/raid1/www/Hosts/bankrupt/TCRLA_Public/170327.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
Monday, March 27, 2017, Vol. 18, No. 61
Headlines
A R G E N T I N A
ARCOS DORADOS: Moody's Revises Outlook to Pos.; Affirms B1 CFR
ARCOS DORADOS: Fitch Rates USS300MM Sr. Unsec. Notes at 'BB+'
ARGENTINA: Unemployment Rate Fell to 7.6% in Fourth Quarter
CITY OF BUENOS AIRES: Fitch Affirms 'B' Issuer Default Ratings
B O G O T A
BANCO GNB: Moody's Assigns B1 LT FC Subordinated Debt Rating
B A R B A D O S
MONTICELLO INSURANCE: Moody's Affirms B1 IFS Rating
B R A Z I L
BR PROPERTIES: Fitch Affirms 'BB-' LT IDRs; Outlook Negative
CYRELA COMMERCIAL: Fitch Affirms 'B+' LT Issuer Default Ratings
IPIRANGA PRODUTOS: Moody's Rates BRL1,012.5MM Debts Ba1/Aaa.br
ITAIPU BINACIONAL: Fitch Affirms Then Withdraws 'BB' IDR
C A Y M A N I S L A N D S
AIC MARINE: Shareholder Receives Wind-Up Report
BELLINI DESIGNS: Commences Liquidation Proceedings
COMPASS INVESTMENTS: Shareholders Receive Wind-Up Report
GAVEA GLOBAL: Shareholders Receive Wind-Up Report
GAVEA GLOBAL SPV: Shareholders Receive Wind-Up Report
GNETOP INC: Shareholders to Receive Wind-Up Report Today
HAWAII ASIA: Shareholders Receive Wind-Up Report
INDOCHINA LAND: Shareholders Receive Wind-Up Report
INDOCHINA MONTGOMERIE: Shareholders Receive Wind-Up Report
INDOCHINA QUANG: Shareholders Receive Wind-Up Report
NMS SERVICES: Shareholders Receive Wind-Up Report
REDISCOVERED (CAYMAN): Shareholders Receive Wind-Up Report
RESIDENTIAL REINSURANCE: Member to Hear Wind-Up Report on April 10
URSA COMPANY: Shareholders Receive Wind-Up Report
WORLD SHIPPING: Commences Liquidation Proceedings
ZEPELLIN INVESTMENT: Deadline to File Proof of Claim Today
C H I L E
* CHILE: Hosts Pacific Alliance Amid TPP's Collapse
C O L O M B I A
ODEBRECHT SA: Bribery Plea Muddies Colombia's Big River Project
D O M I N I C A N R E P U B L I C
DOMINICAN REP: Seeks Interests to Determine Hydrocarbon Potential
J A M A I C A
DIGICEL GROUP: Denies Security Breach, Says "We're Secure"
P A N A M A
AVIANCA HOLDINGS: Fitch Affirms 'B' LT IDRs; Outlook Neg.
P U E R T O R I C O
ISLAND FESTIVAL: Taps Tamarez CPA as Accountant
X X X X X X X X X
* BOND PRICING: For the Week From March 20 to March 24, 2017
- - - - -
=================
A R G E N T I N A
=================
ARCOS DORADOS: Moody's Revises Outlook to Pos.; Affirms B1 CFR
--------------------------------------------------------------
Moody's Investors Service has revised Arcos Dorados' (AD) rating
outlook to positive from negative. At the same time, Moody's
affirmed AD's B1 Corporate Family Rating (CFR) and senior
unsecured ratings and assigned a B1 rating to its proposed USD 300
million senior unsecured notes due 2027. The use of proceeds of
the new senior unsecured notes will be used to refinance existing
debt.
Ratings Assigned:
- USD 300 million new Senior Unsecured Notes due 2027: B1
Ratings Affirmed:
Issuer: Arcos Dorados Holdings Inc.
- USD 393.8 million Senior Unsecured Notes due 2023: B1.
Outlook: Positive
RATINGS RATIONALE
The change in outlook to positive reflects Moody's views that AD
will continue strengthening its credit profile and to demonstrate
strong capital structure, improved liquidity profile extending its
debt maturities and appropriate cash flow generation relative to
its peers.
Arcos Dorados' credit metrics have recovered in the last year as a
result of a macroeconomic stabilization of its most relevant
operating market, Brazil. As a consequence, the company's
leverage, as measured by Moody's adjusted debt-to-EBITDA, has been
improved from 5.2 times in fiscal year 2014 and to 3.7 times in
fiscal year 2016.
Arcos Dorados' B1 ratings are still supported by its status as
McDonald's master franchise in Latin America, which affords it a
leading position and broad geographic footprint in the region,
along with a growing fast food restaurant segment among the
informal eating out market. Moody's believes that the company's
rights to use McDonald's strong brand name and proven operating
procedures as a master franchisee, an expected close strategic
alignment with McDonald's, and the industry experience of the
company's management provide a solid basis to pursue growth
opportunities and expand its earnings base across the region.
On the other hand, Arcos Dorados' currency exposure, high lease-
adjusted leverage, concentration of cash flows in a limited number
of markets with increasing dependency on its Brazilian subsidiary
continue to constrain the ratings. Arcos Dorados is also exposed
to Argentine's country risk and subject to certain minimum
investment requirements and financial covenants under its Master
Franchise Agreements (MFAs). More recently, Arcos Dorados reached
an agreement with McDonald's Corporation in which the company
committed to open 180 new restaurants and to reinvest USD292
million in existing restaurants, totalizing USD 500 million of
capital expenditures for the period 2017-2019.
Arcos Dorados' liquidity is currently adequate. As of December 31,
2016, the company's cash and equivalents position amounted to
USD194 million while adjusted short term debt amounted to USD177
million. Cash and marketable securities over adjusted short term
debt ratio rose to 111% from 37% as of December 2016 when compared
to December 2015.
With the USD300 million issuance, Arcos Dorados plans to extend
most of its debt maturities to 2023 and further.
AD's ratings could experience upward pressure if improved
operating performance and better than anticipated cash flow
generation cause a material and sustainable strengthening of
credit metrics, with lease-adjusted Debt/EBITDA dropping to close
to 4.5 times and EBIT/Interest expense rising towards 2.5 times.
An upgrade would likely also require solid progress in turning
around its operations in Mexico and strengthening Arcos Dorados'
credit and liquidity profile.
Although unlikely in the near term, Arcos Dorados' ratings can be
further downgraded in the near term if the company is unable to
refinance its short term debt. Absent liquidity considerations,
downward pressure on ratings would occur if Arcos Dorados' free
cash flow turns negative over an extended period of time, for
example, because of a combination of margin pressures and weaker
than expected economic performance, and if credit metrics continue
to weaken such that lease-adjusted Debt/EBITDA exceeds 6.5 times
or EBIT/Interest remains below 1 time on a sustained basis.
Headquartered in Buenos Aires, Argentina, Arcos Dorados Holdings
Inc. is the leading quick service restaurant operator in Latin
America and the Caribbean and McDonald's largest franchisee
globally in terms of systemwide sales and restaurant count, with
around 4.5% of McDonald's total systemwide restaurants as of
December 2016. The company has the exclusive right to own, operate
and grant franchises of McDonald's restaurants in 20 Latin
American and Caribbean countries. Arcos Dorados began operating in
August 2007 when it acquired most of McDonald's operations in
Latin America and the Caribbean in a leveraged buyout led by the
company's controlling shareholder Woods Staton, who is also the
company's current Executive Chairman. For fiscal year 2016, the
company's revenues reached USD 2.9 billion.
ARCOS DORADOS: Fitch Rates USS300MM Sr. Unsec. Notes at 'BB+'
-------------------------------------------------------------
Fitch Ratings has assigned a 'BB+(EXP)' rating to Arcos Dorados
Holdings Inc.'s proposed USD300 million issuance of global notes
guaranteed by its subsidiaries including Arcos Dorados B.V. The
proposed senior unsecured notes will mature in 2027. Proceeds will
be used to refinance existing debt and for general corporate
purposes.
Arcos' ratings reflect its solid business position as the sole
franchisee of McDonald's restaurants across Latin America. The
company operates 2,156 McDonald's restaurants and 316 McCafes in
20 countries. Arcos' benefits from McDonald's iconic brand, yet is
confronted by several economic challenges facing the region,
particularly in its key markets of Brazil and Argentina.
KEY RATING DRIVERS
Improving Capital Structure
Fitch expects Arcos to lower its leverage over the next two years
as a result of better profitability thanks to improving economic
conditions, refranchising initiatives, and measures such as asset
sales and no dividend payments in 2017. Fitch projects that the
company's net lease-adjusted debt/EBITDAR ratio will improve to
3.6x by 2018 from 3.8x as of fiscal year-end 2016 (FYE16). As of
Dec. 31, 2016, the company reported a total financial debt/
adjusted EBITDA of 2.6x compared to 2.8x in 2015 Arcos received
cash proceeds of around USD113 million during 2016 as a result of
its asset monetization initiatives. Since the inception, Arcos has
raised approximately USD105 million related to the redevelopment
of certain real estate assets and expects to take the total amount
to USD 150 million by the end of 2017.
Geographical Diversification
Arcos is exposed to foreign exchange risk with currency
fluctuation in its main markets. Arcos cash flow generation is
concentrated in Brazil, which accounted for 46% of sales and 59%
of EBITDA in 2016. The company's geographic diversification
enabled the company to be rated above the Argentine country
ceiling of 'B' despite being headquarter in Argentina. In 2016,
the company reported a decline in revenues of 4.1% year-on-year
(with an increase of 13.9% in constant currency), while its EBITDA
increased by 3.6% to USD238 million thanks to lower G&A costs, or
by 26.2% in constant currency.
MFA With McDonald's Corp.:
The master franchise agreement (MFA) sets strict strategic,
commercial and financial guidelines for the operations of Arcos,
which support the operating and financial stability of the
business, as well as the underlying value of the McDonald's brand
in the region. Arcos has the exclusive right to own, operate and
grant franchises of McDonald's restaurants in 20 Latin American
and Caribbean countries and territories. About 73% of the
restaurants are operated by Arcos, and the remaining 27% are
franchised restaurants. Under the MFA, Arcos expects to open 180
new restaurants and to reinvest USD292 million in existing
restaurants, between 2017 and 2019. Total capex for the same
period is expected to be approximately USD500 million. In
addition, McDonald's Corporation agreed to provide growth support
for the same period. Arcos projects that the impact of this
support could result in an effective royalty rate of 5.3% in 2017,
5.7% in 2018 and 5.9% in 2019.
McDonald's Franchise Strength
The ratings also incorporate the strength of McDonald's as
franchisor and its long standing relationship with Arcos' owners
and management. Under the MFA, McDonald's has a call option to
repurchase its assets in the region under certain events. Terms of
the notes specify that these funds should be applied to debt
repayment. The call option price is set as the fair market value
of all assets of the operating companies (80% in the case of a
material breach), minus debt at operating company and
contingencies, plus cash. The MFA requires all group companies to
remain current on their financial obligations to avoid a material
breach of the agreement.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for Arcos include
the following:
-- Price increases in line with inflation;
-- No dividend payments in 2017;
-- Capex between USD150 million to USD180 million;
-- Lease adjusted net leverage moving towards 3.6x by 2018.
RATING SENSITIVITIES
Arcos' ratings could be negatively affected by significant
deterioration of same store sales; and higher than expected
investments and dividends, pressuring free cash flow (FCF) and
leverage ratios. Additional factors that could lead to
consideration of a downgrade include: inability of Venezuelan
operations to be self-sustaining; failure to comply with the terms
of the MFA; and/or a consolidated net lease adjusted debt-to-
EBITDAR ratio above 4.0x on a sustained basis. A downgrade of
Brazil's sovereign rating would not necessarily trigger a
downgrade of Arcos' ratings. The applicable country ceiling for
Arcos is Brazil's country ceiling of 'BB+'.
The ratings could be positively affected by higher than expected
cash generation from investment-grade countries that would lead to
a material improvement in leverage metrics such as net lease-
adjusted debt levels below 3.0x.
LIQUIDITY
Arcos had USD194 million in cash and cash equivalents and USD28
million of short-term debt as of Dec. 31, 2016. On July 13, 2016,
the company paid at maturity the remaining BRL201 million of
outstanding principal of the original BRL675 million principal of
the 2016 notes from a new BRL613.9 million secured loan by the
company's Brazilian subsidiary on March 29, 2016. Arcos intends to
refinance this secured loan with this issuance.
The company also benefits from a USD25 million committed revolving
credit facility with Bank of America and a USD25 million facility
with JP Morgan.
Fitch currently rates Arcos Dorados, as follows:
Arcos Dorados B.V.
-- Long-Term Foreign Currency IDR 'BB+';
-- Long-Term Local Currency IDR 'BB+'.
Arcos Dorados Holdings Inc.
-- Long-Term Foreign Currency IDR 'BB+';
-- USD473.767 million senior unsecured notes due 2023 'BB+'.
The Rating Outlook for the corporate ratings is Negative.
Fitch has assigned the following expected rating:
Arcos Dorados Holdings Inc.
-- USD 300 million senior notes due 2027 'BB+(EXP)'.
ARGENTINA: Unemployment Rate Fell to 7.6% in Fourth Quarter
-----------------------------------------------------------
Taos Turner at The Wall Street Journal reports that Argentina's
unemployment rate fell to 7.6% in the fourth quarter of 2016,
potentially easing pressure on President Mauricio Macri, who is
battling complaints that his policies are taking too long to jump-
start the economy and create jobs.
The jobless rate, reported by Argentina's statistics agency, is
down from 8.5% in the third quarter and 9.3% in the second
quarter, according to The WSJ.
Earlier, unions in Argentina announced plans to hold a national
labor strike on April 6 to protest Mr. Macri's policies, the
report notes.
While the jobless rate is trending lower, however, the reason is
not so positive, said Fausto Spotorno, an economist at Orlando J.
Ferreres & Asociados, an economic research firm, the report
relays.
"Fewer people are actively looking for work, so that pushed the
rate down," said Mr. Spotorno. "The truth is that the job
situation hasn't improved," he added, notes the report.
Labor Ministry data, though, indicate that the private sector has
been adding since jobs since July, the report discloses.
One measure of employment shows that companies here created 3,700
jobs that month, nearly 14,000 the next, about 5,300 in September,
roughly 20,600 in October and more than 23,000 in November, the
report relays. Job creation slowed to about 5,000 in December,
but ministry officials expect the data to be positive again for
January and February, the report notes.
"We are on the path to recovery," a ministry official said, adding
that the public and private sectors combined to create almost
81,000 jobs last year, the report relays.
According to the report, Argentina's economy took a beating in the
first half of 2016, suffering significant job losses as inflation
and a currency devaluation pushed consumers to buy less and a
recession in Brazil reduced demand for Argentine industrial
exports, including cars.
But most economists expect Argentina's economy to grow about 3%
this year, slowly adding jobs in construction and agriculture, the
report relays. Companies also say they expect to raise wages
sharply in 2017, helping workers recover purchasing power that has
suffered from inflation, the report notes.
A massive increase in government spending on public works projects
including roads and airports should also create jobs in coming
months, which should boost consumer spending later this year and
increase demand for appliances and cars, economists said, notes
the report.
"We'll see a gradual improvement in the employment rate, above all
in rural areas there farming is strong and in provinces like
Neuquen, where we've got investment in gas and energy," the report
quoted Mr. Spotorno as saying.
As reported in the Troubled Company Reporter-Latin America on
March 8, 2017, Moody's Investors Service has changed the outlook
on the Government of Argentina's rating to positive from stable
and affirmed the issuer rating at B3, senior unsecured ratings at
B3 and Ca, senior unsecured shelf and MTN program at (P)B3 and
(P)Ca, short term ratings at NP and global MTN program at (P)NP.
CITY OF BUENOS AIRES: Fitch Affirms 'B' Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed the City of Buenos Aires's (CBA)
ratings as follows:
-- Long-term Foreign and Local Currency Issuer Default Ratings
(IDRs) at 'B';
-- Short-term Foreign and Local Currency IDRs at 'B';
-- Euro medium-term note programme (EMTN) up to USD2.29 billion
long-term rating at 'B';
-- Series 11 for USD500 million long-term rating at 'B';
-- Series 12 for USD890 million long-term rating at 'B';
-- Programme of short-term treasury bills up to ARS6.5 billion
short-term rating at 'B'.
KEY RATING DRIVERS
CBA's ratings consider its high level of fiscal autonomy, balanced
budgetary performance with positive and solid operating margins in
a macroeconomic context of high inflation, low level of debt and
adequate sustainability ratios, as well as the city's important
economic weight with a rich and diversified economy. The CBA's
high level of debt in foreign currency and Argentina's sovereign
rating constrain the ratings.
The CBA is Argentina's primary political and economic centre. The
city has strong local revenues and taxpayers have a high GDP per
capita relative to the national average. On average, the city's
local revenues represented 86% of total revenues during 2012 -
2016, comparing favourably relative to the argentine peer median
of 45.6% and demonstrating CBA's high degree of fiscal autonomy
and low dependence on federal revenues.
The city is characterized by its very good budgetary performance
with solid operating margins during the period of analysis
averaging 12.2% of operating revenues in 2012 - 2016. During 2015
a lower margin was observed due to a lower increase in operating
revenues (27%) than in operating expenses (39%), partly due to an
electoral year and a macroeconomic context of high inflation and
currency devaluation. Still the CBA's positive margins indicate a
high budgetary flexibility with an adequate capability to make
yearly adjustments.
During 2016 continuity in administrative policies and expenditure
controls improved the city's operating margin to 12.9% of
operating revenues (compared with 7.3% in 2015). Also, recent
agreements with the nation favoured a re-composition of the
entity's federal revenues to offset expenditure pressures from the
transfer of security services from the federal government to the
city. CBA's 2017 budget considers a 16.5% margin. Although wage
increases and inflation pressures could drive a higher increase in
operating expenses, Fitch expects the city to maintain a positive
and balanced financial performance.
At year-end 2016 CBA's direct debt totalled ARS49.2 billion.
Leverage ratios remained low and equivalent to 38.5% of its
current revenues and similar to 2015's ratio of 38.8%. In 2015
debt increased 71.7% and in 2016 56.6% in nominal terms largely
due to currency devaluation, and the issuance of new debt in local
and external markets for the re-profiling of maturities and to
finance capex.
Recent market operations have improved CBA's debt maturity
profile; CBA will show better sustainability ratios in the coming
years. Fitch estimates that in 2017 debt servicing/operating
balance will be equivalent to 53.5% below the 2016 ratio of 103.5%
and less than the argentine peer median of 109.9%. Also
considering authorized and prospective debt, leverage will remain
low relative to 2017 budgeted revenues.
Currently, CBA's debt structure is largely composed of debt in
foreign currency (mainly U.S. dollars), despite its low level of
indebtedness. In December of 2016 foreign currency debt accounted
for 83.3% (2013: 97%). This constitutes one of the major rating
weaknesses, due to the high exposure to the foreign exchange rate
risk. To date the ratio of debt in foreign currency is of 74%
after the full amortization of the Series 10 bond in March 1,
2017. The city intends to continue lowering the percentage of debt
in foreign currency towards 50% during the next years. Fitch will
monitor this ratio.
Given the city's economic and financial importance in the national
context, urban infrastructure needs are high. The city records
financial deficits since 2011 due to its high level of capital
spending. Capex represented 19.2% of operating revenues in 2016 a
structurally higher ratio than the argentine peer median of 14%.
For 2017, the city's budget considers public investment works for
ARS33 billion, 18.6% of budgeted total expenditure. Capex efforts
will be focalized towards urbanization, public housing, flood
prevention works, hospitals, education and subway infrastructure.
The agency considers that CBA's financial deficit is still at
reasonable levels relative to its budget and importance. Also, the
city has a higher capex level than other local governments and
more flexibility to make adjustments to capital spending if
necessary.
RATING SENSITIVITIES
The ratings of Buenos Aires are constrained by the sovereign
rating. An upgrade of the sovereign rating would be positive for
CBA's ratings. To date, Fitch's sensitivity analysis does not
foresee any developments that would lead to a rating downgrade
===========
B O G O T A
===========
BANCO GNB: Moody's Assigns B1 LT FC Subordinated Debt Rating
------------------------------------------------------------
Moody's Investors Service assigned a B1 long-term foreign currency
subordinated debt rating to Banco GNB Sudameris S.A.'s (GNB)
subordinated debt issuance due in 2027. These notes will be
unsecured subordinated obligations and will rank junior to all
GNB's existing and future senior obligations and will rank senior
only to GNB's capital stock.
The following rating was assigned:
Long-term foreign currency subordinated debt rating of B1
RATINGS RATIONALE
Moody's B1 rating for the subordinated debt issuance is one notch
below the bank's ba3 baseline credit assessment (BCA) to reflect
the subordination of the notes. The rating and the BCA take into
account GNB's historically good asset quality derived from its
niche focus on payroll-linked loans and commercial lending, and
its moderate profitability and efficiency. The bank's BCA is
nevertheless constrained by its low capitalization and mostly
wholesale funding.
GNB's traditional business focus on low-risk payroll-linked loans
and commercial lending has resulted in one the lowest delinquency
ratios among Colombian banks, at 1.4% of total loans as of year-
end 2016, supported by ample loan loss reserves of 114% of past
due loans, as of the same date. However, GNB's subsidiaries in
Peru and Paraguay, expose the bank to greater credit and market
risks and fierce competition from much larger, entrenched banks.
GNB's moderate profitability reflects the characteristic low-risk,
low-yielding loan book, and the bank's predominantly wholesale
funding base. The bank's net income as a percentage of tangible
assets of 0.8% for 2016 is still below its larger peers in
Colombia, and retains a certain level of volatility stemming from
its role as dealer for Colombian government debt, in line with
valuation fluctuations. The bank has been able to maintain
operating costs relatively stable at 56% as of December 2016,
gradually returning to levels seen prior to the acquisitions.
Capitalization levels remain the key challenge for GNB, whose
adjusted tangible common equity to risk weighted assets of 7.1% as
of year-end 2016 is low by regional standards, though Moody's
expects it to remain stable, supported by full earnings retention
and organic growth.
The bank plans to use the proceeds of the issuance for general
corporate purposes, including the repayment of debt and the
establishment of a wholly owned merchant banking subsidiary or
corporacion financiera. Though GNB's new corporacion financiera
will remain a small subsidiary, it will add risks related to
equity investments in various industries in Colombia, and could
potentially add volatility to results and subject the bank to
conflicts of interest.
WHAT COULD CHANGE THE RATING UP OR DOWN
An improvement in capitalization would lead to upward pressure on
GNB's ba3 standalone BCA and consequently in the B1 foreign
currency subordinated debt rating. The bank's standalone BCA could
be revised downwards if the bank engages in any large scale
expansion, which could affect the bank's asset risk and Moody's
assessment of corporate governance. Further deterioration of the
bank's capitalization levels could also bring negative pressure to
the bank's ratings.
The last rating action on Banco GNB Sudameris S.A. was on 10 June
2015.
GNB is headquartered in Bogota, Distrito Capital, Colombia, and
reported USD8.7 billion (COP26.2 trillion) in assets, as of
December 2016.
===============
B A R B A D O S
===============
MONTICELLO INSURANCE: Moody's Affirms B1 IFS Rating
---------------------------------------------------
Moody's Investors Service has affirmed the B1 insurance financial
strength (IFS) rating, with a stable outlook of Monticello
Insurance Limited (Monticello, or MIL), the captive reinsurance
subsidiary of Brazil based Vale S.A. (senior unsecured debt at
Ba2, positive outlook), one of the largest metal and mining
companies in the world. The affirmation follows the decision to
upgrade Vale's ratings and to change the outlook to positive from
stable (see press release titled "Moody's upgrades Vale's ratings
to Ba2; positive outlook" dated 20 March 2017).
RATINGS RATIONALE
Moody's said that the affirmation of MIL's B1 rating with a stable
outlook, despite the upgrade of Vale's ratings and current
positive outlook, reflects primarily the weak sovereign credit
profile and operating environment of Barbados (Caa3, stable
outlook), where MIL is domiciled, which mitigate upward rating
pressure for MIL. According to Moody's, the likelihood of a credit
event in Barbados in the near-term is very high, given lack of
fiscal adjustment and limited financing options. Also, the low
level of foreign exchange reserves in addition to weak funding
conditions make the country increasingly susceptible to event
risks (see press release titled "Moody's downgraded Barbados'
government bond and issuer ratings to Caa3 and maintained a stable
outlook." dated 09 March 2017). Consequently, Moody's expects that
Monticello's ratings would not be upgraded in the event that
Vale's rating were upgraded by one notch.
Moody's noted that MIL's B1 rating is based primarily on the
support provided by Vale and on Monticello's integration with the
global risk management function of the group. MIL is a core part
of Vale's risk-management program and is the sole insurance
captive utilized in Vale's property insurance and business
interruption program worldwide. Explicit support from Vale to MIL,
which has been provided through capital injections -- totaling
US$240 million over the past three years --and ongoing financial
support to cover losses is a key driver of MIL's credit rating,
absent which MIL's rating would be lower. The rating agency
expects that MIL will continue to receive extensive parental
support from Vale, including the parent company's willingness to
backstop MIL's obligations to its fronting insurance carriers, and
to provide additional capital to MIL in the event that it has
insufficient funds to meet its obligations under the reinsurance
assumed.
MIL's rating is primarily constrained by the weak sovereign credit
profile and operating environment of Barbados as well as by its
product risk concentration and significant risk exposures which
has resulted in earnings volatility, as the company has reported
net losses in 2015.
Moody' mentioned that MIL's rating could be upgraded in the case
of an upgrade of Vale's rating or stronger explicit support from
Vale to MIL, in the form of an unconditional, irrevocable
guarantee, and if Barbados' sovereign rating is upgraded.
Conversely, MIL's rating could be downgraded if: 1) Vale's rating
is downgraded; 2) support from the group to the captive company is
reduced; 3) the captive reinsurer begins to cover risks of
external (i.e. non-Vale) entities or engages in non-reinsurance
business; or 4) Barbados' sovereign rating is downgraded.
Monticello Insurance Limited is based in Barbados. As of December
31, 2016, its total assets amounted to US$348 million and its
shareholders' equity was US$195 million. The company's total
annual gross premium for 2016 totaled US$31.9 million, and the
company recorded a net income of US$65 million in 2016. Year-end
2016 financial information is based on as yet un-audited financial
statements.
===========
B R A Z I L
===========
BR PROPERTIES: Fitch Affirms 'BB-' LT IDRs; Outlook Negative
------------------------------------------------------------
Fitch Ratings has affirmed BR Properties S.A.'s Long-Term Foreign
Currency and Local Currency Issuer Default Ratings (IDRs) at
'BB-'. At the same time, Fitch has downgraded its national scale
long-term rating to 'A(bra)' from 'A+(bra)'. The Rating Outlook
for the corporate ratings is revised to Negative from Stable.
The revision of the Outlook to Negative reflects BR Properties'
important challenges to recover its cash flow generation and
reduce leverage to more conservative levels. The company's cash
flow generation reduced in 2016, due to the negative business
environment and lower scale of operations, which resulted in an
increase in leverage and lower interest coverage ratios, and was
intensified by the relevant acquisition of BRL715 million
concluded in December 2016. Fitch expects credit metrics to remain
weak for current rating level during 2017 and EBITDA generation
should more significantly improve only in 2018. If BR Properties
is not successful in reducing vacancy rates and recovering cash
flow generation during the next two years, the ratings will be
strongly pressured.
BR Properties' ratings remain supported by the company's position
as the largest Brazilian commercial properties company, with high
quality of the properties and of its tenant base. The ratings are
also supported by the estimated market value of properties of
BRL7.2 billion at the end of 2016 (excluding projects under
development), covering in 2.5x the company's net debt, and BR
Properties' conservative liquidity strategy.
The downgrade of BR Properties' national scale rating reflects the
weakening of the company's credit profile within the rating
category 'BB-'.
KEY RATING DRIVERS
Operational Cash Flow Still Pressured by Challenging Macroeconomic
Environment
BR Properties' cash flow from lease agreements reduced during 2016
and Fitch expects a gradual recovery only in 2018. Fitch projects
EBITDA around BRL350 million in 2017, improving to about BRL425
million in 2018. Fitch's projections consider office vacancy rates
between 9% and 11% during 2017 and 2018, excluding the acquisition
of Passeio Corporate office concluded in December 2016, that is in
initial phase of signing lease contracts. Interest coverage,
measured as EBITDA/interest ratio, remains weak and fell to 0.8x
in 2016, from 1.5x in 2015, and Fitch expects interest coverage
close to 1.1x by the end of 2018.
The negative business environment, with high vacant areas and
below inflation lease contract adjustments, combined with the
lower scale of operations, negatively affected the company's
EBITDA generation. In 2016, BR Properties generated BRL336 million
of EBITDA and negative cash flow from operations (CFFO) of BRL168
million as per Fitch's calculation, negatively impacted by high
interest expenses. These numbers compare with BRL591 million and
negative BRL54 million, respectively, in 2015. Investments of
BRL337 million and dividend distributions of BRL3 million resulted
in negative free cash flow (FCF) of BRL507 million during 2016. BR
Properties received about BRL425 million from sale of assets in
2016 and BRL240 million in February 2017.
Leverage to Gradually Reduce
Fitch projects the company's net leverage to reduce to about 6x by
the end 2018, benefiting from a gradual improvement in cash flow
generation due to lower vacancy rates and new lease agreements in
Passeio Corporate office. In 2016, net debt/EBITDA ratio increased
to 8.4x, and compare unfavourable with 4.0x in 2015. On a pro
forma basis, excluding debt for the acquisition of Passeio
Corporate office that is only 10% leased and does not generate
EBITDA, net leverage would reduce to 7.1x. Relative to the value
of the company's property portfolio, loan-to-value ratio was 51%
and 38% on a net basis in December 2016.
As of Dec. 31, 2016, total debt was BRL3.8 billion, compared with
BRL3.6 billion in December 2015 and BRL4.2 billion in December
2014. Total debt includes debt of BRL415 million for the
acquisition of Passeio Corporates. Fitch views manageable the
company's liquidity sources for the total debt of BRL1.0 billion
due up to the end 2018. BR Properties had net debt of BRL2.8
billion, compared with BRL2.4 billion and BRL3.6 billion,
respectively, in the same period.
Vacancy Rate Remains a Concern
Vacancy remained high, pressured by difficult business
environment. In December 2016, financial vacancy was 11.8% and
physical vacancy was 19.8%, compared to 10.4% and 14.3%,
respectively, in December 2015. Considering the recent acquisition
of Passeio Corporate in Rio de Janeiro, financial vacancy
significantly increases to 21.8%. Fitch expects financial vacancy
between 9% and 11% during 2017 and 2018, excluding Passeio
Corporate. During 2016, leasing spread was well below inflation
rates.
BR Properties has few contracts maturing in the next two years.
However, about 35% of the contracts (by revenues) were scheduled
to have market alignment in 2016, of which 28% were closed in
March 2017 and 7% are still delayed and negotiations are expected
for 2017, which could continue to pressure the company's average
rent. In addition, about 7% of the contracts with market alignment
scheduled for 2017 and 28% in 2018, which should bring additional
pressures to the company's cash flow.
Less Diversified Portfolio
BR Properties sold several properties between 2014 and 2016,
including the industrial warehouse and retail portfolio, and some
office buildings, resulting in lower scale of operations and
reduced flexibility during difficult market conditions, as the
portfolio is now concentrated in office buildings. Fitch also
considers high the customer concentration, with the five and 10
largest tenants representing about 51% and 66%, respectively, of
the company's revenues in 2016. The company has a strong
concentration with its largest tenant, Petrobras.
BR Properties financial flexibility from its unencumbered assets
improved. As of Dec. 31, 2016, unencumbered assets had an
estimated market value of BRL2.0 billion, which may be available
for sale or serve as collateral for a secured financing, if
needed. The estimated value of unencumbered assets covered about
2.1x of unsecured debt (1.3x as of December 2015).
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for BR Properties
include:
-- Vacancy rate slowly reducing during 2017 and 2018;
-- Sale of assets of BRL240 million in February 2017;
-- Net leverage reduction to 6x by the end 2018;
-- Low investments of approximately BRL90 million in 2017 and
2018.
RATING SENSITIVITIES
Future developments that may individually or collectively lead to
a negative rating action include:
-- Net leverage consistently above 6.0x, without the expectation
of a reduction trend in the following years;
-- EBITDA to gross interest expense coverage ratio consistently
below 1.0x;
-- Liquidity falling to levels that considerably weaken short-
term debt coverage;
-- Vacancy rates consistently above 20% and higher delinquency
rates, which could result in a reduction in operational cash
generation;
-- Sale of assets that results in a weaker portfolio of
properties, with a significant reduction of the company's cash
flow generation capacity, absent a strong leverage reduction.
A rating upgrade for BR Properties is not likely in the near
future. A sustainable deleveraging process and materially above
Fitch's expectations could result in a stabilization of the Rating
Outlook.
LIQUIDITY
BR Properties' liquidity is strong and benefits from the sale of
assets, and remains as an important rating consideration. Fitch
incorporated that the company will continue to use cash balance to
reduce debt and that it will not be pressured by relevant
dividends distribution. As of Dec. 31, 2016, total cash and
marketable securities was BRL966 million and covered debt maturing
up to the end 2018 by 0.9x. Liquidity also benefited from the sale
of asset for BRL240 million in February 2017.
FULL LIST OF RATING ACTIONS
Fitch has taken the following rating actions:
-- Long-Term Foreign Currency IDR affirmed at 'BB-';
-- Long-Term Local Currency IDR affirmed at 'BB-';
-- USD285 million senior unsecured perpetual notes affirmed at
'BB-';
-- Long-term national scale rating downgraded to 'A(bra)' from
'A+(bra)'.
The Rating Outlook for the corporate ratings is revised to
Negative from Stable.
CYRELA COMMERCIAL: Fitch Affirms 'B+' LT Issuer Default Ratings
---------------------------------------------------------------
Fitch Ratings has affirmed Cyrela Commercial Properties S.A.
Empreendimentos e Participacoes' (CCP) Long-Term Foreign and Local
Currency Issuer Default Ratings (IDR) at 'B+'. Fitch has also
downgraded CCP's National Long-Term rating to 'BBB+(bra)' from 'A-
(bra)'. The Rating Outlook for the corporate ratings is Negative.
A full list of rating actions follows at the end of this release.
The ratings reflect CCP's still weak cash flow generation,
pressured by highly unfavorable macroeconomic conditions and high
operational cash burn, due to high financial expenses. Net
leverage is very high and is not expected to significantly reduce
in the next two years. CCP's liquidity is satisfactory for debt
maturities due in the short term, but Fitch expects cash burn to
remain high in 2017.
Fitch considered the expected proceeds from the sale of assets, in
the amount of BRL450 million to BRL500 million, to be received in
the next months, key to support the rating action. The proceeds
are associated with the proposal to sell and exchange assets with
Canada Pension Plan Investment Board (CPPIB) and Prologis, which
was announced in January 2017. The expected sale of assets should
allow the company to reduce debt during 2017, although it should
remain high, as free cash flow (FCF) should remain highly
pressured by weak operational cash generation and high financial
expenses, despite lower investments.
CCP's ratings benefit from the company's high quality portfolio
and adequate financial flexibility, that has been tested and
remain preserved based on the company's continued access to new
credit lines, in a scenario of restricted credit. This positive
access limited refinancing risk. During the last three years, the
company received BRL400 million of capital increase from
shareholders and BRL220 million from the sale of assets. However,
interest coverage ratios remain weakening since 2013 with no
expectations of improvement while the negative economic conditions
persist.
The downgrade of CCP's national scale rating reflects the
weakening of the company's credit profile within the rating
category 'B+'.
The Negative Outlook reflects CCP's important challenges to
improve its credit metrics to more conservative levels in less
favorable macroeconomic conditions. Fitch expects vacancy rates to
remain high and lease spreads in rental contracts below inflation
in 2017, pressuring the company's cash flow generation. The sale
of 33% equity interest in the companies which own the CCP
corporate offices portfolio will also negatively affect cash flow
generation. High volume of lease contracts expiring or with market
alignment expected in the short term also presents challenges to
CCP.
CCP's credit metrics are weak for the rating level. Fitch views
that additional measures to significantly reduce CCP's
indebtedness and leverage are necessary to reduce pressures for
new negative rating actions.
KEY RATING DRIVERS
Cash Flow to Remain Pressured
CCP's cash flow generation will continue to be affected by
negative business conditions. Fitch expects vacancy rates to
remain high and low lease spreads once demand for commercial
properties is directly related to Brazil's macroeconomic
conditions. Additional pressure is expected in CCP's lease
agreements, as a high 61% of the contracts (by revenues) have
market alignment scheduled for 2017 and 2018, while 16% of the
office and warehouse contracts and 40% of shopping contracts will
expire in the period. In 2016, the company generated BRL207
million of EBITDA. Fitch projects EBITDA of around BRL175 million
in 2017. Fitch's base case scenario considers vacancy rates
between 10% and 20% for office and warehouse segments and leasing
spreads below inflation rate. Fitch excludes gain/loss from the
sale of assets from EBITDA calculation.
High interest expenses should continue to pressure CCP's cash flow
generation capacity. In 2016, the company's cash flow from
operations (CFFO) totaled BRL34 million and FCF was negative
BRL157 million as a result of investments of BRL186 million and
dividends of BRL6 million during the year. During the period, CCP
received about BRL207 million from asset sales. Fitch expects FCF
to remain negative in 2017. Interest coverage deteriorated since
2013 and is not expected to recover in the short term. In 2016,
EBITDA/interest and FFO interest coverage ratios were 1.0x. These
numbers compared with 1.1x and 0.9x, respectively, in 2015. Fitch
expects interest coverage close to 0.8 during 2017.
High Leverage Not Sustainable in Medium Term
Fitch projects CCP's net leverage to reduce to about 7.0x by the
end 2018. Notwithstanding the equity injection and sale of assets,
net debt remained stable at BRL2.0 billion in 2016 and is expected
to reduce to BRL1.6 billion following the transaction with CPPIB
and Prologis. In Fitch's opinion, the company's leveraged capital
structure should not significantly improve in the short term,
without a relevant sale of asset and/or capital increase.
CCP reported net debt/adjusted EBITDA (including dividends
received) of 8.4x in 2016, and compares with 6.6x in 2015. FFO
adjusted net leverage was 8.1x due to weak FFO. Relative to the
value of the company's property portfolio, net loan-to-value ratio
was 44% at December 2016.
Vacancy Rate Remains a Concern
Vacancy should remain high, pressured by adverse business
environment. As of Dec. 31, 2016, financial vacancy rate was 9.8%
and physical vacancy was 12.6%, compared to 10.7% and 8.3%,
respectively, in 2015. In 2016, average rent for office buildings
reduced about 9%, while the average rent for warehouse segment
reduced 10%, pressured by depressed macroeconomic conditions and
by lease contracts that went through revisions during the year.
Diversified Portfolio Adds Flexibility
CCP is one of the largest companies of investment, lease and
commercialization of commercial properties in Brazil, with a
diversified and high quality portfolio. At end 2016, the company
owned 31 commercial properties in operation and had an estimated
market value of BRL4.4 billion. The diversification of revenues
from shopping centers, office buildings, industrial warehouses and
services adds more flexibility to the company. In the last few
years, shopping centers gained relevance to the company's
portfolio and represented about 45% of CCP's recurring revenues in
2016, followed by office buildings (29%), services including
parking lot (20%), industrial warehouses (1%), and others (5%).
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for CCP include:
-- Vacancy rates between 10% and 20% for office and warehouse and
8% for shopping in 2017;
-- Reduction in average rent up to 10% in 2017;
-- Closure of transaction with CPPIB and Prologis, with 33%
reduction in GLA for office in 2017;
-- Net leverage below 7.0x by the end 2018;
-- Low investments of BRL65 million in 2017 and 2018. Investments
in the JV with CPPIB are not considered.
RATING SENSITIVITIES
Future developments that may individually or collectively lead to
a negative rating action include:
-- Net leverage consistently above 7.0x, without the expectation
of a reduction trend in the following years;
-- EBITDA to gross interest expense coverage ratio consistently
below 0.7x;
-- Liquidity falling to levels that considerably weaken short-
term debt coverage;
-- Sale of assets that results in a weaker portfolio of
properties, with a significant reduction of the company's cash
flow generation capacity, and not followed by a strong
leverage reduction.
Future developments that may individually or collectively lead to
a revision of the Rating Outlook to Stable include:
-- Significant improvement in the company's cash flow generation,
following the end of its investment cycle;
-- Additional proactive steps by the company to materially
bolster its capital structure in the absence of stronger
operating cash flow.
LIQUIDITY
CCP's liquidity is satisfactory for debt maturities due in the
short term and the expected cash burn. As of Dec. 31, 2016, cash
and marketable securities totaled BRL413 million and total debt,
BRL2.5 billion. The company has BRL415 million of debt maturing in
2017 and BRL387 million in 2018, of which BRL177 million and
BRL236 million, respectively, consisted of corporate debt. In
November 2016, the company issued a BRL200 million debentures to
extend debt maturity profile.
CCP has an adequate financial flexibility from its unencumbered
assets. As of Dec. 31, 2016, unencumbered assets had an estimated
market value of BRL1.5 billion, which may be available for sale or
serve as collateral for a secured financing, if needed. The
estimated value of unencumbered assets covered about 1.5x of
corporate debt of BRL955 million.
FULL LIST OF RATING ACTIONS
Fitch has taken the following rating actions:
-- Long-term Foreign Currency IDR affirmed at 'B+';
-- Long-term Local Currency IDR affirmed at 'B+';
-- Long-term National Scale rating downgraded to 'BBB+(bra)' from
'A-(bra)';
-- Fifth debenture issuance, in the amount of BRL200 million, due
in 2019, downgraded to 'BBB+(bra)' from 'A-(bra)';
-- Eighth debenture issuance, in the amount of BRL200 million,
due in 2020, downgraded to 'BBB+(bra)' from 'A-(bra)'.
The Rating Outlook for the corporate ratings is Negative.
IPIRANGA PRODUTOS: Moody's Rates BRL1,012.5MM Debts Ba1/Aaa.br
--------------------------------------------------------------
Moody's America Latina assigned a Ba1/Aaa.br rating to Ipiranga
Produtos de Petroleo S.A proposed up to BRL1,012.5 million senior
unsecured debentures due in 2022 and 2024, irrevocably and
unconditionally guaranteed by Ultrapar Participacoes S.A. The
outlook for the rating is stable.
The proposed debentures will be fully subscribed by Eco Consult
Securitizadora S.A. and they will back an issuance of agribusiness
certificates - CRA (Certificados de Recebiveis do Agronegocio).
The proceeds will be directed to finance purchases of ethanol.
With the increased financial flexibility, Ultrapar will pay down
debt in order to complement its liability management strategy.
The rating of the proposed debentures assumes that the final
transaction documents will not be materially different from draft
legal documentation reviewed by Moody's to date and assume that
these agreements are legally valid, binding and enforceable.
Ratings assigned as follows:
Issuer: Ipiranga Produtos de Petroleo S.A
-- BRL 1,012.5 million senior unsecured debentures due 2022
and 2024 (guaranteed by Ultrapar): Ba1/Aaa.br
The outlook for the ratings is stable.
RATINGS RATIONALE
Ultrapar's ratings reflect primarily the company's solid business
model, low risk profile, stable cash flows and leading position in
different segments. Over the past few years the company
demonstrated its ability to post robust growth across all business
lines and to sustain conservative credit metrics and strong cash
generation even under adverse market conditions and sizable
investment plan.
On the other hand, the ratings are primarily constrained by
Brazil's sovereign government bond rating. The company's
acquisitive growth strategy and its dependence on a few key
suppliers for raw materials are additional negative rating
considerations. To a lesser extent, the more cyclical nature of
its specialty chemicals business is also viewed as credit
negative.
Ultrapar's Ba1/Aaa.br Corporate Family Rating ratings stand one
notch above Brazil's government bond rating of Ba2. Granted only
on an exceptional basis, the notching represents a fundamental
corporate profile that is stronger than the sovereign's government
bond rating. This is evidenced by the resilient nature of
Ultrapar's cash flows and financial flexibility, which allow it to
withstand Brazil's weakened economic and fiscal condition.
The stable outlook on Ultrapar's rating mirrors Brazil's sovereign
ratings outlook.
Although unlikely in the short term, an upgrade of Ultrapar's
rating would depend on an upgrade of Brazil's sovereign rating and
on the maintenance by Ultrapar of strong credit metrics and
liquidity profile.
Negative pressure on the rating could arise from a deterioration
in the group's liquidity position or an increase in leverage (debt
to EBITDA above 4.0x) without prospects of deleveraging in the
near term. A drop in interest coverage as measured by EBIT to
interest expense to below 2.5x for a prolonged period of time, and
operating margins below 3.0%, could negatively pressure the
rating. Additional negative actions on Brazil's sovereign rating
would also trigger a downgrade of Ultrapar's ratings.
Ultrapar Participacoes S.A., headquartered in Sao Paulo, Brazil,
is engaged in fuel (Ipiranga) and liquefied petroleum gas
(Ultragaz) distribution, specialty chemicals production (Oxiteno),
storage for liquid bulk (Ultracargo) and retail drugstore
(Extrafarma). In the last twelve months ended December 31, 2016,
Ultrapar reported consolidated net revenues of BRL 77.3 billion
(about USD 22.2 billion). Ipiranga is the group's largest business
segment, representing 86% of consolidated net revenues and 73% of
EBITDA in the same period.
ITAIPU BINACIONAL: Fitch Affirms Then Withdraws 'BB' IDR
--------------------------------------------------------
Fitch Ratings has affirmed and simultaneously withdrawn Itaipu
Binacional's Long-term Foreign and Local Currency Issuer Default
Ratings (IDRs) at 'BB'. The Rating Outlook for the IDRs is
Negative. Fitch has also affirmed Itaipu Long-term National Rating
at 'AA+(bra)'/Negative Outlook.
Fitch has withdrawn Itaipu's Long-term Foreign and Local currency
IDRs for commercial reasons.
KEY RATING DRIVERS
Itaipu's rating reflects its strong credit profile linkage with
the Federative Republic of Brazil (Long-term IDR 'BB'/Negative
Outlook). Brazil has been historically responsible for the
acquisition of 90% to 94% of the energy produced by Itaipu and
guarantees, through the National Treasury, 99.1% of the company's
debt.
The rating also incorporates Itaipu's adequate liquidity position
and cash flow predictability, resulting from the Itaipu Treaty
signed between Brazil and Paraguay. This treaty established that
Itaipu's tariff should be defined on an annual basis in USD and
must be sufficient to cover all operating and maintenance costs,
capital expenditures, financial obligations, and has a true-up
mechanism to adjust for possible mismatches to be recovered or
give backs in the following year. Itaipu is strategically
important for both countries, with the company supplying
approximately 17% of the demand for energy in Brazil and 76% of
the demand in Paraguay in 2016. The company presents a favorable
track record of operating efficiency in terms of energy
production.
Cash Flow Predictability
Itaipu's credit profile benefits from its known cash flow. The bi-
lateral treaty provides the company with the long-term firm
commitment of both countries to remunerate the company for 87% of
its installed capacity of 14,000 MW and the total energy
production of the plant, besides the annual definition of a tariff
sufficient to cover all operating costs, shareholder obligations
and debt service, which reduces its cash flow generation risk.
Brazil and Paraguay make use of Centrais Eletricas Brasileiras
S.A. (Eletrobras) and Administracion Nacional de Eletricidad
(Ande), respectively, the two shareholders of Itaipu, for the sale
of its energy. In the case of Eletrobras, the Brazilian regulator
allocates a proportion of the low cost Itaipu's production to
approximately 30 Brazilian electric distribution companies, the
most representative being Eletropaulo with 15.23%, in 2016. Any
mismatch in Itaipu's cash inflows to outflows due to currency
fluctuations, payment delays by the Brazilian distribution
companies, as well as other budget differences are offset when the
tariff for next year is determined.
Reducing Leverage
Itaipu's financial leverage is quite manageable given the tariff
setting mechanism embedded in the bi-lateral treaty between Brazil
and Paraguay. Fitch expects the company's net debt/EBITDA ratio to
decrease to 2.0x in 2019. The total debt/EBITDA and net
debt/EBITDA ratios were 4.4x and 4.2x in the last 12 months ended
Sept. 30, 2016, compared with 4.7x and 4.6x, respectively at the
end of 2015.
Virtually all of Itaipu's debt is currently owed either to
Brazil's Federal Government or Eletrobras, and guaranteed by
Brazil's National Treasury. The company's indebtedness should
gradually decline and be fully amortized by 2023. As of Sept. 30,
2016, the total debt was USD10.5 billion with USD1.5 billion
falling due over the next 12 months. This debt carries a 7.5%
coupon and compares with USD11.4 billion at year-end 2015.
Inexistence of Hydrologic and Regulatory Risks
Itaipu does not have hydrologic or regulatory risks associated
with the electric sector in Brazil or in Paraguay. The commercial
terms of the Itaipu Treaty signed by both countries are based on
the plant's installed capacity and not on the energy produced,
which results in Itaipu having no obligation to purchase energy
from third parties to serve its customers during adverse
hydrologic situations.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for Itaipu include:
-- Annual tariff adjustments sufficient to cover all operating
costs, shareholder obligations and debt service; and
-- Capex of BRL38 million from 2017 to 2019.
RATING SENSITIVITIES
Future rating actions, either positive or negative, will be highly
correlated to the sovereign rating of the Federative Republic of
Brazil or negative amendments to the bi-lateral treaty.
LIQUIDITY
Itaipu's free cash flow (FCF) continues to be robust and
approximates annual debt amortizations. Furthermore, the company's
financial profile benefits from adequate liquidity to cover any
possible cash flow mismatches. In the last-12-months ended on
September 2016, the company's cash flow from operations (CFFO) was
USD1.6 billion and FCF was USD1.5 million, against net debt
amortization of USD1.3 billion. During that same period, the net
revenue was USD3.8 billion and EBITDA reached USD2.4 billion, with
an EBITDA margin of 62.2%. As of Sep 30, 2016, the company's cash
and marketable securities position was USD534 million, while the
ratio (cash and marketable securities + CFFO)/short-term debt was
adequate at 1.5x.
FULL LIST OF RATING ACTIONS
Itaipu Binacional
-- Long-Term Foreign Currency IDR affirmed and withdrawn at
'BB'; Outlook Negative;
-- Long-Term Local Currency IDR affirmed and withdrawn at 'BB';
Outlook Negative;
-- Long-term National Rating affirmed at 'AA+(bra)'; Outlook
Negative.
==========================
C A Y M A N I S L A N D S
==========================
AIC MARINE: Shareholder Receives Wind-Up Report
-----------------------------------------------
The shareholder of AIC Marine Corp. received on March 13, 2017,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
William J. Lynch
Lynch & Associates
535 Boylston St.
Suite T2, Boston, MA 02116
United States of America
Telephone: +1 (617) 247 7000
Facsimile: +1 (617) 247 7275
BELLINI DESIGNS: Commences Liquidation Proceedings
--------------------------------------------------
The shareholders of Bellini Designs Ltd., on Jan. 9, 2017, passed
a resolution to liquidate the company's business.
Only creditors who were able to file their proofs of debt by
Feb. 28, 2017, will be included in the company's dividend
distribution.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
COMPASS INVESTMENTS: Shareholders Receive Wind-Up Report
--------------------------------------------------------
The shareholders of Compass Investments Ltd. received on March 15,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Alexandria Bancorp Limited
c/o Dayra Triana-Munroe
Barbara Conolly
The Grand Pavilion Commercial Centre
802 West Bay Road
P.O. Box 2428, Grand Cayman KY1-1105
Cayman Islands
Telephone: (345) 945-1111
Facsimile: (345) 945-1122
GAVEA GLOBAL: Shareholders Receive Wind-Up Report
-------------------------------------------------
The shareholders of Gavea Global Fund Ltd. received on March 15,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
c/o Kim Charaman
190 Elgin Avenue
George Town
Grand Cayman, KY1-9005
Cayman Islands
Telephone: (345) 943-3100
GAVEA GLOBAL SPV: Shareholders Receive Wind-Up Report
-----------------------------------------------------
The shareholders of Gavea Global SPV received on March 24, 2017,
the liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
c/o Kim Charaman
190 Elgin Avenue
George Town
Grand Cayman, KY1-9005
Cayman Islands
Telephone: (345) 943-3100
GNETOP INC: Shareholders to Receive Wind-Up Report Today
--------------------------------------------------------
The shareholder of GNETOP Inc. will hear on March 27, 2017, the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Lin Yongyuan
c/o Michelle R. Bodden-Moxam
Portcullis (Cayman) Ltd
The Grand Pavilion Commercial Centre
Oleander Way, 802 West Bay Road
P.O. Box 32052 Grand Cayman KY1-1208
Cayman Islands
Telephone: (345) 946-6145
Facsimile: (345) 946-6146
HAWAII ASIA: Shareholders Receive Wind-Up Report
------------------------------------------------
The shareholders of Hawaii Asia Holdings II Limited received on
March 9, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
Telephone: +1 (345) 949 0100
INDOCHINA LAND: Shareholders Receive Wind-Up Report
---------------------------------------------------
The shareholders of Indochina Land Hoi An Golf Course Ltd.
received on March 20, 2017, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company commenced wind-up proceedings on Feb. 7, 2017.
The company's liquidator is:
Michael Paul Piro
Capital Place, 10th Floor, 06 Thai Van Lung Street
District 1, Ho Chi Minh City
Vietnam
Telephone: +84.8.3520.2030
Facsimile: +84.8.3520.2036
INDOCHINA MONTGOMERIE: Shareholders Receive Wind-Up Report
----------------------------------------------------------
The shareholders of Indochina Montgomerie Links Residences
received on March 20, 2017, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company commenced wind-up proceedings on Feb. 7, 2017.
The company's liquidator is:
Michael Paul Piro
Capital Place, 10th Floor, 06 Thai Van Lung Street
District 1, Ho Chi Minh City
Vietnam
Telephone: +84.8.3520.2030
Facsimile: +84.8.3520.2036
INDOCHINA QUANG: Shareholders Receive Wind-Up Report
----------------------------------------------------
The shareholders of Indochina Quang Nam Resort Holding Ltd.
received on March 20, 2017, the liquidator's report on the
company's wind-up proceedings and property disposal.
The company commenced wind-up proceedings on Feb. 7, 2017.
The company's liquidator is:
Michael Paul Piro
Capital Place, 10th Floor, 06 Thai Van Lung Street
District 1, Ho Chi Minh City
Vietnam
Telephone: +84.8.3520.2030
Facsimile: +84.8.3520.2036
NMS SERVICES: Shareholders Receive Wind-Up Report
-------------------------------------------------
The shareholders of NMS Services (Cayman) Inc. received on March
24, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Intertrust SPV (Cayman) Limited
190 Elgin Avenue
George Town
Grand Cayman, KY1-9005
Cayman Islands
c/o Susan Craig/Jennifer Chailler
Telephone: (345) 943-3100
REDISCOVERED (CAYMAN): Shareholders Receive Wind-Up Report
----------------------------------------------------------
The shareholders of Rediscovered (Cayman) Limited received on
March 7, 2017, the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Wong Teck Meng
c/o Conrad Lai
Briscoe Wong Advisory Limited
602 The Chinese Bank Building
61-65 Des Voeux Road Central
Hong Kong
Telephone: (852) 2899 2178
Facsimile: (852) 2899 2948
RESIDENTIAL REINSURANCE: Member to Hear Wind-Up Report on April 10
------------------------------------------------------------------
The member of Residential Reinsurance 2012 Limited will hear on
April 10, 2017, at 11:00 a.m., the liquidators' report on the
company's wind-up proceedings and property disposal.
The company's liquidators are:
Kevin Poole
James Trundle
Telephone: 914-2270/ 914-2265/ 949-5263
Facsimile: 949-6021
P.O. Box 10233 Grand Cayman
Cayman Islands
URSA COMPANY: Shareholders Receive Wind-Up Report
-------------------------------------------------
The shareholders of URSA Company Limited received on March 23,
2017, the liquidator's report on the company's wind-up proceedings
and property disposal.
The company's liquidator is:
Simon R Conway
c/o Ruth Simpson
Telephone: (345) 914 8734
Facsimile: (345) 945 4237
P.O. Box 258 Grand Cayman KY1-1104
Cayman Islands
WORLD SHIPPING: Commences Liquidation Proceedings
-------------------------------------------------
The members of World Shipping and Investment Company on
Feb. 8, 2017, passed a resolution to voluntarily liquidate the
company's business.
Only creditors who were able to file their proofs of debt by
March 20, 2017, will be included in the company's dividend
distribution.
The company's liquidator is:
Richard Fear
c/o Kevin Butler
Telephone: (345) 814 7374
Facsimile: (345) 945 3902
P.O. Box 2681 Grand Cayman KY1-1111
Cayman Islands
ZEPELLIN INVESTMENT: Deadline to File Proof of Claim Today
----------------------------------------------------------
The members of Zepellin Investment Company on Feb. 8, 2017, passed
a resolution to voluntarily liquidate the company's business.
Only creditors who were able to file their proofs of debt today,
March 27, 2017, will be included in the company's dividend
distribution.
The company's liquidator is:
CDL Company Ltd.
P.O. Box 31106 Grand Cayman KY1-1205
Cayman Islands
=========
C H I L E
=========
* CHILE: Hosts Pacific Alliance Amid TPP's Collapse
---------------------------------------------------
EFE News reports that the Pacific Alliance's meeting started in
Vina del Mar with host Chile holding bilateral talks with Mexico
and New Zealand as the regional organization's members discuss the
future direction of trade in the wake of the collapse of the
Trans-Pacific Partnership (TPP).
"This meeting is an important political signal at a time of
uncertainty," Chilean Foreign Minister Heraldo Munoz said ahead of
the start of the meeting, according to EFE News.
Chile, which holds the alliance's rotating presidency, organized
the gathering to discuss the situation created by the US decision
to drop out of the TPP, an effort to create a free trade area
spanning the Asia-Pacific region, the report notes.
The two-day meeting was attended by the foreign and trade
ministers of Australia, Brunei, Colombia, Canada, China, South
Korea, the United States, Japan, Malaysia, Mexico, Peru, New
Zealand, Singapore and Vietnam, as well as host Chile, the report
relays.
The United States, which did not send a delegation from
Washington, was represented by Ambassador to Chile Carol Perez,
the report discloses.
The participants will "explore and exchange ideas on how to move
forward with open trade that rejects protectionism, creating
prosperity and jobs via more intense and open trade," the report
quoted Mr. Munoz as saying.
The ministers from the Pacific Alliance, whose members are Mexico,
Colombia, Peru and Chile, were scheduled to attend a dinner hosted
by Chilean President Michelle Bachelet, the report relays.
Ministers from the 12 countries that signed the TPP in early 2016
met to examine the trade landscape following President Donald
Trump's decision to fulfill a campaign promise and pull the US out
of the trade deal, the report notes.
The TPP's members account for about 40 percent of global economic
activity and nearly one-third of international trade, the report
adds.
===============
C O L O M B I A
===============
ODEBRECHT SA: Bribery Plea Muddies Colombia's Big River Project
---------------------------------------------------------------
Sara Schaefer Munoz and Kejal Vyas at The Wall Street Journal
reports that a string of gritty river towns along Colombia's
mightiest river have waited years for mounds of silt to be dredged
from the waterway, a project that was supposed to start last year
and bolster growth in Latin America's fourth-largest economy.
But the $862-million contract to make 565 miles of the Magdalena
River more navigable went mostly to Brazilian firm Odebrecht SA,
whose explosive admission that it paid extensive bribes to land
infrastructure projects led Colombian regulators last month to
suspend the river works, according to The WSJ. That contract,
which promised to triple river cargo, was the cornerstone of a now
troubled $25-billion infrastructure initiative to build new
highways, airports and ports that would modernize a country
bedeviled by its rugged terrain, the report notes.
"We have waited decades for someone to pay attention to the
Magdalena River," said Raul Munoz, who operates 13 tugboats that
are often mired in sediment and damaged, the report relays. "It's
hanging by a thread," he added.
In settling criminal charges in the U.S., Switzerland and Brazil
in December, Odebrecht SA admitted paying nearly $800 million in
bribes in Latin America and Africa to secure projects that raked
in $3.3 billion in profits, triggering investigations and arrests
here and elsewhere throughout Latin America, the report notes.
In Colombia, the scandal has also raised investors' concerns about
putting billions into projects they fear could become tainted by
corruption allegations, officials said, delaying and undermining
plans for the country's ambitious new infrastructure network, the
report relays.
The report relays that Odebrecht SA had just two of 50 significant
projects in the country's infrastructure portfolio, the report
discloses. But its troubles have had an outsize effect, leaving
regulators scrambling to reassure potential investors about the
legality of future projects, the report notes.
Investors' reluctance is a blow for the government, the report
relays. It has paved 1,200 miles of four-lane highway since 2010
and is building or renovating dozens of airports, but it still
needs funding for two-thirds of the projects and wants much of the
money to come from foreign banks and infrastructure funds, the
report says.
"There is an issue that no one can deny, and that is the
reputational damage," said Ana Carolina Ramirez, a director of the
Colombian Infrastructure Chamber, which represents construction
companies, the report notes.
In a sign of waning investor enthusiasm, Japan's Sumitomo Mitsui
Bank in January pulled $250 million in funding from the river
project, which it pledged to a consortium that is 87%-owned by
Odebrecht's Colombian unit, the report notes. Representatives
from Sumitomo didn't respond to requests for comment.
For many along this 950-mile river, which fired Nobel Prize-
winning author Gabriel Garcia Marquez's imagination much as the
Mississippi did Mark Twain's, large-scale dredging and the
creation of a stable channel would permit passage of big ships
that would carry three times the cargo borne by all Colombia's
highways combined, the report relays.
"It would be more efficient for us to use the river for
transport," said Marco Quintero, a feed supplier for chicken
producers who says flooded roads and damaged bridges often disrupt
corn deliveries, the report notes. "We really hope this project
doesn't lose momentum," he added.
Prosecutors scrutinizing Odebrecht SA, which admitted to paying
$11 million in bribes here, are investigating allegations that the
Magdalena bidding process was rigged, the report notes. They have
also indicted an official of state-run Banco Agrario for allegedly
falsifying documents to help the Odebrecht-led consortium acquire
a loan for the project, the report relays. Odebrecht's Colombia
unit didn't respond to requests for comment
Colombia's attorney general, Nestor Mart°nez, said investigators
believe Odebrecht spent more in Colombia on bribes than it has
acknowledged, the report discloses. Prosecutors have arrested
three people here, including a former deputy transport minister
who admitted receiving $6.5 million in bribes on a 360-mile
highway project, the report relays. "The investigation has
transcended well beyond what was said in the Department of Justice
document," Mr. Mart°nez told reporters recently, referring to
Odebrecht's settlement with the U.S. government, the report notes.
Transportation officials are now moving to take over Odebrecht's
road work to prevent workers from suddenly losing their jobs
before a new builder is contracted, the report notes.
Luis Andrade, head of Colombia's National Infrastructure Agency,
which oversees public-private works, said "very few companies" now
want to get near the Odebrecht projects because of "risks that are
difficult to measure" regarding investigations into the company's
operations, the report relays.
"They want to see how it is handled," Mr. Andrade said, the report
notes.
Colombian officials say that unwinding legal arrangements with
Odebrecht, while structuring a new bidding process and attracting
new contractors, will delay the Magdalena project and the highway
construction by at least two years, the report relays.
The report discloses that Colombian authorities say they are in
negotiations with Power China to take over the Magdalena River
project. The state-run builder, which had bid on the work last
year, didn't respond to a request for comment.
Here on the Magdalena, the delays mean high transportation costs
for all manner of companies, from state-controlled oil giant
Ecopetrol SA to agricultural firms moving supplies, the report
notes. According to Colombia's infrastructure agency,
transportation costs amount to about 30% of the country's
business-production costs, compared with about 10% in the U.S.,
studies have shown, the report relays.
Construction-materials importer Andres Cardona faced major cost
overruns last year when the water level plunged and barges set to
carry his goods were delayed for weeks, the report notes.
"Not having this river navigable is very problematic for us," he
said, the report adds.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REP: Seeks Interests to Determine Hydrocarbon Potential
-----------------------------------------------------------------
Dominican Today reports that the Dominican Republic Energy and
Mines Ministry called on companies interested in exploring for
hydrocarbons to submit proposals, as part of efforts to determine
Dominican Republic's hydrocarbons potential.
The call, under the multi-client model, applies to the San Pedro
de Macoris (east) and Bahia de Ocoa (south) platforms and
Dominican Republic's territorial waters in general, according to
Dominican Today.
It said those interested will carry out the seismic campaign at
their cost and according to a previously approved seismic
acquisition map, the report notes.
"Once the studies have been completed, companies must submit all
seismic and geophysical information and data collected to the
Dominican State, with a period of exclusivity for the marketing of
the seismic, and sharing the commissions of sale to third parties
with the State itself," Energy and Mines said on its website, the
report relays.
Technical Background
To take their interest into account, companies must have conducted
2D, 3D or 4D seismic surveys at sea in at least three countries in
the last five years, the report notes.
"Stakeholders, moreover, must have carried out at least 5,000
total linear kilometers of seismic 2D in the last seven years or
at least 5,000 square kilometers of seismic 3D or 4D in the same
period," the report adds.
As reported in the Troubled Company Reporter-Latin America on
Nov. 22, 2016, Fitch Ratings has taken the following rating
actions on the Dominican Republic:
-- Long-Term Foreign Currency Issuer Default Rating (IDR)
upgraded to 'BB-' from 'B+'; assigned Stable Outlook;
-- Long-Term Local Currency IDR upgraded to 'BB-' from 'B+';
assigned Stable Outlook;
-- Senior unsecured Foreign and Local Currency bonds upgraded
to 'BB-' from 'B+';
-- Short-Term Foreign Currency IDR affirmed at 'B';
-- Short-Term Local Currency IDR affirmed at 'B'.
=============
J A M A I C A
=============
DIGICEL GROUP: Denies Security Breach, Says "We're Secure"
----------------------------------------------------------
Caribbean360.com reports that telecommunications company Digicel
Group insists its network is safe, reliable and secure, following
a claim that Trinidad and Tobago's prime minister may have had
some of his text messages and emails intercepted.
Caribbean360.com, citing The Sunday Express, notes that Dr. Keith
Rowley had directed Cabinet members to switch the provider for
their work phones to bmobile after police officers disclosed to
him that Reshmi Ramnarine, who once headed the country's highest
level security unit, is currently employed as an account manager,
business solutions, at Digicel Group (Information Technology and
Services).
The police had been investigating a report from Rowley that he was
being inundated with a series of text messages from a particular
cell number, Caribbean360.com notes. The texter had reportedly
asked to meet with Rowley and indicated that they had intercepted
and retrieved text messages and e-mails belonging to him, the
report relays.
But according to the Trinidad Express, says the report, Digicel
issued a statement saying "there has never been a substantiated
claim of this kind in the history of our company's operations in
the Caribbean and over the past 11 years of our presence in
Trinidad and Tobago."
"Since the emergence of such a claim, we have conducted an
extensive audit of all operations related to these technical
functions and have found absolutely no breach in our security
systems," it added, the report relays.
Digicel Group sought to assure customers of the integrity of its
stringent security systems, which it said are designed to
guarantee the highest level of privacy to all users of its mobile
network, the report notes.
"This has been secured at high cost and is rigidly maintained
through an IT infrastructure that is safe and secure," it
insisted, adding that guaranteeing the safety and security of
customer records of all kinds forms the basis of its relationship
with its subscribers, the report adds.
As reported in the Troubled Company Reporter-Latin America on
May 27, 2016, Fitch Ratings has affirmed the ratings of Digicel
Group Limited (DGL) and its subsidiaries Digicel Limited (DL) and
Digicel International Finance Limited (DIFL), collectively
referred to as 'Digicel' as follows.
DGL
-- Long-Term Issuer Default Rating (IDR) at 'B'; Stable Outlook;
-- $US 2.0 billion 8.25% senior subordinated notes due 2020 at
'B-/RR5';
-- $US 1 billion 7.125% senior unsecured notes due 2022 at
'B-/RR5'.
DL
-- Long-Term IDR at 'B'; Stable Outlook;
-- $US 250 million 7% senior notes due 2020 at 'B/RR4';
-- $US 1.3 billion 6% senior notes due 2021 at 'B/RR4';
-- $US 925 million 6.75% senior notes due 2023 at 'B/RR4';
DIFL
-- Long-Term IDR at 'B'; Stable Outlook;
-- Senior secured credit facility at 'B+/RR3'.
The Rating Outlook is Stable.
===========
P A N A M A
===========
AVIANCA HOLDINGS: Fitch Affirms 'B' LT IDRs; Outlook Neg.
---------------------------------------------------------
Fitch Ratings has affirmed the ratings for Avianca Holdings and
its subsidiaries as follows:
Avianca Holdings S.A. (Avianca Holdings):
-- Long-Term Issuer Default Rating (IDR) at 'B';
-- Long-Term Local Currency IDR at 'B';
-- USD550 million unsecured notes due in 2020 at 'B-/RR5'.
Aerovias del Continente Americano S.A. (Avianca):
-- Long-Term IDR at 'B';
-- Long-Term Local Currency IDR at 'B';
Grupo Taca Holdings Limited (Grupo Taca):
-- Long-term IDR at 'B'.
Avianca Holdings, Grupo Taca, and Avianca Leasing are co-issuers
of the USD550 million unsecured notes.
The Rating Outlook remains Negative.
The rating affirmation reflects Avianca Holding's improvements in
profitability and leverage during 2016. The Negative Outlook
reflects Fitch's views that Avianca Holdings' liquidity remains
tight despite improved profitability. Avianca Holdings' pending
debt maturities and scheduled capex levels are viewed as high with
respect to its liquidity and expected FCF generation during 2017-
2018.
The ratings incorporate Avianca Holdings' regional market position
as the lead carrier in Colombia and Central America, and its
geographic diversification. The ratings also consider the
vulnerability of the company's cash flow generation to fuel price
variations and the inherent risks of the airline industry, as well
as the carrier's capacity to maintain operational margins based on
the leader position in the markets where it operates.
The 'B-/RR5' Recovery Rating of the company's unsecured notes
incorporates the subordination of the notes to the significant
levels of secured debt, resulting in below-average-recovery
prospects in the event of default.
KEY RATING DRIVERS
Liquidity Remains Tight
Fitch views the company's liquidity as low. As of Dec. 31, 2016,
Avianca Holdings had cash and equivalents of USD375 million
(USD479 million as of Dec. 31, 2015) and the company does not
maintain unused committed credit lines. Liquidity, measured as
total cash and equivalents, represented around 9.1% of its
revenues in 2016. The company's capacity to generate positive FCF
during 2017-2018 is expected to provide some improvement in its
liquidity position. Upcoming debt maturities are relatively high
for the company's liquidity and expected free cash flow generation
during 2017-2018. Debt maturities during 2017 and 2018 are USD407
million and USD385 million, respectively. Fitch expects Avianca
Holdings to cover its capital expenditures and debt maturities
with a combination of its own cash flow generation and further
borrowing during 2017-2018. The liquidity ratio, measured as total
debt payments plus net capex levels to cash plus free cash flow
generation during 2017-2018, is estimated at 0.7x.
Improved Profitability
Avianca Holdings' 2016 adjusted EBIT margin increased to 7.2% from
2015's 5.7%. The EBIT margin for 2017-2018 is expected to be
around 6.8% driven primarily by continued single-digit growth in
traffic, stabilization in yields and the company's continued
efforts to reduce ex-fuel cost levels. Fitch views the company's
capacity to manage its yields, avoiding material deterioration, as
one of the key factors driving its 2017 operational performance.
Avianca Holdings' 2016 average yield fell 10% compared to 2015.
During 2017, the company's net revenue is expected to increase by
around 6%, with single-digit growth in the number of transported
passengers.
Lower Leverage
Avianca Holdings' adjusted gross financial leverage improved
during 2016 compared to 2015 as a result of lower debt levels as
the company was able to reduce on-balance-sheet debt by
approximately USD200 million. The company's gross adjusted
leverage, as measured by total adjusted debt/EBITDAR was 6.2x at
the end of December 2016 versus 7.1x at the end of December 2015.
Fitch expects the company's gross adjusted leverage ratio to be
around 6x by the end of 2017. Avianca Holdings' cash flow
generation, as measured by EBITDAR, was USD879 million during
2016. The company had approximately USD5.5 billion in total
adjusted debt at the end of December 2016. Debt, as of Dec. 31,
2016, consists primarily of USD3.3 billion of on-balance-sheet
debt, most of which is secured, and an estimated USD2.2 billion of
off-balance-sheet debt associated with lease obligations. The
company's rentals payments during 2016 were USD315 million.
Capex Fleet Reduction Key for FCF:
During 2016, the company's FCF generation was positive USD210
million, resulting in FCF margin (FCF/ revenues) of positive 5.1%.
The company's 2016 positive FCF resulted primarily from its better
operational performance, a significant reduction in net capex, and
lower paid dividends. The 2016 FCF calculation reflects USD418
million in cash flow from operations, USD176 million in net capex
and USD32 million in paid dividends. Avianca Holdings has adjusted
its net capex levels for 2017-2018 and is expected to manage its
capital intensity, measured as the capex/revenue ratio, in the 5%
to 2% range during 2017-2018. Fitch expects the company to reach
positive FCF during 2017-2018.
Limited Visibility on Potential Events; Not Incorporated in
Ratings
Avianca Holdings' ratings do not factor in several potential
events including the incorporation of a strategic partner, the
execution of an equity increase, and/or merger and acquisition
activity-related operations in the Brazilian market. Fitch
considers there to be limited visibility at this point as to final
outcomes and timing of each of these events, but that in general
the incorporation of a global carrier as a strategic partner could
be a positive development. The move would allow Avianca Holdings
to strengthen key areas such as market position and corporate
governance.
Credit Linkages and Notes' Guarantees Structure Incorporated:
The ratings also reflect Avianca Holdings' corporate structure and
credit linkage with its subsidiaries, Aerovias del Continente
Americano S.A. (Avianca): and Grupo Taca. Combined, these two
operating companies represent the main source of cashflow
generation for the holding company. The significant legal and
operational linkages between the two operating companies are
reflected in the existence of cross-guarantee and cross-default
clauses relating to the financing of aircraft acquisitions for
both companies. Avianca Holdings, Grupo Taca, and Avianca Leasing
are jointly and severally liable under the USD550 million
unsecured notes as co-issuers. Avianca Leasing is a wholly owned
subsidiary incorporated under the laws of Delaware, U.S. whose
obligations as a co-issuer of the notes are unconditionally
guaranteed on an unsecured, senior basis by Avianca for up to 2/3
of the total issuance amount.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for Avianca
Holdings include:
-- 2017-2018 total transported passengers to grow around 5% per
year;
-- 2017-2018 EBIT margin approximately at 6.7%;
-- 2017 gross adjusted leverage, measured as total adjusted
debt/EBITDAR ratio, around 6x;
-- 2017 coverage ratio, EBITDAR/(net interest expense + rents),
around 1.9x;
-- 2017 liquidity, measured as the readily available cash over
LTM net revenues, around 9%;
-- 2017-2018 FCF generation neutral to positive.
RATING SENSITIVITIES
Considerations that could lead to a negative rating action (rating
or Outlook)
-- Adjusted gross leverage remaining above 6.5x;
-- EBIT margin consistently below 6%;
-- Coverage ratio, measured as the total EBITDAR/(interest
expense + rents), consistently below 2x;
-- Liquidity, cash/ LTM revenues, consistently below 10%;
-- Sustained negative free cash flow.
Considerations that could lead to a positive rating action (rating
or Outlook)
-- Adjusted gross leverage trending to around 5x;
-- EBIT margin consistently above 7%;
-- Coverage ratio, measured as total EBITDAR/(interest expense +
rents) ratio, consistently above 2.25x;
-- Liquidity, cash/ LTM revenues, consistently above 12%;
-- Moving towards neutral-to-positive free cash flow.
LIQUIDITY
Avianca Holdings' pending debt maturities and scheduled capex
levels are viewed as high with respect to its liquidity and
expected FCF generation during 2017-2018. Fitch expects Avianca
Holdings to cover its capital expenditures and debt maturities
with a combination of its own cash flow generation and further
borrowing during 2017-2018.
======================
P U E R T O R I C O
======================
ISLAND FESTIVAL: Taps Tamarez CPA as Accountant
-----------------------------------------------
Island Festival Rentals and Recycling Corp. seeks approval from
the US Bankruptcy Court for the District of Puerto Rico to employ
Albert Tamarez-Vasquez, CPA, CIRA and his accounting firm TAMAREZ
CPA, LLC as the Debtor's accountant.
Matters on which the accountant will work on are:
a) reconcile financial information to assist the Debtor in
the preparation of monthly operating reports;
b) assist in the reconciliation and clarification of proofs
of claim filed and amount due to creditors, including tax
investigation initiated by Puerto Rico Department of Treasury;
c) provide general accounting and tax services to prepare
quarterly tax returns, withholding statements, year-end reports
and income tax preparation; and
d) assist the Debtor and its counsel in the preparation of
the supporting documents for the Chapter 11 Reorganization Plan.
Tamarez CPA will be paid a fixed monthly rate of $700.00, plus
reimbursement of actual out-of-pocket expenses incurred in this
case.
Albert Tamarez-Vasquez, CPA, CIRA, attests that he is considered a
disinterested party pursuant to 11 U.S.C. Section 101(14) of the
Code.
The Firm can be reached through:
Albert Tamarez-Vasquez, CPA, CIRA
TAMAREZ CPA LLC
First Federal Saving Building
1519 Ave. Ponce De Leon Suite 412
San Juan, PR 00909-1723
Tel: (787) 795-2855
Fax: (787) 200-7912
Email: atamarez@tamarezcpa.com
About Island Festival Rentals
Island Festival Rentals and Recycling Corp. sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No.
17-01377) on February 28, 2017. The petition was signed by
Wilfredo Medina Ramirez, president. The case is assigned to Judge
Edward A Godoy. At the time of the filing, the Debtor estimated
assets of less than $100,000 and liabilities of $1 million to $10
million.
=================
X X X X X X X X X
=================
* BOND PRICING: For the Week From March 20 to March 24, 2017
------------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
BA-CA Finance Cayman Lt 0.518 62.07 KY EUR
CSN Islands XII Corp 7 68 BR USD
CSN Islands XII Corp 7 67.75 BR USD
Decimo Primer Fideicomi 4.54 52.63 10/25/2041 PA USD
Decimo Primer Fideicomi 6 63.5 10/25/2041 PA USD
Dolomite Capital Ltd 13.26 67.2 12/20/2019 CN ZAR
Empresa de Telecomunica 7 73.14 1/17/2023 CO COP
Empresa de Telecomunica 7 73.14 1/17/2023 CO COP
ESFG International Ltd 5.75 0.66 KY EUR
General Shopping Financ 10 72.5 KY USD
General Shopping Financ 10 71.7 KY USD
Global A&T Electronics 10 74 2/1/2019 SG USD
Global A&T Electronics 10 74.5 2/1/2019 SG USD
Global A&T Electronics 10 65.5 2/1/2019 SG USD
Global A&T Electronics 10 65 2/1/2019 SG USD
Gol Finance 8.75 63 BR USD
Gol Finance 8.75 63.88 BR USD
Gol Linhas Aereas SA 10.75 34.63 2/12/2023 BR USD
Gol Linhas Aereas SA 10.75 34.63 2/12/2023 BR USD
Inversora Electrica de 6.5 55 9/26/2017 AR USD
Inversora Electrica de 6.5 55 9/26/2017 AR USD
MIE Holdings Corp 7.5 75.16 4/25/2019 HK USD
MIE Holdings Corp 7.5 75.26 4/25/2019 HK USD
NB Finance Ltd/Cayman I 3.88 58.01 2/7/2035 KY EUR
Newland International P 9.5 19.88 7/3/2017 PA USD
Newland International P 9.5 19.88 7/3/2017 PA USD
Noble Holding Internati 5.25 72.98 3/15/2042 KY USD
Ocean Rig UDW Inc 7.25 39 4/1/2019 CY USD
Ocean Rig UDW Inc 7.25 38 4/1/2019 CY USD
Odebrecht Drilling Norb 6.35 48.5 6/30/2021 KY USD
Odebrecht Drilling Norb 6.35 47.25 6/30/2021 KY USD
Odebrecht Finance Ltd 7.5 49 KY USD
Odebrecht Finance Ltd 4.3 48.29 4/25/2025 KY USD
Odebrecht Finance Ltd 7.12 48.2 6/26/2042 KY USD
Odebrecht Finance Ltd 5.25 46.15 6/27/2029 KY USD
Odebrecht Finance Ltd 7 57.02 4/21/2020 KY USD
Odebrecht Finance Ltd 5.12 53.51 6/26/2022 KY USD
Odebrecht Finance Ltd 8.25 70.88 4/25/2018 KY BRL
Odebrecht Finance Ltd 6 51.47 4/5/2023 KY USD
Odebrecht Finance Ltd 5.25 45.92 6/27/2029 KY USD
Odebrecht Finance Ltd 7.1 47.82 6/26/2042 KY USD
Odebrecht Finance Ltd 7.5 49.25 KY USD
Odebrecht Finance Ltd 4.3 48.39 4/25/2025 KY USD
Odebrecht Finance Ltd 6 51.77 4/5/2023 KY USD
Odebrecht Finance Ltd 8.2 70.88 4/25/2018 KY BRL
Odebrecht Finance Ltd 7 56.85 4/21/2020 KY USD
Odebrecht Finance Ltd 5.1 52.99 6/26/2022 KY USD
Odebrecht Offshore Dril 6.6 39.64 10/1/2022 KY USD
Odebrecht Offshore Dril 6.7 36.44 10/1/2022 KY USD
Odebrecht Offshore Dril 6.6 38.79 10/1/2022 KY USD
Odebrecht Offshore Dril 6.7 38.75 10/1/2022 KY USD
Petroleos de Venezuela 12.75 67.19 2/17/2022 VE USD
Petroleos de Venezuela 9 58.28 11/17/2021 VE USD
Petroleos de Venezuela 6 40.32 5/16/2024 VE USD
Petroleos de Venezuela 9.75 50.15 5/17/2035 VE USD
Petroleos de Venezuela 6 38.22 11/15/2026 VE USD
Petroleos de Venezuela 5.37 37.39 4/12/2027 VE USD
Petroleos de Venezuela 5.5 37.1 4/12/2037 VE USD
Petroleos de Venezuela 6 41.25 10/28/2022 VE USD
Petroleos de Venezuela 6 40.01 5/16/2024 VE USD
Petroleos de Venezuela 9 58.11 11/17/2021 VE USD
Petroleos de Venezuela 6 38.13 11/15/2026 VE USD
Petroleos de Venezuela 12.75 67.2 2/17/2022 VE USD
Petroleos de Venezuela 9.75 49.94 5/17/2035 VE USD
Polarcus Ltd 5.6 60 3/30/2022 AE USD
Siem Offshore Inc 5.8 49.75 1/30/2018 NO NOK
Siem Offshore Inc 5.59 50.25 3/28/2019 NO NOK
STB Finance Cayman Ltd 2.04 58.35 KY JPY
Sylph Ltd 2.36 50.93 9/25/2036 KY USD
Uruguay Notas del Tesor 5.25 68.02 12/29/2021 UY UYU
US Capital Funding IV L 1.25 51.35 12/1/2039 KY USD
US Capital Funding IV L 1.25 51.35 12/1/2039 KY USD
USJ Acucar e Alcool SA 9.87 67.5 11/9/2019 BR USD
USJ Acucar e Alcool SA 9.87 65.75 11/9/2019 BR USD
Venezuela Government In 9.25 48.75 5/7/2028 VE USD
Venezuela Government In 13.63 82.58 8/15/2018 VE USD
Venezuela Government In 9 51.75 5/7/2023 VE USD
Venezuela Government In 9.37 49 1/13/2034 VE USD
Venezuela Government In 7 71.88 12/1/2018 VE USD
Venezuela Government In 9.25 52 9/15/2027 VE USD
Venezuela Government In 7.65 46.38 4/21/2025 VE USD
Venezuela Government In 13.63 82.58 8/15/2018 VE USD
Venezuela Government In 7.75 61.75 10/13/2019 VE USD
Venezuela Government In 11.95 58.13 8/5/2031 VE USD
Venezuela Government In 6 53.75 12/9/2020 VE USD
Venezuela Government In 12.75 67 8/23/2022 VE USD
Venezuela Government In 7 44 3/31/2038 VE USD
Venezuela Government In 6.5 36.53 12/29/2036 VE USD
Venezuela Government In 8.25 47.75 10/13/2024 VE USD
Venezuela Government In 11.75 57.75 10/21/2026 VE USD
Venezuela Government TI 5.25 69.59 3/21/2019 VE USD
***********
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, Ivy B.
Magdadaro, and Peter A. Chapman, Editors.
Copyright 2017. 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 * * *