/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/141017.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, October 17, 2014, Vol. 15, No. 206 Headlines A N T I G U A & B A R B U D A ANTIGUA & BARBUDA: Gonzalo Wreaks Havoc on Farming B R A Z I L CEMIG DISTRIBUICAO: Moody's Affirms Ba1 Global Scale Issuer Rating MMX MINERACAO: Follows Oil Unit in Bankruptcy Protection PETROLEO BRASILEIRO: Refinery 60% Over Budget, Audit Court Says C A Y M A N I S L A N D S ALUXA INVESTMENTS: Members' Final Meeting Set for Oct. 20 ARMS PARK: Placed Under Voluntary Wind-Up GUOTAI JUNAN: Creditors' Proofs of Debt Due Oct. 22 LYONROSS LIQUID: Commences Liquidation Proceedings PMCM LIMITED: Creditors' Proofs of Debt Due Oct. 22 RIVERSIDE GLOBAL: Shareholders Receive Wind-Up Report SKYBASE HOLDINGS: Shareholder to Receive Wind-Up Report on Nov. 22 SMC TRANSPORATION: Members' Final Meeting Set for Oct. 14 VINCI GAS: Placed Under Voluntary Wind-Up VINCI GAS MASTER: Placed Under Voluntary Wind-Up C O L O M B I A BANCO GNB: Moody's Affirms B1 Long Term FC Sub. Debt Rating D O M I N I C A N R E P U B L I C DOMINICAN REP: Taxpayers Foot Subsidy as Road's Tolls Slump J A M A I C A KINGSTON CONTAINER: Negotiations Underway for Sale of Terminal V E N E Z U E L A PETROLEOS DE VENEZUELA: ConocoPhillips Files for Arbitration VENEZUELA: Debt Insurance Costs Surge on Oil Price Drop - - - - - =============================== A N T I G U A & B A R B U D A =============================== ANTIGUA & BARBUDA: Gonzalo Wreaks Havoc on Farming -------------------------------------------------- The Daily Observer reports that the official assessment from the passage of Tropical Storm Gonzalo in Antigua & Barbuda is not yet complete, but the unofficial report card for the agricultural sector is that the storm decimated most of the crops on island. Extension Officer in the Ministry of Agriculture, Owalabi Elabanjo, gave his assessment following consultations with several farmers and visits to a number of farms immediately after the passage of Gonzalo, which battered the island on Oct. 13, according to The Daily Observer. Mr. Elabanjo said it was the wind and not the water, which caused most of the damage, the report notes. "We did not have much flooding but the wind did us bad," Mr. Elabanjo said, the report notes. "We visited McKinnons, Carlisle, Cassada Gardens, Pares Village and other areas and a lot of vegetables have been affected, especially crops like banana, mango, cashew, avocado and other crops like sweet peppers." The agriculture extension officer also indicated that the crop devastation is likely to further affect the existing shortage of some vegetable and fruits, the report relays. "In the Old Road area and Body Ponds, where they grow banana trees, it's a total loss for some farmers," Mr. Elabanjo said, the report notes. "Bananas, once you cut them, it will probably take a few months before they grow back." "Right now, we have a short supply of some of the vegetables like sweet peppers and tomatoes. I know a lot of farmers would have just planted their tomatoes, but when this type of weather comes in, it knocks them out," Mr. Elabanjo added, the report relays. "Based on the information on the ground, we will be providing information to the public as to the likely shortage of whatever commodity or food crop will be in short supply." Backyard farmers, too, were said to be affected by the storm, but Mr. Elabanjo said farmers in this category will be able to rebound in quick time, the report says. Mr. Elabanjo told The Daily Observer that he and his colleagues will continue visiting farms throughout the week to determine the exact dollar value of the crops lost due to the recent storm. He also said once the assessment is completed, the Ministry of Agriculture will be seeking to provide technical assistance to those in need, the report adds. * * * As reported in the Troubled Company Reporter-Latin America on September 23, 2014, The Daily Observer said that Antigua & Barbuda could soon find itself in the company of Japan, Zimbabwe, and Greece, the countries with the highest national debts. In the January 2014 budget presentation, the former administration indicated that the nation's debt was 87 per cent of GDP, according to The Daily Observer. However, Prime Minister Gaston Browne has disputed the figure, deeming it to be as high as 130 per cent, the report noted. Minister Browne said while his government's increased borrowing is pushing up the nation's debt-to-GDP ratio, it is necessary to solve the country's problems, the report related. =========== B R A Z I L =========== CEMIG DISTRIBUICAO: Moody's Affirms Ba1 Global Scale Issuer Rating ------------------------------------------------------------------ Moody's America Latina took the following rating actions related to Companhia Energetica de Minas Gerais (CEMIG, the Holding Company), CEMIG Distribuicao S.A.(CEMIG-D), and CEMIG Geracao e Transmissao S.A. (CEMIG-GT): (i) CEMIG (Holding Company): issuer ratings affirmed at Ba1 (global scale) and Aa2.br (national scale); outlook changed to negative from stable. (ii) CEMIG-D: issuer ratings affirmed at Ba1 (global scale)and Aa2.br (national scale); senior unsecured guaranteed debenture ratings downgraded 1 notch to Ba1 (global scale) and Aa2.br (national scale); outlook remains negative (iii) CEMIG-GT: issuer ratings affirmed at Baa3 (global scale) and Aa1.br (national scale); senior unsecured guaranteed debenture ratings affirmed at Baa3 (global scale) and Aa1.br (national scale); outlook changed to negative from stable. Ratings Rationale The change in the outlooks to negative reflects primarily Moody's action on September 16, 2014, that changed the outlook of the State of Minas Gerais to negative from stable. The downgrade of CEMIG-D's senior unsecured guaranteed debentures reflects the deteriorating credit metrics of CEMIG-D on a stand-alone basis and the expected weakening of CEMIG's consolidated financial position amid the increasing level of uncertainties for the Brazilian electricity sector as a whole due to the negative impact of declining hydro conditions and high thermal power costs due to the persistent drought conditions of the last two years. According to Moody's standard adjustments, from the last twelve months ended on December 31, 2011 (FY2011) to the last twelve months ended on June 30, 2014 (LTM 06/30/2014), CEMIG-D's Cash Flow from Operations pre-Working Capital (CFO pre-W/C) has fallen nearly 47%, from BRL1,543.5 million to BRL830.4 million, while indebtedness relative to EBITDA (Debt/EBITDA) has steadily deteriorated from 2.8 times to 7.7 times. During this period: (i) (CFO pre-W/C)-to-Debt decreased to 10.2% from 29.2%; (ii) (CFO pre-W/C minus Dividends-to-Debt) ratio fell to 5.5% from 22%; and (iii) (CFO pre-WC + Interest)/Interest (or CFO pre-WC Interest Coverage) declined to 2.9x from 5.2x. During this same period some of CEMIG's metrics on a consolidated basis deteriorated primarily due to the performance of CEMIG-D as well as less conservative dividend distributions such that: (i) CFO pre-W/C decreased to BRL 4.29 billion from BRL 4.87 billion; (ii) CFO pre-W/C minus Dividends-to-Debt ratio fell to 5.5% from 15.2%; (iii) CFO pre-W/C-to-Debt increased slightly to 28.2% from 26.1%; and (iv) CFO pre-W/C Interest Coverage increased to 6.1x from 4.4x. For the LTM period ended on 6/30/2014, CEMIG had consolidated net operating revenues of BRL 16,138 million (excluding construction revenues) and EBITDA of BRL 6,752 million, an increase of 18.2% and 18.4%, respectively, when compared with the LTM period ended 12/31/2013 principally due to the high prices received by CEMIG-GT from energy sales made on the spot market. The affirmation of CEMIG-GT's Baa3 and Aa1.br issuer and senior unsecured guaranteed debenture ratings reflects the current stronger standalone financial position of CEMIG-GT versus CEMIG's consolidated financial position. During the same period, according to Moody's standard adjustments, CEMIG-GT's: (i) CFO pre-W/C increased to BRL 3,290.6. million from BRL1,596.3 million, a 106% increase; (ii) CFO pre-W/C minus Dividends-to-Debt ratio increased to 25.5% from 3.5%; (iii) CFO pre-WC Interest Coverage increased to 10.0x from 3.0x; (iv) CFO pre-WC-to-Debt increased to 51.5% from 17.7%; and (v) Debt/EBITDA decreased to 1.3 times from 2.9 times. CEMIG is a GRI as defined in Moody's rating methodology "Government-Related Issuers: Methodology Update", published in July 2010. Moody's methodology for GRIs is to systematically incorporate into the rating both the stand-alone credit risk profile or Baseline Credit Assessment (BCA) of the company as well as an assessment of the likelihood that its government owner would provide extraordinary support to the company's obligations. The BCA of a GRI is expressed on a 1-21 scale or as a range within the 1-21 scale, according to the issuer's preference, where one represents the equivalent risk of an Aaa, two a Aa1, three a Aa2 and so forth. In accordance with Moody's methodology for government related issuers, or GRIs, the implied Ba1consolidated rating of CEMIG reflects the combination of the following inputs: - Baseline Credit Assessment (BCA) of 11 (previously 10 -- now mapping to a ba1) - High Level of Dependence (70%) - unchanged - Strong Level of Support (51%-70%) - unchanged - The Baa3 rating of the State of Minas Gerais -- negative outlook (previously stable) Rating Outlooks The negative outlooks reflect the current negative outlook for the State of Minas Gerais, majority owner of CEMIG, and our expectations that the electricity sector overall in Brazil will continue to suffer a decline in operating margins and credit metrics for the remainder of the year and likely into 2015 given the drought conditions and the uncertainties regarding the government's future actions with respect to cost recoveries. Furthermore, the potential return of large generation concessions in the short to medium term could potentially weaken the company's overall liquidity position. What Could Change the Rating - Up In light of the expected continuation of deterioration in the company's credit metrics in 2014 and potentially into 2015, an upgrade rating action is very unlikely in the short-to medium term despite the current high prices being realized by CEMIG-GT in the spot market . A stabilization of the outlook could be considered in the case of: CEMIG: (i) Cash flow interest coverage ratio stays above 4.0x, and (ii) Retained Cash Flow / Debt remains above 15% on a sustainable basis. CEMIG-D: (i) Cash flow interest coverage ratio stays above 3.0x, and (ii) Retained Cash Flow / Debt remains above 9% on a sustainable basis. CEMIG-GT: (i) Cash flow interest coverage ratio stays above 4.0x, and (ii) Retained Cash Flow / Debt remains above 15% on a sustainable basis. What Could Change the Rating - Down We would consider downgrading the ratings if there was a material deterioration in the company's credit metrics. Quantitatively, there would be pressure for a downgrade in the case of: CEMIG: (i) Cash flow interest coverage ratio fell below 3.5x, and (ii) Retained Cash Flow / Debt stayed below 10% for an extended period. CEMIG-D: (i) Cash flow interest coverage ratio fell below 2.5x, and (ii) Retained Cash Flow / Debt stayed below 5% for an extended period. CEMIG-GT: (i) Cash flow interest coverage ratio fell below 4.0x, and (ii) Retained Cash Flow / Debt stayed below 15% for an extended period. A downgrade of the State of Minas Gerais could also potentially precipitate consideration of a downgrade rating action. CEMIG is an integrated power utility group, with equity stakes in more than 200 companies, operating in the electricity generation, transmission and distribution sectors. CEMIG is publicly traded on the local (BM&FBOVESPA), New York (NYSE) and Madrid (LATIBEX) stock exchanges. The government of the State of Minas Gerais holds 50.96% of CEMIG's voting capital and 22% of its total capital. CEMIG is currently the largest integrated electricity utility in Brazil. CEMIG-D is one of the largest distribution companies in Brazil, with a total concession area of 567,478 square kilometers (Km2), serving 774 cities, and 7.9 million consumers. As of 2013, after Moody's standard adjustments, CEMIG-D accounted for 61% of CEMIG's consolidated net sales, 35% of consolidated EBITDA, and 59% of consolidated indebtedness. CEMIG-D is CEMIG's second largest company in terms of EBITDA, following CEMIG-GT, which accounts for approximately 61% of CEMIG's consolidated EBITDA. CEMIG is currently one of the largest Brazilian electricity generation groups, with total installed capacity of 7,468 MW. CEMIG controls CEMIG-D and CEMIG-GT owning 100% of their voting capital. The principal methodologies used in this rating were Regulated Electric and Gas Utilities Rating Methodology published in December 2013. Other methodologies used include the Government Related Issuers: Methodology Update published in July 2010. MMX MINERACAO: Follows Oil Unit in Bankruptcy Protection -------------------------------------------------------- Juan Pablo Spinetto at Bloomberg News report that Eike Batista's main mining unit became the third of his companies to file for bankruptcy protection in a year after the Brazilian entrepreneur lost his fortune. MMX Mineracao & Metalicos SA said in a statement its subsidiary MMX Sudeste Mineracao SA decided to request protection from creditors in a Belo Horizonte court, according to Bloomberg News. MMX Sudeste is a wholly owned MMX subsidiary that controls the Serra Azul and Bom Sucesso ventures and is the company's main source of revenue. Bloomberg News notes that the request marks another chapter in the demise of Mr. Batista. Mr. Batista's empire of commodities and logistics startups collapsed last year, forcing his flagship oil unit along with his shipbuilding unit into bankruptcy protection amid mounting debt, a shortfall in revenue and a crisis of confidence among investors. MMX, which was the first of six startups that Mr. Batista listed in Sao Paulo from 2006 to 2012, has been selling assets, halting producing units and shrinking operations to cut costs and bolster cash as iron-ore prices slide to a five-year low, Bloomberg News notes. "Despite the management's efforts to negotiate with creditors and seek potential investors, the bankruptcy protection request appeared as the most adequate alternative given the company's economic and financial situation," MMX said in the statement obtained by Bloomberg News. Face Trial The company's chief executive officer and two board members resigned in August, with MMX naming interim Chief Financial Officer Ricardo Werneck Guimaraes as replacement, Bloomberg News relates. Mr. Batista is due to face trial next month for alleged insider trading and market manipulation, notes the report. Mr. Batista's lawyer, Sergio Bermudes, has previously said the allegations against his client were groundless. MMX had record losses last year after putting on hold an expansion of its flagship Serra Azul project and writing down the value of assets, Bloomberg News notes. In February, the company sold a controlling stake in a key iron-ore port project in Rio state and in July agreed to lease its Corumba mine to Vetria Mineracao SA, Bloomberg News recalls. The report said shares of MMX fell to a record low 48 centavos on Oct. 10. The company has halted operations at Serra Azul, its only producing unit, and is reviewing its business plan to bolster cash, Bloomberg News relates. Angra Partners, which is advising Mr. Batista on the reorganization of his EBX Group Co. holding company, was hired by MMX on June 23 to work on restructuring the company's debt. Controlling Stake Veja magazine columnist Lauro Jardim wrote Aug. 18 that the company would seek bankruptcy protection by the end of August, Bloomberg News notes. While MMX had no immediate plans to seek court protection from creditors, it remained an option, a person familiar with the strategy told Bloomberg News at the time. The company was seeking to sell or lease its remaining assets, the person said at the time, Bloomberg News says. It still has 35 percent of a key iron-ore port project in Rio state after selling in February a controlling stake to commodities trader Trafigura Beheer BV and Mubadala Development Co. for US$400 million, Bloomberg News relays. MMX Mineracao e Metalicos S.A., together with its subsidiaries, engages in the extraction, processing, research, and development of minerals; and sale of iron ore in Brazil. PETROLEO BRASILEIRO: Refinery 60% Over Budget, Audit Court Says --------------------------------------------------------------- Anna Edgerton and Sabrina Valle at Bloomberg News report that Petroleo Brasileiro SA (Petrobras), the Brazil-run producer being probed for cost overruns, is set to spend 60 percent more than budgeted at one of its refineries, according to the tribunal overseeing state spending. Petrobras will pay US$21.6 billion to complete the Comperj complex that's scheduled to open in 2016, Jose Jorge, a member of the TCU tribunal, said in documents released in Brasilia, according to Bloomberg News. Bloomberg News notes that Mr. Jorge said there are discrepancies between different government agencies, as well as within different Petrobras divisions, over investments needed for Comperj. Management has been "reckless" with irregularities in the omission of technical analysis, overpaying for contracts and a lack of effective controls, according to the audit report, Bloomberg News says. "We're basically investigating how the structure of Petrobras can undertake such a huge project in such a sloppy way," Mr. Jorge told reporters after the tribunal session, Bloomberg News relays. Mr. Jorge said there were irregularities in three contracts: two that were overpaid and one that was signed in an "emergency" time- frame that didn't allow other companies to bid, Bloomberg News notes. Other tribunal members asked for more time to analyze the audit report and suggested issuing a warning to Petrobras to give the company time to explain the discrepancies, reports Bloomberg News. Comperj will cost US$130,000 for each barrel of production capacity, compared with US$80,000 at the northeastern Abreu e Lima refinery which Petrobras Chief Executive Officer Graca Foster called in 2012 "an experience Petrobras should never repeat" for its increased costs and several changes in the project, Bloomberg News notes. Petrochemical Plans Comperj was initially planned as an industrial complex that would include petrochemical units, notes the report. It now consists of just two refineries. The original project would cost US$47.7 billion if fully executed, Mr. Jorge said, according to Bloomberg. The first of Comperj's units has the capacity to process 165,000 barrels a day. Abreu e Lima, Petrobras' first new refinery in 30 years, is scheduled to be operational by next month and is expected to cost US$18.5 billion, for two units with a total processing capacity of 230,000 barrels a day, according to the company's business plan, Bloomberg News notes. The cost per barrel is obtained by dividing the total cost by the refining capacity. Project Changes "I think when Comperj is investigated thoroughly, the situation will be more difficult than Abreu e Lima in the complexity of resolving the problem," Mr. Jorge told reporters after the TCU session, in reference to the other refinery, also being probed for overspending, Bloomberg News notes. Petrobras said in an April 16 statement that, just like Abreu e Lima, Comperj suffered a series of changes in its initial project, Bloomberg News recalls. The cost in that statement was US$13.5 billion, the same estimate the company used in its business plan for the period between 2014 and 2018, announced in February, the report relays. Mr. Jorge said he would review the suggestion to issue a warning to Petrobras and present his recommendation in the tribunal's next session on Oct. 22, Bloomberg News adds. About Petroleo Brasileiro Based in Rio de Janeiro, Brazil, Petroleo Brasileiro S.A. -- Petrobras (Brazilian Petroleum Corporation) -- explores for oil and gas and produces, refines, purchases, and transports oil and gas products. The Company has proved reserves of about 14.1 billion barrels of oil equivalent and operates 16 refineries, an extensive pipeline network, and more than 8,000 gas stations. * * * As reported in the Troubled Company Reporter-Latin America on Oct. 7, 2013, Moody's Investors Service downgraded Petroleo Brasileiro's multiple seniority shelf to (P)Ba1 from (P)Baa3. ========================== C A Y M A N I S L A N D S ========================== ALUXA INVESTMENTS: Members' Final Meeting Set for Oct. 20 --------------------------------------------------------- The members of Aluxa Investments Ltd will hold their final meeting on Oct. 20, 2014, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands ARMS PARK: Placed Under Voluntary Wind-Up ----------------------------------------- At an extraordinary general meeting held on Sept. 11, 2014, the shareholder of Arms Park Leasing Limited resolved to voluntarily wind up the company's operations. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Commerce Corporate Services Limited P.O. Box 694 Grand Cayman Cayman Islands Telephone: 949 8666 Facsimile: 949 0626 GUOTAI JUNAN: Creditors' Proofs of Debt Due Oct. 22 --------------------------------------------------- The creditors of Guotai Junan Funds SPC are required to file their proofs of debt by Oct. 22, 2014, to be included in the company's dividend distribution. The company commenced liquidation proceedings on Aug. 25, 2014. The company's liquidator is: Stuart Sybersma c/o Darach E. Haughey Deloitte Touche Tohmatsu One Pacific Place, 35th Floor 88 Queensway Hong Kong Telephone: + (852) 2852 1659 Facsimile: + (852) 2850 8362 LYONROSS LIQUID: Commences Liquidation Proceedings -------------------------------------------------- On Sept. 4, 2014, the sole shareholder of Lyonross Liquid Strategies Fund Ltd resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Bruce Catania 183 Madison Avenue, Suite 503 New York, NY 10016 United States of America c/o Walkers 190 Elgin Avenue, George Town Grand Cayman KY1-9001 Cayman Islands PMCM LIMITED: Creditors' Proofs of Debt Due Oct. 22 --------------------------------------------------- The creditors of PMCM Limited are required to file their proofs of debt by Oct. 22, 2014, to be included in the company's dividend distribution. The company commenced wind-up proceedings on Sept. 11, 2014. The company's liquidator is: Eagle Holdings Ltd. c/o Barclays Private Bank & Trust (Cayman) Limited FirstCaribbean House, 4th Floor P.O. Box 487 Grand Cayman KY1-1106 Cayman Islands Telephone: 345 949-7128 RIVERSIDE GLOBAL: Shareholders Receive Wind-Up Report ----------------------------------------------------- The shareholders of Riverside Global Value Fund received on Oct. 15, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mourant Ozannes Cayman Liquidators Limited 94 Solaris Avenue Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands SKYBASE HOLDINGS: Shareholder to Receive Wind-Up Report on Nov. 22 ------------------------------------------------------------------ The sole shareholder of Skybase Holdings Limited will receive on Nov. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Chen Yong Hai c/o Michelle R. Bodden-Moxam Telephone: 345-946-6145 Facsimile: 345-946-6145 Portcullis TrustNet (Cayman) Ltd. The Grand Pavilion Commercial Centre Oleander Way, 802 West Bay Road P.O. Box 32052 Grand Cayman, KY1-1208 Cayman Islands SMC TRANSPORATION: Members' Final Meeting Set for Oct. 14 --------------------------------------------------------- The members of SMC Transporation Limited will hold their final meeting on Oct. 14, 2014, at 9:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Richard Fear c/o Daniel Woolston Telephone: (345) 814 7782 Facsimile: (345) 945 3902 P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands VINCI GAS: Placed Under Voluntary Wind-Up ----------------------------------------- On Sept. 12, 2014, the sole shareholder of Vinci Gas Long Biased Fund resolved to voluntarily wind up the company's operations. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Ogier c/o Jonathan Turnham 89 Nexus Way, Camana Bay Grand Cayman KY1-9007 Cayman Islands Telephone: (345) 949 9876 Facsimile: (345) 949-9877 VINCI GAS MASTER: Placed Under Voluntary Wind-Up ------------------------------------------------ On Sept. 12, 2014, the sole shareholder of Vinci Gas Long Biased Master Fund resolved to voluntarily wind up the company's operations. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Ogier c/o Jonathan Turnham 89 Nexus Way, Camana Bay Grand Cayman KY1-9007 Cayman Islands Telephone: (345) 949 9876 Facsimile: (345) 949-9877 =============== C O L O M B I A =============== BANCO GNB: Moody's Affirms B1 Long Term FC Sub. Debt Rating ----------------------------------------------------------- Moody's Investors Service affirmed Banco GNB Sudameris S.A.'s (GNB) standalone bank financial strength rating (BFSR) of D-, which maps to a standalone baseline credit assessment (BCA) which remains at ba3, and changed the outlook to positive, from stable. Moody's also affirmed with a positive outlook the B1 long-term foreign currency subordinated debt rating. At the same time, Moody's affirmed GNB's Ba1/Not Prime long-/short-term global local and foreign currency deposit ratings and Ba1 long-term foreign currency senior unsecured debt rating. The outlook on the deposit and senior unsecured debt ratings remains stable. List of affected ratings: The following ratings were affirmed, with a positive outlook: - Standalone bank financial strength rating of D- - Long-term foreign currency subordinated debt rating of B1 The following ratings were affirmed, with a stable outlook: - Long-term global local currency deposit rating of Ba1 - Short-term global local currency deposit rating of Not Prime - Long-term foreign currency deposit rating of Ba1 - Short-term foreign currency deposit rating of Not Prime - Long-term foreign currency senior debt rating of Ba1 Overall Outlook: Stable(m) Ratings Rationale In affirming the ratings and changing the outlook on GNB's standalone rating to positive, from stable, Moody's acknowledges the enhancements to GNB's franchise provided by its acquisitions of HSBC subsidiaries in Colombia, Peru and Paraguay in the fourth quarter of 2013 and first quarter of 2014, which increased its loan book by 57% during that period. The acquisitions position the bank well to take advantage of the favorable business prospects offered by Colombia's healthy economic growth and Peru's robust domestic demand. As GNB proceeds with the integration of the former HSBC subsidiaries through end-2015, Moody's expects its profitability to benefit from the opportunities for cost and business synergies the merger has created. Asset quality and capitalization for the consolidated entity remains adequate, and loan loss reserves are ample. GNB's operations in Colombia, its core market, will continue to focus on small business lending and payroll-linked loans, in addition to the bank's ownership of the country's third largest ATM network. As for Peru and Paraguay, which are new markets for GNB, the bank will be challenged to replicate its strategic focus because of strong competition from much larger and more entrenched local players. Management intends to leverage its Peruvian operation for dealings with Colombian businesses; the potential synergies from the Paraguayan acquisition, however, are less evident. Moody's noted that GNB's profitability will likely be boosted by cost management opportunities as the Colombian operations are integrated and revenue contribution increases. We expect operating efficiency to return to pre-acquisition levels of 50% from its current high 63% ratio. Nevertheless, because of GNB's predominantly low risk asset mix, including a large 36% share of liquid assets, its profitability has been modest relative to other Colombian banks', as indicated by return on fully adjusted risk- weighted assets at 0.9%, as of June 2014, down from 1.2%, at year- end 2013. By way of comparison, the average return on assets for Colombian banks is 1.7%. Notwithstanding its high operating costs, the acquisitions appear to have adequate credit quality and relatively similar portfolio compositions to that of GNB. Consequently, as of June 2014, GNB continues to report stable consolidated past due loan ratio of 0.6% that remains among the lowest in the Colombian banking system. GNB's consumer loans, which constitute 39% of its portfolio, are repaid directly from workers' salaries, limiting discretionary defaults. Even if asset quality declines somewhat as a result of problems associated with the integration of its new acquisitions or problems associated with its large exposures, GNB maintains ample cushions against potential pitfalls, particularly loan loss reserves totaling 552.6% of past due loans. In addition, the bank's fully adjusted Tier 1 ratio of 7.1% is one of Colombia's highest, although it remains quite low by regional standards. As the acquisitions were acquired below book value and were largely financed with capital injections from GNB's shareholders, they had little impact on capital. However, these credit strengths are offset by risks and costs stemming from the bank's wholesale funding mix, which is sourced almost 90% from institutional depositors and corporations and exposes the bank to refinancing risk. Moreover, owing to the high cost of this wholesale funding together with the bank's lower- yielding, but lower risk, loan portfolio, its net interest margin of 1.9% is narrower than that of its larger peers in Colombia. Consequently, profitability is expected to remain limited despite projected cost savings over the next 12-18 months. GNB's Ba1 long-term global local and foreign currency deposit and senior unsecured debt ratings benefit from two notches of uplift from the bank's standalone BCA of ba3, as they incorporate Moody's evaluation of a high probability of systemic support for GNB's deposits and senior issuances. This evaluation takes into account the bank's market shares in deposits and loans and Moody's assessment of Colombia as a high support country. GNB held a market share of 2.1% of gross loans in Colombia and 3.7% in deposits, with a substantially higher 10.0% niche share of payroll linked loans, as of June 2014. The ratings carry a stable outlook as they are not expected to increase even if the bank's standalone BCA increases to Ba2 as systemic support will only provide one notch of uplift in such a scenario. Upward pressure on the bank's standalone rating will increase if the bank's efforts to generate cost and business synergies associated with its recent acquisitions lead to an improvement in its profitability. While the standalone rating is unlikely to face downward pressure in the near term given the positive outlook, the outlook could be revised to stable if profitability does not improve or asset quality deteriorates meaningfully. The principal methodology used in this rating was Global Banks published in July 2014. The date of the last rating action was on 18 April 2013 when Moody's assigned ratings to GNB's senior debt issuance. GNB is headquartered in Bogot , Distrito Capital, Colombia. As of June 2014 the bank reported USD10.1 billion in assets, USD4.8 billion in gross loans, USD7.5 billion in deposits, USD661 million in shareholders' equity and USD28 million in net income. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Taxpayers Foot Subsidy as Road's Tolls Slump ----------------------------------------------------------- Dominican Today reports that the failed revenue projections for the Santo Domingo-Samana road (John Paul II highway) forces the government to continue its subsidy, as much as RD$2.5 billion (US$58.1 million) next year, or a 101.77% jump. Budget allocation to offset the low toll revenue will have increased by more than 100% in just two years, according to Dominican Today. The budget allocation of RD$2.3 billion in this year's dubbed the "shadow toll" is RD$933.0 million higher than in 2013, the report notes. Colombian contractor Autopistas del Noreste (highways of the northeast) built the 106-kilometer road, under a contract to collect the tolls during 30 years, the report adds. ============= J A M A I C A ============= KINGSTON CONTAINER: Negotiations Underway for Sale of Terminal -------------------------------------------------------------- RJR News reports that negotiations commenced on Oct. 14, with the preferred bidder for the privatisation of Kingston Container Terminal (KCT). Jamaica Transport Minister Dr. Omar Davies told the House of Representatives that the talks involved head of the negotiating team former Bank of Jamaica Governor Derick Latibeaudiere and the bidder Terminal Link Consortium, according to RJR News. Terminal Link is jointly owned by international shipping companies CMA, CGM, and China Merchant Marine. The report notes that Dr. Davies has given the negotiating team a month to report on the progress of the discussions. "Should these negotiations lead to a preliminary agreement, after that month, which satisfies the criteria laid down by the GOJ, steps will be taken to move towards a final agreement in the shortest time possible," the report quoted Dr. Davies as saying. Dr. Davies served notice, however, that should no such agreement be arrived at, then the negotiating team will be authorized to "initiate negotiations with other parties, which have expressed an interest, subsequent to the termination of the previous tender process," the report relates. Dr. Davies declared that there will be no "fire sale" of KCT, the report relates. Dr. Davies said he has ensured that the facility continues to improve its productivity "and to implement a series of activities to ensure that the port is operated as a going concern, capable of sustaining itself, in the event that there is no satisfactory final agreement with a private sector entity," the report discloses. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: ConocoPhillips Files for Arbitration ------------------------------------------------------------ El Universal, citing Reuters, reports that the U.S. oil company ConocoPhillips Co. said it has filed a request for arbitration against state-run oil company Petroleos de Venezuela (Pdvsa) at the International Chamber of Commerce (ICC) for the takeover of its stake in heavy oil projects Petrozuata and Hamaca. The filing with the ICC is separate from the Conoco arbitration claim pending before the World Bank's International Center for Settlement of Investment Disputes (Icsid), the oil company said, according to EL Universal. In 2007, the Venezuelan government took over ConocoPhillips' investments without paying damages in full, the company claims, the report recalls. About PDVSA 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. * * * As reported in the Troubled Company Reporter-Latin America on Sept. 19, 2014, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on Petroleos de Venezuela S.A. (PDVSA) to 'CCC+' from 'B-'. The outlook remains negative. VENEZUELA: Debt Insurance Costs Surge on Oil Price Drop ------------------------------------------------------- Daniel Bases at Reuters reports that the cost for insuring Venezuelan sovereign debt against default or restructuring surged on Oct. 15 as global oil prices swooned to a 27-month low before rebounding, illustrating rising investor concerns over the OPEC member nation's ability to service its debt. An investor wanting to insure a US$10 million trade for five years would need to spend US$4.175 million as an up-front cost, according to Reuters. In addition, they would have to pay US$500,000 annually, for the duration of the credit default swap contract, according to data provider Markit, Reuters relates. On Oct. 14, the up-front cost was US$3.868 million. Reuters says that the cost to insure a portfolio of Venezuelan sovereign debt for five years has nearly tripled in the last four months. The up-front cost was just below US$1.5 million in late June. "There's panic over whether they are going to be able to pay. That great concern is reflected in the market with yields touching 30 percent," Russ Dallen, head of Caracas Capital Markets in Miami, said in reference to yields on debt issued by state-owned oil company Petroleos de Venezuela (PDVSA), Reuters notes. "Oil prices are being pushed to levels where we will find out how low they can go for Venezuela to be able to still carry on," said Mr. Dallen. PDVSA debt maturing in April 2017 currently trades with a yield of 28.68 percent, notes the report. The bond is down 5.75 points in price with a bid at 60.25, according to Thomson Reuters data. When the debt was issued in 2007, it sold at a premium and a coupon of 5.25 percent, Reuters notes. In the last 2-1/2 months, the bid price on Venezuela's benchmark sovereign bond due 2027 has fallen 32.5 percent to 59.99 cents on the dollar, Reuters discloses. The yield has popped up to nearly 17 percent. Looking across the Venezuelan sovereign curve, the yield spread over benchmark U.S. Treasuries has widened to 1,693 basis points. On Oct. 15, the spread increased by 1.37 percent and total returns fell 6.38 percent, as measured by the JPMorgan Emerging Markets Bond Index Plus, Reuters reports. The report says the weakness in Venezuela has not occurred in a vacuum with many markets under selling pressure, including global stocks, peripheral European sovereign bonds and the U.S. dollar. Increased worries over slowing global economic growth and a glut of oil is exacerbated by rising incidences of the spread of the deadly Ebola virus beyond its origins in West Africa, the report relays. "Bonds have been falling in recent days because of oil prices and (Oct. 15) today especially out of fear that we're at the start of a risk-aversion period," said Jorge Piedrahita, analyst at Torino Capital in New York, citing worries about Ebola and the European economy, the report adds. "In this context there are many rumors going around ... I don't think it will be a period of major risk-aversion. I think it's a spectacular opportunity to buy Venezuelan bonds," the report quoted Mr. Piedrahita as saying. *********** 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 202-362-8552. * * * End of Transmission * * *