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

                           E U R O P E

          Thursday, December 27, 2018, Vol. 19, No. 255


                            Headlines


F R A N C E

NOVARTEX SAS: Fitch Keeps CCC- LT IDR on Rating Watch Negative


G E R M A N Y

HORNBACH BAUMARKT: S&P Lowers Sr. Unsec. Notes Ratings to 'BB'


I R E L A N D

ARMADA EURO III: Fitch Assigns B-sf Rating to Class F Debt
FRANKLIN IRELAND: S&P Affirms 'B' Long-Term ICR, Outlook Stable
GOLDENTREE LOAN 2: Moody's Assigns B2 Rating to Class F Notes


I T A L Y

COOPERATIVA MURATORI: Moody's Cuts CFR to Ca, Outlook Negative
NAPLES CITY: Fitch Affirms BB+ Long-Term IDRs, Outlook Negative
MOBY SPA: S&P Cuts ICR to CCC- on Deteriorating Liquidity Profile
UNIPOL BANCA: Moody's Affirms Ba3 Unsecured Debt Rating


K A Z A K H S T A N

FORTEBANK JSC: S&P Affirms 'B/B' ICRs on Kassa Nova Acquisition


L U X E M B O U R G

GREIF LUXEMBOURG: Moody's Reviews Ba3 Bond Rating for Downgrade


N E T H E R L A N D S

NYRSTAR NETHERLANDS: Moody's Cuts Ratings on Unsec. Notes to Caa2


R U S S I A

DONKHLEBBANK PJCB: Put on Provisional Administration
KIROV REGION: Fitch Withdraws BB- LT IDR for Commercial Reasons
KOSTROMA REGION: Fitch Withdraws B+ LT IDR for Commercial Reasons
RUSSOBANK JSCB: Put on Provisional Administration


T U R K E Y

TURKEY: Fitch Affirms BB Long-Term FC IDR, Outlook Negative


U K R A I N E

DNIPRO CITY: Fitch Assigns B- Long-Term IDRs, Outlook Stable
LVIV CITY: Fitch Affirms B- Long-Term IDRs, Outlook Stable
UKRAINE: Moody's Hikes Senior Unsecured Bond Ratings to Caa1
VTB BANK: National Bank of Ukraine Revokes Banking License


U N I T E D   K I N G D O M

DAILY MAIL: S&P Alters Outlook to Neg. & Affirms 'BB+/B' Ratings
EUROSAIL 2006-1: Moody's Affirms Caa1 Ratings on Two Note Classes
FISHING REPUBLIC: Appoints Administrators, Shares Still Suspended
KAIAM EUROPE: Financial Woes Prompt Administration
SMART REFINISHERS: Enters Administration, 17 Jobs Affected


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F R A N C E
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NOVARTEX SAS: Fitch Keeps CCC- LT IDR on Rating Watch Negative
--------------------------------------------------------------
Fitch Ratings is maintaining Novartex SAS's Long-Term Issuer
Default Rating and senior secured 'New Money' debt rating - both
at 'CCC-' - on Rating Watch Negative (RWN).

The RWN reflects continued uncertainty over Vivarte's ability to
raise sufficient funds from trading and disposals to repay the
remaining outstanding amount of around EUR100 million under the
EUR300 million total "New Money" debt repayment due by October
19, 2019. Vivarte is negotiating the disposal of three further
brands, which Fitch views as critical to achieving this remaining
repayment. Failure to repay would be an event of default under
the 'New Money' debt documentation. Any material reduction in
terms would be a restricted default under its criteria.

The ratings reflect the current political uncertainties and a
competitive womenswear market in France, high execution risk,
continuing cash outflows, rising leverage and tight liquidity.

Key Rating Drivers

Highly Challenging Retail Environment: The French women's
clothing market is highly fragmented, competition remains fierce
and 'bricks and mortar' groups such as Vivarte are finding it
difficult to increase prices above inflation, as discounting has
been rife, and to maintain volumes. Further to challenges from
store-based groups such as H&M and Zara, Vivarte is now also
facing new entrants (pure online retailers, Primark) which are
much more aggressive in prices, have lower costs and more
flexibility with deliveries and challenge traditional fast-
fashion retailers. Current political uncertainties are also
sapping consumer confidence and reducing footfall in France.

Uncertain Turnaround Strategy: Management has announced a
strategy focused on transforming the core brands by making
investments on store openings and remodelling, logistics
optimisation and IT system upgrades. Fitch has some doubts
regarding management's ability to consistently generate positive
like-for-like sales growth in a difficult market that is
experiencing a deep restructuring with an uncertain outcome. The
re-positioning of brands can be challenging by attracting new
customers without alienating the existing customer base.

Significant Refinancing Risk: Given current trading the group has
a major refinancing risk profile with a key date in October 2019
when it has to repay the remaining EUR100 million under the
Fiducie agreement. Should it fail to do so, "New Money" lenders
have the right to take control of the group and dispose of it.
Fitch projects funds from operations (FFO) adjusted net leverage
to increase to 9.0x in financial year ending August 31, 2019,
which represents an excessive refinancing risk. The disposal of
Besson has allowed the group to make a significant repayment
towards the EUR300 million target in September 2018. While
Vivarte had around EUR76 million of readily available cash
(excluding EUR100 million of cash covenanted for working capital
purposes under the legal documents) at end-August 2018, it is
critical that the group disposes of the three brands in order to
have a reasonable prospect of repaying the entire EUR300 million
by end-October 2019.

Tight Liquidity: The group's liquidity remains tight in the short
term, with significant cash outflows and falling cash deposits
and the looming EUR100 million repayment. While there have been
significant disposals in FY17 and FY18, trading remains difficult
and the group has significant working capital requirements in
1Q19 to stock up for the spring season. While its estimates show
that the group will be able to meet these stock purchases from
existing funds and letters of credit, headroom is very tight.

Insufficient Funding for Capex: Vivarte has identified up to
EUR60 million of capex for brands transformation to be split over
FY19 and FY20. However, it remains uncertain as to how Vivarte
will generate these funds, as free cash flow (FCF) is unlikely to
be sufficient to meet the full capex plan in the next two years.
In addition the group must retain a minimum EUR80 million-EUR100
million of liquidity under the "New Money" documentation.

Disposals Continuing: Under its restructuring plan Vivarte has
been disposing of non-core brands such as Besson, Chevignon,
NafNaf, Andre and Merkal, and the group is currently negotiating
a number of other sales. These disposals are necessary not only
as they will allow management to concentrate on core businesses
La Halle and Caroll, but also for the EUR100 million repayment in
October 2019.

Unsustainable Cost-Cutting: Fitch views the group's cost-cutting
measures, such as combining La Halle and La Halle Chaussures
stores, better store staff hour planning and closure of loss-
making stores, as a credit-positive. However, the key task
remains maintaining sustainable profitability that can fund
sufficient maintenance and development capex, particularly in
relation to IT and online, where competition is increasing all
the time.

Improved, albeit Negative, FCF: The closure of non-performing
stores, staff restructuring and the comprehensive disposal plan
has helped management focus on fewer and more promising banners
and limited cash outflows. The revised 'New Money' financial
structure also supports the group's turnaround plan by reducing
cash drain. Despite the improvements, Fitch forecasts continuing
cash outflows in FY19 and FY20, resulting in lower cash available
for capex and debt repayment. Under its projections Fitch does
not expect FCF to become broadly neutral over the next three
years.


Derivation Summary

Vivarte has a lower EBITDAR margin (17.4% at FY18) than most non-
food retailers, due to its uncompetitive position in the fast-
changing mass market clothing market. The traditional store-based
business model, a large debt burden and significant capex needs,
combined with heavy restructuring costs, also weaken its cash
conversion capability compared with asset-light competitors. As
with other non-IG non-food groups (IKKS 'C', New Look 'CC'),
leverage is high (on a FFO lease-adjusted net leverage basis) and
liquidity tight with little flexibility due to nearly fully drawn
debt and letter of credit facilities.

Key Assumptions

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

  - Decreasing like-for-like sales until FY22

  - EUR52 million of restructuring and other non-recurring costs
    in FY19 and EUR30 million in FY20

  - EUR37 million of capex in FY19 and EUR31million-EUR32 million
    per year thereafter

  - A small release (EUR10 million) in cash collateral in FY19 on
    lower trade payables

  - Available cash reduced by EUR100 million to take into account
    seasonal working capital requirements and cash collateral
    needs for lenders

  - No dividends in the next four years

Key Recovery Assumptions

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

  - The recovery analysis assumes a post-restructuring EBITDA of
    EUR51 million. This is the EBITDA level that allows the group
    to continue to operate normally, and leads to a breakeven
    FCF.

  - Fitch has maintained the distressed multiple at 4.0x in light
    of the weakened business model. The distressed multiple is at
    the low end of the sector due to the likely loss of
    attractiveness among potential buyers following several
    previous failed restructurings in an adverse market
    environment. Fitch has assumed existing drawn commitments,
    including drawn letters of credit, ranking ahead of the 'New
    Money' debt in the payment waterfall. The lower EBITDA,
    following the disposal of Besson (shoes), is a key driver
    behind the reduction in expected recovery rates for new money
    debt creditors to 43% from 33%. This is still within the
    'RR4' band, representing average recovery prospects in the
    event of default.

RATING SENSITIVITIES

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

  - Evidence of return to neutral-to-positive like-for-like sales
    growth, with material improvement in profitability

  - Mitigated refinancing risk, implying successful repayment
    through asset sales of the remaining EUR100 million of the
    EUR300 million "New Money" debt by end-October 2019

  - Improved financial flexibility including neutral FCF, FFO
    fixed charge cover sustained at above 1.2x and perennial
    access to committed facilities to fund working capital

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

  - Evidence that the group will fail to repay the outstanding
    debt balance under the EUR300 million "New Money" debt by
    end-October 2019, likely driven by lack of sales and EBITDA
    improvement in FY19 and insufficient asset disposals (asset
    sales are expected by end June 2019).

  - Sharp deterioration of liquidity

  - Signs that the group is heading towards a debt restructuring

Liquidity and Debt Structure

Unfunded Liquidity:  Fitch estimates that Vivarte currently has
around EUR76 milion-EUR85 million in readily available cash and
undrawn debt facilities, excluding around EUR105 million letters
of credit facilities (EUR55 million outstanding at end-August
2018), some of which are cash collateral-backed.  With a smaller
likely usage of letters of credit facilities due to the various
business disposals, Vivarte may be able to release some
collateralised cash (EUR73 million at end-August 2018, excluded
from its available cash calculations).

Public Ratings with Credit Linkage to other ratings

Not applicable.



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G E R M A N Y
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HORNBACH BAUMARKT: S&P Lowers Sr. Unsec. Notes Ratings to 'BB'
--------------------------------------------------------------
On Dec. 21, 2018, S&P Global Ratings lowered its ratings on
Hornbach and on its senior unsecured notes to 'BB' from 'BB+'.
The recovery rating on the notes is unchanged at '3'.

The downgrade reflects S&P's view that Hornbach faces stiff
competition from existing and pure online players in the German
and Austrian do-it-yourself (DIY) sector. This constrains
Hornbach's ability to transfer higher input prices to customers
amid ongoing high overhead expenses for the group's omnichannel
strategy. This results in lower operating margins and in turn
limits cash conversion and the group's financial flexibility in
light of substantial ongoing real estate investments.

Despite strong sales growth and increasing market share,
Hornbach's third quarter reporting revealed increasing cost
pressures on account of intake prices for building materials,
higher rebates after temporarily more delisted products, and
higher home delivery costs in the companies' ecommerce business.
The higher costs have reduced Hornbach's gross margin by about 60
basis points during the third quarter of fiscal year 2018 (ending
Feb. 28, 2019) and accelerated the trend of declining
profitability. S&P said, "We now expect S&P Global Ratings-
adjusted EBITDA margins to drop to about 7.6% from nearly 8.4% in
2017, which is among the lowest in our DIY retailers' peer group.
At the same time, in our view, the strong like-for-like sales
growth will not fully offset margin pressures, resulting in
decreasing earnings and operating cash flow for the current
fiscal year."

S&P said, "While we expect building material price inflation to
persist generally, we regard the high prices for items such as
wood products in 2018 to moderate over 2019. In our base case, we
anticipate ongoing reduction and normalization of such input
prices over fiscal 2019, lending some stability to margins. In
addition, we expect a reduction in delisting in the next
quarters. Moreover, we believe that Hornbach has the strongest
pricing flexibility among DIY players in Germany since its
"everyday low price" strategy is seen as a strong benchmark for
competitors. Nevertheless, we continue to expect stiff
competition over 2019, leaving the group's margins vulnerable to
any unexpected input price increases in other product categories.

"We expect the group to benefit from the increasing share of
generally higher margin private-label products and products
sourced in Asia, but we believe this might be insufficient to
fully offset margin pressures. However, the company's geographic
diversification, with 45% of revenues generated outside Germany,
and its successful expansion into less competitive and higher
margin markets such as Czech Republic and the Netherlands, should
result in more stable profits and better predictability of cash
flows.

"Our ratings on Hornbach continue to reflect our view of the
credit profile of its parent Hornbach Holding on a combined
basis. This is because we consider Hornbach Baumarkt as an
integral part of the Hornbach Holding group; it generates the
vast majority of Hornbach Holding's earnings and is the main
source of the parent company's cash flow and liquidity.
Therefore, our rating on Hornbach is based on Hornbach Holding's
consolidated group accounts, which, among other factors, allow us
to capture the benefit of a relatively moderate share of rented
stores in the overall group.

"Following the revision of our base case, we expect the group's
credit metrics to moderately weaken over the next two years
compared with our previous base case and the past two reported
years. We forecast that S&P Global Ratings-adjusted funds from
operations (FFO) to debt will hover at still-healthy levels of
around 20%-25% compared with about 27% in fiscal 2017. In
addition, we still see the rating supported by a robust level of
the retail-specific EBITDAR cash interest plus rent coverage
ratio of 3.0x, given the low interest burden and higher share of
store ownership resulting in moderate rent payments. However, we
see the cash flow profile as the main constraint for the rating,
with high planned investments in real estate and ecommerce, and
moderate dividend payments amid decreasing earnings. In our view,
this will weaken the group's credit protection metrics and should
translate into comparably low adjusted discretionary cash flow
(DCF) to debt of less than 5%. In this respect, we understand
that the group could scale back real estate investment to protect
cash flows if needed.

"The stable outlook reflects our expectation that, despite a
highly challenging trading environment, the group's established
market position will enable it to withstand the strong market
competition, implement its plan to stem the decline in its
profitability, and achieve robust like-for like sales growth. We
anticipate that debt will creep up moderately given ongoing high
expansionary capital expenditure (capex) and moderate dividends,
resulting in S&P Global Ratings-adjusted DCF to debt of just
below 5%, adjusted FFO to debt of 20%-25%, and adjusted debt to
EBITDA of about 3.0x-3.3x over the next 12 months. The stable
outlook factors in timely refinancing of the 2020 maturing bullet
bond.

"We could downgrade Hornbach over the next 12 months if reported
free operating cash flow remains negative, for example as a
result of elevated capex, or no improvement in earnings due to a
very competitive home market or if remedial actions undertaken
are insufficient, resulting in S&P Global Ratings-adjusted EBITDA
margins falling to less than 7%. We would also downgrade Hornbach
if our adjusted FFO-to-debt ratio approaches 15%, adjusted debt
to EBITDA approaches 4.5x, or we view the refinancing of the
maturing bond as not being addressed in a timely manner,
resulting in less than adequate liquidity.

"Owing to margin pressure, the high level of adjusted debt, and
our forecast of weak free cash flow generation, we consider an
upgrade as unlikely over the next year. The group continues to
invest, which will likely curtail any meaningful improvement in
its credit metrics.

"We could consider raising the rating if profitability improves
sustainably while like-for-sales continue to increase. Coupled
with lower spending on discretionary capex and substantial
positive free operating cash flow, this should translate in FFO
to debt of at least 30% on and DCF to debt approaching 10%."

DIY and home improvement operator Hornbach is present across
Germany and eight other European countries: Austria, Netherlands,
Czech Republic, Switzerland, Sweden, Slovakia, Romania, and
Luxembourg. It provides customers a range of around 50,000 high-
quality DIY and gardening articles at everyday low prices through
a network of 158 large format retail outlets including 97 in
Germany and 61 in other European countries.

Under its base case, S&P assumes:

-- Macroeconomic factors that influence the DIY industry include
    GDP growth, consumer confidence, consumer price inflation,
     discretionary income, and unemployment rate. S&P's
     assumptions for Hornbach reflect economic scenarios for
     mainly Germany, Netherlands, Austria, Switzerland, and Czech
     Republic, which together have accounted for the majority of
     Hornbach's EBITDA in the last fiscal year.

-- Real GDP growth in Germany of 1.8% in 2018 followed by about
    1.4%-1.8% over the next two years, similar to the eurozone as
    a whole resulting in a supportive macroeconomic environment.

-- Hornbach's revenues to increase by about 4.0%-5.0% annually
    over the next three years above the market average, helped by
    strong demand in the online segment and consistently more
    competitive product prices compared with competitors.

-- Adjusted EBITDA margin of 7.6% in fiscal 2018 lowering
    further toward 7.0% in fiscal 2019 and fiscal 2020 on
     continuously strong competition, lower-margin online
     business, and increasing intake prices.

-- Working capital related annual cash outflow of about EUR20
    million-EUR30 million annually for fiscal 2018 and 2019 in
    line with sales growth and ramp up of inventory of three new
    stores in fiscal 2018 and one or two new openings in fiscal
    2019.

-- Elevated capex of EUR200 million-EUR220 million in fiscal
     2018 given two store buybacks in Berlin for EUR40 million-
     EUR50 million and the purchase of development land in
     Switzerland for around EUR30 million, moderating to normal
     annual capex of about EUR140 million-EUR160 million over the
     next three years, which still includes substantial
     expansionary capex.

-- Dividends of around EUR30 million per year, in line with
    previous years.

-- No major acquisitions.

Based on these assumptions, S&P arrives at the following credit
measures for fiscal 2018 and 2019:

-- Debt to EBITDA of about 3.0x-3.3x (2.7x in 2017).
-- FFO to debt of about 20%-25% (26.8% in 2017).
-- DCF to debt of not greater than 5% (6.2% in 2017).
-- EBITDAR to cash interest plus rent cover of around 3.0x (3.1x
    in 2017).



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I R E L A N D
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ARMADA EURO III: Fitch Assigns B-sf Rating to Class F Debt
----------------------------------------------------------
Fitch Ratings has assigned Armada Euro CLO III DAC final ratings,
as follows:

Class X: 'AAAsf'; Outlook Stable

Class A-1: 'AAAsf'; Outlook Stable

Class A-2: 'AAAsf'; Outlook Stable

Class B: 'AAsf'; Outlook Stable

Class C: 'Asf'; Outlook Stable

Class D: 'BBB-sf'; Outlook Stable

Class E: 'BB-sf'; Outlook Stable

Class F: 'B-sf'; Outlook Stable

Class Z: 'NRsf'

Subordinated notes: 'NRsf'

Armada Euro CLO III DAC is a cash flow collateralised loan
obligation (CLO). Net proceeds from the issuance of the notes are
being used to purchase a portfolio of EUR400 million of mostly
European leveraged loans and bonds. The portfolio is actively
managed by Brigade Capital Europe Management LLP. The CLO
envisages a four-year reinvestment period and an 8.5-year
weighted average life (WAL).

KEY RATING DRIVERS

B' Portfolio Credit Quality

Fitch considers the average credit quality of obligors to be in
the 'B' range. The Fitch-weighted average rating factor of the
current portfolio is 32.4.

High Recovery Expectations

At least 90% of the portfolio will comprise senior secured
obligations. Fitch views the recovery prospects for these assets
as more favourable than for second-lien, unsecured and mezzanine
assets. The Fitch-weighted average recovery rate of the current
portfolio is 65.1%.

Diversified Asset Portfolio

The transaction includes four Fitch matrices that the manager may
choose from, corresponding to the top 10 obligors limited at 17%
and 26.5%, and with fixed-rate assets limited at 0% and 10%. The
manager is allowed to interpolate between these matrices. The
transaction also includes limits on maximum industry exposure
based on Fitch's industry definitions. The maximum exposure to
the three largest (Fitch-defined) industries in the portfolio is
covenanted at 40%. These covenants ensure that the asset
portfolio will not be exposed to excessive concentration.

Portfolio Management

The transaction features a four-year reinvestment period and
includes reinvestment criteria similar to other European
transactions. Fitch's analysis is based on a stressed-case
portfolio with the aim of testing the robustness of the
transaction structure against its covenants and portfolio
guidelines.

Cash Flow Analysis

Fitch used a customised proprietary cash flow model to replicate
the principal and interest waterfalls and the various structural
features of the transaction, and to assess their effectiveness,
including the structural protection provided by excess spread
diverted through the par value and interest coverage tests.

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to three notches for the rated
notes. A 25% reduction in recovery rates would lead to a
downgrade of up to four notches for the rated notes.

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

Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

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

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


FRANKLIN IRELAND: S&P Affirms 'B' Long-Term ICR, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'B' long-term issuer
credit rating on Ireland-incorporated Franklin Ireland Topco
Ltd., the parent of value-added tax (VAT) refund and payment
solutions provider Planet. The outlook on Planet remains stable.

S&P said, "We also affirmed our 'B' issue ratings on the EUR355
million term loan B and the EUR65 million revolving credit
facility (RCF). The recovery rating on the loan is '3',
reflecting our expectation of meaningful recovery prospects (50%-
70%; rounded estimate: 50%) in the event of a payment default.

"The affirmation reflects our view that, although Planet may not
reach our previous forecast of S&P Global Ratings-adjusted EBITDA
of EUR65 million-EUR70 million in 2018, the current rating is
supported by the company's free operating cash flow generation
profile (before cash collection from receivable securitization),
together with adequate liquidity position."

The Tax Free market environment has been very challenging in 2018
in Europe due to the relative strength of the euro and of the
sterling against key tourist currencies such as the U.S. dollar,
Russian ruble (RUB) and Chinese yuan (CNY). As a result, Planet's
year-to-date October revenue is behind the budget target, mainly
due to a lower volume of budgeted vouchers in the Tax Free
segment. S&P said, "We expect the number of vouchers to be 12%
below the company's budget for the full year 2018. Currency
fluctuations have had a direct impact on arrivals and spending of
tourists from key source markets including China, the U.S.,
Russia, and the Middle East. In addition, we expect that the
ongoing protest in Paris may have an impact on tourists' spending
in December as luxury retailers expect sales to decline. Although
we view these incidents as short term, and tourists may decide to
change their destination for another city in Europe, the protests
could increase the volatility of the group's earnings for 2018
and 2019 as France represents about 23% of the group's total Tax
Free gross profit."

S&P said, "Mitigating this risk, we take a positive view of the
thus-far successful integration of Planet Payment, where
management has identified e-commerce and new ATM capabilities as
growth drivers for the medium term. We believe the payment
division (dynamic currency conversion [DCC] and processing and
acquiring services) should bring more stability and
predictability in earnings than the VAT segment as payment
solutions does not only target physical retailers but also the e-
commerce, lodging, entertainment, and restaurant industries.
Despite the payment solutions market being very competitive and
dominated by larger players, we believe the company will continue
to target niche but profitable markets with new emerging-market
partnership opportunities, such as with Alipay and WeChat in
China. Finally, the recent opening of the Tax Free market in the
United Arab Emirates should bring additional revenues to the VAT
segment, which should balance the volatility coming from more
mature geographies such as France and the U.K.

"After the revision of our base case, we expect that Planet's
leverage will remain very high over the next couple of years,
with adjusted debt to EBITDA of close to 7.0x in 2018 and 6.5x-
7.0x in 2019 compared with our previous forecast of close to 6.0x
for 2018. We exclude the group's preferred equity certificates
from our debt adjustment and treat them as equity in our
calculation. Our rating on Planet also reflects our forecast of
positive free operating cash flow (FOCF) generation of EUR20
million on average in 2018 and 2019 supported by limited change
in working capital. Indeed, the company put in place a
nonrecourse factoring program at the end of 2017 to compensate
the working capital swing improving the cash conversion overall.
We expect FOCF generation to remain positive excluding the cash
inflow coming from receivable securitization.

"The stable outlook reflects our view that, despite the
challenging market environment in the Tax Free segment, Planet's
adjusted leverage should remain close to 7.0x in 2018, declining
to 6.5x-7.0x in 2019, together with positive free operating cash
flow generation before receivable securitization. We also expect
the group's liquidity will remain adequate.

"The rating could come under pressure in the next 12 months if we
observe a more pronounced deterioration in Planet's adjusted
EBITDA than we forecast in 2018 and 2019. In particular, we could
lower the rating if the ongoing protest in Paris impacts the
traffic of tourists and ultimately the Tax Free segment's EBITDA,
or if a more pronounced utilization of the RCF pushes our
adjusted leverage ratio above 7x within a year. At the same time,
we could lower the rating if liquidity comes under pressure, for
example if the springing covenant under Planet's RCF prevents the
company drawing on it. Finally, we could also take a negative
rating action following material or transformative debt-financed
acquisitions, or dividend recaps that would push up the group's
leverage.

"We view an upgrade as unlikely, mainly because of the elevated
leverage, modest scale of the business, and limited cash flow
generation. Over the longer term, we could raise the rating if
the group commits to a more conservative financial policy,
leading us to consider the overall likelihood of releveraging as
remote. We could raise our rating on Planet if adjusted debt to
EBITDA decreased to below 5x on a sustainable basis, combined
with sizable generation of FOCF."

Planet, formerly Fintrax, is a value-added tax (VAT) refund and
payment solutions provider. The Tax Free revenues represents 61%
of the group's total gross profit while the payment business,
comprising the DCC and processing and acquiring services
represents 39%. Acquired at the end of 2017, Planet Payment
broadened the group's EBITDA base, diversified the group's
operations away from Western Europe, and increased its exposure
to the DCC segment. It has also lead the group to rebrand the new
combined group to Planet from Fintrax. For 2018, S&P estimates
Planet will generate revenues of EUR330 million-EUR340 million,
with a reported EBITDA of EUR55 million-EUR60 million including
restructuring costs.

In S&P's base case it assumes:

-- GDP growth of 2.0% in 2018 and 1.7% in 2019 in Europe and
    6.5% in 2018 and 6.3% in 2019 in China, which should support
    tourist demand.

-- A stable VAT regulatory environment in major inbound markets,
    particularly in the EU. S&P forecasts a EUR/$ foreign
    exchange rate of 1.18 in 2018 and 1.17 in 2019; a EUR/CNY
    exchange rate of 7.83 in 2018 and 8.26 in 2018; and a EUR/RUB
    exchange rate of 73.95 in 2018 and 77.69 in 2019.

-- Revenue growth of about 25% in 2018 to between EUR330 million
    and EUR340 million from EUR268 million in 2017 supported by
    the full effect of the Planet acquisition; and of about 5% in
    2019 supported by an increasing tourist flow from key source
    markets and expanding market share in the payment solutions
    segment.

-- Reported EBITDA of EUR55 million-EUR60 million in 2018 in
    adjusted EBITDA after restructuring costs, and close to EUR60
    million in 2019.

-- Working capital outflow of up to EUR5 million in 2018 and
    2019.

-- Reported capital expenditures (capex) of EUR15 million-EUR20
    million in 2018 and 2019.

-- No acquisitions or shareholder distributions.


GOLDENTREE LOAN 2: Moody's Assigns B2 Rating to Class F Notes
-------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to notes issued by GoldenTree Loan
Management EUR CLO 2 Designated Activity Company:

EUR2,000,000 Class X Senior Secured Floating Rate Notes due 2032,
Definitive Rating Assigned Aaa (sf)

EUR240,000,000 Class A Senior Secured Floating Rate Notes due
2032, Definitive Rating Assigned Aaa (sf)

EUR10,500,000 Class B-1-A Senior Secured Floating Rate Notes due
2032, Definitive Rating Assigned Aa2 (sf)

EUR12,000,000 Class B-1-B Senior Secured Floating Rate Notes due
2032, Assigned Aa2 (sf)

EUR15,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2032,
Definitive Rating Assigned Aa2 (sf)

EUR15,700,000 Class C-1-A Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned A2 (sf)

EUR12,000,000 Class C-1-B Senior Secured Deferrable Floating Rate
Notes due 2032, Assigned A2 (sf)

EUR28,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned Baa3 (sf)

EUR24,300,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned Ba2 (sf)

EUR9,900,000 Class F Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned B2 (sf)

RATINGS RATIONALE

Moody's definitive ratings of the rated notes reflect the risks
from defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants, as well as
the transaction's capital and legal structure. Furthermore,
Moody's considers that the collateral manager GoldenTree Loan
Management, LP has sufficient experience and operational capacity
and is capable of managing this CLO.

The Issuer is a managed cash flow CLO. At least 96% of the
portfolio must consist of senior secured obligations and up to 4%
of the portfolio may consist of senior unsecured obligations,
second-lien loans, mezzanine obligations and high yield bonds.
The portfolio is expected to be 90% ramped up as of the closing
date and to comprise of predominantly corporate loans to obligors
domiciled in Western Europe. The remainder of the portfolio will
be acquired during the six month ramp-up period in compliance
with the portfolio guidelines. Moody's noted that collateral
obligations may also be acquired by the CLO issuing SPV by way of
participation from a bankruptcy remote warehousing SPV with the
intention to elevate the sale of those obligations as soon as
practicable around the effective date. Collateral Obligations not
elevated by the effective date will be considered (i) at zero for
the Effective Date Determination Requirement and (ii) at its
collateral value for calculation of the overcollateralization
tests after the Effective Date.

GoldenTree LM will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's 4.5-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk obligations and are subject to certain restrictions.

Interest and principal amortisation amounts due to the Class X
Notes are paid pro rata with payments to the Class A Notes . The
Class X Notes amortise by EUR 250,000 over eight payment dates
starting on the second payment date.

In addition to the ten classes of notes rated by Moody's, the
Issuer has issued EUR 35,470,000 of Subordinated Notes which are
not rated.

The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.

Methodology underlying the rating action:

The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in August 2017.

The Credit Ratings of the notes issued by GoldenTree Loan
Management EUR CLO 2 Designated Activity Company were assigned in
accordance with Moody's existing Methodology entitled "Moody's
Global Approach to Rating Collateralized Loan Obligations" dated
August 31, 2017. Please note that on November 14, 2018, Moody's
released a Request for Comment, in which it has requested market
feedback on potential revisions to its Methodology for
Collateralized Loan Obligations. If the revised Methodology is
implemented as proposed, the Credit Rating of the notes issued by
GoldenTree Loan Management EUR CLO 2 Designated Activity Company
may be neutrally affected.

Factors that would lead to an upgrade or downgrade of the
ratings:

The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. The collateral manager's
investment decisions and management of the transaction will also
affect the notes' performance.

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
August 2017.

Moody's used the following base-case modeling assumptions:

Par Amount: EUR 400,000,000

Diversity Score: 36*

Weighted Average Rating Factor (WARF): 2817

Weighted Average Spread (WAS): 3.5%

Weighted Average Coupon (WAC): 4.0%

Weighted Average Recovery Rate (WARR): 42%

Weighted Average Life (WAL): 8.5 years

  * The covenanted base case diversity score is 37, however
Moody's has assumed a diversity score of 36 as the deal
documentation allows for the diversity score to be rounded up to
the nearest whole number whereas usual convention is to round
down to the nearest whole number.

Moody's has addressed the potential exposure to obligors
domiciled in countries with local currency ceiling (LCC) of A1 or
below. As per the portfolio constraints and eligibility criteria,
exposures to countries with LCC of A1 to A3 cannot exceed 10% and
obligors cannot be domiciled in countries with LCC below A3.



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


COOPERATIVA MURATORI: Moody's Cuts CFR to Ca, Outlook Negative
--------------------------------------------------------------
Moody's Investors Service has downgraded to Ca-PD/LD from Caa3-PD
the probability of default rating of Italian construction company
Cooperativa Muratori e Cementisti C.M.C. following the group's
announcement that it has missed to pay the interest on its EUR325
million senior unsecured notes. Concurrently, Moody's downgraded
to Ca from Caa2 the group's corporate family rating and to Ca
from Caa2 the instrument ratings on CMC's EUR250 million 6.875%
and EUR325 million 6% senior unsecured notes due 2022 and 2023,
respectively.

The limited default "LD" designation attached to CMC's PDR
reflects that the missed interest payment constitutes a default
under Moody's definition. The LD designation will remain until
the group resolves the missed payment.

The outlook on all ratings is negative.

This rating action concludes the review for downgrade process
Moody's initiated on November 14, 2018.

RATINGS RATIONALE

The downgrade reflects CMC's failure to make the interest payment
on its 6.0% EUR325 million senior unsecured notes on December 15,
2018 after the end of the 30 days grace period, which has started
on November 15, 2018. CMC has entered into a procedure of
arrangement with creditors, with reserve according to art. 161,
subsection 6, of the R.D. 267/1942, under Italian Insolvency Law.

While CMC remains focused on pursuing its ordinary business
activities, which are under supervision by the Court of Ravenna,
Moody's understands that the group continues with its
preparations for a potential restructuring of its indebtedness.

The downgrade of the CFR and the instrument ratings on the senior
unsecured notes to Ca also take into account uncertainty around
whether CMC will be able to restructure its debt and to implement
a more sustainable capital structure within the next 12 months.

WHAT COULD CHANGE THE RATING DOWN / UP

Ratings could be further downgraded should the group default on
other elements of its capital structure or pursue a formal
reorganization of its debt, or if Moody's were to revisit its
recovery expectations on CMC's debt instruments to lower than
currently estimated.

An upgrade of CMC's ratings appears unlikely before its
indebtedness is reduced to more sustainable levels.

OUTLOOK

The negative outlook reflects Moody's view that CMC may have
difficulty refinancing its debt without restructuring or
impairment to creditors.

RATING METHODOLOGY

The principal methodology used in these ratings was Construction
Industry published in March 2017.


NAPLES CITY: Fitch Affirms BB+ Long-Term IDRs, Outlook Negative
---------------------------------------------------------------
Fitch Ratings has affirmed the Italian City of Naples' Long-Term
Foreign- and Local-Currency Issuer Default Ratings at 'BB+' and
Short-Term Foreign Currency IDR at 'B'. The Outlook is Negative.
The issue ratings on Naples' senior unsecured bond and on the
city's programme have also been affirmed at 'BB+'.

The ratings factor in Naples' reliance on a supportive
institutional framework in the form of a preferential payment
mechanism for timely debt servicing, as weak tax and fee
collection rates weigh on fiscal performance, limiting the
recovery of the city's fund balance deficit. They also reflect
the city's GDP growth, high but stable debt and ongoing weak
liquidity.

The Negative Outlook reflects challenges in implementing the
city's recovery plan, which hinges on asset sales of about EUR400
million in 2018-2020, and on improving revenue collection, which
has so far been less than adequate.

KEY RATING DRIVERS

Institutional Framework (Neutral/Stable)

Fitch views inter-governmental relations as neutral to Naples'
ratings. Naples benefits from state transfers to offset its
fiscal capacity, which is weaker than the national average, and
capital subsidy funding for large projects. State transfers
account for one-third of current revenue, the most relevant being
the equalisation fund (EUR340 million in 2017).

Naples has also received subsidised loans to pay down its
commercial liabilities and legal coverage to reschedule its
recovery plan to 20 years from the original 10 years. The central
government has taken over nearly 80% of the EUR85 million off-
balance sheet debt accrued for past liabilities linked to the
after-earthquake reconstruction.

The preferential payment mechanism allows Naples to prioritise
debt service, together with staff costs and some defined
essential services, as long as subordinated bills are paid
according to the chronology of invoices. Fitch calculated Naples'
prioritised operating expenditure at 85% of total spending and
evaluated the city's adjusted senior operating margin in its
overall assessment.

Fiscal Performance (Weakness/Stable)

Fitch expects Naples to record an operating margin, adjusted for
difficult-to-collect revenue, at 7.5% of operating revenue, or
EUR80 million-EUR90 million per year in 2018-2020, covering
interest expenses. However, when adjusted for operating
expenditure that could be subordinated, the margin improves to
EUR230 million or 20%, translating into debt service coverage of
1.25x from 0.50x. The city's plan to strengthen the margin by
improving tax and fee collection continues to fall short of
expectations. Therefore, Fitch expects the city to collect about
80% of its forecast EUR1 billion own revenue.

Fitch expects total operating expenditure to remain under
control, with purchases growing at 1.4% rate in the medium term.
Staff costs will continue to decrease due to early retirements
and a hiring freeze under the recovery plan, which has led to an
employee reduction of roughly 15% of the city's workforce since
2014. Under Fitch's forecasts, the city's EUR0.8 billion capex in
2019-2020 will focus on transportation, extraordinary road
maintenance, public lighting and urban renovation. They will
mostly be funded by non-debt resources such as EU funds and
transfers.

The city's plan to sell real estate assets will be devoted to
shrinking the fund balance deficit, which Fitch expects to hover
around EUR1.3 billion over the medium term. Fitch believes that
the planned EUR400 million asset sales may take longer than
expected to materialise, given the EUR35 million sale of a
municipal company's stake in 2018 was the first tangible result
since the launch of the recovery plan in 2014.

Debt, Liabilities and Liquidity (Weakness/Stable)

Under Fitch's rating scenario, Naples' direct risk will stabilise
at around EUR2.4 billion in 2018-2020 net of undrawn borrowing,
or above 200% of the budget when EUR1.2 billion subsidised loans
to pay down the city's commercial liabilities are included. In
its rating case, Fitch expects the city's debt payback ratio to
hover around 30 years in the medium term, improving to 10 years
when considering the senior operating margin. New borrowing of
around EUR250 million, which roughly matches the city's debt
repayment over the next two years, will be drawn from Cassa
Depositi e Prestiti (CDP; BBB/Negative; the national government
financial arm) and the European Investment Bank.

CDP and the national government account for 75% of Naples' direct
risk and almost the entire stock of Naples' loans carries fixed
interest rates, reflecting a low risk appetite. Fitch expects
debt coverage will be weak, while cash flows remain a risk over
the medium term, since the city's liquidity averaged around
EUR100 million in 2017-2018. However, timely debt service is
underpinned by the preferential payment mechanism that binds the
treasury bank to earmark available liquidity for servicing
financial obligations.

Economy (Neutral/Stable)

With nearly one million inhabitants, Naples is one of the largest
Italian cities. Although it is the most dynamic and
industrialised city in southern Italy, its socio-economic profile
remains weak relative to national levels, and is also affected by
a large shadow economy. Naples' official labour market continues
to underperform the national economy with an unemployment rate of
more than 20% (11.7% nationally). The city's mild GDP recovery,
which is expected to continue in 2018-2019, driven by tourism,
industry and public investments, could help improve tax
performance.

Management & Administration (Weakness/Negative)

The city's administration is facing a challenging recovery plan
amid a low tax-compliant environment, where the achievement of an
annual EUR130 million-EUR180 million shrinkage of the fund
balance deficit relies on overcoming tax evasion. Accounts
payable of EUR1.5 billion, when outstanding bills for capex are
added, at end-2017 and subsequent one-year payment in arrears of
commercial debt could add pressure to the city's liquidity.

In Fitch's view, continued reliance on the preferential payment
mechanism carries a systemic risk as pressures on liquidity from
growing payables and contingent liabilities may hamper the
functioning of the mechanism, eventually leading to default.
Fitch reflects this risk by notching Naples' ratings off the
Italian sovereign (BBB/Negative) by nearly one category.

KEY ASSUMPTIONS

Fitch assumes that the existing preferential payment mechanism as
defined by national law will continue to support timely debt
servicing by Naples, despite the city's growing commercial
liabilities in the medium term as its cash flows generation
capacity continues to be weak.

RATING SENSITIVITIES

A persistently negative adjusted current balance or failure to
shrink the fund balance deficit would lead to a downgrade. The
ratings could also be downgraded if debt and equivalents rise
above 2.5x operating revenue or if the preferential payment
mechanism protecting financial lenders is removed or undermined
by regulatory changes.

The Outlook could be revised to Stable if the fund balance
deficit shrinks as a result of higher- than-expected asset sales
or an improvement in operating performance.


MOBY SPA: S&P Cuts ICR to CCC- on Deteriorating Liquidity Profile
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Italian ferry operator Moby SpA to 'CCC-' from 'CCC+'. The
outlook is negative.

S&P said, "At the same time, we lowered our issue-level rating on
the company's senior secured debt to 'CCC' from 'B-'. The
recovery rating is unchanged at '2', indicating our expectation
of substantial recovery (70%-90%; rounded estimate: 85%) for the
secured lenders in the event of a payment default.

"The rating action reflects our expectation that Moby will likely
breach its net leverage covenant in the quarter ending Dec. 31,
2018, barring an amendment, waiver, or asset disposal. At the
start of 2018, the lender group therefore agreed to relax the
covenant threshold for the test in December 2018; net leverage
may not exceed 5.5x (it was previously 3.5x). A covenant breach
would cause all debt to come due, thus leading to a liquidity
shortfall. As of Sept. 30, 2018, there was EUR205.8 million
outstanding under the secured bank debt and EUR300 million under
the secured notes.

"Even if Moby were able to avert the covenant breach for December
2018, the covenant steps down to the original threshold of 3.5x
in June 2019. Unless the lender group agrees to a waiver or
loosens the threshold requirements, Moby will remain under
persistent covenant compliance stress in 2019. Because it is
experiencing difficult trading conditions, we forecast the
company's cash flow generation will be negative in 2019."

Moby's cash position tightened to about EUR125 million as of
Sept. 30, 2018, from about EUR234 million as of Dec. 31, 2017.
This, combined with its weak EBITDA generation, will weigh on its
liquidity. S&P said, "We see a greater risk that the company
might take steps to restructure its debt, for example, by
amending the mandatory amortization schedule or deferring
maturities. We would view such debt restructuring as tantamount
to default."

S&P said, "We maintain our reported EBITDA forecast for 2018 at
EUR75 million-EUR80 million, based on Moby's weakened EBITDA
generation. Its EBITDA stood at about EUR67 million in the first
nine months of 2018, down from about EUR104 million in the same
period in 2017, excluding capital gain from asset sales. We do
not anticipate any major EBITDA upside in 2019 because of the
fierce competition on Moby's core ferry routes.

"Moby's cash flow generation is likely to remain constrained,
forcing the company to use its cash reserves to make a regular
mandatory debt amortization payment of about EUR50 million in
2019. Therefore, we view Moby's capital structure as
unsustainable."

Additional pressure on the rating stems from uncertainty
regarding the outcome of a European Commission (EC) investigation
started in 2011, which could result in significant cash calls on
the company. The EC is investigating whether subsidies from the
Italian state to Tirrenia-CIN and Toremar, Moby's wholly-owned
subsidiaries, constitute incompatible state aid and threaten to
distort competition. Until the EC concludes the investigation,
the Italian government is contracted to pay annual subsidies of
about EUR87 million for all of Tirrenia-CIN's and some of
Toremar's loss-making routes, in exchange for provision of
services, especially in the winter season. The EC investigation
also encompasses allegations that the privatization of the
Tirrenia-CIN business was conducted unfairly.

To provision for an adverse EC ruling, Moby agreed with Tirrenia-
CIN at the time of the acquisition in 2012 to defer EUR180
million of the acquisition price (included in debt) and suspend
the payment until the EC concludes the investigation. S&P said,
"We consider that the deferred payment provides a cushion for
Moby because it can be reduced or terminated if an EC fine
materializes. Moby has also negotiated payment in deferred
installments (EUR55 million already due and suspended, EUR60
million due in April 2019, and EUR65 million in April 2021),
although the EC could overrule this payment agreement. However,
we acknowledge that the EUR180 million may not cover all the
possible outcomes and, depending on the severity of the potential
fines and payment schedule, Moby could face a liquidity
shortfall."

As a ferry operator with a fleet of 48 passenger and cargo
ferries and 17 tugboats, Moby predominantly serves routes between
continental Italy and Italian islands (as well as the French
island Corsica).

S&P said, "Our business risk assessment for Moby continues to
reflect the company's narrow business scope compared with other
global ship operators and transport service providers.
Furthermore, we consider that Moby participates in a competitive
market where strategic pricing to maintain market share will
continue to strain profitability. Moby's revenues are highly
concentrated on Sardinian routes, some of which are not
profitable outside the tourist season. We note that certain
routes never turn a profit. Although we assume that Moby will
continue to receive state grants in 2019 (EUR86 million per
year), such aid will terminate in 2020, and we view this as
negative to the rating on Moby.

"That said, we assume that Moby could discontinue the services,
sell vessels, charter them out, or implement other efficiency
measures to mitigate any potential changes to the system of state
grants. In addition to its passenger ferry operations, Moby
generates about 30% of its total revenue from cargo
transportation, which we consider displays more stable volume
patterns throughout the year. Partly offsetting the negatives are
Moby's leading position as a ferry operator in the niche Italian
market, its well-recognized and long-standing brand and its
relatively young and difficult-to-replicate fleet of vessels.

"Our financial risk assessment reflects the company's high
adjusted debt relative to its cash flows. We forecast S&P Global
Ratings-adjusted funds from operations (FFO) to debt of 10%-12%
in 2018 and 2019 (compared with 10% in 2017) and adjusted debt to
EBITDA of 6.0x-7.0x in 2018 and 2019 (compared with 5.9x in
2017). Our adjusted calculation for debt to EBITDA is not
consistent with definition of net debt leverage used by the bank
in calculating the leverage covenant. This is mainly because we
apply our standard operating lease and surplus cash adjustments
to total adjusted debt.

"The negative outlook reflects our expectation that absent a
covenant waiver, amendment to its credit agreement, or asset
disposal, Moby will face a liquidity shortfall within the next
six months, which could lead to a debt restructure.

"We would lower the rating if a default appears to be a virtual
certainty, because the company has failed to avert a covenant
breach or intends to take steps to restructure its debt."

A positive rating action would depend on Moby's ability to obtain
covenant waivers or amendments for 2019 tests, which would
alleviate the recurring compliance pressure. It would also
require the company to demonstrate positive revenue and EBITDA
growth for several quarters, leading to improved cash flow
generation and diminished risk of debt restructuring.


UNIPOL BANCA: Moody's Affirms Ba3 Unsecured Debt Rating
-------------------------------------------------------
Moody's Investors Service affirmed Unipol Banca S.p.A.'s long-
term senior unsecured debt rating of Ba3 as well as the long-term
deposit rating of Ba1. The agency changed the outlook on the
long-term deposit rating to positive from negative, to reflect
the ongoing improvement in the bank's credit profile. The outlook
on the senior unsecured debt rating is now developing, reflecting
on the one hand, a possible further improvement in the bank's
credit profile, and on the other hand, the potential for higher
loss-given-failure.

The Baseline Credit Assessment and the adjusted Baseline Credit
Assessment were affirmed at b2 and b1 respectively.

RATINGS RATIONALE

BCA AFFIRMED TO REFLECT THE COMPLETION OF THE DERISKING PLAN

Unipol Banca's BCA was affirmed at b2, reflecting the
strengthening of the asset risk profile of the bank following the
bank's restructuring announced in June 2017 and completed in
2018, in line with Moody's expectations.

The bank's creditworthiness has materially improved following the
transfer of EUR2.9 billion of non-performing loans to a sister
company within the insurance group Unipol Gruppo S.p.A. (Unipol
Gruppo, long-term issuer rating Ba2) in mid-2017. As of end-June
2018 the EUR806 million remaining problem loans are mostly in the
"unlikely-to-pay" category and are 47% covered by provisions,
facilitating potential further disposals.

As a result, the bank reported a 10.1% problem loan ratio at the
end of June 2018, far lower than the 36.5% at end-December 2016.
This compares well with the current Italian average of 12.5%
(according to the Bank of Italy), although is still much weaker
than 3.6%, the European Union average (according to the European
Banking Authority) at the same date.

Despite improvements in asset risk, Unipol Banca's
creditworthiness remains constrained by modest capitalisation,
limited profitability and strategic uncertainty, partly offset by
sound liquidity and funding.

Moody's considers the bank's ability to generate internal capital
to be limited given its small franchise and poor efficiency,
hence expects the bank's capitalisation to remain modest, absent
further support from its parent.

After the transfer of bad loans and the bank's EUR587 million
recapitalization, Unipol Banca has improved its liquidity and
funding profile. In addition, Unipol Banca continues to benefit
from its place within Unipol, which enhances its ability to
source funding and forms the basis of its business franchise.

AFFIRMATION OF THE ADJUSTED BCA

Moody's also affirmed the adjusted BCA at b1 (one notch above the
BCA), to reflect the agency's continued expectation of a moderate
probability of support from Unipol Gruppo.

LONG-TERM RATINGS AFFIRMED

Moody's affirmed Unipol Banca's senior unsecured rating of Ba3.
This reflects low loss-given-failure, resulting in a one-notch
uplift for senior debt instruments relative to the adjusted BCA,
as was previously the case.

Similarly, the affirmation of the long-term bank deposit rating
of Ba1 reflects the extremely low loss-given-failure (also
unchanged) resulting in three notches of uplift from the adjusted
BCA.

OUTLOOKS CHANGED

Moody's changed the outlook on the bank deposit rating to
positive from negative, reflecting the potential for improvement
of the standalone creditworthiness of the bank.

Moody's changed the outlook on the senior unsecured debt ratings
to developing from negative to account for both (1) a possible
further improvement in the creditworthiness of the bank; and (2)
the potential for higher loss-given-failure on the this
instrument, given forthcoming senior unsecured debt maturities.

WHAT COULD MOVE THE RATINGS UP/DOWN

Moody's may upgrade Unipol Banca's debt and deposit ratings if
the bank achieves (1) a sustained improvement in profitability
and (2) resolves the current strategic uncertainty without a
weakening in the bank's capital and asset risk profiles.

Conversely, Moody's could downgrade the ratings if (1) Unipol
Gruppo were to be downgraded; (2) the likelihood of support from
Unipol Gruppo were to diminish; (3) the bank's capitalisation
were to reduce; or (4) in the case of senior unsecured debt, the
stock of senior debt were to fall, increasing loss-given-failure
for these instruments.

LIST OF AFFECTED RATINGS

Issuer: Unipol Banca S.p.A.

Affirmations:

Long-term Counterparty Risk Ratings, affirmed Ba1

Short-term Counterparty Risk Ratings, affirmed NP

Long-term Bank Deposits, affirmed Ba1, Outlook Changed to
Positive from Negative

Short-term Bank Deposits, affirmed NP

Long-term Counterparty Risk Assessment, affirmed Ba1(cr)

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

Baseline Credit Assessment, affirmed b2

Adjusted Baseline Credit Assessment, affirmed b1

Senior Unsecured Regular Bond/Debenture, affirmed Ba3, Outlook
Changed to Developing from Negative

Outlook Action:

Outlook changed to Positive(m) from Negative



===================
K A Z A K H S T A N
===================


FORTEBANK JSC: S&P Affirms 'B/B' ICRs on Kassa Nova Acquisition
---------------------------------------------------------------
S&P Global Ratings affirmed its 'B/B' long- and short-term issuer
credit ratings on Kazakhstan-based ForteBank JSC and Kassa Nova
Bank JSC and revised the outlook on Kassa Nova to stable from
negative. The outlook on ForteBank is positive.

S&P said, "At the same time, we affirmed our 'kzBBB-' long-term
Kazakhstan national scale rating on ForteBank and 'kzBB+' long-
term Kazakhstan national scale rating on Kassa Nova."

Rationale

S&P said, "Our affirmations follow the announcement on Dec. 13,
2018, that ForteBank plans to acquire 100% of Kassa Nova's common
shares, subject to receipt of regulatory approval from the
National Bank of Kazakhstan (NBK). We see a very high likelihood
that this acquisition will complete in the first quarter of 2019.
The two banks are ultimately owned by the same shareholder --
Kazakh businessman Bulat Utemuratov -- who has decided to
consolidate his financial holdings.

"We expect the two banks will to remain separately licensed.
Nevertheless, in our view the deal has a strong commercial logic.
The increasing polarization of the Kazakh banking system has seen
some smaller players come under sustained pressure, the NBK has a
policy of championing consolidation in the industry, and the deal
could offer the two banks efficiency benefits if they share some
operations."

The acquisition of Kassa Nova is likely to be broadly neutral for
ForteBank's creditworthiness, because Kassa Nova is much smaller
than ForteBank. As of Nov. 1, 2018, Kassa Nova was 8% of
ForteBank's size by assets, 11% by loans, 7% by capital, and 8%
by retail deposits. S&P considers ForteBank able to integrate
Kassa Nova's operations into the ForteBank group.

S&P said, "Although we expect the deal to slightly weaken
ForteBank's capitalization, as measured by our risk-adjusted
capital (RAC) ratio, the ratio is forecast to remain adequate at
about 7.3% in 2019-2020, pro forma the acquisition. Kassa Nova's
reported asset quality is higher than ForteBank's, but its small
size means that is unlikely to meaningfully influence our view of
the combined group's asset quality." Provisioning for
nonperforming loans (NPLs; loans more than 90 days overdue) is a
weakness at both banks at about 43% for ForteBank as of Oct. 1,
2018, and about 38% for Kassa Nova as of Dec. 1, 2018.

S&P said, "ForteBank will pay cash for the acquisition, but we
expect its liquidity to remain solid. ForteBank's liquid assets
accounted for about 39% of the bank's total assets as of Oct. 1,
2018, and this ratio is unlikely to decrease materially.

"In our view, the acquisition of Kassa Nova will reinforce
ForteBank's moderate systemic importance in the Kazakh banking
system. The long-term rating on ForteBank is one notch higher
than its stand-alone credit profile (SACP), reflecting our
assumption that the government is supportive of the domestic
banking sector.

"We revised the outlook on Kassa Nova to stable because recent
improvements in asset quality have reduced pressure on the bank's
combined capital and risk position. The bank reported a marked
decrease in NPLs to 5.9% as of Dec. 1, 2018, from 7.7% as of
Sept. 1, 2018. Kassa Nova achieved these results by participating
in a government program to convert residential mortgages
denominated in foreign currency into Kazakhstani tenge at
favorable exchange rates. It also managed recoveries efficiently
and wrote off some problem loans.

"We expect Kassa Nova to maintain capitalization at strong
levels; we forecast that its RAC ratio will be above 10.5%
through 2018-2020. Assuming that the Fortebank acquisition
completes, we anticipate that, in time, Kassa Nova would benefit
from some optimization of administrative expenses, reduced
funding costs, and a stronger reputation. We see also some
potential for ForteBank to provide liquidity and capital support
if needed.

"The positive outlook on ForteBank reflects our expectation that
the bank's track record of generating new business, retaining its
competitive position in the Kazakh banking sector, and recovering
problem loans will continue over the next 12 months. In addition,
the planned acquisition of Kassa Nova would somewhat augment the
bank's market share in total assets and loans.

"We could upgrade the bank over the next 12 months if its year-
end 2018 results show a positive track record of generating
sustainable operating revenues, recovering problem loans, and
maintaining capitalization at adequate levels. An upgrade could
be supported by the bank completing the acquisition of Kassa Nova
on the envisaged terms.

"We could revise the outlook back to stable over the next 12
months if we do not see the bank's business and asset quality
indicators strengthening further. Negative rating pressure could
also build if our forecast RAC ratio decreased below 7%, for
example, because credit costs significantly exceeded our base-
case expectations, the bank saw rapid asset expansion, or the
Kassa Nova acquisition had a more negative effect on capital than
we currently expect.

"The stable outlook on Kassa Nova reflects our expectation that
its business and financial profiles will remain stable in the
coming year, supported by maintaining capitalization and asset
quality at current levels. Assuming that the acquisition
completes, we see ownership by the larger ForteBank as offering
some downside protection if there were unexpected negative
developments at Kassa Nova.

"Whether the acquisition completes or not, we do not expect a
positive rating action on Kassa Nova in the coming 12 months
because we do not envision material improvements to its SACP. If
we upgraded ForteBank in 2019, we are unlikely to raise our
ratings on Kassa Nova to the same level, reflecting its status as
a newly acquired subsidiary."

A negative rating action could follow if the bank's
capitalization weakened meaningfully below our base case
assumption over the next 12 months, leading to the projected RAC
ratio falling below 10%. This could result from higher growth
rates or lower retained earnings, increased provisions, or
payment of dividends. An increase in NPLs to over 10%, coupled
with a decrease in provisioning coverage below 50% of NPLs, could
also lead to a downgrade.



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


GREIF LUXEMBOURG: Moody's Reviews Ba3 Bond Rating for Downgrade
---------------------------------------------------------------
Moody's Investors Service placed the Ba2 corporate family rating,
Ba2-PD probability of default rating, and all instrument ratings
of Greif Inc. and Greif Luxembourg Finance SCA under review for
downgrade. The review follows Greif's December 20, 2018
announcement that it had entered into an agreement to buy
Caraustar Industries, Inc. from H.I.G. Capital in a cash
transaction valued at $1.8 billion. The transaction is subject to
customary closing conditions and is expected to close during the
first quarter of 2019.

Headquartered in Austell, Georgia, Caraustar Industries, Inc. is
an integrated manufacturer of 100% recycled paperboard and
converted paperboard products. Caraustar serves the four
principal recycled boxboard product end-use markets: tubes and
cores, folding cartons, gypsum facing paper and specialty
paperboard products. The company has 13 paper mills that produce
both uncoated recycled board and coated recycled board, 42 tube
and core converting plants, 7 folding carton converting plants
and 1 composite can facility. Caraustar reported sales of $1.35
billion in the twelve months ended September 30, 2018. Caraustar
is a portfolio company of H.I.G. Capital and does not publicly
disclose its financials.

On Review for Downgrade:

Issuer: Greif Luxembourg Finance SCA

Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently Ba3 (LGD5)

Issuer: Greif, Inc.

Probability of Default Rating, Placed on Review for Downgrade,
currently Ba2-PD

Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2

Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently Ba3 (LGD5)

Outlook Actions:

Issuer: Greif Luxembourg Finance SCA

Outlook, Changed To Rating Under Review From Stable

Issuer: Greif, Inc.

Outlook, Changed To Rating Under Review From Stable

RATINGS RATIONALE

The review for downgrade reflects the significant incremental
debt, change in risk profile and the integration risk inherent in
the transaction. Pro forma LTM leverage of over 4.5 times exceeds
the stated 4.2 times rating trigger (excluding synergies). The
acquisition will increase Greif's revenue by 35% and add exposure
to recycled boxboard product end-use markets.

Moody's review will focus on pro forma credit metrics at close,
projected synergies and plan to deleverage. The review will also
focus on the integration plan, cost to integrate and management's
strategy for managing the new segment. The corporate family
rating downgrade, if any, is expected to be no more than one
notch.

Strengths in Greif's credit profile include modest financial
leverage and comfortable interest coverage for the rating
category. Strengths also include the company's size, market
position and its geographic, customer and end market diversity.
Greif's business operations are closely embedded into customer's
operations and Greif has long term relationships with many of its
customers. The rating also benefits from the company's good
liquidity profile.

Weaknesses in Greif's credit profile include inherent cyclicality
and weak margins. The rating is also constrained by the
commoditized product line and lengthy pass-throughs for raw
material price increases and lack of pass-throughs for other
costs.

Greif, Inc., headquartered in Delaware, Ohio, is one of the
leading global industrial packaging products and services
companies. Greif produces steel, plastic, fiber and corrugated
and multi-wall containers for a wide range of industries. Greif
also provides services, such as container lifecycle management
and blending, produces containerboard and manages timber
properties in North America. For the 12 months ended July 31,
2018, the company generated approximately $3.85 billion in
revenue.



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


NYRSTAR NETHERLANDS: Moody's Cuts Ratings on Unsec. Notes to Caa2
-----------------------------------------------------------------
Moody's Investors Service has downgraded to Caa2 from Caa1 the
ratings of the existing EUR340 million senior unsecured
guaranteed notes due in 2019 and the EUR500 million senior
unsecured guaranteed notes due in 2024 both issued by Nyrstar
Netherlands (Holdings) B.V., a subsidiary of Nyrstar NV.
Concurrently, Moody's has put under review for downgrade
Nyrstar's Caa1 corporate family rating and its Caa1-PD
probability of default rating as well as the ratings of the
notes.

"Our decision to downgrade Nyrstar's senior unsecured notes
reflects the increased subordination as a result of a new $650m
trade finance framework agreement with Trafigura Pte Ltd. In
addition, Moody's placed all ratings under review which reflects
the possibility that Nyrstar's capital structure review could
result in a default in accordance with Moody's default
definitions," says Sven Reinke, a Moody's Senior Vice President.

RATINGS RATIONALE

The new $650 million trade finance framework facility provided by
shareholder Trafigura strengthens Nyrstar's liquidity position,
which Moody's believes has been tight in recent weeks following
the Q3 2018 results announcement on October 30, 2018. However,
while the new $650 million trade finance framework facility
benefits from the same upstream guarantees which the rated notes
also benefit from, the new facility also benefits from a security
package comprising pledges over shares of certain subsidiaries of
Nyrstar, pledges over fixed assets and security over certain
inventory and receivables. Accordingly, Moody's considers the
facility senior to the existing notes, which increases the level
of subordination of the notes. The Caa2 rating of the notes, 1
notch below the CFR, reflects of the subordination.

The ratings review will consider the impact of Nyrstar's capital
structure review on its ratings. The company stated that it is
reviewing its options in terms of the refinancing of its upcoming
EUR340 million bond maturity, which is due in September 2019. It
has appointed Freshfields Bruckhaus Deringer LLP as its legal
adviser and Alvarez & Marsal who will assist Nyrstar in the
capital structure review, both working alongside Morgan Stanley.
Moody's sees the possibility that the capital structure review
could lead to an event of default under Moody's definitions,
which could be the case if the company opts for a distressed
exchange or any other form of debt restructuring leading to a
loss for creditors. However, as Moody's continues to forecast a
meaningful improvement of Nyrstar's operating performance in
2019, the company could also try to refinance the upcoming debt
maturities with a combination of measures such as asset disposals
and a capital increase thereby avoiding an event of default.

The Caa1 CFR reflects Moody's expectation of falling EBITDA
generation in 2018 alongside very high expected leverage of
around 9x at the end of 2018. Nyrstar reported very weak results
for Q3 2018 with reported underlying EBITDA of only EUR13 million
compared to EUR56 million in Q2 2018 and EUR51 million in Q3
2017. Nyrstar's Q3 2018 performance suffered from falling zinc
prices, very low zinc treatment charges, rising energy costs in
Europe and Australia as well as weak performance at the mining
operations owing to start up costs from the restart of the Myra
Falls mine and weak cost performance at the Langlois and Middle
Tennessee mines. Overall, Nyrstar's reported underlying EBITDA
for the first nine months of 2018 fell to EUR134 million compared
to EUR162 million during the same period in 2017.

However, Moody's continues to project a material increase in
Nyrstar's 2019 Moody's adjusted EBITDA to around EUR300 million
from around EUR200 million in 2018. This projection is
predominately based on a rising contribution from the Port Pirie
redevelopment and a favorable zinc price hedging book for next
year. Moody's adjusted EBITDA of around EUR300 million could
lower the company's adjusted gross debt/EBITDA ratio to around 6x
in 2019. Nevertheless, high projected adjusted interest expenses
of ca EUR165 million in 2019 make a return to positive free cash
flow challenging, unless EBITDA substantial increases beyond
Moody's expectations.

LIQUIDITY

Nyrstar's liquidity could become inadequate should it fail to
refinance the EUR340 million notes, which mature in September
2019. The company's liquidity is supported by EUR63 million of
unrestricted cash and EUR568 million of available committed
facilities as of September 2018. These facilities consisted of a
EUR600 million revolving structured commodity trade finance
facility (EUR229 million drawn at the end of Q3 2018) which was
extended from June 2019 to December 2021, a US$250 million
facility from Trafigura (undrawn at the end of Q3 2018) due in
December 2019 and a EUR50 million bilateral facility from KBC
(EUR32 drawn at the end of Q3 2018) due in July 2019. On December
6, 2018, the US$250 million facility from Trafigura was replaced
with a US$650 million trade finance framework agreement with
Trafigura, which includes a US$450 million metal prepayment
tranche and a US$200 million suppliers credit tranche. This new
facility matures in June 2020 and cannot be used to repay,
refinance or otherwise redeem Nyrstar's bonds and other financial
liabilities.

While adding US$200 million from the higher cash tranche to
Nyrstar's available liquidity as per the end of September would
give a favourable view of its liquidity, Moody's believes that
the company's liquidity remains tight. Nyrstar's working capital
cycle leads to larger drawdowns of these facilities than
indicated in quarterly reports. Accordingly, under a scenario of
strongly rising inventory financing requirements (as was the case
in Q1 2018 when zinc prices increased) or if the company would
not be able to roll-over most of its metal prepays, Nyrstar's
liquidity could become insufficient to finance its working
capital requirements. Its assessment of Nyrstar's liquidity
position being adequate until the maturity of the September 2019
notes assumes that the company will be able to roll-over most of
the EUR 446m metal prepays which are due between July 2018 and
June 2019 with new metal prepays as it has been routinely able to
do in the past. Moody's also assumes continuous compliance under
the maintenance financial covenants with adequate headroom at all
times.

STRUCTURAL CONSIDERATIONS

The exiting senior notes due 2019 and in 2024 are both rated one
notch below the CFR at Caa2, as they rank pari-passu and are
issued by the same entity, Nyrstar Netherlands (Holdings) B.V., a
subsidiary of Nyrstar.

Both series of notes rank behind the senior secured EUR600
million revolving borrowing base facility as well as the new
US$650 million trade finance framework agreement. While these two
facilities and the two rated notes benefit from senior unsecured
guarantees by the main operating subsidiaries (as of 31 December
2017, Moody's estimates that the issuer and the guarantors for
the notes represented 79.3% of Nyrstar's total underlying EBITDA
and 77.0% of its assets), the revolving borrowing base facility
and the new trade finance framework facility benefit from
additional asset security over certain inventory and receivables.
In addition, the new trade finance framework facility also
benefits from pledges over shares in operating subsidiaries and
over fixed assets.



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


DONKHLEBBANK PJCB: Put on Provisional Administration
----------------------------------------------------
The Bank of Russia, by virtue of its Order No. OD-3269, dated
December 21, 2018, revoked the banking license of Rostov-on-Don-
based credit institution Public Joint-stock Company Donkhlebbank
or PJCB Donkhlebbank (Registration No. 2285) from December 21,
2018.  According to its financial statements, as of December 1,
2018, the credit institution ranked 298th by assets in the
Russian banking system.

The key activity area of Donkhlebbank was financing complex
construction projects executed by the group of companies owned by
its primary owner.  Difficulties related to the implementation of
a number of such projects led to a considerable amount of non-
performing assets in the credit institution's balance sheet.  In
the course of this year, the supervisor repeatedly identified
that the credit institution underestimated the credit risk and
overestimated the value of assets in its accounting.  The
adjustment of the bank's performance indicators for the amount of
additional provisions established a substantial decrease in
capital and entailed the need for action to prevent the credit
institution's bankruptcy, which created a real threat to its
creditors' and depositors' interests.

During 2018, PJCB Donkhlebbank also failed to comply with laws
and Bank of Russia regulations on countering the legalization
(laundering) of criminally obtained incomes and the financing of
terrorism with regard to prompt identifying operations subject to
mandatory control, as well as submitting complete and reliable
information to the authorized body.

The Bank of Russia repeatedly (4 times over the last 12 months)
applied supervisory measures against PJCB Donkhlebbank, including
two impositions of restrictions on household deposit taking.

The credit institution's operations showed signs of misconduct by
its executives who sought to withdraw liquid assets to the
detriment of creditors' and depositors' interests.  The Bank of
Russia will submit information about the bank's transactions
suggesting a criminal offence to law enforcement agencies.

Under these circumstances, the Bank of Russia took the decision
to revoke PJCB Donkhlebbank's banking license.

The Bank of Russia took this measure following the credit
institution's failure to comply with federal banking laws and
Bank of Russia regulations, repeated violations within a year of
the requirements stipulated by Articles 6 and 7 (excluding Clause
3 of Article 7) of the Federal Law "On Countering the
Legalisation (Laundering) of Criminally Obtained Incomes and the
Financing of Terrorism" as well as Bank of Russia regulations
issued in accordance with the said law and application of the
measures stipulated by the Federal Law "On the Central Bank of
the Russian Federation (Bank of Russia)", taking into account a
real threat to the interests of creditors and depositors.

Following the banking license revocation, PJCB Donkhlebbank's
professional securities market participant license was also
cancelled.

The Bank of Russia, by virtue of its Order No. OD-3270, dated
December 21, 2018, appointed provisional administration to PJCB
Donkhlebbank for the period until the appointment of a receiver
pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a
liquidator under Article 23.1 of the Federal Law "On Banks and
Banking Activities".   In accordance with federal laws, the
powers of the credit institution's executive bodies were
suspended.

PJCB Donkhlebbank is a member of the deposit insurance system.
The revocation of a banking license is an insured event as
stipulated by Federal Law "On the Insurance of Household Deposits
with Russian Banks" in respect of the bank's retail deposit
obligations, as defined by law.  The said Federal Law provides
for the payment of indemnities to the bank's depositors,
including individual entrepreneurs, in the amount of 100% of the
balance of funds but no more than a total of RUR1.4 million per
depositor.

The current development of the bank's status has been detailed in
a press statement released by the Bank of Russia.


KIROV REGION: Fitch Withdraws BB- LT IDR for Commercial Reasons
---------------------------------------------------------------
Fitch Ratings has affirmed Russian Kirov Region's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at
'BB-' with Stable Outlooks and Short-Term Foreign-Currency IDR at
'B'.

At the same time, the agency has withdrawn the region's ratings
for commercial reasons, and will no longer provide ratings or
analytical coverage for the issuer.

KEY RATING DRIVERS

The affirmation reflects Kirov's volatile, albeit improving,
fiscal performance, and Fitch's expectation of debt stabilisation
on the back of a close-to-balanced budget in the medium term. The
ratings also factor in the low fiscal capacity of Kirov resulting
from its modest economic indicators, which is however mitigated
by continuous support from the federal government in the form of
low-cost budget loans and transfers.

Fiscal Performance Assessed as Weakness

Fitch projects Kirov's operating margin will consolidate at 4%-5%
in 2018-2020, after its gradual recovery from a negative value in
2013 to a peak of 7% in 2017. The operating balance will be
sufficient to cover interest payments, which should result in a
positive current margin for a sustained period. The improved
performance is supported by higher current transfers from the
federal budget following changes to the formula for federal grant
calculations, which benefit economically weaker Russian regions,
amid a moderate increase in tax revenue.

The region recorded a surplus before debt at 1.5% of total
revenue in 2017 after large budget deficits averaging 9.3% in
2012-2016. The surplus was supported by operating revenue growth
of almost 10%, and a further cut in the region's already low
capex to below 10% of total spending in 2017 (2016: 11.7%). Fitch
rating case forecasts a small deficit over the medium term.

The region's tax capacity and fiscal flexibility remain low.
Kirov's tax-raising ability is limited by the modest size of the
region's tax base and low autonomy in setting tax rates. Most
expenditure is social-oriented and therefore rigid. Additional
pressure will come from expected staff cost growth, following the
federal government's recent decision to increase the minimum
salary to subsistence level.

Debt and other Long-Term Liabilities Assessed as Neutral
Fitch rating case forecasts the region's absolute direct risk
will moderately grow towards RUB26.5 billion by end-2020 from
RUB25.9 billion at end-2017, but will stabilise at 55% of current
revenue (2017: 58.8%), which is moderate relative to
international peers'. Direct risk is also mitigated by material
low-cost budget loans (about 64% of direct risk at end-2017) as a
share of total debt, saving on interest payments. The remaining
debt consists of one- to three-year bank loans.

Like most Russian regions, Kirov took part in the budget loan
restructuring programme initiated by the federal government at
end-2017. This allows Kirov to extend the maturity of a
significant part of its direct risk. Under the programme, the
region extended the maturity of RUB15.8 billion budget loans
received in 2015-2017 to seven years, with most of the payments
due in 2021-2024.

Management Assessed as Neutral
The administration follows a socially-oriented fiscal policy
within an annually adopted three-year budget, which includes the
budget for the current financial year and forecasts for the
following two years. The budget is usually amended in each
financial year. Like most Russian local and regional governments
(LRGs), regional budgetary policy is strongly dependent on the
decisions of the federal authorities. The administration receives
stable support from the federal government in the form of
transfers and - in previous periods - budget loans.

The regional government is committed to narrowing the deficit and
limiting debt growth, driven by requirements imposed by the
Ministry of Finance as a condition for budget loan grants to the
region.

Economy Assessed as Weakness
Kirov is a medium-sized region in the north of European Russia
with a population of 1.289 million residents. Kirov's economic
profile is weaker than the average Russian region's, with a gross
regional product (GRP) per capita at 65% of the national median
in 2016. However, the economy is diversified and its major
taxpayers are spread across sectors. Based on the region's
estimates, GRP will likely stabilise in 2018 after three years of
downturn, before recovering 1.5%-3% annually in 2019-2020. Fitch
forecasts growth of the national economy will slow to 1.5% in
2019, from 2% in 2018.

Institutional Framework Assessed as Weakness
Fitch views Russia's weak institutional framework for LRGs as a
constraint on the latter's ratings. Weak institutions have a
short track record of stable development compared with many of
their international peers. Unstable intergovernmental set-up
leads to lower predictability of LRGs' budgetary policies and
negatively affects regions' forecasting ability, as well as debt
and investment management.


KOSTROMA REGION: Fitch Withdraws B+ LT IDR for Commercial Reasons
-----------------------------------------------------------------
Fitch Ratings has affirmed the Russian Kostroma Region's Long-
Term Foreign- and Local-Currency Issuer Default Ratings at 'B+'
with Positive Outlooks. At the same time, the agency has
withdrawn all Kostroma's ratings for commercial reasons, and will
no longer provide ratings or analytical coverage for the issuer.

The ratings were withdrawn for commercial reasons

Key Rating Drivers

The Positive Outlook reflects Kostroma's improved budgetary
performance and lessened refinancing pressure due to enhanced
support from the federal government. The ratings also factor in
the region's high debt burden and a weak fiscal capacity stemming
from the modest size of the region's economy and budget.

Fiscal Performance Assessed as Weakness/Positive
Fitch's rating case scenario projects that Kostroma Region will
consolidate its operating margin at about 10%, which will cover
expected interest payments by 2x. This is a material improvement
compared with operating margins of 0%-4% recorded in 2014-2016
and it will largely be supported by expected general purpose
grants from the federal budget. These grants almost doubled in
2017 due to changes in the formula for their allocation.

Fitch also expects Kostroma to maintain a small budget deficit
over the medium term as the region is committed to containing the
deficit as required by the Federal Ministry of Finance. Its
rating case projects the deficit at about 2%-4% of total revenue,
which significantly outperforms the deficit of 10%-18% recorded
in 2013-2016. Fitch notes that this budget target would allow the
region to claim ongoing support from the federal budget as its
fiscal capacity and shock resistance remain low, which is evident
from the small size of its budget and rigid expenditure.

Kostroma's interim budget performance for 10M18 was in line with
its expectations. The region collected 80% of the full-year
budgeted revenue and incurred 75% of its annual budgeted
expenditure, which resulted in an intra-year surplus of RUB2
billion. Fitch projects a full-year deficit of about RUB0.5
billion, as the agency envisages some acceleration of expenditure
in December under its rating case.

Debt and Other Long-Term Liabilities Assessed as
Weakness/Positive

Fitch expects the region's debt growth to decelerate due to a
shrinking deficit, although the regional debt burden will likely
remain high over the medium term. its rating case projects that
direct risk will stabilise at about 90%-95% of current revenue,
which is below the average 101% in 2015-2017. The high debt level
is partly mitigated by low-cost budget loans that dominate the
region's debt (end-10M18: 61% of direct risk).

Kostroma's direct risk declined to RUB20.6 billion at end-10M18
from RUB22 billion at end-2017 as the region repaid all
outstanding bonds following its satisfactory 10M18 budget
performance. The region's refinancing pressure remains manageable
since it has refinanced all short-term borrowings with five-year
bank loans and has extended the maturity of its RUB12 billion
budget loans till 2024 under a federal debt restructuring
programme. As a result, about 50% of debt maturities are
concentrated in 2023 and only about 15% of the debt is due in
2018-2020.

Economy Assessed as Weakness/Stable

Kostroma Region is located in the European part of Russia and has
about 650,000 residents. Its economic profile is weaker than the
average Russian region's, with a gross regional product (GRP) per
capita at 72% of the national median in 2016. This results in the
region's below-average tax capacity and material reliance on
financial aid from the federal budget, which represents about 30%
of the region's operating revenue.

Kostroma's economic development lags behind that of the national.
Based on the region's estimates GRP grew 0.7% in 2017 (Russia's
GDP: 1.5%) and could shrink 2.3% in 2018 due to a decline in
industrial production. The region forecasts GRP will likely
stagnate in 2019 before growing 1.1%-1.6% p.a. in 2020-2021. This
is slightly below Fitch's forecast on Russia's GDP annual growth
of 1.5%-1.9% in 2019-2020.

Management and Administration Assessed as Neutral/Stable

The administration follows a socially-oriented fiscal policy
within an annually adopted three-year budget. As with most
Russian local and regional governments (LRGs), regional budgetary
policy is strongly dependent on the decisions of the federal
authorities. Kostroma receives ongoing support - which was
increased in 2017-2018 - from the federal government in the form
of transfers and budget loans. In return for this support, the
region's administration is obliged to achieve the financial
targets on budget and debt imposed by the Ministry of Finance.

Institutional Framework Assessed as Weakness/Stable

Fitch views Russia's weak institutional framework for LRGs as a
constraint on the region's ratings. Weak institutions have a
short track record of stable development compared with many of
the region's international peers. Unstable inter-governmental
set-up leads to lower predictability of LRGs' budgetary policies
and negatively affects the region's forecasting ability.

RATING SENSITIVITIES

Not applicable.

Summary of Financial Adjustments

Fitch has made a number of adjustments to the official accounts
to make the LRG comparable internationally for analyses purposes.
For Kostroma Region these adjustments include:

  - Transfers of capital nature received were re-classified from
    operating revenue to capital revenue

  - Transfers of capital nature made were re-classified from
    operating expenditure to capital expenditure

  - Goods and services of capital nature were re-classified from
    operating expenditure to capital expenditure


RUSSOBANK JSCB: Put on Provisional Administration
-------------------------------------------------
The Bank of Russia, by virtue of its Order No. OD-3271, dated
December 21, 2018, effective from the same date, revoked the
banking license of Moscow-based credit institution Joint-stock
Commercial Bank RUSSOBANK (Registration No. 2313), further also
referred to as the credit institution.  According to financial
statements, as of December 1, 2018, the credit institution ranked
268th by assets in the Russian banking system.

The credit institution's operations were on many occasions found
to be non-compliant with the law on countering the legalization
(laundering) of criminally obtained incomes and the financing of
terrorism with regard to the completeness and reliability of
information provided to the authorized body about operations
subject to obligatory control.

Moreover, the credit institution was involved in dubious transit
operations.  Retail companies' shadow sales of cash receipts to
third parties and siphoning off funds abroad made up an essential
part of these operations.  The supervisory body's interactions
with the credit institution towards improving its anti-money
laundering processes failed to bring about appropriate
corrections to its business model.  This is the reason the bank's
internal controls were found dysfunctional, suggesting strong
reputational risks in its business.  Moreover, a number of facts
constituted evidence for the credit institution's deliberate
involvement in the conduct of suspicious transactions, with its
executives having no intention to take effective action towards
stopping such operations.

The Bank of Russia repeatedly (4 times over the last 12 months)
applied supervisory measures against JSCB RUSSOBANK, including
supervisory action for non-compliance with AML/CFT regulations.

Under these circumstances, the Bank of Russia took the decision
to revoke JSCB RUSSOBANK's banking license.

The Bank of Russia took this decision due the credit
institution's failure to comply with federal banking laws and
Bank of Russia regulations, repeated violations within one year
of the requirements stipulated by Articles 6 and 7 (except for
Clause 3 of Article 7) of the Federal Law "On Countering the
Legalisation (Laundering) of Criminally Obtained Incomes and the
Financing of Terrorism" and taking into account repeated
applications within one year of measures envisaged by the Federal
Law "On the Central Bank of the Russian Federation (Bank of
Russia)".

Following the banking license revocation, JSCB RUSSOBANK's
professional securities market participant license was also
cancelled.

The Bank of Russia, by virtue of its Order No. OD-3272, dated
December 21, 2018, appointed provisional administration to JSCB
RUSSOBANK for the period until the appointment of a receiver
pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a
liquidator under Article 23.1 of the Federal Law "On Banks and
Banking Activities".  In accordance with federal laws, the powers
of the credit institution's executive bodies were suspended.

JSCB RUSSOBANK is a member of the deposit insurance system.  The
revocation of a banking license is an insured event as stipulated
by Federal Law "On the Insurance of Household Deposits with
Russian Banks" in respect of the bank's retail deposit
obligations, as defined by law.  The said Federal Law provides
for the payment of indemnities to the bank's depositors,
including individual entrepreneurs, in the amount of 100% of the
balance of funds but no more than a total of RUR1.4 million per
depositor.

The current development of the bank's status has been detailed in
a press statement released by the Bank of Russia.



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


TURKEY: Fitch Affirms BB Long-Term FC IDR, Outlook Negative
-----------------------------------------------------------
Fitch Ratings has affirmed Turkey's Long-Term Foreign-Currency
Issuer Default Rating (IDR) at 'BB' with a Negative Outlook.

KEY RATING DRIVERS

Turkey is navigating the fallout from a sharp depreciation of the
lira earlier in the year. Currency weakness stemmed from the
materialisation of external financing vulnerabilities, aggravated
by political and geopolitical developments, all areas of weakness
for the sovereign credit profile. The slowdown will challenge a
long-standing commitment to fiscal discipline that underpins
strong public finances relative to rating peers. Growth is
volatile compared with peers, and inflation is higher and set to
remain so. Structural indicators are generally better than rating
peers.

The Negative Outlook reflects the significant and multifaceted
risks to the adjustment path posed by economic policy settings,
domestic political and geopolitical risks and global financing
conditions.

Maintaining a balanced policy stance that is consistent with the
current rating in the face of lower growth and rising
unemployment will test economic policy, an area where Fitch
considers credibility has deteriorated. Fiscal and monetary
policies were tightened in 2H18 and the authorities' economic
targets suggest they are prepared to tolerate a sustained period
of below trend growth. With Fitch assuming that external
financing conditions will tighten in 2019, a premature loosening
of domestic policy settings could lead to renewed pressure on the
currency.

The completion of a prolonged electoral cycle in March 2019 and
the ongoing transformation to an executive presidency (likely to
closer align formal administrative structures and the
presidential administration) could provide an environment more
conducive for economic reform that would begin to tackle long-
standing structural weaknesses, although Fitch is cautious about
prospects for implementation.

Fiscal policy has been tightened in 2H18 as the government
strived to hit its central government deficit target of 1.9% of
GDP. New revenue measures are expected to more than offset
foregone revenues from targeted tax cuts introduced in October. A
deficit of 1.8% of GDP is budgeted for 2019, which implies a
sharp adjustment given the expected slowdown in growth.
Consolidation measures worth 2% of GDP have been identified,
primarily on the expenditure side. Fitch projects that the 2018
and 2019 targets will be missed due to the impact of the weak
economy on revenues. The fiscal targets are at the central
government level and spending by other entities within the
general government perimeter has risen recently. The general
government deficit is forecast to widen to 2.8% of GDP in 2018
and 2019 from 2% in 2017.

The moderate level of general government debt is forecast to
remain a rating strength. Fitch expects general government
debt/GDP to rise to 31.9% at end-2018 from 28.3% at end-2017
owing to the widening of the fiscal deficit and the fall in the
lira (46% of central government debt was FX-denominated at end-
October). This is well below the forecast median for current 'BB'
peers of 48.3%. Debt/revenue is projected to be close to half the
current peer median, despite the weakness of the domestic
economy, reflecting the large revenue base. Contingent
liabilities, which are rising from a low base (driven primarily
by PPPs), are unlikely to have a material impact on public
finances over the forecast period, but pose a risk over the
medium term. Sovereign support for the banks over the current
period of economic weakness is possible.

Monetary policy has long proved unable to anchor inflation in
single digits. Inflation spiked to 25.2% in October after the
currency depreciation and is set to remain well in excess of
rating peers. Inflation will decline owing to the collapse in
domestic demand, although base effects are likely to keep it over
20% until 2H19. At an average of 20.7%, inflation in 2019 is
expected to be the highest of all bar two of the sovereigns rated
by Fitch. Fitch expects inflation to remain in double digits by
end-2020. Uncertainties around the monetary policy response pose
a substantial risk to the inflation outlook.

External vulnerabilities evident in a large external financing
requirement and low international liquidity ratio were exposed by
the tightening of external financial conditions around mid-year.
Some corporates with FX mismatches have restructured their FX
debt, but banks have rolled over syndicated loans and the
sovereign tapped the Eurobond market (in euros and US dollars) in
the final quarter. Although a rebalancing is underway, the
external sector will remain a key credit weakness. Foreign-
exchange reserves have fallen this year (less so net of bank
placements) and gross external financing needs (including short-
term debt) for 2019 are projected at 274% of end-2018 FX
reserves.

The flexible exchange rate and a slump in domestic demand have
played a key role in the external adjustment. The current account
was in surplus in August, September and October, a swing of
USD13.4 billion (1.8% of GDP) yoy. Import compression and rising
exports are projected to narrow the current account deficit to
3.7% of GDP in 2018 and 1.9% in 2019 from 5.6% in 2017, although
the import component of exports and the structure of supply
contracts will neutralise some of the benefits of a cheaper
currency for exporters. Fitch expects a renewed widening of the
current account deficit once the economy regains momentum in
2020.

Banks are being pressured by the weaker operating environment.
Fitch downgraded 20 Turkish banks on October 1 and 26 of the 28
Fitch-rated banks currently have a Negative Outlook. There are
significant risks to banks' credit profiles as a result of the
weaker GDP growth, lira depreciation and high interest rates,
which put pressure on asset quality, margins and capitalisation.
The Negative Outlooks also reflect refinancing and liquidity
pressures, given sector reliance on foreign funding markets, as
well as the risk of a reduction in market access given the
volatile Turkish operating environment and tighter global
financing conditions.

Asset quality has deteriorated. NPLs (loans overdue by 90+ days
on an unconsolidated basis) were 3.5% at end-October, up from 3%
at end-June. Various forbearance measures introduced by the
regulator and a new debt restructuring mechanism put in place in
August could delay the recognition of asset quality problems.
Capital adequacy is above the regulatory requirement, at 18.1% at
end-September. However, Fitch estimates that regulatory
forbearance on exchange rates and securities valuations provided
a 250bp-300bp uplift to this number. Fitch estimates banks total
external debt due within the next 12 months net of more stable
sources of funding to be USD50 billion-USD55 billion, compared
with available foreign currency liquidity of USD75 billion-USD80
billion.

Turkey is set for a prolonged period of below trend growth
against a backdrop of tight domestic policy settings and tough
external conditions. Credit availability has dropped sharply,
firms are reporting delays in collecting receivables, domestic
demand has slumped and the unemployment rate is rising. The
economy contracted by 1.1% qoq in 3Q and Fitch assumes a sharper
fall in 4Q, lowering full year growth to 3.5%. A slow pick-up in
growth in sequential terms is expected in 2019, although base
effects mean the headline rate is forecast at just 0.6%, the
lowest since 2009. Net trade and services will provide the main
support for growth. Average growth for 2018-2020 of 2.5% compares
with a forecast median for current 'BB' peers of 3.4% and an
average for 2010-2017 of 6.8%.

Political and geopolitical risks weigh on Turkey's ratings and
World Bank governance indicators are below the 'BB' median.
Tolerance of dissenting political views is reducing in the
opinion of independent observers. A presidential system is being
formalised, which is causing some administrative disruption.
Local elections, due in March 2019, will complete a prolonged
electoral cycle and are expected to be keenly contested. The
weakening economy does not yet appear to have had a major impact
on support for the ruling AKP. Domestic security conditions have
improved recently.

Relations with the US have improved from their recent low point,
with sanctions against two ministers removed, and Turkey was
awarded a significant reduction exemption enabling it to continue
to import some oil from Iran. However, there are a number of
active pressure points in relations with both the US and the EU.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitch's proprietary SRM assigns Turkey a score equivalent to a
rating of 'BBB-' on the Long-Term Foreign-Currency (LT FC) IDR
scale.

Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final LT FC IDR by applying its QO, relative
to rated peers, as follows:

  - External finances: -1 notch, to reflect a very high gross
external financing requirement and low international liquidity
ratio.

  - Structural features: -1 notch, to reflect an erosion of
checks and balances leading to a political environment that may
continue to adversely affect economic policymaking and
performance, and the risk of serious terrorist attacks.
The -1 notch for macroeconomic policy and performance has been
removed as Fitch considers that the high level of inflation and
weak growth performance in the SRM capture policy weaknesses.
Greater confidence in the commitment to macroeconomic stability
also supports the removal of the notch.

Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully
reflected in the SRM.

RATING SENSITIVITIES

The main factors that, individually, or collectively, could lead
to a downgrade are:

  - Failure to rebalance the economy and implement reforms that
    provide a path to addressing structural deficiencies and
    reducing inflation and external vulnerabilities.

  - A sudden stop to capital inflows or hard landing of the
    economy, particularly if it heightens stresses in the
    corporate or banking sectors.

  - A marked increase in the government debt/GDP ratio to a level
    closer to the peer median.

  - A serious deterioration in the political or security
    situation.

The main factors that, individually, or collectively, could lead
to a stabilisation of the Outlook are:

  - A sustainable rebalancing of the economy evidenced by a
    reduction in the current account deficit and inflation that
    reduces external vulnerabilities.

  - A political and security environment that supports a
    pronounced improvement in key macroeconomic data.

KEY ASSUMPTIONS

  - Fitch forecasts Brent Crude to average USD72.5/b in 2018,
    USD65/b in 2019 and USD62.5/b in 2020.

The full list of rating actions is as follows:

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

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

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

  Short-Term Local-Currency IDR affirmed at 'B'

  Country Ceiling affirmed at 'BB+'

  Issue ratings on long-term senior unsecured foreign-currency
  bonds affirmed at 'BB

  Issue ratings on long-term senior unsecured local-currency
  bonds affirmed at 'BB+'

  Issue ratings on Hazine Mustesarligi Varlik Kiralama Anonim
  Sirketi's foreign-currency global certificates (sukuk) affirmed
  at 'BB

  Issue ratings on Hazine Mustesarligi Varlik Kiralama Anonim
  Sirketi's local-currency global certificates affirmed at 'BB+'



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U K R A I N E
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DNIPRO CITY: Fitch Assigns B- Long-Term IDRs, Outlook Stable
------------------------------------------------------------
Fitch Ratings has assigned Ukrainian City of Dnipro Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'B-'
with Stable Outlook and a Short-Term Foreign-Currency IDR of 'B'.
The National Long-Term Rating has been assigned at 'AA-(ukr)'
with Stable Outlook.

The city's IDRs are capped by the Ukrainian sovereign IDRs (B-
/Stable). Dnipro's standalone credit profile (SCP) is assessed at
'BB-', which reflects a combination of vulnerable risk profile
and strong debt metrics, resulting in a 'aaa' debt sustainability
assessment. The SCP also factors in appropriate rated peers
positioning. Fitch does not apply any asymmetric risk or
extraordinary support from the central government.

Dnipro is a municipality in a unitary country of Ukraine and
classified by Fitch as type B local and regional government
(LRG), which is required to cover debt service from cash flow on
an annual basis. This is one of the largest cities in the country
with a population of about one million. Its revenue sources are
composed of taxes, including about 40% local taxes with some tax-
setting power, and transfers from the national budget. The main
spending responsibilities cover education, healthcare and
utilities. According to budgetary regulation Dnipro has the right
to borrow on the domestic market and externally. Budget accounts
are presented on a cash basis while budget horizon is limited to
one year.

KEY RISK FACTORS

Revenue Framework (Robustness) Assessed as Weaker

The city's revenue framework is unstable amid constantly changing
tax and budgetary regulation. Taxes represent Dnipro's main
revenue source at 60% of operating revenue in 2017, followed by
transfers mostly from the central government. The composition of
taxes collected by the city has changed materially during the
last five years, while transfers from the national budget
averaged 40% of the city's revenue in 2013-2017, fluctuating
between 36% and 47% of total revenue. The dependence on a weak
'B-' rated counterparty for a material portion of the city's
revenue and continuous amendments to national fiscal regulation
drive the weaker assessment for the robustness of Dnipro's
revenue framework.

Revenue Framework (Adjustability) Assessed as Weaker

Fitch assesses Dnipro's ability to generate additional revenue in
response to possible economic downturns as limited. The unified
tax rate on small business, which is one of the largest local
taxes for the city (2017: 13% of total taxes), is capped by a
ceiling. The ability to increase land tax rates - another major
local tax that contributed 26% of total tax proceeds in 2017 - is
limited by the low level of income of the city's population. This
is despite the proportion of local taxes on which the city
formally has rate-setting power having increased materially over
the last five years to 41% of total tax revenue in 2017 from 16%
in 2013.

Expenditure Framework (Sustainability) Assessed as Weaker
The dynamic of spending during the last five years has been
influenced by high inflation and reallocation of spending
responsibilities. Currently, the city's main spending
responsibilities are in education and healthcare, which are of
counter-cyclical nature. However, the city is responsible only
for the maintenance of schools and healthcare institutions while
the salaries of teachers and healthcare personnel are financed by
transfers from the national budget. Due to the structural
weakness of the sovereign it is possible that these
responsibilities may be transferred to the municipal level as has
been the case with certain social benefits. This underlines the
fragile sustainability of the city's expenditure framework.

Expenditure Framework (Adjustability) Assessed as Weaker

Fitch assesses the city's ability to reduce spending in response
to shrinking revenue as weak. This is evidenced by a material
proportion of inflexible items in the city's operating
expenditure and the volatile share of capital expenditure. Capex
fluctuated between 7% and 30% of total spending in 2013-2017, due
to the lack of investment strategy in the context of a limited
budget planning horizon. The ability to control expenditure is
further constrained by low level of per capita spending compared
with international peers.

Liabilities and Liquidity Framework (Robustness) Assessed as
Weaker

Ukraine's framework for debt and liquidity management is weak.
The national capital market is underdeveloped, while unfavourable
credit history of the sovereign, including Ukraine's default in
2015, exerts further downward pressure. The recent sovereign
default has impaired Ukrainian LRGs' access to debt capital
markets. However, following Ukraine's return to the capital
market in 2017 LRGs have resumed borrowing in 2018, while
interest rates remain high with Ukraine's policy rate being at
18% as of December 1, 2018.

Liabilities and Liquidity Framework (Flexibility) Assessed as
Weaker

Liquidity available to Dnipro is restricted to the city's own
cash reserves, which are low (September 2018: UAH283.6 million).
The city has no undrawn committed credit lines. Local banks,
which are potential liquidity providers, are 'B-' rated
counterparties, which justify its weak assessment for the
liquidity factor. There are no emergency bail-out mechanisms from
the national government in place due to the fragile capacity and
hence weak public finance position of the sovereign, which is
dependent on IMF funding for the smooth repayment of its external
debt.

Debt Sustainability Assessment: 'aaa'

Fitch rating case expects a debt payback ratio (net direct risk-
to-operating balance) - the primary metric of debt sustainability
assessment - will remain below one year over the next five years,
which justifies the city's debt sustainability 'aaa' assessment.
Fitch rating case expects the city's actual debt service coverage
ratio (operating balance/debt service, including short-term debt
maturities) will be well above 4x over the same period.

KEY ASSUMPTIONS

Fitch's key assumptions within its rating case for the issuer
include:

  - Nominal growth of operating revenue close to expected
    inflation

  - Nominal growth of operating expenditure above 2pp of
    inflation

  - Proportion of capex to remain at around 20% of the city's
    total expenditure

  - Operating margin averaging 18% in 2018-2022

  - Fiscal debt burden to rise to 13% by 2022

RATING SENSITIVITIES

Dnipro's IDRs are currently constrained by the sovereign ratings
('B-'/Stable) while the city's SCP is assessed at 'BB-'.

A downgrade of the sovereign would lead to a downgrade of Dnipro.

An upgrade would be possible if the sovereign is upgraded and the
city maintains its sound debt sustainability.


LVIV CITY: Fitch Affirms B- Long-Term IDRs, Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed the Ukrainian City of Lviv's Long-Term
Foreign- and Local-Currency Issuer Default Ratings at 'B-'. The
Outlooks are Stable.

The ratings continue to be constrained by Ukraine's sovereign
ratings (B-/Stable/B) and the weak institutional framework
governing Ukrainian local and regional governments.

The affirmation also reflects Fitch's expectations that the
city's sound operating results and low direct debt will be
maintained over the medium term. The ratings further take into
account the city's growing but moderate contingent liabilities
stemming from guarantees issued to municipal companies.

KEY RATING DRIVERS

Institutional Framework Assessed as Weakness

Ukraine's institutional framework lacks clarity and
sophistication, hindering the long-term development and budget
planning of local governments. The national government is under
pressure from a challenging reform agenda imposed by IMF to
secure external funding for the rising debt repayments starting
2019. Institutional constraints, as well as geopolitical and
political risks arising from unresolved conflict in eastern
Ukraine remain a risk for overall macroeconomic performance.
High, albeit declining, inflation and elevated interest rates
create further challenges for debt and investment policies.

Fiscal Performance Assessed as Neutral

Fitch expects Lviv's financial performance will remain sound,
albeit fragile, over the medium term due to the continued reform
of financial decentralisation resulting in numerous legal
amendments.

Fitch projects Lviv's operating balance to remain close to 20% of
operating revenue, supported by tax revenue increase following
economic recovery and steady inflow of current transfers from the
central government. Fitch expects the city to post close-to-
balanced budgets over the medium term.

During 3Q18 Lviv collected 71% of its revenue budgeted for the
full year and incurred 64% of its full-year expenditure, which
resulted in an intra-year budget surplus of UAH276 million, ie.
3.8% of total revenue. Fitch expects expenditure to accelerate
towards the end of the year due to a seasonal rise in outlays in
the fourth quarter.

Based on 3Q18 results Fitch estimates the operating balance for
2018 at about UAH1.9 billion (in line with 2017 result),
accounting for almost 20% of operating revenue. Unless some of
the city's planned investments slip into the following year,
Fitch estimates that the city will post a deficit of more than 5%
of total revenue, which will be covered by cash accumulated in
the previous year and UAH440 million of bonds issued in June
2018.

Debt and other Long-Term Liabilities Assessed as Neutral
Fitch expects Lviv's direct debt to remain low in the medium
term, although following an UAH440 million bond issue in June
2018 to fund investments, the city's debt rose to an estimated
4.7% of current revenue in 2018.

Fitch expects the city's net overall risk to rise to about 30% of
current revenue in 2020 from 16% in 2017. This is in line with
the city's policy in supporting municipal companies that
undertake large infrastructural investments by issuing guarantees
on loans from international institutions such as EBRD.

The city's issued guarantees totalled UAH1.4 billion (ie. 16% of
current revenue) at end-2017 in support of investments in water
and wastewater, the heating and hot water supply system, and the
transport sector, including renewal of vehicle fleet and road
construction. The guaranteed loans were provided by EBRD and
NEFCO in euro and US dollars with final maturity in 2021-2030.
The city injects capital into its municipal companies (estimated
at more than UAH1.6 billion in 2018, up from UAH1.32 billion in
2017) to fund investments, loan repayments and cover losses when
tariffs are insufficient to cover the costs of services provided.

Management and Administration Assessed as Neutral

The city authorities' main priority is the development of Lviv's
infrastructure to support local economic growth. This includes
attracting investors to higher gross value added sectors such as
the IT industry or congress and exhibition tourism by taking
advantage of the city's heritage. The city works in close
cooperation with international financial institutions, such as
EBRD, on non-returnable grants and debt to fund major investments
by municipal companies.

The city's administration is prudent in its budgetary policy in
view of a frequently changing legal framework, which calls for
swift and adequate responses to potential developments.

Economy Assessed as Weakness

Lviv is the biggest city in the west part of Ukraine. It is the
capital of the seventh-largest region, which contributed 4.8% to
Ukraine's GDP in 2016 and 6% of the total population in 2017.
Lviv is one of the country's key scientific, industrial and
cultural centres. Although Lviv's economy is well-positioned
among domestic peers', it significantly lags international
peers', with GRP per capita well below the EU average. This leads
to its assessment of the economy as a weakness.

The Ukrainian economy has continued its mild recovery, which
Fitch forecasts to grow 3.3% and 2.9% in 2018 and 2019,
respectively, supporting the city's economic prospects and tax
revenue growth.

RATING SENSITIVITIES

The city's ratings are constrained by the sovereign's. A positive
rating action on Ukraine's ratings would lead to a corresponding
action on Lviv's ratings, provided the city's credit profile
remains unchanged.

A material increase of Lviv's net overall risk, combined with
significant deterioration of the city's financial flexibility,
could lead to a negative rating action.


UKRAINE: Moody's Hikes Senior Unsecured Bond Ratings to Caa1
------------------------------------------------------------
Moody's Investors Service has upgraded Government of Ukraine's
issuer and senior unsecured bond ratings to Caa1 from Caa2. The
outlook on these ratings has been changed to stable from
positive.

Excluded from the upgrade is the rating on the $3 billion
Eurobond that Ukraine sold exclusively to the Russian government
in December 2013, which is in default due to the military and
political dispute between the two governments. Russia has sued
Ukraine for repayment of the bond in English courts, under whose
jurisdiction the bond was issued, and the case is set for trial.
Moody's has affirmed the rating on that bond at Ca.

The key drivers for the upgrade to Caa1 from Caa2 are the
following:

1. The anticipated improvement in external strength as a
   consequence of the new Stand-by Arrangement reached with the
   IMF, including the likelihood of renewed capital market access
   that will reduce the risk of default;

2. Its expectations that recently adopted reforms will make
   incremental progress on reducing corruption, one of the
   country most credit-negative institutional weaknesses;

3. An incremental improvement in Ukraine's resilience to the
   ongoing conflict with Russia.

The stable outlook balances these developments against the fact
that Ukraine is still a country that is heavily dependent on the
IMF for funding as well as for reform impetus. While Ukraine's
external position is improving, its external vulnerability
remains high, and official financial support crucially depends
upon the IMF's imprimatur over the economic policies that the
country implements. Furthermore, the country remains highly
exposed to risks of renewed geopolitical confrontation and
disorderly political transition, as well as a change in
leadership that could result in a delay or partial reversal of
the reform progress.

Concurrently, Moody's has withdrawn the Caa2 backed issuer rating
of the Financing of Infrastructural Projects (FIP), which had
previously issued debt with the full and unconditional guarantee
of the government of Ukraine. FIP's Eurobonds were restructured
at the same time as the rest of the sovereign Eurobonds were
restructured in November 2015. The entity thus currently has no
Eurobonds, nor does it benefit any longer from the government's
guarantee. Hence, Moody's is no longer in a position to apply a
credit substitution approach with respect to the backed issuer
rating as the guarantee is no longer in place. In this context,
Moody's no longer has the needed information to rate the entity
and has therefore taken the business decision to withdraw the
rating.

Moreover, concurrent with the rating actions, Moody's has raised
the country ceiling for foreign currency bonds to B3 from Caa1,
whereas the country ceiling for foreign currency deposits has
been raised to Caa2 from Caa3. Ukraine's short-term foreign
currency ceilings for debt and deposits remain Not-Prime (NP).
The country ceilings for local currency debt and deposits have
been raised to B3 from Caa1. Country ceilings generally determine
the highest rating that can typically be assigned to obligations
of an issuer resident within a given country.

RATINGS RATIONALE

RATIONALE FOR THE UPGRADE OF UKRAINE'S RATINGS TO Caa1 from Caa2

FIRST DRIVER: ANTICIPATED REDUCTION OF EXTERNAL VULNERABILITY
SUFFICIENT TO LOWER THE RISK OF DEFAULT

The first driver for the upgrade is the reduction foreseen in the
government's external vulnerability because of its new $3.9
billion, 14-month Stand-by Arrangement (SBA) reached with the
IMF. An immediate disbursement equivalent to $1.4 billion will
lead directly to a modest replenishment of the central bank's
foreign exchange reserves (boosting them closer to $18.8 billion
at year-end 2018, from $16.7 billion at the end of November) but
more importantly, it will provide the stamp of approval for the
government's macroeconomic and political reforms that was needed
to unblock new funding from other official sources to the
government.

In addition, Moody's expects that the government will be able to
return to the global capital market to sell Eurobonds,
potentially allowing it to extend the maturity structure of their
bonds coming due in 2019-20 and thereby easing its repayment
burden. As a consequence, the new external financing made
available to Ukraine as a result of the IMF agreement will reduce
the risk of default in the next two years, enough to be better
reflected in a Caa1 instead of a Caa2 rating.

The process of agreeing the fourth review of the previous IMF
Extended Fund Facility (EFF), which was replaced by the SBA, was
long and drawn-out. Many criteria needed to be fulfilled in the
review that were domestically controversial and unpopular. In
addition, the country's fragmented parliament needed to approve
multiple elements of these reforms. As a consequence of this
delay and others that had preceded it, Ukraine would have left
undrawn roughly $8.7 billion (at current exchange rates) that
were scheduled to be disbursed during the four years of the
program had they not finally fulfilled the terms set in the
fourth review of the EFF. By qualifying now for the SBA, the
government has the possibility of cutting that undrawn amount
nearly in half.

Moody's also said Ukraine has a somewhat better chance of
completing at least one of next year's reviews despite being an
election year with presidential and parliamentary elections in
March and October, respectively. The program is designed to allow
the authorities to progress with difficult but credit-
strengthening reforms that will not require parliamentary
approval, which might have been problematic the closer the time
comes to the October election.

SECOND DRIVER: EXPECTATIONS THAT RECENT REFORMS WILL GRADUALLY
REDUCE CORRUPTION AND STRENGTHEN INSTITUTIONS

The second driver relates to the recently adopted reforms which
Moody's expects to advance incremental progress on reducing
corruption, one of the country most credit-negative institutional
weaknesses. New, independent institutions focused on combating
corruption, namely the National Anti-Corruption Bureau (NABU),
the Specialized Anti-Corruption Prosecutor's office and more
recently, the Anti-Corruption Court, were created during the
course of the IMF's last program.

The Special Prosecutor's office and NABU are already operational
but in the absence of the relevant court, the prosecutors have
tended to settle cases rather than try them. The court itself
will take months or even years to become operational. Still,
parliament's approval of a truly independent court knocked down a
major hurdle in the comprehensive strategy to tackle corruption
that in turn is a critical element in Ukraine's overall economic
and political reform strategy.

Moody's noted that vested interests as well as notions around the
concept of sovereignty were particularly challenged by the anti-
corruption reforms that the government had to adopt in the
context of the IMF program, and these interests remain very
strong. Accordingly, conflicts erupted even between the new
institutions, which are proving detrimental to their progress.
The Special Prosecutor's office has opened multiple criminal
cases against the director of NABU. In response, Western
officials who have championed Ukraine's anti-corruption reforms
are defending the work being done at NABU and they have asked
instead for the Special Prosecutor to step down because of
suspicion that he undermined several high-profile corruption
investigations.

While Moody's expects these and other clashes between and with
the new anti-corruption agencies to continue as the efforts to
eradicate corruption continue, gradual but slow progress is
expected, at least as long as the government is dependent on
multilateral and financial support. At some stage, the IMF and
Western governments anticipate that such reforms will become more
entrenched, but that stage has not yet arrived, one of the
reasons that the rating remains in the Caa-range.

THIRD DRIVER: IMPROVED RESILIENCE TO GEOPOLITICAL RISK STEMMING
FROM THE CONFLICT WITH RUSSIA

The ramifications of the outbreak of Russian-backed separatist
uprisings in Crimea and the eastern provinces of Luhansk and
Donetsk continue to weigh on Ukraine's economic and fiscal
performance, but Moody's believes these risks are somewhat
attenuated at this point. In Moody's view, therefore, Ukraine's
economic resilience to an escalation of geopolitical risks has
modestly strengthened.

Ukraine's government cut off trade with the breakaway regions in
2017, which means that the residual direct risk to economic
activity in areas under Kyiv's control is greatly reduced at this
point. Efforts to complete the economic isolation of the occupied
areas in eastern Ukraine is estimated to have cost around 1% of
GDP in lost output, incurred mainly in 2017. Absent significant
escalation of the conflict, Moody's expects that future economic
costs stemming from it will be related mainly to subdued
investment and elevated defense spending.

Russia's more recent seizure of Ukrainian military ships bound
for the port of Mariupol as well as sailors on those ships is
likely to have minimal impact on Ukraine's already high
geopolitical risks unless further escalation takes place, which
Moody's thinks is unlikely. Moody's noted that the de facto
blockade of Ukrainian ports on the Sea of Azov followed months of
increasing interference with Ukraine-related maritime traffic
passing through the Kerch Strait. Ukraine's imposition of limited
martial law after this incident has had very little effect on
consumer or investor confidence, as indicated by a very brief
bout of hryvnia depreciation that reversed within days, and has
not disrupted the upcoming presidential election. While
interference with commercial traffic continues, the outright
blockade has been lifted. Should it be reinstated, once again
paralyzing Ukrainian ports on the Azov Sea, downside economic
risks for the country are still manageable because less than 10%
of Ukraine's seaborne exports originate from those ports and
their traffic can be largely rerouted through Black Sea ports.

RATIONALE FOR CHANGING TO THE STABLE OUTLOOK

The stable outlook balances the constructive developments
mentioned above against the fact that Ukraine is still a country
that is heavily dependent on the IMF, other multilaterals and
bilateral lenders for funding as well as for reform impetus.
While Ukraine's external position is improving, its external
vulnerability remains high and official financial support
crucially depends upon the IMF's imprimatur over the economic
policies that the country implements. Private sector investors
similarly demand very high yields to provide Ukraine with credit
in the absence of a functioning IMF program. Long delays in
meeting IMF program criteria beyond deadlines suggest that
domestic ownership of economic and political reforms is elusive.
Furthermore, the country remains highly exposed to risks of
renewed geopolitical confrontation and disorderly political
transition as well as a change in leadership that results in
partial reversal of its reform progress.

WHAT WOULD CHANGE THE RATING UP/DOWN

Moody's would likely change to a positive outlook to Ukraine's
rating should progress on the anti-corruption reforms gain speed,
with evidence of material improvement in the rule of law and
control of corruption. Also positive would be ongoing fiscal and
monetary discipline such that the macroeconomic situation remains
well balanced, with sustainable reductions in external deficits
and timely repayments of foreign currency debt obligations that
would lower Ukraine's high external vulnerability and further
declines in government indebtedness. A reduction in geopolitical
tensions would support these positive trends.

Moody's would likely change to a negative outlook to or downgrade
Ukraine's rating in the event that compliance with the
commitments to keep the primary fiscal balance in surplus are
meaningfully compromised due to overspending during the election
season, putting at risk Ukraine's access to funding and
threatening its ability to pay down or refinance its large debt
payment obligations. Negative ratings pressure would also derive
from a further escalation of geopolitical tensions that would
have spillover impact on Ukraine's credit profile, as well as
from government attempts to limit the independence of the central
bank and its monetary or exchange rate policy framework, or
otherwise impair the nascent improvement of Ukraine's banking
system.

GDP per capita (PPP basis, US$): 8,754 (2017 Actual) (also known
as Per Capita Income)

Real GDP growth (% change): 2.5% (2017 Actual) (also known as GDP
Growth)

Inflation Rate (CPI, % change Dec/Dec): 13.7% (2017 Actual)

Gen. Gov. Financial Balance/GDP: -1.4% (2017 Actual) (also known
as Fiscal Balance)

Current Account Balance/GDP: -2.2% (2017 Actual) (also known as
External Balance)

External debt/GDP: 102.9% (2017 Actual)

Level of economic development: Very Low level of economic
resilience

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

On December 19, 2018, a rating committee was called to discuss
the rating of Ukraine, Government of. The main points raised
during the discussion were: The issuer has become less
susceptible to event risks. Expectation of an improvement in
control of corruption and institutions.


VTB BANK: National Bank of Ukraine Revokes Banking License
----------------------------------------------------------
The press service of the Individuals' Deposit Guarantee Fund has
told Interfax-Ukraine National Bank of Ukraine on Dec. 18 made a
decision to terminate the banking license of Kyiv's VTB Bank, a
subsidiary of the eponymous Russian lender,

"The Deposit Guarantee Fund made the corresponding decision based
on the National Bank decision [on December 18] on revoking the
license, and today we are entering VTB Bank as a liquidator,"
Interfax-Ukraine quotes the press service as saying.



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


DAILY MAIL: S&P Alters Outlook to Neg. & Affirms 'BB+/B' Ratings
----------------------------------------------------------------
S&P Global Ratings revised the outlook on Daily Mail & General
Trust PLC (DMGT) to negative from stable and affirmed its 'BB+/B'
long- and short-term ratings on DMGT. S&P also affirmed the 'BB+'
issue rating on DMGT's senior unsecured bonds.

U.K.-based media group Daily Mail & General Trust PLC (DMGT) saw
a drop in earnings in 2018 due to adverse impact from a weak U.S.
dollar, disposals of some B2B operations, continued structural
decline in print media, and an increase in corporate costs.

S&P's forecast S&P Global Ratings-adjusted EBITDA to decline in
financial year 2019, however we expect adjusted leverage to
remain below 0.5x, with the group being in a net cash position at
end-2018.

S&P said, "The outlook revision reflects that we expect Daily
Mail & General Trust PLC (DMGT) to see a further decline in
adjusted EBITDA and margins, which could weaken our assessment of
the group's business strength. However, we note the material
reduction in leverage such that the group is in a net cash
position at the end of 2018.

"We see downside risk in the next 12 months from continued
operating underperformance or portfolio disposals that lead to
further declines in the group's earnings profile and operating
scale."

In 2018, DMGT reported GBP1.43 billion in revenues, a 9% drop on
a reported basis from GBP1.56 billion in 2017. Of this, B2B
revenues were down 12% and consumer media down 4% (with 2017 pro
forma excluding Euromoney). B2B operations represent 54% of total
group revenue and consumer media 46%. Total group operating
profit fell by 19% to GBP145 million (2017 pro forma, excluding
Euromoney). Before accounting for corporate costs, B2B operating
profit was GBP128 million (67% of group) and consumer media
operating profit GBP64 million (33% of group). Corporate costs
were GBP47 million (23% of operating profit before corporate
costs).

Contributors to the earnings decline included:

-- Year-on-year portfolio disposals;

-- Adverse impact from a weaker U.S. dollar, with the group
    reporting in pound sterling;

-- An increase in corporate costs from higher advisory and
    restructuring costs as well as having to absorb some DMG
    information U.S. costs; and

-- An underlying decline in consumer media divisional
    performance.

In consumer media, the Daily Mail's print advertising revenues
were down 9% with circulation falling by 5%, for a combined
decline of 7%. Operating income fell by 17% on a reported basis.
S&P forecasts continued declines in the consumer media division
in 2019 and note the group is forecasting a further drop in
operating margins to high single digits. MailOnline reported that
revenues were up 3%, with this revenue representing 19% of
consumer media division revenue.

DMGT is looking to simplify its portfolio; part of its strategy
is to focus on fewer businesses. Within the B2B operations, the
group undertook portfolio initiatives including the closure of
Xceligent, and the sales of EDR, Hobsons' admissions and
solutions division, and Locus Energy. Reported B2B operating
profit was down 4%, with a lower edtech contribution after the
sale of Hobsons admissions and solutions as well as lower
profitability in events.

Consumer media remains a sizable part of the group, and therefore
DMGT remains exposed to the industry's structural decline.
Additionally, corporate costs remain material relative to the
group's earnings profile and we expect them to remain elevated,
particularly as further portfolio initiatives are undertaken.
We estimate that DMGT will generate about GBP180 million-GBP200
million adjusted EBITDA in the financial year ending Sept. 30,
2019 (FY2019) and FY2020. Crucially, this includes our modeling
assumption of additional acquired earnings from deployment of
GBP100 million of capital in FY2019 and GBP200 million in FY2020.
S&P forecasts the group's adjusted leverage will be 0x-0.5x in
FY2019 and 0.8x-1.3x in FY2020. Without any acquisitions, S&P's
adjusted leverage forecasts would remain in net cash for the
period.

S&P said, "The negative outlook reflects our view that DMGT's
adjusted earnings will remain under pressure in the next 12
months from a continued structural decline in print and
potentially from further portfolio disposals. Our FY2020 forecast
crucially relies on stable performance in the non-media
operations as well as an increasing contribution from acquired
earnings as the group deploys capital over time. Our negative
outlook also reflects the uncertainty around the timing of
redeployment of group excess capital. We forecast adjusted debt
to EBITDA of below 0.5x for the next 12 months.

"We could downgrade DMGT in the next 12 months if operating
performance declined materially, resulting in sustained weakening
in margins and the group being unable to stabilize and increase
earnings. This could occur if continued declines in the media
divisions' earnings, combined with any other portfolio weakness,
resulted in further material declines in EBITDA of existing
operations. It could also occur through further portfolio
disposals, which materially shrink group operations.
Additionally, we could lower the rating if DMGT reduces its stake
in Euromoney or distributed surplus capital through shareholder
returns.

"We could revise the outlook if DMGT were to demonstrate a
sustainable improvement in earnings and margins, including
sustained organic earnings growth. This would need to be
accompanied by continuation of group financial policy of under 2x
net leverage (which translates into 2x-3x S&P Global Ratings-
adjusted leverage)."

DMGT is a diversified media group operating across consumer
media, B2B information operations, risk management, events, and
portfolio investments. In consumer media, the group operates the
Daily Mail newspapers, MailOnline, and the Metro publication.
Within the B2B segment, the group's operations span across energy
and property information businesses, with key brands including
Landmark, Genscape, and Trepp. The group owns RMS, which provides
catastrophe risk modeling services to the insurance industry.
DMGT also operates global B2B events, with a particular focus on
the energy and tourism sectors. Lastly, DMGT owns 49% of
Euromoney, a listed financial publishing and events group.

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

-- GDP growth of 2.3% and 1.8% in 2018 and 2019, in the U.S.,
    respectively, and 1.3% in the U.K.

-- Revenue to remain uncorrelated to economic growth due to a
     mix of operations, with both declining revenue trends in
     print newspapers and generally more stable revenues at
     faster-growing operations such as RMS and DMG Events.

-- S&P forecasts a 1%-3% revenue decline in FY2019 and a 4%-7%
    increase in FY2020. The forecast does not include allowance
    for any further disposals and includes the benefit from
    acquired earnings in FY2020.

-- S&P Global Ratings-adjusted EBITDA of GBP180 million-GBP200
    million in 2019 and 2020. This includes our assumption of
    continued structural decline in consumer media, balanced by
    stable to moderate growth in B2B earnings and a growing
    contribution from capital deployed for acquisitions.

-- S&P forecasts capital expenditure (capex) of GBP30 million-
    GBP40 million, as lower overall capex is required after
    disposals and negative working capital movement of around
    GBP30 million in 2019 and neutral in 2020.

-- Dividends paid to shareholders of around GBP85 million in
    2019 and gradually increasing by around 3% after.

-- Dividends received from joint ventures and associates of
    around GBP15 million-GBP20 million in 2019 and 2020.

-- Adjusted free operating cash flow of greater than GBP100
    million in 2019 and more than GBP130 million in 2020, which
    benefits from the neutral working capital assumption.

-- S&P's assumption of gradual deployment of capital with GBP100
    million spent in 2019 and GBP200 million in 2020.

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

-- Adjusted debt to EBITDA around 0x-0.5x in 2019 and 0.8x-1.3x
    in 2020.

-- Adjusted discretionary cash flow to debt of greater than 50%
     in 2019 and greater than 20% in 2020.


EUROSAIL 2006-1: Moody's Affirms Caa1 Ratings on Two Note Classes
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of 5 tranches,
downgraded the ratings of 2 tranches, and affirmed 18 tranches in
4 Eurosail UK Non-conforming RMBS transactions:

Eurosail 2006-1

GBP321.2 million Class A2c Notes, Affirmed Aa1 (sf); previously
on Feb 28, 2018 Affirmed Aa1 (sf)

EUR20.7 million Class B1a Notes, Affirmed Aa1 (sf); previously on
Feb 28, 2018 Affirmed Aa1 (sf)

GBP17.5 million Class B1c Notes, Affirmed Aa1 (sf); previously on
Feb 28, 2018 Affirmed Aa1 (sf)

EUR13.6 million Class C1a Notes, Upgraded to Aa3 (sf); previously
on Feb 28, 2018 Upgraded to A3 (sf)

GBP16.5 million Class C1c Notes, Upgraded to Aa3 (sf); previously
on Feb 28, 2018 Upgraded to A3 (sf)

EUR26.4 million Class D1a Notes, Affirmed Caa1 (sf); previously
on Feb 28, 2018 Affirmed Caa1 (sf)

GBP3 million Class D1c Notes, Affirmed Caa1 (sf); previously on
Feb 28, 2018 Affirmed Caa1 (sf)

Eurosail 2006-2BL PLC

GBP269.06 million Class A2c Notes, Affirmed Aa1 (sf); previously
on Sep 17, 2009 Downgraded to Aa1 (sf)

EUR27 million Class B1a Notes, Affirmed Aa1 (sf); previously on
Oct 14, 2015 Upgraded to Aa1 (sf)

US$18 million Class B1b Notes, Affirmed Aa1 (sf); previously on
Oct 14, 2015 Upgraded to Aa1 (sf)

EUR24.8 million Class C1a Notes, Upgraded to A1 (sf); previously
on Oct 14, 2015 Upgraded to A2 (sf)

GBP11 million Class C1c Notes, Upgraded to A1 (sf); previously on
Oct 14, 2015 Upgraded to A2 (sf)

EUR9 million Class D1a Notes, Affirmed B2 (sf); previously on Oct
14, 2015 Upgraded to B2 (sf)

GBP17.3 million Class D1c Notes, Affirmed B2 (sf); previously on
Oct 14, 2015 Upgraded to B2 (sf)

GBP7.38 million Class E1c Notes, Affirmed Caa3 (sf); previously
on Sep 17, 2009 Downgraded to Caa3 (sf)

Eurosail 2006-3NC PLC

EUR128 million Class A3a Notes, Affirmed Aa1 (sf); previously on
Jul 27, 2017 Upgraded to Aa1 (sf)

GBP80.2 million Class A3c Notes, Affirmed Aa1 (sf); previously on
Jul 27, 2017 Upgraded to Aa1 (sf)

EUR48.8 million Class B1a Notes, Upgraded to Aa1 (sf); previously
on Jul 27, 2017 Upgraded to Aa2 (sf)

EUR20 million Class C1a Notes, Affirmed Ba3 (sf); previously on
Oct 14, 2015 Upgraded to Ba3 (sf)

GBP9.85 million Class C1c Notes, Affirmed Ba3 (sf); previously on
Oct 14, 2015 Upgraded to Ba3 (sf)

EUR6.05 million Class D1a Notes, Affirmed Caa3 (sf); previously
on Oct 14, 2015 Upgraded to Caa3 (sf)

GBP11 million Class D1c Notes, Affirmed Caa3 (sf); previously on
Oct 14, 2015 Upgraded to Caa3 (sf)

Eurosail-UK 2007-5NP PLC

GBP439.1 million Class A1a Notes, Downgraded to A3 (sf);
previously on Dec 17, 2015 Upgraded to A1 (sf)

GBP75 million Class A1c Notes, Downgraded to A3 (sf); previously
on Dec 17, 2015 Upgraded to A1 (sf)

GBP29.04 million Class B1c Notes, Affirmed Caa3 (sf); previously
on Dec 17, 2015 Confirmed at Caa3 (sf)

RATING RATIONALE

Upgrades are prompted by an increase in the credit enhancement
available for the affected tranches, and in some cases, due to a
decrease of the key collateral assumptions, namely the portfolio
Expected Loss (EL) and MILAN CE. The rating downgrades reflect
the correction of an input in its cash flow modelling for
Eurosail-UK 2007-5NP PLC.

  -- Revision of Key Collateral Assumptions

As part of the rating action, Moody's reassessed its lifetime
loss expectation for the portfolio reflecting the collateral
performance to date.

In Eurosail 2006-1, the cumulative losses currently stand at 4.2%
of the original pool balance. Moody's decreased the EL assumption
to 6.0% as a percentage of original pool balance from 6.5%
previously.

Similarly, in Eurosail 2006-3NC PLC, the cumulative losses
currently stand at 4.3% of the original pool balance. Moody's
decreased the EL assumption to 7.25% as a percentage of original
pool balance from 7.9% previously.

Moody's EL assumptions for the other two transactions remain
unchanged.

Moody's has also assessed loan-by-loan information as a part of
its detailed transaction review to determine the credit support
consistent with target rating levels and the volatility of future
losses. Moody's updated the MILAN CE assumption based on updated
loan-by-loan data on the underlying pools, taking into
consideration the Minimum EL Multiple, a floor defined in Moody's
methodology for rating EMEA RMBS transactions. As a result,
Moody's has decreased the MILAN CE assumption for Eurosail 2006-
3NC PLC to 37.0% from 40.0% previously. MILAN CE assumptions for
the other three transactions were left unchanged.

The rating action also took into account the increased
uncertainty relating to the impact of the performance of the UK
economy on the transaction over the next few years due to the on-
going discussions relating to the final Brexit agreement.

  -- Increase in Available Credit Enhancement

The increase in the available credit enhancement may be explained
by deleveraging, due to sequential amortization and/or non-
amortizing Reserve Funds and/or trapping of excess spread. All
transactions, except Eurosail-UK 2007-5NP PLC, are currently
subject to sequential amortization. Reserve Funds in all
transactions, with the same exception of Eurosail-UK 2007-5NP
PLC, are currently non-amortizing and thus provide an increasing
credit enhancement.

  -- Model input correction in Eurosail-UK 2007-5NP PLC

In Eurosail-UK 2007-5NP PLC, the correction to an input for the
cash model has partially prompted the downgrade of two senior
Notes. In prior rating actions, the transaction was modeled
sequentially, based on the initial conditions for amortization.
In November 2013, the transaction was restructured affecting the
conditions to switch from sequential to pro-rata amortization.
Based on these amended conditions, the transaction has been
amortising pro-rata since December 2015. The model has now been
corrected to reflect the priority of payment among the different
Notes. Additionally, the rating action on these two tranches
reflects the impact of higher losses expected as a percentage of
the current portfolio.The downgrades of the two Notes reflect
these changes.

The affirmation of the ratings reflect that the current credit
enhancement is sufficient to maintain the current ratings. In the
specific case of tranche B1c in Eurosail-UK 2007-5NP, Moody's
rating takes into consideration: (1) the loss resulting from the
tranche write-down following the restructuring of Eurosail-UK
2007-5NP PLC in November 2013 (write-down of 28% of the original
Note principal balance); and (2) any future loss to be incurred
due to collateral performance. Moody's believes that the expected
recovery rate on this Note is consistent with the current rating.

The rating action also took into consideration the Notes'
exposure to relevant counterparties, such as servicers, swap
counterparties and account banks.

The ratings of the Notes in all transactions, except Eurosail-UK
2007-5NP PLC, are capped at Aa1 (sf) due to the Financial
Disruption Risk, stemming from the fact that the servicer is an
unrated entity and the transaction's mitigating structural
features are not sufficient to achieve the Aaa (sf) rating. This
cap constraints the ratings of senior Notes in the transactions.

Principal Methodology

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2017.

The Credit Ratings for this rating action were assigned in
accordance with Moody's existing Methodology entitled "Moody's
Approach to Rating RMBS Using the MILAN Framework" dated
September 11, 2017.
The analysis undertaken by Moody's at the initial assignment of
ratings for RMBS securities may focus on aspects that become less
relevant or typically remain unchanged during the surveillance
stage.

Factors that would lead to an upgrade or downgrade of the
ratings:

Factors or circumstances that could lead to an upgrade of the
ratings include: (1) performance of the underlying collateral
that is better than Moody's expected; (2) deleveraging of the
capital structure; and (3) improvements in the credit quality of
the transaction counterparties.

Factors or circumstances that could lead to a downgrade of the
ratings include: (1) an increase in sovereign risk; (2)
performance of the underlying collateral that is worse than
Moody's expected; (3) deterioration in the Notes' available
credit enhancement; and (4) deterioration in the credit quality
of the transaction counterparties.


FISHING REPUBLIC: Appoints Administrators, Shares Still Suspended
-----------------------------------------------------------------
Fishing Republic plc on Dec. 20 disclosed that further to recent
notifications, Andrew Poxon -- andrew.poxon@leonardcurtis.co.uk
-- and Julien Irving -- julien.irving@leonardcurtis.co.uk -- of
Leonard Curtis Recovery Limited have been appointed Joint
Administrators of the Company.

The Company also disclosed that Northland Capital Partners
Limited has resigned as Nominated Adviser and Broker with
immediate effect.

In accordance with AIM Rule 1, if the Company fails to appoint a
replacement Nominated Adviser within one month of the date of
Northland's resignation, admission of the Company's shares to
trading on AIM will be cancelled.

The Company's shares remain suspended from trading on AIM.

Fishing Republic was one of the largest retailers of fishing
tackle in the UK by floor space.  Catering for all types of
anglers, coarse, carp, game and sea fishing, it operates a chain
of outlets currently all located in the North of England.
Situated in out-of-town light industrial estates, these have been
designed as "destination" stores, offering a wide range of
product and with knowledgeable and enthusiastic staff.  Fishing
Republic also provides its products online via
www.fishingrepublic.net and www.yorkshiregameangling.co.uk as
well as through third-party online retailers.


KAIAM EUROPE: Financial Woes Prompt Administration
--------------------------------------------------
Business Sale reports that Kaiam Europe Limited (KEL) and Kaiam
UK Limited (KUL), a computer factory based in Livingston, West
Lothian, has entered administration due to a series of financial
struggles.

Administrators from KPMG were appointed over the weekend, with
partners Blair Nimmo -- blair.nimmo@kpmg.co.uk -- and
Alistair McAlinden -- alistair.mcAlinden@kpmg.co.uk -- looking to
explore the possible sale of the business, Business Sale relates.

According to Business Sale, Mr. Nimmo, who is also the global
head of insolvency at KPMG, said: "KEL has faced challenging
trading conditions, which caused the business to experience acute
cash flow pressure.  Despite the action of the directors to try
to increase sales and attract new investment, the business
entered administration.

"We are exploring a sale of the business and are working with
Scottish Enterprise, Skills Development Scotland and West Lothian
Council to provide a full range of support to the company's
employees as this process takes place.  We would encourage any
interested parties to contact us as soon as possible."

KEL and KUL are subsidiaries of Kaiam Corporation, an American
organization established in 1998, which manufactures computer
parts to support rapid data-transfer between numerous servers at
data centers, Business Sale discloses.  As they are part of the
European operations, their administrations do not affect the US
arm of the company, Business Sale notes.


SMART REFINISHERS: Enters Administration, 17 Jobs Affected
----------------------------------------------------------
Adele Merson at Evening Express reports that a total of 17 people
have been made redundant after Smart Refinishers (Aberdeen)
Limited, an Aberdeen vehicle repair company, went into
administration.

The liquidator, Johnston Carmichael, has made all 17 of the
company's employees redundant, Evening Express relates.

"In common with many businesses in the north-east of Scotland in
recent years, Smart Refinishers (Aberdeen) encountered cashflow
difficulties rising from ever-increasing overheads and reduced
margins," Evening Express quotes Gordon MacLure --
gordon.maclure@jcca.co.uk -- restructuring partner at the firm,
as saying.

"The company's managing director, Evan Smart, has also suffered
health issues which impacted on the operation of the business.

"With these factors considered, Mr. Smart concluded that it was
not sustainable for the company to continue trading and
regretfully took the decision that the company should be wound
up."

Smart Refinishers (Aberdeen) Limited, which operated from
premises in Kirkhill Industrial Estate, Dyce, provided vehicle
accident repair services.



                            *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


                            *********


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

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

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

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

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

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


                 * * * End of Transmission * * *