/raid1/www/Hosts/bankrupt/TCRLA_Public/060410.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, April 10, 2006, Vol. 7, Issue 71
Headlines
A R G E N T I N A
AGRO MARBALD: Trustee Sets June 5 Claims Verification Deadline
BANCO HIPOTECARIO: Sets Apr. 18 Deadline to Subscribe to Notes
DISCO: Ahold Released from Argentine Tax Claims
EMPRESA DISTRIBUIDORA: Moody's Puts B3 Rating on Senior Notes
GAS ARGENTINO: Moody's Argentina Puts D Rating on US$130M Debt
MCC S.R.L.: Creditors Must Submit Proofs of Claim by May 31
METROGAS: Moody's Places Ratings Under Category 4
MONTON FOOD: Asks Court for Reorganization Approval
B E R M U D A
GLOBAL CROSSING: Provides Call Center Services for Mexicana
INTELSAT LTD: Lenders Waive Reporting Default Until April 30
B O L I V I A
* BOLIVIA: Plans to Buy 5% Stake in Venezuela TV News Network
B R A Z I L
BANCO BMC: Fitch Affirms D/E Individual Ratings
BANCO NACIONAL: Inks Pact to Spur Brazil-Italy Bilateral Trading
BRASKEM: Fitch Assigns BB- Rating on US$200 Mil. Perpetual Bonds
BRASKEM: Petroquisa Won't Boost Voting Share Capital
BRASKEM: S&P Affirms BB Rating on US$200 Million Perpetual Bonds
ELETROPAULO: S&P Puts B+ Rating on US$200 Million Senior Bonds
GERDAU S.A.: S&P Says Ratings Unaffected by Sheffield Buy
GOL FINANCE: Closes US$200 Million Perpetual Bond Offering
PETROBRAS ENERGIA: S&P Removes B Cur. Rating from Credit Watch
PETROLEO IPIRANGA: Buys Back US$75.1 Mil. of 2008 Step-Up Notes
* BRAZIL: Aneel Allows 3 Electric Companies to Hike Power Rates
C A Y M A N I S L A N D S
AALL REALTY: Creditors Have Until May 3 to File Proofs of Claim
ADAMS STREET: Proofs of Claim Filing Deadline Is on May 4
ALMATIS DEBT 2: Creditors Have Until April 24 to File Claims
GHK FIRST: Holds Final General Meeting on April 20
LSA INVESTMENTS: Final Shareholders Meeting Set for April 11
MAYFLOWER: Holds Shareholder & Liquidator's Final Meeting Today
C O L O M B I A
BANCOLOMBIA: Plans to Raise Mortgage Loan Market Share by 23%
COLOMBIA TELECOM: Government Retains Stake After Privatization
* COLOMBIA: Agrees to Launch Trade Talks with Cuba
C O S T A R I C A
* COSTA RICA: Banks Ditch Government Bonds for US Treasury Bonds
C U B A
* CUBA: Will Launch Trade Talks with Colombia
D O M I N I C A N R E P U B L I C
AES CORP: Robin Pence Says Dominican Republic's Claims Are False
* DOMINICAN REPUBLIC: Central Bank Sells RD$400-Mil Certificates
E C U A D O R
* ECUADOR: Central Bank Fears Lawsuits Due to Tax Exemption Law
* ECUADOR: Hydrocarbon Law Reform Impedes Trade Pact with US
E L S A L V A D O R
* EL SALVADOR: Enters Joint Venture with Venezuela
G U Y A N A
* GUYANA: Closes Deal on Transfer of State Miner Rights to Rusal
H O N D U R A S
* Honduras & Nicaragua Formally Signs FTA with U.S.
J A M A I C A
KAISER ALUMINUM: Incurs US$753.7 Mil. Net Loss in 2005
M E X I C O
GRUPO MEXICO: No Talks Scheduled to Resolve Strike
URBI DESARROLLOS: Moody's Assigns Ba3 Rating on US$150MM Notes
VITRO SA: Sells 51% Vitrocrisa Stake to Libbey for US$103 Mil.
VITRO SA: S&P Downgrades Corporate Credit Rating to B- from B
N I C A R A G U A
* Nicaragua & Honduras Formally Signs FTA with U.S.
P A N A M A
BANCO LATINOAMERICANO: Redeems Preferred Shares by May 15
GRUPO BANISTMO: Turns Down Buyers to Continue Expansion
P E R U
* PERU: Local Banking Association Proposes Reform on Bank Law
* PERU: Secures US$50 Mil. Loan from IDB to Aid Decentralization
P U E R T O R I C O
CENTENNIAL COMMS: Equity Deficit Tops US$1 Billion on Feb. 28
DORAL FINANCIAL: Delays Filing of Annual Report on Form 10-K
U R U G U A Y
* URUGUAY: Plans to Reactivate Paysandu & Salto Ports
V E N E Z U E L A
CITGO PETROLEUM: Discounts Rumored Sale of Strategic Assets
CITGO PETROLEUM: Inks Letter of Intent with Lyondell for JV Sale
CITGO PETROLEUM: S&P Says Ratings Unaffected by Sale of Refinery
PDVSA: Enters Joint Venture with El Salvador's Leftist Mayors
PDVSA: Terminates Oil Contracts of ENI and Total
- - - - -
=================
A R G E N T I N A
=================
AGRO MARBALD: Trustee Sets June 5 Claims Verification Deadline
--------------------------------------------------------------
Mr. Pablo Amante -- the trustee appointed by the Buenos Aires
court for the Agro Marbald S.A. bankruptcy case -- will stop
validating proofs of claim from the company's creditors on June
5, 2006.
Mr. Amante will present the validated claims in court as
individual reports on Aug. 1, 2006. The trustee will also
submit a general report on the case on Sept. 13, 2006.
The debtor can be reached at:
Agro Marbald S.A.
Olleros 3892
Buenos Aires, Argentina
The trustee can be reached at:
Mr. Pablo Amante
Lavalle 1537
Buenos Aires, Argentina
BANCO HIPOTECARIO: Sets Apr. 18 Deadline to Subscribe to Notes
--------------------------------------------------------------
The deadline for investors to subscribe to Banco Hipotecario
S.A.'s Obligaciones Negociables Serie 5 is set for April 18.
The new titles, for a total of US$290 million, will have a fixed
interest rate (to be paid every 6 months, in April and October)
and will become due in 2016.
The minimum amount for subscription was fixed at US$35,000,
though the price and yield of the issue will be given at a later
date.
Once the price and the rate are determined, investors will be
able to confirm their interest until April 18.
Citigroup Global Market and Deutsche Bank Securities are in
charge of the global transaction, while Citicorp Capital Markets
and Deutsche Bank will be in charge of the local transaction.
Additionally, Bank Boston is designated as the locator within
the internal market.
Banco Hipotecario will use the funds obtained from these
issuance to buy two other series of debts -- one in dollars,
another in euros -- which will come due in 2013.
The actual nominal value of the dollar-denominated bonds reaches
US$343,578,004, while euro-denominated bonds reach 312,250,105
million euros.
The bank offers to pay US$905 for every 1.000 of nominal value
of the emitted ON in dollars, plus an additional 20 dollars if
holders accept the proposal before April 19.
For the euro-denominated bonds, the bank proposes to pay 925
euros for every 1.000 of nominal value. Also, an additional
payment of 20 euros has been fixed if the proposal is accepted
before April 19.
* * *
On Jan. 25, 2006, Standard & Poor's Ratings Services assigned
'B-' foreign currency senior unsecured debt rating to Banco
Hipotecario S.A.'s $100 million issuance. The issuance
constituted the second tranche of BH's Series IV notes due Nov.
16, 2010, issued under the $1.2 billion senior unsecured global
MTN program. With this issuance, the series (whose first
tranche was rated 'B-' on Nov. 16, 2005) will total US$250
million. At the same time, Standard & Poor's affirmed its
ratings on the Argentine bank's outstanding debt and its 'B-
/Stable/--' counterparty credit ratings. S&P said the outlook
is stable.
* * *
As reported in the Troubled Company Reporter on March 28, 2006,
Standard & Poor's Ratings Services raised the foreign and local
currency counterparty credit ratings on Banco Hipotecario S.A.
At the same time, Standard & Poor's placed the ratings on
several Argentine entities on CreditWatch with positive
implications. These rating actions follow the upgrade on the
Republic of Argentina.
S&P raised the global foreign and local currency ratings on
Argentina to 'B' from 'B-' and the ratings on the national scale
to 'raAA-' from 'raA', reflecting Argentina's improved external
and fiscal flexibility.
The outlook on the sovereign rating is stable.
S&P's transfer and convertibility risk assessment for Argentina
was raised to 'BB-', two notches higher than Argentina's foreign
currency rating.
S&P raised the rating on Banco Hipotecario one notch to
'B/Stable/--', in tandem with the sovereign upgrade on
Argentina, reflecting the close linkage between the credit
quality of the sovereign and that of its financial system.
DISCO: Ahold Released from Argentine Tax Claims
-----------------------------------------------
Dutch company Royal Ahold N.V. reported that the Argentine tax
authorities -- the Administracion Federal de Ingresos Publicos
aka AFIP -- have agreed to withdraw both a firm and a
preliminary tax claim against Disco S.A. for taxes allegedly
owed in connection with Disco bond issues in 1998 in the
aggregate of US$350 million.
These claims were mentioned in Ahold's annual report 2004. The
tax assessments, including penalties and interest, totaled
approximately ARP 753 million (EUR 210 million) at year-end
2005.
The AFIP submitted a request to the Argentine Tax Court to
withdraw litigation pending against Disco S.A. It is also in
the process of withdrawing its preliminary tax assessment and
releasing attachments on Disco's real estate.
Under the terms of a share purchase agreement signed on March 5,
2004, with Cencosud on the sale of Disco shares, Ahold was to
indemnify Cencosud and Disco for the outcome of these tax
assessment claims.
On July 17, 2003, the AFIP served Disco with a formal assessment
notice for taxes allegedly owed in connection with a USD 100
million Disco bond issue in 1998 due May 2003, which was repaid
at maturity, and a US$250 million Disco bond issue in 1998 due
May 2008, which was redeemed in July 2003. The AFIP alleged
that Disco improperly failed to pay Value Added Tax on both bond
issues and failed to withhold tax on the interest paid to
foreign holders of its allegedly non-public bonds. Disco has
always maintained that the bonds were placed through a public
offer and that taxes have been withheld and paid in compliance
with applicable Argentine laws and regulations. Consequently,
Ahold has never taken a provision in connection with these
claims.
The withdrawal of the tax assessment claims needs in part to be
ratified by the Argentine Tax Court. It was made under the
condition that each party agrees to bear its own legal costs
related to the defense of the matter.
About Royal Ahold
Koninklijke Ahold NV fka Royal Ahold N.V. --
http://www.ahold.com/-- retails food through supermarkets,
hypermarkets and discount stores in North and South America,
Europe and Asia. The company's chain stores includes Stop &
Shop, Giant, TOPS, Albert Heijn and Bompreco. Ahold also
supplies food to restaurants, hotels, healthcare institutions,
government facilities, universities, stadiums, and caterers.
About Disco S.A.
Headquartered in Buenos Aires, Argentina, Disco S.A. --
http://www.disco.com.ar-- is one of the leading food retailers
in Argentina, operating 109 supermarkets under the Disco,
Elefante and La Gran Provision names. The main business of
these stores include the purchase, sale, import, export,
consignment, distribution and retail packaging of food,
beverages, home appliances, apparel, household goods, health and
beauty aids and any other activity related to the supermarket
business. In April 1996 the company made its initial public
offering and its shares became listed on the New York and Buenos
Aires Stock Exchanges. Disco is the sole supermarket chain in
Argentina that is listed on the New York Stock Exchange.
Standard & Poor's Argentine arm assigned Disco S.A. a raBB+ long
term issuer credit.
EMPRESA DISTRIBUIDORA: Moody's Puts B3 Rating on Senior Notes
-------------------------------------------------------------
Moody's Investors Service assigned a B3 Global Scale and Baa3.ar
National Scale first-time rating to Empresa Distribuidora Norte
S.A. aka Edenor's dollar denominated notes. The rating outlook
is stable. The ratings reflect Edenor's improved financial
structure after the planned debt exchange and also the uncertain
nature of Argentina's electricity market.
Moody's National Scale Ratings are intended as relative measures
of creditworthiness among debt issues and issuers within a
country, enabling market participants to better differentiate
relative risks. NSRs in Argentina are designated by the ".ar"
suffix. NSRs differ from global scale ratings in that they are
not globally comparable to the full universe of Moody's rated
entities, but only with other rated entities within the same
country.
Moody's assignments on Empresa Distribuidora Norte S.A. or
Edenor:
-- Senior Unsecured Regular Bond/Debenture, Assigned B3; and
-- Senior Unsecured Regular Bond/Debenture, Assigned Baa3.ar
The B3 senior unsecured rating on the global scale reflects
Edenor's expected financial performance and its regulatory risk
profile in accordance with Moody's global rating methodology for
regulated electric utilities. The key expected credit metrics
over the next several years include a ratio of funds from
operations to debt in the range of 10% to 15% and a debt to
capitalization of about 50%. These financial metrics would be
consistent with the B3 rating for a company whose risk profile
falls into the high risk category under the global methodology.
The high risk category for Edenor reflects the regulatory
environment in Argentina, which is less consistent than average,
and considers the lack of timely rate relief to cover increased
costs in the recent past.
Edenor's ratings consider its improved debt position and
financial profile resulting from the restructuring, which will
include a debt reduction of approximately US$90 million to be
paid in cash from its current cash balance. Edenor will benefit
from the more favorable terms of the new notes including reduced
interest rates and extensions on principal debt maturities,
which will increase gradually from 2008 to 2019.
The ratings also incorporate the uncertainties surrounding
Argentina's electric industry and the market's unclear and
unstable regulations. Moreover, Edenor has not reduced its
foreign exchange exposure, as all the new notes will continue to
be denominated in foreign currency.
Moody's assumes the government will address the tariff question
in the near term given that maintaining the current frozen
tariffs will ultimately affect service quality. In support of
this view, Edenor's new controlling group has already arranged
for a Memorandum of Understanding with the government to
increase tariffs, including a 28% raise in the distribution
margin of which 5% will be applied to certain investments. The
agreement was passed by Congress and only lacks presidential
approval. However, there is no definite timeframe for
presidential approval.
The rating outlook is stable, reflecting expectations that
tariff changes will be made in the near future but that the
regulatory environment will continue to have an above average
level of uncertainty.
Based in Buenos Aires, Argentina, Edenor is the largest
electricity distribution company in Argentina in terms of number
of customers and volume of energy sold. Edenor commenced
operations in 1992, as a result of the privatization of the
previously state-owned SEGBA. At that time, it was granted a
95-year concession to distribute electricity on an exclusive
basis in its concession area, the greater Buenos Aires
metropolitan area and northern portion of the City of Buenos
Aires. EASA, which is controlled by Dolphin Energia S.A., is
Edenor's holding company.
GAS ARGENTINO: Moody's Argentina Puts D Rating on US$130M Debt
--------------------------------------------------------------
The Argentine arm of Moody's Investor Service assigned a D
rating on Gas Argentino S.A.'s Obligaciones negociables simples
for US$130,000,000. The debt became due on June 7, 2000.
MCC S.R.L.: Creditors Must Submit Proofs of Claim by May 31
-----------------------------------------------------------
Creditors of MCC S.R.L. are required to submit by May 31, 2006,
proofs of claim to Rut Noemi Alfici -- trustee appointed by the
Buenos Aires court for the company's liquidation. Infobae
relates that the claims will undergo a verification phase.
Claims that are verified will then be presented in court as
individual reports on July 27, 2006.
A general report, which will contain the company's audited
business records as well as a summary of events pertaining to
the liquidation, will be submitted in court on Sep. 8, 2006.
The trustee can be reached at:
Rut Noemi Alfici
Rodriguez Pena 565
Buenos Aires, Argentina
METROGAS: Moody's Places Ratings Under Category 4
-------------------------------------------------
The Argentine arm of Moody's Investor Service have included
ordinary shares of Metrogas S.A. under category 4.
Emission of debt:
-- Obligaciones negociables simples for US$600,000,000
* Rated date: April 4, 2006
* Rate: D
* Date of balance: Dec. 31, 2005
-- Serie A for US$100,000,000 included under the program for
US$600 million
* Last due: April 1, 2003
* Rated date: April 4, 2006
* Rate: D
* Date of balance: Dec. 31, 2005
-- Serie B for 110 millions euros
* Last due: Sept. 27, 2002
* Rated date: April 4, 2006
* Rate: D
* Date of balance: Dec. 31, 2005
-- Serie C for US$130,000,000 included under the program for
US$600 million
* Last due: May 7, 2004
* Rated date: April 4, 2006
* Rate: D
* Date of balance: Dec. 31, 2005
MONTON FOOD: Asks Court for Reorganization Approval
---------------------------------------------------
Monton Food S.A., a company operating in Buenos Aires, has
requested for reorganization after failing to pay its
liabilities.
The reorganization petition, once approved by the court,
will allow the company to negotiate a settlement with its
creditors in order to avoid a straight liquidation.
The case is pending before Buenos Aires' Court No. 20.
Clerk No. 40 assists the court on this case.
The debtor can be reached at:
Monton Food S.A.
Santa Fe 2939
Buenos Aires, Argentina
=============
B E R M U D A
=============
GLOBAL CROSSING: Provides Call Center Services for Mexicana
-----------------------------------------------------------
Global Crossing said in a statement that Mexicana de Aviacion is
utilizing Global Crossing's business-critical integrated call
center voice services to support its U.S.-based international
reservation centers. Now delivering services to 17 Latin
American call centers and five multinational airlines including
Mexicana de Aviacion, Global Crossing is a supplier of choice
for the contact center and transportation sectors.
Global Crossing is providing Mexicana with business line
services, long distance services, toll-free services and local
digital services across its 20 offices and call center locations
in the U.S. Furthermore, Mexicana is leveraging these services
through bill consolidation and unified pricing mechanisms that
are expected to yield 58 percent monthly savings on voice
expenses.
"As a recognized best-in-class airline, it is crucial that we
are able to rely on superior telecommunications services, such
as those delivered by Global Crossing, enabling us to focus on
serving our global customer base twenty-four hours a day," said
Santiago Ontanon, EVP and CIO for information technology of
Mexicana de Aviacion. "Global Crossing's top quality, cost-
effective voice solutions are improving the efficiency of our
business operations."
Global Crossing addresses the specific operational and security
needs of call center and transportation companies through its
hybrid product portfolio and fully meshed, fully interoperable
private network, reaching more than 600 cities in 60 countries.
Call center and transportation companies can readily employ a
proven global network application, using technology as a driver
for cost reduction, improved efficiency, unprecedented network
security and simplified network design.
"We are pleased that top regional and global airlines such as
Mexicana de Aviacion are relying on Global Crossing for their
critical business needs," said Jose Antonio Rios, Global
Crossing's international president and chief administrative
officer. "Global Crossing's superior technology, security,
support and control are key differentiators for global
enterprises choosing network providers."
Global Crossing's bundled voice services provide an integrated
offering that consolidates provisioning, maintenance and billing
functions, for simplified administration and increased
productivity. Furthermore, the company's voice service
portfolio is offered in conjunction with Global Crossing's
industry leading Web-based management tool, uCommandr, enabling
Mexicana to stay in control of their account information, order
services and obtain real time customer support, among other
things.
"We are delighted to be able to meet Mexicana's core business
needs by providing the global reach and 24x7 customer support
that airlines require. Our voice solutions offer enterprises
unsurpassed clarity and network reliability, backed by world-
class customer support that is ideal for call center
applications," concluded Jose Luis Kruyff, vice president of
enterprise sales for southern Florida and Latin America.
Global Crossing supports fully interoperable legacy and IP-based
services, offering customers the ability to transition to IP at
their own pace. The company provides one of the most secure,
scalable and flexible Converged IP solutions available today,
supporting the delivery of multiple IP applications -- voice,
video and data -- over a single connection worldwide.
About Mexicana de Aviacion
Mexicana de Aviacion is Mexico's first airline company and the
leading carrier serving the Mexico-U.S. market. From its
operations hub in Mexico City International Airport, Mexicana
flies to approximately 50 destinations in North, Central, and
South America and the Caribbean.
About Global Crossing
Headquartered in Florham Park, New Jersey, Global Crossing
Ltd. -- http://www.globalcrossing.com/-- provides
telecommunications solutions over the world's first integrated
global IP-based network, which reaches 27 countries and more
than 200 major cities around the globe. Global Crossing serves
many of the world's largest corporations, providing a full range
of managed data and voice products and services. The company
filed for chapter 11 protection on Jan. 28, 2002 (Bankr.S.D.N.Y.
Case No. 02-40188). When the Debtors filed for protection from
their creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on Dec. 9, 2003.
As of Dec. 31, 2005, Global Crossing's balance sheet reflects a
$173 million equity deficit compared to a $51 million of
positive equity at Dec. 31, 2004.
INTELSAT LTD: Lenders Waive Reporting Default Until April 30
-----------------------------------------------------------
Intelsat Ltd. has until April 30, 2006, to file its fourth
quarter and full year 2005 financial statements. The company's
lenders under a January 28, 2005, Credit Agreement agreed to
waive the reporting default for a month.
The company and these entities signed a Waiver to the Credit
Agreement, on March 30, 2006:
* Deutsche Bank Trust Company Americas, as Administrative
Agent;
* Bank of America, N.A.;
* Bear Stearns Corporate Lending Inc.;
* BNP Paribas, as Co-Documentation Agent;
* Merrill Lynch Capital Corporation, as Co-Documentation
Agent;
* Credit Suisse (f/k/a Credit Suisse First Boston), as
Co-Syndication Agent
* Lehman Brothers Inc., as Co-Syndication Agent; and
* 56 lenders.
The company said that it requires additional time to complete
its reporting process.
A full-text copy of the Waiver to Credit Agreement is available
for free at http://ResearchArchives.com/t/s?79c
Intelsat, Ltd., offers telephony, corporate network, video and
Internet solutions around the globe via capacity on 25
geosynchronous satellites in prime orbital locations. Customers
in approximately 200 countries rely on Intelsat's global
satellite, teleport and fiber network for high-quality
connections, global reach and reliability.
* * *
Standard & Poor's Ratings Services assigned a 'BB-' rating on
Intelsat Ltd in March 2006. The outlook is placed at negative.
=============
B O L I V I A
=============
* BOLIVIA: Plans to Buy 5% Stake in Venezuela TV News Network
-------------------------------------------------------------
The Bolivian government plans to buy a 5% stake in Venezuelan
television news network Telesur, EFE News Service reports.
According to Bolivia's ABI government news agency, Bolivian
President Evo Morales will meet with President Hugo Chavez for
the signing of an agreement regarding the purchase. The signing
is expected to occur during an April 19-20 gathering in
Paraguayan capital Asuncion, where they will hold talks on
energy cooperation and security with Paraguay's President
Nicanor Duarte and Uruguay's President Tabare Vazquez.
EFE relates that Telesur, which is based in Caracas, is a joint
venture of Latin American countries:
-- Venezuela, which holds a 51% stake of the firm;
-- Argentina, 20%;
-- Cuba, 19%; and
-- Uruguay, which holds 10%.
The network, which went on air in June last year, was created to
strengthen the ties between the Latin American countries,
according to EFE.
Telesur, whose launching was pushed by President Chavez,
provides a 24-hour news channel that claims to show a Latin
American view of events. However, it was criticized by some for
what is alleged to be left-leaning bias emphasizing anti-
imperialism, EFE reports.
* * *
Fitch Ratings assigns these ratings on Bolivia:
Rating Rating Date
------ -----------
Country Ceiling B- Jun. 17, 2004
Long Term IDR B- Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating B- Dec. 14, 2005
===========
B R A Z I L
===========
BANCO BMC: Fitch Affirms D/E Individual Ratings
-----------------------------------------------
Fitch Ratings has affirmed Banco BMC S.A.'s national ratings at
long-term 'BBB- (bra)' and Short-term 'F3(bra)'. Its other
ratings are:
-- local and foreign currency Issuer Default 'B-',
-- Short-term 'B',
-- Individual 'D/E' and
-- Support '5'
The Outlooks for all the Issuer Default and Long-term National
ratings are Stable.
The ratings reflect BMC's successful strategy and focus on the
securitization of credits, the latter of which has seen strong
demand from large banks and allowed improvements in BMC's
performance and liquidity. On the other hand, they reflect
BMC's increasing leverage and its small size, making it more
susceptible to the volatile environment in Brazil. They also
consider the bank's lower internal cash generation due to a high
dividend payout ratio and the inferior quality of the credit
portfolio relative to that of its peers. Following the decision
in 2004 and 2005 to terminate certain activities, the bank has
started to see greater concentration in specified products,
which can limit the bank's overall revenues generation capacity.
The ratings also factor in its still acceptable capitalization,
despite the strong dividend distribution during 2005.
To maintain the current ratings and the Stable Outlook, BMC
would need to continue growing its activities, strengthening its
franchise, achieving profitability levels close to its peers',
improving its asset quality and cost ratios as well as
maintaining adequate liquidity.
Adjusting the capital ratio to the total securitized credits,
BMC has a capitalization ratio of 12%, which is low compared to
its peers. Thus, Fitch expects the bank to maintain its
moderate leverage and a dividend policy compatible with its
earnings. Given its size and funding structure, BMC could be
more affected than its peers in the event of a financial
distress.
Controlled by Jaime Pinheiro, BMC primarily focuses on
consignment loan agreements, as well as direct consumer vehicle
financing and loans to medium-sized companies, secured by
receivables.
BANCO NACIONAL: Inks Pact to Spur Brazil-Italy Bilateral Trading
----------------------------------------------------------------
Banco Nacional de Desenvolvimento Economico e Social S.A. aka
BNDES and Societa Italiana per le Imprese all'Estero aka SIMEST
signed an memorandum of agreement to spur Brazil-Italy bilateral
trading, mainly among the small and medium enterprises of both
countries, upon financing or equity interest programs.
The document was signed during the Brazil-Italy Business Forum,
held on March 29 and 30 at the Federation of Industries for the
State of Sao Paulo, with the presence of President Luiz Inacio
Lula da Silva, the minister of Development, Industry and Foreign
Trade, Mr. Luiz Fernando Furlan, and the minister of Italy's
Productive Activities, Mr. Claudio Scajola.
SIMEST is the governmental financial institution liable for the
development of Italian enterprises abroad, offering a full
assortment of products and financial services. Created in 1990,
SIMEST has the Ministry of Italy's Productive Activities as its
main shareholder. Also participating in that institution are
the main Italian banks and enterprises linked to the
Confederation representing the industry --Confindustria -- of
that country.
Confindustria has elected Brazil as a priority for its
operations in 2006, aiming at enhancing the bilateral trading
relations and spurring the creation of joint ventures among
small and medium Italian enterprises in Brazil.
* * *
As reported by Troubled Company Reporter on March 3, 2006,
Standard & Poor's Ratings Services raised its foreign currency
counterparty credit rating on Banco Nacional de Desenvolvimento
Economico e Social S.A. aka BNDES to 'BB' with a stable outlook
from 'BB-' with a positive outlook. The company's local
currency credit rating was also shifted to 'BB+' with a stable
outlook from 'BB' with a positive outlook.
BRASKEM: Fitch Assigns BB- Rating on US$200 Mil. Perpetual Bonds
----------------------------------------------------------------
Fitch has assigned a rating of 'BB-' to the proposed offering of
US$200 million senior unsecured perpetual bonds to be issued by
Braskem S.A. The perpetual bonds have no fixed final maturity
but will become callable by Braskem in whole on a quarterly
basis after the five-year initial term ending April 2011. The
bonds are privately placed pursuant to rule 144A of the
Securities Act of 1933. Interest will be paid on a quarterly
basis. The proceeds of the offering are expected to be used to
pay for the Politeno acquisition and for general corporate
purposes. Fitch also maintains an international local currency
rating of 'BB+' and a national scale rating of 'AA-(bra)' for
Braskem. The Rating Outlook for Braskem's Foreign Currency
rating is Positive and is Stable for all other ratings.
Braskem's ratings reflect the company's solid credit profile,
supported by a strong and sustained operational cash flow, low
leverage, a long-term debt profile and a strong liquidity
position. Braskem also benefits from its leadership position in
the petrochemical industry in Latin America and Brazil. The
integration of its first and second generation activities
provides the company with a competitive advantage within the
national petrochemical industry. Braskem is well positioned in
the rating category to maintain its credit quality throughout
the petrochemical cycle. Braskem's foreign currency bond
ratings are constrained by the 'BB-' country ceiling of the
Federative Republic of Brazil.
The acquisition of Politeno, a second generation petrochemical
company, is positive but should not materially affect Braskem's
credit profile. Politeno represents approximately 18% of the
domestic production of polyethylene thus strengthening Braskem's
leadership in the polyethylene market. Braskem also expects
other relevant synergies to positively affect its consolidated
EBITDA. Braskem previously owned 35% of Politeno's voting
capital, which is 34% of total capital, and will consolidate the
asset post-acquisition. The purchase of 65% of the voting
capital of Politeno or 62.2% of total capital for approximately
US$111 million, as announced on April 5 2006, will be financed
with the proceeds from the Perpetual Bond issuance. In 2005
Politeno reported an EBITDA of BRL123 million and a total debt
of BRL97 million.
On the other hand, the recent decision by Petrobras Quimica aka
Petroquisa not to increase its participation in Braskem's voting
capital from 10% to 30% is neutral to Braskem's credit quality.
In Fitch's view, however, a positive decision on Petroquisa's
part would have strengthened Braskem's credit fundamentals due
to the incorporation of new assets transferred by Petroquisa as
compensation for Petroquisa's increased participation in the
capital of Braskem.
In recent years, Braskem has concentrated on consolidating its
first and second generation petrochemical operations. Braskem
has achieved substantial synergies and cost reductions that,
added to a larger sales volume of its products in an environment
of higher petrochemical prices, has enabled the company to build
a strong liquidity position. Despite a more challenging
scenario, as was seen in 2005, Braskem continued to reduce its
indebtedness and increase the average maturity of its debt. The
year 2005 was characterized by greater pressures on margins due
to the increase in the price of naphtha and appreciation of the
real against the dollar.
Braskem's credit protection measures have shown solid
improvement in recent years. In 2005, a larger sales volume and
higher prices were not sufficient to neutralize the negative
effects of the increase in the price of naphtha and the
appreciation of the Real. Although Braskem reported a lower
EBITDA, its credit quality was not compromised. Interest
coverage increased to 4.8 times in 2005 versus 4.0(x) during
2004 and 3.5(x) in the same period for 2003. The reduction in
Braskem's EBITDA was offset by lower debt levels resulting in a
gross debt/EBITDA ratio of 2.4(x), close to the 2.2(x) of 2004.
Increased liquidity was reflected in its net debt/EBITDA ratio
of 1.4(x), versus 1.5(x) in 2004 and 3.5(x) in 2003. The
maintenance of a strong credit profile in 2005 reflects the
company's efficiency in generating robust free cash flows in
less favorable scenarios and its ability to continue its debt
reduction process. The company has reduced debt by BRL2.3
billion since December 2003.
Fitch expects that Braskem management will maintain a debt
profile that in terms of maturities and cost of debt, will allow
the company to satisfactorily operate through the peaks and
troughs of the petrochemical industry cycle. Fitch expects that
the company will maintain a liquidity position sufficiently
strong to limit its exposure to refinancing risk.
The actual results of the petrochemical industry in 2005 were
not completely in line with the outlook from the beginning of
the year. The significant rise in the prices of oil and its
derivates tempered the expected greater spreads within the
petrochemical chain. Also, the outlook of continued high oil
prices resulted in increasing purchases of petrochemical
products in the beginning of 2005, which caused an accumulation
of stocks in the petrochemical chain throughout the year. The
price of oil (Brent) in 2005 rose by 43% in relation to the same
period of 2004, while the increase for naphtha was 26% in
relation to the 2004 average.
The Brazilian petrochemical sector followed the same tendency as
the international market. The industry was affected by the rise
in average naphtha prices, which was mitigated, in part, by the
appreciation of the Brazilian real versus the U.S. dollar. The
weaker performance of the Brazilian economy and higher interest
rates resulted in a lower demand for the petrochemical industry
in the local market, especially resin products, and,
consequently, the companies directed a higher proportion of
production to the international market, with consequent losses
in margin. Under this scenario, Braskem reported a decline of
18% in its EBITDA (BRL2.1 billion) compared with that of 2004.
Despite its less robust EBITDA, Braskem was able to reduce its
total debt by BRL647 million and increase its liquidity position
by BRL387 million.
The near term fundamentals that drive industry performance are
still positive. For the next three years, the global balance
for petrochemical products remains favorable. Capacity
utilization rates are expected to remain above 92% until 2008,
influenced by expectations that the growth in demand will exceed
that of supply. The additions of ethylene capacity from the
Middle East and Asia are not expected to be sufficient to change
the current imbalance between supply and demand. However, for
2006 Fitch does not expect significant changes in the current
spreads obtained by Braskem within the petrochemical chain.
Consequently, in 2006 Braskem is expected to report an EBITDA
close to that of 2005.
Braskem remains exposed to risks of an increase in the price of
oil and its direct influence on the raw material costs of
petrochemical companies, as well as the effect of high prices on
demand and the market's capacity to continue passing on cost
increases. Continued appreciation of the already strong Real
against the dollar could also continue to affect the company's
EBITDA. In 2005, Braskem reported a net negative impact of
BRL652 million from the negative and positive exchange effects,
respectively, on revenues and costs.
Braskem is the largest petrochemical company in Latin America,
producing 5.7 million tons of primary, secondary and
intermediary petrochemical products in its integrated first and
second generation petrochemical production facilities. The
company has grown over the past four years as a result of the
integration of six Brazilian petrochemical companies:
-- Copene Petroquimica do Nordeste S.A.,
-- OPP Quimica S.A.,
-- Polialden Petroquimica S.A.,
-- Trikem S.A.,
-- Proppet S.A. and
-- Nitrocarbono S.A.
The company is currently organized into four business units:
-- basic inputs,
-- polyolefins,
-- vinyls and
-- business development
Braskem is controlled by the Odebrecht group and Norquisa, which
hold 47.5% and 25.4%, respectively, of its voting capital.
BRASKEM: Petroquisa Won't Boost Voting Share Capital
----------------------------------------------------
Braskem S.A. disclosed that its minority shareholder, Petrobras
Quimica S.A., or Petroquisa, did not exercise its option to
increase its share of Braskem's voting share capital and
accordingly, that its option has expired. If Petroquisa had
exercised its option, it would have increased its ownership of
Braskem's voting share capital from approximately 10% to as much
as 30%. The option was not exercised, as it was not possible to
reach a consensus regarding the terms and conditions that would
allow the creation of value for all of Braskem's shareholders.
Braskem's Chief Executive Officer Jose Carlos Grubisich noted
that, "Braskem maintains its strong belief that consolidation
and integration remain the best approach for the Brazilian
petrochemical industry to become more competitive in response to
greater challenges as the petrochemical market is increasingly
globalized." Braskem's CEO added that, "our company will
continue working to improve the competitiveness of the entire
production chain for petrochemicals and plastics in Brazil."
Mr. Grubisich also noted that Braskem will continue to implement
all of its programs for growth and increasing competitiveness,
with a focus on additional production capacity, strong
technological innovation and access to new sources of
competitive raw materials: "Braskem will continue to invest in
its growth, which is the best way to demonstrate confidence in
the strength of the petrochemical market and the Brazilian
economy." He affirmed that "Braskem reiterates its commitment
to the development of the State of Rio Grande do Sul and the
Triunfo Petrochemical Complex, where its most modern and
competitive industrial units are located, including its Center
for Technology and Innovation. Braskem will continue to manage
Copesul, together with the Ipiranga Group, with the same success
achieved thus far."
Braskem's existing corporate structure will not change in any
manner, and Petroquisa will maintain its existing ownership
interest of 10.02% and 8.45% of Braskem's voting and total share
capital, respectively.
Braskem S.A. -- http://www.braskem.com.br/-- is a thermoplastic
resins producer in Latin American, and is among the three
largest Brazilian-owned private industrial companies. The
company operates 13 manufacturing plants located throughout
Brazil, and has an annual production capacity of 5.8 million
tons of resins and other petrochemical products.
* * *
On Oct. 17, 2005, Fitch Ratings revised the Rating Outlook of
the 'BB-' long-term foreign currency rating of Braskem S.A. and
Braskem International Ltd. to Positive from Stable.
The action followed the recent change in the Rating Outlook to
Positive from Stable of the 'BB-' foreign currency rating of the
Federative Republic of Brazil. The Brazilian corporate foreign
currency ratings continue to be linked to the 'BB-' foreign
currency rating of the sovereign.
BRASKEM: S&P Affirms BB Rating on US$200 Million Perpetual Bonds
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' local- and
foreign-currency corporate credit ratings on Brazil's largest
petrochemical company Braskem S.A. At the same time, Standard &
Poor's assigned its 'BB' rating to the forthcoming US$200
million perpetual bonds to be issued by Braskem. The outlook is
stable.
The rating action follows the announcement that Braskem will
take over the control of Politeno Ind£stria e Com,rcio S.A., a
producer of several grades of polyethylene in Northeast Brazil,
becoming the sole owner of the company.
"We believe that the acquisition does improve Braskem's overall
credit quality in the long term by strengthening Braskem's
positioning in polyethylene in Northeast Brazil and providing
the company with operating, commercial, and fiscal synergies
similar to those already captured with other merged assets in
the past," said Standard & Poor's credit analyst Reginaldo
Takara.
The ratings on Braskem reflect the company's exposure to its
main feedstock, naphtha, as well as to the associated working
capital volatility (despite current adequate funding sources);
dependence on its home market for EBITDA and sales generation
and increasing competition with the consolidation and expansion
of other local large players; and the risks of Braskem's own
growth and internationalization plans, which are gaining
momentum by now. These risks are partly offset by Braskem's
leading business and market position in the Latin American
petrochemical industry; economies of scale and some level of
geographic diversification that are not shared by its local
competitors; increasing technological expertise and new product
developments; and efficiency improvement initiatives making the
company more resilient to the petrochemical cycle.
Braskem is the largest petrochemical company in Latin America,
with net sales and EBITDA of US$4.8 billion and US$835.1 million
in 2005, respectively. Adjusted total debt (including
receivables fund) amounted to US$2.4 billion as of Dec. 31,
2005.
The stable outlook reflects our expectations that Braskem will
sustain a prudent financial profile and manageable debt levels
even under a market scenario of depressed domestic demand and
raw material cost pressure. Still, the company is gradually
moving ahead with its growth and internationalization plans,
which may result in financial leverage.
In the meantime, Braskem should continue strengthening its
capital structure, liquidity, and resilience to the
petrochemical cycle (as it has done in the past two years),
although at a more gradual pace compared with recent
improvement. Upward potential for Braskem's ratings may arise
in the medium term from a more clear definition of the company's
growth strategy and its impact on financial and business
profiles, coupled with continuing efforts to extend debt tenors,
decrease overall debt leverage relative to normalized cash
flows, and reduce its cost of debt. On the other hand, a
negative revision could result from Braskem not being able to
cope with raw material volatility and working capital pressures
(combined with depressed profitability), resulting in
significant compression of free operating cash flows and
material and difficult-to-reverse increasing short-term debt
pressures.
ELETROPAULO: S&P Puts B+ Rating on US$200 Million Senior Bonds
--------------------------------------------------------------
Standard and Poor's Ratings Services assigned a B+ on Brazilian
electric utility Eletropaulo Metropolitana Electricidade de Sao
Paulo S.A.'s local and foreign currency corporate credit rating
and its US$200 million senior unsecured and unsubordinated euro
bonds. The outlook is stable.
The rating reflects Eletropaulo's improvement in cash flow
protection measures and its quick return to the domestic and
international credit markets. The company's creditworthiness
enhancement during 2005 was faster than we had expected, and are
mostly evidenced by the full placement of a Brazilian real
(BrR)-linked US$200 million euro bond in June 2005 and two
debentures issues, in September (BrR800 million) and December
(BrR250 million), both due in 2010. Considering that
Eletropaulo has been posting adequate--and increasing--cash
generation since 2004, comparing positively with other companies
in its rating category, credit access was the main factor
limiting Eletropaulo's ratings. By issuing the international
bonds and the local debentures, Eletropaulo showed the ability
to access the credit markets, thus reducing its cost of debt,
extending its future amortization profile, and materially
shrinking its exposure to foreign-currency-denominated debts.
On the other hand, Eletropaulo still has significant short-term
debt, including pension funds obligation; pressure to upstream
dividends to holding company Brasiliana Energia S.A. from 2007
on, together with AES Tiete S.A. and AES Uruguaiana; and a
still-leveraged capital structure (total debt to total
capitalization of 78% in December 2005).
Eletropaulo's operating results continue to improve. For 2005,
Eletropaulo registered EBITDA of BrR1.9 billion, an improvement
of 35.7% over 2004, basically as a result of economies of scale
from the 12% revenue increase fueled by the July 2004 18.6%
average tariff increase, which partially affected 2005 results.
FFO reached BrR1.15 billion, up 44% from the BrR800 million
achieved in 2004. The strong improvement in FFO is a direct
result of increased EBITDA, plus the reduction of interest
burden resulting from the completed debt restructuring in March
2004. As a result of this performance, FFO to interest coverage
picked up, hitting 3.6x in 2005 compared with 3.26x in 2004.
However, although FFO to total debt also improved, hitting 21.6%
in 2005 (from 14% in 2004), Eletropaulo continues to present a
leveraged capital structure with ratios of total debt to total
capitalization of 78%, although the debt profile now is more
extended and total debt to EBITDA is less aggressive at about
2.7x (considering BrR1.9 billion of accounted pension fund
liabilities and not considering the cash income from Reajuste
Tarif rio Extraordin rio in the EBITDA calculation).
In 1998, Eletropaulo was granted a 30-year concession to
distribute energy in the Sao Paulo metropolitan area.
Eletropaulo supplies electricity to more than 15 million people
spread out in 5.2 million consumption units, with a consumption
of 32,668 gigawatt-hours in 2004. Together with AES Tiet^ and
AES Uruguaiana, Eletropaulo is part of the Brasiliana group
controlled by the nonoperating holding company, Brasiliana.
Brasiliana shareholders are:
-- BNDES with ratings of:
* foreign currency BB/Stable/
* local currency BB+/Stable/ and which has 53.84% of
total capital and
-- AES Corp. with B+/Positive/--, it holds 46.4% of total
capital U.S.-based AES manages the group.
Liquidity
Standard & Poor's Ratings Services considers Eletropaulo's
liquidity and financial flexibility as improving since the
company came out from a wide debt renegotiation last year. The
placement of a US$200 million international bond in June 2005
and, more recently, BrR1.05 billion in two debentures, attests
to the company's improved financial flexibility. Liquidity and
financial flexibility are the key credit factors for this
company, and their recent enhancement led to the rating
improvement. As of September 2005, the company reduced foreign
currency exposure to less than 10% of the total debt, compared
with 40% in 2003, and has already swapped 100% of the total to
local currency until their maturities. Standard & Poor's
expects that Eletropaulo will keep the level of foreign currency
exposure around 10% or even lower.
Eletropaulo reported total debt of BrR5.2 billion as of FYE2005;
including the BrR148 million of negative hedge result plus a
total of BrR2.1 billion of the pension fund liability. Out of
the total debt as of September 2005, short-term maturities are
BrR1.5 billion, including a pension fund short-term portion of
BrR400 million plus BrR148 million of a negative hedge position,
and represent about 29% of total debt. Amortization requirements
for 2006 should be resolved through Eletropaulo's projected
internal free cash generation of BrR700 million, including RTE
receivablesm, at fiscal year-end 2006, BrR500 million of cash
holdings as of FYE2005, and new debt structures to improve debt
profile.
Free cash flow generation forecasts for 2007 and onward are
tighter because Brasiliana, its holding company, will start to
amortize its debt with BNDES, which will require Eletropaulo to
increase the amount of dividends upstream, together with AES
Tiete and AES Uruguaiana. As a result, Standard & Poor's views
dividends sent to Brasiliana as a mandatory requirement for
Eletropaulo because Brasiliana holds in its books an 11-year,
US$510 million debt with BNDES, which starts to mature in 2007
and whose sole repayment source is cash from its subsidiaries
Eletropaulo AES Tiete, and AES Uruguaiana.
Outlook
The stable outlook on Eletropaulo's ratings reflects Standard &
Poor's expectation that the company will continue to reduce the
level of short-term debt, including pension funds, and to
present adequate performance that results in fairly favorable
credit measures for the rating category:
-- a continually extending future amortization profile;
-- EBITDA margin around 18%;
-- minimum FFO to interest coverage of 2x; and
-- FFO to total debt higher than 15%.
A positive outlook might be considered if, Eletropaulo's
financial performance keeps highly comfortable even considering
the significant future dividends upstream prospects.
Conversely, the ratings would come under downward pressure (a
negative outlook or a downgrade to 'B') if the contribution to
upstream dividends to Brasiliana weakens Eletropaulo's cash flow
protection measures (lower than those indicators above) and
overall financial standpoint, meaning high leverage and a worse
debt amortization profile. Downward pressure would also result
if the level of past due accounts continues to increase, or if
the company faces soaring deferred regulatory costs, which would
affect free cash flow and, ultimately, raising the total debt.
GERDAU S.A.: S&P Says Ratings Unaffected by Sheffield Buy
---------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings of
BB+/Stable/-- on Gerdau S.A. are not immediately affected by the
acquisition of Sheffield Steel by its subsidiary Gerdau
Ameristeel Corp. with ratings of BB-/Positive/-- in the United
States.
The transaction adds 560,000 metric tons per year of rolled
products capacity to Gerdau's existing 14.8 million mtpy rolling
capacity and will cost the company approximately US$76 million,
coupled with the assumption of US$94 million in net debt and
other obligations currently owed by Sheffield, which should not
have any material impact on the company's consolidated financial
figures. As of Dec. 31, 2005, Gerdau reported EBITDA of US$2.0
billion, funds from operations of US$1.6 billion, total debt of
US$3.2 billion, and cash reserves of US$2.3 billion. Gerdau's
performance softened in second-half 2005 due to more difficult
market conditions in its most profitable market, Brazil, but
financial measures remained consistent with our expectations. We
believe Gerdau will benefit from the gradual recovery of the
Brazilian economy through 2006 while sustaining an active growth
strategy through acquisitions; with the commitment to
disciplined financial leverage targets.
GOL FINANCE: Closes US$200 Million Perpetual Bond Offering
----------------------------------------------------------
GOL Finance -- a wholly-owned subsidiary GOL Linhas Aereas
Inteligentes -- has closed an issuance of US$200 million 8.75%
perpetual notes in an offering exempt from regulatory
registration. GOL and its subsidiary GOL Transportes Aereos
S.A. guarantee the perpetual notes. The issue was assigned a
credit rating of Ba2 by Moody's, one notch above Brazil's
sovereign rating. The perpetual notes were placed with
institutional and retail investors in Asia, Europe and the
United States.
The perpetual notes are senior unsecured debt obligations of GOL
Finance and have no fixed final maturity date, and are callable
at par at the option of the issuer after five years. The notes
were priced at 397 basis points over the 5-year U.S. Treasury
Note, and 150 basis points over the long-term Brazil Sovereign
bond ('37). GOL intends to use the proceeds to finance a
portion of its cash payments related to its fleet expansion
plan.
"This offering further reduces our cost of capital and bolsters
the Company's capitalization," says Richard Lark, Chief
Financial Officer of GOL.
The perpetual notes and the guarantees have not been and will
not be registered under the United States Securities Act of
1933, as amended, and may not be offered or sold
(a) in the United States absent registration or an applicable
exemption from registration under the Securities Act; or
(b) in any other jurisdiction in which such offer or sale is
prohibited.
* * *
As reported by the Troubled Company Reporter on March 23, 2006,
Moody's Investors Service has assigned a Ba2 Foreign Currency
Debt Rating to the proposed USD $250 million guaranteed senior
unsecured perpetual bonds to be issued by Gol Finance, an
offshore subsidiary of Gol Linhas Aereas Inteligentes S.A. The
bond will be jointly, severally and unconditionally guaranteed
on a senior unsecured unsubordinated basis by Gol Transportes
Aereos S.A., which is its primary operating subsidiary, and Gol
Linhas Aereas Inteligentes S.A. Simultaneously, Moody's
assigned a Ba2 Global Local Currency Corporate Family Rating to
Gol. The outlook is stable.
PETROBRAS ENERGIA: S&P Removes B Cur. Rating from Credit Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services removed its 'B' foreign
currency rating on Argentina-based Petrobras Energia S.A. or
PESA from CreditWatch with negative implications, where it was
placed on Oct. 3, 2005 following recent developments that
partially clarify the company's operating situation in
Venezuela. The rating is affirmed, and the outlook is stable.
"The rating had been placed on CreditWatch after the government
of Venezuela announced several measures that affected the
company's operations in that country and thus had the potential
to affect its financial profile," said Standard & Poor's credit
analyst Pablo Lutereau. "However, PESA recently announced that
it has entered into several memorandums of understanding with
the Venezuelan Government through Petroleos de Venezuela S.A.
with a rating of B+/Watch Dev/--, and Corporacion Venezolana del
Petroleo S.A. in order to migrate the current operating
agreements of the Oritupano Leona, La Concepcion, Acema, and
Mata areas to partially state-owned companies, with the
Venezuelan Government holding a 60% interest."
As a result, effective April 1, 2006, PESA's interest in the
above-mentioned areas will be reduced to 22%, 36%, 34.5%, and
34.5%, respectively, from 55%, 90%, 86.23%, and 86.23%,
respectively, prior to the conversion of the contracts. The new
concessions will have a 20-year maturity, representing a
significant extension from the previous remaining nine years on
average, and the company will receive in compensation an US$85
million transferable credit that could be used to participate in
future exploration projects in Venezuela.
The final cash flow effect is still uncertain given that the
definition of some operational conditions such as pricing and
capital expenditures, is still pending. However, even assuming
a 70% reduction of cash flows coming from Venezuela, we believe
that PESA should be able to generate at least US$800 million in
EBITDA in 2006 at current hydrocarbon prices. As a result,
EBITDA interest coverage and funds from operations to total debt
should be in the 4.5x-5.5x and 25%-35% ranges, respectively,
commensurate with the current rating category. Nevertheless,
the company still faces significant capital expenditures needs,
which should be about $400 million in 2006. All figures in this
analysis exclude the effect of the proportional consolidation of
PESA's participation in companies in gas transportation and
electricity distribution in Argentina in which PESA has joint
control.
The stable outlook reflects our expectations that the company
should be able to sustain a financial performance consistent
with the current rating category even taking into account lower
expected cash flows from Venezuela after new operational
conditions are defined. The current ratings incorporate PESA's
ability to sustain total debt to EBITDA below 2.5x and a
projected FFO-to-total debt ratio of at least 25% throughout the
cycle. The ratings could be lowered if potential government
intervention in Venezuela or Argentina further affects PESA's
financial performance and credit metrics deteriorate from the
above-mentioned levels. On the other hand, a rating upgrade
would require a strong improvement in the company's operating
performance, particularly the ability to increase production
levels.
PETROLEO IPIRANGA: Buys Back US$75.1 Mil. of 2008 Step-Up Notes
---------------------------------------------------------------
Brazilian fuels distributor Companhia Brasileira de Petroleo
Ipiranga said that it has bought back more than half, or US$75.1
million, of the US$133.72 million in 2008 step-up notes still
outstanding in the market.
The company is aiming to buy back all the notes. Ipiranga said
that it has changed the expiration date for completion of the
operation to May 2, 2006, from April 11 as previously announced.
The notes pay a coupon rate of 7.875%.
The company will use part of an issue of non-convertible
debentures worth 450 million Brazilian reals (US$202 million) to
finance the operation. The company is awaiting approval from the
Brazilian Securities Commission, or CVM, to issue the
debentures.
Companhia Brasileira de Petroleo Ipiranga distributes diesel,
gasoline, hydrated alcohol, industrial and automotive
lubricating oils and greases, natural gas and other related
products and activities.
* * *
As reported on Feb. 28, 2006, Moody's Investors Service upgraded
to Ba3 from B1 the foreign currency rating of Companhia
Brasileira de Petroleo Ipiranga's outstanding US$134 million
step-up senior unsecured notes due 2008. The outlook of the
notes rating was changed from positive to stable. The Ba3
foreign currency rating of the notes is presently not
constrained by Brazil's sovereign ceiling.
The rating is supported by Ipiranga's position as the second
largest fuel distribution company in Brazil, and its
demonstrated ability to defend and expand its market share in
the Brazilian fuel distribution market while maintaining
acceptable operating margins. In addition, the rating
incorporates the company's efficient logistics and strong brand
recognition, as well as the improved competitive environment for
the diesel and gasoline markets in Brazil.
At the same time, the rating is constrained by Ipiranga's
volatile working capital needs, its high dependence on
Petrobras' for fuel supply, the increased capex and dividends
distribution which have negatively impacted its free cash flow
generation, and by the fierce competition in the fast-growing
ethanol market.
* BRAZIL: Aneel Allows 3 Electric Companies to Hike Power Rates
---------------------------------------------------------------
Reuters reports that Aneel, Brazil's electricity market
regulator allows three companies to raise their power rates for
both household and industrial usage:
Company Household Rate Industrial Rate
------- -------------- ---------------
CEMIG 5.16% 11.31%
CPFL 0.62% 13.65%
Enersul 9.30% 13.25%
* * *
As reported on April 6, 2006, Fitch assigns these ratings to
Brazil:
-- Foreign currency Issuer Default Rating (IDR) 'BB-';
-- Local currency Issuer Default Rating (IDR) 'BB-';
Fitch said the raating outlook is positive.
===========================
C A Y M A N I S L A N D S
===========================
AALL REALTY: Creditors Have Until May 3 to File Proofs of Claim
---------------------------------------------------------------
Creditors of AALL Realty Holdings Corporation are given until
May 3, 2006, to have their claims against the company verified
by the liquidation -- Stuart Sybersma. Failure to do so would
mean disqualification from receiving the benefit of any
distribution that the company will make.
AALL Realty started liquidating assets on March 9, 2006.
The liquidator can be reached at:
Stuart Sybersma
Deloitte & Touche
Attention: Joshua Taylor
P.O. box 1787, George Town
Grand Cayman, Cayman Islands
Telephone: (345) 949-7500
Facsimile: (345) 949-8258
ADAMS STREET: Proofs of Claim Filing Deadline Is on May 4
---------------------------------------------------------
Creditors of Adams Street 2002-1 Limited are required to submit
on or before May 4, 2006, claims against the company to the
liquidators -- Carlos Farjallah and Emile Small. Creditors who
fail to do so will be disqualified from receiving the benefit of
any distribution that the company will make.
Adams Street started liquidating assets on March 20, 2006.
The liquidators can be reached at:
Carlos Farjallah
Emile Small
Maples Finance Limited
P.O. Box 1093 George Town
Grand Cayman, Cayman Islands
ALMATIS DEBT 2: Creditors Have Until April 24 to File Claims
------------------------------------------------------------
Creditors of Almatis Debt 2 Limited are required to submit on or
before April 24, 2006, proofs of claim against the company to
the company's appointed liquidator -- Westport Services
Limited. Failure to do so would mean exclusion from receiving
the benefit of any distribution that the company will make.
Almatis Debt 2 started liquidating assets on March 13, 2006.
The liquidator can be reached at:
Westport Services Limited
Attention: Patricia Tricarico
P.O. Box 1111
Grand Cayman, Cayman Islands
Telephone: (345) 949-5122
Facsimile: (345) 949-7920
GHK FIRST: Holds Final General Meeting on April 20
--------------------------------------------------
Shareholders of GHK First Equity Fund Ltd. will have their final
general meeting on April 20, 2006, at the registered office of
the company.
Accounts on the company's liquidation process will be presented
during the meeting. The shareholders will also authorize the
liquidators to retain the records of the company for a period of
five years, starting from the dissolution of the company.
Any person who is entitled to attend and vote at this meeting
may appoint a proxy to attend and vote in his stead. A proxy
need not be a member or a creditor.
The company's liquidators can be reached at:
CFS Liquidators Ltd.
Attention: M. David Makin
c/o Windward 1, Regatta Office Park
West Bay Road, P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
Telephone: (345) 949 - 3977
Facsimile: (345) 949 - 3877
LSA INVESTMENTS: Final Shareholders Meeting Set for April 11
------------------------------------------------------------
Shareholders of LSA Investments Limited will convene on April
11, 2006, at 10:00 a.m. for an extraordinary final general
meeting at the offices of:
Deloitte, Fourth Floor
Citrus Grove
P.O. Box 1787, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the meeting. The shareholders will also authorize the
liquidators to retain the records of the company for a period of
five years, starting from the dissolution of the company.
Any person who is entitled to attend and vote at this meeting
may appoint a proxy to attend and vote in his stead. A proxy
need not be a member or a creditor.
As reported in the Troubled Company Reporter on Jan. 31, 2006,
the sole shareholder of LSA Investments passed special
resolutions on Dec. 16, 2005, allowing the company's voluntary
liquidation and appointing Ian Wight and Stuart Sybersma as
liquidators. Creditors were given until Feb. 24, 2006, to have
their claims verified by the liquidators.
The company's liquidator can be reached at:
Stuart Sybersma
Deloitte & Touche
Attention: Joshua Taylor
P.O. Box 1787, George Town
Grand Cayman, Cayman Islands
Telephone: (345) 949-7500
Facsimile: (345) 949-8258
MAYFLOWER: Holds Shareholder & Liquidator's Final Meeting Today
---------------------------------------------------------------
The sole shareholder of Mayflower 747-98 Limited and the
company's liquidator -- Griffin Management Limited -- will have
an extraordinary final meeting today, April 10, 2006, at the
offices of:
Caledonian House
69 Dr. Roy's Drive, George Town
Grand Cayman, Cayman Islands
Accounts on the company's liquidation process will be presented
during the final meeting.
As reported in the Troubled Company Reporter on March 30, 2006,
Mayflower 747-98 Limited started liquidating assets on Feb. 27,
2006. Creditors were given until March 27, 2006, to have their
claims verified by the company's liquidator.
The liquidator can be reached at:
Griffin Management Limited
Caledonian Bank & Trust Limited
Caledonian House
P.O. Box 1043, George Town
Grand Cayman, Cayman Islands
===============
C O L O M B I A
===============
BANCOLOMBIA: Plans to Raise Mortgage Loan Market Share by 23%
-------------------------------------------------------------
Bancolombia plans to increase by the end of 2006 its mortgage
loan market share by 23% from last year's 20.8%, Luis Fernando
Munoz -- the company's mortgage loan vice president -- told
Business News Americas.
BNamericas relates that last year's mortgage loan market share -
- equivalent to COP1.40 billion loan portfolio -- was reached
after the company completed a three-way merger with Conavi and
Corfinsura. The merger raised Bancolombia's clients to more
than 4.68 million clients from 1.83 million.
Mr. Munoz told BNamericas that for this year, Bancolombia will
strengthen its offering of mortgage loans online and appeal to
clients with its Casa para todos mortgage plan on offer at the
firm's more than 690 branches.
BNamericas recalls that Bancolombia disclosed earlier in March a
nominal fixed-rate for home loans of 1% per month, three basis
points less than its preferential rate.
* * *
As reported by the Troubled Company Reporter on March 13, 2006,
Moody's Investors Service assigned a 'Ba3' rating on Bancolombia
S.A.'s long-term foreign currency deposit and changed the
outlook to stable from negative.
* * *
On Dec. 22, 2005, Fitch Ratings affirmed the ratings assigned to
Bancolombia, as:
-- Long-term/short-term foreign currency at 'BB/B';
-- Long-term/short-term local currency at 'BBB-/F3';
-- Individual at 'C';
-- Support at '3'.
The ratings assigned to Bancolombia and subsidiaries reflect its
dominant Colombian franchise, sound asset quality, and solid
performance, which should be further strengthened by the recent
merger with Conavi and Corfinsura and, in turn, boost capital,
which weakened with the merger. The ratings also factor in the
challenges posed by operational integration, its high exposure
to the Colombian government, and the risks inherent in its
operating environment.
COLOMBIA TELECOM: Government Retains Stake After Privatization
--------------------------------------------------------------
The Colombian government will retain a stake in Colombia
Telecomunicaciones aka Colombia Telecom after the privatization,
the country's President Alvaro Uribe said to Expansion. Only
majority of the company's share would be privatized.
As reported in the Troubled Company Reporter on April 6, 2006,
Telefonica S.A. and CA Nacional Telefonos de Venezuela aka CANTV
would bid for Colombia Telecom's 50% plus one share on April 7.
Telefonica and CANTV were able to present the technical
proposals last week, ensuring their participation in the
auction. Colombia Telecom said to Reuters that by presenting
technical bids, the two firms had promised to pay the $233
million minimum price the government set for the auction.
Other pre-qualified bidders -- Telefonos de Mexico S.A. aka
Telmex, Cablecentro S.A. and Phone 1 -- will not bid for
Colombia Telecom in the coming auction, according to Dow Jones
Newswires.
Jorge Lagunas, an equity analyst with Mexico-based Interacciones
Casa de Bolsa S.A., told Dow Jones that the withdrawal of Telmex
from the auction could be a result of the CANTV acquistion.
Telmex said Monday it would team up with America Movil S.A. for
the purchase of the 28.5% stake Verizon Communications owned in
CANTV. Telmex came close to acquiring Colombia Telecom for $350
million in 2005 was interested in trying again.
As reported in the Troubled Company Reporter on April 5, 2006,
the Colombian government set the minimum price for a 50% stake
in Colombia Telecom at $233 million.
The government had required the bidders to submit an offer in a
closed envelope. However, the auction will go on even after the
envelopes are opened.
To continue participating, firms have to make a bid that is at
least COP40 billion higher than the previous highest bid.
The Colombian government will hold as many rounds as needed to
select a winner, Alfonso Gomez Palacios -- chief executive of
Colombia Telecom -- told Dow Jones. He expected that the
auction would bring at least $350 million to his firm.
As reported in the Troubled Company Reporter on March 22, 2006,
a consortium by Cablecentro and Swedtel -- now joined by Phone 1
-- will bid in Colombia Telecom auction, along with Telefonica
S.A., CA Nacional Telefonos de Venezuela and Telefonos de Mexico
S.A.
The Troubled Company Reporter also reported on March 22, 2006,
that municipal telcos Empresa de Telecomunicaciones de Bogota
S.A. aka ETB and Empresas Publicas de Medellin S.A. aka EPM
backed out of the auction due to discriminatory bidding
conditions. Among the conditions ETB president Rafael Orduz
considered discriminatory is the requirement that no monies
belonging to the Colombian people may be used in the
partnership. ETB, which could only finance a strategic
partnership with the state telco through currently held assets,
would be forced to take out a loan.
According to Business News, the tender also requires the winning
company to surrender its Internet and data unit to Telecom,
which Orduz found absurd. Mr. Ordiz said that with this
condition, ETB would lose one of its more important units.
Business News relates that Telmex made an offer in 2005 for the
50% plus one share of Telecom. The company was willing to pay
about US$350 million, but the Colombian government backed out of
the deal to embark on a broader bidding process.
Gina Paola Achuri -- Cablecentro's executive director -- told
Business News that the sale process has been overly favorable
for Telmex, which has had access to Telecom's key information
since August 2005.
Former central bank board member and director of think-tank
National Association of Financial Institutions, Sergio Clavijo,
had said to Dow Jones that the state-run company needs a foreign
partner to exit from its precarious financial condition.
Colombia Telecomunicaciones is facing a COP5 trillion of pension
liability that, according to Mr. Palacios, the winner would have
to pay by 2022 and only then would the ownership be transferred.
"Neither the company nor the government have a financial muscle
needed to keep investing in this company," Mr. Clavijo had told
Dow Jones.
* COLOMBIA: Agrees to Launch Trade Talks with Cuba
--------------------------------------------------
Colombia has agreed to work with Cuba in developing a trade deal
between the two countries, The Associated Press reports. The
deal is aimed at removing trade barriers and extending
preferential tariffs.
According to AP, the negotiations between Colombia and Cuba will
be similar to the free trade discussions Colombia had with El
Salvador, Guatemala and Honduras.
AP relates that commerce between the countries is barely in an
infant state, representing less than 1% of each of the country's
exports.
Despite disagreements on politics, Cuba's President Alvaro Uribe
-- a staunch supporter of the United States -- showed more
concern economics than about supporting Washington's desire to
isolate the country of Cuban President Fidel Castro, AP states.
* * *
On May 30, 2005, Fitch Ratings has affirmed Colombia's ratings
as:
-- Long-term foreign currency 'BB';
-- Country ceiling 'BB';
-- Local currency 'BBB-';
-- Short-term 'B'.
Fitch said the Rating Outlook is Stable.
* * *
Moody's assigns these ratings to Cuba:
-- CC LT Foreign Bank Depst, Caa2
-- CC LT Foreign Curr Debt, Caa1
-- CC ST Foreign Bank Depst, NP
-- CC ST Foreign Curr Debt, NP
-- Issuer Rating, Caa1
===================
C O S T A R I C A
===================
* COSTA RICA: Banks Ditch Government Bonds for US Treasury Bonds
----------------------------------------------------------------
Banks in Costa Rica have switched to US Treasury bonds, local
daily Capital Financiero reports. The banks were forced to sell
government bonds to reduce the risk profile of their investment
portfolios.
Banks have begun selling part of their government bond holdings
and instead bought US Treasury bonds when the new capital rules
were approved in January, Capital Financiero relates.
According to Business News Americas, the new capital rules,
which will take effect on April 18, require the banks to
calculate capital strength by considering both the loan
portfolio risk and the risk profile of their investments in
financial instruments.
Capital Financiero states that the US Treasury bonds are less
profitable but with the new capital rules around, it is safer to
have them.
ABC, the country's banking association, has asked the local
banking regulator to delay the rules' implementation for three
months, Capital Financiero reports.
* * *
As reported in the Troubled Company Reporter on Mar. 10, 2006,
Fitch rates Costa Rica's foreign and local currency issuer
default ratings 'BB' and 'BB+', respectively. Fitch said the
Rating Outlook is Negative.
Fitch said that while the victory of Oscar Arias in Costa Rica's
recent presidential elections bodes well for reforms, the narrow
victory margin could affect the pace of reforms.
Contrary to pre-election polls in which Mr. Arias was leading by
several percentage points, he won only by a very narrow margin.
President Arias is viewed to be in favor of the US-Central
American Free Trade Agreement aka CAFTA and is pro-fiscal reform
and pro-private enterprise, but a weaker election mandate could
undermine his ability to spearhead reforms.
"As the PLN -- the party of President Arias -- has failed to
obtain a simple majority in Congress, it remains to be seen how
quickly the new administration will be able to garner sufficient
support in a divided Congress to enact crucial reforms," said
Shelly Shetty, Senior Director in Fitch's Sovereign Group in New
York.
Fitch believes that the newly elected Arias administration needs
to make headway in CAFTA and fiscal reforms in order to place
the country on a higher growth trajectory.
Although the fiscal reform has passed the first vote in the
legislative assembly, it is unclear whether it would be passed
before the next administration takes over in May. Fiscal reform
entailing revenue-raising measures is necessary to improve the
medium-term outlook for the Costa Rican public finances.
Although Fitch recognizes the recent reduction in Costa Rica's
fiscal deficit, it believes that a permanent reduction in the
general government deficit would require a revenue-enhancing
reform.
Inflation in Costa Rica ended at 14% last year, which is among
the highest in the Latin American region. Additional tax
revenues are needed to recapitalize the central bank in order to
improve the effectiveness of monetary policy. The central
bank's much lauded goal of moving toward a more flexible
exchange rate regime and reversing the widespread financial
dollarization could only be achieved after a fiscal reform is
passed.
Fitch also notes that Costa Rica is the only Central American
country that has not yet approved CAFTA in its Congress.
"Approval of CAFTA is critical to further strengthen Costa
Rica's position as a leading destination for foreign direct
investment flows in the Central American region. It is hoped
that the new government uses its political honeymoon period to
seek a speedy approval of CAFTA," said Shetty.
Although the Pacheco government submitted CAFTA in Congress last
year, the approval of this crucial trade pact has not been easy
to obtain because of opposition from the unions and some
political parties. The treaty will not only provide Costa Rica
with the opportunity to gain permanent access to the US market,
but it will also indirectly benefit private businesses in Costa
Rica, as the treaty requires the liberalization of state-
dominated telecom and insurance sectors.
Costa Rica's economy has experienced relatively high growth in
the past few years. Benefiting from a favorable external
backdrop and robust tourism flows, the economy is estimated to
have grown at 4% in 2005. However, the approval of CAFTA along
with fiscal reforms could make higher growth more sustainable.
In the coming months, Fitch will assess the ability of the Arias
administration to push through reforms in Congress. Continued
fiscal restraint, passage of a tax-enhancing package and/or
implementation of CAFTA could help in stabilizing Costa Rica's
ratings.
=======
C U B A
=======
* CUBA: Will Launch Trade Talks with Colombia
---------------------------------------------
Cuba has agreed to work with Colombia in developing a trade deal
between the two countries, The Associated Press reports. The
deal is aimed at removing trade barriers and extending
preferential tariffs.
According to AP, the negotiations between Colombia and Cuba will
be similar to the free trade discussions Colombia had with El
Salvador, Guatemala and Honduras.
AP relates that commerce between the countries is barely in an
infant state, representing less than 1% of each of the country's
exports.
Despite disagreements on politics, Cuba's President Alvaro Uribe
-- a staunch supporter of US -- showed more concern economics
than about supporting Washington's desire to isolate the country
of Cuban President Fidel Castro, AP states.
* * *
On May 30, 2005, Fitch Ratings has affirmed Colombia's ratings
as:
-- Long-term foreign currency 'BB';
-- Country ceiling 'BB';
-- Local currency 'BBB-';
-- Short-term 'B'.
Fitch said the Rating Outlook is Stable.
* * *
Moody's assigns these ratings to Cuba:
-- CC LT Foreign Bank Depst, Caa2
-- CC LT Foreign Curr Debt, Caa1
-- CC ST Foreign Bank Depst, NP
-- CC ST Foreign Curr Debt, NP
-- Issuer Rating, Caa1
===================================
D O M I N I C A N R E P U B L I C
===================================
AES CORP: Robin Pence Says Dominican Republic's Claims Are False
----------------------------------------------------------------
Robin Pence, Vice President of Communications at AES Corp., told
the Bahama Journal that the Dominican Republic's allegations of
illegal waste disposal are false.
As reported in the Troubled Company Reporter Latin America on
March 21, 2006, the Dominican Republic is seeking US$80 million
in damages from AES for 82,000 tons of coal ash dumped on its
beaches. The government said that the tons of ash were left on
the beaches in Manzanillo and the Samana Bay port town of Arroyo
Barril between October 2003 and March 2004 without proper
government permits. These tons of ash were transported from an
AES Plant in Guayama, Puerto Rico.
AES Corp. confirmed that the ash originated at its plant.
However, the company said that it did nothing improper and that
the dispute is between the Dominican government and a Florida
businessman Roger Charles Fina, chief executive officer of
Silverspot Enterprises, who was hired by AES to transport the
ash.
AES has said that it had proper permits for disposal of the ash
and believed that it was not toxic.
"We will defend the company vigorously against the allegations,"
Ms. Pence said.
Dr. Max Puig, the Dominican Republic's Minister of Environment,
told the Journal that his government's environmental damage
lawsuit filed against AES Corp. has every possibility of
succeeding.
Setting An Example
Dr. Puig believes that the most important aspect of the case is
setting precedence in suing an American company for violating
American laws outside the United States' territory.
Dr. Puig informed the Bahama Journal that Trinidad and Tobago
has already approached the Dominican Republic's government on
how to proceed with similar cases.
Trinidad is the main supplier of liquefied natural gas to the
United States.
"The US Federal law establishes that when a (company) generates
waste, (that waste) is (the company's) responsibility until it
disappears. What the legal representatives have established is
that this company violated the US federal laws in proceeding to
get rid of the waste produced by creating phantom companies and
hiding their responsibility," Dr. Puig has charged in the same
report.
AES Corporation -- http://www.aes.com/-- is a global power
company. The Company operates in South America, Europe, Africa,
Asia and the Caribbean countries. Generating 44,000 megawatts
of electricity through 124 power facilities, the Company
delivers
electricity through 15 distribution companies.
* * *
As reported in the Troubled Company Reporter on Jan. 11, 2006,
Moody's affirmed the ratings of The AES Corporation, including
its Ba3 Corporate Family Rating and the B1 rating on its senior
unsecured debt. Moody's said the rating outlook remains stable.
* DOMINICAN REPUBLIC: Central Bank Sells RD$400-Mil Certificates
----------------------------------------------------------------
The Dominican Republic's Central Bank sold, through an auction,
RD$400 million in investment certificates.
According to the Dominican Today, the auction was attended by
financiers, from multiple banking firms, savings and loans
associations, savings and credit banks, credit corporations,
small loans financial entities, and savings and credit
cooperatives.
Likewise, institutional investors, insurance companies, public
and private investment funds, exchange agencies and other non-
financial entities, as well as the general public, were also
invited to participate.
Maturities for these certificates range from 35, 91, 182 and 364
days, and the minimum offer is set at RD$100 thousand.
Fitch Ratings assigns these ratings on Dominican Republic:
Rating Rating Date
------ -----------
Country Ceiling B- May 11, 2005
Long Term IDR B- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating B May 11, 2005
=============
E C U A D O R
=============
* ECUADOR: Central Bank Fears Lawsuits Due to Tax Exemption Law
---------------------------------------------------------------
Other Andean nations could sue the Ecuadorean government due to
the tax exemption law implemented in Huaquillas, a municipality
near the Peruvian border, Dow Jones Newswires reports.
The central bank said in a report, "The imports this law would
benefit would come from member countries of the World Trade
Organization...Ecuador would fail to fulfill its obligations
with the Andean Community of Nations by not imposing the Andean
general duty that the countries have to apply to imports from
third-party nations."
This would open the door for lawsuits and sanctions that could
affect Ecuador's exports, the central bank was quoted by Dow
Jones saying.
As reported in the Troubled Company Reporter on April 7, 2006,
the Ecuadorian Congress passed in March a new tax exemption law
in Huaquillas, which has about 40,000 inhabitants. The law will
take effect on Jan. 1, 2007.
Each inhabitant will have an annual quota of up to $400,000 to
import any goods, tax free, from Peru, Dow Jones relates.
Huaquillas could import, duty free, about $16 billion a year.
According to The Troubled Company Reporter, Ecuador's total
imports last year was $8.91 billion, for which the national tax
agency SRI charged $800 million in tariffs and $1 billion in
value-added tax aka VAT.
The tax exemption law may result to an annual US$400 million
reduction in tax collection starting next year, the economy
ministry told Dow Jones.
Central bank director, Maria Belen Freire, said to Dow Jones
that the Huaquillas law -- as well as similar ones now being
studied in Congress -- threatens Ecuador's competitiveness and
productivity. The laws, according to Ms. Freire, promote an
unfair competition with Ecuador's formal sector, which pays
taxes.
Those laws don't boost investments, Ms. Freire revealed to Dow
Jones. They are against principles of gradually reducing taxes,
which countries such as Ecuador are demanding in their free
trade agreement discussions with the US as well as with the
European Union.
The Troubled Company Reporter states that Wilson Ruales -- an
advisor to the SRI -- complained that the Huaquillas law will
encourage contraband, raise the fiscal deficit and inflation,
damage the productive structure, and affect the dollarization of
Ecuador's economy, and provoke the closing of firms as well as
an increase in unemployment.
"It is a complicated problem because there are other similar
bills in Parliament. We know that Huaquillas needs special
treatment, but we don't want to harm the rest of the country,"
Dow Jones quoted Jose Modesto Apolo, the administration
secretary, saying.
The Guayaquil chamber of commerce, says Dow Jones, sought for
the law's cancellation at the Constitutional Court last week.
Congressman Ernesto Pazmino of the Democratic Left party also
presented his own proposal to abolish the law.
According to Dow Jones, Congressman Pazmino was supported by the
40 members from his own party as well as from the Pachakutik
indigenous party, the Social Christian Party and some
independents.
Dow Jones reveals that Congressman Pazmino was the only lower
house legislator to vote against the law while 74 voted in favor
of it. The 74 congressmen now said they regret that vote.
Wilfrido Lucero -- the president of Congress -- had apologized,
saying that they did not realize what they were approving.
While some congressmen have regretted passing the law, there are
also people behind the law who have hidden interests linked to
contraband and money laundering, Congressman Pazmino said to Dow
Jones.
Jose Modesto Apolo, the administration secretary, said to Dow
Jones that the government is looking for ways to terminate the
law. In fact, President Alfredo Palacio is considering whether
to declare the law unconstitutional, or whether to send a new
law to Congress to overturn the original law.
Dow Jones states that President Palacio cannot reject the new
law for the second time, after it was reintroduced this year and
finally approved. In such cases, laws are put immediately into
effect. The Congress had first passed the law in 2005.
President Palacio could however send the Congress a bill that
will revoke the law, says Dow Jones. The Congress could also
make the said bill.
Huaquillas' inhabitants and authorities have said they are
planning protests to ensure the law stands, Dow Jones reports.
* * *
Fitch Ratings assigns these ratings on Ecuador:
Rating Rating Date
------ -----------
Country Ceiling B- Aug. 29, 2005
Long Term IDR B- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
* ECUADOR: Hydrocarbon Law Reform Impedes Trade Pact with US
------------------------------------------------------------
Negotiations for a Free Trade Agreement aka FTA between Ecuador
and the United States have stopped, Prensa Latina reports. This
is due to the Ecuador's hydrocarbon law reform.
Prensa Latina relates that US firms in Ecuador have rejected the
new law, which authorizes the redistribution of oil profits due
to the high oil prices. The US government, siding with the
firms, stopped FTA negotiations on services and environment.
The US will not continue the dialogue unless a change would be
implemented in the hydrocarbon law, Vinicio Baquero -- FTA
negotiating team member -- said to Prensa Latina.
As reported in the Troubled Company Reporter on April 4, 2006,
Ecuador's Congress passed a bill reforming the country's law on
hydrocarbons. Under the new bill, contracts with foreign oil
producers will be revised giving the government a 60% split of
profits whenever oil market prices exceeds what's established in
existing contracts.
The old contracts give the state about 20% of profits, while
prices were pegged at US$15 per barrel.
Rene Ortiz -- president of the Hydrocarbon Industries
Association aka HIA -- had said that the will of the parties
reflected in the contracts could not be changed by a law.
According to him, the National Congress and the Executive would
be violating the basic principles of a contractual relationship
if they would approve the new law.
According to the HIA, existing contracts can only be changed
through renegotiations between the partiers involved -- not
unilaterally through a new law.
* * *
Fitch Ratings assigns these ratings on Ecuador:
Rating Rating Date
------ -----------
Country Ceiling B- Aug. 29, 2005
Long Term IDR B- Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
=====================
E L S A L V A D O R
=====================
* EL SALVADOR: Enters Joint Venture with Venezuela
--------------------------------------------------
A company has been created by the Intermunicipal Energy
Association for El Salvador -- an association of El Salvador's
leftist mayors -- and Petroleos de Venezuela's aka PDVSA, the
Associated Press reports. This joint venture will handle fuel
sales to El Salvador's cities under the preferential terms from
Venezuela.
Business News Americas relates that a signing ceremony took
place between PDVSA deputy president for refining Alejandro
Granado and Carlos Garcia Ruiz -- the municipal governments'
representative -- on April 5 in El Salvador for the creation of
the new company, which will be tasked with the importing,
storing as well as commercializing the fuel.
According to a press release, El Salvador's 22 municipal offices
held by elected officials from former guerrilla group FMLN --
have incorporated themselves into a firm called the El Salvador
Inter-Municipal Energy Association aka Enepasa.
BNamericas reports that the accord allows Enepasa to purchase up
to 100,000 barrels a day of crude or liquid fuels from
Venezuela. About 40% of the purchases can be financed at a 1%
annual interest rate for 23 years while the remaining 60% can be
financed over 90 days or paid with El Salvadoran products.
As reported in the Troubled Company Reporter on March 24, 2006,
Enepasa inked an agreement with Venezuela to purchase oil under
preferential terms.
The pact was signed at the presidential palace of Miraflores and
shipments are to begin "as soon as possible," El Salvador quoted
Violeta Menjivar, who is to be inaugurated as San Salvador mayor
on May 1.
Operations are to be conducted through Venezuelan state-run oil
corporation PDV-Caribe, the Associated Press reported.
Under the agreement, Enepasa will pay 60% of oil supplied within
90 days, while paying for the rest in 23 years, with a fixed
annual interest rate of one percent, plus a two-year grace
period, news agency EFE reported.
President Hugo Chavez conceded he reached the agreement with
Enepasa because he was unable to negotiate with his Salvadoran
counterpart Elas Antonio Saca's government. President Saca
urged the FMLN not to try to generate among Salvadorans "false
hopes" about the possibility to find cheap oil in Venezuela, El
Universal relates.
President Saca said in reports that oil imports requires major
storage and processing facilities. "This implies we need a
refinery that may cost some US$3-5 billion."
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'. The rating of PDVSA's export receivable future
flow securitization, PDVSA Finance Ltd, was also upgraded to
'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating. The Rating Outlook is Stable.
Both rating actions follow Fitch's November 2005 upgrade of
Venezuela's sovereign rating.
* * *
Fitch Ratings assigns these ratings on El Salvador:
Rating Rating Date
------ -----------
Country Ceiling BB+ Jun. 18, 2004
Long Term IDR BB+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
* * *
On Nov. 29, 2005, Fitch Ratings assigned expected 'BB-' ratings
to the pending issues of Venezuelan government bonds maturing
Feb. 26, 2016, and Dec. 9, 2020. The 2016 bond has a 5.75%
fixed coupon and the 2020 bond has a 6% fixed coupon. The bonds
are being marketed in Venezuela to be purchased in local
currency at the official exchange rate but under New York law,
with all coupon and principal payments in U.S. dollars.
Venezuela's sovereign ratings are supported by superior
international liquidity and low external financing
requirements relative to similarly rated sovereigns. The
ratings are constrained by vulnerability to external shocks
because of oil dependency; diminished capacity of the private
sector to absorb shocks because of heavy government
intervention in the productive sector; recent spending
increases that reduce fiscal flexibility; and concerns about
the rule of law and potential political instability. Fitch said
the Rating Outlook is Stable.
===========
G U Y A N A
===========
* GUYANA: Closes Deal on Transfer of State Miner Rights to Rusal
----------------------------------------------------------------
The ownership of Guyana's state mining company -- Aroaima Mining
Company aka AMC -- will be transferred to Bauxite Company of
Guyana aka BCGI, a subsidiary of Russian aluminum producer
Rusal, according to the latter's statement. The company has
finally closed the deal with Guyana's government.
AMC's financials, productive operations, the majority of its
assets, infrastructure and bauxite deposits that total reserves
of 96Mt are being transferred to BCGI, the statement said.
Business News Americas relates that BCGI was created in December
2004 as part of Rusal's memorandum of understanding with the
government to revitalize the country's bauxite industry.
Bauxite is one of Guyana's major exports, along with gold, sugar
and rice.
According to BNamericas, the government will keep a 10% share in
BCGI. As agreed, BCGI commits to spend about US$20 million
through 2007 to raise AMC's production capacity to 2.5Mt/y from
1.3Mt/y. AMC had spent about US$10 million last year primarily
in new mining equipment.
===============
H O N D U R A S
===============
* Honduras & Nicaragua Formally Signs FTA with U.S.
---------------------------------------------------
Honduras and Nicaragua have formally joined a free trade
agreement with the United States.
At a ceremony to inaugurate the Central American Free Trade
Agreement, Honduran President Manuel Zelaya was quoted by the
Associated Press as saying taht his country is embarking on a
"different and extremely important path for the strengthening of
democracy." The treaty, he added, is "a way for us to broaden
our growth possibilities and reduce our poverty."
In Managua, Nicaragua, President Enrique Bolanos certified his
country's first export under the treaty through a US$20,000
shipment of beans. Nicaragua hopes to increase its exports by
20% and produce more jobs.
However, the treaty also caused protests to erupt throughout
Central America on fears that it will harm small businesses and
farmers.
Nicaraguan lawmaker Doris Gutierrez, of the leftist Party of
Democratic Unification, told the AP that the pact violates the
constitution, omitting "all possibilities that small and medium-
size producers can compete." She added that while U.S. products
already dominate Honduras' import market, the United States
"buys few products from Honduras ... and that's going to hurt
us."
The deal is designed to eliminate tariff and non-tariff barriers
among the participating countries and is part of Washington's
push to strike free trade deals with nations around the world as
a way of boosting U.S. exports.
Moody's Investor Service puts these ratings on Honduras:
Rating Rating Date
------ -----------
Senior Unsecured B2 Sept. 29, 1998
Long Term IDR B2 Sept. 29, 1998
Moody's Investor Service puts these ratings on Nicaragua:
Rating Rating Date
------ -----------
Long Term Caa1 June 30, 2003
Senior Unsecured
Debt B3 June 30, 2003
=============
J A M A I C A
=============
KAISER ALUMINUM: Incurs US$753.7 Mil. Net Loss in 2005
------------------------------------------------------
Kaiser Aluminum Corporation (OTCBB: KLUCQ) reported a net loss
of approximately $753.7 million for the year ended Dec. 31,
2005, despite strong results in income for the fabricated
products operating segment that will form the core of the
company upon emergence from bankruptcy.
The net loss figure is largely attributed to losses related to
Chapter 11 restructuring and includes three large non-recurring
special items:
(a) the previously reported approximate $366 million gain in
the second quarter of 2005 related to the company's sale
Of interests in and related to Queensland Alumina
Limited,
(b) a fourth quarter non-cash charge of approximately
$1.1 billion associated with the liquidation of certain
commodity subsidiaries, and
(c) another fourth quarter non-cash charge totaling $42
million associated with resolution of a third-party claim
against one of its commodity subsidiaries (now reported
as part of Discontinued Operations).
Operating income for 2005 reached $59.8 million, up
significantly from 2004 when the company reported an $817.6
million operating loss that included $793.2 million of special
charges associated with resolving Chapter 11 related matters.
Net sales for 2005 were approximately $1,089.7 million, up from
$942.4 in 2004. The increase reflects the year over year
improvement in the fabricated products markets and higher
underlying primary aluminum prices.
"We experienced particularly strong fourth quarter results in
our core fabricated products operations and currently expect
such strength to continue into and past the first quarter of
2006," Jack A. Hockema, President and CEO of Kaiser Aluminum,
said. "The first quarter of 2006 is the first period in which
market activity driving volume and conversion spreads appears to
be more broad based and sustainable than in previous quarters,
thus our optimism going forward."
Plan of Reorganization
As previously reported in the Troubled Company Reporter on Feb.
7, 2006, the U.S. Bankruptcy Court for the District of Delaware
overseeing its Chapter 11 proceedings has confirmed the
company's plan of reorganization, which was accepted by all
classes of claim holders entitled to vote on it.
However, the plan of reorganization must still be approved by
the United States District Court and certain other conditions to
emergence that must be satisfied or waived and appeals by
certain insurers must be addressed by the District Court. The
company remains optimistic it can still emerge in the second
quarter of 2006.
"The continued strong fabricated products markets provide us
considerable momentum and further move us toward our goal of
emerging a strong, competitive company with low debt and a solid
position for growth," added Mr. Hockema. "With the most
difficult aspects of the restructuring process behind us, we
look forward to the continued implementation of our key
initiatives that will guide the improvement of our operations,
further strengthen our market position and help us to grow the
company as we work to capture the benefits the current markets
offer."
A full-text copy of the Company's Form 10-K is available at no
charge at http://ResearchArchives.com/t/s?761
About Kaiser Aluminum Corp.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company, along with its Jamaican subsidiaries
-- Alpart Jamaica Inc. and Kaiser Jamaica Corporation -- filed
for chapter 11 protection on February 12, 2002 (Bankr. Del. Case
No. 02-10429), and has sold off a number of its commodity
businesses during course of its cases. Corinne Ball, Esq., at
Jones Day, represents the Debtors in their restructuring
efforts. On June 30, 2004, the Debtors listed $1.619 billion in
assets and $3.396 billion in debts.
===========
M E X I C O
===========
GRUPO MEXICO: No Talks Scheduled to Resolve Strike
--------------------------------------------------
No talks have been planned to resolve the miners' strike against
Grupo Mexico SA de C.V., Reuters reports.
According to Reuters, union heads themselves are arguing on who
should represent the workers.
"Right now there is no way to give a date for a resolution
because it's really in the hands of the company," said Consuelo
Aguilarunion spokeswoman.
Union members who work at the Sicartsa and Mittal steel mills
and the Agua Prieta lime plant have joined the thousands of
striking Grupo Mexico copper miners and other workers in a
leadership dispute, Reuters states. The strikers demanded that
the government respect union autonomy and worker dignity and
recognize the leadership of Napoleon Gomez, whose corruption
case has prompted the labor ministry to appoint another leader.
The dispute over the leadership has hindered Grupo Mexico and
the striking miners in reaching an agreement.
As reported in the Troubled Company Reporter on March 28, 2006,
workers at the La Caridad copper-molybdenum mine of Grupo Mexico
S.A. de C.V. went on strike Friday after the mine operator
Industrial Minera Mexico reportedly refused to conduct a
collective contract review.
The country's labor ministry has extended the review deadline
again, the STMMRM union complained to Business News.
According to Dow Jones Newswires, the deadline -- originally set
on March 5 -- had been put back several times.
The STMMRM said in the statement that the workers in the union's
section 298, which represents La Caridad, are demanding that
Grupo Mexico fulfill its legal obligation and negotiate the
collective contract.
As reported by the Troubled Company Reporter on Oct. 31, 2005,
that Grupo Mexico had agreed to pay each worker in the La
Caridad mine MXN10,000 after a day of strike.
Dow Jones Newswires recalled that workers went on strike due to
Grupo Mexico's alleged refusal to share profits from 2003
results.
As reported in the Troubled Company Reporter on April 3, 2006,
the union's ratification of Napoleon Gomez Urrutia's leadership
has been rejected by the Mexican Labor Ministry despite the
union's threat of taking further action alongside other unions.
The ministry was firm on its decision of recognizing Elias
Morales as the union's head.
The ministry said that the extraordinary general convention held
by the union between March 18 and 19 in Monclova -- where
majority of the 250,000-member union's 130 chapters ratified Mr.
Urrutia's leaderhip --failed to meet attendance and other
requirements set out in the union's laws.
According to Dow Jones, the ministry recognizes Mr. Morales as
the union's leader and cited a February 17 notification from the
union's oversight committee on Mr. Morales' appointment as union
head in place of Mr. Urrutia, who is being investigated by the
government for an alleged embezzlement of the $55 million
payment made by Grupo Mexico to the union last year. One of the
supposed signatories, however, has denied having signed the
document.
The leadership conflict had sparked a nationwide strike that
started on walkouts at Grupo Mexico's La Caridad mine last week
due to a contract revision.
Several hundred members joined the demonstration outside the
ministry, demanding that the ministry accept the notification of
Mr. Urrtia's leadership, unfreeze union bank accounts and keep
Mr. Morales from involving in union affairs.
The union said it would remain on strike and refuse to resume
contract talks unless the negotiating team is appointed by Mr.
Urrutia.
Grupo Mexico SA de C.V. -- http://www.grupomexico.com/--
through its ownership of Asarco and the Southern Peru Copper
Company, Grupo Mexico is the world's third largest copper
producer, fourth largest silver producer and fifth largest
producer of zinc and molybdenum.
* * *
Fitch Ratings assigned these ratings to Grupo Mexico SA de C.V.:
-- foreign currency long-term debt, BB; and
-- local currency long-term debt, BB.
URBI DESARROLLOS: Moody's Assigns Ba3 Rating on US$150MM Notes
--------------------------------------------------------------
Moody's has assigned a Ba3 senior unsecured rating to Urbi
Desarrollos Urbanos, S.A. de C.V.'s US$150 million notes.
Moody's also assigned a Ba3 corporate family rating to URBI.
This is the first time Moody's has rated URBI, a homebuilder
engaged in the development, construction, marketing and sale of
affordable, middle-income and residential housing in Mexico.
The rating outlook is stable. The company is planning to issue
the US$150 million of senior unsecured notes to refinance
existing debt.
According to Moody's, the Ba3 rating reflects URBI's strong
financial position, and the financial flexibility that has
allowed it to respond effectively to the volatile Mexican
property market. URBI has produced consistently sound
profitability, and maintained good liquidity, with a
conservative capital structure. The company is a public company
with a solid corporate infrastructure, which enhances
transparency and governance. URBI has modest independence on
its board of directors, with three out of nine members being
independent. The company's land bank, cost controls, and firm
technological platform support its strong operating margins.
URBI has been in business since 1981, and is a public company
traded on the Mexican Bolsa de Valores since 2004. URBI has
strong liquidity with more than MXP7 billion in cash and
availability on its committed bank lines. URBI has committed
lines of credit with various banks totaling MXP5 billion with an
outstanding balance of MXP303 million as of December 31, 2005.
The lines have various terms ranging from one year (for the
general working capital lines) to four years. The company also
has strong credit metrics. As of December 31, 2005, URBI's
EBITDA margin was 26%, its fixed charge coverage was 5.75x and
Debt/EBITDA was 1x.
URBI's primary credit challenges are its reliance on the Mexican
economic and political environment, and important role the
government plays in supporting housing policy, and the high
costs of land and land development. Furthermore, the housing
development market is fragmented, and homes are built on a
predominately speculative basis, since URBI and other home
developers have the risk of finding homebuyers. The funding of
homes remains concentrated with Sociedad Hipotecaria Federal,
INFONAVIT and FOVISSTE -- all government-related entities -- and
the timing of receipt of the mortgages funded by them can range
from three to twelve months.
The stable rating outlook reflects Moody's expectation that URBI
will maintain a conservative approach to leverage, and stable
earnings. Moody's believes that URBI has solid franchise value,
with a well-recognized brand and good land reserves.
Furthermore, Moody's expects that URBI will continue to focus on
targeting all segments of the housing market, while maintaining
high quality construction and good operating controls.
A rating upgrade would reflect a reduction in leverage, measured
as follows: debt to total assets below 10%, and debt to EBITDA
below 1x. An upgrade would also be considered should operating
margins move to the low to mid 20% range, and EBITDA/Interest
approach 10x, all while the company continues to improve its
industry leadership. A rating downgrade would result from debt
to total assets approaching 20%, fixed charge coverage falling
below 4x, and operating margins falling below 15%. A downgrade
could also result from a loss in falling out of top ten
homebuilders in terms of units sold, as well as from an adverse
shift in the Mexican Government's housing policy.
Urbi Desarrollos Urbanos is a publicly traded, fully integrated
homebuilder engaged in the development, construction, marketing
and sale of affordable housing in Mexico. The firm reported
assets of MXP12.1 billion and equity of MXP6.7 billion at
December 31, 2005.
VITRO SA: Sells 51% Vitrocrisa Stake to Libbey for US$103 Mil.
--------------------------------------------------------------
Vitro, S.A. de C.V. (NYSE: VTO and BMV: VITROA) reached an
agreement to sell its 51% interest in Vitrocrisa Holdings, S de
R.L. de C.V. and related companies (Vitrocrisa) to Libbey Inc.,
for a total of US$103 million. Libbey currently owns 49% of the
Mexico-based joint venture formed in 1997.
After the transaction is completed, Libbey Inc., will become the
sole owner of this Mexican operation.
As of Dec. 31, 2005 Vitrocrisa has a total debt of US$67 million
which will be refinanced by Libbey.
"We are very pleased with this important transaction. The sale
is consistent with Vitro's Strategic Plan aimed at reducing the
holding company debt and strengthening our financial position
and operations," Federico Sada, Vitro's CEO, said. "We have had
a strong and solid partnership with Libbey for the past eight
years and I believe that this transaction serves the strategic
goals of both companies."
With annual sales of US$192 million in 2005, Vitrocrisa
manufactures and distributes glassware for the retail, food
service, and industrial segments of the glassware industry, and
is the largest manufacturer of glass tableware in Latin America.
The completion of this transaction is subject to approval from
governmental authorities and Vitro's shareholders.
The closing of the acquisition is subject to customary
conditions, including:
* successful completion of the financing,
* receipt by Vitro of the approval of its stockholders and
* regulatory approval by the Mexican Competition and
Foreign Investment commissions.
Closing is expected to occur in the second quarter of 2006.
About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. operates glass tableware
manufacturing plants in the United States in Louisiana, and
Ohio, in Portugal and in the Netherlands. Its Royal Leerdam
subsidiary, located in Leerdam, Netherlands, is among the world
leaders in producing and selling glass stemware to retail,
foodservice and industrial clients. Its Crisal subsidiary,
located in Portugal, provides an expanded presence in Europe.
In addition, Libbey is a joint venture partner in the largest
glass tableware company in Mexico. Its Syracuse China
subsidiary designs, manufactures and distributes an extensive
line of high-quality ceramic dinnerware, principally for
foodservice establishments in the United States. Its World
Tableware subsidiary imports and sells a full-line of metal
flatware and holloware and an assortment of ceramic dinnerware
and other tabletop items principally for foodservice
establishments in the United States. Its Traex subsidiary,
located in Wisconsin, designs, manufactures and distributes an
extensive line of plastic items for the foodservice industry.
In 2005, Libbey Inc.'s net sales totaled $568.1 million.
About Vitro S.A. de C.V.
Headquartered in Nuevo Leon, Mexico, Vitro, S.A. de C.V. --
http://www.vitro.com/-- (NYSE: VTO; BMV: VITROA), through its
subsidiary companies, is one of the world's leading glass
producers. Vitro is a major participant in three principal
businesses: flat glass, glass containers and glassware. Its
subsidiaries serve multiple product markets, including
construction and automotive glass; food and beverage, wine,
liquor, cosmetics and pharmaceutical glass containers; glassware
for commercial, industrial and retail uses. Vitro also produces
raw materials and equipment and capital goods for industrial
use, which are vertically integrated in the Glass Containers
business unit.
Founded in 1909 in Monterrey, Mexico-based Vitro has joint
ventures with major world-class partners and industry leaders
that provide its subsidiaries with access to international
markets, distribution channels and state-of-the-art technology.
Vitro's subsidiaries have facilities and distribution centers in
eight countries, located in North, Central and South America,
and Europe, and export to more than 70 countries worldwide.
* * *
As reported in the Troubled Company Reporter on Mar. 27, 2006,
Standard & Poor's Ratings Services lowered its long-term local
and foreign currency corporate credit ratings assigned to glass
manufacturer Vitro S.A. de C.V. and its glass containers
subsidiary Vitro Envases Norteamerica S.A. de C.V. (Vena) to 'B-
' from 'B'.
Standard & Poor's also lowered the long-term national scale
corporate credit rating assigned to Vitro to 'mxBB+' from
'mxBBB-'. The outlook is negative.
Standard & Poor's also lowered the rating assigned to Vitro's
notes due 2013 and Servicios y Operaciones Financieras Vitro
S.A. de C.V. notes due 2007 (which are guaranteed by Vitro) to
'CCC' from 'CCC+'. Standard & Poor's also lowered the rating
assigned to Vena's notes due 2011 to 'B-' from 'B'.
VITRO SA: S&P Downgrades Corporate Credit Rating to B- from B
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term local
and foreign currency corporate credit ratings assigned to glass
manufacturer Vitro S.A. de C.V. and its glass containers
subsidiary Vitro Envases Norteamerica S.A. de C.V. (Vena) to 'B-
' from 'B'.
Standard & Poor's also lowered the long-term national scale
corporate credit rating assigned to Vitro to 'mxBB+' from
'mxBBB-'. The outlook is negative.
Standard & Poor's also lowered the rating assigned to Vitro's
notes due 2013 and Servicios y Operaciones Financieras Vitro
S.A. de C.V. notes due 2007 (which are guaranteed by Vitro) to
'CCC' from 'CCC+'. Standard & Poor's also lowered the rating
assigned to Vena's notes due 2011 to 'B-' from 'B'.
"The rating action reflects our increased concerns regarding the
group's liquidity," said Standard & Poor's credit analyst Jose
Coballasi. "Although we acknowledge the group's refinancing
efforts and ongoing initiatives to reduce the debt of the
holding company, the continued weakness in the group's operating
cash flow generation has increased the importance of asset sales
as a source of free operating cash flow to meet upcoming debt
maturities, which total about $650 million over the next two
years."
The ratings on Vitro reflect the company's high financial
leverage and tight liquidity and the challenging business
environment it faces. The ratings also reflect the company's
leading position in glass containers and important share in flat
glass in Mexico and its export activities and international
operations (particularly in the U.S.), which contribute about
50% of total revenues.
The ratings on Vena remain equalized with those of its parent
company, reflecting the latter's ability and incentive to burden
the company with liabilities thanks to its 100% equity interest
in Vena.
Monterrey, Mexico-based Vitro, through its subsidiary companies,
is Mexico's leading glass producer. Vitro is a major
participant in three principal businesses:
* flat glass,
* glass containers, and
* glassware.
Vitro also produces raw materials and equipment and capital
goods for industrial use.
The negative outlook reflects Standard & Poor's concerns
regarding Vitro's reliance on its asset sales and refinancing
efforts to meet upcoming debt maturities. Further weakness in
the group's liquidity and financial performance would lead to a
negative rating action. Actions that effectively reduce the
group's debt burden and/or a significant improvement in its
operating and financial performance could lead to a positive
rating action.
=================
N I C A R A G U A
=================
* Nicaragua & Honduras Formally Signs FTA with U.S.
---------------------------------------------------
Honduras and Nicaragua have formally joined a free trade
agreement with the United States.
At a ceremony to inaugurate the Central American Free Trade
Agreement, Honduran President Manuel Zelaya was quoted by the
Associated Press as saying taht his country is embarking on a
"different and extremely important path for the strengthening of
democracy." The treaty, he added, is "a way for us to broaden
our growth possibilities and reduce our poverty."
In Managua, Nicaragua, President Enrique Bolanos certified his
country's first export under the treaty through a US$20,000
shipment of beans. Nicaragua hopes to increase its exports by
20% and produce more jobs.
However, the treaty also caused protests to erupt throughout
Central America on fears that it will harm small businesses and
farmers.
Nicaraguan lawmaker Doris Gutierrez, of the leftist Party of
Democratic Unification, told the AP that the pact violates the
constitution, omitting "all possibilities that small and medium-
size producers can compete." She added that while U.S. products
already dominate Honduras' import market, the United States
"buys few products from Honduras ... and that's going to hurt
us."
The deal is designed to eliminate tariff and non-tariff barriers
among the participating countries and is part of Washington's
push to strike free trade deals with nations around the world as
a way of boosting U.S. exports.
Moody's Investor Service assigned these ratings on Honduras:
Rating Rating Date
------ -----------
Senior Unsecured B2 Sept. 29, 1998
Long Term IDR B2 Sept. 29, 1998
Moody's Investor Service assigned these ratings to Nicaragua:
Rating Rating Date
------ -----------
Long Term Caa1 June 30, 2003
Senior Unsecured
Debt B3 June 30, 2003
===========
P A N A M A
===========
BANCO LATINOAMERICANO: Redeems Preferred Shares by May 15
---------------------------------------------------------
Banco Latinoamericano de Exportaciones, S.A., aka Bladex
notifies its holders of preferred shares that effective May 15,
2006, the Bank will redeem all of its outstanding preferred
shares, which were not redeemed in previous years.
In order to receive payment, holders of preferred shares must
send their preferred share certificates to:
Bladex Shareholder Relations
Attention: Luisa Lin de Polo
P.O. Box 0819-08730
Republic of Panama
Tel: (507) 210-8667
Fax: (507) 210-8666
email: lpolo@blx.com
Headquartered in Panama City, Panama, Banco Latinoamericano de
Exportaciones, S.A. aka Bladex -- http://www.bladex.com-- is a
supranational bank originally established by the Central Banks
of Latin American and Caribbean countries to promote trade
finance in the Region. Based in Panama, its shareholders include
central banks and state- owned entities in 23 countries in the
Region, as well as Latin American and international commercial
banks, along with institutional and retail investors. Through
December 31, 2005, Bladex had disbursed accumulated credits of
over US$135 billion.
* * *
As reported on April 7, 2006, Moody's affirmed the following
ratings for Bladex:
-- Bank Financial Strength Rating: D-minus, change to
positive outlook from stable;
-- Long Term Foreign Currency Deposit Rating: Baa3, with
stable outlook;
-- Short Term Foreign Currency Deposit Rating: Prime-3;
-- Foreign Currency Senior Unsecured Rating: Baa3, with
stable outlook; and
-- Foreign Currency Issuer Rating: Baa3, with stable outlook.
GRUPO BANISTMO: Turns Down Buyers to Continue Expansion
-------------------------------------------------------
Panama's Grupo Banistmo has turned down purchase offers from
foreign groups, according to local daily La Prensa. Banistmo
has decided to remain an independent firm and continue
expansion.
Samuel Lewis Galindo -- president of the Banistmo board -- said
to Dow Jones Newswires that many foreign investors including
financial institutions had expressed interest in buying
Banistmo. In fact, the company created a special committee in
July 2005 to evaluate the offers.
However, after much thought and analysis, the board decided that
this is not the time to sell control of the company, Dow Jones
states.
"The outlook for Central America and our country are very good
and therefore we have reached the conclusion that the interests
of shareholders are best served by continuing our strategy of
regional expansion and local consolidation, " Dow Jones quoted
Mr. Galindo saying.
Dow Jones relates that the group, which has assets worth US$6.96
billion, acquired in February a 53.7% stake in El Salvador's
Inversiones Financieras Bancosal and has disclosed a plan to
expand in Guatemala through an acquisition before the end of
2007. It has built up an enviable retail banking franchise in
Colombia and Central America.
"For now we are taking the necessary steps to give our shares
the greatest possible liquidity," Mr. Galindo told Dow Jones,
saying that Banistmo is considering the possibility of listing
its shares on an international market like New York and Madrid.
* * *
As previously reported Nov. 9, 2005, Moody's Investors Service
affirmed the D+ financial strength rating and Ba1 foreign
currency deposit rating of Primer Banco del Istmo, S.A. The
affirmation follows the announcement that Banistmo's
shareholder, Grupo Banistmo, S.A., has agreed to purchase
between 51% and 60% of Inversiones Financieras Bancosal S.A.,
the owner of Banco Salvadoreno, El Salvador's third largest
bank.
=======
P E R U
=======
* PERU: Local Banking Association Proposes Reform on Bank Law
-------------------------------------------------------------
A reform on Peru's bank law has been proposed by local banking
association Asbanc Business News Americas reports.
The congress finance committee is studying the reform, Enrique
Arroyo -- Asbanc's head - told Business News. Ratification is
expected within two weeks.
Mr. Arroyo said to Business News that the reform is aimed at
raising financial institutions' investment in bonds by
increasing investment alternatives.
As stated by Business News, Moises Reyes -- Lima-based PCR
Ratings analyst -- believed the banking law reform will allow
banks to generate more profits through low-risk productive
assets instead of accumulating funds, considering there is an
excess of liquidity in the market.
Mr. Reyes also said that the reform will also generate more
alternatives for firms that need financing as it will allow them
to make the most of the good performance of Peru's economy.
According to Mr. Arroyo, the reform needs the approval of both
the finance committee and the congress in two separate sessions
for it to come into effect, Business News states.
Business News reveals that the reform is related to article 200
in Peru's banking law created in 1996. A part of the article
states that financial institutions are authorized to invest up
to 20% of their investment portfolios in bonds, equities, mutual
funds and investment funds.
According to the article, the institutions are however not
allowed to invest more than 15% in one of the instruments
mentioned. Meaning, banks cannot invest more than 15% in bonds
issued by Peruvian companies.
Mr. Arroyo said to Business News that in 1996 there was no
problem. There were no bond markets, only equities and some
mutual funds. However, as the Peruvian financial system
developed, corporations, large companies and the government
started to issue bonds on the local stock exchange.
Business News reveals that the reform on the banking law will
remove the term "bonds" from article 200. Financial
institutions would then be allowed to invest up to 10% of their
equity in bonds issued by a single Peruvian company.
"Therefore [if the reform is approved] and there are three
companies issuing bonds, any bank will be able to invest 10% of
its equity from three companies so the bank will have 30% of its
equity in bonds, which is not possible now", Business News
quoted Mr. Arroyo saying.
Julio Loc -- Apoyo & Asociados Internacionales' analyst --
informed Business News that banks' investment portfolios are
concentrated on low-risk instruments like treasury bonds,
including Peru's central bank certificates of deposits, which
are safe and liquid instruments.
* * *
Fitch Ratings assigns these ratings on Peru:
Rating Rating Date
------ -----------
Country Ceiling BB Nov. 18, 2004
Long Term IDR BB Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
* PERU: Secures US$50 Mil. Loan from IDB to Aid Decentralization
----------------------------------------------------------------
Peru's Minister of Finance Fernando Zavala Lombardi and Inter-
American Development Bank President Luis Alberto Moreno signed
on April 2, a $50 million loan to support a program designed to
improve the system of secondary roads in the framework of the
country's decentralization process.
The resources will benefit the secondary roads network in the
country's 24 regions that will sign agreements with the Ministry
of Transport and Communications to undertake a program to
enhance their regional institutional capacity for road
rehabilitation and maintenance, adopting specified
environmental, technical and managerial standards
A priority will be assigned to maintenance of 2,700 kilometers
secondary roads that have been transferred to the regional
governments and to rehabilitation of 2,200 kilometers of roads,
raising the roads in good condition from 5 percent to 35
percent.
The regional governments, responsible for the secondary roads,
will be committed to adopting standards of planning, citizens'
participation, maintenance, outsourcing to microenterprises and
environmental and social protection. The regional governments
will also be committed to making their own resources available
to support the program, thus providing to the sustainability of
the secondary roads management.
In two previous lending operations beginning in 1996 the IDB
provided $140 million in financing to support the rehabilitation
and maintenance of rural roads. The projects resulted in
successful demonstrations of the effectiveness of citizens'
participation in the planning and execution of projects and the
deployment of microenterprises for construction and maintenance.
Secondary roads play a critical role in providing an outlet for
agricultural products and other commerce and communications,
improving physical accessibility of rural population and small
towns to major cities and markets, thus raising the incomes and
opportunities of the poorest segments of the population.
* * *
Fitch Ratings assigns these ratings on Peru:
Rating Rating Date
------ -----------
Country Ceiling BB Nov. 18, 2004
Long Term IDR BB Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
=====================
P U E R T O R I C O
=====================
CENTENNIAL COMMS: Equity Deficit Tops US$1 Billion on Feb. 28
-------------------------------------------------------------
Centennial Communications Corp. (NASDAQ: CYCL) reported a loss
from continuing operations of $6.1 million for the fiscal third
quarter of 2006 as compared to income from continuing operations
of $4.2 million in the fiscal third quarter of 2005. The fiscal
third quarter of 2006 included $18.6 million of costs related
to the Company's strategic alternatives and recapitalization
process.
Consolidated adjusted operating income from continuing
operations for the fiscal third quarter was $84.8 million, as
compared to $90.9 million for the prior-year quarter.
"Our empowered local teams continue to make important decisions
in each of our regional markets, and we're seeing good progress
as we measure the impact of our recent growth initiatives," said
Michael J. Small, Centennial's chief executive officer. "Our
U.S. wireless business reported its best quarter of subscriber
growth in five years, while our Caribbean wireless franchise
continues to chart a course for data leadership that's backed by
the capabilities of our integrated network."
Centennial reported fiscal third-quarter consolidated revenue
from continuing operations of $232.5 million, which included
$109.9 million from U.S. wireless and $122.6 million from
Caribbean operations. Consolidated revenue from continuing
operations grew 5% versus the fiscal third quarter of 2005. The
Company ended the quarter with 1.39 million total wireless
subscribers, which compares to 1.20 million for the year-ago
quarter and 1.34 million for the previous quarter ended
November 30, 2005. The Company reported 329,400 total access
lines and equivalents at the end of the fiscal third quarter,
which compares to 294,100 for the year-ago quarter.
"We've taken the right long-term steps to support future cash
flow growth across all of our businesses," said Centennial chief
financial officer Thomas J. Fitzpatrick. "We'll continue to
closely monitor our profitability and be disciplined about
capital spending as we return to our path of deleveraging."
On February 21, 2006, the Company updated its financial outlook
for the 2006 fiscal year ending May 31, 2006. For the 2006
fiscal year, the Company now expects consolidated adjusted
operating income from continuing operations between $350 million
and $360 million, including approximately a $9 million startup
loss related to its recent launch of service in Grand Rapids and
Lansing, Missouri. Centennial also now anticipates
consolidated capital expenditures of approximately $150 million
for fiscal 2006.
Based in Wall, N.J., Centennial Communications, (NASDAQ: CYCL)
-- http://www.centennialwireless.com/-- is a leading provider
of regional wireless and integrated communications services
in the United States and the Caribbean with approximately
1.3 million wireless subscribers and 326,400 access lines and
equivalents. The U.S. business owns and operates wireless
networks in the Midwest and Southeast covering parts of six
states. Centennial's Caribbean business owns and operates
wireless networks in Puerto Rico, the Dominican Republic and the
U.S. Virgin Islands and provides facilities-based integrated
voice, data and Internet solutions. Welsh, Carson, Anderson &
Stowe and an affiliate of the Blackstone Group are controlling
shareholders of Centennial.
At February 28, 2006, Centennial Communications' balance sheet
showed a $1,072,190,000 stockholders' deficit, compared to a
$518,432,000 deficit at May 31, 2005.
DORAL FINANCIAL: Delays Filing of Annual Report on Form 10-K
------------------------------------------------------------
Doral Financial Corporation notified the New York Stock
Exchange, Inc. that it would not be able to file on time its
Annual Report on Form 10-K for the year ended December 31, 2005,
this is in connection with the filing of its restated financial
statements for the periods from January 1, 2000, to December 31,
2004.
The NYSE will monitor the company and the filing status of the
2005 Form 10-K. If the company has not filed the 2005 Form 10-K
within six months of the filing due date, the NYSE, in its sole
discretion, may grant the company up to an additional six-month
trading period to file the 2005 Form 10-K or commence suspension
and delisting procedures against the company.
Doral is working diligently to complete the preparation of its
quarterly unaudited selected financial information for each of
the three quarters of 2005 and its annual audited consolidated
financial statements for the year ended December 31, 2005 and
expects to file its 2005 Form 10-K before the initial six-month
period provided.
The company has also announced that it does not expect to
distribute its annual report to shareholders for the year ended
December 31, 2005 in time for the regular date of the annual
meeting, which is generally held during the third week of April.
As a result, the Company will not be able to comply with Rule
203.01 of the NYSE's Listed Company Manual, which requires that
a listed company deliver an annual report to shareholders within
120 days after the close of each fiscal year.
About Doral Financial
Doral Financial Corporation -- http://www.doralfinancial.com/
-- a financial holding company, is the largest residential
mortgage lender in Puerto Rico, and the parent company of Doral
Bank, a Puerto Rico based commercial bank, Doral Securities, a
Puerto Rico based investment banking and institutional brokerage
firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal
savings bank based in New York City.
* * *
As reported in the Troubled Company Reporter on March 27, 2006,
Moody's Investors Service downgraded to B1 from Ba3 the senior
debt ratings of Doral Financial Corporation, and reiterated the
negative rating outlook. Moody's action follows cease and
desist orders placed by banking regulators on Doral and some of
its subsidiaries, including Doral Bank, San Juan, Puerto
Rico. When Moody's last downgraded Doral's debt on Oct. 28,
2005, it issued a negative rating outlook, but noted that any
credit deterioration including regulatory consequences or
liquidity issues could result in a review for possible downgrade
or an outright downgrade.
=============
U R U G U A Y
=============
* URUGUAY: Plans to Reactivate Paysandu & Salto Ports
-----------------------------------------------------
The government of Uruguay has plans to reactivate ports Paysandu
and Salto, according to the ministry Web site.
Business News Americas reports that the Uruguayan authorities
would pave the way for the two river ports to be included in the
national port system under a national river and seaport strategy
created to help complement the various forms of transport.
The government's executive branch transferred earlier this week
the control of the Paysandu port to the national port authority
ANP from the national hydrography authority, BNamericas relates.
ANP will facilitate studies on the port's potential, carry out
works to improve operations and to promote the port.
According to BNamericas, Victor Rossi -- transport and public
works minister -- said that the Salto port would also be handled
by the ANP.
Mr. Rossi told BNamericas that after four years of not investing
in the ports, the ministry is at last developing a multi-modal
transport plan that includes a national system of commercial
ports as well as complementary rail and road transport.
BNamericas quoted Mr. Rossi saying that the changes would be
part of the productive country project covering the next 20-25
years with which the government aims to allow everyone to
participate.
Uruguay's productive development needs adequate transport
infrastructure and firms, Mr. Rossi told BNamericas.
* * *
Fitch Ratings assigns these ratings on Uruguay:
Rating Rating Date
------ -----------
Country Ceiling BB- Mar. 7, 2005
Long Term IDR B+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB- Mar. 7, 2005
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: Discounts Rumored Sale of Strategic Assets
-----------------------------------------------------------
Felix Rodriguez, president and CEO of CITGO Petroleum
Corporation, reaffirmed the company's commitment to its
customers and the U.S. energy marketplace.
"CITGO will continue to supply its customers with the top
quality products for which our brand is known. We are not
selling our wholly owned refineries or other strategic assets,"
he noted in response to a report carried by an industry media
outlet earlier today.
Rodriguez added that a letter of intent has been signed with
Lyondell Chemical Company to jointly explore the sale of the
Lyondell-CITGO Refining LP partnership that operates a refinery
in Houston with a crude oil processing capacity of 268,000
barrels per day.
Lyondell holds a 58.755 interest in LCR and is the operating
partner. CITGO holds a 41.25% interest.
Headquartered in Houston, Texas, CITGO -- http://www.citgo.com/
--is owned by PDV America, an indirect, wholly owned subsidiary
of Petroleos de Venezuela S.A., the state-owned oil company of
Venezuela.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.
* * *
As reported on Feb. 16, 2006, Standard and Poor's Ratings
Services assigned a 'BB' rating on CITGO Petroleum Corp.
Standard & Poor's 'BB' rating on CITGO is higher than the 'B+'
corporate credit rating on PDVSA, because of the relative
strength of the refiner's financial profile and the asset
protection afforded to CITGO creditors, if CITGO defaults for
PDVSA-specific reasons, for example, a Venezuela sovereign
default. Nevertheless, CITGO could be challenged by events
surrounding PDVSA.
CITGO PETROLEUM: Inks Letter of Intent with Lyondell for JV Sale
----------------------------------------------------------------
Citgo Petroleum Corp. -- the US refining arm of Petroleos de
Venezuela S.A. aka PDVSA -- has signed a letter of intent with
Lyondell Chemical Co. to jointly explore the sale of their
Lyondell-Citgo Refining L.P. refinery in Houston, Dow Jones
Newswires reports.
Dow Jones relates that the joint venture was created in 1993,
with Lyondell having a 58.75% stake and Citgo owning about
41.25%. The refinery has a crude oil processing capacity of
268,000 barrels a day.
According to Dow Jones, PDVSA said last September that it wanted
to sell its stake in the refinery to recover its $5 billion
investment.
Lyondell, Citgo and PDVSA has resolved all litigation related to
the refinery, Dow Jones states.
Dow Jones recalls that Lyondell had sued PDVSA in February 2002
for $90 million, claiming that the Venezuelan firm had ceased
supplying feedstock to the refinery.
Dow Jones adds that the US Department of Labor issued in March
citations against Lyondell-Cito Refining L.P. for health and
safety violations. It fined the venture about $55,000.
PDVSA, Citgo and Lyondell planned to move diligently to solicit
offers for the refinery and it was decided any deal would be
subject to approval by the appropriate governing bodies, Dow
Jones reports.
Headquartered in Houston, Texas, CITGO is owned by PDV America,
an indirect, wholly owned subsidiary of Petroleos de Venezuela
S.A., the state-owned oil company of Venezuela.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'. The rating of PDVSA's export receivable future
flow securitization, PDVSA Finance Ltd, was also upgraded to
'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating. The Rating Outlook is Stable.
Both rating actions follow Fitch's November 2005 upgrade of
Venezuela's sovereign rating.
As reported on Feb. 16, 2006, Standard and Poor's Ratings
Services assigned a 'BB' rating on CITGO Petroleum Corp.
Standard & Poor's 'BB' rating on CITGO is higher than the 'B+'
corporate credit rating on PDVSA, because of the relative
strength of the refiner's financial profile and the asset
protection afforded to CITGO creditors, if CITGO defaults for
PDVSA-specific reasons, for example, a Venezuela sovereign
default. Nevertheless, CITGO could be challenged by events
surrounding PDVSA.
CITGO PETROLEUM: S&P Says Ratings Unaffected by Sale of Refinery
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
CITGO Petroleum Corp., which is 'BB/Stable/--' would remain
unchanged following the announcement that the Lyondell-Citgo
Refining L.P. joint venture would seek to sell its Houston,
Texas, refinery. The credit implications of the divestiture
would depend on the amount and use of proceeds, but reduction in
the scale of CITGO's refining capacity is viewed as unfavorable.
The ratings on CITGO are limited by those on the company's
parent, Petroleos de Venezuela S.A. (B+/Watch Dev/--).
PDVSA: Enters Joint Venture with El Salvador's Leftist Mayors
-------------------------------------------------------------
A company has been created by the Intermunicipal Energy
Association for El Salvador -- an association of El Salvador's
leftist mayors -- and Petroleos de Venezuela's aka PDVSA, the
Associated Press reports. This joint venture will handle fuel
sales to El Salvador's cities under the preferential terms from
Venezuela.
Business News Americas relates that a signing ceremony took
place between PDVSA deputy president for refining Alejandro
Granado and Carlos Garcia Ruiz -- the municipal governments'
representative -- on April 5 in El Salvador for the creation of
the new company, which will be tasked with the importing,
storing as well as commercializing the fuel.
According to a press release, El Salvador's 22 municipal offices
held by elected officials from former guerrilla group FMLN --
have incorporated themselves into a firm called the El Salvador
Inter-Municipal Energy Association aka Enepasa.
Business News reports that the accord allows Enepasa to purchase
up to 100,000 barrels a day of crude or liquid fuels from
Venezuela. About 40% of the purchases can be financed at a 1%
annual interest rate for 23 years while the remaining 60% can be
financed over 90 days or paid with El Salvadoran products.
As reported in the Troubled Company Reporter on March 24, 2006,
Enepasa inked an agreement with Venezuela to purchase oil under
preferential terms.
The pact was signed at the presidential palace of Miraflores and
shipments are to begin "as soon as possible," El Salvador quoted
Violeta Menjivar, who is to be inaugurated as San Salvador mayor
on May 1.
Operations are to be conducted through Venezuelan state-run oil
corporation PDV-Caribe, the Associated Press reported.
Under the agreement, Enepasa will pay 60% of oil supplied within
90 days, while paying for the rest in 23 years, with a fixed
annual interest rate of one percent, plus a two-year grace
period, news agency EFE reported.
President Hugo Chavez conceded he reached the agreement with
Enepasa because he was unable to negotiate with his Salvadoran
counterpart Elas Antonio Saca's government. President Saca
urged the FMLN not to try to generate among Salvadorans "false
hopes" about the possibility to find cheap oil in Venezuela, El
Universal relates.
President Saca said in reports that oil imports requires major
storage and processing facilities. "This implies we need a
refinery that may cost some US$3-5 billion."
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'. The rating of PDVSA's export receivable future
flow securitization, PDVSA Finance Ltd, was also upgraded to
'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating. The Rating Outlook is Stable.
Both rating actions follow Fitch's November 2005 upgrade of
Venezuela's sovereign rating.
* * *
Fitch Ratings assigns these ratings on El Salvador:
Rating Rating Date
------ -----------
Country Ceiling BB+ Jun. 18, 2004
Long Term IDR BB+ Dec. 14, 2005
Short Term IDR B Dec. 14, 2005
Local Currency
Long Term Issuer
Default Rating BB+ Dec. 14, 2005
Venezuela's foreign currency long-term debt is rated B2 by
Moody's, B+ by Standard & Poor's, and BB- by Fitch.
* * *
On Nov. 29, 2005, Fitch Ratings assigned expected 'BB-' ratings
to the pending issues of Venezuelan government bonds maturing
Feb. 26, 2016, and Dec. 9, 2020. The 2016 bond has a 5.75%
fixed coupon and the 2020 bond has a 6% fixed coupon. The bonds
are being marketed in Venezuela to be purchased in local
currency at the official exchange rate but under New York law,
with all coupon and principal payments in U.S. dollars.
Venezuela's sovereign ratings are supported by superior
international liquidity and low external financing
requirements relative to similarly rated sovereigns. The
ratings are constrained by vulnerability to external shocks
because of oil dependency; diminished capacity of the private
sector to absorb shocks because of heavy government
intervention in the productive sector; recent spending
increases that reduce fiscal flexibility; and concerns about
the rule of law and potential political instability. Fitch said
the Rating Outlook is Stable.
PDVSA: Terminates Oil Contracts of ENI and Total
------------------------------------------------
The Associated Press reports that as of April 1, Petroleos de
Venezuela ended oil contracts of both ENI SpA and Total of
France to run services in their Dacion and Jusepin fields,
respectively. The two European firms in operating contracts won
the fields in the 1990s.
PDVSA took control of the oil field after the company refused to
sign an agreement to turn the site over to a state-run joint
venture.
"We didn't migrate the field ... and PDVSA took it. That's
logical," Total spokeswoman Patricia Marie told the Associated
Press, adding the company had not made any formal decision yet
on how to proceed.
ENI on the other hand, told the AP that PDVSA informed the
company that management operations would be transferred to
personnel appointed by the state oil firm.
Venezuela has proposed contract overhauls with the companies who
signed 32 operating contracts in the 1990s.
In response to PDVSA's move, ENI said in a statement that it
"will comply with PDVSA's request by ensuring that activities
are handed over in a professional way and at an agreed time."
However, despite its compliance, ENI believes that "this action
by PDVSA is a violation of contract rights. It is ENI's
intention to offer PDVSA a period of time in which a full
reparation of ENI's contract rights can be agreed."
"In the event that an agreement cannot be reached, ENI will
pursue legal action to claim its right," ENI told the AP.
PDVSA said in a statement that among those who won the original
32 contracts, a total of 16 firms signed the guidelines on
Friday for the oil fields they used to operate independently.
Among those who signed were Brazil's Petrobras, Chevron
Corporation and Royal Dutch Shell.
Under the new "mixed companies" model, the private oil firms
will hold a maximum of only 40% stake in the 32 oil fields and
will pay at least half of total revenue in taxes. While PDVSA
will hold 60 to 80% percent in each field and will be the one to
control management decisions.
Jusepin oil field in eastern Venezuela has been producing about
30,000 barrels a day and PDVSA awarded Total a 55% stake in the
field and British Petroleum PLC a 45% stake, while ENI had a
100% stake in the Dacion field.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry,
as well as planning, coordinating, supervising and controlling
the operational activities of its divisions, both in Venezuela
and abroad.
* * *
On Jan. 23, 2005, Fitch Ratings upgraded the local and foreign
currency ratings of Petroleos de Venezuela S.A. aka PDVSA to
'BB-' from 'B+'. The rating of PDVSA's export receivable future
flow securitization, PDVSA Finance Ltd, was also upgraded to
'BB+' from 'BB'. In addition, Fitch has assigned PDVSA a
'AAA(ven)' national scale rating. The Rating Outlook is Stable.
Both rating actions follow Fitch's November 2005 upgrade of
Venezuela's sovereign rating.
***********
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 - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Lyndsey Resnick, Marjorie C. Sabijon, Sheryl Joy
P. Olano, and Stella Mae Hechanova, Editors.
Copyright 2006. All rights reserved. ISSN 1529-2746.
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