply lower  Turkish new car
sales in the year-to-date. This will result in Dogus's credit
metrics and liquidity profile being inconsistent with the
previous 'BBB+(tur)' rating.

The ratings continue to reflect Dogus's strong business profile
and established nature of the company's operations. Dogus
benefits from strong market shares and high barriers to entry,
increasing diversification through a larger share of more stable
spare parts and service sales, as well as an effectively hedged
FX position.

The Negative Outlook reflects risks on credit availability and
the significantly increased refinancing risk of parent Dogus
Holding AS. (DH).

KEY RATING DRIVERS

Weakened Liquidity: Given negative free cash flow (FCF) and the
absence of committed credit facilities for Dogus which is common
in Turkey, liquidity remains a key pressure on its credit
profile, which is captured in its 'BB+(tur)' rating. While Dogus
had historically enjoyed large limits of uncommitted credit
facilities (around TRY5 billion) from a wide range of banks,
undrawn cash limits have been revoked as at October 2018. As a
result, Dogus's liquidity profile has weakened and is contingent
upon the continued successful rollover of drawn credit
facilities.

Heightened Risk of Credit Availability: Fitch believes that
accessing credit facilities is becoming harder under the current
macro-economic environment in Turkey. Although Dogus enjoys
strong relationships with both local and international banks and
to date has been able to regularly rollover these lines, it is
exposed to an increasing risk of reduced availability of credit
and renewal at mor onerous conditions if the currency crisis
worsens further and the impact on Turkish banks intensifies.

Stretched Financial Metrics: Due to the large adverse FX impact
in the year-to-date on Dogus's cash interest costs, the
utilisation of factoring to meet working capital requirements,
coupled with its assumption of declining operational cash flow,
Fitch projects funds from operations (FFO) adjusted net leverage
to grow to around 7.0x by end-2018 (end-2017: 5.6x) and to remain
around this level over 2019-2020.

Resilient Business Model: Dogus's strong business model benefits
from an established market position, a high market share of
Volkswagen group brand cars, and high barriers to entry, owing to
the company's status as exclusive Turkish distributor of
Volkswagen group's brands. Consequently, the geographic presence
of own retailing points and independent dealers can be optimised
without significant overlap with other dealers or competitors.

Strong Market Position: The Volkswagen group's brands have
leading market shares in Turkey. This is made up of a number two
position in passenger vehicles (PV) after Renault and a number-
three position in light commercial vehicles (LCV) after Ford
Otosan and Tofas. The market share of Volkswagen has gradually
grown over the last 15 years and Fitch expects the Volkswagen
group's brands to maintain a sustainable market share of around
20%. However, Dogus is reliant on the continuous commercial
success of Volkswagen group brands and subject to disruptive
trends in the automotive industry.

Manageable FX Risks: Car imports are entirely euro-denominated
while Dogus's operations generate mostly Turkish lira-denominated
revenue, creating a significant FX mismatch. However, pricing
mechanisms with automotive manufacturers provide a balanced
burden-sharing model over the long-term, smoothing out average
currency volatility. Nonetheless, Fitch believes Dogus's 2H18
operating profit will be impacted by the sharp depreciation of
the Turkish lira against hard currencies, which will only be
gradually, and potentially only in part, recouped by the
company's pricing mechanisms in place. However, Fitch notes that
the exact impact remains to be seen.

Fitch views credit-positive the absence of hard-currency
denominated debt, which compares favourably with Turkish
corporate peer Yasar Holding A.S. (B-/BB(tur)/Stable) and
Georgia-based auto spare parts provider Tegeta Motors LLC (B-
/Stable). Both peers have substantial unhedged foreign currency-
denominated debt on their balance sheets; leading to an adverse
FX-driven impact on leverage metrics.

Standalone Rating Assessment: Fitch has applied its 'Parent and
Subsidiary Rating Linkage' Criteria and assessed that the legal,
operational and strategic linkage with DDH was sufficiently weak
to rate Dogus on a standalone basis. In particular, the absence
of up- and down-stream guarantees, ring-fencing mechanisms and
cross-default clauses underpins the separate financing of both
entities, while a small management overlap and a broadly
independent Board of Directors promote an autonomous management
strategy with only marginal influence from DH.

Fitch views the credit profiles of DH and Dogus as broadly
similar. However, further deterioration of DH's credit profile
could be negative for Dogus as Fitch believes that Dogus is
unlikely to be rated more than one notch above its parent.

Parent's Planned Refinancing Stalls: Fitch believes that Dogus 's
financial profile is somewhat stressed by DH's tight liquidity
profile and heightened refinancing risk. DH's planned EUR725
million refinancing has stalled and asset sales planned in 2019
are yet to be contractually confirmed, while remaining subject to
increased execution risk. This is despite management's continued
working assumption that Dogus will be exempted from the debt
reorganisation at DH and Fitch's view that inter-linkages are
weak. Following DH's disposal of its stake in Garanti Bank, Dogus
has become the largest dividend source.

DERIVATION SUMMARY

Dogus's rating of 'BB+(tur)' is underpinned by the company's
leading market position as one of Turkey's largest automotive
distributors, coupled with leading market shares and a premium
portfolio, mostly focusing on Volkswagen group brands. However
Dogus's size is small relative to large importers and dealerships
rated investment grade by Fitch, such as AutoNation Inc. (BBB-).
Dogus's's EBIT margin of around 4% is broadly in line with global
automotive distributors', significantly lagging behind the 'B'
midpoint of 7% in its generic ratings navigator. Fitch believes
the low profitability reflects the nature of the import-
distribute business model, and believes Dogus is no outlier from
its global peers.

Although FFO margins are broadly in line with the peer group,
Dogus's leverage metrics are higher than EMEA peers such as
Tegeta Motors LLC (B-(EXP)/Stable) and Mercedes Benz Russia AO
(A-/Stable). This is partially mitigated by Dogus's stronger
business profile, larger size and lower FX risks than smaller-
sized EMEA peers, such asTegeta.

Similar to its peers, FCF generation at Dogus is weak, neutral or
mostly negative in the past years, driven by expansion plans
pushing capex to historical highs. Although Fitch expects capex
to normalise over the next three years, high dividend payments
will continue to weigh on FCF generation, which continues to be
the main rating constraint. Dogus's size compares well with
higher-rated peers in Turkey such as Arcelik AS (AA(tur)) and
Emlak Konut Gayrimenkul Yatirim Ortakligi AS (AA(tur)). However,
Dogus' ratings are constrained by the absence of hard currency-
denominated revenue, and higher leverage metrics than Turkish
peers.

KEY ASSUMPTIONS

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

  - Revenue to decline around 3% in 2018, as drop in Turkish new
    car sales (26% year-on-year in January-September 2018) are
    not fully offset by price increases.

  - Rollover the majority of existing drawn credit lines to
    ensure funding.

  - Normalisation of capex with annual investment slightly in
    excess of TRY200 million through 2018-2020.

  - Generous dividends of TRY143 million in 2018 and TRY160
    million-TRY230 million annually through 2019-2021.

  - No major acquisition or disposal over the next four years.

  - Rating predicated on current corporate structure remaining in
    place

RATING SENSITIVITIES

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

  - FFO adjusted net leverage consistently below 6.0x.

  - EBIT margin sustained above 2%.

  - FFO margin sustained above 1%.

  - Improvement of available liquidity, mitigating refinancing
    risks

The Outlook could be revised to Stable if i) the company
continues to show a successful rollover of its credit lines; ii)
upon successful refinancing at DH and iii) Dogus safeguards
operational cash flows, yielding FFO adjusted net leverage
trending sustainably below 7.0x.

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

  - Further weakening of available liquidity

  - Operating shortfall, such as sharply contracting revenue,
    that further constrains cash flow and/or liquidity

  - FFO adjusted net leverage consistently above 7.0x.

  - EBIT margin sustained below 2%.

  - FFO margin sustained below 1%.

  - Significant deterioration of DH's credit profile

LIQUIDITY AND DEBT STRUCTURE

Thin Liquidity: Dogus's liquidity profile is weak with a
liquidity score significantly below 1.0x, owing to the
predominantly short-term funding of the group. Readily available
cash and cash equivalents was TRY125 million at end-1H18, after
adjusting for TRY100 million restricted cash and the inclusion of
20% of Dogus's stake in DH valued at TRY116 million. This does
not cover TRY2.5 billion of short-term debt as at the same date
and expected negative free cashflow for the coming 12 months.

With previous uncommitted cash limits (roughly TRY3 billion)
revoked, Dogus's liquidity is contingent on the continued
rollover of drawn credit lines, while being exposed to an
increasing risk of reduced availability of credit and renewal at
more onerous conditions.

SUMMARY OF FINANCIAL STATEMENT ADJUSTMENTS

Fitch has adjusted available cash at end-2017 to reflect
restricted cash of TRY100 million needed for seasonal changes in
working-capital requirements. Fitch also includes 20% of the fair
value (TRY116 million) of shares held in DH in readily available
cash.

Fitch has adjusted end-2017 debt by applying a multiple of 5.0x
of yearly operating lease expense (TRY27 million for 2017). 5.0x
is a standard multiple Fitch uses for Turkish companies.

Fitch treats assumed average utilisation of TRY250 million
factoring receivables (under VDF factoring line) as debt, and
adjusts its ratios accordingly.


GARANTI BANK: Fitch Lowers Long-Term IDR to BB-, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded Garanti Bank S.A.'s Long-Term Issuer
Default Rating to 'BB-' from 'BB'. The Outlook on the Long-Term
IDR is Stable. Fitch has also affirmed GBR's Viability Rating at
'bb-', Short-Term IDR at 'B' and Support Rating at '3'.

The rating action follow the downgrade of GBR's direct parent
Turkiye Garanti Bankasi A.S. to 'BB-'/ Negative Outlook.

The IDR of GBR is now driven by its standalone profile as
expressed by its VR and no longer benefits from a rating uplift
for likely extraordinary support from the ultimate parent and
TGB's controlling shareholder Banco Bilbao Vizcaya Argentaria
(BBVA; A-/Stable). The Stable Outlook reflects its view that GBR
is sufficiently independent from TGB and that internal and
regulatory restrictions on capital and funding transfers are
sufficiently strict to allow for GBR to be rated above TGB's IDR
if the latter is downgraded again, as indicated by its Negative
Outlook.

KEY RATING DRIVERS

IDRS and VR

The IDR of GBR is driven by its VR, which is stronger (with
respect to the 'Outlook') than the support-implied IDR of 'BB-',
which is on Negative Outlook. The VR of GBR reflects its moderate
risk profile, which has improved over the last two years, driven
by a reduction in the stock of impaired loans on its balance
sheet, stronger regulatory capitalisation and better risk
controls implemented as part of its alignment with BBVA's
processes and risk appetite framework. However Fitch views the
bank's links to Turkish corporates and banks as a source of
potential risk to the bank's asset quality and earnings. The
bank's modest franchise in the local market and limited track
record of profitability are also rating weaknesses.

GBR's asset quality has continued to improve in 1H18, benefitting
from a cyclical upswing of the Romanian economy, and the bank's
impaired loans decreased to 5.2% of gross customer loans. The
non-performing exposure ratio of 4.9% is lower than the sector
average of 5.7% (using EBA methodology). However the bank's loan
book is less granular than larger peers' given GBR's overall
size. Exposures are predominantly domestic, but include about
2.8% of loans to Turkish companies. Although they are currently
performing they could come under financial pressure as a result
of the recent depreciation of the Turkish lira, a spike in
interest rates, and the weaker growth outlook that Fitch foresees
for this jurisdiction, which could impact the bank's asset
quality metrics.

GBR's domestically oriented activities should continue to benefit
from favourable macroeconomic conditions in Romania in 2018,
which can help buffer a small deterioration in Turkey-related
exposures. Profitability has benefitted from low loan impairment
charges in 2017 and 1H18 after a sharp clean-up action undertaken
in 2016, which rendered the bank loss-making. Margin pressure and
lower gains from securities sales resulted in slightly weaker
earnings yoy in 1H18, but the operating return on risk-weighted
assets (RWAs) of 2.2% remains healthy compared with historical
levels.

GBR's Fitch Core Capital (FCC) ratio of 15.2% is slightly lower
than larger peers', and decreased in 1H18 because of a stronger
increase in RWAs than in capital, as well as the impact of
implementing IFRS9. The bank's CET1 ratio, including transitional
relief from the implementation of IFRS9 of 15.8%, was in excess
of regulatory total capital requirements, including buffers.
Fitch expects capitalisation to remain adequate given reasonable
non-performing loan coverage and a healthy outlook for domestic
profitability.

Fitch views the bank's funding profile as fairly resilient to
potential credit stress at the parent level, as funding is
predominantly from deposits (90% of total funding) and the bank
is not reliant on parent funding, with the exception of a EUR10
million subordinated loan. GBR's liquidity position is adequate
as reflected by cash, accounts at the national bank and Romanian
government bonds equivalent to 26% of total funding.

SUPPORT RATING

GBR's Support Rating of '3' reflects its view of a moderate
probability of support from the bank's ultimate parent BBVA, if
needed, given the ownership link, GBR's small size in relation to
BBVA and potential reputational effects on BBVA and its
subsidiary TGB.

However, GBR's direct strategic importance to BBVA is rather
limited, as Romania does not feature prominently in the group's
strategy. This leads us to believe that the likelihood of BBVA
providing extraordinary support to GBR is no higher than that for
BBVA's more strategic investment TGB. As a result, the support-
implied IDR is capped at the level of TGB's IDR.

Fitch continues to view GBR as a strategic subsidiary of TGB,
which is evident in a track record of capital and liquidity
support from the latter, high management and systems integration
and common branding.

RATING SENSITIVITIES

IDRS, VR and SUPPORT RATING

GBR's IDR is mainly sensitive to changes in the VR. A sharper-
than-expected deterioration in asset quality could lead to a
downgrade of the VR if the bank's capitalisation is affected with
no immediate remedy plan. A weakening of the bank's liquidity
could also result in a downgrade. An upgrade of the VR would
require a strengthening of the bank's franchise, a track record
of profitable growth while maintaining adequate asset quality and
capital metrics.

A one-notch downgrade of TGB's Long-Term IDR will likely lead to
a downgrade of GBR's Support Rating, but is unlikely to impact
the subsidiary's Long-Term IDR. Fitch views GBR's IDR and VR as
moderately resilient to contagion from the parent, but Fitch will
continue to monitor any evidence of funding or capital erosion
relating to the parent.

An upgrade of TGB's Long-Term IDR would result in an upgrade of
GBR's because it would provide headroom for us to consider
support uplift. Increased strategic importance within the BBVA
group could also positively impact GBR's IDR.

GBR's Short-Term IDR of 'B' corresponds to a Long-Term IDRs
between 'BB+' and 'B-' and will only change if the Long-Term IDR
moves outside this range.

The rating actions are as follows:

Garanti Bank S.A.

Long-Term IDR downgraded to 'BB-' from 'BB'; Outlook Stable

Short-Term IDR affirmed at 'B'

Support Rating affirmed at '3'

Viability Rating affirmed at 'bb-'


KUVEYT TURK: Moody's Affirms BB- Long-Term Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign-Currency Issuer
Default Ratings (LT FC IDRs) of Kuveyt Turk Katilim Bankasi A.S
(Kuveyt Turk) and Turkiye Finans Katilim Bankasi A.S. (Turkiye
Finans) at 'BB-' and Vakif Katilim Bankasi AS (Vakif Katilim) at
'B+'. The agency has downgraded the Viability Ratings (VRs) of
Kuveyt Turk and Turkiye Finans to 'b+' and Vakif Katilim to 'b-'.
The Outlook on all the banks' LT IDRs is Negative.

The VRs have been downgraded to reflect increased risks to the
banks' standalone credit profiles over the rating horizon since
these were placed on Rating Watch Negative on June 1, 2018. In
Fitch's view, the banks' performance, asset quality,
capitalisation, and liquidity and funding profiles are now more
likely to come under pressure as a result of the further
depreciation of the Turkish lira (by about 17% against the US
dollar since the last rating review), the spike in interest rates
(driven by the increase in the policy rate to 24% from 17.75% on
September 13) and the weaker growth outlook (Fitch has revised
downwards its forecasts for Turkish GDP growth to 3.8% in 2018
and 1.2% in 2019).

KEY RATING DRIVERS

IDRs, NATIONAL RATINGS AND SENIOR DEBT FOR KUVEYT TURK AND
TURKIYE FINANS

Kuveyt Turk's and Turkiye Finans's IDRs, National Ratings and
senior debt ratings are driven by potential support from their
respective controlling shareholders, Kuwait Finance House (KFH;
A+/Stable) and The National Commercial Bank (NCB; A-/Stable). KFH
owns a 62% stake in Kuveyt Turk, and NCB holds a 67% stake in
Turkiye Finans.

Fitch views Kuveyt Turk and Turkiye Finans as strategically
important subsidiaries for their parent banks, as reflected in
their '3' Support Ratings. This view is based on the banks'
ownership, integration with parent banks and roles within their
respective groups.

Kuveyt Turk accounted for a high 25% of KFH's total assets at
end-1H18. Given its size relative to its parent, Fitch believes
that, in case of need, support would be forthcoming from the
Kuwaiti authorities, on whose support KFH's ratings rely.

Turkiye Finans, which accounted for a more manageable 9% of NCB's
total assets at end-1H18, would look to its parent for support in
the first instance, in Fitch's view. NCB's ratings are driven by
its standalone creditworthiness but underpinned by support from
the Saudi authorities. The affirmation of Turkiye Finans reflects
its base-case expectation that any tensions in relations between
Turkey and Saudi Arabia would not impact the credit profile of
the bank or potential support from NCB.

The LT FC IDRs and FC senior debt ratings of both Kuveyt Turk and
Turkiye Finans, at one notch below the Turkish sovereign rating
of 'BB', reflect its view that, in case of a marked deterioration
in Turkey's external finances, the risk of government
intervention in the banking sector would be higher than that of a
sovereign default. The Negative Outlooks on the banks' IDRs
reflect those on the Turkish sovereign. The banks' Local-Currency
(LC) IDRs also take into account intervention risk.

Fitch continues to view the risk of capital controls being
imposed in Turkey as remote given Turkey's high dependence on
foreign capital (and ensuing strong incentive to retain market
access) and the eventually orthodox policy response to recent
market pressures. Nevertheless, in case of a marked deterioration
in Turkey's external finances, some form of intervention in the
banking system that might impede banks' ability to service their
FC obligations would become more likely, in Fitch's view.

IDRs, NATIONAL RATING AND SUPPORT RATING FLOOR FOR VAKIF KATILIM

Vakif Katilim's FC IDR is driven by the bank's 'B+' Support
Rating Floor (SRF), two notches below the sovereign's LT FC IDR,
reflecting Fitch's view of risks to the ability of the sovereign
to provide support in FC.

Fitch continues to believe the Turkish authorities would have a
high propensity to support the bank in case of need, given its
99% ownership by the state-related General Directorate of
Foundations (GDF) and the significant share of funding being
provided in the form of state-related deposits (based on the
bank's definition). Its view also factors in Vakif Katilim's
participation (Islamic) banking nature, in the light of the
government's strategic focus on developing this particular
sector.

The bank's LT LC IDR of 'BB' indicates the higher ability of the
sovereign to provide support in LC. It is one notch below the
sovereign rating due to Fitch's view of a higher risk of
government intervention in the banks than of a sovereign default,
in the event of a stress in Turkey's external finances.

The Negative Outlook on the bank's IDRs mirrors that on the
sovereign rating.

KEY RATING DRIVERS

VRs OF ALL BANKS

The banks' VRs reflect the concentration of their operations in
the high-risk Turkish operating environment, which exposes them
to macroeconomic and exchange rate volatility and puts pressure
on asset quality, profitability and capitalisation. In addition,
there is a material risk of a reduction in access to foreign
funding markets, and of volatility in deposit levels, which
creates heightened refinancing and liquidity pressures. Risks to
financial stability are also significant, given potential
unpredictability in the policy framework and Turkey's large
external financing requirements.

The VRs of Kuveyt Turk and Turkiye Finans reflect their limited
domestic franchises, although they are ranked first and second by
total assets, respectively, in the participation banking segment
in Turkey.

Vakif Katilim's 'b-' VR reflects its short record of operation
and only limited franchise in the challenging Turkish operating
environment. It also reflects high borrower concentration risk,
rapid growth and weaknesses in the bank's underwriting standards,
as well as significant depositor concentration due to lumpy
state-related deposit funding. In addition, the VR reflects
pressure on the bank's capital position and funding profile due
to its rapid growth and the price sensitivity of deposits in a
higher interest rate environment, respectively.

Asset-quality risks for the banks have increased given the weaker
growth outlook and high FC lending (a material portion of which
consists of risky FC-indexed financing) and the potential impact
of depreciation on often weakly hedged borrowers' ability to
service their debt. At end-1H18, FC lending ranged from 37%
(Vakif Katilim) to 39% (Turkiye Finans) and 41% (Kuveyt Turk),
levels that will have increased further given the lira
depreciation since June.

Significantly higher interest rates following the increase in the
policy rate are also likely to negatively affect lira borrowers'
debt service capacity, and weigh on asset quality performance. In
the case of Kuveyt Turk and Turkiye Finans, the banks have high
exposure to mid-sized and smaller companies, which are among the
most sensitive to the weaker growth outlook. Exposure to the
high-risk construction sector is an additional source of risk at
all three banks.

Non-performing financings (NPFs, overdue by 90+ days/gross
financings) have remained broadly stable at Kuveyt Turk and
Turkiye Finans. Kuveyt Turk has historically reported asset
quality ratios (end-1H18: 1.8% NPF ratio) that outperform the
sector, although this partly reflects the bank's rapid growth.
Turkiye Finans's higher NPF ratio (5.1%) should be considered in
light of the contraction of financing in 2017 and 1H18,
reflecting its portfolio clean-up and tightened underwriting
standards.

Vakif Katilim reported an NPF ratio of a very low 0.5% at end-
1H18, which should be considered in light of the bank's rapid
growth (from a low base), and likely impairment growth as
financings season in the challenging Turkish operating
environment. High single-name borrower concentration could also
bring volatility to asset quality ratios.

Growth in Stage 2 financings (albeit partly explained by the
banks' transition to IFRS9 in 1Q18) also suggests the potential
for future increases in NPFs at all three banks. At end-1H18,
Stage 2 financings ranged from a low 0.3% of financing (Vakif
Katilim) to a moderate 6% (Kuveyt Turk) and a high 12% (Turkiye
Finans). Migration to the non-performing category could also be
influenced by the new loan restructuring framework agreement
being implemented in Turkey, which could potentially delay the
recognition of asset quality problems by banks.

Total reserves coverage of NPFs amounted to 96% (Turkiye Finans),
129% (Kuveyt Turk) and 142% (Vakif Katilim) at end-1H18, but was
significantly weaker taking into account Stage 2 financing.

ROE ranged from a fairly weak 10% at Turkiye Finans to 22% at
Kuveyt Turk and Vakif Katilim in 1H18, compared to the sector
average of 16%. Profitability is set to weaken at all three banks
given higher funding costs, slower credit growth and higher
impairment charges. Performance could deteriorate more
significantly in case of a marked weakening in asset quality.

Kuveyt Turk's performance has proven reasonable and consistent,
reflecting its high share of zero-cost current account funding,
supporting its wide net profit margin. Turkiye Finans has been
weighed down by asset quality pressures and lower revenues as it
has focused on cleaning up financing.

Vakif Katilim's performance has been underpinned by its high
share of cost-effective state-related funding. The bank has
reported large gains on sharia-compliant derivatives as it has
undertaken lira swap transactions with domestic bank
counterparties, benefiting from its excess lira liquidity.

The capital positions of all three banks have come under pressure
from lira depreciation (which inflates FC assets), higher
interest rates (which result in weaker valuations of government
bond portfolios) and potential asset quality deterioration,
although pre-impairment profit provides a reasonable buffer to
absorb credit losses. Forbearance measures introduced by the
Banking Regulation and Supervision Authority to alleviate the
impact on reported regulatory capital metrics reduce the risk of
regulatory capital breaches, in its view.

At end-1H18, the banks reported Fitch Core Capital ratios of
11.7% (Kuveyt Turk), 12.9% (Vakif Katilim) and 14% (Turkiye
Finans). The total capital ratios of Kuveyt Turk and Turkiye
Finans of 15.7% and 18.8%, respectively, were significantly
higher and comfortably above the 12% recommended regulatory
minimum, reflecting FC subordinated debt, which provides a
partial hedge against FC risk-weighted assets.

Vakif Katilim's total capital ratio was tighter at 12.2%. In
3Q18, its shareholder, the GDF, provided TRY115 million of new
capital, resulting in an approximately 130bp uplift to its total
capital ratio, and further capital is likely to be needed to
support the bank's operations. A new decree - passed in December
2017 but still awaiting presidential approval - has paved the way
for the GDF to transfer its stake in Turkiye Vakiflar Bankasi to
the Turkish treasury in return for cash.

All three banks benefit from local regulations allowing Islamic
banks to reduce the risk weighting on assets directly financed by
profit share accounts to 50% (due to the implicit transfer of
risk) on the basis of the "profit-sharing" concept. This results
in below-sector-average equity/assets ratios at all three banks.
The banks calculate uplift from the so-called alpha factor to
have been 250bp (Turkiye Finans), 290bp (Kuveyt Turk) and 400bp
(Vakif Katilim) at end-1H18.

Funding at all three banks is sourced largely from customer
deposits. Kuveyt Turk and Vakif Katilim report solid
financing/deposits ratios (below 100% at end-1H18), outperforming
the sector average (128%). Vakif Katilim benefits from a high
share of largely LC state-related deposits (44% of total
deposits). Turkiye Finans's financing/deposits ratio is higher at
127%, albeit broadly in line with the sector average. Owing to
the structure of deposits, participation banks are unable to
compete with conventional banks on price in an increasing
interest rate environment. A recent change in regulation relating
to wakala deposit funding could facilitate growth in this
product, enabling banks to compete more effectively on deposit
pricing.

Refinancing risks are high for the banks - albeit generally below
the larger banks in the sector - given their short-term maturing
FC wholesale funding liabilities, particularly in light of recent
heightened market volatility and tightening global financing
conditions (driven mainly by an increase in dollar interest
rates). Excluding parent funding, FC wholesale funding ranged
from 10% (Vakif Katilim) to 14% (Kuveyt Turk) and 22% (Turkiye
Finans) of the banks' total liabilities at end-1H18.

FC liquidity at all three banks is adequate; Fitch calculates
that at end-1H18 their FC liquidity buffers (comprising mainly
cash and interbank placements, FC reserves held under the reserve
option mechanism, and FC swaps) broadly covered short-term FC
non-deposit liabilities due within a year. Liquidity buffers are
also supported by the largely monthly amortising nature of their
financing books. Nevertheless, FC liquidity could come under
pressure in the event of prolonged market closure.

Refinancing risks are less pronounced at Kuveyt Turk and Turkiye
Finans, given potential FC liquidity support from shareholders.

SUBORDINATED DEBT RATINGS

Kuveyt Turk's 'B+' subordinated debt rating is notched down once
from the bank's 'BB-' IDR. The notching includes zero notches for
incremental non-performance risk and one notch for loss severity.
Subordinated debt was issued by KT Sukuk Company Limited, Kuveyt
Turk's SPV.

RATING SENSITIVITIES

IDRs, NATIONAL RATINGS, SUPPORT RATINGS, SENIOR DEBT RATINGS OF
KUVEYT TURK AND TURKIYE FINANS

The LT FC IDRs, National Ratings, FC senior debt ratings and
Support Ratings (SRs) of Kuveyt Turk and Turkiye Finans could be
downgraded if the Turkish sovereign is downgraded, or if there is
a sharp reduction in a parent bank's ability or propensity to
support its Turkish subsidiary. The banks' IDRs are sensitive to
Fitch's view of the risk of government intervention in the
banking sector.

SUPPORT RATING AND SUPPORT RATING FLOOR OF VAKIF KATILIM

The SR and SRF of Vakif Katilim could be downgraded and revised
lower if Fitch concludes that the stress in Turkey's external
finances is sufficient to materially reduce the reliability of
support for the banks in FC from the Turkish authorities. The
introduction of bank resolution legislation in Turkey aimed at
limiting sovereign support for failed banks could also negatively
affect Fitch's view of support, but Fitch does not expect this in
the short term.

VRs OF ALL BANKS

Further VR downgrades could result from a further marked
deterioration in the operating environment, as reflected, in
particular, in negative changes in the lira exchange rate,
domestic interest rates, economic growth prospects and external
funding market access; bank-specific deterioration of asset
quality; marked erosion of capital ratios; a weakening of the
banks' FC liquidity positions (without this being offset by
shareholder support); or deposit instability that leads to
pressure on banks' liquidity and funding profiles.

SUBORDINATED DEBT RATING OF KUVEYT TURK

The rating is sensitive to a change in Kuveyt Turk's LT FC IDR, a
revision in Fitch's assessment of the probability of the notes'
non-performance risk relative to the risk captured in the IDR, or
a change in its assessment of loss severity in case of non-
performance.

The rating actions are as follows:

Kuveyt Turk Katilim Bankasi A.S and Turkiye Finans Katilim
Bankasi A.S

  Long-Term Foreign-Currency IDRs affirmed at 'BB-'; Outlook
  Negative

  Long-Term Local-Currency IDRs affirmed at 'BB'; Outlook
  Negative

  Short-Term Foreign- and Local-Currency IDRs affirmed at 'B'

  Viability Rating downgraded to 'b+' from 'bb-'; Off RWN

  Support Rating affirmed at '3'

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

Turkiye Finans's TF Varlik Kiralama A.S., Kuveyt Turk's KT Kira
Sertifiklari Varlik Kiralama A.S. senior unsecured debt issues
(sukuk) affirmed at 'BB-'

KT Sukuk Company Limited: Subordinated debt affirmed at 'B+'

Vakif Katilim Bankasi A.S.

  Long-Term Foreign-Currency IDR affirmed at 'B+'; Outlook
  Negative

  Long-Term Local-Currency IDR affirmed at 'BB'; Outlook Negative

  Short-Term Foreign- and Local-Currency IDRs affirmed at 'B'

  Viability Rating downgraded to 'b-' from 'b+'; Off RWN

  Support Rating Floor affirmed at 'B+'

  Support Rating affirmed at '4'

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



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


AFREN PLC: Two Former Execs Convicted of Fraud, Money Laundering
----------------------------------------------------------------
Noor Zainab Hussain at Reuters reports that the UK's Serious
Fraud Office (SFO) said two former executives of collapsed oil
firm Afren were convicted on Oct. 24 of fraud and money
laundering offences relating to a US$300 million business deal.

According to Reuters, the SFO said former Afren Chief Executive
Osman Shahenshah and former Chief Operating Officer Shahid Ullah
received more than US$17 million and laundered US$45 million,
some of which was used to buy luxury properties in Mustique and
the British Virgin Islands.

The SFO said Messrs. Shahenshah and Ullah created shell companies
and agreed a side deal with one of Afren's Nigerian oil partners
from which they would benefit, without the knowledge of Afren's
board, Reuters relates.

"Instead of acting in their company's best interests, they used
Afren like a personal bank account to fund an illicit deal, with
no regard for the consequences," Reuters quotes Lisa Osofsky,
Director of the SFO, as saying in a statement.

The men, who did not enter a plea, were found not guilty at
Southwark Crown Court on a separate charge relating to a
management buyout of another of Afren's business partners,
Reuters notes.

Afren went into administration in July 2015 after failing to
secure support for a refinancing and restructuring plan, Reuters
recounts.


DEBENHAMS PLC: To Close 50 Stores, Posts Almost GBP500MM Loss
-------------------------------------------------------------
Wil Crisp and LaToya Harding at The Telegraph report that
Debenhams is to close up to 50 of its under-performing stores
over the next three to five years, putting around 4,000 jobs at
risk.

According to The Telegraph, the troubled department store swung
to a loss of almost GBP500 million for the year to Sept. 1, its
biggest annual loss since it started trading more than 205 years
ago, compared to a GBP59 million profit in 2017.

The main drivers for the loss are writedowns worth more than half
a billion pounds connected to goodwill and store impairments
linked to store leases and computer systems, The Telegraph
discloses.

Like-for-like revenue dropped 2.3% over the period, while total
sales for the year also fell 1.8% to GBP2.9 billion, The
Telegraph notes.


GOURMET BURGER: Board Initiates Company Voluntary Arrangement
-------------------------------------------------------------
Nqobile Dludla at Reuters reports that UK Gourmet Burger Kitchen
(GBK) filed for a form of bankruptcy protection on Oct. 24 after
running up millions of pounds of losses, the latest British
retail name to fall victim of weak consumer spending and high
costs.

The chain's parent, South Africa's Famous Brands, said the board
of GBK had initiated a company voluntary arrangement (CVA) for
the business that would allow it to avoid insolvency or
administration and ensure its continued existence, Reuters
relates.

Famous Brands bought GBK in 2016 but its contribution to group
profitability has taken longer than the company initially
anticipated, hampered by pressure on consumer spending as well as
factors ranging from higher property rates, increased input costs
and an oversupply of restaurants, Reuters recounts.

"The CVA process has the objective to ensure financial viability
and the sustainability of the business into the future," Reuters
quotes Famous Brands as saying in a statement, adding it has
assistance of accountants Grant Thornton for the process.

Early in October, Famous Brands forecast GBK would make a wider
operating loss of GBP2.6 million (US$3.4 million) for the six
months ended Aug. 31, compared with a loss of GBP872,000 in the
corresponding period last year, Reuters discloses.

It also said it would take a pretax impairment charge of ZAR874
million (US$61.7 million) due to difficult trading conditions and
the sustained underperformance of GBK, Reuters notes.


HOUSE OF FRASER: ScS Abandons Partnership After Ashley Buyout
-------------------------------------------------------------
Karina Dsouza and Noor Zainab Hussain at Reuters report that
ScS Group said on Oct. 25 it would stop selling its sofas and
carpets at House of Fraser stores from January, saying the
partnership had ceased to be beneficial since billionaire Mike
Ashley bought the collapsed department store group.

Sports Direct, the British sportswear retailer controlled by
Ashley, snapped up House of Fraser and its 58 stores from
administrators for GBP90 million (US$116 million) in August,
Reuters recounts.

House of Fraser's collapse followed months of upheaval at the
company, falling sales and a now-abandoned restructuring plan
that would have seen nearly half of its stores close, Reuters
notes.

According to Reuters, ScS Group, which started trading in
Sunderland around the 1890s as a family-owned home furnishings
store, said orders at its 27 concessions within House of Fraser
stores had halved in the 12 weeks ended Oct. 20.

"Given the recent change of ownership of House of Fraser, both
companies came to a mutual decision to end the relationship.  For
ScS, the partnership was no longer beneficial given the
developments in House of Fraser over the last few months,"
Reuters quotes an ScS spokeswoman as saying.


MITCHELLS & BUTLERS: S&P Cuts Rating on Cl. D1 Notes to BB-
-----------------------------------------------------------
S&P Global Ratings affirmed its credit ratings on Mitchells &
Butlers Finance PLC's (M&B Finance) class A, AB, B, and C notes.
At the same time, S&P lowered its rating on the class D notes.

M&B Finance is a corporate securitization of the U.K. operating
business of the managed pub estate operator Mitchells & Butlers
Retail Ltd. (M&B Retail or the borrower). It originally closed in
November 2003 and was subsequently tapped in September 2006.

The transaction features five classes of notes (A, AB, B, C, and
D), the proceeds of which have been on-lent by the issuer to M&B
Retail, via issuer-borrower loans. The operating cash flows
generated by M&B Retail are available to repay its borrowings
from the issuer that, in turn, uses those proceeds to service the
notes.

The transaction will likely qualify for the appointment of an
administrative receiver under the U.K. insolvency regime. An
obligor default would allow the noteholders to gain substantial
control over the charged assets prior to an administrator's
appointment, without necessarily accelerating the secured debt,
both at the issuer and at the borrower level.

S&P said, "Following our review of M&B Retail's performance, we
have affirmed our ratings on the class A, AB, B, and C notes and
lowered our rating on the class D notes issued by M&B Finance.
Amid challenging operating conditions, characterized by
significant competition and cost inflation, we have lowered our
profitability forecasts, while our business risk assessment is
unchanged at satisfactory. Our downgrade of the class D notes
results from our view of the creditworthiness of the borrower,
our lower cash flow forecasts leading to lower minimum projected
debt service coverage ratios (DSCRs), and reflects their
subordination and weaker access to the security package compared
to the class C notes."

  Class              Rating
               To              From

  Ratings Lowered

  D1           BB- (sf)        BB (sf)

  Ratings Affirmed

  A1N          A- (sf)
  A1N (SPUR)   A- (sf)
  A2           A- (sf)
  A2 (SPUR)    A- (sf)
  A3N          A- (sf)
  A3N (SPUR)   A- (sf)
  A4           A- (sf)
  A4 (SPUR)    A- (sf)
  AB           BBB+ (sf)
  AB (SPUR)    BBB+ (sf)
  B1           BBB- (sf)
  B2           BBB- (sf)
  C1           BB (sf)
  C2           BB (sf)


NEWDAY FUNDING 2018-2: Fitch Rates Class F Debt 'B(EXP)sf'
----------------------------------------------------------
Fitch Ratings has assigned NewDay Funding's Series 2018-2 notes
expected ratings as follows:

Series 2018-2 A1: 'AAA(EXP)sf'; Outlook Stable

Series 2018-2 A2: 'AAA(EXP)sf'; Outlook Stable

Series 2018-2 B: 'AA(EXP)sf'; Outlook Stable

Series 2018-2 C: 'A(EXP)sf'; Outlook Stable

Series 2018-2 D: 'BBB(EXP)sf'; Outlook Stable

Series 2018-2 E: 'BB(EXP)sf'; Outlook Stable

Series 2018-2 F: 'B(EXP)sf'; Outlook Stable

The notes to be issued by NewDay Funding 2018-2 plc are
collateralised by a pool of non-prime UK credit card receivables.

The final rating is contingent on the receipt of final
documentation conforming to information already reviewed. Fitch
expects to affirm NewDay Funding's existing tranches when it
assigns final ratings.

KEY RATING DRIVERS

Non-Prime Asset Pool

The charge-off and payment rate performance of the portfolio
differs from that of other rated UK credit card trusts, due to
the non-prime nature of the underlying assets. Fitch Ratings
assumes a steady state charge-off rate of 18%, with a stress on
the lower end of the spectrum (3.5x for 'AAAsf'), considering the
high absolute level of the steady state assumption and lower
historical volatility in charge-offs. Fitch applied a steady
state payment rate assumption of 10%, with a median level of
stress (45% at 'AAAsf').

Changing Pool Composition

The portfolio consists of an open book and a closed book, which
have displayed different historical performance trends. Overall
pool performance is expected to migrate towards the performance
of the open book as the closed book amortises. This has been
incorporated into Fitch's steady-state asset assumptions.

Variable Funding Notes Add Flexibility

In addition to Series VFN-F1 providing the funding flexibility
that is typical and necessary for credit card trusts, the
structure employs a separate Originator VFN, purchased and held
by NewDay Funding Transferor Ltd (the transferor). It provides
credit enhancement to the rated notes, adds protection against
dilution by way of a separate functional transferor interest, and
meets the EU and US risk retention requirements.

Key Counterparties Unrated

The NewDay Group will act in several capacities through its
various entities, most prominently as originator, servicer and
cash manager to the securitisation. In most other UK trusts,
these roles are fulfilled by large institutions with strong
credit profiles. The degree of reliance is mitigated in this
transaction by the transferability of operations, agreements with
established card service providers, a back-up cash management
agreement and a series-specific liquidity reserve.

Stable Asset Outlook

Fitch maintains its stable sector outlook, as performance remains
benign and any potential deterioration would remain fully
consistent with the steady-state assumptions for UK credit card
trusts.

Weak real wage growth and changes to the benign unemployment
levels in the UK would put the repayment ability of borrowers
under pressure in the near future. However, receivables
performance did not deteriorate during the most recent multi-year
period of negative real wage growth, most likely due to the
robust labour market during that period. Fitch's expectation for
UK unemployment supports the stable rating outlook for credit
card trusts.

RATING SENSITIVITIES

Rating sensitivity to increased charge-off rate

Increase base case by 25% / 50% / 75%

Series 2018-2 A: 'AAsf' / 'AA-sf' / 'A+sf'

Series 2018-2 B: 'A+sf' / 'Asf' / 'BBB+sf'

Series 2018-2 C: 'BBB+sf' / 'BBBsf' / 'BBB-sf'

Series 2018-2 D: 'BB+sf' / 'BBsf' / 'B+sf'

Series 2018-2 E: 'B+sf' / 'Bsf' / NA

Series 2018-2 F: NA / NA / NA

Rating sensitivity to reduced Monthly Payment Rate (MPR)

Reduce base case by 15% / 25% / 35%

Series 2018-2 A: 'AAsf' / 'AA-sf' / 'Asf'

Series 2018-2 B: 'A+sf' / 'Asf' / 'A-sf'

Series 2018-2 C: 'BBB+sf' / 'BBBsf' / 'BBB-sf'

Series 2018-2 D: 'BBB-sf' / 'BB+sf' / 'BBsf'

Series 2018-2 E: 'BB-sf' / 'B+sf' / 'B+sf'

Series 2018-2 F: NA / NA / NA

Rating sensitivity to reduced purchase rate (ie aggregate new
purchases divided by aggregate principal repayments in a given
month)

Reduce base case by 50% / 75% / 100%

Series 2018-2 D: 'BBB-sf' / 'BBB-sf' / 'BBB-sf'

Series 2018-2 E: 'BB-sf' / 'BB-sf' / 'B+sf'

Series 2018-2 F: NA / NA / NA

No rating sensitivities are shown for class A to C, as Fitch is
already assuming a 100% purchase rate stress in these rating
scenarios

Rating sensitivity to increased charge-off rate and reduced MPR

Increase base case charge-offs by 25% and reduce MPR by 15% /
Increase base case charge-offs by 50% and reduce MPR by 25% /
Increase base case charge-offs by 75% and reduce MPR by 35%

Series 2018-2 A: 'A+sf' / 'A-sf' / 'BBB-sf'

Series 2018-2 B: 'A-sf' / 'BBBsf' / 'BB+sf'

Series 2018-2 C: 'BBBsf' / 'BB+sf' / 'BB-sf'

Series 2018-2 D: 'BBsf' / 'B+sf' / NA

Series 2018-2 E: 'Bsf' / NA / NA

Series 2018-2 F: NA / NA / NA


USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

Fitch was provided with Form ABS Due Diligence-15E (Form 15E) as
prepared by Deloitte LLP. The third-party due diligence described
in Form 15E focused on observing and comparing specific loan
level data contained in a sample of credit card receivables.
Fitch considered this information in its analysis and it did not
have an effect on Fitch's analysis or conclusions.


DATA ADEQUACY

Fitch reviewed the results of a third party assessment conducted
on the asset portfolio information, and concluded that there were
no findings that affected the rating analysis.

Fitch conducted a review of a small targeted sample of the
originator's origination files and found the information
contained in the reviewed files to be adequately consistent with
the originator's policies and practices and the other information
provided to the agency about the asset portfolio.

Overall and together with the assumptions referred, Fitch's
assessment of the asset pool information relied upon for the
agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.



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


* BOOK REVIEW: Macy's for Sale
------------------------------
Author: Isadore Barmash
Paperback: 180 pages
List price: $34.95
Review by Henry Berry
Order your personal copy today at
http://www.beardbooks.com/beardbooks/macys_for_sale.html

Isadore Barmash writes in his Prologue, "This book tells the
story of Macy's managers and their leveraged buyout, the newest
and most controversial device in the modern financial armament"
when it took place in the 1980s. At the center of Barmash's story
is Edward S. Finkelstein, Macy's chairman of the board and chief
executive office. Sixty years old at the time, Finkelstein had
worked for Macy's for 35 years. Looking back over his long career
dedicated to the department store as he neared retirement,
Finkelstein was dismayed when he realized that even with his
generous stock options, he owned less than one percent of Macy's
stock. In the 185 years leading up to his unexpected, bold
takeover, Finkelstein had made over Macy's from a run-of-the-mill
clothing retailer into a highly profitable business in the lead
of the lucrative and growing fashion and "lifestyle" field.

To aid him in accomplishing the takeover and share the rewards
with him, Finkelstein had brought together more than three
hundred of Macy's top executives. To gain his support for his
planned takeover, Finkelstein told them, "The ones who have done
the job at Macy's are the ones who ought to own Macy's." Opposing
Finkelstein and his group were the Straus family who owned the
lion's share of Macy's and employees and shareholders who had an
emotional attachment to Macy's as it had been for generations,
"Mother Macy's" as it was known. But the opponents were no match
for Finkelstein's carefully laid plans and carefully cultivated
alliances with the executives. At the 1985 meeting, the
shareholders voted in favor of the takeover by roughly eighty
percent, with less than two percent opposing it.

The takeover is dealt with largely in the opening chapter. For
the most part, Barmash follows the decision making by
Finkelstein, the reorganization of the national company with a
number of branches, the activities of key individuals besides
Finkelstein, Macy's moves in the competitive field of clothing
retailing, and attempts by the new Macy's owners led by
Finkelstein to build on their successful takeover by making other
acquisitions. Barmash allows at the beginning that it is an
"unauthorized book, written without the cooperation of the buying
group." But as he quickly adds, his coverage of Macy's as a
business journalist and his independent research for over a year
gave him enough knowledge to write a relevant and substantive
book. The reader will have no doubt of this. Barmash's narrative,
profiles of individuals, and analysis of events, intentions, and
consequences ring true, and have not been contradicted by
individuals he writes about, subsequent events, or exposure of
material not public at the time the book was written.

First published in 1989, the author places the Macy's buyout in
the context of the business environment at the time: the
aggressive, largely laissez-faire, Reagan era. Without being
judgmental, the author describes how numerous corporations were
awakened from their longtime inertia, while many individuals were
feeling betrayed, losing jobs, and facing uncertain futures.
Isadore Barmash, a veteran business journalist and author, was
associated with the New York Times for more than a quarter-
century as business-financial writer and editor. He also
contributed many articles for national media, Reuters America,
and the Nihon Kenzai Shimbun of Japan. He has published 13 books,
including a novel and is listed in the 57th edition of Who's Who
in America.



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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.


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S U B S C R I P T I O N   I N F O R M A T I O N

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

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

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

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

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


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