/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/161027.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 Thursday, October 27, 2016, Vol. 17, No. 213 Headlines B R A Z I L BRAZIL: Spending Cap Approved by Lower House of Congress SAMARCO MINERACAO: S&P Lowers Rating on Sr. Unsecured Notes to 'D' C A Y M A N I S L A N D S LDK SOLAR: Liquidation Approved And Buyer Selected SITO CAPITAL: Shareholders' Final Meeting Set for Nov. 15 SUISSE EMERGING: Members' Final Meeting Set for Nov. 30 TALARA INTERNATIONAL: Shareholder to Hear Wind-Up Report on Nov. 2 TALARA MASTER: Shareholder to Hear Wind-Up Report on Nov. 2 C H I L E LATAM AIRLINES: Fitch Assigns 'B+' LT Issuer Default Rating M E X I C O MEXICO: Trade Deficit Widens in September SANTA FE: Fitch Assigns 'B' Long Term Foreign Currency Rating P U E R T O R I C O PAONESSA ALFOMBRAS: Hires MRO Attorneys as Counsel PRINTING AND BIKE: Unsecureds To Recoup 6% Under Plan RESTAURANT EL OBRERO: Unsecureds To Get 5.65%-5.97% Under Plan VACA BRAVA: Unsecured Creditors to Recoup 10.57% Under Exit Plan V E N E Z U E L A ARENDAL S DE RL: S&P Affirms 'D' CCR Then Withdraws Rating PETROLEOS DE VENEZUELA: Venezuela Accuses Firm of Corruption PETROLEOS DE VENEZUELA: Raises Stakes in Bond Swap PETROLEOS DE VENEZUELA: S&P Lowers Corp. Credit Rating to 'SD' PETROLEOS DE VENEZUELA: Fitch Cuts Long Term IDRs to 'CC' - - - - - =========== B R A Z I L ============ BRAZIL: Spending Cap Approved by Lower House of Congress -------------------------------------------------------- Reuters reports that Brazil's lower house of Congress approved the main text of legislation establishing a ceiling on federal spending, handing President Michel Temer another victory in his effort to restore fiscal discipline. The constitutional amendment, which would limit the growth of public spending to the rate of inflation of the previous 12 months for up to 20 years, was passed by 359-116 votes, receiving less support than it did in a first round vote, according to Reuters. The house has yet to vote on six suggested changes to the text before it can send the amendment to the Senate for approval, the report notes. As reported in the Troubled Company Reporter-Latin America on March 29, 2016, severe contraction that was preceded by several years of below-trend growth has impaired Brazil's (Ba2, negative) underlying economic strength, despite the country's large and diversified economy, says Moody's Investors Service. The country's credit rating is also coming under pressure from the government's high level of mandatory spending. SAMARCO MINERACAO: S&P Lowers Rating on Sr. Unsecured Notes to 'D' ------------------------------------------------------------------ S&P Global Ratings has lowered its issue-level rating on Samarco Mineracao S.A.'s (D/--) senior unsecured notes due 2023 to 'D' from 'CC'. The company has missed interest payments on the notes that were due on Oct. 24, 2016. Samarco has a 30-day cure period to amend such payment; however, given the company's currently difficult financial situation and its recent default on its other debt, S&P don't expect Samarco to make the payments. S&P has lowered its corporate rating on Samarco to 'D' on Sept. 28, 2016, after it failed to make payments on its 2024 senior unsecured notes' interests, reflecting S&P's view that the company would not amend payments during the notes cure period, and would fail to make payments on other financial obligations, including other senior unsecured notes. RATINGS LIST Downgraded To From Samarco Mineracao S.A. Senior Unsecured D CC Rating Affirmed Samarco Mineracao S.A. Senior Unsecured Recovery Rating 5H ========================== C A Y M A N I S L A N D S ========================== LDK SOLAR: Liquidation Approved And Buyer Selected --------------------------------------------------- PV Tech reports that former China-based integrated PV manufacturer LDK Solar, which entered liquidation proceedings in the Cayman Islands and bankruptcy in mainland China has resulted in major creditor losses and its wafer and cell production operations being acquired. The Cayman Islands registered LDK Solar entity previously entered bankruptcy proceedings in early 2014 after failing to repay a US convertible bond, according to PV Tech. After a lengthy restructuring the company exited insolvency proceedings in April, 2015 only to be liquidated a few months later and its China-based operations filed for restructuring proceedings with total liabilities of around US$5.2 billion and a deficit of over US$2.4 billion (as per 1H 2015), when the last financial statements were published, the report notes. The company had short-term borrowings, primarily with Chinese banks of over US$2.7 billion of which over US$1.4 billion had been outstanding as of June 30, 2015, the report discloses. The report says that although Chinese banks are expected to have taken the largest hit in respect to the collapse, Kin-Ming Cheng, the owner of investment firm Fulai and major shareholder of Shunfeng International Clean Energy (SFCE) had also been an investor in LDK Solar's China operations. Creditors were said to expect to lose around 80% of their investments in the company, the report relays. However, instead of the expected acquisition of LDK Solar's assets, which included two idled polysilicon plants, wafer (4GW) and module assembly (1.5GW) capacity by SFCE, its wafer and module assets have be acquired by Henan Yicheng New Energy Co, which is a major supplier of wafer cutting materials, the report discloses. SFCE recently announced that it was seeking to sell its solar PV manufacturing operations (Wuxi Suntech) to major shareholder Kin Ming Cheng for around RMB5 billion (US$760 million), the report says. During LDK Solar's restructuring, several other potential buyers were identified, which included GCL and JinkoSolar as well as former LDK founder, Peng Xiaofeng and chairmen of PV project developer, SPI Energy a former subsidiary of LDK Solar and separately listed on NASDAQ, the report relates. The report notes it is not clear what the plans are for LDK Solar's manufacturing operations under publically listed Yicheng New Energy and it remains unclear whether LDK Solar's idled polysilicon plants would secure a buyer. SITO CAPITAL: Shareholders' Final Meeting Set for Nov. 15 --------------------------------------------------------- The shareholders of Sito Capital Management Ltd. will hold their final meeting on Nov. 15, 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: Kenneth Stewart c/o Apex Fund Services (Cayman) Ltd. P.O. Box 10085 161a Artillery Court, Shedden Road Grand Cayman KY1-1001 Cayman Islands Telephone: (345) 747 2739 SUISSE EMERGING: Members' Final Meeting Set for Nov. 30 ------------------------------------------------------- The members of Suisse Emerging Europe Investment Fund Ltd. will hold their final meeting on Nov. 30, 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 liquidators are: Desmond Campbell Stuart Brankin Circumference FS (Cayman) Ltd. P.O. Box 32322 Grand Cayman KY1-1209 Cayman Islands Telephone: (345) 814 0711 TALARA INTERNATIONAL: Shareholder to Hear Wind-Up Report on Nov. 2 ------------------------------------------------------------------ The shareholder of Talara International Fund, Ltd. will hear on Nov. 2, 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: Talara Capital Management, LLC c/o Justin Savage Ogier, Attorneys 89 Nexus Way, Camana Bay Grand Cayman KY1-9009 Cayman Islands Telephone: +1 (345) 949 9876 Facsimile: +1 (345) 949 9877 TALARA MASTER: Shareholder to Hear Wind-Up Report on Nov. 2 ----------------------------------------------------------- The shareholder of Talara Master Fund, Ltd. will hear on Nov. 2, 2016, at 10:10 a.m., the liquidator's report on the company's wind-up proceedings and property disposal. The company's liquidator is: Talara Capital Management, LLC c/o Justin Savage Ogier, Attorneys 89 Nexus Way, Camana Bay Grand Cayman KY1-9009 Cayman Islands Telephone: +1 (345) 949 9876 Facsimile: +1 (345) 949 9877 ========= C H I L E ========= LATAM AIRLINES: Fitch Assigns 'B+' LT Issuer Default Rating ----------------------------------------------------------- Fitch Ratings, on Oct. 6, 2016, assigned an expected rating of 'B+(EXP)/RR4' to LATAM Airlines Group S.A.'s (LATAM) proposed unsecured notes to be issued through its fully owned subsidiary LATAM Finance Limited. Fitch is withdrawing LATAM's expected rating as its forthcoming debt issuance/transaction is no longer expected to convert to final ratings. Fitch currently rates LATAM and TAM S.A. as follows: LATAM Airlines Group S.A.: -- Long-Term Issuer Default Rating (IDR) 'B+'; -- National Equity Rating at 'Primera Clase Nivel 3 (cl)'; -- USD500 million senior unsecured note due 2020 'B+/RR4'. TAM S.A. -- Long-Term IDR 'B+'; -- Local currency IDR 'B+'; -- National long-term rating 'A-(bra)'. Tam Linhas Aereas S.A. -- Long-Term IDR 'B+'; -- Local currency IDR 'B+'; -- National long-term rating 'A-(bra)'. Tam Capital Inc. -- USD300 million senior unsecured note due 2017 'B+/RR4'. Tam Capital Inc. 3 -- USD500 million senior unsecured note due 2021 'B+/RR4'. The Rating Outlook is Negative. =========== M E X I C O =========== MEXICO: Trade Deficit Widens in September ----------------------------------------- Anthony Harrup at The Wall Street Journal reports that Mexico's trade deficit increased in September as imports of petroleum products and components outpaced growth in crude oil and factory exports. Exports last month rose 1.4% from a year earlier to $32.62 billion, while imports grew 1.7% to $34.23 billion, for a deficit of $1.61 billion, the National Statistics Institute said, according to WSJ. It was wider than the year-ago deficit of $1.47 billion and the expected deficit of $535 million, the report notes. Petroleum exports rose 5.7% from a year before to $1.89 billion as state oil company Petroleos Mexicanos increased its crude shipments to 1.425 million barrels a day from 1.169 million, the report relays. The increase last month coincided with a sharp drop in Pemex's refinery output. The average oil price was little changed at $37.91 a barrel. Petroleum imports, including gasoline, diesel and natural gas, rose 15.8% in September to $3.07 billion, the report discloses. Trade in petroleum accounted for $8.99 billion of Mexico's accumulated $12.46 billion trade deficit in the first nine months of this year, the report relays. Exports of manufactured goods, which account for 90% of total exports, edged up 0.7% in September, thanks to greater auto exports, but remained lower for the first nine months. Imports of intermediate goods, such as components used in manufacturing, rose 2.7%, the report notes. The weaker Mexican peso against the U.S. dollar, meanwhile, continued to limit imports of consumer goods, which fell 7.7% in September excluding fuels, the report adds. SANTA FE: Fitch Assigns 'B' Long Term Foreign Currency Rating ------------------------------------------------------------- Fitch Ratings has assigned an expected Long-Term Foreign-Currency Rating of 'B(EXP)' to the Province of Santa Fe, Argentina's upcoming senior unsecured bond issuance. KEY RATING DRIVERS The bond is rated at the same level as the Province of Santa Fe. Both ratings are capped by Argentina's country ceiling. Santa Fe's Long-Term Foreign Currency Issuer Default Rating (IDR) reflects its low leverage, despite debt plans, when compared to local and international peers as well as its solid and stable revenue system. The rating also considers the province's constrained but increasing fiscal and budgetary flexibility as well as its relatively weak liquidity position, which is mitigated by a low refinancing risk. The notes will be issued in USD for an amount of up to USD250 million, to accrue a fixed interest rate to be determined at issuance and payable on a semi-annual basis. The estimated maturity of the bond is between seven and 10 years, with three annual instalments of USD83.3 million in the last three years. The notes will be senior (direct, general, unconditional and unsubordinated) unsecured (will not have the benefit of any collateral) obligations of the Province of Santa Fe. Provincial Law No. 13,543 of 2016 authorized the issuance of this debt. The proceeds will be used by the province to finance public works projects, in areas such as roads, water and drainage, schools, hospitals and public housing. The issuance will be governed by the laws of the State of New York. Among the events of default, Fitch highlights the failure to pay debt principal for a period of 10 days and debt service for 30 days and failure to perform any payment when due having and aggregate principal amount equal or higher the equivalent to USD15 million. RATING SENSITIVITIES The final rating of Santa Fe's new bond is contingent upon the receipt of final documents conforming to information already received. Any change in the Province of Santa Fe's IDR could have a direct impact on the bond rating. ====================== P U E R T O R I C O ====================== PAONESSA ALFOMBRAS: Hires MRO Attorneys as Counsel -------------------------------------------------- Paonessa Alfombras, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ MRO Attorneys at Law, LLC as counsel to the Debtor. Paonessa Alfombras requires MRO Attorneys to: a. give the Debtor legal advise with respect to its powers and duties as debtor-in-possession in the continued operation of the Debtor's business; and b. perform all legal services for the Debtor as may be necessary in the reorganization of the Debtor's business. MRO Attorneys will be paid at the hourly rate of $200. MRO Attorneys will be paid a retainer in the amount of $6,000. MRO Attorneys will also be reimbursed for reasonable out-of-pocket expenses incurred. Myrna L. Ruiz-Olmo, member of MRO Attorneys at Law, LLC, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. MRO Attorneys can be reached at: Myrna L. Ruiz-Olmo, Esq. MRO ATTORNEYS AT LAW, LLC P.O. Box 367819 San Juan, PR 00936-7819 Tel: (787) 237-7440 E-mail: mro@prbankruptcy.com About Paonessa Alfombras Paonessa Alfombras, Inc., filed for Chapter 11 bankruptcy protection (Bankr. D.P.R. Case No. 16-00532) on Jan. 28, 2016, disclosing under $1 million in both assets and liabilities. MRO Attorneys at Law, LLC serves as counsel to the Debtor. The U.S. Trustee has been unable to appoint an official committee of unsecured creditors in the case. PRINTING AND BIKE: Unsecureds To Recoup 6% Under Plan ----------------------------------------------------- Printing and Bike Corporation filed with the U.S. Bankruptcy Court for the District of Puerto Rico a plan of reorganization and accompanying disclosure statement, which propose that the aggregate dividend to general unsecured creditors classified in Class 5 would be fixed in the amount of $5,000, with payments to be distributed pro-rata among outstanding and allowed claims. On the consummation date, Class 5 claimants will receive from the Debtors a non-negotiable, non-interest bearing promissory note, dated as of the Effective Date, providing for a total amount of $5,000, which will be payable in consecutive monthly installments of $83.00 during a period of five years, starting on the Effective Date; with a monthly pro-rata distribution among all members of this Class 5. This dividend equal for a 6% of their allowed claims. Administrative expenses are classified in Class 1 and will be paid in cash and in full as soon as practicable or agreed with the creditor on the later of (a) the Effective Date or (b) the date any claim becomes an allowed Administrative Claim. Secured claim is classified in Class 2, comprised by Banco Popular de PR. This bank filed the claim number 6 in the amount of $149,344, this classified as a secured claim. This BPPR's claim was a mortgage loan secured by the Debtors' commercial property located at 175B Calle Jose C Barbosa, Las Piedras, Puerto Rico The Class 3 consists of all allowed priority claims pursuant to Section 507(a)(4), namely for employee benefits, specifically vacations, up to a maximum of $11,725 for each individual, earned within 180 days before the date of the filing of the petition. Employee vacations accrued or owed within 180 days prior to filing the Debtors' petition were scheduled and claimed in the amount of $1,450. All allowed amounts owed under this class will be paid in the ordinary course of business of the debtor. In the alternative, members of this class which are no longer employed by the debtor will receive full payment on account of their claim on the effective date of the plan. The Class 4 consists of a Proof of Claim No. 4 filed by Xerox Corporation in the amount of $10,166.39 in relation with a lease agreement between this creditor and the Debtor. The creditor's claim will be paid in full through monthly over a period of five years, starting on the Effective Date. The Plan will be implemented as required under Section 1123(a) (5) of the Code with the daily operations of the business and its resulting operating cash flows. Debtor will retain property of the estate in order to operate its business and produce cash flow for the execution of the Plan A full-text copy of the Disclosure Statement dated October 14, 2016, is available at http://bankrupt.com/misc/prb15-10240-71.pdf Judge Brian K. Tester on Oct. 18, 2016, ruled that Printing and Bike Corporation's Disclosure Statement filed on Oct. 14, 2016, is conditionally approved. A hearing to consider final approval of the Disclosure Statement and confirmation of the Plan and of objections as may be made to either will be held on Nov. 16, 2016 at 9:00 a.m. at the U.S. Bankruptcy Court, U.S. Post Office and Courthouse Building, 300 Recinto Sur, Courtroom No. 1, Second Floor, San Juan, Puerto Rico. Acceptances or rejections of the Plan may be filed in writing by the holders of all claims on/or before 10 days prior to the date of the hearing on confirmation of the Plan. Any objection to the final approval of the Disclosure Statement and/or the confirmation of the Plan shall be filed on/or before 10 days prior to the date of the hearing on confirmation of the Plan. About Printing and Bike Printing and Bike Corporation filed a Chapter 11 petition (Bankr. D.P.R. Case No. 15-10240) on Dec. 24, 2015, estimating less than $1 million in assets and debt. The Debtor is represented by Alexis A. Betancourt Vincentry, Esq., at Lugo Mender Group LLC. RESTAURANT EL OBRERO: Unsecureds To Get 5.65%-5.97% Under Plan -------------------------------------------------------------- Restaurant El Obrero Inc. filed with the U.S. Bankruptcy Court for the District of Puerto Rico a small business plan and disclosure statement, which propose that holders of unsecured convenience claims that are under or equal to $5,000 will recover 5.65% of the allowed amount, while holders of unsecured convenience class claims that are over $5,000 will recover 5.97% of the allowed amount. The Municipal Revenue Collection Center's secured claim, which totals $9,158.03, will be paid in 48 monthly installments of $203.72 for principal and interest. The secured claim of Oriental Bank, which encumbers the parking lot for customers who visit the restaurant and which balance due is $219,365.17, will be paid the current regular payment of $2,008.30 per the original contract. The secured claim of Oriential Bank, which encumbers the commercial lot from which the Debtor operates its business and which balance due is $85,325.05, will be paid the current regular payment of $1,743.01 per the original contract. Luis Ortiz Torres, the equity interest holder, will receive no distribution under the reorganization plan. The Plan will be implemented with the continued operation of the Debtor's business endeavors. A full-text copy of the Disclosure Statement dated October 14, 2016, is available at: http://bankrupt.com/misc/prb15-10208-111.pdf Restaurant El Obrero Inc., which operates a restaurant, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 15-10208) on December 23, 2015, and is represented by Javier Vilarino, Esq., at Vilarino & Associates LLC. VACA BRAVA: Unsecured Creditors to Recoup 10.57% Under Exit Plan ---------------------------------------------------------------- The Hon. Mildred Caban Flores of the U.S. Bankruptcy Court for the District of Puerto Rico has conditionally approved Vaca Brava Old San Juan LLC's disclosure statement dated Oct. 4, 2016, describing the Debtor's small business Plan of Reorganization. A hearing for the consideration of the final approval of the Disclosure Statement and the confirmation of the Plan will be held on Nov. 9, 2016, at 1:30 p.m. The Small Business Plan provides for these terms: -- Class 1 Unsecured convenience class pursuant to 11 U.S.C. Sec. 1122 for claims that are under or equal to $5,000: This class will receive a lump-sum distribution of $5,000.00 on the effective date of the plan. Each claim holder under this class will receive pro-rata distributions, as per the allowed amounts. Based on the current allowed amounts, each claim holder in this class will receive approximately 8.37% of the allowed amount. Any change in the allowed amounts may change the actual distribution percentage, but it will be nevertheless the same to all of them. -- Class 2 Unsecured convenience class pursuant to 11 U.S.C. Sec. 1122 for claims that are over $5,001: The Debtors will pay $500.00 monthly to the general unsecured creditors for a 5-year period. Each claim holder under this class will receive pro-rata distributions, as per the allowed amounts. Based on the current allowed amounts, each claim holder in this class will receive approximately 10.57% of the allowed amount. Any change in the allowed amounts may change the actual distribution percentage, but it will be nevertheless the same to all of them. -- Class 3 Equity Interest Holders: Mr. Juan C. Cintron and Mrs. Lisandra Hernandez are the equity interest holders and will receive no distribution under the reorganization plan. -- Priority tax claims shall be paid in cash and in full, plus statutory interest, through monthly payments each year over a period not exceeding five years from the date of the filing of the petition. -- Priority claim for State Insurance Fund Corporation shall be paid in cash and in full, through monthly payments each year over a period not exceeding five years from the date of the filing of the petition. -- Priority claim for Department of Labor shall be paid in cash and in full, for the amount of $2,488.00, to be paid as a lump-sum on the effective date of the Plan. A copy of the Small Business Disclosure Statement is available at: http://bankrupt.com/misc/prb15-09787-0116.pdf Objections to the final approval of the Disclosure Statement and the confirmation of the Plan must be filed on or before 14 days prior to the date of the hearing on confirmation of the Plan. Acceptances or rejections of the Plan must be filed in writing by the holders of all claims on or before 14 days prior to the date of the hearing on confirmation of the Plan. The Debtor will file with the Court a statement setting forth compliance with each requirement in U.S.C. Section 1129, the list of acceptances and rejections and the computation of the same, within seven working days before the hearing on confirmation. About Vaca Brava Vaca Brava Old San Juan LLC operates a restaurant business located in the vicinity of Old San Juan, which is a vivid and highly busy area visited by many tourists and locals alike. Vaca Brava Old San Juan filed for Chapter 11 bankruptcy protection (Bankr. D.P.R. Case No. 15-09787) on Dec. 10, 2015, estimating its assets and liabilities at between $100,001 and $500,000 each. Javier Vilarino, Esq., at Vilarino & Associates LLC serves as the Debtor's bankruptcy counsel. ================= V E N E Z U E L A ================= ARENDAL S DE RL: S&P Affirms 'D' CCR Then Withdraws Rating ---------------------------------------------------------- S&P Global Ratings said that it affirmed its 'D' long-term corporate credit rating and issue-level rating on Arendal S. de R.L. de C.V. and its '4' recovery rating. S&P subsequently withdrew the ratings at the company's request. At the time of the withdrawal, Arendal was still negotiating with its debtholders to reach a definitive agreement on debt restructuring. PETROLEOS DE VENEZUELA: Venezuela Accuses Firm of Corruption ------------------------------------------------------------ offshore-technology.com reports that a report by Venezuelan congressional commission has accused state-run oil company Petroleos de Venezuela of financial wrong doing during the 2004-14 period when current United Nations' envoy Rafael Ramirez was managing affairs. The amount of funds claimed to have gone missing is around $11 billion. Comptroller commission president Freddy Guevara told Reuters: "It is more than the (annual) budget of five Central American countries," according to offshore-technology.com. Around 95% of the country's export revenues are from PDVSA, which manages large oil reserves, the report notes. The news agency reported PDVSA as saying that in case a proposed bond swap of $5.3 billion does not go through it 'could be difficult' to pay large debt commitments, the report relays. The investigation carried out by Venezuelan congressional commission focuses on 11 cases, which range from scandals in an Andorran bank and PDVSA pension funds to alleged overpricing in acquiring oil equipment, the report notes. Accusations are based in part on documents from the company's auditor KPMG, as well as foreign investigations, the report discloses. Based on the report, it was found that interviews conducted with a representative of KPMG showed the company had informed PDVSA's auditing committee of 'frauds', the report relays. The US Justice Department said that an investigation is going on into bribery at PDVSA, the report notes. Bloomberg reported that PDVSA is the primary foreign oil supplier to the US Gulf Coast region and a potential default by the company may cause trouble for refineries there, the report adds. PETROLEOS DE VENEZUELA: Raises Stakes in Bond Swap -------------------------------------------------- Jonathan Wheatley at The Financial Times reports that Venezuela's state-owned oil company has threatened to default on its debts unless enough bondholders agree to a $5.3 billion bond swap by the end of the week, highlighting the country's tattered finances and potentially presaging a wider government debt restructuring. The announcement by Petroleos de Venezuela (PDVSA) weighed on both the oil company and the country's government bonds, as investors fretted that the government is finally reaching the end of its ability to stay current on its financial liabilities, according to The Financial Times. "The stakes are high with not many options other than drawing down foreign exchange reserves and cash flow increasingly dependent upon oil prices," said Siobhan Morden, head of Latin America fixed income strategy for Nomura, the report notes. On Oct. 18, PDVSA once again extended a deadline for investors to agree to swapping $5.3 billion of bonds due next year for longer dated debt, which the national oil group hopes will buy it time for Venezuela's finances to recover. However, despite three extensions on the swap deadline and a slight sweetening of terms, less than half of bondholders have so far agreed, according to PDVSA, the report relays. If it fails altogether, it will struggle to service its debts and may be forced to restructure, the company indicated in its statement, the report notes. "If the exchange offers are not successful, it could be difficult for the company to make scheduled payments on its existing debt . . . . which would result in the company evaluating all alternative options," said PDVSA in a statement obtained by the news agency. On a conference call with investors -- at which Eulogio del Pino, PDVSA's president and Venezuela's oil minister, failed to show up -- Rafael Rodriguez, Mr. del Pino's chief of staff, appealed to investors to take part in the swap, the report notes. "We hope investors will support PDVSA in the same way that we have supported them for many years," the report quoted Mr. del Pino as saying. "It is very important that this swap is financed in the best way possible. It has been a very complicated and tough process," he added. Investors have looked sceptically at the deal, preferring the prospect of getting paid out at par next year rather than accept the terms presented, which were sweetened in September, the report relays. Bondholders of the November 2017 debt will receive as much as 1.22 times their principal if they tender, the report notes. The April 2017 bondholders would receive 1.17 times their principal, the report relays. Holders have until 5pm Eastern standard time on October 21 to tender their bonds, according to the latest offering, the report discloses. Asked if the alternative to a successful swap was default, or if there were options beyond default, Mr. Rodriguez said: "Options are options, we have to consider everything on the table. But we don't have one particular option [in mind]. Everybody has to get together and look to the future. We have good reasons to believe that investors should continue to invest in the future of the company. But options are options," the report notes. Ms. Morden said the latest extension and statement from PDVSA "represent a negotiation tactic to encourage participation; however we cannot rule out an inflection point on lower commitment to priorities external debt payments," the report discloses. There was renewed nervousness among Venezuelan bond investors, with PDVSA's 2026 bond falling from 40.4 cents on the dollar to 39.28 cents, for an annual yield of 21.54 per cent, and its November 2017 bond slipping to 85.45 cents on the dollar from 86.44 cents, for a yield of 45.2 per cent, the report says. Venezuela's government bonds also sold off on Tuesday, on concerns that the government's efforts to stay current on all its debts are finally foundering, the report notes. While PDVSA's bonds do not enjoy a sovereign guarantee, its importance as the central conduit of the country's oil exports means Venezuela is unlikely to let it default unless the government itself is running out of money, the report relays. The price of Venezuela's $3 billion bond maturing in 2022 slumped to 57.25 cents on the dollar on Oct. 18, down from nearly 70 cents earlier this month, pushing the annual yield to just over 30 per cent, the report relays. Investors taking part in the call complained about the shortage of information supplied. Mr. Rodrigues declined to say how many bonds had been tendered for the swap, although he said it was substantially less than the required 50 per cent, or whether bonds held by the government had been tendered, the report adds. PETROLEOS DE VENEZUELA: S&P Lowers Corp. Credit Rating to 'SD' -------------------------------------------------------------- S&P Global Ratings lowered its corporate credit rating on Petroleos de Venezuela S.A. (PDVSA) to 'SD' from 'CC'. At the same time, S&P lowered its issue-level ratings on the company's $3.0 billion 5.25% senior unsecured notes due April 2017 and on its $4.1 billion 8.5% senior unsecured notes due November 2017 to 'D' from 'CC'. The downgrade follows PDVSA's announcement that it will exchange 31.4% of its 3.0 billion 5.25% senior unsecured notes due April 2017 and 45.30% of its $4.1 billion 8.5% senior unsecured notes due November 2017. As a result, PDVSA will issue new senior secured notes for $3.3 billion at an 8.50% interest rate due 2020. The new notes will be guaranteed by 50.1% of equity shares in PDVSA's indirect subsidiary, Citgo Holding Inc. S&P views the transaction as a distressed exchange because in S&P's view, the timing of payments will be delayed with the extension of the maturity date of the new notes. Also, S&P views the offer as distressed rather than purely opportunistic, given the currently difficult operating conditions and the significant upcoming debt maturities that PDVSA faces, which would very likely lead to a conventional default when the existing notes come due. S&P expects to review the corporate credit and issue-level ratings on PDVSA once the transaction is completed. PETROLEOS DE VENEZUELA: Fitch Cuts Long Term IDRs to 'CC' --------------------------------------------------------- Fitch Ratings has downgraded Petroleos de Venezuela S.A.'s (PDVSA) long-term foreign and local currency issuer default ratings (IDRs) to 'CC' from 'CCC' and the company's National scale long-term rating to 'CCC(ven)' from 'AA(ven)'. Fitch has also downgraded the long-term rating for approximately USD30 billion of senior unsecured debt outstanding to 'CC/RR4' from 'CCC/RR4' and the expected rating for the company's proposed senior secured notes to 'CC(EXP)/RR4' from 'CCC(EXP)/RR4'. KEY RATING DRIVERS The rating action follows PDVSA's announcement last Oct. 17, 2016 that it could be difficult for the company to make scheduled payments on its existing debt if a recently announce debt exchange was not successful. This announcement highlights PDVSA's low liquidity and Fitch's perception that company's ability to service its debt has deteriorated. The company announced on Oct. 24, 2016 that it had received and accepted tenders for USD2.8 billion of the offered USD5.3 billion of principal. Despite the partial success of the exchange offer, PDVSA's liquidity position is weak and the company could still face difficulties making scheduled payments. The debt exchange was aimed at improving the company's amortization schedule as it faced approximately USD7.1 billion of principal payments for cross border bonds over the next 12 months. With the results of the exchange, the company's principal payments over the next twelve months amount to approximately USD6.1 billion as PDVSA expects to exchange USD2.8 billion of upcoming maturities for USD3.4 billion of new senior secured notes it intends to issue on Oct. 27, 2016. The new notes will have four equal principal amortizations starting in 2017 and until 2020. Although Fitch continues to expect that PDVSA will receive financial aid from the Venezuelan government to make its upcoming principal payments, the company's claim that it could be difficult to make scheduled payments on its existing debt increases uncertainty about the company's liquidity. Venezuelan government external reserves amounted to approximately USD12 billion as of the end of September 2016, of which USD7.7 billion were in gold and USD4.4 billion were in hard currencies. PDVSA's cash on hand as of Dec. 31, 2015 amounted to approximately USD5.8 billion. The Venezuelan government does not have cross border principal payments until 2018 and its interest expenses average approximately USD3.0 billion per year. LINKAGE TO SOVEREIGN PDVSA's credit quality continues to be linked to that of the Venezuelan government. Venezuela's ratings (IDR 'CCC') reflect the sovereign's weakened external reserves, high commodity dependence, rising macroeconomic distortions, limited reduced transparency in official data, and continued policy and political uncertainty. The sovereign's strong repayment record and relatively low debt amortization profile mitigate imminent risks to debt service. PDVSA is fully owned by the government and its transfers have historically represented around 45% of the government's revenues. It is of strategic importance to the economic and social policies of the country, as oil accounts for around 95% of total exports. LIMITED TRANSPARENCY The Venezuelan government displays limited transparency in the administration and use of government-managed funds, as well as in fiscal operations, which poses challenges to accurately assessing its fiscal state and the full financial strength of the sovereign. PDVSA also displays similar characteristics, which reinforces the linkage of its ratings to the sovereign. FOCUS SHIFTS TO RECOVERY PDVSA's 'CC' rating suggests that default of some kind appears probable. If a default or restructuring occurs, Fitch anticipates average recovery for PDVSA's bondholders of 31%-50%, and likely closer to the lower end of the range. While Fitch's recovery analysis yields a high recovery, the willingness of Venezuela's government to extend concessions to investors will likely move actual recovery closer to the lower end of the 31% to 50% range. In addition, should oil prices remain depressed, an average recovery may lead to additional future defaults in order to further reduce obligations and allow for necessary transfers to the government. The proposed senior secured notes have also been assigned an 'RR4' average Recovery Rating as the collateral provided may only marginally enhance recovery given default, which could still range between 31% and 50%. KEY ASSUMPTIONS Linkage to government: PDVSA's ratings assume that implicit support from the government, given the company's strategic importance, would likely materialize should the company need it. Slow hydrocarbon price recovery: Fitch assumes West Texas Intermediate crude prices to average approximately USD42 per barrel in 2016 and to slowly recover to approximately USD65 per bbl in the long term. Stable Production: PDVSA's ratings assume the company's production will remain relatively flat or decline marginally over the rating horizon. RATING SENSITIVITIES Catalysts for a downgrade include non-payment of a financial obligation, or a downgrade to Venezuela's ratings. Although not expected in the short- to medium-term, catalysts for an upgrade include a stabilization in the company's liquidity position and improvement in the short-term debt maturity profile, or an upgrade to Venezuela's sovereign rating. LIQUIDITY PDVSA's liquidity position is expected to continue to weaken as a result of the unsuccessful exchange offer and recent and near-term debt service payments, current low oil price environment and transfers to the central government. As of December 2015, PDVSA reported cash of USD5.8 billion, which compared unfavorably with estimated principal payments of approximately USD6.1 billion over the next twelve months. The company's current liquidity position is uncertain given expenditures, transfers to government, and interest and principal debt payments that might have driven down liquidity from the last reported amount as of year-end 2015. Under Fitch's base case scenario, which assumes oil prices of USD42/bbl in 2016 and USD45/bbl in 2017, and investments of USD25 billion annually, PDVSA's liquidity position will continue to deteriorate. Venezuela's gross international reserves have declined by USD4.3 billion to USD12 billion between January and September 2016. FULL LIST OF RATING ACTIONS Fitch downgraded the following ratings Petroleos de Venezuela, S.A. -- Foreign Currency Long-Term IDR downgraded to 'CC' from 'CCC'; -- Local currency long-term IDR downgraded to 'CC' from 'CCC'; -- National Scale long-term Rating downgraded to 'CCC(ven)' from 'AA(ven)'; -- Sr. unsecured notes downgraded to 'CC/RR4' from 'CCC/RR4'; -- Sr. secured notes due 2020 expects to assign a 'CC(EXP)/RR4'. *********** 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 * * *