/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/140206.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 Thursday, February 6, 2014, Vol. 15, No. 26 Headlines B E R M U D A VIMPELCOM LTD: Taps Aleksandr Vorobyev as Acting Director General VIMPELCOM LTD: Fin'l. Policy Updates Credit Positive says Moody's B R A Z I L CENTRAIS ELETRICAS: Moody's Withdraws 'Caa1' Issuer Rating CIA DE SANEAMENTO: Will Cut Bills for Customers Who Save Water * BRAZIL: Treasury Cancels Bond Auctions Citing Market Conditions C A Y M A N I S L A N D S AVILA FUND: Commences Liquidation Proceedings CABA LIMITED: Placed Under Voluntary Wind-Up CANADIAN SHIELD: Shareholders Receive Wind-Up Report DRAGONSPELL HOLDINGS: Commences Liquidation Proceedings FCM REINSURANCE: Commences Liquidation Proceedings HELIUM MASTER: Commences Liquidation Proceedings IVIRON FUND: Placed Under Voluntary Wind-Up LAIDA LIMITED: Shareholders Receive Wind-Up Report MCT CAPITAL: Placed Under Voluntary Wind-Up PCM SPC: Shareholders Receive Wind-Up Report PYTHIA LIMITED: Shareholder Receives Wind-Up Report RAM CAPITAL: Placed Under Voluntary Wind-Up REDBREAST AIRCRAFT: Shareholders Receive Wind-Up Report RHONE-SAM: Placed Under Voluntary Wind-Up RITCHIE DEBT: Placed Under Voluntary Wind-Up RITCHIE RML: Placed Under Voluntary Wind-Up SL PREMIUM: Placed Under Voluntary Wind-Up SPECIAL CREDIT: Placed Under Voluntary Wind-Up TUTOR INTERNATIONAL: Shareholder Receives Wind-Up Report VENCAP 7 LLC: Commences Liquidation Proceedings D O M I N I C A N R E P U B L I C * DOMINICAN REP: Gas Stations Complain of Sagging Sales P A N A M A BANCO PANAMENO: S&P Affirms 'BB' ICR; Outlook Stable GROUP UNITED: Panama Canal Expansion on 'Brink of Failure' P A R A G U A Y PARAGUAY: Moody's Ups Gov't. Bond Rating to Ba2; Outlook Positive P U E R T O R I C O GOVERNMENT DEV'T BANK: S&P Lowers LT Issuer Credit Rating to 'BB' PUERTO RICO: GO Bonds Inch Higher After S&P Downgrade PUERTO RICO: Investors Appears to Shrug Off Debt Downgrade PUERTO RICO: S&P Cuts Debt to Junk, Cash Squeeze Intensifies PUERTO RICO AQUEDUCT: S&P Lowers Revenue Bonds Rating to 'BB+' UNIV. OF PUERTO RICO: S&P Lowers SPUR to 'BB+' on Revenue Bonds - - - - - ============= B E R M U D A ============= VIMPELCOM LTD: Taps Aleksandr Vorobyev as Acting Director General ----------------------------------------------------------------- UzDaily News reports that telecommunication operator Vimpelcom Ltd (Beeline trademark) appointed Aleksandr Vorobyev as acting director of its subsidiary in Uzbekistan, Unitel LLC. Prior to appointment, Mr. Vorobyev worked as financial director of the operator, according to UzDaily News. Former director-general of Unitel Andrei Safronyuk, who worked in the position since June 2010, left the post as his contract expired, the report notes. Mr. Safronyuk will continue his career outside of Vimpelcom, the report relays. Aleksandr Vorobyev worked as financial director at Takom, Vimpelcom's subsidiary in Tajikistan, between November 2011 and August 2013. In August 2013, he started to work as financial director of Unitel. Domiciled in Bermuda and headquartered in the Netherlands, VimpelCom Ltd is a holding company for Vimpel-Communications OJSC (Ba3 stable), Kyivstar (unrated), Wind Telecomunicazioni S.p.A. (B1 negative), and Global Telecom Holding S.A.E. (unrated), with strong positions in Russia, Ukraine, Kazakhstan, Italy, Algeria, Pakistan, and operations in countries in the Commonwealth of Independent States (CIS), Africa, South-East Asia and North America. VIMPELCOM LTD: Fin'l. Policy Updates Credit Positive says Moody's ----------------------------------------------------------------- Moody's Investors Service has said that it views recent updates VimpelCom Ltd (Ba3 stable) has made to its financial policy as credit positive for the group. The updated policy prioritises deleveraging and investment in 3G/4G mobile data network over dividend payouts. The new policy should support the group's financial metrics and competitive positions. However, any positive pressure on the rating will depend on the development of the group's financial metrics as a result of both the implementation of its new financial policy and its operating performance. On January 28, VimpelCom announced that it intends to (1) limit its dividend payouts to $0.035 from $0.8 per share until it deleverages to reported net debt/EBITDA of below 2.0x, and (2) focus on deleveraging and investment in the expansion of its 3G/4G mobile data network, with capital expenditure (capex) accounting for 21% of the group's revenue in 2014. The announced policy, in and of itself, does not translate into immediate positive pressure on VimpelCom's rating. The impact on the rating will depend on the evolution of the group's financial metrics as a result of the implementation of the updated financial policy. As yet, VimpelCom has not disclosed details of whether it plans to use the cash saved on dividends for either debt reduction or financing capex, and which entities within the group will be affected. Moody's notes that VimpelCom's Ba3 corporate family rating (CFR) continues to reflect the company's ongoing reliance upon its Russian and Ukrainian subsidiaries consolidated under VimpelCom Holdings B.V., which continue to determine VimpelCom's financial flexibility. As such, Moody's primarily bases its assessment of VimpelCom's business and financial profile on VimpelCom Holdings. Moody's estimates that as of year-end 2013 VimpelCom Holdings' leverage stood at around 2.4x adjusted debt/EBITDA, materially exceeding 2.0x, which is the threshold for an upgrade of VimpelCom's Ba3 CFR. Should VimpelCom apply all cash saved on dividends in 2014 to repay debt consolidated at the VimpelCom Holdings' level (as opposed to repaying debt at VimpelCom's highly leveraged business in Italy consolidated under Wind Telecom S.p.A.), the company's leverage would not necessarily decline below 2.0x. This is because deleveraging will also depend on the company's ability to preserve its historically strong operating performance in the highly competitive core Russian market, which is yet to be evidenced. The rating agency recognises the long-term positive effect of VimpelCom's investment in the expansion of its 3G/4G networks, as operations in the lucrative mobile data segment are likely to be the main driver for the group's revenues growth in the medium term. The scale and quality of those networks are likely to be one of the key factors for the group in maintaining its extensive subscriber base, particularly in Russia. However, it will take time for increased investment in the 3G/4G networks to translate into meaningful revenues and earnings growth. Domiciled in Bermuda and headquartered in the Netherlands, VimpelCom Ltd is a holding company for Vimpel-Communications OJSC (Ba3 stable), Kyivstar (unrated), Wind Telecomunicazioni S.p.A. (B1 negative), and Global Telecom Holding S.A.E. (unrated), with strong positions in Russia, Ukraine, Kazakhstan, Italy, Algeria, Pakistan, and operations in countries in the Commonwealth of Independent States (CIS), Africa, South-East Asia and North America. =========== B R A Z I L =========== CENTRAIS ELETRICAS: Moody's Withdraws 'Caa1' Issuer Rating ---------------------------------------------------------- Moody's Investors Service is withdrawing all Centrais Eletricas do Para's (CELPA) ratings for its own business reasons. Moody's last rating action on CELPA was on December 23, 2013 when Moody's upgraded Celpa's Issuer rating to Caa1 on the global scale from Ca and to Caa1.br on the Brazilian National Scale from Ca.br with a stable outlook. At the same time, Moody's upgraded the rating on CELPA's former senior unsecured 5-year USD 250 million bond issue to Caa1 on the global scale from Ca. The following ratings were withdrawn: Issuer Ratings: Caa1/Caa1.br Senior Unsecured rating of Caa1 on 10.5% 5 year USD 250 million bonds due June 3, 2016 Ratings Rationale CELPA has been in judicial recovery since February 28, 2012. The main points approved on CELPA's financial recovery plan on September 01, 2012 included the following: a BRL 700 million equity infusion by new owner Equatorial Energia S.A. (not rated); a transition and restructuring plan approved by ANEEL; a reschedule of taxes due over a minimum term of term of 60 months; and a renegotiation and rescheduling of its debt. All of these items have been implemented; however, Equatorial Energia still needs to infuse its remaining BRL 250 million in new equity which will be used to finance part of the capital expenditure program. Despite its ownership by a financially strong and experienced shareholder and the above credit positives, CELPA's future is still viewed as challenging given his still highly levered capital structure the material investments that will be required to achieve ANEEL's energy loss target of 28.5% given the 36.5% energy losses registered at the end of the recent third quarter. Moody's Investors Service has withdrawn the credit rating for its own business reasons. CELPA, headquartered in Belem, owns a 30-year concession contract that expires in 2028, which is subject to a further 30-year renewal, to distribute electricity to 143 cities in the state of Para. In the first 9 months of 2013, CELPA sold 5.3 TWh to approximately 1.99 million consumers, and had net revenues of BRL1.5 billion which excludes BRL282 million construction revenues and net loss of BRL118 million. CELPA is controlled by Equatorial Energia S.A. (Equatorial, not rated) since November 01, 2012 when it acquired 65.2% of the voting capital from Rede Energia S.A for just BRL 1.00 CIA DE SANEAMENTO: Will Cut Bills for Customers Who Save Water -------------------------------------------------------------- Denyse Godoy and Stephan Nielsen at Bloomberg News report that Cia. de Saneamento Basico do Estado de Sao Paulo said it will cut bills for customers who save water amid a drought that's draining dams to a record low. Sabesp is offering business and residential clients in the greater Sao Paulo area a 30 percent discount through August if they cut their monthly usage 20 percent below their average between February 2013 and January 2014, the Sao Paulo-based company said in a statement, according to Bloomberg News. Bloomberg News notes that a dry spell in parts of Brazil is also hurting coffee and sugar crops and sending electricity prices to a record high as hydropower plants struggle with low reservoirs. "Investors are concerned about the impact that the discount and the rationing may have over the company's revenue," Bloomberg News quoted Sandro Fernandes, an analyst at the brokerage firm Geraldo Correa, as saying. "If reservoir levels fall further, Sabesp will just run out of the product it sells," Mr. Fernandes said, Bloomberg News relates. Bloomberg News discloses that Sabesp's net revenue may be BRL360 million (US$148.3 million) lower than the previously estimated BRL9.57 billion because of the discount for clients, according to a research note from Goldman Sachs Group Inc. Sabesp's Cantareira water system, which supplies water to almost 10 million people, is at a "critical level," according to the statement, Bloomberg News says. The system is at 21.9 percent of capacity, its lowest level ever. Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP) provides basic and environmental sanitation services; and supplies treated water on a wholesale basis to residential, commercial, industrial, and municipal customers in the State of Sao Paulo. As reported in the Troubled Company Reporter-Latin America on Nov. 14, 2013, Standard & Poor's Ratings Services affirmed its 'BB+' global scale and 'brAA+' national scale corporate credit ratings on Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP). The outlook on both scales remains positive. The company's stand- alone credit profile (SACP) is 'bb+'. * BRAZIL: Treasury Cancels Bond Auctions Citing Market Conditions ----------------------------------------------------------------- Filipe Pacheco at Bloomberg News reports that Brazilian Treasury canceled auctions of Brazilian government's fixed-rate and zero- coupon bonds scheduled for today, Feb. 6, citing market conditions. "The market is reacting calmly and sees that the Treasury is not desperate to refinance its debt," Ricardo Ramos, trader at Icap do Brasil in Sao Paulo, told Bloomberg News in a phone interview. ========================== C A Y M A N I S L A N D S ========================== AVILA FUND: Commences Liquidation Proceedings --------------------------------------------- On Dec. 22, 2008, the shareholders of Avila Fund Ltd. resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Commerce Corporate Services Limited c/o CIBC Financial Centre 11 Dr. Roy's Drive P.O. Box 694 Grand Cayman, KY1-1107 Cayman Islands CABA LIMITED: Placed Under Voluntary Wind-Up -------------------------------------------- At an extraordinary general meeting held on Dec. 6, 2013, the shareholders of Caba Limited resolved to voluntarily wind up the company's operations. The creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Commerce Corporate Services Limited P.O. Box 694 Grand Cayman Telephone: 949 8666 Facsimile: 949 0626 Cayman Islands CANADIAN SHIELD: Shareholders Receive Wind-Up Report ---------------------------------------------------- The shareholders of Canadian Shield Offshore Fund, Ltd received on Jan. 10, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Avalon Ltd. Landmark Square, 1st Floor 64 Earth Close, West Bay Beach P.O. Box 715 Grand Cayman KY1-1107 Cayman Islands Facsimile: +1 (345) 769-9351 DRAGONSPELL HOLDINGS: Commences Liquidation Proceedings ------------------------------------------------------- On Dec. 6, 2013, the shareholders of Dragonspell Holdings Limited resolved to voluntarily liquidate the company's business. Only creditors who were able to file their proofs of debt by Jan. 6, 2014, will be included in the company's dividend distribution. The company's liquidator is: CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands FCM REINSURANCE: Commences Liquidation Proceedings -------------------------------------------------- At an extraordinary general meeting held on Aug. 19, 2013, the shareholders of FCM Reinsurance Ltd. resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Stuart Jessop Windward 3, 5th Floor Regatta Office Park, West Bay Road Grand Cayman KY1-1105 Cayman Islands HELIUM MASTER: Commences Liquidation Proceedings ------------------------------------------------ On Dec. 4, 2013, the sole shareholder of Helium Master Fund Limited resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Syquant Capital Laurent Boscherel 67 rue la Boetie 75008 Paris France Telephone: +331.42.56.56.27 IVIRON FUND: Placed Under Voluntary Wind-Up ------------------------------------------- At an extraordinary general meeting held on Nov. 29, 2013, the shareholders of The Iviron Fund resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Jan. 17, 2014, will be included in the company's dividend distribution. The company's liquidator is: Fides Limited P.O. Box 10338 Grand Cayman KY1-1003 Telephone: (345) 949-7232 LAIDA LIMITED: Shareholders Receive Wind-Up Report -------------------------------------------------- The shareholders of Laida Limited received on Jan. 6, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Royhaven Secretaries Limited c/o Julie Reynolds Telephone: +1 (345) 914 1344 Facsimile: +1 (345) 945 4799 Coutts & Co (Cayman) Limited Coutts House 1446 West Bay Road P.O. Box 707 Grand Cayman KY1-1107 Cayman Islands MCT CAPITAL: Placed Under Voluntary Wind-Up ------------------------------------------- At an extraordinary general meeting held on Nov. 29, 2013, the shareholders of MCT Capital Management Ltd. resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Jan. 17, 2014, will be included in the company's dividend distribution. The company's liquidator is: Fides Limited P.O. Box 10338 Grand Cayman KY1-1003 Telephone: (345) 949-7232 PCM SPC: Shareholders Receive Wind-Up Report -------------------------------------------- The shareholders of PCM SPC received on Jan. 7, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Florence Lo Telephone: (852) 6908 2833 Facsimile: (852) 3602 3051 Ogier Fiduciary Services (Cayman) Limited 89 Nexus Way, Camana Bay Grand Cayman KY1-9007 Cayman Islands PYTHIA LIMITED: Shareholder Receives Wind-Up Report --------------------------------------------------- The shareholder of Pythia Limited received on Jan. 13, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Ogier c/o Jo-Anne Maher Telephone: (345) 815-1762 Facsimile: (345) 949-9877 RAM CAPITAL: Placed Under Voluntary Wind-Up ------------------------------------------- On Dec. 6, 2013, the sole shareholder of Ram Capital Structure Arbitrage, Ltd. resolved to voluntarily wind up the company's operations. The creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Avalon Ltd. Reference: GL Telephone: +1 (345) 769 4422 Facsimile: +1 (345) 769 9351 Landmark Square, 1st Floor 64 Earth Close West Bay Beach P.O. Box 715, George Town Grand Cayman KY1-1107 Cayman Islands REDBREAST AIRCRAFT: Shareholders Receive Wind-Up Report ------------------------------------------------------- The shareholders of Redbreast Aircraft Leasing Ltd received on Jan. 10, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Avalon Ltd. Landmark Square, 1st Floor 64 Earth Close, West Bay Beach P.O. Box 715 Grand Cayman KY1-1107 Cayman Islands Facsimile: +1 (345) 769-9351 RHONE-SAM: Placed Under Voluntary Wind-Up ----------------------------------------- On Dec. 6, 2013, the sole shareholder of Rhone-Sam Select (Cayman), Ltd resolved to voluntarily wind up the company's operations. The creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Avalon Ltd. Reference: GL Telephone: +1 (345) 769 4422 Facsimile: +1 (345) 769 9351 Landmark Square, 1st Floor 64 Earth Close West Bay Beach P.O. Box 715, George Town Grand Cayman KY1-1107 Cayman Islands RITCHIE DEBT: Placed Under Voluntary Wind-Up -------------------------------------------- On Dec. 6, 2013, the sole shareholder of Ritchie Debt Acquisition Fund, Ltd. resolved to voluntarily wind up the company's operations. The creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Avalon Ltd. Reference: GL Telephone: +1 (345) 769 4422 Facsimile: +1 (345) 769 9351 Landmark Square, 1st Floor 64 Earth Close West Bay Beach P.O. Box 715, George Town Grand Cayman KY1-1107 Cayman Islands RITCHIE RML: Placed Under Voluntary Wind-Up ------------------------------------------- On Dec. 6, 2013, the sole shareholder of Ritchie RML Capital III, Ltd. resolved to voluntarily wind up the company's operations. The creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Avalon Ltd. Reference: GL Telephone: +1 (345) 769 4422 Facsimile: +1 (345) 769 9351 Landmark Square, 1st Floor 64 Earth Close West Bay Beach P.O. Box 715, George Town Grand Cayman KY1-1107 Cayman Islands SL PREMIUM: Placed Under Voluntary Wind-Up ------------------------------------------ At an extraordinary general meeting held on Nov. 29, 2013, the shareholders of SL Premium Equity Fund Ltd. resolved to voluntarily wind up the company's operations. Only creditors who were able to file their proofs of debt by Jan. 17, 2014, will be included in the company's dividend distribution. The company's liquidator is: Fides Limited P.O. Box 10338 Grand Cayman KY1-1003 Telephone: (345) 949-7232 SPECIAL CREDIT: Placed Under Voluntary Wind-Up ---------------------------------------------- On Dec. 6, 2013, the sole shareholder of Special Credit Opportunities, Ltd. resolved to voluntarily wind up the company's operations. The creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Avalon Ltd. Reference: GL Telephone: +1 (345) 769 4422 Facsimile: +1 (345) 769 9351 Landmark Square, 1st Floor 64 Earth Close West Bay Beach P.O. Box 715, George Town Grand Cayman KY1-1107 Cayman Islands TUTOR INTERNATIONAL: Shareholder Receives Wind-Up Report -------------------------------------------------------- The shareholder of Tutor International, Ltd. received on Jan. 14, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: John D. Barrett c/o 15901 Olden Street, Symlar California 91342 United States of America Telephone: +818 362 8391 Facsimile: +818 364 8451 VENCAP 7 LLC: Commences Liquidation Proceedings ----------------------------------------------- At an extraordinary general meeting held on Nov. 27, 2013, the shareholders of Vencap 7 LLC resolved to voluntarily liquidate the company's business. Only creditors who were able to file their proofs of debt by Dec. 16, 2013, will be included in the company's dividend distribution. The company's liquidator is: Ian D. Stokoe c/o Adam Keenan Telephone: (345) 914 8743 Facsimile: (345) 945 4237 P.O. Box 258 Grand Cayman KY1-1104 Cayman Islands =================================== D O M I N I C A N R E P U B L I C =================================== * DOMINICAN REP: Gas Stations Complain of Sagging Sales ------------------------------------------------------- Dominican Today reports that Dominican Republic's gas station owners grouped in Andegas complained that despite the 4.1% economic growth, fuel consumption fell during 2013, which in their view reveals a boom in contraband and harms public finances and the stability of the businesses that pay taxes. Anadegas President Emilio Vazquez said lower government revenue from that fuel could lead to higher taxes on other derivatives of petroleum, according to Dominican Today. Mr. Vazquez, the report notes, also disclosed a picket in front of the Industry and Commerce Ministry to demand a change in the "temperature differential," the provision which allows the major fuel suppliers to pocket extra income before the gasoline cools. The group said refined fuels need to be heated to high temperatures to pump through pipes, which increases volume, but once cooled, it recovers its original volume, the report notes. Mr. Vazquez, the report relays, added that international fuel wholesalers have taken advantage of the volume differential during the last 50 years. =========== P A N A M A =========== BANCO PANAMENO: S&P Affirms 'BB' ICR; Outlook Stable ---------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long term issuer credit rating on Banco Panameno de la Vivienda, S.A. y Subsidiarias (Banvivienda). The outlook is stable. Standard & Poor's Ratings Services' rating on Banvivienda reflects the bank's "moderate" business position, "adequate" capital and earnings, "adequate" risk position, "below average" funding, and "adequate" liquidity, as S&P's criteria define these terms. "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 for a commercial bank operating only in Panama is 'bbb-', based on the country's economic risk score of '6' and an industry risk score of '5'. Panama's economic risk assessment reflects high levels of household debt and a limited ability to take on additional loans, which in our view, results from the country's low per capita GDP. The country's economy has become increasingly resilient and diversified in the past decade and it has shown adequate GDP growth rates for the past five years. However, our economic risk assessment also considers Panama's small domestic market, which leads to its high reliance on global and regional economic activity to drive its growth. In our view, credit growth itself doesn't worsen economic imbalances, as it is fairly moderate. Furthermore, whenever the economy slows down, so does credit. Other factors such as commercial real estate (CRE) prices and the country's external position pose additional risk in our economic imbalances assessment, in our view. Our industry risk assessment recognizes that Panama adequately regulates and supervises financial institutions, fostering the financial system's stability. Despite high leverage levels, Panama's authorities engage in adequate oversight of the financial system and apply international standards. There are some minor exceptions to this policy, but Panama's major banks' conservative management mitigates these factors. Nevertheless, our industry risk assessment remains limited by the absence of a lender of last resort in the country. Although the government offered liquidity support to all banks in 2008, we are uncertain that it would provide support again in the event of an adverse economic scenario," S&P noted. "The stable outlook reflects our expectations that the bank will continue implementing its growth plan while maintaining adequate risk position and asset quality metrics, adequate capitalization levels with RAC ratios above 7%, and liquidity metrics that are in line with is national peers," said Standard & Poor's credit analyst Ivana Recalde. GROUP UNITED: Panama Canal Expansion on 'Brink of Failure' ---------------------------------------------------------- Dan Molinski, writing for The Wall Street Journal, reported that work to expand the Panama Canal so bigger ships can fit through the 100-year-old waterway has virtually ground to a halt, and the consortium in charge of the construction effort said the project is now on the "brink of failure" after talks broke down between the contractors and Panama's government over who is going to pay for $1.6 billion in cost overruns. According to the report, the storied canal, built by American engineers, is among the world's most vital shipping routes, acting as a shortcut between the Pacific and Atlantic oceans that shaves nearly two weeks off travel times for ships that otherwise would need to travel around South America at Cape Horn. But the canal has become too narrow for the world's ever-larger ships, including those hauling products such as natural gas and other fuels. Countries including the U.S., which is fast becoming a net exporter of natural gas as it uses new drilling technology to tap into rock formations, are eager to take advantage of a wider canal to boost their shipments to Asia. But the expansion project, already 70% complete, is now in turmoil, the report said. Early on Feb. 5, the European building consortium GUPC, or Group United for the Canal, said the government-controlled Panama Canal Authority walked out on monthlong talks late on Feb. 4 night. "The break in negotiations puts the Panama Canal expansion and up to 10,000 jobs at immediate risk," said the consortium, which is 48%-controlled by Sacyr SA of Spain and 48%-controlled by Salini Impregilo SpA of Italy, notes the report. Hours later, Jorge Quijano, the head of the Panama Canal Authority, a government agency, said GUPC is to blame for the collapse in negotiations, accusing the consortium of going outside the contract to demand "exorbitant" and undeserved funding for cost overruns that haven't been substantiated, the report related. The canal authority said "almost all" the work by GUPC stopped on Wednesday, and demanded that the consortium resume its activities, adding that the construction companies need to take advantage of Panama's dry season to get as much work done as possible, notes the WSJ report. =============== P A R A G U A Y =============== PARAGUAY: Moody's Ups Gov't. Bond Rating to Ba2; Outlook Positive ----------------------------------------------------------------- Moody's Investors Service has upgraded Paraguay's government bond rating by one notch to Ba2 from Ba3, and changed the outlook to positive from stable. Moody's decision to upgrade Paraguay's rating was driven by the following factors: 1. The improving standing of Paraguay's key fiscal metrics relative to 'Ba' peer medians, 2. A strengthened institutional framework as a result of the legislation package that was approved last year, 3. A smooth political transition since the impeachment of former president Fernando Lugo in 2012. Ratings Rationale First Driver - Improving Standing Of Key Fiscal Metrics Relative to 'Ba' Peer Medians After the central government reported average debt ratios of 18% of GDP and 112% of revenues during 2003-2012, compared with the 39% and 149% for 'Ba'-rated medians during the same period, these debt ratios declined to just 12.7% of GDP and 79% of revenues in 2013. That is well below the 'Ba' medians of 36% and 151%, respectively. Debt affordability, as measured by the ratio of interest payment to revenues, is high at less than 2% (Ba median: 7.7%) owing to the largely concessional nature of Paraguay's debt. The country's average debt maturity is over 20 years. Although most of the government's debt is in foreign currency, Paraguay has a natural hedge since revenues from hydroelectric energy sales to Brazil and Argentina are US dollar-denominated. Second Driver -- Strengthened Institutional Framework The government of President Horacio Cartes, who took office in August 2013, secured passage of several key pieces of legislation within months of coming to power, including a tax reform, a Fiscal Responsibility Law, a Law to Modernize Financial Administration, a Public Private Partnership (PPP) Law, and a revision of the Sovereign Bond Law. Third Driver -- Smooth Political Transition The transition of power since the impeachment of former president Fernando Lugo has been smooth and seamless, including the changeover to the interim Franco administration and more recently to the new Cartes administration. There was no material impact on the economy or to the country's creditworthiness during the transition period. And Paraguay was ultimately reincorporated into MERCOSUR. Throughout the transition, the technical capacity of the Ministry of Finance and central bank remained strong. Rationale For Positive Outlook The positive outlook on the Ba2 rating reflects our expectation that, even though it will take time for the government to implement the various laws approved in late 2013, they are likely to improve fiscal oversight (e.g., through the Fiscal Responsibility Law) and allow for higher levels of infrastructure investment (e.g., through the PPP law and/or the revision of the Sovereign Bond Law) over the medium-to-long term. What Could Move The Ratings Up/Down Upward rating pressure could result from: (i) successful implementation of recently passed laws; (2) investments in the economy that could enhance economic diversity and/or markedly improve infrastructure. Downward rating pressure could result from: (1) a reversal of the government's prudent fiscal management (2) a significant and prolonged commodity shock driven by declining prices or adverse climate conditions; (3) recurrent political instability. Country Ceilings As a result of this rating action, the long-term local currency bond and deposit ceilings changed to Baa3 from Ba1, while the short-term local currency bond and deposit ceilings changed to P3 from Not Prime. The long-term foreign currency deposit ceiling changed to Ba3 from B1, while the short-term foreign currency deposit ceiling remains at Not Prime. The long-term foreign currency bond ceiling remains unchanged at Ba1, while the short- term foreign currency bond ceiling remains Not Prime. GDP per capita (PPP basis, US$): $6,053 (2012) Real GDP growth (% change): 13.6% (2013 Estimate) Rate (CPI, % change Dec/Dec): 4.2% (2013 Estimate) Gen. Gov. Financial Balance/GDP: -1.9% (2013 Estimate) Current Account Balance/GDP: 0.8% (2013 Estimate) External debt/GDP: 18.2% (2013 Estimate) Level of economic development: Low level of economic resilience Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On 29 Jan 2014, a rating committee was called to discuss the rating of the Paraguay, Government of.The main points raised during the discussion were: The issuer's institutional strength/framework, have materially increased. The issuer's fiscal or financial strength, including its debt profile, has materially increased. The issuer has become increasingly susceptible to event risks. An analysis of this issuer, relative to its peers, indicates that a repositioning of its rating would be appropriate. Other views raised included: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's governance and/or management, have not materially changed. The systemic risk in which the issuer operates has not materially changed. The principal methodology used in this rating was Sovereign Bond Ratings Methodology published in September 2013. ===================== P U E R T O R I C O ===================== GOVERNMENT DEV'T BANK: S&P Lowers LT Issuer Credit Rating to 'BB' ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term issuer credit rating on the Government Development Bank for Puerto Rico (GDB) to 'BB' from 'BBB-' and its short-term issuer credit rating to 'B' from 'A-3'. S&P initially placed the ratings on CreditWatch with negative implications on Jan. 24, 2014. The ratings remain on CreditWatch with negative implications. "The downgrade reflects GDB's constrained market access, which has led to a material deterioration in its liquidity position," said Standard & Poor's credit analyst Sunsierre Newsome. "It also reflects GDB's high business and loan exposure to the Commonwealth of Puerto Rico, whose creditworthiness has deteriorated, and other government related entities." GDB, which is providing permanent and bridge financing to the local public sector, is experiencing a steady deterioration in its liquidity position. Public-sector loans have increased, while public-sector deposits, which constitute the bulk of the bank's deposit base, have declined materially. S&P estimates GDB's loan- to-deposit ratio to be, currently, higher than 160%, demonstrating a structural funding reliance on market access. S&P could see some inflows of public-sector deposits in the coming months as a result of a proposed bill authorizing GDB to require certain public-sector entities to transfer their deposits, which are currently held at private local banks, to GDB. Potential related deposit inflows are unlikely to be significant enough, in S&P's opinion, to materially improve GDB's liquidity position. "In our opinion, GDB currently has a reduced ability to fund the Commonwealth's liquidity needs in the coming quarters without accessing the markets," said Ms. Newsome. Issuances by either GDB or the Commonwealth have been modest in recent quarters. For example, on Dec. 27, 2013, GDB placed $110 million of notes yielding 8% with the Puerto Rico State Insurance Fund Corp., a government entity that provides workers compensation. Although S&P expects GDB or the Commonwealth to access the market in the near future, this will likely be more difficult and significantly more expensive than in the past, in S&P's view. The other liquidity sources of GDB are primarily related to its investment portfolio. The $2.8 billion investment portfolio, as of Sept. 30, 2013, consists primarily of U.S. Treasury securities, U.S. agency securities, mortgage-backed securities, and money market investments. About half of the portfolio is pledged, which leaves more than $1 billion, by S&P's calculation, available as collateral to obtain secured funding. GDB is not regulated and supervised by the Federal Reserve Board or the Federal Deposit Insurance Corp., and the bank currently is not a member of any Federal Home Loan Bank (FHLB). Therefore, it cannot borrow from an FHLB, nor does it have access to a central bank for contingent liquidity. This exacerbates the pressure on S&P's assessment of its liquidity, given the company's current funding constraints. As a result, S&P is revising its liquidity assessment to "moderate" from "adequate" (as S&P's criteria describe the terms). GDB's funding is "below average." These two factors combined cap the stand-alone credit profile at 'bb'. S&P also believes that the deterioration in the creditworthiness of the Commonwealth has weakened the bank's business position. The bulk of GDB's balance-sheet activities are tied to the Commonwealth, either by extending loans to the government and other government related entities, or by collecting public-sector deposits. As a consequence, S&P has lowered its business position score to "weak" from "moderate." The current pressures experienced by the Commonwealth heighten the risk of GDB's heavy loan portfolio concentration to the Commonwealth. Loans also tend to be outsize, with GDB's 20 largest borrowers making up the majority of the loan portfolio. Many of the Commonwealth's agencies and instrumentalities have had losses from operations, which could affect their ability to repay their outstanding loan balances. However, GDB has entered into fiscal oversight agreements with some of its largest borrowers to allow the bank to more closely monitor these entities' finances. Still, nonperforming assets have doubled over the past few years. Although specific revenue sources fund the repayment of private loans--most of which are nonperforming--budgetary constraints and the weak fiscal state of Puerto Rico could limit payment. As a consequence, S&P has also revised its risk position score to "weak" from "moderate." Although S&P views GDB as a government-related entity based on its view that the link between GDB and the Commonwealth is very strong, S&P do not ascribe uplift to its ratings because of the one notch rating difference with the Commonwealth GO rating. GDB plays a very important role for the government, given that it provides funding to the Commonwealth and other Puerto Rican public corporations and that it is a fiscal agent to the Commonwealth and its instrumentalities. The ratings remain on CreditWatch with negative implications. The current pressures on funding access that the Commonwealth is experiencing weaken GDB's liquidity profile. S&P's ratings reflect expectations that either GDB or the Commonwealth will access the market in the near future. S&P would view a debt placement by either GDB or the Commonwealth of $1 billion or more as an important credit stabilizing factor. S&P could further lower the ratings if the bank failed to raise additional funding in the coming months or to otherwise improve cash flows. S&P expects to resolve or address the CreditWatch within the next couple of months. PUERTO RICO: GO Bonds Inch Higher After S&P Downgrade ----------------------------------------------------- Al Yoon and Mike Cherney, writing for The Wall Street Journal, reported that Puerto Rico's bonds inched higher a day after Standard & Poor's cut the island's credit rating to junk status, as some buyers are relieved to have the event behind them, according to traders and investors. "The markets can now trade without the heavy weight of a downgrade looming over its head," said Randy Jacobus, a portfolio manager with Alternative Strategy Advisers LLC, the report cited. Among large trades, $1 million Puerto Rico 5% general obligation bonds maturing in 2041 traded at 67 cents on the dollar on the morning of Feb. 5, up from 66.75 cents on a $3.1 million trade on Feb. 4, according to the Municipal Securities Rulemaking Board's website, the report related. The $837 million Market Vectors High-Yield Municipal Index ETF, which includes some Puerto Rico debt, rose almost 1% on Feb. 5, the report said. Share prices for the ETF fell more than 1.2% on Feb. 4, with a clear drop about when S&P announced the downgrade. "There hasn't been anything representing a wave of panic selling or great volatility in any of the Puerto Rico credits in the secondary market," said Jim Colby, senior municipal strategist and portfolio manager at Van Eck Global, which manages the ETF, the report cited. "This is being reflected in the valuation of the stock today." PUERTO RICO: Investors Appears to Shrug Off Debt Downgrade ---------------------------------------------------------- Michael Corkery, writing for The New York Times' DealBook, reported that investors' faith in Puerto Rico's debt appeared undaunted on Feb. 5 after Standard & Poor's cut the island's credit rating to junk a day earlier. According to the report, analysts and traders said prices of some Puerto Rico bonds traded lower on Feb. 4, but there was no mass selling that might indicate a panic. The spread between Puerto Rico's 30-year general obligation bonds and a benchmark of highly rated municipal bonds was unchanged from Feb. 4, when S.&P. issued its downgrade, according to Thomson Reuters Municipal Market Data. Many investors shrugged off the downgrade, saying they had anticipated it months ago, while others said the possibility of a default remained remote, the report related. "I think the market for Puerto Rico bonds has been oversold," said James Colby, senior strategist for Van Eck's municipal exchange- traded funds, which have exposure to Puerto Rico bonds, the report cited. "Is there a possibility for further downgrades? Yes. Does it mean they are not going to pay? No." Such confidence in the beleaguered island's ability to pay back its debts is based on a longstanding bargain: Investors have been willing to lend Puerto Rico billions of dollars to deal with its grave economic problems, the report pointed out. In exchange, its bonds have historically generated some of the highest returns in the municipal debt market. PUERTO RICO: S&P Cuts Debt to Junk, Cash Squeeze Intensifies ------------------------------------------------------------ Mary Williams Walsh, writing for dealbook.nytimes.com, reports that Standard & Poor's downgraded the debt of Puerto Rico to junk status, intensifying a cash squeeze for the commonwealth, whose financial condition is of outsize importance to the rest of the United States because its debt is widely held by individual investors through mutual funds. S&P, which lowered its rating to BB+ from BBB-, said it had decided that Puerto Rico was no longer qualified as investment grade because its government was losing its ability to raise cash through the Government Development Bank, according to dealbook.nytimes.com. S&P, the report notes, said it did not expect the cash squeeze to ease soon and was keeping all of Puerto Rico's debt on negative watch, which means more downgrades could follow. The report discloses that the implications of slipping into junk territory are greater than a one-notch downgrade might suggest. A good portion of Puerto Rico's debt was issued with promises to make cash payments if it fell below investment grade, and ready cash is precisely what Puerto Rico lacks, the report relays. dealbook.nytimes.com discloses that S&P estimated that the downgrade would initiate cash calls totaling $940 million, including the acceleration of debt service and the posting of additional collateral on interest-rate swaps. Some of those commitments call for Puerto Rico to produce the cash within 30 days. "We understand that the G.D.B. is currently negotiating to have certain debt holders waive acceleration provisions," S.&P. said, referring to the Government Development Bank, which orchestrates the island's many borrowings, among other duties, the report notes. S.&P. said the development bank was also "arranging for new multiyear external bank credit lines that could mitigate near- term liquidity risks," the report relates. The report says that some institutional holders of Puerto Rico's debt have rules saying they cannot hold junk-rated debt, although those rules typically kick in after two such downgrades by the top rating agencies. That left market participants watching for the next downgrade; Moody's Investors Service and Fitch Ratings both rate Puerto Rico's debt a single notch above junk, the report notes. "I think you'd be hard-pressed to find any financial professional who did not think Puerto Rico did not deserve an investment grade rating," the report quoted Matt Fabian, a managing director at Municipal Market Advisors. "You have to expect more downgrades." Mr. Fabian, the report relates, said the mere fact that S.&P. had taken the step would reduce market confidence, making downgrades by the other firms more likely. The report notes that Puerto Rico had been planning to bring $1 billion to $2 billion of new debt to market this month or next. The downgrade and cash calls seemed likely to complicate that borrowing, the report relates. The Puerto Rican treasury secretary, Melba Acosta Febo, and the chairman of the Government Development Bank, David H. Chafey Jr., issued a joint statement confirming that they were having discussions with unidentified parties about how to address immediate cash needs, the report notes. "We are confident that we have the liquidity on hand to satisfy all liquidity needs until the end of the fiscal year, including any cash needs resulting from today's decision," the two officials said, the report adds. PUERTO RICO AQUEDUCT: S&P Lowers Revenue Bonds Rating to 'BB+' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered by one notch, to 'BB+', the rating on Puerto Rico Aqueduct & Sewer Authority's (PRASA) revenue bonds guaranteed by the Commonwealth of Puerto Rico. The rating remains on CreditWatch, where it was placed with negative implications on Jan. 24, 2014. The downgrade and CreditWatch status reflect S&P's similar action today on the commonwealth's general obligation (GO) debt rating. In addition, S&P has placed the 'BB+' rating on PRASA's senior- lien (gross pledge) revenue bonds on CreditWatch with negative implications. Although the rating is not immediately affected by the downgrade, the CreditWatch action on those bonds reflects the relationship between PRASA and the commonwealth. PRASA's stand- alone credit profile remains 'bb+', which reflects S&P's view of the authority's general creditworthiness solely on its own fundamentals. "The CreditWatch action on the senior-lien revenue bonds is based our opinion that PRASA is a governmental-related entity of the commonwealth. Should the GO rating be lowered again, we would also downgrade the commonwealth-supported PRASA bonds as well as PRASA's senior-lien revenue bonds," said Standard & Poor's credit analyst Ted Chapman. "The Government Development Bank (GDB) continues to be the key tool for financing the commonwealth's structural budgetary gap, which also then affects PRASA debt supported by the commonwealth. The GDB is also PRASA's main source of interim capital improvement funding by way of several different revolving credit agreements and committed lines of credit," said Mr. Chapman. PRASA's commonwealth-backed debt is about $1.1 billion (including State Revolving Fund and U.S. Dept. of Agriculture borrowings) out of the authority's roughly $4.6 billion in total debt. UNIV. OF PUERTO RICO: S&P Lowers SPUR to 'BB+' on Revenue Bonds --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term rating and underlying rating (SPUR) to 'BB+' from 'BBB-' on the University of Puerto Rico's (UPR) existing university system revenue bonds, some of which were issued by the Puerto Rico Industrial, Tourist, Educational, Medical, & Environmental Control Facilities Finance Authority. S&P also lowered the standalone credit profile on the university to 'bb+' from 'bbb-'. The rating remains on CreditWatch with negative implications. "Per our government related entities (GRE) criteria, a rating change on Puerto Rico (BB+/Watch Negative) would result in a rating change to the UPR given the high likelihood of extraordinary support," said Standard & Poor's credit analyst Bianca Gaytan-Burrell. *********** 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. Submissions about insolvency-related conferences are encouraged. 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