/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/131009.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 Wednesday, October 9, 2013, Vol. 14, No. 200 Headlines A R G E N T I N A SUPERVIELLE CREDITOS: Moody's Rates Floating Rate Debt Sec. 'Ba3' * ARGENTINA: Rejected by U.S. Court in Bond Payment Appeal B R A Z I L BANCO PINE: S&P Affirms 'BB+/B' Rating; Outlook Stable OGX PETROLEO: Bonds Hit All-Time Low Amid Restructuring Talks OGX PETROLEO: ANP Denies Request to Suspend Oil Fields Development C A Y M A N I S L A N D S ADLOGICA: Shareholder to Hear Wind-Up Report on Oct. 15 ALLEGRO OPTHALMICS: Shareholder to Hear Wind-Up Report on Oct. 15 CARLYLE HIGH: Shareholder to Hear Wind-Up Report on Nov. 1 COSIMO (GP): Shareholders' Final Meeting Set for Oct. 28 DIAMOND STARS: Shareholder Receives Wind-Up Report GK FORTUNE: Shareholder to Hear Wind-Up Report on Nov. 1 GLOBAL INTERNATIONAL: Members' Final Meeting Set for Oct. 15 MULTI BANKING: Shareholders' Final Meeting Set for Oct. 31 THAI INVESTOR IX: Members' Final Meeting Set for Oct. 15 THAI INVESTOR X: Members' Final Meeting Set for Oct. 15 TRIAGE OFFSHORE: Shareholders' Final Meeting Set for Oct. 18 C H I L E INVERSIONES ALSACIA: Supplements Consent Solicitation Statement D O M I N I C A N R E P U B L I C XSTRATA FALCONDO: Miners Protest, 10,000 Jobs at Risk Amid Closure J A M A I C A * JAMAICA: Shortage of Foreign Currency Affecting Large Buyers P U E R T O R I C O DORAL FINANCIAL: Moody's Lowers Sr. Unsecured Rating to 'Caa3' * PUERTO RICO: Lawyers, Experts Predict Restructuring of Bonds * PUERTO RICO: Debt Troubles U.S. Regulators T R I N I D A D & T O B A G O CARIBBEAN AIRLINES: Looks to Jamaica to Fill Keys Posts - - - - - ================= A R G E N T I N A ================= SUPERVIELLE CREDITOS: Moody's Rates Floating Rate Debt Sec. 'Ba3' ----------------------------------------------------------------- Moody's Latin America Calificadora de Riesgo rates Supervielle Creditos 72, a transaction that will be issued by Equity Trust (Argentina) S.A. - acting solely in its capacity as Issuer and Trustee. As of Oct. 7, the securities for this transaction have not yet been placed in the market. If any assumption or factor Moody's considers when assigning the ratings change before closing, the ratings may also change. - ARS 196,000,000 in Floating Rate Debt Securities of "Fideicomiso Financiero Supervielle Creditos 72", rated Aaa.ar (sf) (Argentine National Scale) and Ba3 (sf) (Global Scale, Local Currency) - ARS 4,000,000 in Certificates of "Fideicomiso Financiero Supervielle Creditos 72", rated C.ar (sf) (Argentine National Scale) and C (sf) (Global Scale, Local Currency) Ratings Rationale: The rated securities are payable from the cash flow coming from the assets of the trust, which is an amortizing pool of approximately 30,546 eligible personal loans denominated in Argentine pesos, with a fixed interest rate, originated by Banco Supervielle, in an aggregate amount of ARS 200,003,182.89 These personal loans are granted to pensioners that receive their monthly pensions from ANSES (Argentina's National Governmental Agency of Social Security - Administraci▋ Nacional de la Seguridad Social). The pool is also constituted by loans granted to government employees of the Province of San Luis. Banco Supervielle is the payment agent entity and automatically deducts the monthly loan installment directly from the employee's paycheck and pensioner's payment. Overall credit enhancement is comprised of 2% of subordination for the Class A Floating Rate Debt Securities. In addition the transaction has various reserve funds and excess spread. Moody's considered the credit enhancement provided in this transaction through the initial subordination levels for each rated class, as well as the historical performance of Supervielle's portfolio. In addition, Moody's considered factors common to consumer loans securitizations such as delinquencies, prepayments and losses; as well as specific factors related to the Argentine market, such as the probability of an increase in losses if there are changes in the macroeconomic scenario in Argentina. These factors were incorporated in a cash flow model in order to determine the expected loss for the rated securities. Finally, Moody's also evaluated the back-up servicing arrangements in the transaction. In assigning the rating to this transaction, Moody's assumed a lognormal distribution for defaults on the main pool with a mean of 2.5% and a coefficient of variation of 50%. Also, Moody's assumed a lognormal distribution for prepayments with a mean of 25% and a coefficient of variation of 70%. These assumptions are derived from the historical performance to date of the Supervielle's pools. Servicer default was modeled by simulating the default of the Banco Supervielle as the servicer consistent with its current rating of B2/Aa3.ar. In the scenarios where the servicer defaults, Moody's assumed that the defaults on the pool would increase by 20 percentage points and a month of collections will be lost, given that the trust account is in Banco Supervielle. The model results showed 1.95% expected loss for the Floating Rate Debt Securities and 75.13% for the Certificates. *Moody's ran several stress scenarios, including increases in the default rate assumptions. If default rates were increased one percentage point from the base case scenario for the pool (i.e., mean of 3.5% and a coefficient of variation of 50%), the ratings of Class A Floating Rate debt securities would likely be downgraded to B1 (sf). The ratings of the Certificates would likely remain the same. Moody's also considered the risk that a disruption in the flow of payments from ANSES or the Government of San Luis to pensioners and employees respectively, could severely affect the performance of the pool. Moody's believes that the ratings assigned are consistent with this risk. Finally, Moody's also evaluated the back-up servicing arrangements in the transaction. If Banco Supervielle is removed as servicer, Equity Trust S.A. will be appointed as the back-up servicer. * ARGENTINA: Rejected by U.S. Court in Bond Payment Appeal ---------------------------------------------------------- Greg Stohr at Bloomberg News reports that the U.S. Supreme Court left intact a ruling that may force Argentina to make payments on defaulted government bonds, rejecting that country's appeal in a clash that has roiled its financial markets. The justices let stand a 2012 U.S. appeals court decision that bars Argentina from making payments on US$24 billion in restructured debt unless it also pays owners of the earlier repudiated bonds, according to Bloomberg News. The bondholders include a fund controlled by billionaire Paul Singer. The Supreme Court still could get involved at a later stage, Bloomberg News notes. The legal fight, which puts U.S. courts in the unusual position of shaping a foreign country's finances, has raised the possibility of a new Argentine default and prompted Standard & Poor's, Fitch and Moody's to lower the country's bond ratings. Argentina said it faces the prospect of having to pay more than US$15 billion to cover defaulted debt and penalties, Bloomberg News discloses. Bloomberg News relates that the lower court ruling "represents an unprecedented intrusion into the activities of a foreign state within its own territory," Argentina argued in its appeal. The report says the focus of the fight now turns to a federal appeals court in New York, where Argentina is seeking reconsideration of a separate decision in the case. Should that bid fail, the country could file a new Supreme Court appeal, Bloomberg News says. Bloomberg News notes that the appeals court has said its decision won't take effect until the Supreme Court makes a final decision on whether to hear Argentina's appeals. Finance Secretary Bloomberg News relates that Argentina will use all legal means to appeal the case, Finance Secretary Adrian Cosentino said. Justice Sonia Sotomayor didn't participate in the high court action, giving no reason. Justice Sotomayor took part in Argentina debt litigation when she was an appeals court judge, Bloomberg News relays. Bloomberg News discloses that Singer's NML Capital Ltd., a unit of Elliott Management Corp., says Argentina is exaggerating the impact of the appeals court ruling, which directly affects claims for US$1.5 billion. The fund said Argentina can afford to pay both sets of bondholders, notes the report. According to Bloomberg News, Ms. Singer said the dispute won't affect the ability of nations to borrow money. Argentina's problems are "of its own making," Mr. Singer said at the Wall Street Journal's Heard on the Street conference in New York, Bloomberg News notes. Bloomberg News recalls that the dispute stems from Argentina's 2001 default on a record US$95 billion in debt. The country offered to substitute bonds worth 25 to 29 cents on the dollar in 2005 and made a similar proposal in 2010. Owners tendered about 92 percent of the outstanding debt, notes the report. Bond Agreement The report says NML bought some of the defaulted bonds from the holdouts and sued to collect the full amount. NML said a clause in the bond agreement bars Argentina from treating the restructured securities more favorably than the defaulted bonds, Bloomberg News relates. A federal trial judge agreed with that argument, as did the New York-based 2nd U.S. Circuit Court of Appeals, says Bloomberg News. Bloomberg News relates that in its Supreme Court appeal, Argentina contended that the lower courts violated foreign sovereign immunity by dictating what the country can do with property located outside the U.S. NML and a second group of investors led by Aurelius Capital Master Ltd. urged the high court to reject the appeal. Bloomberg News added that the 2nd Circuit issued a second ruling in August, saying Argentina must pay the holdout creditors in full if it makes payments on its restructured debt. Argentina is seeking a new hearing before a larger panel of judges. A rejection of that request would clear the way for the country to file another Supreme Court appeal, Bloomberg News discloses. 'Speculative, Hyperbolic' In the August opinion, Bloomberg News reports, the appeals court said Argentina's predictions of a financial cataclysm were "speculative, hyperbolic and almost entirely of the republic's own making." Bloomberg News relates that the country is exploring options for trying to sidestep the appeals court ruling. Argentine President Cristina Fernandez de Kirchner said in August that the country will offer a new restructuring to defaulted bondholders and let investors who own the restructured notes swap them into debt subject to local law, Bloomberg News relays. Bloomberg News notes that a federal judge on Oct. 4 barred Argentina from going forward with that plan, calling it "an apparent attempt to evade" his previous orders. Bloomberg News adds that Argentina previously said it never would pay the funds, which the country's leaders have called "vultures." Its legislature passed a law in 2005 barring payment on the defaulted bonds. The case is Argentina v. NML Capital, 12-1494. =========== B R A Z I L =========== BANCO PINE: S&P Affirms 'BB+/B' Rating; Outlook Stable ------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB+/B' global scale and 'brAA' national scale ratings on Banco Pine S.A. (Pine). The outlook is stable. S&P based its ratings on Pine's conservative risk management and strong asset quality, "adequate" liquidity, and "adequate" capital and earnings. The bank's "moderate" business position given its small scale in the Brazilian financial system and focus on the corporate and small and medium enterprise (SME) segments, as well as its relatively concentrated funding profile compared to other Latin American banks offset the positives. "Under our bank criteria, we use our Banking Industry Country Risk Assessment's (BICRA) economic risk and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. Our anchor is based on the country's economic risk score of '5' and an industry risk score of '4'. Brazil's economic risk reflects low household credit capacity and GDP per capita, which limits the sovereign's ability to withstand economic downturns. It also considers our view that economic imbalances have increased as a result of rapid credit expansion. As this trend in lending continues amid a slowly growing economy, we are concerned about increasing household debt burden," S&P said. Conversely, Brazil's improvement in payment culture and rule of law, moderate leverage in the corporate sector, and the absence of high-risk loans in banks somewhat mitigate the higher risk factors of S&P's economic risk assessment. S&P assess the current trend of economic risk as negative. Despite the slowdown in credit expansion during 2012, S&P believes that the current administration's policies could lead to a new period of rapid credit expansion. Further lending would increase an already hefty debt burden on households, subjecting the system to incremental credit risk. S&P continues to view Pine's business position as "moderate" given its relatively small market share in the Brazilian financial system, and its focus on the corporate and SME lending segment. "The bank has relatively stable revenues and has continued to diversify its sources. As of June 30, 2013, it had about R$10.5 billion in assets and R$5.2 in loans (R$9 billion considering letters of credit, bank guarantees and corporate bonds), ranking as the 34th largest financial institution in the country with less than 1% of the financial system's assets, according to the Central Bank," said Standard & Poor's credit analyst Vitor Garcia. Its portfolio is concentrated in loans to corporate companies and larger SMEs in Brazil, which leads to a concentrated portfolio given the bank's relatively small size and large tickets that its clients demand. On the other hand, the bank's client base, and management's conservatism and expertise has allowed Pine to post better-than-average asset quality and stable profitability in the last few years. OGX PETROLEO: Bonds Hit All-Time Low Amid Restructuring Talks ------------------------------------------------------------- Luciana Magalhaes at Daily Bankruptcy Review reports that bonds of OGX Petroleo e Gas Participacoes SA, the Brazilian oil company controlled by businessman Eike Batista, fell to an all-time low on Oct. 7, 2013. Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participaaoes S.A. is an independent exploration and production company with operations in Latin America. * * * As reported in the Troubled Company Reporter-Latin America on July 17, 2013, Moody's Investors Service downgraded OGX Petroleo e Gas Participaaoes S.A.'s Corporate Family Rating to Ca from Caa2 and OGX Austria GmbH's senior unsecured notes ratings to Ca from Caa2. The rating outlook remains negative. OGX PETROLEO: ANP Denies Request to Suspend Oil Fields Development ------------------------------------------------------------------ Luciana Magalhaes and Jeff Fick at The Wall Street Journal report that Brazil's National Petroleum Agency (ANP) has denied a request by OGX Petroleo e Gas Participacoes SA, controlled by businessman Eike Batista, to suspend the development of three offshore oil fields. According to the minutes of the ANP meeting on Sept. 25, ANP has requested that OGX files a development plan for the three oil fields, The WSJ notes. If OGX doesn't file the plan, ANP will likely start an administrative process to terminate the concession contract, according to The WSJ. The WSJ relates that OGX wanted to suspend the development of its Tubarao Tigre, Tubarao Areia and Tubarao Gato oil fields for five years. The request was made after OGX said there's no technology currently available that would economically allow the development of those fields back in July, The WSJ relays. The WSJ discloses that disappointing output at OGX's Tubarao Azul field -- currently OGX's only productive oil field, but which is expected to be shut down sometime next year -- caused a crisis of confidence that spread throughout Mr. Batista's interlinked group of companies, raising concerns about the one-time billionaire's ability to deliver concrete results. The WSJ notes that OGX is looking for possible investors as it is seeking debtor-in-possession financing, a special form of financing usually provided to companies in financial distress, a person familiar with the company said, adding that the company is considering seeking court protection before the end of the month. OGX said in a regulatory filing that it needs to consider all legal measures to protect its interests and the continuity of its business, the WSJ adds. Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participaaoes S.A. is an independent exploration and production company with operations in Latin America. * * * As reported in the Troubled Company Reporter-Latin America on July 17, 2013, Moody's Investors Service downgraded OGX Petroleo e Gas Participaaoes S.A.'s Corporate Family Rating to Ca from Caa2 and OGX Austria GmbH's senior unsecured notes ratings to Ca from Caa2. The rating outlook remains negative. ========================== C A Y M A N I S L A N D S ========================== ADLOGICA: Shareholder to Hear Wind-Up Report on Oct. 15 ------------------------------------------------------- The shareholder of Adlogica will receive, on Oct. 15, 2013, at 9:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Ramu Yalamanchi 300 3rd Street, Apt. 402 San Francisco, California 94107-1248 ALLEGRO OPTHALMICS: Shareholder to Hear Wind-Up Report on Oct. 15 ----------------------------------------------------------------- The shareholder of Allegro Opthalmics International will receive, on Oct. 15, 2013, at 9:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mark D. Kirshbaum 200 Shasta Irvine, CA 92612-2223 CARLYLE HIGH: Shareholder to Hear Wind-Up Report on Nov. 1 ---------------------------------------------------------- The shareholder of Carlyle High Yield Partners VI, Ltd. will receive, on Nov. 1, 2013, at 11:15 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman/Jennifer Chailler Telephone: (345) 943 3100 COSIMO (GP): Shareholders' Final Meeting Set for Oct. 28 -------------------------------------------------------- The shareholders of Cosimo (GP) Limited will hold their final meeting on Oct. 28, 2013, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Matthew Wright c/o Omar Grant Telephone: (345) 949 7576 Facsimile: (345) 949 8295 P.O. Box 897 Windward 1 Regatta Office Park Grand Cayman KY1-1103 Cayman Islands DIAMOND STARS: Shareholder Receives Wind-Up Report -------------------------------------------------- The shareholder of Diamond Stars Limited received on Sept. 30, 2013, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Commerce Corporate Services Limited Telephone: 949 8666 Facsimile: 949 0626 P.O. Box 694 Grand Cayman Telephone: 949 8666 Facsimile: 949 0626 GK FORTUNE: Shareholder to Hear Wind-Up Report on Nov. 1 -------------------------------------------------------- The shareholder of GK Fortune Holdings Inc. will receive, on Nov. 1, 2013, at 11:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Intertrust SPV (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands c/o Kim Charaman/Jennifer Chailler Telephone: (345) 943 3100 GLOBAL INTERNATIONAL: Members' Final Meeting Set for Oct. 15 ------------------------------------------------------------ The members of Global International Vessels, Ltd will hold their final meeting on Oct. 15, 2013, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Michael Csizmadia c/o Ruth Hatt Travers Thorp Alberga Harbour Place 2nd Floor 103 South Church Street Grand Cayman KY1-1106 Cayman Islands 11700 Katy Freeway Suite 150 Houston TX 77079 USA MULTI BANKING: Shareholders' Final Meeting Set for Oct. 31 ---------------------------------------------------------- The shareholders of Multi Banking Corporation (Overseas) Limited will hold their final meeting on Oct. 31, 2013, at 11:30 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Trident Liquidators (Cayman) Limited Randal Daije Telephone: (345) 914 5353/ (345) 949 0880 Facsimile: (345) 949 0881 e-mail: rdaije@naleil.net P.O. Box 847, George Town Grand Cayman KY1-1103 Cayman Islands THAI INVESTOR IX: Members' Final Meeting Set for Oct. 15 -------------------------------------------------------- The members of Thai Investor IX Inc. will hold their final meeting on Oct. 15, 2013, at 11:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Krys Global VL Services Limited KRyS Global Governor's Square, Building 6, 2nd Floor 23 Lime Tree Bay Avenue P.O. Box 21237 Grand Cayman KY1-1205 Cayman Islands Telephone: +1 (345) 947 4700 Facsimile: +1 (345) 946 6728 THAI INVESTOR X: Members' Final Meeting Set for Oct. 15 ------------------------------------------------------- The members of Thai Investor X Inc. will hold their final meeting on Oct. 15, 2013, at 11:15 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Krys Global VL Services Limited KRyS Global Governor's Square, Building 6, 2nd Floor 23 Lime Tree Bay Avenue P.O. Box 21237 Grand Cayman KY1-1205 Cayman Islands Telephone: +1 (345) 947 4700 Facsimile: +1 (345) 946 6728 TRIAGE OFFSHORE: Shareholders' Final Meeting Set for Oct. 18 ------------------------------------------------------------ The shareholders of Triage Offshore Fund, Ltd. will hold their final meeting on Oct. 18, 2013, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands ========= C H I L E ========= INVERSIONES ALSACIA: Supplements Consent Solicitation Statement --------------------------------------------------------------- Inversiones Alsacia S.A. on Oct. 3 disclosed that it is supplementing its Amended and Restated Consent Solicitation Statement dated September 25, 2013 and its accompanying consent form, to (i) extend the expiration date of the consent solicitation to Wednesday, October 9, 2013, and (ii) make changes to the proposed waiver and accompanying disclosures relating to the Debt Service Coverage Ratio and the potential contribution by Alsacia's controlling stockholder. Holders are urged to read the supplement in its entirety as it contains important information about the consent solicitation. The supplement is being distributed to bondholders through the DTC's LENS system and can also be obtained upon request from Alsacia. About Alsacia Alsacia, together with its affiliate, Express de Santiago Uno S.A., are collectively the largest operator in the Transantiago Transportation System, transporting approximately 1.2 million passengers every day, throughout 35 communities in Santiago, which accounts for more than 30% of the passengers in Transantiago. Alsacia and Express belong to an international holding company with interests in public passenger transportation, environmental solutions, outsourcing services and real estate development in Chile, Colombia, Panama, Peru and the United States. =================================== D O M I N I C A N R E P U B L I C =================================== XSTRATA FALCONDO: Miners Protest, 10,000 Jobs at Risk Amid Closure ------------------------------------------------------------------ Dominican Today reports that Xstrata Falcondo mine workers marched to Congress on Oct. 3 to protest the mine's temporary shutdown, and complained that more than 10,000 people will lose their jobs. Protest spokesman Raffy Bueno demanded the truth about Falcondo which in his view is a responsible company and that its planned mine at Loma Miranda is feasible, according to Dominican Today. The report notes that Mr. Bueno said the authorities must take into account the situation Falcondo's employees and their families will face. For Rafael - Pepe - Abreu, president of the Labor Unions Council, Dominican Republic should seek out the formulas being applied to exploit the mineral deposits worldwide, the report relates. Mr. Abreu said Loma Miranda could be exploited without harming environment, adding nonetheless that labor will fight to protect the rights of the company's workers, the report relays. ============= J A M A I C A ============= * JAMAICA: Shortage of Foreign Currency Affecting Large Buyers -------------------------------------------------------------- RJR News says that reports are circulating in the private sector of a tightening in the availability of foreign currency in the financial system. This is said to have resulted in a spike in the trading rate to large buyers, according to RJR News. RJR News notes that Jamaica Broilers confirmed that it has experienced challenges in accessing US dollar. "The official rate is probably just about J$104 to US$1. However we are actually finding it quite difficult to get the quantum of US (dollar) that we really require and as a result we are actually buying US dollar at a price that is significantly above that J$104 to US$1," the report quoted Ian Parsard, vice president of Jamaica Broilers as saying. ===================== P U E R T O R I C O ===================== DORAL FINANCIAL: Moody's Lowers Sr. Unsecured Rating to 'Caa3' -------------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured rating of Doral Financial Corporation to Caa3 from Caa1. Doral Financial's rating outlook remains negative. Doral Financial's lead bank, Doral Bank, is unrated. The rating agency also downgraded the senior secured bonds (CUSIPs 74527BLB8, 74527BLC6, 74527BLD4, and 74527BSL9) issued by Doral Properties, Inc. through the Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority (AFICA) to Caa3 from Caa1. Doral Properties, Inc. is a wholly-owned subsidiary of Doral Financial, which is legally responsible for the payments on the AFICA bonds that are currently outstanding. Moody's also took the following actions today: - Banco Santander Puerto Rico (BSPR): Affirmed all ratings (deposits Baa1, standalone bank financial strength rating (BFSR)/baseline credit assessment (BCA) D+/ba1). Rating outlook on BSPR's standalone BFSR/BCA changed to negative from stable. Stable outlook maintained on the bank's supported deposit and debt ratings. BSPR's deposit and debt ratings benefit from uplift because the bank has a higher-rated US affiliate, Sovereign Bank (deposits Baa1 stable, standalone BFSR/BCA C-/baa1 stable). Moody's believes that within a US banking family, the deposit ratings of affiliates should be equalized because of regulatory powers afforded by the cross-indemnification provisions of the Federal Deposit Insurance Act. - Popular, Inc. (Popular) and its subsidiaries: Affirmed all ratings (lead bank deposits Ba2, standalone BFSR/BCA D/ba2). Rating outlook changed to negative from stable. - FirstBank Puerto Rico (FirstBank): Affirmed all ratings (deposits B2, standalone BFSR/BCA E+/b2). Rating outlook changed to negative from stable. Ratings Rationale: Moody's said the downgrade of Doral Financial's senior unsecured rating was driven by the company's extremely weak financial condition. Doral Financial's credit profile reflects very poor asset quality, weak capital, and a funding profile that is highly- dependent on non-core sources. Doral Financial's poor asset quality is evidenced by its extremely high level of non-performing assets (NPAs), which Moody's defines as non-accrual loans, loans past due 90 days or more and still accruing, all restructured loans, and other real estate owned (OREO). At 30 June 2013, Doral Financial's NPAs represented 19% of loans plus OREO and 249% of tier 1 common equity plus reserves. These ratios are by far the weakest of any rated Puerto Rican bank. Moreover, there is little likelihood of significant improvement in the company's asset quality given Puerto Rico's very weak economy. This will place further negative pressure on the company's already-weak capital position. At 30 June, Doral Financial's tier 1 common ratio was a low 5.99%. Moody's added that Doral Financial is highly-dependent on non-core funding, such as brokered deposits. At 30 June, brokered deposits accounted for 36% of total deposits and core deposits only funded 31% of total loans. The negative outlooks on the ratings of BSPR, Popular and FirstBank reflect the continued weakening of Puerto Rico's already-poor economy, which is in the midst of a protracted recession that began in 2006. The economy is challenged by high unemployment, low workforce participation, high poverty levels compared to the US mainland, a declining population, and weakness in its key pharmaceutical sector. Continued weakening is evidenced by the recent increase in the unemployment rate to 13.9% in August 2013 and the higher-than expected 5% year-over-year decline in the Government Development Bank for Puerto Rico's Economic Activity Index, which is a good proxy for the health of the Puerto Rican economy. Moreover, the prospects for a sustainable recovery are constrained by the commonwealth's poor finances. The commonwealth is challenged by a very large unfunded pension liability even after recently-enacted reforms, and an increasingly heavy debt load. The commonwealth also has a high dependence on capital markets financing that has led to increased refinancing risk and reduced financial flexibility as it waits out currently-volatile market conditions. Actions to address the commonwealth's fiscal problems will likely put additional stress on the economy. This will continue to threaten the health of the banking system. The banks' NPAs remain extremely high relative to US mainland banks, which could lead to significant losses if conditions do not improve. The recent market volatility also creates uncertainties for the Puerto Rican banking system. Although the banks' deposit flows have been steady during this period of heightened volatility, ongoing volatility could put additional stress on funding profiles that tend to be weaker than US mainland banks. Following the ratings actions, the negative outlooks on the ratings of BSPR, Popular, FirstBank, and Doral are consistent with the negative outlook on the commonwealth. Moody's affirmed Puerto Rico's Baa3 government obligation rating on October 3, 2013 (see press release "Moody's affirms Puerto Rico general obligation bonds at Baa3; affirms notched and related debt as well.") The principal methodology used in these rating were Global Banks published in May 2013. * PUERTO RICO: Lawyers, Experts Predict Restructuring of Bonds -------------------------------------------------------------- An article by Emily Glazer of The Wall Street Journal relates that while no action seems imminent, many lawyers and other experts on distressed debt predict that at least some of Puerto Rico's outstanding bonds eventually will be restructured. That could mean changes to interest rates or to the amount of time Puerto Rico has to repay. The tipping point will likely come if Puerto Rico runs out of money to cover debt payments and can't refinance with new bonds. Puerto Rico has cut back on its bond-issuance plans and is turning to banks for short-term loans. The article says Puerto Rico is not eligible to seek creditor protection under Chapter 9 of the U.S. Bankruptcy Code, which is only for municipalities. Puerto Rico is an unincorporated territory. According to the article, which was presented as a question-and-answer segment, some experts said it might be possible to at least try restructuring some of Puerto Rico's debt in Chapter 9 or Chapter 11, the part of bankruptcy companies use to reorganize. For example, some bond issuers in Puerto Rico are classified as "semi-autonomous authorities," possibly giving them a loophole to seek protection from certain obligations, lawyers said. * PUERTO RICO: Debt Troubles U.S. Regulators -------------------------------------------- Mike Cherney, writing for the Wall Street Journal, reports that U.S. government officials are becoming more concerned about Puerto Rico's deepening economic and financial woes -- and their risks for American investors. An index that tracks bonds issued by Puerto Rico is down more than 18% so far this year, and leaders have put off selling new bonds while they work to restructure some of the island's troubled finances, according to the Wall Street Journal. As a result, officials at the White House, Treasury Department and Federal Reserve have been meeting to discuss the matter and to assess the potential consequences for the overall municipal-bond market, unnamed sources said, the WSJ notes. The WSJ discloses that few analysts and investors expect Puerto Rico to renege on its obligations anytime soon. But it owes about US$70 billion on its bonds, has a credit rating just one notch above junk status and is having trouble attracting investors because of its budget deficit and high unemployment, the WSJ relays. For decades, the WSJ notes, Puerto Rico was a bedrock investment in many municipal-bond portfolios, its bonds owned directly or through mutual funds. The biggest reason: Unlike most other municipal bonds, interest on Puerto Rico's debt is free from local, state and U.S. income taxes, the WSJ relates. About three-fourths of all municipal-bond mutual funds own debt issued by Puerto Rico, according to Morningstar Inc, the WSJ report notes. Ingrid Vila, chief of staff to Puerto Rico Gov. Alejandro Garcia Padilla, said officials are working closely with the Treasury Department and the President's Task Force on Puerto Rico's Status, an advisory group that includes representatives of Cabinet-level agencies, the WSJ says. "There have been many conversations from January until now," the WSJ quoted Ms. Vila as saying. The WSJ notes that a Treasury spokeswoman said: "Given the potential for Puerto Rico's financial challenges to impact U.S. markets, including the municipal market, Treasury continues to closely monitor developments." The White House advisory group is coordinating with other federal agencies "to make sure that federal resources are fully utilized for maximum impact for the people of Puerto Rico," one senior Obama administration official said, the WSJ relays. The WSJ discloses that Puerto Rico's debt load -- gigantic compared with the roughly US$18 billion owed by Detroit when it filed in July for the largest municipal bankruptcy in U.S. history -- also was discussed at a recent meeting of Treasury officials and Municipal Market Advisors, a widely followed municipal-bond research firm. Analysts there have said they believe U.S. officials are looking for ways to help, the WSJ says. The WSJ relays that no decisions have been made, and there is reluctance to throw Puerto Rico any lifeline that might be seen as a precedent for rescues of financially troubled states or cities, these people said. Still, this year's slide in Puerto Rico bond prices and the island's chronic financial troubles have grown too big to ignore, the WSJ discloses. The Wall Street Journal reported in September that some large securities firms are limiting access to Puerto Rico bonds amid deepening unease about its financial health. Mutual funds with especially big exposure to Puerto Rico have suffered overall losses ranging from 5% to more than 10% of their overall asset value so far this year, the WSJ relays. The WSJ notes that steeper losses are likely if credit-rating firms follow through on their warnings that Puerto Rico could be cut to junk-bond status. Puerto Rico has an overall credit rating of triple-B-minus from Standard & Poor's Ratings Services. The US$3.7 trillion municipal-bond market usually is a safe haven from the ups and downs of stocks and other bonds, the WSJ discloses. But Puerto Rico is deepening jitters fueled by the recent jump in interest rates on U.S. Treasury securities and Detroit's bankruptcy filing, the WSJ says. Puerto Rico isn't allowed under U.S. law to file for municipal bankruptcy protection. The WSJ notes that Puerto Rico's economy has been in decline for several years, hurt by tax breaks that attracted U.S. companies for decades but ended in 2006. As of August, the unemployment rate was 13.9%, higher than any U.S. state. Its three pension systems amassed less than 10% of the money needed to meet future obligations, according to the island's latest official financial report, the WSJ relays. The report covered the fiscal year ended in June 2012. Investors are so skittish that Puerto Rico has cut back its bond- issuance plans -- and is turning to banks for short-term loans, the WSJ discloses. In the past few weeks, the WSJ notes that Puerto Rico officials have told credit-rating firms that the island is making progress by reducing its budget deficit this year, cutting benefits to some retirees and hiking taxes to bring in more revenue. The WSJ relays that seven OppenheimerFunds Inc. municipal-bond funds named after Arizona, Massachusetts, North Carolina and other states have roughly 25% to 33% of their total portfolios in Puerto Rico bonds, according to Morningstar. OppenheimerFunds is a unit of Massachusetts Mutual Life Insurance Co. U.S. securities regulators allow such single-state funds to buy lots of Puerto Rico bonds as long as they are disclosed in customer prospectuses and meet certain tax criteria, the WSJ discloses. Dan Loughran, senior vice president and senior portfolio manager at the Rochester municipal group unit of OppenheimerFunds, said Puerto Rico's finances are moving in the right direction and there is no need to reverse the unit's investment strategy, the WSJ adds. =============================== T R I N I D A D & T O B A G O =============================== CARIBBEAN AIRLINES: Looks to Jamaica to Fill Keys Posts ------------------------------------------------------- RJR News reports that Caribbean Airlines Limited has turned to Jamaica as it tries to find a new chief executive officer. The air carrier has advertised the post locally with less than three weeks to go before the October 25 deadline for persons to submit their resumes, according to RJR News. In an advertisement in the two Jamaican daily newspapers on Oct. 6, the new Caribbean Airlines boss will, among other things, be required to turn around the entity's performance, RJR News relates. The report notes that acting Chief Executive Officer of Caribbean Airlines, Robert Corbie, resigned suddenly in July. Vice President, Captain Jagmohan Singh, was appointed to oversee day- to-day operations, the report relates. The report discloses that in the newspaper advertisement CAL also sought applications for the posts of Chief Financial Officer and Vice President for Commercial and Customer Experience. Caribbean Airlines Limited -- http://www.caribbean-airlines.com/ -- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. * * * As reported in the Troubled Company Reporter-Latin America on May 20, 2013, Caribbean360.com said that Trinidad and Tobago Finance Minister Larry Howai said Caribbean Airlines Limited recorded losses estimated at US$70 million in 2012. In 2011, CAL had recorded losses of US43.7 million. TCRLA reported on March 21, 2012, that RJR News said Caribbean Airlines Limited owes nearly US$30 million to Trinidad and Tobago's fuel provider National Petroleum. Trinidad Express said CAL enjoys a seven-day credit facility for aviation fuel from the company, according to RJR News. However, the report related that the airline has not been able to pay the full amount when invoiced and instead has been issuing partial payments to sustain the account. RJR News noted that Trinidad Express reported that the arrears were built up as no payments have been made despite an attractive fuel subsidy which the airline has enjoyed since it began operations. *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR-LA. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** 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., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Valerie U. Pascual, Julie Anne L. Toledo, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2013. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. * * * End of Transmission * * *