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/raid1/www/Hosts/bankrupt/TCRLA_Public/150204.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, February 4, 2015, Vol. 16, No. 024 Headlines B A R B A D O S BARBADOS: No Interference With Fixed Exchange Rate, Minister Says B R A Z I L AES ELETROPAULO: Faces State Audit Over Sao Paulo Power Cuts PARANAPANEMA S.A.: Moody's Affirms Ba3 CFR; Outlook Negative C A Y M A N I S L A N D S ALPHA SCOUT: Members Receive Wind-Up Report BLUE SEA: Members Receive Wind-Up Report CENTILLION INVESTMENT: Members Receive Wind-Up Report CINTRA HANSON: Shareholders Receive Wind-Up Report DELRAY LIMITED: Members Receive Wind-Up Report ESE FUND: Shareholders Receive Wind-Up Report IPGIS CENTRAL: Shareholders Receive Wind-Up Report JAMES ALPHA: Shareholders Receive Wind-Up Report LODESTONE GLOBAL: Members Receive Wind-Up Report METIER ACTIVE: Shareholders Receive Wind-Up Report OSWALD MAGNIAC: Members Receive Wind-Up Report PROFITABLE INVESTMENTS: Members Receive Wind-Up Report SHREE HANUMANTE: Members Receive Wind-Up Report STONE MILLINER: Shareholders Receive Wind-Up Report TSF FUND: Shareholders Receive Wind-Up Report D O M I N I C A N R E P U B L I C DOMINICAN REP: After Falling Since Nov., All Fuel Prices Unchanged J A M A I C A JAMAICA: Devaluation Questions From Holness M E X I C O NII HOLDINGS: Proposes March 20 Auction for Mexican Affiliate P A N A M A AES PANAMA: Fitch Affirms 'BB+' IDRs; Outlook Negative P U E R T O R I C O PUERTO RICO ELECTRIC: S&P Keeps CCC Rev. Bond Rating on Watch Neg. T R I N I D A D & T O B A G O TRINIDAD AND TOBAGO: Foreign Exchange Woes Continue V E N E Z U E L A VENEZUELA: In a Bind As Nicolas Maduro Faces Default Dilemma X X X X X X X X X LATIN AMERICAN: Default Wave Just Getting Started - - - - - =============== B A R B A D O S =============== BARBADOS: No Interference With Fixed Exchange Rate, Minister Says ----------------------------------------------------------------- Caribbean360.com reports that Barbados Prime Minister Freundel Stuart said his administration has no intention of interfering with the fixed exchange rate of the Barbados currency to the United States currency. Minister Stuart told members of the private sector that the conditions in Barbados did not justify any tampering with the exchange rate, according to Caribbean360.com. "The government over which I preside will, through its policy choices, continue to make the preservation of that exchange rate a matter of continuing priority. I give this assurance, well aware that this will serve neither as a deterrent nor a discouragement to that small coterie of alarmists who continue to believe in economic witchcraft and are therefore preoccupied with and intrigued by this brand of necromancy," the report quoted Minister Stuart as saying. Minister Stuart told members of the Barbados Chamber of Commerce and Industry that the island took the decision in 1975 to have a fixed exchange rate in relation to the US dollar after delinking from the British pound sterling, the report notes. Minister Stuart said for the past 40 years, government had defended the exchange rate. "We have done so because, in good times and in bad, this exchange rate has served us well. Those who blithely and glibly argue that our currency is over-valued have not been able to show us how devaluation has improved spectacularly the situation of those of our neighbors who have pursued that course," the report quoted Minister Stuart as saying. "I have certainly heard no argument credible enough to persuade me that it is a course of action to which we should have resorted," Minister Stuart said, arguing that devaluation was supposed to be a policy response to a "chronic disequilibrium in a country's balance of payments position," he added, notes the report. Prime Minister Stuart pointed out that its rationale is to correct that chronic imbalance by making imports more expensive and exports cheaper, the report relays. "Resort to it, however, is not without risk or peril as the venerable economist, Sir Arthur Lewis so discerningly observed," Minister Stuart said, telling the audience government is of the view that the State should create an operating environment in which the private sector could flourish with uninhibited vigor, the report discloses. But, Minister Stuart cautioned that such an enabling environment did not mean there should be no Town and Country Planning Department; no border Customs Officers to ask questions or insist on receiving truthful answers to those questions; or that the Immigration Department should approve every application for work permits or any other status without question, the report says. "The physical development of Barbados must continue to be ordered and the Town Planning Department has therefore to be allowed to do its work efficiently, always operating within the provisions of the law which may govern its operations from time to time," the report quoted Minister Stuart as saying. "The Customs and Immigration Departments are not merely revenue streams but are intimately linked to our national security apparatus and, for countries like Barbados, national security is in addition to everything else, a developmental issue. If you were to remove our sense of national security, all of our economic gains would disappear in short order," Minister Stuart suggested, says Caribbean360.com. However, Minister Stuart stressed that there was no justification for unnecessary obstacles being placed in the way of the private sector by the agencies named, the report relays. Minister Stuart insisted that facilitation and the improvement of competitiveness were non-negotiable commitments of the Government of Barbados, the report adds. =========== B R A Z I L =========== AES ELETROPAULO: Faces State Audit Over Sao Paulo Power Cuts ------------------------------------------------------------ Reuters reports that Brazil's state of Sao Paulo will investigate AES Eletropaulo Metropolitana SA for delays in restoring power to several parts of the nation's wealthiest state in the wake of rains and rolling blackouts, a state official said. Arsesp, Sao Paulo state's agency in charge of public services, will begin an audit of the company that should be done by Feb 17, Joao Carlos Meirelles, the state energy secretary, told reporters, notes Reuters. According to Meirelles, Eletropaulo has failed to provide full information about its efforts to restore the supply of electricity in several urban and rural regions, the report notes. About AES Corporation The AES Corporation (NYSE:AES) -- http://www.aes.com/-- is one of the world's largest global power companies, with 2007 revenues of US$13.6 billion. With operations in 29 countries on five continents, AES's generation and distribution facilities have the capacity to serve 100 million people worldwide. PARANAPANEMA S.A.: Moody's Affirms Ba3 CFR; Outlook Negative ------------------------------------------------------------ Moody's Investors Service changed the outlook for Paranapanema S.A. to negative from stable, and affirmed the Ba3 Corporate Family Rating. The change in outlook to negative reflects the deterioration in the industry's fundamentals for copper products in Brazil , as key consuming industries -- energy, construction, refrigeration, industrial machinery, automotive -- will continue to be challenged in the next 12-18 months by the tougher operating environment stemming from Brazil's economic slowdown eventually leading to cash flow pressures for Paranapanema. Ratings affirmed: Paranapanema S.A. Corporate Family Rating: Ba3 Outlook actions: The outlook for all ratings: changed to negative from stable Ratings Rationale Paranapanema's Ba3 ratings reflect the company's leading position in the Brazilian copper market, as well as its large scale and partially-integrated operations that include access to high-grade copper, its efficient logistics, and its long-term relationship with copper suppliers and clients. The ratings also reflect Paranapanema's exposure to the cyclicality of global copper markets and foreign exchange, which has historically resulted into margins and cash flows volatility, although Moody's recognize that the company has revisited its hedging policy in order to mitigate future price and FX volatility. The ratings incorporate Moody's expectations that challenging fundamentals in the copper industry may pressure Paranapanema's credit metrics. Also constraining the ratings are the negative perspective for Brazil's economic growth and industrial activity, which should impact Paranapanema's domestic sales while reducing the ability of the company to pass through costs as a consequence of the BRL devaluation and of rising administrative prices, such as energy . Imports remain a threat, but the devaluation of the local currency (BRL) should continue to help hinder imported copper products. Exposure to copper prices and foreign exchange volatility also constrain the ratings. Besides, the high concentration of debt in the short term (55% of total reported debt at the end of 3Q14) poses additional risk to Paranapanema's credit profile, although Moody's acknowledge the export financing nature of the majority of these lines. Despite the deterioration in the domestic market fundamentals in the 2H2014, Paranapanema's operational performance has improved in the past quarters, and better working capital management resulted in a stronger liquidity position, with cash balance near BRL1.0 billion at the end of September 2014. The ratings could be upgraded if Paranapanema is able to improve operating performance such that adjusted EBITA to interest expense is sustained above 3.5x (1.8x in the last twelve months ended September 2014) and EBITA margin above 8% on a sustained basis (4.5% in the last twelve months ended September 2014 ). An improved liquidity profile and a lower concentration of debt in the short term could support positive rating actions. All ratios incorporate Moody's standard adjustments. On the other hand, the ratings could be downgraded if Paranapanema's liquidity profile deteriorates or if its capital structure weakens, with adjusted Debt to Ebitda above 4.75x (3.9 x in the last twelve months ended September 2014) for a continued period. Performance falling below Moody's expectations, indicated by free cash flow to debt below 5% (24.8% in the last twelve months ended September 2014), could also lead to negative rating actions. The principal methodology used in this rating was Global Manufacturing Companies published in July 2014. Paranapanema S.A. (Paranapanema) is the largest refined copper producer in Brazil, with an annual smelting production capacity of 280,000 tons. The company is also a leading producer of semi- finished copper products, including wires, tubes, rolling, rods and bars. In the last twelve months ended September 2014, Paranapanema reported consolidated revenues of BRL 5.1 billion ( USD 2.2 billion converted by the average foreign exchange rate for the period). The company has four industrial facilities in Brazil -- one in the state of Bahia, one in Esp¡rito Santo and two in the state of Sao Paulo. ========================== C A Y M A N I S L A N D S ========================== ALPHA SCOUT: Members Receive Wind-Up Report ------------------------------------------- The members of Alpha Scout Canadian Opportunities Fund Ltd. received on Jan. 7, 2015, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: William Messer Harbour Place, 4th Floor 103 South Church Street P.O. Box 10240 Grand Cayman KY1-1002 Cayman Islands BLUE SEA: Members Receive Wind-Up Report ---------------------------------------- The members of Blue Sea Holdings Limited received on Dec. 23, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands CENTILLION INVESTMENT: Members Receive Wind-Up Report ----------------------------------------------------- The members of Centillion Investment Funds SPC received on Dec. 23, 2014, 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 CINTRA HANSON: Shareholders Receive Wind-Up Report -------------------------------------------------- The shareholders of Cintra Hanson Investment Fund received on Dec. 31, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Summit Management Limited c/o David Egglishaw Telephone: (345) 945 7676 Suite # 4-210, Governors Square P.O. Box 32311 Grand Cayman KY1-1209 Cayman Islands DELRAY LIMITED: Members Receive Wind-Up Report ---------------------------------------------- The members of Delray Limited received on Dec. 23, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands ESE FUND: Shareholders Receive Wind-Up Report --------------------------------------------- The shareholders of ESE Fund SPC Ltd. received on Dec. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Appleby Trust (Cayman) Ltd. c/o Richard Gordon Telephone: +1 (345) 949 4900 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands IPGIS CENTRAL: Shareholders Receive Wind-Up Report -------------------------------------------------- The shareholders of IPGIS Central London Income (Cayman) Limited received on Dec. 23, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Garry John Hope Harcourt House Suite 601-6, 6th Floor 39 Gloucester Road Wanchai, Hong Kong Telephone: +852 3965 9310 Facsimile: +852 3965 9399 JAMES ALPHA: Shareholders Receive Wind-Up Report ------------------------------------------------ The shareholders of James Alpha CIE Fund, Ltd. received on Dec. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Appleby Trust (Cayman) Ltd. c/o Richard Gordon Telephone: +1 (345) 949 4900 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands LODESTONE GLOBAL: Members Receive Wind-Up Report ------------------------------------------------ The members of Lodestone Global Natural Resources General Partner Ltd. received on Dec. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Jess Shakespeare c/o Kinetic Partners (Cayman) Limited The Harbour Centre 42 North Church Street P.O. Box 10387 Grand Cayman KY1-1004 Cayman Islands Telephone: (345) 623 9903 Facsimile: (345) 943 9900 METIER ACTIVE: Shareholders Receive Wind-Up Report -------------------------------------------------- The shareholders of Metier Active Fund, Ltd. received on Dec. 31, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Summit Management Limited c/o David Egglishaw Telephone: (345) 945 7676 Governors Square, Suite # 4-210 P.O. Box 32311 Grand Cayman KY1-1209 Cayman Islands OSWALD MAGNIAC: Members Receive Wind-Up Report ---------------------------------------------- The members of Oswald Magniac Limited received on Dec. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. 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 PROFITABLE INVESTMENTS: Members Receive Wind-Up Report ------------------------------------------------------ The members of Profitable Investments Limited received on Dec. 23, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Buchanan Limited P.O. Box 1170, George Town Grand Cayman KY1-1102 Cayman Islands SHREE HANUMANTE: Members Receive Wind-Up Report ----------------------------------------------- The members of Shree Hanumante Limited received on Dec. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. 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 STONE MILLINER: Shareholders Receive Wind-Up Report --------------------------------------------------- The shareholders of Stone Milliner Cayman Inc. received on Dec. 29, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mourant Ozannes c/o Stone Milliner Asset Management LLP, c/o Jo-Anne Maher Telephone: (345) 814 9255 Facsimile: (345) 949 4647 94 Solaris Avenue, Camana Bay P.O. Box 1348 Grand Cayman KY1-1108 Cayman Islands TSF FUND: Shareholders Receive Wind-Up Report --------------------------------------------- The shareholders of TSF Fund, Ltd. received on Dec. 22, 2014, the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Appleby (Cayman) Ltd. Titan Advisors, LLC 2 International Drive, Suite 120, Rye Brook New York 10573 =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: After Falling Since Nov., All Fuel Prices Unchanged ------------------------------------------------------------------ Dominican Today reports that after nine straight weeks of falling prices the Industry and Commerce Ministry on Jan. 30, left all fuels unchanged. For the week from January 31 to Feb. 6 premium gasoline will cost RD$192.80; regular gasoline will sell for RD$170.10; premium diesel will cost RD$157.80 and regular diesel RD$149.70, while optimum diesel will cost RD$166.60 per gallon, according to Dominican Today. Avtur will still cost RD$99.70; kerosene will cost RD$132.10; fuel oil will cost RD$84.60 per gallon; propane gas will sell for RD$82.90 per gallon, while natural gas also remains unchanged at RD$31.44 per cubic meter, the report notes. The Central Bank's average posted exchange rate of RD$44.71 per dollar was used to calculate fuel prices, the report relates. ============= J A M A I C A ============= JAMAICA: Devaluation Questions From Holness ------------------------------------------- RJR News reports that opposition Leader Andrew Holness is raising concern about the continued slide in the value of the Jamaican dollar. Mr. Holness said there was no indication when the depreciation will end, according to RJR News. Mr. Holness added: "What is this saying to us? Does it mean that in the next 30 years, we're going to have a 230-dollar-to-one? Is that what our economy will do? Is that the future of your children? Is that your future? We must find a new way for a better life!" At the end of trading on Jan. 30, it was costing an average J$115.81 to purchase one American dollar, the report notes. =========== M E X I C O =========== NII HOLDINGS: Proposes March 20 Auction for Mexican Affiliate ------------------------------------------------------------- NII Holdings, Inc., et al., ask the U.S. Bankruptcy Court for the Southern District of New York to approve procedures governing the sale of the entirety of their interest in their non-debtor operations in Mexico to an affiliate of AT&T, subject to higher and better bids. According to the Debtors, AT&T affiliate New Cingular Wireless Services, Inc., offered to purchase NII Mexico for approximately $1.875 billion and its bid will serve as the stalking horse bid in the auction and sale process. The Purchaser's offer is supported by major creditor constituencies; specifically, a group of entities managed by Aurelius Capital Management, LP; a group of entities managed by Capital Research and Management Company; and the Official Committee of Unsecured Creditors, each of which is a party to the existing Plan Support Agreement. The Debtors propose an auction to be held on March 20, 2015, and a hearing to consider approval of the sale to be held on March 23, 2015. A Potential Bidder that desires to make a bid must deliver written and electronic copies of its bid so as to be received no later than March 17. The Sale Transaction may be terminated if (i) the Bidding Procedures Order has not been entered on or before Feb. 17, 2015, (ii) the Auction is not held on or before March 20, 2015, (iii) the Sale Hearing is not held on or before March 23, 2015 or (iv) the Sale Order has not become a Final Order on or before April 6, 2015. The closing date is scheduled to occur on or before June 30, 2015, which may be extended until Sept. 30, 2015 if certain conditions are satisfied. The Debtors also are requesting approval of the provision of the Purchase Agreement regarding the payment of a break-up fee of $32 million and an expense reimbursement not to exceed $10 million. A hearing on the Bidding Procedures Motion will be held on Feb. 17, 2015, at 2:00 p.m. (Eastern Time). Objections, if any, must be filed on or before Feb. 10. About NII Holdings NII Holdings Inc. through its subsidiaries provides wireless communication services for businesses and consumers in Brazil, Mexico and Argentina. NII Holdings has the exclusive right to use the Nextel brand in its markets pursuant to a trademark license agreement with Sprint Corporation and offers unique push-to-talk ("PTT") services associated with the Nextel brand in Latin America. NII Holdings' shares of common stock, par value $0.001, were publicly traded under the symbol NIHD on the NASDAQ Global Select Market. NII Holdings and 12 wholly owned subsidiaries sought bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 14-12611) in Manhattan on Sept. 15, 2014. The Debtors' cases are jointly administered and are assigned to Judge Shelley C. Chapman. The Debtors have tapped Jones Day as counsel and Prime Clerk LLC as claims and noticing agent. NII Holdings disclosed $1.22 billion in assets and $3.068 billion in liabilities as of the Chapter 11 filing. The U.S. Trustee for Region 2 appointed five creditors of NII Holdings to serve on the official committee of unsecured creditors. NIU Holdings LLC, holder of 100% of the equity of Nextel International (Uruguay), LLC, sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 15-10155) on Jan. 25, 2015. NIU Holdings is a direct subsidiary of Netherlands-based NIHD Telecom Holdings, B.V., and affiliated with debtors NII Holdings, Inc., et al. NIU Holdings' principal asset is its equity interests in Nextel Uruguay. The Debtor estimated its assets at $500 million to $1 billion and debt at $0 to $50,000. =========== P A N A M A =========== AES PANAMA: Fitch Affirms 'BB+' IDRs; Outlook Negative ------------------------------------------------------- Fitch Ratings has affirmed AES Panama S.R.L.'s (AESP) foreign and local currency Issuer Default Ratings (IDRs) at 'BB+'. Fitch also affirms AESP's outstanding USD300 million notes due in 2016 at 'BB+'. The Rating Outlook is Negative. AES Panama's ratings are based on the company's strong portfolio of assets with a competitive dispatch position, its multiple power purchase agreements (PPAs) and its adequate historical financial profile. The ratings also reflect the company's exposure to hydrology risk given its elevated contracted capacity, increased volatility in cash flows evidenced during recent years and weakening operating environment due to energy transmission problems in the country. Fitch expects the company's credit metrics will stabilize in the short-to-medium term as a result of the start of operations of the power barge in the first quarter of 2015 (1Q'15) and compensations for up to USD60 million to be received in the next two years due to restrictions in the country's transmission lines. The lower spot prices and moderate improvements in hydrological conditions observed since the second half of 2014 (2H'14) should lessen the cash outflows for purchases of energy in the coming quarters. KEY RATING DRIVERS Weakened Credit Metrics: AES Panama's financial profile has weakened and its cash flows have exhibited increased volatility in the last two years. The company's credit metrics deteriorated mainly as result of non- planned purchases of energy in the spot market to fulfill obligations derived from its PPAs. The net impact of these transactions on operating cash was approximately USD117 million in 2013 and USD116 million in the first nine months of 2014. EBITDA declined to negative USD1.6 million for latest 12 months (LTM) ended in September 2014. Over the same period, leverage increased as the company funded the acquisition of a 72MW power barge with debt and tapped its working capital facilities to finance purchases of energy. Cash flows could deteriorate further should hydrology remain abnormally low or 'El Nino' effect materializes. The start of operations of the power barge in the 1Q'15 and the compensation payments for restrictions in country's transmission lines should mitigate the impact of adverse hydrological conditions. The barge will generate a cumulative incremental EBITDA of USD108 million in the next five years, considering capacity payments only. Revenues derived from energy dispatches will depend on future market conditions, including spot prices. AESP expects elevated levels of dispatch in the short to medium term given the low reserve margins in the system. The current variable cost of the plant is approximately USD83/MWh and spot prices for January 2015 were above USD96/MWh. As per agreement with the Ministry of Finance, the company will receive compensation for future purchases in the spot market for up USD30 million in each of the next two years. These actions could help the company to return to its historical levels of leverage by 2016, if current financial policies remain unchanged. Cash Flow Supported by Contractual Position: AES Panama's ratings reflect the company's contractual position with low counterparty risk. Generation companies in Panama are permitted to enter into PPAs for up to their firm capacity allocation. The regulations promote the use of PPAs by requiring distribution companies to secure 100% of their peak regulated demand for the following year. AES Panama maintains PPAs for approximately 90%, on average, of available capacity through 2018. The company sells electricity under separate PPAs with the country's three distribution companies, Empresa de Distribucion Electrica Metro-Oeste S.A. (Edemet), Elektra Noreste (Fitch IDR of 'BBB'), and Empresa de Distribucion Electrica Chiriqui (Edechi), with various maturities. Panamanian distribution companies appear to have the sufficient credit quality and financial ability to support their respective obligations under the PPAs with AES Panama. AES Panama benefits from a competitive portfolio of low-cost hydroelectric generating assets, including dam-based reservoirs and run of the river units. The diverse location of the company's assets somewhat mitigates its exposure to hydrology risk as the plants are located in different hydrology regions. AES Panama is the largest generation company in the country based on installed capacity. The company has four hydroelectric plants throughout the country with a total installed capacity of approximately 482 MW and different dispatch priorities. The Bayano plant (260MW) operates during the peak load hours yet ahead of the more expensive thermal units. La Estrella (48MW) and Los Valles (54MW) are run of the river facilities and the first units to be dispatched in the system. Esti (120MW) is normally dispatched similar to run of the river facilities given the limited size of its reservoir. Weakening Liquidity: The company's liquidity position has been affected during recent years as a result of a weaker cash flow generation from operation and the company's continued dividend payment policy. Cash on hand as of Sept. 30, 2014 was approximately USD16 million, additionally the issuer maintained restricted cash for approximately USD10 million in the Debt Service Reserve Account. The company's financial policy is to maintain a minimum cash balance of USD20 million and future dividend payments may follow this policy. Working capital debt was approximately USD35 million as of September 2014; this compares with cash of USD16 million and a negative LTM EBITDA of USD1.6 million. The company expects to improve its liquidity levels as the barge starts operations and cash outflows from purchase of energy reduces given the lower spot prices and higher hydro production. Exposure to Regulatory Risk: The company's ratings also reflect its exposure to regulatory risk. Historically, generation companies in Panama were competitive unregulated businesses free to implement their own commercial strategies. In the past years, the increase in electricity prices has resulted in increased government intervention in the sector in order to curb the impact of high energy prices for end-users. Exposure to Hydrological Risk: The company maintains PPAs that represent approximately 91% of its firm capacity for 2014 (93% in 2013). According to the local regulator, firm capacity is calculated based on a 30-year historical average. This elevated level exposes AES Panama to changes in hydrological conditions such as those observed in 2013 and 2014. Generation shortfalls are covered via purchases in the spot market. In 2013 and 1H'14, spot prices were severely impacted by the abnormal hydrology and other factors. Since 2H'14 spot prices has significantly declined given the decline in oil prices and better year-over-year (YoY) hydrological conditions. In December 2014, the average spot price was USD127.5/MWh compared to USD212.61/MWh in December 2013. Prices considered in AESP's PPAs with distribution companies, the company's largest clients, are below USD100/MWh. Currently, AES Panama's operations are being pressured by delays in the expansion of country's transmission infrastructure. This has further exposed the company to the spot market and triggered the government to compensate the affected generation companies. The Panamanian government has agreed to compensate the issuer for future purchases in the spot market; this agreement synthetically reduces company's contracted capacity in approximately 70MW or to 77% of its firm capacity for 2014. These compensations have a cap of USD40 million in 2014, USD30 million in 2015 and USD30 million in 2016. Transmission bottle necks are expected to be resolved in 2016, when the Chiriqui - Panama line starts operations. RATING SENSITIVITIES A downgrade could result from a combination of the following factors: leverage above 4.0x on a sustained basis, increased government intervention in the sector coupled with weakening regulatory framework, inability to reduce exposure to the spot market, and/or payment of dividends coupled with high leverage levels. Factors that could trigger a positive rating action include: a sustained decrease in leverage below 3.0x coupled with an effective diversification of revenues among different fuels, and reduced exposure to the spot market. ====================== P U E R T O R I C O ====================== PUERTO RICO ELECTRIC: S&P Keeps CCC Rev. Bond Rating on Watch Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it maintained its 'CCC' rating on the Puerto Rico Electric Power Authority's (PREPA) power revenue bonds on CreditWatch with negative implications. S&P originally placed the rating on CreditWatch on June 18, 2014. PREPA has $8.3 billion of power revenue bonds. A pledge of the electric system's net revenues secures the bonds. "The rating, which we lowered to 'CCC' from 'B-' on July 29, indicates that we believe the authority's debt is vulnerable to nonpayment and depends on favorable business, financial, and economic conditions for the obligor to meet its commitment," said Standard & Poor's credit analyst Jeffrey Panger. In this event, PREPA is not likely to have the capacity to meet its financial commitment on its obligations. "We believe that the absence of an overarching solution to liquidity issues and the structural imbalance among its revenues, operating expenses, and debt service commitments suggests an increasing likelihood that the authority will not be able to satisfy debt service obligations on time," added Mr. Panger, "and will avail itself of the Puerto Rico Public Corporation Debt Enforcement and Recovery Act, and restructure all or portions of its debt." S&P expects to resolve the CreditWatch placement in the next three months after it has evaluated PREPA's plans and the actions they will take to resolve the imbalance among revenues, expenses, and debt service. "We will lower the rating if PREPA restructures the debt by extending maturity dates, which is a default according to our rating policies," said Mr. Panger. ================================ T R I N I D A D & T O B A G O ================================ TRINIDAD AND TOBAGO: Foreign Exchange Woes Continue --------------------------------------------------- Caribbean360.com reports that the Central Bank of Trinidad and Tobago says it has pumped US$400 million into the banking system in January, the largest foreign exchange intervention it has made since selling US$315 million in November 2010. The bank said that it started its 2015 strategic foreign exchange management program with a US$200 million intervention on January 15 and eight days later sold US$100 million followed by another sale of US$100 million on January 28, according to Caribbean360.com. The report notes that the International Monetary Fund said that shortages of foreign exchange remain a critical headwind for the Trinidad and Tobago economy, with businesses continuing to report severe difficulties in paying suppliers. But it said it was encouraged by the central bank's intention to increase the size and frequency of foreign exchange injections until the backlog of orders is eliminated, the report relays. "It will be essential to continue to meet foreign exchange demands in a timely manner in order to restore the market's confidence," the IMF noted, the report relays. The Central Bank said despite selling USS1.7 billion to the banking system last year, significant unsatisfied demand carried over into the start of 2015, Caribbean360.com discloses. "The negative national sentiment surrounding sharply falling oil prices aggravated unsatisfied demand for foreign exchange as future demands from the public and business community have been brought forward," the Central Bank said, the report discloses. "With elevated domestic liquidity levels fuelling strong growth of consumer credit and helping to finance substantial imports of consumer durables, Central Bank's foreign exchange interventions are indirectly contributing to absorbing excess liquidity in the banking system," Central Bank added. The Central bank said that one objective of its monetary policy is to maintain stable conditions in the domestic foreign exchange market, the report relays. "Our 2015 foreign exchange program is framed in the context of our medium-term balance of payments outlook, which prudently views lower energy prices as a cyclical phenomenon over the next three years," Central Bank said, the report notes. "This year's program is aimed at preventing foreign exchange shortfalls from arising as a result of escalating demand and reduced supply due to lower energy export earnings," the Central Bank said, noting that Trinidad and Tobago's net official reserves currently stand at US$11.1 billion, representing 12.5 months of import cover, the report adds. ================= V E N E Z U E L A ================= VENEZUELA: In a Bind As Nicolas Maduro Faces Default Dilemma ------------------------------------------------------------ Global Insolvency reports that Nicolas Maduro promised "God will provide" after Venezuela's president returned to Caracas apparently empty handed from a world tour where he had sought financial help for his country's ravaged economy. Venezuela -- which is a member of Opec, the oil producer's cartel -- is heavily dependent on exports of crude, the price of which has more than halved since the summer, according to Global Insolvency. In a televised state of the nation speech, Mr. Maduro said oil would "not return to $100", adding: "We have less foreign currency". . . "But God will provide," the report notes. Bondholders, worried about default, were unconvinced. The report relays that alarmed by Mr. Maduro's seeming failure to win support from China or fellow Opec countries such as Saudi Arabia, they immediately marked down Venezuelan debt. At almost 29 per cent, its benchmark 2027 bond now yields three times more than comparable Russian debt, the report discloses. "Growing social pressures influence [Venezuela's] willingness to pay," said Siobhan Morden, head of Latin American strategy at investment bank Jefferies, the report discloses. Facing skeptical financial markets abroad and a domestic economy that the International Monetary Fund forecasts will shrink 7 per cent this year, Mr. Maduro and his ruling Socialist party are in a bind, the report adds. ================= X X X X X X X X X ================= LATIN AMERICAN: Default Wave Just Getting Started ------------------------------------------------- Global Insolvency, citing Bloomberg News, reports that Latin America is turning into the world leader in corporate-bond defaults. Four companies in the region have skipped dollar-denominated debt payments this month, more than any other area and almost half the total in all of 2014, according to Global Insolvency. The report notes that in a sign bond investors are increasingly concerned about Latin American companies' ability to repay debt, borrowers led by Mexico's oil-rig operators have pushed the amount of the region's bonds trading at distressed prices to $58 billion, about a third of all emerging-market debt trading at such levels. The strains that have investors from Prudential Financial Inc. to Hartford Investment Management Co. bracing for more defaults are showing few signs of abating, the report relates. An oil-led collapse in commodities prices has persisted, growth is flagging in economies from Mexico to Colombia, and the biggest corruption scandal in Brazil's history is spreading, the report notes. That raises the risk of even bigger losses for investors saddled with the worst returns in emerging-markets this year, the report relays. *********** 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 2015. 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 * * *