/raid1/www/Hosts/bankrupt/TCRLA_Public/140521.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, May 21, 2014, Vol. 15, No. 99
Headlines
A R G E N T I N A
ARGENTINA: VP May Have to Testify in Probe After Court Decision
B O L I V I A
BOLIVIA: S&P Raises LT Currency Ratings to 'BB'; Outlook Stable
B R A Z I L
ELETROPAULO METROPOLITANA: S&P Affirms 'BB' CCR; Outlook Neg.
LIBRA TERMINAL: Fitch Assigns Issuer Default Rating of 'BB+'
C A Y M A N I S L A N D S
AL ZOR: Creditors' Proofs of Debt Due June 17
CITADEL GLOBAL: Creditors' Proofs of Debt Due June 16
HIROSHIMA PREFERRED: Creditors' Proofs of Debt Due June 16
LM ISIS: Creditors' Proofs of Debt Due June 13
LM ISIS MASTER: Creditors' Proofs of Debt Due June 13
LONE BALSAM I: Creditors' Proofs of Debt Due June 17
LONE CEDAR III: Creditors' Proofs of Debt Due June 17
LONE CEDAR IV: Creditors' Proofs of Debt Due June 17
LONE SEQUOIA I: Creditors' Proofs of Debt Due June 17
MKP PARTNERS: Creditors' Proofs of Debt Due June 19
C H I L E
PS24: Fitch Affirms C Series' National Classification at 'C (cl)'
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Agro Paces 5.5% Growth in First Quarter
J A M A I C A
RBC JAMAICA: Sagicor Expects Minister to Approve Deal in June
M E X I C O
ARENDAL: S&P Lowers ICR to 'B-'; Outlook Stable
TENEDORA NEMAK: S&P Affirms 'BB+' CCR; Outlook Stable
URBI DESARROLLOS: Moody's Lowers Corporate Family Rating to C
URBI DESARROLLOS: Moody's Cuts Sr. Unsecured Debt Rating to C.mx
P U E R T O R I C O
DDR CORP: Fitch Affirms 'BB' Rating on $350MM Preferred Stock
V E N E Z U E L A
PETROLEOS DE VENEZUELA: Alstom Grid Gets EUR15MM Project Award
PETROLEOS DE VENEZUELA: Fitch to Rate US$5BB Issuance 'B/RR4'
PETROLEOS DE VENEZUELA: S&P Assigns 'B-' Rating to $5BB Sr. Notes
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: VP May Have to Testify in Probe After Court Decision
---------------------------------------------------------------
Ken Parks and Shane Romig at The Wall Street Journal report that
an Argentine federal appeals court decision opened the door for
Vice President Amado Boudou to be called to testify as a suspect
in a criminal investigation.
On May 16, a three-judge panel rejected a request by Mr. Boudou's
attorney to have the vice president removed from the case on
grounds that there was no criminal wrongdoing, according to The
WSJ. The ruling paves the way for federal judge Ariel Lijo to
call the vice president to testify in the coming weeks, according
to people familiar with the case, the report relates.
Judge Lijo would then have to decide to dismiss the case or
continue prosecution, The WSJ notes.
The report relates that the case centers on Ciccone Calcografica
SA, a struggling family-run printing firm that had a long history
of printing money and high-security documents, such as ID cards,
for government clients.
Shortly after a judge declared the firm bankrupt in July 2010, the
Ciccone family asked the government to reschedule almost 250
million pesos ($31 million) in taxes, the report discloses. That
request prompted the tax agency to seek Mr. Boudou's opinion,
according to legal documents seen by The Wall Street Journal.
Prosecutors have built much of their case around a vaguely-worded
memo, released by the local tax agency director, in which Mr.
Boudou allegedly suggested the agency help Ciccone because of its
strategic importance, but without compromising the public purse,
the report notes.
The tax agency rejected the Ciccone family's proposal, though it
approved a subsequent request that wasn't reviewed by Mr. Boudou,
the report relays.
The company exited bankruptcy later that year, following a capital
injection by investment firm The Old Fund, whose chairman,
Alejandro Vandenbroele, was an acquaintance of Mr. Boudou's
lifelong friend and business partner, Jose Maria Nunez Carmona,
the report recalls.
The Old Fund's sources of funding are also under scrutiny in the
same probe, according to people familiar with the investigation,
the report discloses.
The probe started in February 2012, but didn't affect Mr. Boudou
until, days before Easter that same year, the police raided an
apartment owned by the vice president, The WSJ notes.
Investigators found cable TV and other receipts in Mr.
Vandenbroele's name in the apartment, according to legal
documents, says the report.
Ciccone passed into state hands in August 2012.
Mr. Boudou has denied that he knows Mr. Vandenbroele. German
Soria, Mr. Vandenbroele's lawyer, said that his client was hired
to oversee The Old Fund's investment in Ciccone and that he
doesn't know Mr. Boudou, the report relates.
The report notes that Mr. Boudou has repeatedly denied any
wrongdoing, saying that special interest groups are trying to
smear the administration.
His lawyer, Diego Pirota, said he would appeal the ruling to the
Supreme Court.
"It's hardly a credible country that has a [criminal] suspect for
a vice president," federal prosecutor Jorge Di Lello, who is
investigating Mr. Boudou, said in an interview with WSJ.
Government officials found guilty of influence peddling face up to
six years in jail.
The investigation has proved deeply embarrassing to President
Cristina Kirchner, who said she picked Mr. Boudou as her running
mate in 2011 because of his loyalty, the report notes.
As director of the federal pension agency, Mr. Boudou oversaw the
expropriation of private retirement savings in 2008. Mrs.
Kirchner promoted him to economy minister the following year, the
report relays.
Pres. Kirchner's re-election with 54% of the vote in October 2011
crowned Mr. Boudou's swift rise through the ranks of government.
Some pundits even considered the charismatic vice president as a
possible successor to Pres. Kirchner, the report continued.
Now, the criminal investigation appears to have derailed Mr.
Boudou's political career, the report relates. A recent survey by
pollster Management & Fit found that 57% of Argentines had a
negative view of the vice president, the worst rating out of a
dozen national political leaders.
"He can't reboot the image he has now. He is the banner of
Kirchnerist corruption in the eyes of the public," the report
quoted Mariel Fornoni, a director at Management & Fit, as saying.
"Independent of what happens in the justice system, in the court
of public opinion the battle is lost," Ms. Fornoni said, the
report adds.
=============
B O L I V I A
=============
BOLIVIA: S&P Raises LT Currency Ratings to 'BB'; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term foreign
and local currency ratings on the Plurinational State of Bolivia
to 'BB' from 'BB-'. The outlook is stable. S&P affirmed the
short-term rating at 'B'. S&P also revised its transfer and
convertibility (T&C) assessment to 'BB' from 'BB-'.
RATIONALE
The upgrade reflects greater economic resilience against negative
shocks thanks to persistent GDP growth and current account and
fiscal surpluses. Bolivia has had current account surpluses since
2003 and fiscal surpluses since 2006. This sustained strong
economic performance has contributed to a decline in net general
government debt, which S&P projects will decline to 12% of GDP in
2014 from 31% in 2007, and has boosted the country's external
liquidity. Foreign exchange reserves, excluding central bank
assets held for future financing of public-sector enterprises,
reached 47% of GDP in 2013. S&P projects Bolivia's gross external
financing requirements will equal 54% of current account receipts
(CAR) and usable reserves in 2014. S&P estimates the country has
a net external creditor position of 104% of CAR this year.
GDP has grown at an average of 5% since 2006, and it rose 6.8% in
2013--even faster than the average. S&P projects that per capita
GDP will exceed US$3,000 in 2014, more than double the level in
2007. Per capita GDP growth averaged 3.4% in the past four years,
and S&P projects it will average 3% in the next four years.
Greater economic stability, as well as regulatory measures and
higher reserve requirements, has contributed to declining
dollarization in the financial system, improving the effectiveness
of monetary policy. Dollar-denominated deposits fell to 23% of
total deposits in early 2014 from 94% in 2002, and dollar-
denominated loans fell to 11% of total loans from 97% during the
same period.
S&P's ratings on Bolivia reflect its strong fiscal and external
balance sheet, ample external liquidity, and favorable growth
prospects. They also reflect Bolivia's fragmented political
landscape, as well as its fiscal and export dependence on
commodities, which can be subject to volatile prices. The
hydrocarbons (mainly natural gas) and minerals sectors accounted
for over 80% of total exports last year. About one-third of
general government revenues come directly or indirectly from
hydrocarbons.
Political uncertainty and fragmentation has diminished in recent
years, following momentous changes to the country's constitution
and economic policies since the 2005 election of President Evo
Morales. Nevertheless, private-sector investment has remained
below 8% of GDP in the past two years, partly reflecting the
government's strategy to deploy public-sector investment in key
sectors of the economy, and lingering uncertainties that dampen
investor confidence.
OUTLOOK
The stable outlook is based on S&P's expectation of continuity in
economic policies after elections later this year. Continued
public-sector investment, especially in natural gas and oil,
should sustain GDP growth above 5% in 2014 and likely at about
4.6% on average in the next three years. The current account
balance will likely be in a surplus of about 2% of GDP in the next
two years.
Pragmatic implementation of recent laws affecting both public- and
private-sector companies would raise the likelihood of continued
investment in the natural resource and industrial sectors, setting
the stage for future GDP growth. Success in boosting exploration
and development of natural gas and oil would improve the chances
of continuing to increase hydrocarbon production. The combination
of continued GDP growth, higher hydrocarbon production, and a
gradual diversification of the economy would strengthen Bolivia's
ability to withstand a potentially sharp fall in commodity prices,
leading to a higher credit rating.
Conversely, a potential increase in uncertainty about economic
policies could damage private investment. That, combined with low
or ineffective public-sector investment that fails to strengthen
the country's productive capacity (especially in hydrocarbons),
could lead to slower GDP growth. An unexpectedly sharp long-term
fall in commodity prices, absent higher export volumes, could also
reduce economic growth. Such a scenario could result in growing
fiscal and current account deficits, reversing the macroeconomic
gains in recent years. The resulting increase in the country's
vulnerability to adverse shocks could lead S&P to lower the
rating.
Domestic credit has grown rapidly in recent years, reaching nearly
53% of GDP in 2013 from about 40% in 2010, although the level of
dollarization has declined substantially. Rapid credit growth
raises the importance of cautious application of regulatory
policies. S&P expects that the government will pragmatically
apply financial legislation that passed in late 2013--giving the
government added powers to set interest rates and to direct
lending to specific sectors--to contain the risk of future
contingent liabilities that could weaken the rating.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts. The chair
ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook.
RATINGS LIST
Upgraded; Ratings Affirmed
To From
Bolivia (Plurinational State of)
Sovereign Credit Rating BB/Stable/B BB-
/Stable/B
Upgraded
To From
Bolivia (Plurinational State of)
Senior Unsecured BB BB-
Transfer & Convertibility Assessment BB BB-
===========
B R A Z I L
===========
ELETROPAULO METROPOLITANA: S&P Affirms 'BB' CCR; Outlook Neg.
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' global scale
and 'brAA-' national scale corporate credit ratings on Eletropaulo
Metropolitana Eletricidade de Sao Paulo S.A. (Eletropaulo). The
outlook on both ratings remains negative. At the same time, S&P
affirmed its 'brAA-' rating on Eletropaulo's 11th debentures
issuance of R$200 million due 2018.
The ratings affirmation reflects the company's "core" status to
its parent company, Companhia Brasiliana de Energia S.A.
(Brasiliana; not rated) despite S&P's expectation of Eletropaulo's
weak financial performance in 2014 because of the deferred
negative impact of the third tariff review cycle and its cash
generation's exposure to the current severe drought in Brazil.
S&P assess Eletropaulo's business risk profile as "satisfactory."
This assessment incorporates S&P's view of the favorable Brazilian
regulatory framework for electric utilities, which enables them to
develop the electricity sector in a sustainable manner. However,
the distribution companies are exposed to some working capital
needs to absorb the time mismatches between the annual tariff
adjustments and the energy purchase charges.
LIBRA TERMINAL: Fitch Assigns Issuer Default Rating of 'BB+'
------------------------------------------------------------
Fitch Ratings has assigned long-term foreign and local currency
Issuer Default Ratings (IDRs) of 'BB+' and a National Scale rating
of 'AA(bra)' to Libra Terminal Rio S.A. (Libra Rio). Fitch has
also assigned initial expected rating of 'AA(bra)[EXP]' to the
company's proposed debentures issuance of BRL200 million due 2019.
The proceeds of the proposed issuance will be used to refinance
short-term debt and finance part of the company's capex plan. The
Rating Outlook is Stable.
Libra Rio's ratings reflect the company's solid business profile
based on its port terminal operation in Rio de Janeiro and
positive track record presenting consistently robust EBITDA
margins over the last five years. Libra's ratings also reflect
its consolidated healthy capital structure supported by
satisfactory liquidity and moderate leverage projected through the
company's significant capex period.
Libra Rio is the key EBITDA generator of the Libra Group and
consequently the main dividend distributor to its parent, Libra
Holding S.A. (Libra Holding). Although Libra Holding does not
hold any standalone debt, it is strongly committed to the other
companies of the group, providing guarantees to a great part of
its subsidiaries' debt. This could pressure Libra Rio's cash flow
through aggressive dividend payments. Libra's ratings incorporate
analysis of the group on a consolidated basis, due to the strong
operational and financial linkage of the issuer with the whole
group, which is composed of other port terminal operations in
Brazil's Santos Port and logistics assets.
Further factored into the company's ratings are Fitch's concerns
related to the operations in Santos Port: the renewal of two
concession contracts, contingencies with the port authority and
the higher competition with new projects at the port. Also, the
additional debt to finance the consolidated capex program of
around BRL1.7 billion over the next five years should increase
Libra Holding's consolidated leverage to levels close to
acceptable limits for this rating category.
Key Rating Drivers
Low Business Risk
Libra Rio operates in a low-risk industry in Brazil with the port
sector benefitting from solid business fundamentals. The lack of
logistics infrastructure in Brazil, mainly port terminals,
combined with an increase in international trading over the last
decade, support the operations of the country's current ports.
The risks stemming from the speculative outlook for the Brazilian
economy may have a limited negative effect on port operations in
general, because of the limited competition in this sector.
Adequate Business Profile
Libra Rio is a mature operation in Rio de Janeiro Port. It holds a
solid concession contract that started in 1998, was renewed in
2011, and that will expire in 2048, providing clear visibility of
the company's future cash flow. This terminal is the third
largest operator in the Rio de Janeiro Port, with 25% of the
port's market share.
The Libra group's consolidated operations are more concentrated in
the port sector when compared to other peers in the infrastructure
segment rated by Fitch. In 2013, about 73% and 85% of Libra
group's consolidated net revenues and EBITDA, respectively, was
generated by the port activity, and the second-largest business
(logistics) is also closely related to the port business. Libra
Rio represented 33% and 52% of the consolidated net revenues and
EBITDA.
Libra's port business has an important track record of
successfully operating in Brazil for almost 20 years. While Libra
Rio has not faced aggressive competition over the last year, its
sister company, Libra Terminal Santos S.A. (Libra Santos), has
faced some operating challenges due to the entrance of new
important players in the market during 2013, which has enhanced
competition.
Consistent Cash Flow Generation
Libra Rio exhibits solid operational cash flow, based on a
relatively stable volume of cargo handled and stored combined with
increasing port tariffs. During the last 12 months (LTM) to March
2014, the company generated BRL174 million of EBITDAR, BRL107
million of funds from operations (FFO) and BRL123 million of cash
flow from operations (CFFO). These figures compare with BRL185
million, BRL132 million and BRL135 million, respectively, in 2012.
EBITDAR margins have been relatively high at around 50% over the
last three years.
Consolidated operational cash flow has also been strong. As of
the LTM to September 2013, Libra Holding generated consolidated
EBITDAR of BRL459 million, FFO of BRL272 million and CFFO of
BRL261 million. The upcoming expiry dates, over the next five
years, for the concession contracts of Libra T Santos (T-37, in
2015, and T-35, in 2018) are a key risk for the cash generation of
this group. These terminals generate 23% of Libra's consolidated
EBITDA. Fitch's Base Case projections incorporate the likelihood
of renewal of these concession contracts. This expectation
considers the government's public interest in supporting
investments in the port segment in order to bolster the Brazilian
transportation infrastructure base.
Capex Plan Expected to Pressure Cash Flow
Libra Rio is starting a significant capex plan that is expected to
pressure its cash flows. The company plans to invest about BRL430
million from 2014 to 2018, compared with a total capex of about
BRL170 million from 2011 to 2013. Libra Rio's free cash flow
(FCF) was negative at BRL98 million during the LTM to March 2014
and it is not expected to become positive during the high capex
period. Funding for this capex is planned to originate from a
combination of sources including long-term debt, operating cash
flow generation, and reimbursements from the grant power. Libra's
agreement with the regulatory authority in Rio de Janeiro expects
that part of the capex program will be financed by the government
through a discount of BRL135 million in total on the current grant
fees of the port's concession contracts.
The agressive capex at Libra Rio combined with additional capex at
other subsidiaries will also put pressure in the consolidated cash
flow. Libra Holding historically reported positive consolidated
FCF before dividends until 2011, but its aggressive dividend
policy has led to negative FCF levels since that time. Libra
Holding's FCF is expected to remain negative during the large
investment period.
Moderate Leverage; Increase Expected
As of March 2014, Libra Rio's total adjusted debt was BRL564
million, including around BRL104 million for its port authority
obligations. This indicates an adjusted net debt-to-EBITDAR ratio
of 3.1x. Libra Holding's consolidated adjusted net debt-to-EBITDA
ratio was 2.2x for the LTM to September 2013. Fitch expects
consolidated adjusted net leverage to increase to about 3.5x by
the end of 2014 and decline slightly as the investments mature.
Alongside the group's additional debt for its capex financing,
including the proposed debentures issuance, a further increase in
consolidated debt may follow from additional debt raised by Libra
Santos with the grant power. This debt may follow as soon as an
agreement between Libra Santos and the government is reached
regarding the extension of its concession. This agreement
stipulates that Libra will assume new investments in the terminals
and an additional grant power obligation of BRL299 million. In
return, the government would concede the renewal of Santos
terminals' concession contracts for an additional 25 years.
Healthy Liquidity
Libra Rio maintains a healthy liquidity position as it is linked
with the whole group, and the group's cash is centralized. As of
September 2013, the company reported a consolidated cash balance
of BRL220 million and short-term debt of BRL149 million. Between
2009 and 2013, the company's annual cash-to-short--term debt
position was 1.9x and the ratio of cash+FFO/short-term debt was
3.6x. The average debt maturity is 5.4 years. Funding for future
capex is expected to come from long-term credit lines, and to be
repaid in about 10 years.
Rating Sensitivities
Libra Rio's ratings could be downgraded if consolidated net debt-
to-EBITDA remains above 3.5x on a sustained basis due to
deterioration in its operating performance. This could occur
following a large increase in capex and/or dividends above the
levels expected by Fitch which further weaken FCF and have a
negative effect on the consolidated capital structure.
A rating upgrade is unlikely in the medium term, due to the
expected increase in leverage. The group is also required to
resolve its agreement with the Sao Paulo port authority and renew
the concession for the two terminals which will expire in 2015 and
2018.
==========================
C A Y M A N I S L A N D S
==========================
AL ZOR: Creditors' Proofs of Debt Due June 17
---------------------------------------------
The creditors of Al Zor Leasing Limited are required to file their
proofs of debt by June 17, 2014, to be included in the company's
dividend distribution.
The company commenced liquidation proceedings on May 14, 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
CITADEL GLOBAL: Creditors' Proofs of Debt Due June 16
-----------------------------------------------------
The creditors of Citadel Global Equities Alpha Select Master Fund
Ltd. are required to file their proofs of debt by June 16, 2014,
to be included in the company's dividend distribution.
The company commenced liquidation proceedings on May 12, 2014.
The company's liquidator is:
Aisling Clarke
c/o Maples Liquidation Services (Cayman) Limited
P.O. Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
e-mail: aisling.clarke@maplesfs.com
HIROSHIMA PREFERRED: Creditors' Proofs of Debt Due June 16
----------------------------------------------------------
The creditors of Hiroshima Preferred Capital Cayman Limited are
required to file their proofs of debt by June 16, 2014, to be
included in the company's dividend distribution.
The company commenced liquidation proceedings on May 12, 2014.
The company's liquidator is:
Aisling Clarke
c/o Maples Liquidation Services (Cayman) Limited
P.O. Box 1093, Boundary Hall
Grand Cayman KY1-1102
Cayman Islands
LM ISIS: Creditors' Proofs of Debt Due June 13
----------------------------------------------
The creditors of LM Isis Opportunities Fund, Ltd are required to
file their proofs of debt by June 13, 2014, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on May 1, 2014.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1
Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
LM ISIS MASTER: Creditors' Proofs of Debt Due June 13
-----------------------------------------------------
The creditors of LM Isis Opportunities Master Fund, Ltd are
required to file their proofs of debt by June 13, 2014, to be
included in the company's dividend distribution.
The company commenced liquidation proceedings on May 1, 2014.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1
Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
LONE BALSAM I: Creditors' Proofs of Debt Due June 17
----------------------------------------------------
The creditors of Lone Balsam I, Ltd. are required to file their
proofs of debt by June 17, 2014, to be included in the company's
dividend distribution.
The company commenced liquidation proceedings on May 9, 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
LONE CEDAR III: Creditors' Proofs of Debt Due June 17
-----------------------------------------------------
The creditors of Lone Cedar III, Ltd. are required to file their
proofs of debt by June 17, 2014, to be included in the company's
dividend distribution.
The company commenced liquidation proceedings on May 9, 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
LONE CEDAR IV: Creditors' Proofs of Debt Due June 17
----------------------------------------------------
The creditors of Lone Cedar IV, Ltd. are required to file their
proofs of debt by June 17, 2014, to be included in the company's
dividend distribution.
The company commenced liquidation proceedings on May 9, 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
LONE SEQUOIA I: Creditors' Proofs of Debt Due June 17
-----------------------------------------------------
The creditors of Lone Sequoia I, Ltd. are required to file their
proofs of debt by June 17, 2014, to be included in the company's
dividend distribution.
The company commenced liquidation proceedings on May 9, 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
MKP PARTNERS: Creditors' Proofs of Debt Due June 19
---------------------------------------------------
The creditors of MKP Partners Offshore, Ltd. are required to file
their proofs of debt by June 19, 2014, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on May 12, 2014.
The company's liquidator is:
Matthew Wright
c/o Omar Grant
Telephone: (345) 949 7576
Facsimile: (345) 949 8295
P.O. Box 897 Windward 1
Regatta Office Park
Grand Cayman KY1-1103
Cayman Islands
=========
C H I L E
=========
PS24: Fitch Affirms C Series' National Classification at 'C (cl)'
-----------------------------------------------------------------
Fitch Ratings took the following actions classification of BCI
Separate Equity 24 Securitizadora SA (hereafter PS24):
-- Serie A: Increased national scale classification category 'AAA
(cl)' with Stable Outlook from 'AA (cl)' with Stable Outlook;
-- Series B: I affirm national scale classification category 'BBB
(cl)' Outlook Stable;
-- C Series: classification affirm nationally in category 'C
(cl)'.
The rise in the ratings of the bonds issued by the PS24
incorporates the performance of the portfolio that guarantees the
payment of interest and principal, by recording a performance of
risk indicators in line with Fitch's expectations as well as the
end of the period revolving. It is worth mentioning that the B
series has not been placed to date.
Key Factors Of Qualification
-- Level Credit Enhancement: In March 2014, Series A has a level
of Credit Enhancement of Total 47.3%, considering the present
discounted value of the portfolio at a rate of 9% per annum in
accordance with the provisions Broadcast in the contract, but the
box set. Thus, the ability to pay the Serie A is covered with
sharp increases in the major risk variables.
-- Book by Dynamic Dilution: The bonds are protected from the risk
of dilution of invoices by the application of a dynamic reserve,
which is calculated based on the level and volatility shown by the
dilution of the securitized in the last six months.
-- Variables Desempeno of Risk: The main risk variables have
evolved according to expectations, experiencing normal for this
type of active behavior.
-- Structure of the Bonds: The bond structure presents
acceleration to trigger declines in the risk profile of the
portfolio. Besides the above, the priority in the allocation of
payments, protects the bond payments under the assigned
classification scenarios. Remarkably, with the term of the
revolving period, all balances price keychain subordinates to full
payment of the Series A.
-- Reserve Funds: The structure of the bonds considered various
reserve funds to allow operational continuity PS24 against
possible contingencies, and to assure payment of the next coupon
more maturity.
Sensitivity Classification
-- Significant deterioration of the securitized: Substantial
increases in indicators of portfolio risk could potentially affect
the flow proceeds to meet its obligations on time series A,
reducing levels of Credit Enhancement and thereby the protection
that have currently these bonds.
Summary Of The Transaction
The active backup is composed of cash flows and credit sales
originate Copeval Compania Agropecuaria SA to its customers, which
appear in invoices issued in pesos.
In March 2014, the present value of the portfolio (valued
according to contract Broadcast) reaches CLP47.133 million.
Additionally, the PS24 has a box set (valued according to contract
issuance) of Rs 326 million.
The stress analysis considers various qualitative aspects such as;
the analysis of policy origination and collection Copeval and the
market in which, among other works. These factors are added to
the quantitative aspects such as; the monthly payment, gross
default, the purchase rate and dilution. All of the above is
evaluated by Fitch under various scenarios, in this case a
scenario stress 'AAA (cl)' for the series A, with the aim of
determining the ability of bondholders to receive payments on
their obligations in a timely form.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Agro Paces 5.5% Growth in First Quarter
-----------------------------------------------------------
Dominican Today reports that agriculture paced Dominican
Republic's 5.5 percent economic growth in the first quarter,
Central banker Hector Valdez Albizu said.
Mr. Albizu said the sectors which spurred the 7.3% growth in the
last quarter last year continue their expanse into the January to
March period, according to Dominican Today.
Mr. Albizu said agricultural led the sectors in growth at 6.2%,
mining (35.3%), manufacturing (5.9%), construction (14.6%), energy
and water (3.6%), retail sales (3.6%), hotels, bars and
restaurants (8.9%), transport (3.9%), financial intermediation
(14.6%), education (3.5%), health (5.9%.), and other services
(6.1%), notes the report.
Mr. Valdez said private and Government investment have lead to a
boom in the construction sector, especially schools, while
manufacturing has been steadily recovering since the second
quarter last year, the report adds.
=============
J A M A I C A
=============
RBC JAMAICA: Sagicor Expects Minister to Approve Deal in June
-------------------------------------------------------------
RJR News reports that Sagicor Jamaica Group is expecting Jamaica
Finance Minister Dr. Peter Phillips to approve its acquisition of
RBC Royal Bank before the end of next month.
The company announced this year it has reached agreement to
acquire RBC Royal Bank for $9.5 billion dollars, according to RJR
News. Sagicor says with approval it will start the process of
merging RBC's operations with its own banking unit, the report
relates.
The merger is expected to be completed by the first half of next
year, RJR News notes.
As reported in the Troubled Company Reporter-Latin America on
March 6, 2014, Jamaica Gleaner said that Royal Bank of Canada has
set aside CDN$40 million for payouts to employees of subsidiary
RBC Jamaica and other restructuring charges in the Caribbean.
The bank booked the expected losses of CDN$60 million in its first
quarter ending January, and said other provisions had been made
for post-employment benefits to be finalized once the deal with
Sagicor Jamaica Group had closed, according to Jamaica Gleaner.
The report noted that the transaction is expected to get
regulatory approval within the second quarter.
Redundancy
Earlier this year, the report noted, RBC cut 20 staff in Trinidad
& Tobago, and the union there expects more positions will be made
redundant. There have also been reports of cuts coming in
Dominica, the report relayed.
Sagicor has agreed to buy RBC Jamaica for JM$9.5 billion for the
operation with the bad debts stripped out, the report disclosed.
To date, RBC has declined to shed light on the fate of the Wyndham
hotel property which it took over in 2011 and placed into
receivership on claims that a US$33-million loan had fallen into
arrears, the report relayed.
The hotel owners, in turn, have countered that the bank breached
the loan agreement, the report added.
===========
M E X I C O
===========
ARENDAL: S&P Lowers ICR to 'B-'; Outlook Stable
-----------------------------------------------
Standard & Poor's Ratings Services lowered its issuer credit
rating on Arendal to 'B-' from 'B'. At the same time S&P assigned
its 'B-' issue-level rating of to Arendal's proposed up to $100
million two-year bullet senior unsecured proposed notes with a
recovery rating of '4'. The outlook on the issuer credit rating
(ICR) is stable.
"The downgrade on the ICR follows our revision of the company's
financial risk profile to "aggressive" from "significant." This
is mostly based on the company's expected increased leverage
following the proposed issuance and a higher refinancing risk
stemming from the bullet maturity in 2016," said Standard & Poor's
credit analyst Francisco Gutierrez.
S&P rates Arendal's proposed senior unsecured notes at 'B-' with a
recovery rating of '4'. S&P estimates that bondholders would have
an "average" recovery (between 30% and 50%) in the event of a
hypothetical default.
TENEDORA NEMAK: S&P Affirms 'BB+' CCR; Outlook Stable
-----------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' global scale
long-term corporate credit and issue-level ratings on Tenedora
Nemak S.A. de C.V. (Nemak). S&P also affirmed its 'mxAA-'
national scale long-term corporate credit rating. The recovery
rating of '3' on Nemak's $500 million senior unsecured notes
remains unchanged. The outlook remains stable.
The ratings on Nemak reflect its "fair" business risk profile,
"significant" financial risk profile, and "adequate" liquidity as
per our rating criteria. The ratings also reflect S&P's view of
Nemak as a "moderately strategic" subsidiary for its parent
company Alfa S.A.B. de C.V. (BBB/Stable/--), in line with S&P's
group rating methodology.
"Our assessment on Nemaks "fair" business risk profile reflects
the "moderately high" industry risk, "intermediate" country risk,
and the company's "fair" competitive position. The business risk
profile reflects the company's strong and fairly stable operating
margins stemming from its efficient operations, worldwide leading
position in the aluminum components casting sector for the
automotive industry, geographically diversified operations, close
and long-term relationship with key customers and technologically
advanced processes. On the other hand, Nemak's concentration of
about 60% of its revenues in the North American market, of more
than 60% in the three major U.S.-based automakers--Ford Motor Co.
(Ford), General Motors Co. (GM), and Chrysler Group LLC
(Chrysler)-- and of about 85% in manufacturing cylinder heads and
engine blocks coupled with the cyclical nature of the automotive
industry constrain the company's business risk profile," S&P said.
"Our assessment of Nemak's "significant" financial risk profile
reflects the company's improved capital structure due to its
latest refinancing activities, stronger key financial ratios, and
"adequate" liquidity. On the other hand, it incorporates the
company's growth strategy through debt-financed acquisitions and
significant capital expenditures. Mainly due to its improved
operating performance, Nemak has also improved its key financial
ratios," S&P noted.
URBI DESARROLLOS: Moody's Lowers Corporate Family Rating to C
-------------------------------------------------------------
Moody's Investors Service downgraded Urbi, Desarrollos Urbanos
(Urbi)'s corporate family rating and senior unsecured debt ratings
to C from Ca. This concludes Moody's review.
The following ratings were downgraded:
Long Term Corporate Family Rating, Downgraded to C from Ca
Senior Unsecured (domestic currency rating), Downgraded to C from
Ca
Senior Unsecured (foreign currency rating), Downgraded to C from
Ca
Senior Unsecured MTN (domestic currency rating), Downgraded to C
from Ca
USD 500 million guaranteed senior global notes due 2022:
Downgraded to C from Ca
USD 300 million guaranteed senior global notes due 2020:
Downgraded to C from Ca
USD 150 million guaranteed senior global notes due 2016:
Downgraded to C from Ca
The following ratings were affirmed:
Commercial Paper (domestic currency rating), affirmed at Not
Prime
Ratings Rationale
The ratings downgrade follows Moody's view that the continuous
delays in Urbi's debt restructuring process have resulted in a
weaker than anticipated recovery for debt holders.
Last May 7, 2013 we downgraded Urbi's long term ratings to Ca from
Caa2 following Urbi's failure to make an interest payment on its
2014 local bonds (URBI 11), constituting an event of default that
triggered a payment acceleration of the company's remaining debt.
At the same time, we placed the ratings on review for downgrade.
The review was focused on Urbi's ability to repay its short-term
obligations, in light of its limited access to external sources of
capital. During the review, we would assess the company's
restructuring plan, particularly in terms of its ultimate
strategic direction, capital structure and overall recovery for
bondholders.
Since then, Urbi has not been able to conclude its restructuring
process, likely resulting in further deterioration of operating
and credit profile. Although there's limited information on Urbi's
operations and restructuring process, we estimate its business
profile has continued to deteriorate as its access to external
sources of capital remained restricted. As a result of such
deterioration, loss severity for bondholders should be higher than
anticipated and more commensurate with the C rating assigned.
Subsequent to today's rating actions, Moody's will withdraw all
the ratings of Urbi because of the current debt restructuring
process. Moreover, in Moody's opinion the information available to
support the credit rating is insufficient to effectively assess
the creditworthiness of Urbi and its obligations. For more
information, please refer to Moody's Withdrawal Policy on
moodys.com.
Urbi, Desarrollos Urbanos S.A.B. de C.V., is a Mexican housing
developer, with a focus on affordable entry-level and low middle-
income housing. The company has been in business for over 30 years
and has been traded on the Mexican Bolsa de Valores since 2004.
The principal methodology used in this rating was Global
Homebuilding Industry Methodology published in March 2009.
URBI DESARROLLOS: Moody's Cuts Sr. Unsecured Debt Rating to C.mx
-----------------------------------------------------------------
Moody's de Mexico downgraded Urbi, Desarrollos Urbanos (Urbi)'s
national scale senior unsecured debt rating to C.mx from Ca.mx.
This concludes Moody's review.
The following ratings were downgraded:
National Scale Senior Unsecured (domestic currency rating),
Downgraded to C.mx from Ca.mx
National Scale Senior Unsecured MTN (domestic currency rating),
Downgraded to C.mx from Ca.mx
MXN 2,000 million MTN program: Downgraded to C.mx from Ca.mx
MXN 600 million FLT Gtd. Rate Notes Ser. URBI 11 due 2014:
Downgraded to C.mx from Ca.mx
The following ratings were affirmed:
National Scale Commercial Paper (domestic currency rating),
affirmed at MX-4
Ratings Rationale
The ratings downgrade follows Moody's view that the continuous
delays in Urbi's debt restructuring process have resulted in a
weaker than anticipated recovery for debt holders.
Last May 7, 2013 Moody's downgraded Urbi's long term ratings to Ca
from Caa2 following Urbi's failure to make an interest payment on
its 2014 local bonds (URBI 11), constituting an event of default
that triggered a payment acceleration of the company's remaining
debt. At the same time, Moody's placed the ratings on review for
downgrade. The review was focused on Urbi's ability to repay its
short-term obligations, in light of its limited access to external
sources of capital. During the review, Moody's would assess the
company's restructuring plan, particularly in terms of its
ultimate strategic direction, capital structure and overall
recovery for bondholders.
Since then, Urbi has not been able to conclude its restructuring
process, likely resulting in further deterioration of operating
and credit profile. Although there's limited information on Urbi's
operations and restructuring process, Moody's estimate its
business profile has continued to deteriorate as its access to
external sources of capital remained restricted. As a result of
such deterioration, loss severity for bondholders should be higher
than anticipated and more commensurate with the C rating assigned.
Subsequent to the rating actions, Moody's will withdraw all the
ratings of Urbi because of the current debt restructuring process.
Moreover, in Moody's opinion the information available to support
the credit rating is insufficient to effectively assess the
creditworthiness of Urbi and its obligations. For more
information, please refer to Moody's Withdrawal Policy on
moodys.com.mx.
Urbi, Desarrollos Urbanos S.A.B. de C.V., is a Mexican housing
developer, with a focus on affordable entry-level and low middle-
income housing. The company has been in business for over 30 years
and has been traded on the Mexican Bolsa de Valores since 2004.
The principal methodology used in this rating was Global
Homebuilding Industry published in March 2009.
The period of time covered in the financial information used to
determine Urbi, Desarrollos Urbanos, S.A.B. de C.V.'s rating is
between 1/1/09 and 31/3/13.
The types of information used to determine these ratings are
financial data, public information and Moody's information.
=====================
P U E R T O R I C O
=====================
DDR CORP: Fitch Affirms 'BB' Rating on $350MM Preferred Stock
-------------------------------------------------------------
Fitch Ratings has affirmed the credit ratings for DDR Corp. (NYSE:
DDR) as follows:
-- Issuer Default Rating (IDR) at 'BBB-';
-- $815 million unsecured revolving credit facilities at 'BBB-';
-- $350 million senior unsecured term loans at 'BBB-';
-- $331.5 million senior unsecured convertible notes at 'BBB-';
-- $2.4 billion senior unsecured notes at 'BBB-';
-- $350 million preferred stock at 'BB'.
The Rating Outlook is Stable.
Key Rating Drivers
The affirmation of DDR's IDR at 'BBB-' takes into account credit
strengths including DDR's improving asset quality via non-core
asset sales and re-development, strong expected fixed-charge
coverage for the rating, granular tenant roster with select strong
credit tenants and improving financial flexibility, featuring a
growing unencumbered pool that will further increase following the
repayment of the company's Term Asset-Backed Securities Loan
Facility (TALF) mortgage loan in July 2014. Balancing these
factors is leverage that remains appropriate for the 'BBB-' rating
and heavy 2015 debt maturities, although liquidity coverage is
adequate. The company's strong access to capital, limited cost to
complete development, and low adjusted funds from operations
(AFFO) payout ratio also mitigate near-term liquidity risk.
Improving Asset Quality
DDR continues to execute on its strategic plan, which entails
investing in market-dominant power centers in select markets with
favorable population demographics and thereby generating
consistent cash flow. Portfolio transformation is evidenced by a
lower asset count of 396 as of March 31, 2014, down from 702 in
2008, and DDR's goal is reducing the portfolio to approximately
350 assets. The average asset size increased to 278,000 square
feet in 2013 from 217,000 in 2008 with a target of 350,000 square
feet on average. Leasing and rental rates have both improved
substantially, with the leased rate of 95.1% as of March 31, 2014,
up from 92.2% in 2008 (goal of 96.5%) and average rent per square
foot of $13.44 per square foot in the first quarter of 2014
(1Q'14) from $12.60 in 2008 (goal of more than $16 per square
foot).
Brazil Investment Sale Enhances Portfolio Focus
On April 28, 2014, affiliates of DDR closed on the sale of a 50%
interest in Sonae Sierra Brazil BV Sarl (SSB BV Sarl), which owned
an approximate 66% interest in a publicly traded company in
Brazil, Sonae Sierra Brasil, S.A., and an indirect interest in the
Parque Dom Pedro shopping center to Alexander Otto and certain of
his affiliates for $343.6 million. The Otto family owned 15.4% of
DDR's common shares as of the filing of DDR's most recent proxy
statement Feb. 24, 2014. This transaction simplifies DDR's
business by reducing joint venture cash flow and is emblematic of
the company's investment thesis that centers on U.S. power
centers. After the SSB BV Sarl investment sale, top geographical
regions are Florida (10.8% of base rent), Georgia (9.2%), Puerto
Rico (8.6%), North Carolina (7.6%) and Ohio (7.5%).
Active Re-Leasing
The company is creatively and proactively re-leasing space.
Examples of recent re-leasing activities include consolidation
(Ulta in Richmond, VA), downsizing (Old Navy in Atlanta), small
shop consolidation (Nordstrom Rack in Columbia, South Carolina)
and lease terminations (K-Mart in Westlake, Ohio), resulting in
incremental cash flow. Going forward, lease expirations through
2017 include 85 anchors with naked leases (tenants have no option
to control the lease beyond the natural expiration date) that
provide mark-to-market growth, while Barnes & Noble has various
leases with DDR expiring through 2016 that present tenant
replacement opportunities.
Strong Leasing Spreads; CapEx Weighs on Effective Rents
Blended leasing spreads on new and renewal leases were 7.5% in
1Q'14 following 8.3% growth in 2013, 6.7% growth in 2012 and 6.1%
growth in 2011. Looking forward, 1Q'14 average per square foot
new leases on comparable space was $16.22, exceeding the weighted
average for remaining of 2014, as well as 2015-2016 lease
expirations, indicative of future positive leasing spreads. As of
March 31, 2014, 5% of leases expire for the remainder of 2014
followed by 12.2% in 2015 and 14% in 2016. Capital expenditures
continue to weigh on cash flow growth, as evidenced by net
effective rents of $12.21 psf in 1Q'14 and $14.18 psf in 2013 on
new deals, and $14.42 psf in 1Q'14 from $14.60 psf in 2013 on
renewal deals.
Solid Fixed-Charge Coverage
DDR's fixed-charge coverage ratio was 2.4x for the 1Q'14 pro forma
for the Brazil investment sale, TALF loan repayment and redemption
of series H preferred stock (2.3x for the trailing 12 months [TTM]
ended March 31, 2014), up from 2.2x for 2013 and 2.0x in 2012.
Growth in organic and re-development EBITDA were the primary
contributors to the improvement. Under Fitch's base case whereby
the company generates 3% same-store net operation income (SSNOI)
growth in 2014 (due to positive releasing spreads and minor
improvements in occupancy) followed by a slight moderation in
2015, fixed charge coverage would be in the low-to-mid-2x range
over the next 12-to-24 months, which would be strong for the
'BBB-' rating.
In a stress case not anticipated by Fitch in which SSNOI declines
by levels experienced in 2009, fixed-charge coverage would remain
just above 2x, which would remain adequate for the 'BBB-' rating.
Fitch defines fixed-charge coverage as recurring operating EBITDA
including recurring cash distributions from unconsolidated
entities less recurring capital expenditures and straight-line
rent adjustments, divided by total interest incurred and preferred
stock dividends.
Granular Tenant Base
DDR has limited tenant concentration and quality credit tenants
including TJX Companies (3% of rental revenues in 1Q'14), Wal-Mart
Stores, Inc. (IDR of 'AA' with a Stable Outlook at 2.8%), Bed Bath
& Beyond (2.7%), PetSmart (2.5%) and Kohl's Corporation (IDR of
'BBB+' with a Stable Outlook at 2.3%) and no other tenant exceeds
2% of total rental revenues.
Growing Unencumbered Asset Pool
As of March 31, 2014, the company's unencumbered assets (1Q'14
annualized unencumbered NOI divided by a stressed 8%
capitalization rate) covered net unsecured debt by 1.7x, which is
weak for the rating. However, pro forma for the repayment of the
TALF mortgage loan on 27 assets, which matures in October 2014 but
has a 90-day prepayment window, unencumbered asset coverage
improves to 2.0x, which is appropriate for the 'BBB-' rating.
Appropriate Leverage
Leverage was 7.1x in 1Q'14 pro forma for the Brazil investment
sale, TALF loan repayment and redemption of series H preferred
stock (7.7x for the TTM ended March 31, 2014), down from 8.3x in
2013 and 7.8x in 2012. Leverage was skewed upward for full-year
2013 due to the timing of the company's October 2013 acquisition
of a portfolio of 30 power centers previously owned by a joint
venture with Blackstone Real Estate Partners VII L.P. for $1.46
billion.
Fitch projects that leverage will approach 7.0x over the next 12-
to-24 months principally due to EBITDA growth, which would remain
appropriate for the 'BBB-' rating. In the above-mentioned stress
case not anticipated by Fitch, leverage would exceed 7.5x, which
would be weak for the 'BBB-' rating. Fitch defines leverage as
net debt to recurring operating EBITDA including recurring cash
distributions from unconsolidated entities.
Adequate Liquidity Coverage, Heavy 2015 Debt Maturities
Liquidity coverage is adequate at 1.1x for the period April 1,
2014 to Dec. 31, 2015. Fitch defines liquidity coverage as
sources divided by uses. Liquidity sources include unrestricted
cash (pro forma for the Brazil investment sale, TALF loan
repayment, Puerto Rico mortgage, and redemption of remaining
series H preferred stock), availability under the company's
unsecured revolving credit facilities, and projected retained cash
flows from operating activities. Liquidity uses include pro rata
debt maturities, projected recurring capital expenditures and
remaining cost to complete development.
DDR has heavy 2015 debt maturities, when 17.6% of pro forma debt
matures. If 80% of secured debt maturities during 2014-2015 are
refinanced, liquidity coverage would improve to 1.7x, however,
Fitch does not view this as a likely scenario since the company
intends to continue unencumbering the portfolio.
Mitigating liquidity risk is DDR's strong access to capital and
low AFFO payout ratio. DDR funded the Blackstone joint venture
portfolio acquisition with a combination of proceeds from the
issuance of new common equity and unsecured debt that priced in
May 2013, preferred equity and mezzanine loan repayments, and the
assumption of existing mortgage debt. In November 2013, DDR
issued $300 million aggregate principal amount of 3.50% senior
unsecured notes due January 2021 to repay mortgage debt assumed
from the acquisition of assets from the Blackstone joint venture.
The company's AFFO payout ratio was 57.5% in 1Q'14, up slightly
from 52.5% in 2013 and 47.5% in 2012 but still reflective of good
internally generated liquidity of over $140 million annually based
on a 1Q'14 run rate, which will be used to fund the company's
redevelopment projects. In addition, the covenants in the
company's unsecured credit agreements do not limit DDR's financial
flexibility.
Active Redevelopment Pipeline
Cost-to-complete to development represented 0.7% of undepreciated
assets as of March 31, 2014, up slightly from 2009-2011 levels but
still below 3.5% as of year-end 2007. Two new development projects
in Kansas City, KS and Seabrook, NH are largely complete and
expected to open in 3Q'14 and 2Q'14, respectively.
DDR has eight re-development projects underway and has identified
approximately $635 million of active and redevelopment
opportunities. The company could potentially grow the
redevelopment pipeline to $1 billion. For example, the company
redeveloped Brookside Marketplace in Chicago, IL adding Ross Dress
for Less, Panera Bread and Pier 1 Imports through development and
T.J. Maxx through small shop consolidation, generating an
unlevered cash on cost of 10.3%. These improvements should
improve asset quality and cash flow growth as DDR generally
targets an unlevered cash on cost in excess of 10%.
Puerto Rico Exposure
Puerto Rico accounts for 8.6% of DDR's annualized base rent. On
Feb. 11, 2014, Fitch downgraded the ratings for the Commonwealth
of Puerto Rico debt to 'BB' from 'BBB-'. The Rating Outlook is
Negative. The commonwealth continues to have challenges
maintaining financial flexibility in light of the deterioration in
capital markets access. The commonwealth's economy has been in
recession since 2006. Initial signs of recovery in 2012 appear to
have been more a reflection of economic stimulus than underlying
growth and subsequent economic performance has been weak. Despite
economic weakness, DDR's portfolio in Puerto Rico has performed
well with 4% SSNOI growth in 2013, blended rents PSF up 21% since
2010, spurred by demand from relationship tenants.
Strong Management Team Executing Strategic Plan
DDR's management team is strong and continues to execute on
various elements of DDR's strategic plan. The plan entails factors
related to portfolio quality (asset count, demographic
information, base rents, asset size, leasing levels), transactions
(acquisition and disposition volumes and funding sources),
operations (SSNOI growth, company-defined prime NOI percentages),
and balance sheet metrics.
Preferred Stock Notching
The two-notch differential between DDR's IDR and preferred stock
rating is consistent with Fitch's criteria for corporate entities
with an IDR of 'BBB-'. Based on Fitch research titled 'Treatment
and Notching of Hybrids in Nonfinancial Corporate and REIT Credit
Analysis', these preferred securities are deeply subordinated and
have loss absorption elements that would likely result in poor
recoveries in the event of a corporate default.
Stable Outlook
The Stable Outlook centers on Fitch's expectation of leverage
around 7.0x, which is appropriate for the rating, fixed-charge
coverage in the mid-2x range, which is strong for the rating, and
weak liquidity coverage for the rating (offset by a growing
unencumbered pool).
Rating Sensitivities
-- Fitch's expectation of leverage sustaining below 6.5x is the
primary ratings sensitivity for positive momentum on the
ratings and/or outlook since this metric is more consistent
through interest rate cycles (pro forma leverage is 7.1x);
-- Fitch's expectation of growth in the size and quality of the
unencumbered pool post-TALF with unencumbered assets
(unencumbered NOI divided by a stressed capitalization rate of
8.0%) to net unsecured debt of 2.5x is another important
positive ratings sensitivity (this metric is 2.0x pro forma);
-- Fitch's expectation of fixed-charge coverage sustaining above
2.3x is a less meaningful ratings sensitivity for positive
ratings and/or outlook momentum as it is less consistent
through interest rate cycles (pro forma fixed-charge coverage
is 2.4x).
The following factors may have a negative impact on DDR's ratings
and/or Outlook:
-- Fitch's expectation of leverage sustaining above 7.5x;
-- Fitch's expectation of fixed-charge coverage sustaining below
2.0x;
-- Base case liquidity coverage sustaining below 1.0x (this ratio
is 1.1x for April 1, 2014 to Dec. 31, 2015).
=================
V E N E Z U E L A
=================
PETROLEOS DE VENEZUELA: Alstom Grid Gets EUR15MM Project Award
--------------------------------------------------------------
Penn Energy News reports that Alstom Grid has been awarded a EUR15
million (US$20 million) contract by SNC Engineering & Construction
to supply the new 138/24 kV Zulia 8 digital substation in
Venezuela.
Located in Maracaibo City, Zulia State, the digital substation
solution offers ease of configuration, maximized reliability and
availability, and superior presentation of data to operators.
The project is part of the production plans of Petroleos de
Venezuela (PDVSA) PETROBOSCAN to increase the availability of
secure and reliable power to the new oil campus south of
Maracaibo, according to Penn Energy News.
This will allow PDVSA to achieve its goal of raising crude oil
production in the Boscan Field, from 107,000 barrels per day up to
127,000 barrels per day by 2016, the report notes.
The report notes that the IEC 61850 compliant full digital
substation provides protection and monitoring functions, ensuring
increased real-time communication efficiency within the
substation.
The richness of data communicated offers flexibility -- a key
feature of the modern, smarter power grid, where health monitoring
for all primary assets is of paramount importance, the report
relates.
The report notes that the removal of kilometers of live copper
wiring by this solution also maximizes the safety of personnel,
and improves maintainability.
Site operation will be done in Venezuela, and the substation
automation system (protection and control) will be implemented by
Alstom's team in Mexico, the report adds. Site tests are expected
to start mid-2015.
Petroleos de Venezuela S.A. -- http://www.PDVSA.com/-- engages in
the exploration, production, refining, transport, and commerce of
hydrocarbons. The company was founded in 1975 and is based in
Caracas, Venezuela.
PETROLEOS DE VENEZUELA: Fitch to Rate US$5BB Issuance 'B/RR4'
-------------------------------------------------------------
Fitch Ratings expects to assign a 'B/RR4' rating to Petroleos de
Venezuela, S.A.'s proposed USD5 billion senior unsecured issuance.
The company expects to use the proceeds from the issuance to
finance its investment program as well as for general corporate
purposes.
Key Rating Drivers
PDVSA's credit quality reflects the company's linkage to the
government of Venezuela as a state-owned entity, combined with
increased government control over business strategies and internal
resources. This underscores the close link between the company's
credit profile and that of the sovereign. PDVSA's ratings also
consider the company's strong balance sheet, sizeable proven
hydrocarbon reserves, and strategic interests in international
downstream assets.
Linkage to Sovereign:
PDVSA's credit quality is inextricably linked to the Venezuelan
government. It is a state-owned entity whose royalties and tax
payments have historically represented more than 50% of the
government's revenues, and it is of strategic importance to the
economic and social policies of the country. In 2008, the
government changed PDVSA's charter and mission statement to allow
it to participate in industries that contribute to the country's
social development, including healthcare, education, and
agriculture.
Limited Transparency of Sovereign:
The Venezuelan government displays limited transparency in the
administration and use of government-managed funds, and in its
fiscal operations. This factor poses challenges to accurately
assess the stance of fiscal policy and the full financial strength
of the sovereign. As a direct by-product of being a state-owned
entity, PDVSA displays similar characteristics, which reinforces
the linkage of its ratings to the sovereign, and are evidenced by
the extensive amount of transactions with its shareholder,
government agencies and other related parties. These transactions
have a significantly negative impact on PDVSA's financial
position.
Strong Stand-Alone Credit Profile:
PDVSA continues to be an important player in the global energy
sector. The company's competitive position is strong and
supported by its sizeable reported proven hydrocarbon reserves,
strategic interests in international downstream assets and private
participation in upstream operations. The company also benefits
from a strong, yet weakening capital structure, which is in line
with many of its competitors. Over the past five years, PDVSA's
total debt has increased to USD43 billion at year-end 2013 from
approximately USD25 billion at the end of 2010. Meanwhile,
EBITDA, adjusted for social expenditures, has remained relatively
flat at about USD25 billion. This level of leverage is consistent
with a higher rating category, although sovereign-related risks
offset the strength of the financial profile and constrain the
rating to that of the sovereign.
Adequate Credit Metrics:
PDVSA reported an EBITDA (after royalties and social expenditure,
which include most oil bartering agreements) of approximately
USD17.7 billion as of the year end Dec. 31, 2013. Total financial
debt as of Dec. 31, 2013 increased to USD43 billion, from USD40
billion in 2012. The leverage level is low for the rating
category with a net debt to EBITDA ratio of 1.9x. Capex continues
to be moderate, totaling USD94 billion over the past five years,
which has somewhat offset declining production levels from
existing fields.
Large Hydrocarbon Reserves:
PDVSA's reported hydrocarbon reserves continue to rank among the
largest in the world, with proven hydrocarbon reserves of 332
billion barrels of oil equivalent (boe) as of year-end 2013.
Proven developed hydrocarbon reserves were approximately 20
billion boe as of December 2012, which represents around a 15-year
proven developed reserve life. Venezuela reported oil production
of approximately 3 million barrels per day (bpd) as of year-end
Dec. 31, 2013. Various independent reports have estimated that
production levels are lower than reported by the company, which
adds to risk and is incorporated into the ratings.
Rating Sensitivities
Catalysts for a downgrade include a downgrade to Venezuela's
ratings, a substantial increase in leverage to finance capital
expenditures or government spending and a sharp and extended
commodity price downturn. Catalysts for an upgrade include an
upgrade to Venezuela's sovereign rating and/or real independence
from the government.
PETROLEOS DE VENEZUELA: S&P Assigns 'B-' Rating to $5BB Sr. Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' debt rating
to Petroleos de Venezuela S.A.'s (PDVSA; B-/Negative/--) proposed
$5 billion senior unsecured notes due 2024. PDVSA Petroleo S.A.,
PDVSA's exploration-and-production subsidiary (not rated),
unconditionally and irrevocably guarantees the notes.
The rating on the notes reflects the corporate credit rating on
PDVSA, which is based on the company's 'b-' stand-alone credit
profile (SACP) and S&P's opinion that there is an "almost certain"
likelihood of extraordinary government support to PDVSA under
financial distress scenarios, and/or extraordinary financial
burden under a sovereign distress scenario.
S&P's assessment of an "almost certain" likelihood of
extraordinary support is based primarily on PDVSA's:
-- "Critical" role as it contributes about 50% of Venezuela's
fiscal revenues and 90% of its exports, and plays a key role
in meeting the sovereign's political and economic
objectives; and
-- Its "integral" link with the government, given its full and
stable ownership of the company and significant involvement
in its day-to-day operations.
The SACP reflects the company's "weak" business risk profile due
to the government's significant intervention in PDVSA and the
challenges associated with boosting production. The Organization
of the Petroleum Exporting Countries (OPEC) lowered crude oil
production to 20,000 barrels in 2013, which has weakened PDVSA's
top-line growth.
The rating also reflects the company's "aggressive" financial risk
profile due its rising debt, very high capital expenditures needed
to develop reserves and increase production, and the government's
dependence on PDVSA to finance social programs.
Although the ratio of priority liabilities to total assets is
slightly above S&P's threshold of 15%, which would lead to a lower
rating on the notes, S&P rates the proposed notes at the same
level as the corporate credit rating based on its assessment of
"almost certain" likelihood of extraordinary support from the
government to PDVSA and its most relevant operating subsidiaries.
RATINGS LIST
Petroleos de Venezuela S.A.
Corporate credit rating B-/Negative/--
Ratings Assigned
$5 bil. senior unsecured notes due 2024 B-
***********
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. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000 or Nina Novak at
202-241-8200.
* * * End of Transmission * * *