/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/140502.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 Friday, May 2, 2014, Vol. 15, No. 86 Headlines B R A Z I L BROOKFIELD INCORPORACOES: Moody's Rates BRL300MM Debentures 'B1' DIAGNOSTICOS DA AMERICA: S&P Affirms 'BB' CCR; Outlook Stable C A Y M A N I S L A N D S CENTRON GLOBAL: Creditors' Proofs of Debt Due May 22 CFS LIQUIDATORS: Creditors' Proofs of Debt Due May 13 CHATEAU ASSET: Court Enters Wind-Up Order EUCALYPTUS MACRO: Creditors' Proofs of Debt Due May 22 LION/SILK: Creditors' Proofs of Debt Due May 15 LION/SILK: Shareholder to Hear Wind-Up Report on May 16 LION/SILK HOLDINGS: Creditors' Proofs of Debt Due May 15 LION/SILK HOLDINGS: Shareholder to Hear Wind-Up Report on May 16 TSF KASUMIGASEKI: Creditors' Proofs of Debt Due May 22 VEGA CAPITAL: Creditors' Proofs of Debt Due May 13 VITALITY RE II: Creditors' Proofs of Debt Due May 13 WILMINGTON TRUST: Creditors' Proofs of Debt Due May 13 C O L O M B I A COLOMBIA: Warns of Emergency Decree for Pipeline Standoff D O M I N I C A N R E P U B L I C DOMINICAN REP: Commonwealth Countries Mull Mining Industry Impact J A M A I C A JAMAICA: Innovators Get Pre-qualification for EXIM Bank Loan M E X I C O TABASCO: Moody's Changes Ba1 Issuer Rating Outlook to Positive P A N A M A MULTIBANK INC: S&P Revises Outlook to Pos. & Affirms 'BB+' LT ICR U R U G U A Y BANCO DE LA NACION: Moody's Withdraws Caa1 Deposit Rating - - - - - =========== B R A Z I L =========== BROOKFIELD INCORPORACOES: Moody's Rates BRL300MM Debentures 'B1' ---------------------------------------------------------------- Moody's America Latina assigned ratings of B1 on the global scale and Baa2.br on the Brazilian national scale to the BRL300 million senior unsecured debentures issued by Brookfield Incorporacoes S.A. (Brookfield) in March 2011. The ratings are under review for downgrade. Ratings Assigned: BRL150 million senior unsecured debentures due March 2015 (1st series; 3rd issue): B1 (global scale) / Baa2.br (Brazil national scale) BRL150 million senior unsecured debentures due March 2016 (2nd series; 3rd Issue): B1 / Baa2.br Ratings Rationale The B1/Baa2.br ratings reflect Brookfield's position among the largest homebuilders in Brazil, with strong brand name, long track record in real estate development and good diversity in terms of product offering ranging from economic to high income apartments and office buildings. The ratings also consider the benefit of having Brookfield Asset Management Inc. (BAM; Baa2/ stable) as the largest individual shareholder. On the other hand, Brookfield's high leverage and ongoing execution risks constrain the ratings, as does the sizeable land bank, which is not entirely suitable for its current business strategy, and its relatively tight liquidity position. The 3rd issuance debentures are effectively subordinated to other secured debt issued at Brookfield's project level, but are rated at the same level as the company's corporate family rating given the high amount of unsecured debt in its overall capital structure and the still comfortable level of unencumbered assets outstanding, which should provide adequate recovery for the unsecured debt holders in case of a default. Moody's estimate the level of unencumbered assets at approximately 1.3 time the amount of unsecured debt outstanding for fiscal year end 2013. Brookfield's ratings are currently under review for possible downgrade given the company's limited liquidity to address significant debt maturities over the next two years and the challenges to improve profitability and deleverage its balance sheet on a timely basis, amid evolving industry fundamentals and ongoing changes in its governance structure. The ratings review process, which Moody's expects to conclude swiftly, will focus on Brookfield's expected capital structure after the completion of the planned tender offer for outstanding shares, along with the company's initiatives to lengthen its debt profile. The ratings could be downgraded if Brookfield proves unable to address about BRL2.1 billion in corporate debt maturing until 2015 or indicate a clear deleveraging trend within a reasonable timeframe. In Moody's view, although cash generation could improve, supported by the high number of project deliveries combined with lower launches, liquidity and leverage should remain pressured in the absence of a substantial capital increase or a major land bank divesture. A material increase in the relative amount of secured or project level debt in Brookfield's consolidated capital structure could also trigger a downgrade of the ratings assigned to the senior unsecured debentures. The principal methodology used in this rating was Global Homebuilding Industry published in March 2009. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for M‚xico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings". DIAGNOSTICOS DA AMERICA: S&P Affirms 'BB' CCR; Outlook Stable ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' global scale corporate credit rating and 'brAA-' national scale corporate credit and debt ratings on Diagnosticos da America S.A. (DASA). The outlook on the corporate credit ratings remains stable. The ratings on DASA reflect S&P's assessment of its "fair" business risk profile and "significant" financial risk profile. S&P's business risk profile is based on its assessment of the company's "fair" competitive position, reflecting its leading position and large scale in the Brazilian medical diagnostics sector, with about 13% of market share, which translates into reasonable bargaining power with suppliers. However, the company's profitability weakened since 2011 partly due to the integration of several acquisitions. S&P's business risk assessment also incorporates its view of the health care services industry's "intermediate" risk and "moderately high" country risk, as DASA only operates in Brazil. S&P don't expect the company to make any significant acquisition in the next few years because the anti-trust regulator wouldn't allow greater market concentration and we believe the company will focus on internal expansion mainly through the opening of new patient service centers and new lab-to-lab clients. The company should continue to benefit from the increasing access to healthcare, as employment levels in Brazil remain high, and from its multibrand platform, which allows it to reach customers at different income levels. After a period of lower profitability due to equipment changes and higher expenses to improve service quality, S&P expects DASA to improve EBITDA margin to above 22%, through the full integration of acquired assets (after the approval of MD1 acquisition in December 2013), ongoing gains of scale related to its fixed-cost structure, higher capacity utilization, and somewhat different mix of services with focus on more profitable image diagnostic exams. ========================== C A Y M A N I S L A N D S ========================== CENTRON GLOBAL: Creditors' Proofs of Debt Due May 22 ---------------------------------------------------- The creditors of Centron Global Opportunity Fund are required to file their proofs of debt by May 22, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 9, 2014. The company's liquidator is: Sami Dahmani Telephone: (41) 919 1 18540 Facsimile: (41) 919 1 18542 UBS Fund Services (Cayman) Ltd UBS House, 227 Elgin Avenue Grand Cayman Cayman Islands CFS LIQUIDATORS: Creditors' Proofs of Debt Due May 13 ----------------------------------------------------- The creditors of CFS Liquidators Ltd are required to file their proofs of debt by May 13, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on March 27, 2014. The company's liquidator is: CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands CHATEAU ASSET: Court Enters Wind-Up Order ----------------------------------------- On April 3, 2014, the Grand Court of Cayman Islands entered an order to wind up the operations of Chateau Asset Management SPC. The company's liquidator is: Stuart Sybersma Timothy Derksen Deloitte & Touche P.O Box 1787, Grand Cayman, KY1-1109, Cayman Islands EUCALYPTUS MACRO: Creditors' Proofs of Debt Due May 22 ------------------------------------------------------ The creditors of Eucalyptus Macro Fund Ltd. are required to file their proofs of debt by May 22, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 9, 2014. The company's liquidator is: DMS Corporate Services Ltd c/o Nicola Cowan Telephone: (345) 946 7665 Facsimile: (345) 949 2877 dms House, 2nd Floor P.O. Box 1344 Grand Cayman KY1-1108 Cayman Islands LION/SILK: Creditors' Proofs of Debt Due May 15 ----------------------------------------------- The creditors of Lion/Silk Investments Ltd are required to file their proofs of debt by May 15, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 11, 2014. The company's liquidator is: Stuarts Walker Hersant Telephone: (345) 949 3344 Facsimile: (345) 949 2888 P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands LION/SILK: Shareholder to Hear Wind-Up Report on May 16 ------------------------------------------------------- The shareholder of Lion/Silk Investments Ltd will hear on May 16, 2014, at 11:30 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company commenced liquidation proceedings on April 11, 2014. The company's liquidator is: Stuarts Walker Hersant Telephone: (345) 949 3344 Facsimile: (345) 949 2888 P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands LION/SILK HOLDINGS: Creditors' Proofs of Debt Due May 15 -------------------------------------------------------- The creditors of Lion/Silk Investments Holdings Ltd are required to file their proofs of debt by May 15, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 11, 2014. The company's liquidator is: Stuarts Walker Hersant Telephone: (345) 949 3344 Facsimile: (345) 949 2888 P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands LION/SILK HOLDINGS: Shareholder to Hear Wind-Up Report on May 16 ---------------------------------------------------------------- The shareholder of Lion/Silk Investments Holdings Ltd will hear on May 16, 2014, at 11:30 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company commenced liquidation proceedings on April 11, 2014. The company's liquidator is: Stuarts Walker Hersant Telephone: (345) 949 3344 Facsimile: (345) 949 2888 P.O. Box 2510 Grand Cayman KY1-1104 Cayman Islands TSF KASUMIGASEKI: Creditors' Proofs of Debt Due May 22 ------------------------------------------------------ The creditors of TSF Kasumigaseki are required to file their proofs of debt by May 22, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 8, 2014. 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 VEGA CAPITAL: Creditors' Proofs of Debt Due May 13 -------------------------------------------------- The creditors of Vega Capital Ltd. are required to file their proofs of debt by May 13, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 10, 2014. The company's liquidator is: Carl Gosselin Wilmington Trust (Cayman), Ltd. P.O. Box 32322 Grand Cayman KY1-1209 Cayman Islands Telephone: (345) 640-6712 VITALITY RE II: Creditors' Proofs of Debt Due May 13 ---------------------------------------------------- The creditors of Vitality RE II Ltd. are required to file their proofs of debt by May 13, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 10, 2014. The company's liquidator is: Carl Gosselin Wilmington Trust (Cayman), Ltd. P.O. Box 32322 Grand Cayman KY1-1209 Cayman Islands Telephone: (345) 640-6712 WILMINGTON TRUST: Creditors' Proofs of Debt Due May 13 ------------------------------------------------------ The creditors of Wilmington Trust CI Holdings Limited are required to file their proofs of debt by May 13, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on April 1, 2014. The company's liquidator is: Carl Gosselin Wilmington Trust (Cayman), Ltd. Attn.: Carl Gosselin P.O. Box 32322 Grand Cayman KY1-1209 Cayman Islands Telephone: (345) 640-6712 =============== C O L O M B I A =============== COLOMBIA: Warns of Emergency Decree for Pipeline Standoff --------------------------------------------------------- Andrew Willis and Oscar Medina at Bloomberg News report that members of a Colombian indigenous group blocking essential repairs to the country's second-largest pipeline say they'll peacefully oppose any government attempts to fix the oil duct using force. The forest-dwelling U'wa want the Cano Limon-Covenas pipeline partially re-routed and a cessation of oil exploration activities by state-controlled Ecopetrol SA (ECOPETL) at the Magallanes site in the eastern Norte de Santander province, according to Bloomberg News. "We will resist, but only using words," U'wa Association Vice President Heber Tegria told Bloomberg News in a telephone interview. "We are not optimistic the government will accept our requests," Mr. Tegria said, Bloomberg News relates. Paralysis at the Cano Limon pipeline following an attack by Marxist rebels March 25 has cut Ecopetrol exports by 2.7 million barrels so far, the company said in an e-mailed response to questions, Bloomberg News notes. The U'wa are also blocking the entrance to the Magallanes site, Mr. Tegria said, Bloomberg News relates. Government, Ecopetrol and U'wa representatives were scheduled to meet May 1 after earlier attempts to end the standoff failed. State of Emergency The month-long confrontation at the Ecopetrol-owned pipeline is threatening Colombia's ability to meet oil export targets and may force the government to declare a national emergency, Mines and Energy Minister Amylkar Acosta said, Bloomberg News relates. "This almost merits a declaration of emergency by the national government," Mr. Acosta told local radio station Caracol, Bloomberg News notes. "There are reasons of state, and there's a public interest that takes precedence," Mr. Acosta said, relays the report. Bloomberg News notes that an emergency declaration would give Colombian President Juan Manuel Santos powers to rule by decree for 30 days and would potentially overrule standard protocol when dealing with the indigenous group. Royalties from oil, Colombia's biggest export, are a key source of revenue for the government, which is currently battling farmer protests ahead of presidential elections in four weeks, Bloomberg News relates. The Cano Limon pipeline takes oil from eastern Colombia to the Caribbean coast, Bloomberg News says. The U'wa demand the duct's path be partially altered to bypass ancestral lands that have suffered repeated oil spills and a rising military presence, Bloomberg News discloses. 'Social Debt' "The Colombian state has a historic social debt with the U'wa nation for ethnocide, genocide and ecocide," the group said in an April 25 statement, demanding COP2 trillion (US$1 billion) in compensation, Bloomberg News notes. As well as blocking the pipeline repair works, the indigenous group has halted gas exports from the Gibraltar field, Mr. Acosta said, Bloomberg News relates. "The government has a very difficult balancing act," Bloomberg News cited James Lockhart Smith, Latin America analyst with risk consultants Maplecroft, as saying by phone from London. "It wants to ensure companies can invest efficiently while making every attempt to be respectful of indigenous rights." Colombian pipeline explosions have surged over the past year as the government holds peace talks in Havana with the country's largest rebel group, the Revolutionary Armed Forces of Colombia, or FARC, Bloomberg News discloses. There were 33 pipeline attacks in the first three months of this year, and a total of 259 in 2013, according to Defense Ministry data, Bloomberg News adds. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Commonwealth Countries Mull Mining Industry Impact ----------------------------------------------------------------- Dominican Today reports that representatives from the countries of the Commonwealth in the Dominican Republic will meet in their traditional monthly luncheon, to discuss the importance of mining and its impact on the nation's economic development. David Soares, Xstrata Nickel Falcondo Chief Executive Officer in Dominican Republic will be guest speaker in the luncheon slated for the Hilton Hotel, hosted by the Chambers of Commerce of Great Britain, Canada, Trinidad & Tobago, India and the Dominican Foreign Investment Companies Association (ASIEX), according to Dominican Today. The report notes that Mr. Soares will speak on the mining industry's impact on the country's various productive sectors. The Roundtable of Commonwealth Countries in the Dominican Republic promotes bilateral relations between its 53 nations, from as large as India to as small as Trinidad & Tobago; both rich and poor, but united by the same language, political system and idiosyncrasy, the report relates. ============= J A M A I C A ============= JAMAICA: Innovators Get Pre-qualification for EXIM Bank Loan ------------------------------------------------------------ RJR News reports that a number of Jamaican innovators in the creative industries have received pre-qualification for an EXIM Bank loan of up to J$2 million, at a special concessionary rate of 9.5 per cent. Their work, upon completion, will also receive exposure at tourist stops across the island, according to RJR News. The group was among 114 entrants that participated in a Jamaica Intellectual Property Office (JIPO) Authentic Jamaica Design Competition, the report relates. =========== M E X I C O =========== TABASCO: Moody's Changes Ba1 Issuer Rating Outlook to Positive -------------------------------------------------------------- Moody's de Mexico changed the outlook on the state of Tabasco's A1.mx (Mexico National Scale) and Ba1 (Global Scale, local currency) issuer ratings to positive from stable. Affirmations: Issuer: Tabasco, State of Issuer Rating, Affirmed Ba1 Issuer Rating, Affirmed A1.mx MXN 449.9 million enhanced loan with Santander, Affirmed Baa2 MXN 449.9 million enhanced loan with Santander, Affirmed Aa1.mx MXN 3 billion enhanced loan with Banorte, Affirmed Baa2 MXN 3 billion enhanced loan with Banorte, Affirmed Aa1.mx MXN 1.6 billion enhanced loan with Banamex, Affirmed Baa2 MXN 1.6 billion enhanced loan with Banamex, Affirmed Aa2.mx Ratings Rationale Moody's revised the outlook of the state of Tabasco's issuer ratings to positive from stable, reflecting Moody's expectation that the state's cash financing surpluses along with low debt levels and positive liquidity position will continue in the near to medium term reflecting stronger governance and management practices. Over the last five years, Tabasco has registered cash financing surpluses equivalent, on average, to 3.5% of total revenues. In 2013, the state posted a cash financing surplus equivalent to 5.3% of total revenues, a level higher than national peers. These results reflect the state's efforts to control expenditure growth and initiatives to increase own-source revenues enhanced by the current administration. The stable financial results are partially underpinned by own- source revenues, which have grown at a compound annual growth rate of 30.2% over the period 2009-2013. Own-source revenues represent 8.5% of Tabasco's total revenues, above national peers. Thanks to frequent budgetary surpluses, the state of Tabasco was able to maintain low debt levels. Net direct and indirect debt was equivalent to a low 10% of total revenues at the end of 2013. Moody's expects debt indicators to remain low at roughly 9% of total revenues during 2014, as the state does not have plans to contract additional loans. The state of Tabasco registers high unfunded pension liabilities estimated on 178% of total revenues in 2013, a credit challenge. Furthermore, reflecting cash management measures recently implemented, the state posted positive liquidity during 2013. Measured as net working capital (current assets less current liabilities) liquidity was equivalent to 1.5% of total expenditures, compared to a -6.4% registered, on average, during the 2009-2012 period. What Could Change The Ratings Up/Down The positive outlook reflects the positive trends of financial performance, low debt metrics and positive liquidity. Upward rating pressure would result from a) balanced cash financing results, b) low debt levels, c) positive liquidity position and d) strengthening of Tabasco's pension system. A shift in fiscal policy, generating cash financing deficits, larger-than-expected debt levels and a deterioration in the state's net working capital position, could exert downward pressure on the ratings. The principal methodology used in this rating was Regional and Local Governments published in January, 2013. The period of time covered in the financial information used to determine state of Tabasco's rating is between January 1, 2009 and December 31, 2013. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for M‚xico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings". =========== P A N A M A =========== MULTIBANK INC: S&P Revises Outlook to Pos. & Affirms 'BB+' LT ICR ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Multibank Inc. y Subsidiarias to positive from stable. At the same time, S&P affirmed its long-term 'BB+' and short-term 'B' issuer credit ratings on the bank. The outlook revision reflects S&P's view that Multibank has strengthened its capitalization levels; as of Dec. 31, 2013, S&P's risk adjusted capital (RAC) ratio was 9.96%. S&P expects this trend to continue during the next two years. If the bank continues to strengthen its capital base through capital injections and/or the issuance of hybrid capital instruments -- with loss absorption capacity on a going-concern basis -- then S&P's projected RAC ratio could surpass 10% and remain at that level for the next couple of years. In this context, S&P would revise its assessment on its capital and earnings to "strong" from "adequate." This would trigger an upgrade on the bank if its business and risk positions, funding, and liquidity remained unchanged. The ratings on Multibank reflect S&P's view of its "moderate" business position, "adequate" capital and earnings, "adequate" risk position, "average" funding, and "adequate" liquidity, as S&P's criteria define these terms. The bank's stand-alone credit profile (SACP) is 'bb+'. "Under our bank criteria, we use our Banking Industry Country Risk Assessment's economic risk and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. Our anchor for Multibank is 'bbb-', which reflects our view of the weighted-average economic risk in the countries to which the bank is exposed through its loan book -- mainly Panama (representing approximately 70% of loans as of Dec. 31, 2013), Colombia, Peru, Costa Rica, and other Latin American countries. We score BICRAs on a scale of '1' to '10', ranging from the lowest risk banking systems (group '1') to the highest risk (group '10'). Our weighted economic risk score for these countries is '6.0'," S&P said. "The common factors behind this score are low income levels in the countries where the bank operates, which affect the countries' vulnerability to external shocks, and debt and payment capacity in countries that have a weak rule of law. In particular, 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," S&P added. "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 said. S&P continues to assess Multibank's business position as "moderate" based on its still small market position within Panama, where the bank held 70% of its total loans, as of Dec. 31, 2013, and smaller customer base with respect to other Panamanian banks. S&P do not believe Multibank holds a significant market position in any of the business activities that represent a significant share of its loan portfolio. Multibank holds less than 6% of the market of its most relevant business line, the commercial segment, which represents about 30% of its total loans granted in Panama. During the past four years, Multibank's loan portfolio has grown above that of the Panamanian banking industry, which is reflected in a compound annual growth rate (CAGR) of 23.4% versus the industry's 13.7%. However, given Multibank's small customer base, this aggressive growth is still not reflected in a strong market position. As of Dec. 31, 2013, the bank's total loans were $2.1 billion, representing 4.1% of the Panamanian banking system. "In our view, the Panamanian banking system is highly competitive, and if domestic players -- in particular those who enjoy higher economies of scale, access to cheaper funding costs, and wider distribution networks compared to Multibank -- were to implement aggressive growth strategies, the low-price environment would weaken Multibank's ability to attract and retain customers, adding volatility to its business volumes. The bank's significant exposure to small and medium enterprises (SMEs) and the risks these entities' represent due to their susceptibility to a potential economic downturn, threaten its business stability. Panamanian banks' appetite for SMEs is building; therefore, despite Multibank's strong expertise in this segment, banks with larger business volumes and greater business line diversification are better positioned for a downside scenario," S&P said. As a universal bank, Multibank offers a well-diversified product range. As of Dec. 31, 2013, Multibank's total loans were distributed among corporate and commercial loans (66% versus 54% for the Panamanian banking industry), personal loans (22% compared to 19% for the industry), and mortgages (12% versus 27% for the industry). Additionally, Multibank's geographic distribution increasingly supports its total revenues, which in turn boosts its business position. In 2013, Multibank incorporated German development bank, DEG, a subsidiary of the KfW Group (AAA/Stable/A-1+), as stakeholder. DEG currently holds 7% of Multibank's shares through a US$30 million capital injection, and will become a strategic partner. S&P believes this partnership will further improve the already good corporate governance standards Multibank has established. S&P's assessment of Multibank's capital and earnings remains "adequate." S&P's RAC ratio on Multibank is at the upper end of the "adequate" category, and it believes the bank will continue to further strengthen its capital base, which will likely lead S&P to raise its capital and earnings assessment on Multibank. During 2013, Multibank strengthened is risk-adjusted capitalization due to significantly lower-than-expected credit expansion (observed loan growth was 17% in 2013 while we expected 30% growth), and higher-than-expected capital injections (US$40 million versus our expectation for US$30 million). S&P's RAC ratio was 9.96% at year-end 2013. In S&P's view, Multibank will continue to strengthen its capitalization levels through its internal capital generation capacity, and through the issuance of additional preferred shares with similar characteristics to those that are outstanding, which we assess as having "intermediate" equity content. Therefore, S&P expects its RAC ration on Multibank will be consistently above 10.25% in the next two years. S&P's financial forecasts take into consideration the following assumptions for 2014 and 2015: -- Panama's expected GDP of about5%; -- Loan portfolio growth of about 19% in 2014 and 15% in 2015; -- Nonperforming assets (NPAs; NPAs = past due loans plus repossessed assets) of about 1% fully covered by reserves and net charge-offs below 0.4%; -- Return on assets of about 1.4% with a net interest margin at about 3.5%, and credit loss provisions representing around 9.5% of its operating revenues. Non-interest expenses to operating revenues will be at about 55%. Multibank expects to generate $7 million of additional income by year-end 2014. However, if the bank is unsuccessful, it plans to make a capital injection (common stock) to cover that amount; -- A $29 million issuance of preferred shares with intermediate equity content (according to our criteria) during the second-half of 2014, and an additional $15 million issuance of these instruments in 2015; and -- In case the dividend payout ratio exceeds 18%--setting pressure on the RAC ratio--then the bank's shareholders would compensate it with capital injections of common equity. In S&P's view, Multibank's quality of capital and earnings remains moderate, reflecting the important participation of hybrid instruments within its total adjusted capital, 22% as of Dec. 31, 2013. S&P expects this ratio to be at about 25% in the next two years. Multibank's US$73 million preferred shares are fully integrated in S&P's estimates for the bank's total adjusted capital. In S&P's opinion, Multibank's earnings capacity is moderate. Although the bank's pre-provision operating income fully covers its normalized losses, according to S&P's criteria, its earnings buffer remains at about 1%. During 2013, Multibank's market-related income was somewhat affected by the volatility associated with the U.S. Federal Reserve's announcements regarding potential changes in its monetary policy in the near future. During the third quarter 2013, Multibank reclassified some securities from the "available for sale" to the "hold-to-maturity" category. This was because at that time these securities had unrealized losses (US$11.3 million), and the bank believed that given the high credit quality of the issuers, those securities would recover in the future. That strategy allowed the bank to remove volatility from its bottom-line results. Multibank's board of directors plans to cover these securities with derivatives to avoid a drop in its capital base due to the unrealized losses. S&P continues to assess Multibank's risk position as "adequate." In S&P's view, the bank's healthy asset quality metrics, and the management's continued efforts to improve its risk diversification within its loan portfolio are positive factors in S&P's risk position assessment, as they limit the bank's past aggressive credit expansion. In spite of Multibank's aggressive growth strategy implemented in recent years, during 2013, the bank's growth slowed to 17% (the bank's CAGR of for the past four years was 23.4%). This slowdown was primarily due to the marginal growth in its commercial loans in 2013 of less than 5%, which S&P believes was associated with challenges related to the Colon Free Trade Zone (CFTZ). For Multibank, the exposure to CFTZ represents about 17% of its commercial loans. The bank has reduced its exposure to this business line following what it considers low margins related to this business, resulting in a 25% contraction in 2013. The banking system's growth in this line was about 10%. In order to mitigate CFTZ risks, Multibank limits its customers to those who have a long track record operating this business line. "In our view, there is no material risk for Multibank in terms of the concentration of exposures to individual debtors, counterparties, and industries or sectors, or aggregations of risk across asset classes or risk types. We believe the bank has an effective strategy to diversify its loan portfolio by individual borrower. As of Dec. 31, 2013, Multibank's top 20 customers represented 10.4% of its total loans and 73% of its total equity. The bank's exposure to related parties remains marginal; it represented 1.2% of the bank's total assets at year-end 2013 (1.5% in 2012). On the other hand, the commercial segment remains as the most relevant business line, representing 35% of Multibank's loan portfolio as of Dec. 31, 2013. Construction represents 9% of the bank's total loans and, in our view, the bank's relatively low risk appetite is reflected in the low participation of the commercial real estate loans within the construction business segment (12%). Multibank is oriented to middle-market residential developers, which, in our view, represent lower risk with respect to those oriented in high-end projects," S&P said. S&P believes Multibank will maintain its adequate underwriting policies which will allow it to maintain low credit losses during the next 12-24 months, representing a positive factor for its risk position. As of Dec. 31, 2013, Multibank's NPAs represented 0.9% of its total loans and were fully covered by reserves (1.8 x). S&P expects these ratios to remain relatively stable during the next two years, as it expects Multibank's strong expertise in the commercial sector and given the high participation of payroll loans within the bank's consumer and mortgage portfolios will continue to support its asset quality. "In our opinion, Multibank has "average" funding in the Panamanian banking system and "adequate" liquidity. Total deposits continue to be the bank's primary funding source, representing 75% of its funding base as of Dec. 31, 2013. We believe the bank's deposit base is well-diversified considering the high participation of retail deposits (around 50%) within its total deposit base, which we consider to be more stable than those that are wholesale. Additional funding sources include repos (3.4%), interbank loans (20%), and corporate bonds (1.6%). We view the bank's ability to consistently fully cover its stable funding needs with its available stable funding as a positive factor. At year-end 2013, this ratio was 106.8% with a three-year average of 107.2%, which we consider as average compared to other banks in the country and in the region. One of the bank's main challenges is to raise funding outside of Panama in order to finance its future growth in the countries where the bank is expanding. In addition, we believe the bank faces challenges as it diversifies its funding sources, aiming at longer tenor funds to better match its balance sheet," S&P said. Multibank has $73 million preferred shares that S&P considers "intermediate" equity content hybrid instruments. These are fully incorporated within its total adjusted capital, and S&P believes this kind of instruments could represent an additional source of funding for the bank in the future. Multibank's liquidity remains "adequate." Panamanian banks in general, report higher liquidity ratios with respect to other banking industries in the region. This reflects the absence of a lender of last resort in Panama. In the case of Multibank, its coverage of short-term wholesale funding through broad liquid assets (1.6x as of Dec. 31, 2013 while the average of the last three years was 1.9x) is adequate. However, this ratio is slightly below that of other Panamanian players'; however, S&P believes Multibank's liquidity is still adequate and in line with other players within the region. As of Dec. 31, 2013, Multibank's broad liquid assets represented about 29% of the bank's total deposit base. The positive outlook reflects S&P's expectation that Multibank will keep improving its risk-adjusted capital through capital injections and/or issuing hybrid capital instruments -- with similar equity characteristics -- with loss absorption capacity on a going-concern basis. S&P believes that if Multibank issues additional preferred shares during 2014 and 2015, and considering its expected internal capital generation capacity for the next two years, S&P's RAC ratio on the bank could surpass 10% consistently. S&P would revise its assessment on its capital and earnings to "strong" from "adequate" if its projected RAC remains consistently above 10% because: -- Multibank's loan growth meets our expectations (19% in 2014 and 15% in 2015), -- It strengthens its capital through capital injections of common stock and/or hybrid instruments, and in case the dividend payout ratio exceeds 18%--setting pressure on the RAC ratio--then the bank would compensate it with capital injections of common equity, A "strong" capital and earnings assessment could then trigger an upgrade on Multibank in the next six to 12 months, if its business and risk positions, funding, and liquidity remain unchanged. S&P could revise Multibank's outlook to stable if its observed results (loan growth, capitalization levels, and dividend payments) fall short of S&P's financial forecasts, resulting in a RAC ratio below 10% and if Multibank's business and risk positions, and funding and liquidity remain unchanged. ============= U R U G U A Y ============= BANCO DE LA NACION: Moody's Withdraws Caa1 Deposit Rating --------------------------------------------------------- Moody's Investors Service has withdrawn all of its ratings for Banco de la Nacion Argentina (Uruguay) for business reasons. The following ratings of Banco de la Nacion Argentina (Uruguay) were withdrawn: Long- and short-term global local currency deposit rating of Caa1/Not Prime, stable outlook Long term national scale local currency deposit rating of Ba2.uy Long- and short-term global foreign currency deposit rating of Caa1/Not Prime, stable outlook Long term national scale foreign currency deposit rating of Ba2.uy Ratings Rationale Moody's has withdrawn the rating for its own business reasons. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. Banco de la Nacion Argentina (Uruguay) is headquartered in Montevideo, Uruguay, and as of December 2013 it had US$139.5 million in assets and US$16.2 million in equity. *********** 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. 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, and Peter A. Chapman, Editors. Copyright 2014. 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. 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