/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/241008.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Tuesday, October 8, 2024, Vol. 25, No. 202 Headlines F R A N C E ACTICOR BIOTECH: Paris Court Extends Receivership Process SEHPSGA: Maison Gainsbourg Placed in Receivership G E R M A N Y TELE COLUMBUS: EUR462.5MM Bank Debt Trades at 21% Discount I R E L A N D AVOCA CLO XXIII: Fitch Hikes Rating on Class E Notes to 'BB+sf' BILBAO CLO II: Fitch Hikes Rating on Class E-R Notes to 'B+sf' BLACKROCK EUROPEAN IX: Fitch Affirms 'B-sf' Rating on Class F Notes CVC CORDATUS VI: Fitch Assigns B-(EXP)sf Rating on Cl. F2-RR Notes HARVEST CLO XVI: Fitch Hikes Rating on Class F-R Notes to 'B+sf' K A Z A K H S T A N KAZAKHSTAN UTILITY: Fitch Affirms BB- LongTerm Foreign Currency IDR MANGISTAU ELECTRICITY: Fitch Affirms & Withdraws 'BB-' LongTerm IDR L U X E M B O U R G COVIS FINCO: EUR309.6MM Bank Debt Trades at 55% Discount EOS FINCO: EUR475MM Bank Debt Trades at 24% Discount M O L D O V A MOLDOVA: Fitch Assigns 'B+' LongTerm Foreign Currency IDR N E T H E R L A N D S LOPAREX MIDCO: EUR14.8MM Bank Debt Trades at 33% Discount LOPAREX MIDCO: EUR186MM Bank Debt Trades at 32% Discount R U S S I A BANK AGROBANK: Fitch Rates USD400MM & UZS700BB EuroBonds 'BB-' S P A I N LA CASTILLEJA: EUR26MM Bank Debt Trades at 21% Discount S W E D E N POLESTAR AUTOMOTIVE: Swings to $539.5 Million Net Loss in H1 2024 T U R K E Y GDZ ELEKTRIK: Fitch Assigns 'BB-(EXP)' LongTerm IDR, Outlook Stable U N I T E D K I N G D O M BELA STRUCTURES: Seneca IP Named as Administrators CLIVEY BARN: Opus Restructuring Named as Administrators DAILY MAIL: Fitch Alters Outlook on 'BB+' LongTerm IDR to Stable R. H. OVENDEN: Rushtons Insolvency Named as Administrator RENALYTIX PLC: Reports $33.5 Million Net Loss in FY 2024 - - - - - =========== F R A N C E =========== ACTICOR BIOTECH: Paris Court Extends Receivership Process --------------------------------------------------------- CercleFinance.com reports that Acticor Biotech, a biopharmaceutical firm, has relayed that the Paris Commercial Court has opted to prolong its receivership process, which began on August 6, 2024. According to CercleFinance.com, the goal of these proceedings is to allow Acticor to explore all potential options for continuing its development, securing financing, and finding partners. Additionally, it will provide the company with the necessary funds to sustain its operations until January 2025. About Acticor Biotech Acticor Biotech operates as a clinical stage biopharmaceutical company. The Company focuses on developing a treatment for thrombotic diseases, ischemic stroke. Acticor Biotech serves customers in France. [BN] SEHPSGA: Maison Gainsbourg Placed in Receivership ------------------------------------------------- hpenews.com reports that the Societe d'exploitation de l'hotel particulier de M. X., or "SEHPSGA", the company managing a museum honoring Serge Gainsbourg has entered receivership just two days before its first anniversary on September 20, 2024. Mr. Gainsbourg is one of France's most cherished yet infamous musicians. The Paris Commercial Court placed SEHPSGA in receivership over unpaid bills, according to hpenews.com. French news site L'Informe revealed that in addition to unpaid bills, questionable management and legal conflicts have plagued Maison Gainsbourg, hpenews.com relays. A court-appointed administrator will now take charge of the company in an effort to prevent bankruptcy. Maison Gainsbourg has faced controversy before. In March 2023, a legal dispute arose between co-partners Charlotte Gainsbourg and property developer Dominique Dutreix, during which a court uncovered evidence of financial irregularities and determined that Dutreix had violated French commercial law, hpenews.com reports. Additionally, the Paris Commercial Court revealed that approximately 1.6 million euros (US$1.7 million) were owed to suppliers for services such as security, cleaning, and electricity. Dutreix was ordered to repay 1.5 million euros, hpenews relays. ============= G E R M A N Y ============= TELE COLUMBUS: EUR462.5MM Bank Debt Trades at 21% Discount ---------------------------------------------------------- Participations in a syndicated loan under which Tele Columbus AG is a borrower were trading in the secondary market around 78.9 cents-on-the-dollar during the week ended Friday, Oct. 4, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR462.5 million Term loan facility is scheduled to mature on October 16, 2028. The amount is fully drawn and outstanding. Tele Columbus AG provides cable services. The Company offers cable television programming, telephone, and internet connection services to homeowners and the housing industry. Tele Columbus operates throughout Germany. ============= I R E L A N D ============= AVOCA CLO XXIII: Fitch Hikes Rating on Class E Notes to 'BB+sf' --------------------------------------------------------------- Fitch Ratings has upgraded Avoca CLO XXIII DAC's class D and E notes and affirmed the others. Entity/Debt Rating Prior ----------- ------ ----- Avoca CLO XXIII DAC A Loan LT AAAsf Affirmed AAAsf A Notes XS2336488411 LT AAAsf Affirmed AAAsf B-1 XS2336488684 LT AA+sf Affirmed AA+sf B-2 XS2336488767 LT AA+sf Affirmed AA+sf C XS2336488841 LT A+sf Affirmed A+sf D XS2336489229 LT BBB+sf Upgrade BBBsf E XS2336489492 LT BB+sf Upgrade BBsf F XS2336489575 LT B-sf Affirmed B-sf Avoca CLO XXIII DAC is a securitisation of mainly senior secured obligations (at least 92.5%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds were used to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by KKR Credit Advisors (Ireland) Unlimited Company. The CLO will exit its reinvestment period in October 2025. KEY RATING DRIVERS Stable Performance; Low Refinancing Risk: The rating actions reflect the stable asset performance. As per the trustee report as of 30 August 2024, the transaction is slightly below par (by 0.2%) and the portfolio has no defaulted assets. The transaction is passing all collateral quality, portfolio profile and coverage tests. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 4.3%, versus a limit of 7.5%. In addition, the notes are not vulnerable to near- and medium-term refinancing risk, as no assets in the portfolio mature, before 2024 or 2025 and only 3.2% in 2026. The large break-even default rate cushions at the current ratings support the Stable Outlooks on the class A to E debt and the Positive Outlook on the class F notes. Reinvesting Transaction: As the transaction is still in the reinvestment period, its analysis is based on a stressed portfolio testing the Fitch-calculated weighted average life, Fitch-calculated weighted average rating factor (WARF), Fitch-calculated weighted average recovery rate (WARR), weighted average spread, weighted average coupon and fixed-rate asset share to their covenanted limits. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/ 'B-'. The WARF, as calculated by Fitch under its latest criteria, is 25.6. High Recovery Expectations: Senior secured obligations comprise 98% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The WARR, as calculated by Fitch as of 21 September 2024, is 60.9%. Diversified Portfolio: The portfolio is well diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 11.6%, and no obligor represents more than 1.5% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 37.4% as calculated by Fitch. The transaction includes four Fitch matrices corresponding to top 10 obligor concentration limits at 16% and 20% and fixed-rate assets limits at 0% and 10%. Fixed-rate assets reported by the trustee are at 5.2% of the portfolio balance. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if its loss expectations are larger than assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread to cover losses in the remaining portfolio USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for this transaction. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. BILBAO CLO II: Fitch Hikes Rating on Class E-R Notes to 'B+sf' -------------------------------------------------------------- Fitch Ratings has upgraded Bilbao CLO II DAC's class A-2A-R, A-2B-R, B-R, C-R, D-R, and E-R notes, and affirmed the rest. The Outlook is Stable on all notes. Entity/Debt Rating Prior ----------- ------ ----- Bilbao CLO II DAC A-1-R XS2364001581 LT AAAsf Affirmed AAAsf A-2A-R XS2364001821 LT AA+sf Upgrade AAsf A-2B-R XS2364002399 LT AA+sf Upgrade AAsf B-R XS2364002555 LT A+sf Upgrade Asf C-R XS2364002803 LT BBB+sf Upgrade BBBsf D-R XS2364003280 LT BB+sf Upgrade BBsf E-R XS2364003520 LT B+sf Upgrade Bsf Transaction Summary Bilbao CLO II DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by Guggenheim Partners Europe Limited and will exit its reinvestment period in February 2026. KEY RATING DRIVERS Stable Performance: Since Fitch's last rating action in November 2023, the portfolio's performance has remained stable. The transaction has continued to pass all collateral-quality, portfolio-profile and coverage tests, with no reported defaulted assets. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 4.9%, versus a limit of 7.5% and the portfolio's total par loss remains below its rating-case assumptions at 0.6%. Low Refinancing Risk: The notes have no near- and medium-term refinancing risk, with no assets maturing in 2024 or 2025, and only 2.1% of the portfolio maturing by June 2026. The combination of stable performance, low refinancing risk and a shortened weighted average life (WAL) covenant, has resulted in large break-even default-rate cushions. This has led to today's rating action. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The Fitch-calculated weighted average rating factor of the current portfolio is 34.7 as reported by the trustee based on its old criteria and 26.3 as calculated by Fitch under its latest criteria. High Recovery Expectations: Senior secured obligations comprise 99.2% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio as reported by the trustee is 63.1%. Diversified Portfolio: The top 10 obligor concentration as calculated by Fitch is 13.0%, which complies with the 15% limit of the current Fitch test matrix, and no obligor represents more than 1.6%. According to the latest trustee report, exposure to the three largest Fitch-defined industries is 36.6% and the portfolio consists of 8.2% fixed-rate assets versus a limit of 10%. Transaction Within Reinvestment Period: Given the manager's ability to reinvest, its analysis is based on a Fitch-stressed portfolio. Fitch tested the notes' achievable ratings across all Fitch test matrices, since the transaction can still migrate to different collateral quality tests, and the percentage of fixed-rate assets as well as the top 10 obligor concentration could also change. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets 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 or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for Bilbao CLO II DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. BLACKROCK EUROPEAN IX: Fitch Affirms 'B-sf' Rating on Class F Notes ------------------------------------------------------------------- Fitch Ratings has upgraded BlackRock European CLO IX DAC's class B notes and affirmed the rest. The Rating Outlook is Stable. Entity/Debt Rating Prior ----------- ------ ----- BlackRock European CLO IX DAC A XS2062957910 LT AAAsf Affirmed AAAsf B XS2062958215 LT AA+sf Upgrade AAsf C XS2062958561 LT Asf Affirmed Asf D XS2062958991 LT BBBsf Affirmed BBBsf E XS2062959379 LT BBsf Affirmed BBsf F XS2062959452 LT B-sf Affirmed B-sf Transaction Summary BlackRock European CLO IX DAC is a cash flow collateralised loan obligation (CLO). The underlying portfolio of assets mainly consist of leveraged loans and are managed by BlackRock Investment Management (UK) Limited. The deal exited its reinvestment period in June 2024, but the manager is still able to reinvest, according to the reinvestment criteria post-reinvestment period. KEY RATING DRIVERS Stable Performance; Low Refinancing Risk (Positive): The portfolio's credit quality remains stable. Exposure to assets with a Fitch-derived rating of 'CCC+' and below was reported at 6.9%, versus a limit of 7.5% under the latest trustee report of September 2024. The transaction is passing all the collateral- quality, portfolio-profile and over-collateralisation tests. Reported defaulted assets represent 0.9% of total collateral balance. The transaction is below target par by 0.8%, but losses have been below its rating-case expectations. The transaction has low refinancing risk with about 4% of assets maturing before June 2026. This supports the affirmation and the upgrade of the notes, in line with their respective model-implied ratings (MIRs). The Stable Outlook reflects comfortable default rate cushion at their respective ratings. 'B'/'B-' Portfolios (Neutral): Fitch assesses the average credit quality of the obligors at 'B'/'B-' in the portfolio. Fitch calculated a weighted average rating factor (WARF) of 25.2. High Recovery Expectations (Positive): Senior secured obligations comprise at least 90% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. Fitch calculated a weighted average recovery rate (WARR) of 61.7%. Diversified Portfolios (Positive): The portfolio is well-diversified across obligors, countries and industries. The top-10 obligor concentration is 12.8%, and no obligor represents more than 1.9% of the portfolio balance. Reinvesting Transaction (Neutral): The transaction exited its reinvestment period but can still reinvest under the reinvestment criteria post the reinvestment period. Therefore, its analysis is based on a stressed portfolio testing the Fitch-calculated weighted average life, Fitch-calculated WARF, Fitch-calculated WARR, weighted average spread, weighted average coupon and fixed-rate asset share to their covenanted limits. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets 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 or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for BlackRock European CLO IX DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. CVC CORDATUS VI: Fitch Assigns B-(EXP)sf Rating on Cl. F2-RR Notes ------------------------------------------------------------------ Fitch Ratings has assigned CVC Cordatus Loan Fund VI DAC reset notes expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ CVC Cordatus Loan Fund VI DAC A1 Loan-RR LT AAA(EXP)sf Expected Rating A1 Notes RR LT AAA(EXP)sf Expected Rating A2-RR LT AAA(EXP)sf Expected Rating B1-RR LT AA(EXP)sf Expected Rating B2-RR LT AA(EXP)sf Expected Rating C-RR LT A(EXP)sf Expected Rating D1-RR LT BBB(EXP)sf Expected Rating D2-RR LT BBB-(EXP)sf Expected Rating E-RR LT BB-(EXP)sf Expected Rating F1-RR LT B+(EXP)sf Expected Rating F2-RR LT B-(EXP)sf Expected Rating Transaction Summary The CVC Cordatus Loan Fund VI DAC is a reset securitisation of mainly (at least 90%) senior secured obligations with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Notes proceeds will be used to refinance the outstanding notes and purchase a portfolio with a target par of EUR400 million. The portfolio is actively managed by CVC Credit Partners Investment Management Limited (CVC) and the collateralised loan obligation (CLO) will have a reinvestment period of about 4.4 years and a seven-year weighted average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors at 'B'/'B-'. The Fitch weighted average rating factor (WARF) of the identified portfolio is 25.8. High Recovery Expectations (Positive): 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 (WARR) of the identified portfolio is 60.0%. Diversified Asset Portfolio (Positive): The transaction will have a concentration limit on the 10 largest obligors of 20%. The transaction will also include various concentration limits, including a maximum exposure to the three-largest Fitch-defined industries in the portfolio at 40% and a fixed-rate obligation limit at 10%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by 1.5 year on the step-up date, which is 1.5 years after closing. The WAL extension is subject to conditions including satisfaction of all the collateral-quality, portfolio-profile, and the coverage tests, plus the adjusted collateral principal amount being at least equal to the reinvestment target par balance. Portfolio Management (Neutral): The transaction has a 4.4-year reinvestment period and includes reinvestment criteria similar to those of 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 Modelling (Positive): The WAL used for the transaction's Fitch-stressed portfolio analysis was reduced by 12 months. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These include passing the coverage tests and the Fitch 'CCC' maximum limit after reinvestment and a WAL covenant that progressively steps down over time, both before and after the end of the reinvestment period. These conditions would in its opinion reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to downgrades of no more than one notch for the class B1-RR, B2-RR, C-RR, D1-RR, D2-RR, E-RR and F1-RR notes, to below 'B-sf' for the class F2-RR and have no impact on the class A1-RR and A2-RR notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio the class F1-RR notes display a rating cushion of three notches, the class D2-RR, E-RR and F2-RR notes have two notches, the class B1-RR, B2-RR, C-RR and D1-RR have one notch, while the class A1-RR and A2-RR notes have no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to four notches, except for the 'AAAsf' notes. During the reinvestment period, based on the Fitch-stressed portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the transaction's remaining life. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets 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 or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for CVC Cordatus Loan Fund VI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. HARVEST CLO XVI: Fitch Hikes Rating on Class F-R Notes to 'B+sf' ---------------------------------------------------------------- Fitch Ratings has upgraded Harvest CLO XVI DAC's class F-R notes and affirmed the others. Fitch has also revised the Outlook on class B-1-RR and B-2-RR to Positive from Stable. Entity/Debt Rating Prior ----------- ------ ----- Harvest CLO XVI DAC A-RR XS2304366227 LT AAAsf Affirmed AAAsf B-1-RR XS2304367035 LT AA+sf Affirmed AA+sf B-2-RR XS2304367894 LT AA+sf Affirmed AA+sf C-RR XS2304368603 LT A+sf Affirmed A+sf D-RR XS2304373439 LT BBB+sf Affirmed BBB+sf E-R XS1890819011 LT BB+sf Affirmed BB+sf F-R XS1890817585 LT B+sf Upgrade Bsf Transaction Summary Harvest CLO XVI DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction closed in October 2018. It is actively managed by Investcorp Credit Management EU Limited and exited its reinvestment period in April 2023. KEY RATING DRIVERS Asset Performance Better Than Rating Case: Since Fitch's last rating action in November 2023, the portfolio's performance has been stable. As reflected in the last trustee report dated 30 August 2024, the transaction is passing all its collateral quality and portfolio profile tests apart from its WAL test. The transaction is now 1.3% below par (calculated as the current par difference over the original target par). Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 4.17%, according to the trustee, compared to a limit of 7.5%. There are no defaulted assets in the portfolio, and total par loss remains well below its rating-case assumptions. This supports the upgrade of the class F-R notes. Deleveraging Transaction: The transaction has started to repay its class A-RR notes, which increases the credit enhancement for the remaining notes. This supports the Outlook revision to Positive on the class B-1-RR and B-2-RR notes. Limited Refinancing Risk: The transaction has manageable exposure to near- and medium-term refinancing risk, in view of the large default-rate cushions for each class of notes. The CLO has no portfolio assets maturing in 2024, 1.2% maturing in 2025, and a total of 5.1% maturing before June 2026, as calculated by Fitch. The transaction's comfortable break-even default-rate cushions supports the Stable Outlook on the other classes. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor (WARF) of the current portfolio is 25.7 as calculated by Fitch under its latest criteria. For the portfolio including entities with Negative Outlooks that are notched down one level under its criteria, the WARF was 27.5 at 21 September 2024. High Recovery Expectations: Senior secured obligations comprise 99.1% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio was 61%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 14%, and no obligor represents more than 2% of the portfolio balance. The exposure to the three-largest Fitch-defined industries is 34.2% as calculated by the trustee. Fixed-rate assets currently are reported by the trustee at 6.4% of the portfolio balance compared to the current maximum of 10%. Transaction Outside Reinvestment Period: The manager can reinvest unscheduled principal proceeds and sale proceeds from credit improved/impaired obligations after the reinvestment period, subject to compliance with the reinvestment criteria. However, the manager is currently restricted as the transaction is failing the weighted average life (WAL) test. The manager has not been actively reinvesting since June 2024 and the transaction has become static. Given the manager has not been reinvesting and is currently restricted by the failure of one collateral quality test, Fitch's analysis is based on the current portfolio to test for downgrades and the current portfolio notching down any obligor with an Issuer Default Rating on Negative Outlook by one notch (with a CCC- floor) and flooring the portfolio's WAL at four years when testing for upgrades. Deviation from MIR: The class B, D and F notes are one notch below their model-implied ratings (MIR) and the class C notes two notches below the MIR. The deviations reflect the sensitivity of the notes' MIRs to negative portfolio migration and additional defaults as a result of refinancing risk. In this sensitivity analysis, Fitch assumed its top Market Concern Loans (MCLs) and tier 2 MCLs defaulted, with the standard criteria recovery assumptions. Fitch also downgraded tier 3 MCLs and issuers with maturities before June 2026 by two notches with a 'CCC-' floor. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if loss expectation is larger than initially assumed, owing to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may occur if there is stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread being available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Condiderations Fitch does not provide ESG relevance scores for Harvest CLO XVI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. =================== K A Z A K H S T A N =================== KAZAKHSTAN UTILITY: Fitch Affirms BB- LongTerm Foreign Currency IDR ------------------------------------------------------------------- Fitch Ratings has affirmed Limited Liability Partnership Kazakhstan Utility Systems' (KUS) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'. The Outlook is Stable. KUS's rating reflects a solid performance and stable position in Kazakhstan's electricity market, healthy tariff growth in electricity generation and distribution and moderate leverage. Set against these factors are the evolving regulatory framework with social and political pressure on tariff decisions, corporate governance limitations, FX risks and limited liquidity. Fitch forecasts funds from operations (FFO) net leverage to gradually increase towards 3x from 2025 (1.6x in 2023) as KUS starts expanding its generating coal capacity under newly-signed investment agreements with the Ministry of Energy. Key Rating Drivers Healthy Growth in Generation Tariffs: Electricity generation tariffs were increased in January 2024 by around 11%-12% for KUS's generation companies, Karaganda Energotsentr and Ust-Kamenogorskaya CHPP. As in previous years, the regulatory order assumes that tariffs will remain flat in 2025, although annual revisions are likely. Over 2021-2024, KUS generation tariffs increased at an average rate of around 20% per year, above inflation Higher Capacity Tariffs: Around 80% of KUS's installed capacity receives capacity payments (on top of generation tariffs), which represent 12% of total KZT 50 billion EBITDA in 2023. These cover the company's fixed costs and do not have volume risk. The capacity tariff was increased by 80% to KZT1.06 million per megawatt per month in 2024, the first increase since 2019. A further 14% hike has been approved from 2025. Fitch expects these indexations will add around KZT6 billion to KUS's EBITDA. Fitch forecasts capacity payments to account for 15%-17% of EBITDA over the rating horizon. Long-Term Distribution Tariffs: The regulator has been testing new, more profitable tariff methodology for electricity distribution companies attract investment. Distribution tariffs for KUS's networks have been extended until 2028-2029. Mangistau Regional Electricity Network Company's distribution tariffs were approved with an average 10% increase a year over 2024-2029. Tariffs for Karaganda Zharyk and Ontustik Zharyk Transit were approved with an average increase of 11% and 7% a year, respectively. The approval of long-term tariffs improves cash-flow visibility in the distribution segment. Emerging Regulation: Tariffs for generation, distribution and supply segment are regulated in Kazakhstan. The regulatory framework generally allows for recovery of costs and investments. Despite some favourable changes to the framework in recent years, the tariff-setting process remains subject to social and political pressure. This results KUS's cash flows having less stability than markets with more established regulation. Expected High Investments: In May 2024 KUS and the Ministry of Energy signed investment agreements on expansion of KUS's two coal-fired power plants, with capacity addition of 240 MW and budgeted investments of KZT319 billion over 2025-2028. Those projects are at the early stages, and KUS is negotiating key terms with contractors. Investment agreements lock in approved capacity tariffs from 2028 once projects are completed, at KZT10 million-KZT11 million per MW per month, which provides an attractive return on investments, in its view. Fitch includes those projects in the rating case, given their high profitability, KUS's low leverage and its ambition to expand. This is despite the projects not yet being part of the issuer's business plan and Fitch understands that KUS has some flexibility to delay or cancel the projects. Capex-Driven Re-leveraging Likely: KUS has substantially improved its financial profile in recent years, and Fitch expect FFO net leverage at around 1x in 2024 (3.5x in 2020), due to tariff growth, limited capex and the resolution of some related-party transactions. Fitch expects KUS's FFO net leverage to weaken towards 3x by 2027, in line with the negative sensitivity. The weakening will reflect cash flow from operations averaging KZT50 billion per year over 2024-2027, average capex of KZT36 billion per year as per its business plan, and the recent investment agreements, which will add around KZT80 billion capex per year from 2025. In the absence of capex under new investment agreements and credit-negative related party transactions, Fitch estimates that FFO net leverage could remain at around 1x over 2024-2027. Covenants Breach: As of end-2023, KUS had breached several covenants, mostly technical in nature, under loans agreements with Sberbank and European Bank for Reconstruction and Development. This resulted in the reclassification of KZT47 billion debt as payable on demand. The banks did not demand early repayment, and KUS managed to receive the related waivers in 2024. Corporate Governance Limitations: KUS has a record of receiving the auditor's qualified opinions, mainly related to insufficient disclosure and incorrect accounting of related-party transactions. The frequency and volume of KUS's related-party transactions have materially decreased since 2018. However, Fitch continues to view KUS's corporate governance as weak, reflecting a non-transparent ownership structure and large related-party transactions with limited disclosure when economic benefit to KUS is uncertain. Vertical Integration; Limited Scale: KUS's business profile benefits from vertical integration and a strong position in electricity generation, distribution and supply in four regions of Kazakhstan, which in total account for 35% of the country's population. The business profile is constrained by KUS's limited scale of operations, with around a 5% market share of the country's electricity generation, and high exposure to coal-fired generation. Derivation Summary KUS's closest peers are Kazakhstan-based utility holding JSC Samruk-Energy (BB+/Stable, Standalone Credit Profile (SCP): b+) and transmission operator Kazakhstan Electricity Grid Operating Company (KEGOC, BBB/Stable, SCP: bbb-). These peers have a stronger market position than KUS due to their larger scale of operations and a wider geographical presence within Kazakhstan. KEGOC also has better cash-flow visibility than KUS. Both Samruk-Energy and KEGOC have stronger liquidity profiles than KUS, thanks to better access to credit lines and longer maturity profiles, and both have higher debt capacity than KUS. Following expected re-leveraging, KUS's financial profile will still be stronger than Samruk-Energy, but weaker than KEGOC. Energo-Pro a.s. (EPas, BB-/Stable) is active in electricity generation, distribution and supply in Bulgaria, Georgia, Turkiye and Spain. Both companies are exposed to cash-flow volatility and high FX mismatch. However, EPas benefits from stronger geographic diversification and stronger regulation, so has higher debt capacity, balanced by its higher leverage, resulting in the same rating as KUS. KUS and EPas are rated on a standalone basis. Samruk-Energy is rated two notches below the sovereign under its Government-Related Entities (GRE) Criteria. Fitch notches KEGOC up once for strong links with the sovereign under the GRE Criteria. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer: - GDP growth of 4%-5% and CPI of 7%-9% over 2024-2028 - Electricity generation and distribution volume to grow at low single-digit percentages in 2024-2028; flat heat generation volumes over the same period - Average electricity generation tariffs to increase by over 10% in 2024 as approved by the regulator, with below inflation growth in2025-2028; - Capacity sales tariffs as approved by the regulator for 2024 and 2025 and remaining flat for 2026-2028 - Electricity distribution tariff growth as approved by the regulator in 2024-2028 - Cost inflation slightly below expected CPI - Capex averaging KZT94 billion per year over 2024-2028, including new projects under investment agreements - No repayment of loans by third parties, no new funds provided to third parties RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - FFO net leverage below 2x and FFO interest coverage above 4.2x, both on a sustained basis - Stronger financial flexibility, due to improved liquidity profile and lower FX mismatch between revenue and debt - Improved predictability of the regulatory framework - Increased transparency of the ownership structure and generally stronger corporate governance Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - FFO net leverage higher than 3x and FFO interest coverage below 3.7x, both on a sustained basis - Deterioration of corporate governance (e.g. a significant increase in loans and guarantees to companies outside the company), adverse tariff changes or aggressive M&A - Worsening liquidity position Liquidity and Debt Structure Liquidity Improved, Remains Tight: At end-1H24, KUS had cash and cash equivalents of around KZT5billion and an available uncommitted credit line of KZT7 billion. Together with projected positive cash flow of around KZT20 billion for the following year, this covers the expected maturities of around KZT22 billion in 2H24-1H25. KUS plans to refinance some of its overdraft loans. Negative FCF Expected: Fitch expects negative free cash flow (FCF) from 2025, driven by large capex under investment agreements, which Fitch understands are under the company's discretion, to be funded with new debt. KUS is negotiating the financing of the projects. If it decides not to proceed or to postpone the new investment projects, its positive annual pre-dividend FCF of around KZT20 billion over 2024-2027 should cover expected debt maturities. FX Mismatch: At end-1H24 debt comprised loans from JSC Sberbank Russia (KZT46 billion), JSC Bank CenterCredit (KZT11 billion), the European Bank for Reconstruction and Development (KZT9 billion), interest-free loans (KZT11 billion) and other debt (KZT3 billion). Around 60% of debt at end-June 2024 was Russian rouble-denominated in and 2% in US dollars, with the rest in tenge. Sberbank Refinancing Planned: KUS plans to refinance the rouble-denominated Sberbank loan with a local bank in tenge, which should be positive for liquidity profile, despite a higher interest rate. Refinancing will significantly reduce FX risks, eliminating the exposure to volatile KZT/RUB exchange rate, extend the maturity, and release the majority of KUS's pledged assets. Issuer Profile KUS is an integrated utility in Kazakhstan, which owns coal-fired CHPs in Karaganda and East Kazakhstan regions with total installed capacity of 1.1 gigawatt and 5% market share of the country's electricity generation. KUS also owns three electricity distribution companies in Karaganda, Turkestan and Mangistau regions, and three electricity supply companies. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations KUS has an ESG Relevance Score of '4' for Governance Structure and '4' for Group Structure due to non-transparent ownership structure and large related-party and third-party transactions. These factors have a negative impact on the credit profile and are relevant to the rating, in conjunction with other rating factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Limited Liability Partnership Kazakhstan Utility Systems LT IDR BB- Affirmed BB- LC LT IDR BB- Affirmed BB- Natl LT BBB+(kaz)Affirmed BBB+(kaz) MANGISTAU ELECTRICITY: Fitch Affirms & Withdraws 'BB-' LongTerm IDR ------------------------------------------------------------------- Fitch Ratings has affirmed Kazakhstan-based Mangistau Regional Electricity Network Company JSC's (MRENC) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'with a Stable Outlook. Fitch has simultaneously withdrawn all ratings. The affirmation reflects the continued alignment of MRENC's rating with that of its majority shareholder, Limited Liability Partnership Kazakhstan Utility Systems (KUS, BB-/Stable), which owns 52.63% of ordinary shares. MRENC's ratings are aligned with its parent due to the strong legal incentive to support, as KUS guarantees around 70% of MRENC's debt. MRENC's Standalone Credit Profile (SCP) of 'b+' is constrained by its small size, geographical and customer concentrations, and the evolving regulatory framework. This is balanced by the company's higher revenue visibility on the back of extended tariffs approved until 2029 and the company's near-monopoly position in electricity transmission and distribution in the Region of Mangistau, one of Kazakhstan's strategic oil- and gas-producing regions. The ratings have been withdrawn for commercial reasons. Fitch will therefore no longer provide rating or analytical coverage on MRENC. Key Rating Drivers Ratings Aligned with Parent: KUS owns 50.19% of equity or 52.63% of ordinary shares in MRENC and provides guarantees under the majority of its loans with European Bank for Reconstruction and Development (EBRD), which comprise around 70% of MRENC's debt. This indicates strong legal ties between the companies and supports MRENC's rating alignment with the parent under Fitch's Parent and Subsidiary Rating Linkage criteria. Fitch expects KUS to continue providing guarantees for the majority of MRENC's debt. Long-term Distribution Tariffs: The regulator has been testing new and more profitable tariff methodology for electricity distribution companies to attract investment. MRENC's distribution tariffs were extended to 2029 from 2025 and approved with an average 10% increase per year for legal entities' counterparties (which represent 90% of electricity distribution volumes for MRENC) over 2024-2029. The approval of long-term tariffs provides greater visibility to the company's cash flows. Small Scale, Concentrated Customer Base: The business profile is constrained by MRENC's small scale of operations with focus on only one region in western Kazakhstan, exposing the company to service disruption risk caused by a core network failure, and dependence on key personnel. The other constraining factor is high exposure to a single industry (oil and gas) and within that, high customer concentration. Strong Financial Profile: Fitch forecasts the company's funds from operations (FFO) leverage below 1x on average over 2024-2027, which is strong for the rating. MRENC has sufficient headroom under the EBRD loan covenants of debt to EBITDA below 4x and an interest coverage ratio above 2.5x. Derivation Summary MRENC is a small electricity distribution company in western Kazakhstan. It has a weaker business profile than Kazakhstan Electricity Grid Operating Company (KEGOC, BBB/Stable, SCP: bbb-), which operates nationwide, and has greater geographic diversification and lower volume risk. Like other utilities in Kazakhstan, MRENC is subject to regulatory uncertainties influenced by macroeconomic shocks and possible political interference. Another peer is Uzbekistan-based distribution and supply company Regional Electrical Power Networks JSC (BB-/Stable, SCP: ccc). It has a larger asset base and greater geographical and customer diversification than MRENC, which is balanced by Mangistau's more established regulatory framework, with a longer record and multi-year tariffs, and a stronger operating environment in Kazakhstan. On a SCP basis, Regional Electrical Power Networks is also penalised by much higher leverage compared with Mangistau. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - GDP growth of 4%-5% and CPI of 7%-9% over 2024-2027 - Electricity distribution volumes growth close to zero in 2024-2027 - Electricity distribution tariff for legal entities counterparties to increase by 10% on average per year until 2029 as approved by the regulator - Cost inflation in line with CPI - Capex on average at around KZT5.7 billion annually for 2024-2027, higher than management guidance - Conservative inclusion of KZT2 billion dividend payments on ordinary shares in 2025-2027 RATING SENSITIVITIES Not applicable, as the ratings have been withdrawn. Liquidity and Debt Structure Manageable Liquidity: Following the bond repayment in July 2024, MRENC's debt mainly consists of EBRD loans of around KZT9 billion, gradually amortising until 2028. Fitch expects MRENC to generate pre-dividend free cash flow around KZT4 billion annually over 2025-2027, which comfortably covers annual debt maturities on EBRD loans of KZT2.4 billion. Approximately 10% of the debt is US dollar-denominated, with the remainder in tenge. Issuer Profile MRENC has a near-monopoly position in electricity transmission and distribution in the Region of Mangistau, one of Kazakhstan's strategic oil-and gas-producing regions. Summary of Financial Adjustments Preference shares are treated as debt. Public Ratings with Credit Linkage to other ratings MRENC's rating is equalised with that of KUS. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Mangistau Regional Electricity Network Company JSC LT IDR BB- Affirmed BB- LT IDR WD Withdrawn BB- ST IDR B Affirmed B ST IDR WD Withdrawn B LC LT IDR BB- Affirmed BB- LC LT IDR WD Withdrawn BB- Natl LT BBB+(kaz)Affirmed BBB+(kaz) Natl LT WD(kaz)Withdrawn BBB+(kaz) senior unsecured LT WD Withdrawn BB- senior unsecured LT BB- Affirmed RR4 BB- =================== L U X E M B O U R G =================== COVIS FINCO: EUR309.6MM Bank Debt Trades at 55% Discount -------------------------------------------------------- Participations in a syndicated loan under which Covis Finco Sarl is a borrower were trading in the secondary market around 45.1 cents-on-the-dollar during the week ended Friday, Oct. 4, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR309.6 million Term loan facility is scheduled to mature on February 18, 2027. About EUR286.3 million of the loan is withdrawn and outstanding. Covis Finco SARL is an entity affiliated with Covis Pharma, which is backed by Apollo Global Management. Covis Pharma distributes pharmaceutical products for patients with life-threatening conditions and chronic illnesses. Finco is the borrower under a term loan facility used to refinance existing debt and refinance the debt incurred to finance products acquired from AstraZeneca. Finco has its registered office in Luxembourg. EOS FINCO: EUR475MM Bank Debt Trades at 24% Discount ---------------------------------------------------- Participations in a syndicated loan under which EOS Finco Sarl is a borrower were trading in the secondary market around 76.3 cents-on-the-dollar during the week ended Friday, Oct. 4, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR475 million Term loan facility is scheduled to mature on October 8, 2029. The amount is fully drawn and outstanding. EOS US Finco LLC is a hardware technology company based in the United States. The Company’s country of domicile is Luxembourg. ============= M O L D O V A ============= MOLDOVA: Fitch Assigns 'B+' LongTerm Foreign Currency IDR --------------------------------------------------------- Fitch Ratings has assigned Moldova a Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B+' with a Stable Outlook. Key Rating Drivers Credit Fundamentals: Moldova's 'B+' rating reflects commitment to policies that have preserved macroeconomic and financial stability through a series of potentially destabilising shocks in recent years, low government debt with a manageable debt repayment profile, availability of external financial support, and strengthened external buffers. These factors are balanced by high exposure to geopolitical tensions due to current war in neighbouring Ukraine, a frozen conflict, and the risk of destabilising foreign interference in domestic politics, as well as a structurally large current account deficit (CAD) and high net external debt. Prudent, Consistent Policy Mix: Moldova's economic policy mix, including a prudent fiscal policy, credible commitment to inflation targeting and exchange rate flexibility, has supported its capacity to navigate external shocks. The National Bank of Moldova (NBM) response to the 2022 geopolitical and energy shocks, including significant monetary tightening, helped preserve macro-financial stability and bring inflation close to its target (5±1.5%) in late 2023. Fitch forecasts inflation to average 4.6% in 2024 and 5.3% in 2025, broadly in line with 'B' peers. Resilient Banking Sector: The banking sector has demonstrated resilience to a volatile external environment, reflecting a strengthening of fundamentals supported by an overhaul of regulatory and supervision standards since the USD1 billion banking sector fraud of 2014. Moldova's banks are adequately capitalised (capital adequacy ratio of 28.2% in March), profitable (return on equity 12.1%) and have relatively low non-performing loans (5.5%). Dollarisation has been on a multi-year downward trend but remains relatively elevated at 35.2% for deposits and 22.4% for loans. Demonstrated External Support: A pro-European government since 2021 and geopolitical considerations after Russia's invasion of Ukraine have galvanised international financial and technical support. Disbursements by the IMF, EU and other official creditors have provided budget and balance of payments funding. Moldova received EU candidate status in June 2022, and accession negotiations officially opened in June 2024. The EU accession process will test the institutional capacity of the public administration to implement a complex and broad reform agenda. The frozen conflict with Transnistria could hinder the accession process. Strengthened Liquidity Buffers: The NBM's tight policy stance, resilient remittances, loan disbursements and the reduced seasonality of energy-related FX purchases have led to a broadly balanced FX market and higher international reserves. Fitch forecasts international reserves to reach USD5.2 billion by end-2024, up from USD3.1 billion in 2019. This offers 5.5 months of coverage of current external payments, above the 'B' median of 4.2. Moldova's external liquidity ratio (liquid external assets over short-term external liabilities), forecast at 153% in 2025, is stronger than peers. High CADs: Moldova's CAD has remained in double digits since 2021 (peaking at 17.2% of GDP in 2022) due to higher energy imports and prices. Remittances, a key source of FX, equalled 12.2% of GDP in 2023. Moldova has significantly reduced its exposure to Russia, and its main trading partner is the EU, most importantly Romania. Fitch forecasts the deficit to ease to 11.4% of GDP in 2024 and average 10.9% in 2025-2026. CADs are only partially covered by relatively lacklustre foreign direct investment (FDI) inflows under 3% of GDP, which Fitch projects will lift net external debt to a relatively high 27.2% of GDP in 2024. Elevated Geopolitical Risks: Moldova is highly exposed to the fallout from Ukraine war due to its geographic proximity, Russia's interference in domestic politics and military presence in Transnistria, and the risk that domestic political developments could disrupt the ongoing foreign policy reorientation towards the EU/US. Currently, a destabilising military threat from Russia appears contained by the Ukrainian armed forces' success in maintaining control of its Black Sea coast and the absence of direct transport links between Tiraspol and Moscow. Energy-related Vulnerabilities: Moldova is a net energy importer. It has made significant progress in reducing its energy dependence on Russia, for example, stopping gas imports in December 2022 and successfully disconnecting from the CIS electricity grid in 2022. Nevertheless, indirect exposure remains through the electricity supply from Transnistria (fed by Russian gas), which constitutes 62% of the electricity supply. The risk of disruptions remains, especially as Ukraine will not renew the gas transit agreement with Gazprom after 2024. Improved external buffers, availability of external financial support and alternative energy supply sources would help Moldova manage this shock, in its view. Upcoming Elections, Interference Risks: On 20 October, Moldova will hold the first round of presidential elections and a referendum to enshrine the country's commitment to EU membership in its constitution. The incumbent president Maia Sandu is currently the front runner. The president's and current government party (Party of Action and Solidarity) currently hold a majority (62 out of 101 seats), and parliamentary elections are due in July 2025. Pro-Russian parties garner considerable support, and Russia has reportedly interfered in local politics in various forms including disinformation campaigns, cyber-attacks, and financial support to certain political actors. Gradual Fiscal Consolidation, Low Debt: Fitch forecasts the general government deficit to ease to 5.1% of GDP in 2024 before declining to 3.7% by 2026, reflecting higher economic growth and ongoing efforts to improve expenditure efficiency including the targeting of social spending (36% of spending). Current expenditure pressures stem from personnel costs (8.4% of GDP in 2024) and social benefits (13.8% of GDP). General government debt, projected at 37.1% of GDP in 2024, is lower than the projected 'B' median of 51%. Close to 60% of government debt is foreign-currency denominated, but this exposure is to official creditors in mostly concessional terms. The sovereign does not have external commercial debt. Interest costs are relatively low at a projected 1.6% of GDP, or 5% of government revenues (below the 12.8% 'B' median). Contingent liabilities are low and mostly related to government housing programme guarantees (0.5% of GDP). Growth Recovery: Fitch forecasts growth of 2.4% in 2024 and 3.6% in 2025 supported by stronger consumer spending, due to salary and pension increases amid lower inflation, recovery in investment, and higher growth in the EU. Uncertainty remains elevated, in its view, due to the ongoing war in Ukraine and the upcoming electoral cycle. Growth potential is weighed down by low labour force participation, outward migration and skilled labour shortages, low investment, and a large state-owned enterprise sector. ESG - Governance: Moldova has an ESG Relevance Score (RS) of '5' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model. Moldova has a medium WBGI ranking at the 42nd percentile reflecting a track record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and improving but still high level of corruption. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Structural: Adverse external and/or domestic political developments that create risks for macroeconomic and financial stability or the availability of external official financing. - External Finances: A sharp decline in international reserves, for example, due to sustained widening of the CAD or the emergence of external financing constraints. - Public Finances: Sustained fiscal slippage that leads to a rapid increase in government debt over the medium term. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Structural: A significant and sustained reduction in geopolitical tensions - External: A reduction in external vulnerabilities, for example due to a sustained reduction in the CAD, especially if accompanied by greater FDI inflows. - Macro: Stronger growth prospects while preserving macroeconomic stability, for example, as a result reforms that lead to higher investment and improved institutional strength. Sovereign Rating Model (SRM) and Qualitative Overlay (QO) Fitch's proprietary SRM assigns Moldova a score equivalent to a rating of 'BB-' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM score to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows: - Structural: -1 notch, to reflect heightened geopolitical risks, as Moldova is exposed to the spillover of the war in Ukraine, hosts a frozen conflict with a breakaway territory and is vulnerable to Russian interference in domestic politics. 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. Country Ceiling The Country Ceiling for Moldova is 'B+', in line with the LT FC IDR. This reflects no material constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments. Fitch's Country Ceiling Model produced a starting point uplift of '0' notches above the IDR. Fitch's rating committee did not apply a qualitative adjustment to the model result. Date of Relevant Committee 12 September 2024 ESG Considerations Moldova has an ESG Relevance Score of '5' for Political Stability and Rights as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Moldova has a percentile rank below 50 for the respective Governance Indicator, this has a negative impact on the credit profile. Moldova has an ESG Relevance Score of '5' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Moldova has a percentile rank below 50 for the respective Governance Indicators, this has a negative impact on the credit profile. Moldova has an ESG Relevance Score of '4+' for Human Rights and Political Freedoms as the Voice and Accountability pillar of the World Bank Governance Indicators is relevant to the rating and a rating driver. As Moldova has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile. Moldova has an ESG Relevance Score of '4' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Moldova, as for all sovereigns. As Moldova has a fairly recent restructuring of public debt in 2006, this has a negative impact on the credit profile. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Moldova LT IDR B+ New Rating WD ST IDR B New Rating WD LC LT IDR B+ New Rating WD LC ST IDR B New Rating Country Ceiling B+ New Rating WD ===================== N E T H E R L A N D S ===================== LOPAREX MIDCO: EUR14.8MM Bank Debt Trades at 33% Discount --------------------------------------------------------- Participations in a syndicated loan under which Loparex Midco BV is a borrower were trading in the secondary market around 67.1 cents-on-the-dollar during the week ended Friday, Oct. 4, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR14.8 million Term loan facility is scheduled to mature on February 1, 2027. The amount is fully drawn and outstanding. Loparex is a provider of release liners. Based in the Netherlands, Loparex Midco B.V. operates as a financial holding company incorporated in 2019. The majority of the Company's end market sales come from graphic arts, tapes, industrial, and medical. Labelstock, hygiene, and composites accounts for a smaller portion of end market sales. LOPAREX MIDCO: EUR186MM Bank Debt Trades at 32% Discount -------------------------------------------------------- Participations in a syndicated loan under which Loparex Midco BV is a borrower were trading in the secondary market around 67.9 cents-on-the-dollar during the week ended Friday, Oct. 4, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR186 million Term loan facility is scheduled to mature on August 3, 2026. The amount is fully drawn and outstanding. Loparex is a provider of release liners. Based in the Netherlands, Loparex Midco B.V. operates as a financial holding company incorporated in 2019. The majority of the Company's end market sales come from graphic arts, tapes, industrial, and medical. Labelstock, hygiene, and composites accounts for a smaller portion of end market sales. =========== R U S S I A =========== BANK AGROBANK: Fitch Rates USD400MM & UZS700BB EuroBonds 'BB-' -------------------------------------------------------------- Fitch Ratings has assigned Joint-Stock Commercial Bank Agrobank's issue of USD400 million 9.25% five-year senior unsecured Eurobonds and issue of UZS700 billion 21.75% two-year senior unsecured Eurobonds final long-term ratings of 'BB-'. The assignment of the final ratings follows the receipt of documents conforming to information already received. The final ratings are the same as the expected ratings assigned to the unsecured notes. Key Rating Drivers The final rating is in line with Agrobank's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'BB-', as all settlements will be in US dollars. The notes represent direct, unconditional and senior unsecured obligations of the bank, which rank pari passu with its other senior unsecured obligations. Agrobank's 'BB-' Long-Term IDRs reflect Fitch's view of a moderate probability of support from the government of Uzbekistan, as captured by the bank's 'bb-' Government Support Rating. This view is based on majority state ownership, the bank's important roles in the government's economic and social policy, the low cost of potential support relative to sovereign international reserves, and a record of capital and liquidity support. The terms of the Eurobonds include financial covenants relating to Agrobank's compliance with regulatory capital ratios. A put option gives bondholders the right to seek early repayment in the event that the Republic of Uzbekistan ceases to control at least 51% of the bank's issued and outstanding voting share capital. For more details on Agrobank, see the rating action commentary dated 4 July 2024. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Agrobank's senior unsecured debt rating could be downgraded if the bank's Long-Term Foreign-Currency IDR was downgraded. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Agrobank's senior unsecured debt rating could be upgraded if the bank's Long-Term Foreign-Currency IDR was upgraded. Date of Relevant Committee September 13, 2024 Public Ratings with Credit Linkage to other ratings Agrobank's IDRs are linked to the IDR of the Republic of Uzbekistan. ESG Considerations Agrobank has an ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the bank at board level and in the business. Its ESG Relevance Score of '4' for Financial Transparency reflects delays in IFRS accounts publications, which are prepared only on annual basis. Both factors have a negative impact on the bank's credit profile and are relevant for the ratings in conjunction with other factors. In addition, the bank also has ESG Relevance Score of '3' for Exposure to Environmental Impacts and Exposure to Social Impacts (a deviation from the sector guidance of '2' for comparable banks), given the bank's focus on subsidised lending to the agricultural sector. This only has a minimal credit impact on the entity and minimal relevance for the ratings. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Joint-Stock Commercial Bank Agrobank senior unsecured LT BB- New Rating BB-(EXP) ========= S P A I N ========= LA CASTILLEJA: EUR26MM Bank Debt Trades at 21% Discount ------------------------------------------------------- Participations in a syndicated loan under which La Castilleja Energia SL is a borrower were trading in the secondary market around 79 cents-on-the-dollar during the week ended Friday, Oct. 4, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR26 million Term loan facility is scheduled to mature on December 31, 2034. The amount is fully drawn and outstanding. The Company's country of domicile is Spain. =========== S W E D E N =========== POLESTAR AUTOMOTIVE: Swings to $539.5 Million Net Loss in H1 2024 ----------------------------------------------------------------- Polestar Automotive Holding UK PLC filed with the U.S. Securities and Exchange Commission its unaudited condensed consolidated financial statements for the first half of 2024, reporting a net loss of $539.5 million on $905.8 million in revenue for the six months ended June 30, 2024, compared to a net loss of $340.8 million on $1.2 billion in revenue for the same period in 2023. Polestar continues to finance its operations primarily through various short-term credit facilities, including working capital facilities, medium term loans with credit institutions and related parties, sale leaseback arrangements, inventory finance facilities and extended trade credit with related parties. Polestar anticipates it will continue to need to raise funding via these methods and via equity to meet the cash requirements to fulfill its obligations. The principal uses for liquidity and capital are funding operations, repayment of debt, market expansion, and investments in Polestar's future vehicles and automotive technologies. Polestar continues to generate negative operating and investing cash flows as a result of scaling up commercialization efforts globally, along with continuing capital expenditures for the PS2, PS3, PS4, PS5, and PS6. Polestar does not expect to achieve positive free cash flows until late 2025. Managing the company's liquidity profile and funding needs remains one of management's key priorities. Substantial doubt about Polestar's ability to continue as a going concern persists as timely realization of financing endeavors is necessary to cover forecasted operating and investing cash outflow. Polestar intends to continue developing its short, medium, and long-term financing relationships with European and Chinese banking partners and Polestar's related parties, including upsizing current facilities where applicable, while also continuing to explore potential equity or debt offerings. As of June 30, 2024, the Company had $4 billion in total assets, $5.8 billion in total liabilities, and $1.8 billion in total deficit. Full-text copy of the Company's reports attached on Form 6-K with the Securities and Exchange Commission are available at: https://tinyurl.com/ar37s8bm About Polestar Automotive Polestar Automotive Holding UK PLC manufactures and sells premium electric vehicles. The company was founded in 2017 and is headquartered in Gothenburg, Sweden. As of December 31, 2023, the Company had $4.1 billion in total assets, $5.4 billion in total liabilities, and $1.3 billion in total deficit. Gothenburg, Sweden-based Deloitte AB, the Company's auditor since 2021, issued a 'going concern' qualification in its report dated August 14, 2024, citing that the Company requires additional financing to support operating and development activities that raise substantial doubt about its ability to continue as a going concern. =========== T U R K E Y =========== GDZ ELEKTRIK: Fitch Assigns 'BB-(EXP)' LongTerm IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has assigned GDZ Elektrik Dagitim Anonim Sirketi (GDZ), an electricity distribution company in Turkiye, an expected first-time Long-Term Issuer Default Rating (IDR) of 'BB-(EXP)' with Stable Outlook. Fitch has also assigned GDZ's proposed notes of USD500 million an expected senior unsecured rating of 'BB-(EXP)', in line with the expected Long-Term IDR, with a Recovery Rating of 'RR4'. The final ratings are contingent on the receipt of final documentation conforming materially to information already received and the implementation of a refinancing scheme as proposed in GDZ's business plan. The rating reflects GDZ's moderate leverage, good network quality, solid operating performance, and fully regulated revenues under a regulatory framework of investment renumeration and high insulation from price and volume risk. Rating constraints include GDZ's high exposure to the Turkish economy with a challenging operating environment and high inflation, plus a regulatory framework prone to social or political pressure that may lead to revenue underperformance and cash flow volatility. It also faces high foreign-exchange (FX) risks due to currency mismatch between revenue and debt. Key Rating Drivers Regulated Utility Network: GDZ is the fourth largest electricity distribution network in Turkiye with an 8% market share by distributed volumes and serves around 3.8 million customers. Its business is fully regulated, with Energy Market Regulatory Authority setting key regulatory parameters and distribution tariffs. GDZ has been consistently earning network-quality bonuses and has managed to reduce its electricity loss rate to 5.2% in 2023, one of the strongest ratios in Turkiye, from 7.3% in 2016. Regulatory Framework with Long Record: GDZ's Tariffs are based on the regulated asset base (RAB) since 2006. The key parameters for the fourth regulatory period of 2021-2025, such as RAB, real weighted average cost of capital (WACC) of 12.3%, a 10-year reimbursement period and efficiency incentives, support GDZ's profitability. Tariffs are protected from volume and inflation risks. Any deviation of actual results from projected figures is corrected via tariffs with a moderate lag along with adjustments to compensate for the lag itself. Regulatory Weaknesses: The regulatory framework in Turkiye also has weaknesses, some of which emerged since 2022 on the back of accelerating inflation and macroeconomic turbulence. Those include delayed and insufficient tariff increases, or mismatch between operating spending allowances and actual operating spending affected by high inflation. Regulator decisions can be influenced by social and political reasons to cap the growth of utility bills. This results in high cash flow volatility at GDZ, with working capital inflow at 15% of revenue in 2022 and outflow of 17%-18% of revenue in 2023 and 1H24. Following the latest distribution fee increase of 59% in July 2024, cumulative tariff growth for 2022-2024 has been broadly in line with inflation for the same period. Challenging Operating Environment, FX Risk: FX volatility and operating environment risks in Turkiye undermine the stability of the regulatory framework for Turkish distribution companies. Lira depreciated against US dollar by around 2.5x between end-2021 and September 2024 while inflation fluctuated between 38% and 86% over the same period. FX mismatch between GDZ's fully US dollar-denominated debt and lira-denominated cash flows limits financial flexibility. This is, however, mitigated by inflation-linked tariffs pre-empted by regulation and GDZ's limited leverage. Comfortable Headroom for Credit Ratios: Fitch forecasts funds from operations (FFO) net leverage to remain below 3x and FFO interest coverage at above 4x for 2024-2027, in line with the IDR. Fitch expects distribution tariffs to rise with inflation from 2025, driving operating cash flow to around TRY6.5 billion (around USD150 million) per year for 2024-2027. Fitch forecasts free cash flow (FCF) to be moderately negative, driven by capex of around TRY8 billion (around USD200 million) per year over 2024-2027 and Fitch expects bond covenants to allow GDZ to pay dividends from 2025. Part of Larger Group: GDZ is 100% controlled by Aydem Holding, which is present across the utility value chain in Turkiye. Apart from its distribution businesses in Izmir and Manisa regions, it has renewable and thermal generation assets with 2.2 GW of installed capacity, electricity retail and manufacturing businesses. Standalone Profile Drives Rating: Fitch expects GDZ bondholders to benefit from proposed covenants that will restrict dividend payments, loans to the parent and other affiliate transactions. Fitch therefore views legal ring-fencing as 'Insulated' under its Parent and Subsidiary Rating Linkage Criteria, while Fitch assesses access and control of the parent as 'Porous', which result in a standalone rating approach for GDZ. Derivation Summary GDZ peer group includes Nama Electricity Distribution Company SAOC (BB+/Stable), an electricity network covering most of the territory of Oman, and Georgia Global Utilities JSC (GGU, BB-/Stable, SCP: b+), a water network in Georgia. Nama operates under a more transparent, stable and predictable regulatory framework, and benefits from its larger size, higher profitability and lower FX risks than GDZ. This results in Nama's rating being two notches higher than GDZ despite the latter's lower leverage. Compared with GGU, GDZ is larger in size and has better asset quality, which is counterbalanced by a stronger operating environment in Georgia. Both companies have a high FX mismatch between revenue and debt and a similar debt capacity. GGU's SCP is one notch lower than GDZ's due to higher leverage, but its rating benefits from a one-notch uplift for parental support from FCC Aqualia S.A. (BBB-/Stable). GDZ's business profile shares similarities with that of Energo-Pro a.s. (EPas, BB-/Stable), which is involved in electricity generation, distribution and supply in Bulgaria, Georgia, Turkiye and Spain. Both companies are exposed to high cash flow volatility and FX mismatch. EPas benefits from stronger geographic and business diversification and stronger operating environments in countries of operation. This results in its higher debt capacity than GDZ and the same rating as GDZ's despite moderately higher leverage. In Turkiye, GDZ compares well with renewable energy producer Aydem Yenilenebilir Enerji Anonim Sirketi (B/Stable). Aydem benefits from the renewable energy support mechanism, known as YEKDEM, a law that provides fixed feed-in tariffs denominated in US dollars for 10 years. YEKDEM has been more stable than regulation for distribution networks in a high inflationary environment. Aydem's exposure to merchant risk and FX mismatch, however, has been increasing as feed-in tariffs expire. GDZ's higher rating is driven by its lower projected leverage. Key Assumptions - GDP growth in Turkiye of 2.8%-3.7% per year over 2024-2027 and inflation of 59% in 2024, 31% in 2025 and 19% in 2026-2027 - Distribution fee increase of 59% from July 2024 and in line with inflation from 2025 - Real returns on RAB in 2021-2025 at 12.3% - Capex reimbursement period of 10 years as assumed by the regulatory framework - Capex averaging TRY8 billion per year over 2024-2027, in line with management guidance - Moderate dividends starting from 2025 at USD20 million-USD40 million per year - Cost of new debt in hard currency in line with similarly rated debt by Turkish issuers RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Downgrade - An upward revision of Turkiye's Country Ceiling - currently at 'BB-' - together with FFO net leverage below 2.5x and FFO interest coverage above 3.7x on a sustained basis - Higher stability of the regulatory framework, as manifested in consistent tariff adjustments as foreseen by regulation and reduced cash flow volatility, could have a positive impact on the debt capacity Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Upgrade - FFO net leverage above 3.5x and FFO interest coverage below 3x, both on a sustained basis - A downward revision of Turkiye's Country Ceiling - Material weakening of the liquidity profile - Adverse regulation effects including delays or insufficient tariff increases, contraction of return on investments and excessive cash flow volatility could have a negative impact on the debt capacity Liquidity and Debt Structure Liquidity to Improve Post-Refinancing: Fitch views GDZ's liquidity profile prior to refinancing as weak, but manageable. At end-1H24, available cash of TRY14 million was insufficient to cover short-term debt of TRY2.3 billion. Liquidity risk is mitigated by GDZ's regulated business, which should ease access to bank funding, and by its good banking relationships in Turkiye. GDZ plans to place Eurobonds to refinance almost all existing bank debt, repay trade payables to Turkish state-owned utility companies and partially fund capex. In its view, refinancing will significantly improve its liquidity profile with no debt maturities over the next few years. Further, as stipulated in its proposed covenants, GDZ will hold cash balances of at least USD25 million, which should support liquidity. However, GDZ will have to fund negative FCF expected in its rating case. Issuer Profile GDZ is a Turkiye-based electricity distribution company serving Izmir and Manisa regions, with 8% market share of the country's distribution volumes. GDZ serves 3.8 million customers and around 6 million population. GDZ is 100% indirectly owned by Aydem Holding. Summary of Financial Adjustments Fitch-calculated EBITDA and FFO include cash-effective capex and WACC reimbursements related to service concession arrangements, and exclude financial income accrued but not yet paid. Date of Relevant Committee 23 September 2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- GDZ Elektrik Dagitim Anonim Sirketi LT IDR BB-(EXP) Expected Rating senior unsecured LT BB-(EXP) Expected Rating RR4 =========================== U N I T E D K I N G D O M =========================== BELA STRUCTURES: Seneca IP Named as Administrators -------------------------------------------------- Bela Structures Limited, fka Bela Formwork Ltd, was placed in administration proceedings in the High Court of Justice Business and Property Court in Manchester Company and Insolvency List, Court Number: 001259 of 2024, and John Hedger of Seneca IP Limited were appointed as administrator on Sept. 27, 2024. Bela Structures Ltd is a concrete structure specialist that can tender for basements, groundworks, formwork, paving, landscaping and structural operations from start to finish. Its registered office and principal trading address is at 6 Wordsworth Parade, Green Lanes, London, N8 0SJ. The joint administrator can be reached at: John Hedger Seneca IP Limited Speedwell Mill, Old Coach Road Tansley, Matlock DE4 5FY For further information, contact: Michelle Shaw Email:Michelle.Shaw@seneca-ip.co.uk Tel No: 01629 761700 CLIVEY BARN: Opus Restructuring Named as Administrators ------------------------------------------------------- Clivey Barn Farm Limited was placed in administration proceedings in the High Court of Justice, Court Number: CR-2024-000089, and Jack Callow and Stella Davis of Opus Restructuring LLP were appointed as administrators on Sept 25, 2024. Clivey Barn Farm operates a traditional working farm. Its registered office and principal trading address is at Stable Cottage, Mells, Frome, BA11 3RF. The administrators can be reached at: Stella Davis Opus Restructuring LLP 322 High Holborn, London WC1V 7PB -- and -- Jack Callow Opus Restructuring LLP 6th Floor, Broad Quay House Broad Quay, Bristol BS1 4DJ For further information, contact: Tel No: 0121 222 4140 Optional alternative contact name: Ellie McEvilly DAILY MAIL: Fitch Alters Outlook on 'BB+' LongTerm IDR to Stable ---------------------------------------------------------------- Fitch Ratings has revised Daily Mail and General Trust plc's (DMGT) Outlook to Stable from Negative, while affirming its Long-Term Issuer Default Rating (IDR) at 'BB+'. Fitch has also affirmed its senior unsecured instrument rating at 'BB+' with a Recovery Rating (RR) of 'RR4'. The Outlook revision reflects its belief that DMGT's revenue and Fitch-defined EBITDA for the financial year to September 2024 will exceed its previous expectations, and that credit metrics will remain within its thresholds over FY24 to FY27, albeit with limited leverage headroom due to its business profile and scale. DMGT has a portfolio of businesses with variable growth prospects and profitability. The company holds a strong market position within traditional print and online media, property information, and a successful events business, which supports the rating. However, it is heavily exposed to the UK economy. While DMGT's profitability is weak for the rating, this is mitigated by sound financial discipline, as reflected in its low leverage and strong available liquidity. Key Rating Drivers Improved Metrics, Stable Outlook: Fitch forecasts Fitch-defined EBITDA net leverage to decline to 1.6x in FY24 from 2.1x in FY23, driven by revenue and profit growth. Fitch expects EBITDA margin to rise above 8% from 6.8%. Strong performance in events, better-than-budgeted print media revenues, and growth in Trepp will offset weakness in Landmark. Fitch expects EBITDA margin to remain flat in FY25, before it rises to 9% by FY27. This will be supported by cost savings although Landmark's reduced yet still higher fixed-cost business model exposes it to some earnings volatility. With no further gross debt reduction expected before bond maturity in June 2027, Fitch forecasts leverage will remain within its thresholds of 1.2x-1.7x. This, along with its estimates of pre-dividend free cash flow (FCF) margin remaining above 3%, supports the revision of the Outlook to Stable. Efficiency Drive in Focus: Fitch anticipates a new joint venture (JV) with News UK, combining print operations, could generate run-rate cost savings of GBP13 million per year. Further cost reductions from efficiency programmes, IT upgrades, and rationalisation of operations in the US, will help enhance profit margin despite secular challenges in print media. Fitch expects large one-off restructuring costs in FY24 to support these initiatives. If a portion of such costs becomes recurring Fitch may reclassifies them above EBITDA, potentially lowering EBITDA margin and leading to a negative rating action. Events, Strategic Asset: Fitch expects events revenue and earnings to be sharply higher in FY24, driven by a continued post-pandemic recovery across the events sector and the success of COP28. Fitch believes events will contribute over 20% of total revenues on a run-rate basis, becoming a material value driver for the portfolio. This growth is supported by the traditional big five energy and construction events globally and strong performance in emerging markets like Saudi Arabia. Profit margins in events are higher than those in media, while revenue visibility is typically no longer than a year. UK Property Market, 2024 Trough: Landmark's revenues and profitability have continued to be hit by a weak UK property market, with transaction volumes constrained by high interest rates. Listings per month have remained above FY23 levels, but searches and completions have been weak. Fitch cautiously expects a general improvement in activity and completion rates from late 2024 into 2025 as falling rates lead to better mortgage deals, though the market may continue to experience interim volatility. As a market leader, Landmark stands to benefit quickly from any recovery. Cover Prices Mitigate Circulation Decline: DMGT has made cover price increases to manage costs and mitigate falling circulation. As of August 2024, Mail circulation was 8%-10% lower year-on-year, with many other competing papers also experiencing declines in the mid-to-high teens. Print revenues have benefited from a gradually improving advertising market but Fitch believes regular price increases will become less feasible as cost inflation eases. Fitch expects circulation and print advertising revenues to continue declining by mid-single digits. Reduced circulation and content will also hit advertising yield, but DMGT's online content will offset a portion of the lost revenues and earnings. Focus on Digital Media: Fitch expects MailOnline to help mitigate some of the revenue loss in print as DMGT leverages its strong brand, content, and wide reach. Fitch expects its share of total dmg Media revenues to rise from around 30% currently, as print media continues its structural decline. DMGT is investing in improving content quality, better tailoring it to regions, and expanding its data repository to better target advertising to readers. However, growing scale takes time and it is uncertain if digital media will fully compensate for print losses due to stiff competition across media platforms. Derivation Summary DMGT's credit profile is supported by the group's B2B and consumer media portfolio and measured financial policy providing the flexibility to manage operational risks. However, the medium- to long-term visibility of cash flow is affected by uncertainties in the evolution of print circulation and advertising, and the likely need for continued investment in new products and digital platforms. The company's active management of its asset portfolio leads to more limited visibility of the scale and scope of the business. As a result, the thresholds for DMGT have been set tighter at the rating relative to peers. Higher-rated larger peers with greater leverage flexibility such as RELX PLC (BBB+/Stable) and Informa PLC (BBB/Stable), Adevinta ASA (WD) and Thomson Reuters Corporation (BBB+/Stable) benefit from a combination of factors such as increased scale, a stronger operating mix driven by a higher proportion of subscription-based revenue and higher Fitch-defined EBITDA margins, little/lower exposure to print, and more discretionary cash flows supporting higher leverage or ratings. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Revenue CAGR of 2.0% in FY24-FY27 as near-term pressures in the consumer business and challenging macroeconomic outlook are offset by improved growth prospects in the events and property information businesses and economic recovery in later years - Fitch-defined EBITDA margin of 8.4% in FY24 and trending to 9% by FY25 - Capex averaging 1.1% of revenue in FY24-FY27 - Non-recurring cash outflows of GBP37 million in FY24 and GBP10 million in FY25 - Dividends around GBP20 million in FY24, growing steadily to GBP25 million by FY27 - M&A outflows of GBP15 million in FY24, GBP13 million in FY25 and GBP10 million in FY26-FY27 RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Fitch does not expect positive rating action due to the company's limited scale and diversification. However, an upgrade could occur on the following: - Tangible improvement in the overall scale and/or diversification of the business, along with visibility of Fitch-defined EBITDA margin rising above 12.5% - Fitch-defined EBITDA net leverage below 1.2x on a sustained basis - Pre-dividend FCF margin above 5% on a sustained basis Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch-defined EBITDA net leverage consistently above 1.7x - Weakening of Fitch-defined EBITDA margin, exacerbated by continuing exceptional charges deemed by Fitch to be operating and/or recurring in nature - Pre-dividend FCF margin below 3% on a sustained basis Liquidity and Debt Structure Adequate Liquidity: Fitch expects DMGT to generate stable low single-digit FCF margins for FY24- FY27. This, along with cash on its balance sheet and a GBP205 million undrawn revolving credit facility (RCF), should be sufficient to support operations and cover short-term liabilities. The company's RCF and GBP150 million bond mature in FY27. Generic Approach for Debt Ratings: Fitch rates DMGT's senior unsecured rating in accordance with its Corporates Recovery Ratings and Instrument Ratings Criteria, under which Fitch applies a generic approach to instrument notching for 'BB' rated issuers. This results in a Recovery Rating of 'RR4', in line with its IDR. Issuer Profile DMGT is a diversified company with a portfolio of assets in the B2B and B2C spaces. B2B investments include property information and an events business. DMG Media is the B2C print and online media business with most of the revenues earned by the Daily Mail, Mail on Sunday and MailOnline news outlets. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Daily Mail and General Trust plc LT IDR BB+ Affirmed BB+ senior unsecured LT BB+ Affirmed RR4 BB+ R. H. OVENDEN: Rushtons Insolvency Named as Administrator --------------------------------------------------------- R. H. Ovenden Ltd was placed in administration proceedings in the High Court of Justice Business and Property Courts in Leeds, Court Number: CR-2024-000938, and Nicola Baker of Rushtons Insolvency Limited, was appointed as administrators on Sept 27, 2024. R. H. Ovenden engages in the construction of civil engineering projects. Its registered office and principal trading address is at Hegdale Quarry Badlesmere, Ashford Rd, Badlesmere, Faversham, ME13 0JX. The administrators can be reached at: Nicola Baker Rushtons Insolvency Limited 6 Festival Building Ashley Lane, Saltaire BD17 7DQ For further details, contact: 01274 598585 Alternative contact: Dominic Wolski E-mail: dwolski@rushtonsifs.co.uk RENALYTIX PLC: Reports $33.5 Million Net Loss in FY 2024 -------------------------------------------------------- Renalytix plc filed with the U.S. Securities and Exchange Commission its Annual Report on Form 10-K reporting a net loss of $33.5 million on $2.3 million of revenue for the year ended June 30, 2024, compared to a net loss of $45.6 million on $3.4 million in revenue for the year ended June 30, 2023. New York, New York-based CohnReznick LLP, the Company's auditor since June 2024, issued a "going concern" qualification in its report dated September 30, 2024, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. The Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $211.8 million as of June 30, 2024. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of KidneyIntelX or any future products currently in development. Substantial additional capital will be necessary to fund the Company's operations, expand its commercial activities and develop other potential diagnostic related products. The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's shareholders. If the Company is unable to obtain funding it could be required to delay, curtail or discontinue research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospect. The Company's ability to continue as a going concern is contingent upon successful execution of management's intended plan over the next 12 months to improve the Company's liquidity and profitability, which includes, without limitation: * Seeking additional capital through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements. * Implementation of various additional operating cost reduction options that are available to the Company. * The achievement of a certain volume of assumed revenue. A full-text copy of the Company's Form 10-K is available at: https://tinyurl.com/5euc5m4u About Renalytix Headquartered in United Kingdom, Renalytix (LSE: RENX) (NASDAQ: RNLX) -- www.renalytix.com -- is an artificial intelligence enabled in-vitro diagnostics and laboratory services company that is the global founder and leader in the field of bioprognosis for kidney health. In late 2023, the Company's kidneyintelX.dkd test was recognized as the first and only FDA-authorized prognostic test to enable early-stage CKD (stages 1-3b) risk assessment for progressive decline in kidney function in T2D patients. By understanding how disease will progress, patients and clinicians can take action earlier to improve outcomes and reduce overall health system costs. As of June 30, 2024, the Company had $7.97 million in total assets, $15.8 million in total liabilities, and $7.9 million in total stockholders' deficit. ********* 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 2024. 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. 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