/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/160914.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, September 14, 2016, Vol. 17, No. 182 Headlines B R A Z I L BANCO CITIBANK: S&P Affirms 'BB' LT ICR; Outlook Remains Neg. BANCO VOTORANTIM: S&P Affirms 'BB/B' ICRs & Removes from Watch Neg JSL S.A.: Fitch Affirms 'BB' Long-Term Issuer Default Ratings MASISA SA: Fitch Affirms 'B+' Issuer Default Ratings C A Y M A N I S L A N D S AIP JAPAN: Shareholder to Hear Wind-Up Report on Sept. 23 BBID LIMITED: Sole Member to Hear Wind-Up Report on Sept. 27 BIBBY INTERNATIONAL: Creditors Hold Second Meeting CHINA CLINIC HUANGPU: Member to Hear Wind-Up Report on Sept. 20 CHINA CLINIC JINGAN: Member to Hear Wind-Up Report on Sept. 20 CHINA REHAB (CHANGZHOU): Member to Hear Wind-Up Report on Sept. 20 CHINA REHAB (SHANGHAI): Member to Hear Wind-Up Report on Sept. 20 COLUMBIA HOSPITAL: Member to Hear Wind-Up Report on Sept. 20 DW SKYLINE 2015-1: Members' Final Meeting Set for Sept. 21 LANZO LIMITED: Members' Final Meeting Set for Sept. 29 NCB MERCHANT: Sole Member to Hear Wind-Up Report on Sept. 29 SABRINA INVESTMENTS: Members' Final Meeting Set for Sept. 16 WHITE FALCON: Shareholders' Final Meeting Set for Sept. 19 M E X I C O GRUPO IDESA: S&P Lowers CCR to 'B+'; Outlook Negative X X X X X X X X X LATAM: IMF, World Bank Say Region Hindered by Weak Fiscal Position - - - - - =========== B R A Z I L =========== BANCO CITIBANK: S&P Affirms 'BB' LT ICR; Outlook Remains Neg. ------------------------------------------------------------- S&P Global Ratings affirmed its global scale 'BB' long- and 'B' short-term issuer credit ratings (ICR) on Banco Citibank S.A. At the same time, S&P affirmed its national scale 'brAA-' long- and 'brA-1' short-term ratings on the bank. The outlook on all ratings remains negative. Banco Citibank is a Brazil-based universal bank with a wide range of banking products and focuses on corporate and investment banking activities. The bank's ratings on reflects its adequate business position thanks to its diversified business portfolio and the competitive advantage of belonging to a large and international banking group; moderate capital and earnings underpinned by S&P's forecasted risk-adjusted capital (RAC) ratio of 5.7% for the next 18 months; moderate risk position; average funding; and adequate liquidity. The bank's stand-alone credit profile (SACP) remains at 'bb'. "We view Banco Citibank as a highly strategic subsidiary for its U.S.-based parent, Citigroup Inc. (BBB+/Stable/A-2). Banco Citibank is the group's fifth-largest subsidiary in terms of revenue. It's Citigroup's largest corporate & investment banking (CIB) franchise in Latin America. Despite Banco Citibank's plan to sell its retail portfolio, we believe the bank's strategy is aligned with that of its parent by focusing on the CIB segment. We believe that the parent will provide support to Banco Citibank when necessary. As a result of the highly strategic status, Banco Citibank could stand one notch below Citigroup's group credit profile, but its rating is currently capped at Brazil's 'BB' foreign currency rating. Therefore, even if the bank's rating factors weaken to the point where we lower its SACP, we would only downgrade Banco Citibank if we downgrade the sovereign or our view of the parent's support changes," S&P said. BANCO VOTORANTIM: S&P Affirms 'BB/B' ICRs & Removes from Watch Neg ------------------------------------------------------------------ S&P Global Ratings affirmed its 'BB/B' global scale and 'brA+/brA- 1' national scale issuer credit ratings on Banco Votorantim S.A. (BV); 'brA-' issue-level rating on BV Leasing Arrendamento Mercantil S.A., and 'brA+/brA-1' ratings Votorantim Financas. S&P also removed the ratings from CreditWatch negative. The outlook is negative. The rating actions follow on the shareholder and ultimate parent Votorantim S.A. (Votorantim; BB+/Negative/brAA+). Ratings on BV are one notch above its SACP of 'bb-' due to S&P's assessment of the holding company, Votorantim Financas, as a moderately strategic subsidiary of Votorantim. The bank is a core subsidiary of Votorantim Financas; therefore, the ratings on the bank are the same as on the former. S&P considers BV, through Votorantim Financas, to be part of Votorantim's GCP. In S&P's ratings on BV, BV Leasing Arrendamento Mercantil, and Votorantim Financas, S&P incorporates potential ongoing support from Banco do Brasil, particularly on liquidity if necessary. S&P's GCP assessment of the Votorantim group incorporates a potential contingent liability from BV through Votorantim Financas that may spill over to the ultimate holding level. This results from S&P's understanding that under the Brazilian law (9,447/1997), the individuals or legal entities exercising control over a financial institution subject to intervention or liquidation are jointly and severally liable with the lender's officers and managers for the amount of its unpaid liabilities. While the responsibility of a controlling shareholder to support the bank isn't equivalent to a financial guarantee (it does not guarantee timely payment), it's a legal obligation ultimately enforceable via a potential freeze on assets. In S&P's view, this creates a very strong incentive for the Votorantim group to capitalize the bank when needed. JSL S.A.: Fitch Affirms 'BB' Long-Term Issuer Default Ratings ------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of JSL S.A. (JSL) at 'BB' and National Scale Ratings at 'AA-(bra)'. The Rating Outlook has been revised to Stable from Negative. The revision of the Outlook to Stable reflects JSL's business resilience, underpinned by the company's improving operating cash flow generation despite the recession in Brazil. Fitch's base case scenario projects that JSL's net leverage ratio, as measured by FFO Adjusted Net Leverage, will remain at approximately 2.5x in the next two years. Given the nature of its business, Fitch believes JSL has an above- average ability versus its 'BB' rated peers to post free cash flow (FCF) generation, given its ability to postpone capital expenditures related to new vehicles. Fitch's expects JSL to continue to pursue growth in a managed way for its Movida car rental operations. As a result, FCF should remain negative by approximately BRL500 million in the next two years, also as result of its high interest burden. KEY RATING DRIVERS JSL's ratings reflect its strong business profile, supported by a leading position in the Brazilian logistics industry and diversified service portfolio, and its resilient operating performance over the last few years. The company's track record of maintaining an adequate liquidity position vis-a-vis its short- term obligations is a key consideration for the ratings. Prominent Market Position and Diversified Portfolio JSL has a leading position in the Brazilian logistics industry with a diversified portfolio of services with relevant presence in multiple sectors of the economy. The company's services include: supply chain management (33% of its net revenue), fleet and Movida car rental business (23%), vehicle dealerships (13%), passenger transportation (7%) and general cargo transportation (4%). JSL's strong market position, coupled with long-term contracts for most of its revenues (48%), minimizes its exposure to more volatile economic cycles. The company's significant operating scale has made it an important purchaser of light vehicles and trucks, giving it a significant amount of bargaining power versus other competitors in the industry. Consistent Increase in Operating Cash Flow; High Interest Rates is a Challenge JSL has been efficiently expanding its business profitability while maintaining solid growth. The integration of its business and cross-selling opportunities has supported gains of scale, benefiting its operating margins. Fitch expects JSL's FFO margin to remain resilient at around 23% on average in the next two years, which positively compares with an average of 19% during the 2012 - 2015 period. Between 2012 and the latest-12-month period (LTM) ended June 30, 2016, JSL's net revenue increased by 58%, to BRL6.3 billion. During the same period, the company's EBITDA grew to BRL1.1 billion from BRL430 million while its funds from operations (FFO) rose to BRL1.4 billion from BRL638 million. JSL's business is capital intensive and still strongly dependant on high cost local financing. JSL's FFO interest coverage dropped to 2.7x in the LTM period ended in June 30 2016 from an average of 4.3x between 2012 and 2014. Fitch's base case does not foresee any relevant improvement in this coverage ratio in the medium-term, as local interest rates should remain elevated. More Rational Capex Growth to Alleviate FCF; Used Car Sale Remains Key During LTM June 30, 2016, JSL reported negative FCF of BRL1 billion, pressured by BRL2.5 billion of capital expenditures. Fitch expects FCF to remain negative, ranging between BRL450 million and BRL550 million in the next two years. JSL has the flexibility to improve FCF by reducing growth capex, as most of its capital investments are geared toward increasing the size of its fleet/equipment and linked to a contract. Considering only renewal capex, JSL's operating cash flow generation is sufficient to support these investments. Helping to offset these disbursements, proceeds from used car sales totalled BRL1.1 billion in the period. Excluding growth capex, JSL generated BRL239 million of positive FCF during LTM June 30, 2016. FFO Leverage to Remain Adequate JSL's leverage, as measured by FFO net adjusted leverage, was 2.6x as of LTM June 30, 2016. Fitch does not expect a material reduction in the near term with net leverage expected to be around 2.5x in 2016 and 2017, with a gradual decline from 2018 on. One trait of the industry is that leverage measured on an EBITDA basis is generally higher as the EBITDA does not fully reflect the cash inflow from used vehicle sales. Fitch's base case considers that JSL's net debt to EBITDA ratio will remain around 4.0x to 4.5x in the next few years. JSL's leverage relative to its fleet market value is adequate. The company reports a fleet market value of approximately BRL5.7 billion, which is slightly above its net debt position (BRL5.2 billion). However, the company's flexibility is limited, as only about 79% of its fleet is not used as liens for loans. KEY ASSUMPTIONS -- Mid-single-digit revenue growth in 2016 and 2017; -- FFO margins at around 23%; -- Net Capex at around BRL650 million in the next two years; -- Cash balance remains sound compared to short-term debt; -- Dividends at 25% net income; -- No large-scale M&A activity. RATING SENSITIVITIES Positive: Future developments that could lead to a positive rating action: -- FFO Adjusted Net Leverage below 2.0x on a sustained basis; -- FFO Margin above 27%; -- Solid and consistent operating results from its retail rent a car business (Movida); Negative: Future developments that may, individually or collectively, lead to a negative rating action: -- FFO net adjusted leverage consistently above 3.0x; -- Deterioration of sound liquidity compared to short-term debt, leading to refinancing risk exposure. -- Deterioration in Used Car Sale in Brazil and/or in the coverage ratio fleet value-to-net value to below 1.0x; -- Large debt-funded M&A acquisition or entering into a new business in the logistics sector that adversely impacts JSL's capital structure on a sustained basis or increases its business risk exposure; -- Secured debt relative to FFO above 2.0x could lead to a downgrade of the unsecured debt. LIQUIDITY JSL's adequate liquidity position vis-a-vis its short-term debt obligations is a key credit consideration, with cash covering short-term debt by an average 1x during the last five years. JSL has a recurring need for debt refinancing, since its debt schedule amortization is still concentrated in the next three years. Up until year-end 2018 JSL has BRL4.1 billion of debt coming due. As of June 30, 2016, JSL reported total debt of BRL6.5 billion, of which BRL1.3 billion was classified as short-term. This level of near-term debt compares with BRL1.3 billion of cash and marketable securities and BRL150 million of undrawn stand-by credit facilities due in 2018. The ratio of short-term debt coverage, as measured by cash plus CFFO-to-short-term debt, is solid, at 2.3x. About 23% of JSL's debt is secured. The company's debt profile is mainly composed of FINAME operations (22%), banking credit lines (28%), debentures (24%), and leasing operations (6%). FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: JSL S.A. -- Long-Term Foreign Currency IDR at 'BB'; -- Long-Term Local currency IDR at 'BB'; -- National Long-Term Rating at 'AA-(bra)'; Fitch has upgraded the following -- Local Debentures issuance upgraded to 'AA-(bra)' from 'A+(bra)'. The upgrade for the local debentures reflects the improvement in JSL's mix of secured and unsecured debt, which has reduced the structural subordination of the unsecured debt. The Rating Outlook has been revised to Stable from Negative. MASISA SA: Fitch Affirms 'B+' Issuer Default Ratings ---------------------------------------------------- Fitch Ratings has affirmed the Foreign and Local Currency Issuer Default Ratings (IDRs) of Masisa S.A. (Masisa) at 'B+' and National long-term rating at 'BBB(cl)'. The Rating Outlook remains Negative. The Negative Outlook continues to reflect concerns about economic weakness in Latin America and Fitch's expectation that the company will continue to struggle in this market during 2016 and 2017. Potential cash flow relief provided by the completion of Masisa's new MDF plant in Mexico is not projected to offset the substantial decline in Brazilian operations until 2018. During 2015 and first- half 2016 (1H16), Masisa sold about USD121 million of non-core assets, which contributed to reduce debt and extend debt amortization profile. Additional measures to bolster Masisa's capital structure and reduce leverage, in the absence of stronger cash flow generation, are necessary to prevent negative rating actions. KEY RATING DRIVERS Weak Brazilian Operations Brazil's EBITDA contribution significantly deteriorated and Fitch expects EBITDA below USD5 million in 2016, excluding the sale of non-core assets. In the latest 12 months (LTM) ended June 2016, Brazilian recurring EBITDA was only USD5.4 million. Excluding Venezuela, Brazil represented 4.5% of recurrent EBITDA in the period, down from 9% in 2015 and 27% in 2014. Masisa had generated more than USD40 million of EBITDA in this market in the past. Contribution from Mexico to Gradually Increase Recurring EBITDA from Mexico represented about 15% of total recurring EBITDA, excluding Venezuela, in the LTM June 2016. This figure should gradually increase following the startup of the new MDF plant in June 2016. The mill, which has an annual capacity of 220,000 cubic meters of MDF, including 100,000 cubic meter of melamine capacity, is expected to add USD5 million to EBITDA during 2016 as it ramps-up production and has the potential to increase consolidated EBITDA by over USD20 million going forward. Investments in the project totalled USD123 million. High Leverage Leverage increased due to weak results from Brazil and sluggish economic growth throughout the region, while the company's debt levels remain elevated due to a number of recent investments. Fitch's base case expectation is that net leverage will peak at 6.5x in 2016 and slowly reduce to about 6.0x during 2017. These ratios compare with 5.3x in LTM ended June 2016. Masisa's net debt was USD711 million at the end of June 2016. This compares unfavorably with USD707 million in December 2015 and USD655 million in December 2014. Fitch's base case excludes non-recurrent items in EBITDA, such as the sale of wood, as well as the company's Venezuelan operations. Significant Presence in Venezuela and Argentina Masisa has diversified operations in Latin America, with a presence in Chile, Brazil, Mexico, Argentina and Venezuela. Masisa is exposed to exchange controls in its Venezuelan operations, although its operations are self-sufficient in the country. Restrictions imposed by the Venezuelan Central Bank have limited the U.S. dollar supply in that country, which constrains the repatriation of available cash. Venezuela represented about 17% of total recurring EBITDA in the LTM ended June 2016. About 33% of Masisa's total recurring EBITDA are related to its Argentine operations. Still Weak Operational Cash Flow Fitch expects Masisa to generate about USD115 million of recurring EBITDA in 2016 and USD140 million in 2017, and includes Venezuela's EBITDA. The company generated recurring EBITDA of USD159 million and cash flow from operations of USD45 million in the LTM ended June 2016. Recent initiatives to reduce operational costs and working capital needs positively impacted the company's cash flow generation capacity. However, results remain pressured by declining demand for wood boards in Latin America and weak currencies in several markets. Lower investments and dividends contributed to free cash flow (FCF) of negative USD44 million in the LTM ended June 2016, compared with negative USD120 million and USD90 million in 2015 and 2014, respectively. The company invested USD43.6 million in the LTM June 2016, after investing USD364 million between 2013 and 2015. Masisa has some flexibility to lower its maintenance capex for a couple of years to improve FCF. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Masisa include: -- Sale of non-core assets of USD45 million in 2016, not included in EBITDA; -- Investments around USD70 million per year between 2016 and 2018; -- Weak operational performance in Brazil in 2016 and 2017; -- EBITDA contributions from Mexico operations of around USD20 million in 2016 and USD28 million in 2017; -- Dividends distribution of 30% of net income. RATING SENSITIVITIES Future developments that may individually or collectively lead to a negative rating action include: -- Downturn of Fitch's expectation of improved profitability in Mexico; -- Net debt/recurring EBITDA ratio, excluding Venezuela, above 7.0x. Future developments that may individually or collectively lead to a positive rating action include: -- Material reversal of EBITDA generation, reducing net debt/recurring EBITDA ratio, excluding Venezuela, to close to 5.0x, the Negative Outlook would likely be revised to Stable; -- Reduction of net debt/recurring EBITDA ratio, excluding Venezuela, to below 5.0x, an upgrade would be likely. LIQUIDITY AND DEBT STRUCTURE Masisa's liquidity position is manageable for operational purposes with USD66.2 million of cash and equivalents, of which USD65.6 million was held outside Venezuela as of June 30, 2016, compared with USD110 million as of Dec. 31, 2015. Masisa made a non- recurring sale of non-core assets for USD120 million, which benefited the company's liquidity. Additionally, Masisa has USD70 million in committed credit lines, with USD15 million currently not used. Masisa had USD777 million of total debt as of June 30, 2016, of which USD590 million consisted of long-term debt, mainly related to USD516 million of bonds, USD47 million of bank debt and USD25 million hedging liabilities. In August 2016, Masisa concluded a USD100 million syndicated loan due in five years. Proceeds will be used to extend debt maturity profile, reducing refinancing risk in the short term. On a pro forma basis, Masisa had USD58 million of debt maturing in the 2H16, USD56 million in 2017 and USD55 million in 2018. The company has higher debt maturities of USD254 million only in 2019. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: -- Long-Term Foreign and Local Currency IDRs at 'B+'; -- National scale rating of Bond Line No. 356, No. 439, No. 560, No. 724, and No. 725 at 'BBB(cl)'; -- Long-term National Scale rating at 'BBB(cl)'; -- USD300 million senior unsecured 9.5% notes due 2019 at 'B+/RR4'; the notes are unconditionally guaranteed by Forestal Tornagaleones and Masisa Forestal; -- National Short-term rating at 'N2(cl)'. The Rating Outlook remains Negative. ========================== C A Y M A N I S L A N D S ========================== AIP JAPAN: Shareholder to Hear Wind-Up Report on Sept. 23 --------------------------------------------------------- The shareholder of AIP Japan Recovery Fund IV (Cayman) Ltd. will hear on Sept. 23, 2016, at 10:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Carrie Delima 4350 S Monaco Street 5th Floor Denver Colorado 80237 United States of America BBID LIMITED: Sole Member to Hear Wind-Up Report on Sept. 27 ------------------------------------------------------------ The sole member of BBID Limited will hear on Sept. 27, 2016, at 10:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Chan Lee Fong 168 Robinson Road #30-01, Capital Tower Singapore 068921 Telephone: + 65 6713 2915 Facsimile: + 65 6713 2999 BIBBY INTERNATIONAL: Creditors Hold Second Meeting -------------------------------------------------- The creditors of Bibby International Services (Cayman Islands) Limited held their second meeting on Sept. 12, 2016. The company's liquidator is: David Griffin c/o Kieran Linton FTI Consulting (Cayman) Limited Suite 3212, 53 Market Street Camana Bay P.O. Box 30613 Grand Cayman KY1-1203 Cayman Islands e-mail: kieran.linton@fticonsulting.com Telephone: +1 (345) 743 683 CHINA CLINIC HUANGPU: Member to Hear Wind-Up Report on Sept. 20 --------------------------------------------------------------- The sole member of China Clinic (Shanghai Huangpu), Limited will hear on Sept. 20, 2016, at 9:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Walkers Liquidations Limited 27 Hospital Road, George Town Grand Cayman KY1-9008 Cayman Islands CHINA CLINIC JINGAN: Member to Hear Wind-Up Report on Sept. 20 -------------------------------------------------------------- The sole member of China Clinic (Shanghai Jingan), Limited will hear on Sept. 20, 2016, at 9:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Walkers Liquidations Limited 27 Hospital Road, George Town Grand Cayman KY1-9008 Cayman Islands CHINA REHAB (CHANGZHOU): Member to Hear Wind-Up Report on Sept. 20 ------------------------------------------------------------------ The member of China Rehab Hospital (Changzhou), Limited will hear on Sept. 20, 2016, at 9:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Walkers Liquidations Limited 27 Hospital Road, George Town Grand Cayman KY1-9008 Cayman Islands CHINA REHAB (SHANGHAI): Member to Hear Wind-Up Report on Sept. 20 ----------------------------------------------------------------- The member of China Rehab Hospital (Shanghai), Limited will hear on Sept. 20, 2016, at 9:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Walkers Liquidations Limited 27 Hospital Road, George Town Grand Cayman KY1-9008 Cayman Islands COLUMBIA HOSPITAL: Member to Hear Wind-Up Report on Sept. 20 ------------------------------------------------------------ The member of Columbia Hospital Investment will hear on Sept. 20, 2016, at 9:00 a.m., the liquidator's report on the company's wind- up proceedings and property disposal. The company's liquidator is: Walkers Liquidations Limited 27 Hospital Road, George Town Grand Cayman KY1-9008 Cayman Islands DW SKYLINE 2015-1: Members' Final Meeting Set for Sept. 21 ---------------------------------------------------------- The members of DW Skyline 2015-1 Ltd. will hold their final meeting on Sept. 21, 2016, 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: Andre Slabbert Estera Trust (Cayman) Limited 75 Fort Street PO Box 1350 Grand Cayman KY1-1108 Cayman Islands Telephone: +1 (345) 623-6800 LANZO LIMITED: Members' Final Meeting Set for Sept. 29 ------------------------------------------------------ The members of Lanzo Limited will hold their final meeting on Sept. 29, 2016, to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Zedra Directors (Cayman) Limited c/o Zedra Trust Company (Cayman) Limited FirstCaribbean House, 4th Floor P.O. Box 487 Grand Cayman KY1-1106 Cayman Islands NCB MERCHANT: Sole Member to Hear Wind-Up Report on Sept. 29 ------------------------------------------------------------ The sole member of NCB Merchant Voucher Receivables, Ltd. will hear on Sept. 29, 2016, at 10:00 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidators are: Thomas Mylott c/o Marguerite Britton 238 North Church Street P.O. Box 1043 George Town Grand Cayman KY1-1102 Cayman Islands Telephone: (345) 640-6600 SABRINA INVESTMENTS: Members' Final Meeting Set for Sept. 16 ------------------------------------------------------------ The members of Sabrina Investments Ltd. will hold their final meeting on Sept. 16, 2016, 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 WHITE FALCON: Shareholders' Final Meeting Set for Sept. 19 ---------------------------------------------------------- The shareholders of White Falcon Limited will hold their final meeting on Sept. 19, 2016, at 10:00 a.m., to receive the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Mohammed Bin Suroor Mohammed Al Nahyan c/o Avril G. Brophy P.O. Box 1111 Grand Cayman KY1-1102 Cayman Islands Telephone: (345) 949 5122 Facsimile: (345) 949 7920 =========== M E X I C O =========== GRUPO IDESA: S&P Lowers CCR to 'B+'; Outlook Negative ----------------------------------------------------- S&P Global Ratings said that it lowered its corporate credit rating on Grupo Idesa S.A. de C.V. to 'B+' from 'BB-'. At the same time, S&P lowered its issue-level rating to 'B+' from 'BB-' on the company's $300 million 144A/Reg. S senior unsecured notes due 2020. The '4' recovery rating on the debt, indicating S&P's expectation of an average (30%-50%, in the higher band of the range) recovery in the event of a payment default, remains unchanged. The outlook on the corporate credit rating is negative. The downgrade reflects IDESA's weaker credit measures as a result of continued low oil prices, which have impaired the company's petrochemical revenues and EBITDA margins. IDESA's continues to work on capital raising alternatives to improve its credit metrics which were due to occur in 2016, and has been postponed, S&P now expects that the company will finalize the process in 2017. The capital increase will be used to pay down debt. However, S&P is uncertain that capital increases will occur in 2017 because it will ultimately depend on market conditions. While S&P believes that IDESA's adjusted debt to EBITDA will be close to 10.0x through 2016, S&P expects the company to benefit from in the following years from additional cash flow from its investment in Braskem IDESA which recently began operations, as well as the CyPlus IDESA project that is expected to start operating in the third quarter of 2016. The rating reflects the company's leading market position in the Mexican chemical and petrochemical markets. IDESA enjoys leading market shares in ethylene glycols, ethanol amines, phtalic anhydride, alkyl amines, and chemicals and petrochemicals distribution. However, its product portfolio is concentrated in ethylene glycols and ethanol amines, which represent about 20% and 11% of its total sales volumes, respectively, as of June 30, 2016. Its end-market concentration (with about 46% of total sales volume in the petrochemical business segment for the polyethylene terephtalate [PET] and polyester fiber industry) and the concentration of its operations in Mexico, with exports representing 10%-15% of sales, also mitigate the rating strengths. The commodity-like nature of IDESA's products and its exposure to price volatility, along with high supplier concentration, weaken its business risk profile. State-owned oil and gas company Petroleos Mexicanos purchases significant portion of IDESA's petrochemical products. S&P revised its assessment of the company's financial risk profile to highly leveraged from aggressive, reflecting S&P's expectation that its leverage metric will remain close to 10.0x for the remainder of the year. For the 12 months ended June 30, 2016, IDESA posted adjusted debt to EBITDA of 9.1x, funds from operations (FFO) to debt of 3.8%, and EBITDA interest coverage of 1.5x, compared with 3.6x, 19.9%, and 2.6%, respectively, during the same period in 2015. Given the recent cash flow from Braskem IDESA and expected start of operations of Cyplus IDESA projects starting in September 2016 and the potential capital increase, the company's key credit metrics should strengthen in 2017. S&P's base-case scenario: -- Mexico's GDP growth of 2.5% in 2016 and 2.9% in 2017, resulting in modest demand conditions. A Brent price assumption of $40 per barrel in 2016 and $45 per barrel in 2017, which indicates that a modest recovery in oil prices next year will benefit petrochemical product prices, given their correlation with oil. Natural gas (Henry Hub) will be $2.5 per million British Thermal Unit (BTU) for the remainder of 2016 and $2.75 per million BTU in 2017, indicating that natural gas prices will remain at low levels, benefiting producers that use it as feedstock. -- MXN18.3 per $1 in 2016 and MXN18 per $1 in 2017. -- Revenues growth of about 0.8% in 2016 mostly due to lower sales prices as a result of depressed oil prices. A revenue growth of about 8.2% in 2017 mainly due to an expected recovery in the oil prices, resulting in higher prices in the petrochemicals and distribution business segments. A drop in EBITDA in 2016 as a result of lower product pricing. However, EBITDA should improve in 2017 as a result of expected recovery in oil prices. -- Disbursement of the $130 million credit line from Banco Inbursa. As of June 30, 2016, the company has received $106 million. -- Capital increase in 2017, mostly which the company plans repay the credit line from Banco Inbursa. Capital expenditures (capex) of about MXN250 million in 2016 and MXN400 million in 2017. No further investments from the company in Braskem IDESA and a contribution of approximately MXN$180 million to CyPlus Idesa project during the second half of 2016., and -- No dividend payments. Based on these assumptions, S&P arrives at these credit measures: -- Adjusted Debt to EBITDA of about 9.3x in 2016 and 3.8x in 2017; -- FFO to debt of about 3.2% in 2016 and 10.5% in 2017; and -- EBITDA interest coverage of about 1.4x and 2.2x, respectively. IDESA's potential capital increase in 2017, together with additional cash flow from the already completed projects, will improve its key leverage metrics significantly in that year and beyond. As a result, S&P expects the company's debt to EBITDA of less than 4x in 2017. Therefore, S&P asses its comparable rating analysis as positive, based on its view that future metrics will be more indicative of the company's financial risk profile assessment, bolstering IDESA's anchor score. The negative outlook on IDESA reflects the uncertainties regarding its challenge to reduce its debt significantly for the next 12 months. S&P could lower the rating if the company does not complete a capital increase in 2017 to reduce its debt, which could result from tightening markets conditions. Additionally, S&P could also lower the rating if additional leverage or a further weakening in operating performance undermines key credit metrics, particularly if adjusted debt to EBITDA remains higher than 5.0x and FFO to debt is below 12% in the next 12 months. S&P could revise the outlook to stable if the company reduces debt significantly and its cash flow generation improves at a higher pace than expected as a result of market growth, expansion initiatives, price improvements, and/or joint ventures, resulting in adjusted debt to EBITDA below 4.0x and FFO to debt exceeding 20% in the next 12 months. ================= X X X X X X X X X ================= LATAM: IMF, World Bank Say Region Hindered by Weak Fiscal Position ------------------------------------------------------------------ EFE News reports that Latin American countries have a weak fiscal position and less room to maneuver than before in responding to the current recessionary climate, the chief economists for the region from the International Monetary Fund and the World Bank said. The fiscal positions of all of the region's economies are worse than they should be, Alejandro Werner, the IMF's Western Hemisphere director, said during a panel discussion on the region's economic prospects at the 20th annual conference of the Development Bank of Latin America, or CAF, in Washington, according to EFE News. Mr. Werner said that situation was generating significant risks now that the China-led commodities boom has abated and after Latin America's political class grew accustomed to governing in times of abundance in the previous decade, the report notes. During that recent period of high prices for raw materials, governments did not concern themselves greatly with public spending efficiency, Mr. Werner said, adding that it is important to review efficiency levels in the current economic cycle and implement structural reforms, the report relays. In July, the IMF forecast that Latin America would contract by 0.4 percent this year, its second straight year of negative growth, the report notes. The World Bank's chief economist for Latin America and the Caribbean, Augusto de la Torre, also said the countries of the region had less room to maneuver on the fiscal front, though adding that the situation was not the same in every country, the report says. Mr. De la Torre said Argentina was taking a gradual approach to correcting its budget deficit while warning that Brazil will not achieve solid growth without a major fiscal adjustment, the report discloses. Mr. De la Torre added that the fiscal situation of Chile, Peru and Colombia was less problematic and they therefore have more room to maneuver in terms of spurring growth, the report discloses. The World Bank economist said Latin America was facing the problem of charting an export-oriented path to growth at a time when the global trend is against trade liberalization, the report relays. Also taking part in the panel were Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and the Caribbean; Chilean former Finance Minister Alejandro Foxley; and CAF President Enrique Garcia, the report adds. *********** 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 2016. 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 * * *