/raid1/www/Hosts/bankrupt/TCRLA_Public/170524.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, May 24, 2017, Vol. 18, No. 102
Headlines
A R G E N T I N A
BANCO DE LA CIUDAD: Moody's Assigns B3 Global Sr. Debt Rating
B E R M U D A
ARCHER LIMITED: Chapter 15 Case Summary
BERMUDA COMMERCIAL: Fitch Affirms BB+ LT IDR; Outlook Stable
B R A Z I L
BANCO ABC: Fitch Affirms 'BB+' IDR; Outlook Negative
BANCO DAYCOVAL: Fitch Affirms BB Long-Term Issuer Default Ratings
BANCO INDUSTRIAL: Fitch Affirms BB Long-Term IDRs
BRAZIL: S&P Puts 'BB' Sovereign Credit Rating on Watch Negative
CONCESSIONARIA RODOVIAS: Moody's Cuts Sr. Secured Rating to Caa1
JBS SA: Moody's Lowers Corporate Family Rating to Ba3
JBS SA: Fitch Lowers Issuer Default Ratings to 'BB'
USJ ACUCAR: Fitch Affirms 'CCC' Long-Term Issuer Default Ratings
* Brazil Probes Alleged Graft in World Cup Stadium Construction
* Fitch Affirms Ratings of Five Brazilian Midsized Banks
C A Y M A N I S L A N D S
ARES INVESTMENT: Creditors' Proofs of Debt Due June 8
ATMU INC: Court Enters Wind-Up Order
GORHAM FUNDAMENTAL: Commences Liquidation Proceedings
KALIS CAPITAL: Appoints Stower and Blake as Liquidators
MSREF VII JAPAN XIV: Commences Liquidation Proceedings
MSREF VII JAPAN XXIII: Commences Liquidation Proceedings
SHANGHAI (Z.J.): Creditors' Proofs of Debt Due May 29
TIMES FILMS: Commences Liquidation Proceedings
VINCI CORPORATE: Placed Under Voluntary Wind-Up
WORLDWIDE AGGRESSIVE: Commences Liquidation Proceedings
D O M I N I C A N R E P U B L I C
DOMINICAN REP: Bill for Law That Preserves Banking Secret Advances
DOMINICAN REPUBLIC: Haiti Again Bars Local Products
M E X I C O
GRUPO GICSA: Fitch Affirms and Withdraws BB- IDR
VALUE S.A.: Moody's Lowers Global Long-Term Issuer Rating to B1
P E R U
BANCO INTERNACIONAL: S&P Affirms 'BB+' Rating on Sub. Bonds
P U E R T O R I C O
PUERTO RICO: CCI Seeks Appointment of Unsecured Creditors Panel
T R I N I D A D & T O B A G O
TRINIDAD & TOBAGO: Gloomy Days Ahead for Economy
TRINIDAD & TOBAGO: Private Sector Not Up to The Task, IDB Says
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A R G E N T I N A
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BANCO DE LA CIUDAD: Moody's Assigns B3 Global Sr. Debt Rating
-------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo (MLA) has
assigned a B3 global local currency senior unsecured debt rating
and a Baa1.ar Argentina national scale senior debt rating to Banco
de la Ciudad de Buenos Aires S.A. Class X and Class XI inflation
linked ("UVA") senior unsecured debt issuances. The notes will be
due 2019 and 2022, respectively, and will be issued under Ciudad's
existing multi-currency senior unsecured program of $500 million,
and up to Ar$3,000 million total issued amount. The outlook on
Banco de la Ciudad de Buenos Aires' global senior unsecured debt
rating is positive, while in national scale is stable.
The following ratings were assigned to Banco de la Ciudad de
Buenos Aires's Class XI and Class XII local currency senior
unsecured notes:
Global local currency senior unsecured debt rating of B3; positive
outlook
Argentinean national scale local currency senior debt rating of
Baa1.ar; stable outlook
RATINGS RATIONALE
Ciudad's B3 global scale rating (GSR) is constrained by
Argentina's operating environment , which remains challenging
despite various market-friendly policy reforms implemented by the
new administration that are expected to result in a return to
economic growth and a continued decline in inflation this year.
These environmental challenges outweigh Ciudad's strong
fundamentals, including its good capitalization levels and strong
liquidity metrics.
Ciudad has a well-established franchise, particularly in the
retail banking segment, and a stable, low-cost funding profile,
supported by the bank's role as financial agent of the city of
Buenos Aires. As a government-owned bank, Ciudad is focused on
providing products and services to public servants of the city of
Buenos Aires, a strategy which generates recurring earnings,
sustained by the low risk loan portfolio that helps to reduce
credit costs, a lean operational structure. While the bank's
profitability improved in 2016, however, it remains considerably
lower than the Argentine system average; net income rose from 1.8%
of tangible assets in 2015 to 2.1% in 2016, while the system
average equaled 3%.
The bank exhibits a solid track record of good asset quality, with
nonperforming loans equal to just 1.64% of total loans as of year-
end 2016, below the already low 2% industry average. While loan
loss reserves were low at just 1.55% of total loans, this is due
to the bank's high share of lower-risk secured mortgage loans,
which accounted for 22.4% of its total loans.
The bank's disciplined risk management guidelines and moderate
capitalization, with tangible common equity equal to 11.2% of
adjusted risk-weighted assets as of year-end 2016, positions it
well to support future portfolio expansion in a scenario of a
gradual economic recovery in 2017 and 2018.
The Baa1.ar national scale local-currency deposit and debt ratings
equal the highest NSR assigned to any domestically-owned Argentine
bank and reflect the relative strength of Ciudad when compared to
other B3 rated local banks.
While the country's operating environment remains challenging, the
positive outlook on the bank's GSR reflects the expected impact of
market-friendly policy reforms implemented in by the new
administration, which are expected to result in a return to
economic growth and a continued decline in inflation this year. In
turn, this will create new business opportunities for Ciudad that
will ease its transition into a more competitive, market-driven
operating environment and help mitigate an expected drop in
lending rates and return on securities investments and rising
credit costs.
Notwithstanding the positive outlook on the GSR, the outlook on
the national scale rating remains stable to reflect the likelihood
that the correspondence between Argentine NSRs and GSRs will be
recalibrated if and when the sovereign is upgraded such that most
GSRs will correspond to lower Argentine NSRs than is currently the
case. Consequently, even if the bank's GSR is upgraded by MIS, the
NSR is not likely to be affected.
WHAT COULD CHANGE THE RATING UP/DOWN
An upgrade of the Argentine sovereign and a corresponding increase
in Argentina's debt and deposit ceilings would put upward pressure
on the bank's GSRs, provided the bank continue to demonstrate
sound operating performance. Conversely, a downgrade of the
Argentine sovereign could put downward pressure on the bank's
GSRs, but this is unlikely at this time given Argentina's positive
outlook.
As Ciudad's Baa1.ar NSR is the already the highest of the three
NSR categories in Argentina that correspond to its B3 GSR assigned
by MIS, upward pressure on the NSR is unlikely at this time. The
NSR could be downgraded if the bank experiences a significant
deterioration in its financial fundamentals without a
corresponding deterioration in the government of Argentina's
creditworthiness.
The principal methodology used in these ratings was Banks
published in January 2016.
Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable with
the full universe of Moody's rated entities, but only with NSRs
for other rated debt issues and issuers within the same country.
NSRs are designated by a ".nn" country modifier signifying the
relevant country, as in ".za" for South Africa. For further
information on Moody's approach to national scale credit ratings,
please refer to Moody's Credit rating Methodology published in May
2016 entitled "Mapping National Scale Ratings from Global Scale
Ratings". While NSRs have no inherent absolute meaning in terms of
default risk or expected loss, a historical probability of default
consistent with a given NSR can be inferred from the GSR to which
it maps back at that particular point in time. For information on
the historical default rates associated with different global
scale rating categories over different investment horizons.
Banco de la Ciudad de Buenos Aires is headquartered in Buenos
Aires, with assets of ARS78.3 billion ($4.95 billion) and equity
of ARS7.59 billion ($479.6 million) as of December 31, 2016.
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B E R M U D A
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ARCHER LIMITED: Chapter 15 Case Summary
---------------------------------------
Chapter 15 Debtor: Archer Limited
4th Floor, Par-la-Velle Place
14, Par-la-Ville Road
Hamilton HM08
Bermuda
Type of Business: Archer -- http://www.archerwell.com-- is a
global oil services company with a heritage that
stretches back over 40 years. With a strong
focus on safety and delivering the highest
quality products and services, Archer operates
in 40 locations over 19 countries providing
drilling services, well integrity &
intervention, plug & abandonment and
decommissioning to its upstream oil and gas
clients. Archer is publicly traded on the Oslo
Stock Exchange under the ticker ARCHER. The
main operations currently take place in the
major basins within Europe, North and South
America and the company is expanding rapidly
throughout the Middle East, Asia Pacific and
West Africa.
Foreign Proceeding: The Debtor applied to the Bermuda Court on
May 3, 2017, for an order directing it to
convene a meeting of creditors to vote upon a
scheme of arrangement.
Chapter 15 Case No.: 17-33103
Chapter 15 Petition Date: May 19, 2017
Court: United States Bankruptcy Court
Southern District of Texas (Houston)
Judge: Hon. Jeff Bohm
Foreign Representative: Maxime L. Bouthillette
President - Western Hemisphere, General
Counsel, and Executive Vice President of
Archer Limited
Debtor's U.S. Counsel: Timothy Alvin Davidson, II, Esq.
ANDREWS KURTH KENYON LLP
600 Travis, Suite 4200
Houston, TX 77002
Tel: 713-220-3810
Fax: 713-220-4285
E-mail: TadDavidson@andrewskurth.com
- and -
Ashley L. Harper, Esq.
ANDREWS KURTH KENYON LLP
600 Travis, Suite 4200
Houston, TX 77002
Tel: 713-220-4013
E-mail: ashleyharper@andrewskurth.com
- and -
Joseph Peak Rovira, Esq.
ANDREWS KURTH KENYON LLP
600 Travis, Suite 4200
Houston, TX 77007
Tel: 713-220-4609
E-mail: josephrovira@andrewskurth.com
Debtor's Bermuda Counsel: Andrew Alexander Martin, Esq.
MJM LIMITED
4 Burnaby Street
Hamilton, Bermuda
Estimated Assets: Not Indicated
Estimated Debt: Not Indicated
BERMUDA COMMERCIAL: Fitch Affirms BB+ LT IDR; Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed the Long- and Short-Term Issuer Default
Ratings (IDRs) of Bermuda Commercial Bank (BCB) at 'BB+/B'. The
Rating Outlook remains Stable.
KEY RATING DRIVERS
IDRs and VR
The affirmation reflects the company's good capital levels and
high on-balance sheet liquidity that provides necessary offset for
the bank's weak earnings profile, concentrated business model and
deposit base.
Capital levels remain strong and provide a necessary buffer given
the bank's concentrated business model that is focused on deriving
returns primarily from asset based lending to consumers and small
businesses, as well as investing in high yielding corporate bonds,
equities and other risky financial instruments. As of fiscal year-
end 2016 (FYE16), BCB had a Fitch Core Capital Ratio of 20.8%
which is among the highest in Fitch's U.S. rated universe.
Leverage is also low with a tangible common equity ratio of 14.8%
at FYE16; a rating strength.
BCB reported a loss of $6.6 million for FY16, primarily as a
result of weak P&L in the externally managed investment portfolio.
However, BCB has since engaged in efforts to improve the quality
of the investment portfolio. At FYE16, roughly 55% of the
portfolio consisted of high rated-government bonds and short-term
high quality liquid assets (HQLA). This compares to 44% at FYE15.
As a result, risk-based capital ratios remained stable over the
year despite the loss reported in FY16. The rating affirmation
incorporates this improvement in asset quality which, if
maintained, is expected to improve earnings stability.
Until recently, BCB's credit risk originated primarily from the
investment portfolio. As a result, loan impairments have
historically been low. As of FYE16, BCB's impaired loans comprised
4.2% of total loans, with the vast majority of impaired loans held
by the recently acquired Private and Commercial Finance Group
(PCFG). PCFG is a consumer and small business finance company
based in the U.K.
Fitch notes that over the last fiscal year, BCB has adjusted its
business model to become more lending focused and less reliant on
the investment portfolio for revenue. This has resulted in a
decline of the level of interest income, dividends and potential
gain-on-sale revenue. However, as the bank repositions the
business and grows the PCFG loan portfolio, Fitch expects earnings
to remain positive but low. Furthermore, Fitch expects earnings to
follow an improving and more stable trend over the longer term
given BCB's higher risk appetite.
BCB's on-balance sheet liquidity remains strong with cash and HQLA
representing 42% of total assets as of FYE16, and a very low loan-
to-deposit ratio of 47%. Nevertheless, Fitch believes BCB's strong
balance sheet liquidity is necessary given BCB's corporate deposit
concentrations that puts the bank at risk of large deposit
outflows, especially during times of stress.
From a loss standpoint, loan performance at PCFG continues to
improve and remains satisfactory on a risk-adjusted basis. The
charge-off rate dropped to 1.2% in FY16, the lowest it has been in
recent years. Fitch views PCFG's contribution to BCB's overall
business as credit neutral given the greater stability it brings
to earnings relative to the more volatile investment portfolio.
Furthermore, Fitch expects that asset quality will continue to
improve as PCFG plans to originate higher quality loans following
its recent grant of a banking license in the U.K. However, this is
dependent on PCFG obtaining approval to begin taking deposits
(expected mid-to-late 2017) which will drive cost of funds lower.
SUPPORT RATING AND SUPPORT RATING FLOOR
BCB's Support Rating of '5' and Support Rating Floor of 'NF'
reflect Fitch views that BCB is not systemically important in the
local Bermuda market and, therefore, Fitch believes the
probability of support is unlikely. IDRs and VRs do not
incorporate any support for BCB.
RATING SENSITIVITIES
IDRs and VR
BCB's ratings are firmly situated at current levels and ratings
upside potential is currently limited.
Over the longer term, BCB could garner positive ratings momentum
should it significantly improve its deposit composition and
franchise, stabilize and diversify earnings and maintain solid
asset quality in both its loan and investment portfolios.
Negative ratings pressure could develop should the bank continue
to report a net loss or the banks is unable to achieve earnings
improvement and stability.
Additionally, should BCB manage capital aggressively or if the
quality of the investment or loan portfolio weakens materially,
negative ratings momentum could also develop. Additionally,
material losses associated with derivative positions will also
cause negative ratings pressure.
Fitch has affirmed the following ratings:
Bermuda Commercial Bank
-- Long-Term IDR at 'BB+'; Outlook Stable;
-- Short-Term IDR at 'B';
-- Viability Rating at 'bb+'
-- Support Rating at '5';
-- Support Floor at 'NF'.
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B R A Z I L
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BANCO ABC: Fitch Affirms 'BB+' IDR; Outlook Negative
----------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) of Banco ABC Brasil S.A.
(ABCBr) at 'BB+'. The Rating Outlook is Negative. Fitch also
affirmed the bank's other ratings.
KEY RATING DRIVERS
IDRS, NATIONAL RATINGS
The bank's IDRs are above ABCBr's Viability Rating (VR), National
and senior debt ratings which reflects the expected institutional
support that Fitch believes it would receive from its parent, Arab
Baking Corporation B.S.C. (Long-Term IDR 'BBB-'/Stable Outlook).
ABCBr's VR of 'bb' continues to be driven by the bank's credit
metrics that reflect a low risk profile, stable profitability,
stronger capitalization and liquidity and sound risk management.
The bank's profitability during 2016 and during the first three
months of 2017 remained satisfactory, despite the challenges of
the operating environment.
The Negative Outlook reflects the Negative outlook on the
Sovereign Rating as the bank is closely linked with Brazil's
operating environment.
The bank's credit metrics were aided in part by ABCBr's relatively
low funding costs, its strategic focus and the lower appetite of
some of its other competitors. The bank's credit portfolios
continue to be conservatively matched to its funding, providing
for comfortable levels of liquidity. ABCBr's ratings also reflect
the well-positioned franchise and its overall sound financial
profile as a wholesale-funded bank.
The bank operates under a well-defined strategy of providing
credit and other banking services mainly to the large corporate
segment (annual revenues over BRL800 million) and also corporates
(annual revenues between BRL100 million and BRL800 million).
ABCBr's rating remains constrained by its parent's rating and
ABCBR's own company profile, as its franchise does not compare as
well to the larger retail banks in Brazil in terms of credit and
funding diversification. This results in, among other things, a
lower level of low-cost, diversified deposit funding. However,
despite this, the bank maintains a very strong liquidity position
which enables lower funding costs.
The bank has performed consistently despite the difficult and
still uncertain operating environment of the last four years.
During the last 15 months ending March 31, 2017, the bank
continued to focus on the business segments that it knows well.
However, management restricted its on-balance-sheet loan portfolio
exposure and growth, especially reducing the amount of credit to
its mid-sized company segment, while at the same time, increasing
the amount of credit offered through guarantees - mainly for the
corporate segment. Thus the bank was able to maintain a
satisfactory level of revenues while lowering its level of risk.
As of March 31, 2017, ROAE and ROAA were 13.3% and 1.5%,
respectively, slightly lower than the 15.0% and 1.7% ratios
reported at Dec. 31, 2016.
The bank also continues to benefit from reduced levels of
competition while maintaining its conservative underwriting, which
is reflected in its low level of non-performing loans (NPLs). As
of Dec. 31, 2016, ABCBr reported a low level of NPLs over 90 days
(E-H) of 0.7% even though its impaired loan ratio (D-H) saw a rise
to 5.9% from 4.5% a year earlier. The over 90 day ratio compares
well to the banking system average. ABCBr's smaller ratio is a
reflection of the focus on lower-risk companies and its
conservative underwriting. The bank's loan loss reserve coverage
ratio on E-H loans remained strong at 3.7%. During the first
quarter of 2017 (1Q17), the impaired loans ratio improved slightly
to 5.8% while the over 90-day NPL ratio remained flat at 0.7%,
however, coverage improved slightly to 3.9%. While Fitch expects
to see continued challenges with asset quality in 2017, it will be
due mostly to the continued weak operating environment. Fitch base
case is that any deterioration should be easily absorbed by the
comfortable level of ABCBr's loan loss reserves.
The bank continues to focus on ensuring a stable liquidity
position through conservative asset liability management policies
to mitigate gaps through hedging and funding diversification.
Strategies include the sourcing of longer-term funding which
includes the use of longer-term instruments.
ABCBr continues to maintain satisfactory capital ratios. At Dec.
31, 2016, the Fitch core ratio (FCC) had improved significantly to
nearly 14.2% (12.6% a year earlier). At March 31, 2017, the FCC
ratio improved further to 15.3% given the continued internal
capital generation and the low pace of risk asset growth during
the quarter. The bank already well-exceeds the Central Bank
regulatory minimum total capital requirement just by means of its
1Q17 Tier I regulatory capital ratio of 14.3%. Fitch does not
expect that ABCbr will have any difficulty adjusting to the
upcoming implementation of Basel III according to the Brazilian
Central Bank's timetable. ABCBr had a total Regulatory Capital
ratio of 15.6% at the end of 1Q17.
SUPPORT RATING
The bank's Support Rating of '3' reflects the expected support
from its parent, Arab Banking Corporation, ('BBB-/Outlook Stable),
which is based in Bahrain. Given the subsidiary's relevant
contribution to the parent's revenues and the brand, Fitch
believes that in the unlikely event it is needed, the Brazilian
subsidiary would likely receive support from its majority
shareholder.
RATING SENSITIVITIES
IDRS, VR
Positive Rating Action: ABCbr's VR and its IDRs are constrained by
Brazil's operating environment; as a result, an upgrade of these
ratings is very unlikely in the near future. The Outlook of the
long-term IDRs could be revised to Stable if Fitch makes a similar
revision of its Outlook for the banking system's operating
environment, which in turn is influenced by the Negative Outlook
on the sovereign rating.
Negative Rating Action: Although unlikely in Fitch's view, a
significant deterioration of ABCBr's asset quality that results in
credit costs that severely limit its profitability and ability to
grow its capital, combined with a reduction in its liquidity or
capitalization position could lead towards a downgrade of the
bank's ratings. An unlikely decline in the FCC-to-risk-weighted
assets ratio below 10%, along with a reduction in operating
income-to-average asset ratio below 1.5% could result in a ratings
review. ABCbr's ratings could also be impacted by a further
deterioration in the Sovereign rating, as the bank is closely
linked with Brazil's operating environment.
SUPPORT RATING
The bank's support rating could be impacted by a deterioration of
Arab Banking Corporation's rating as the support rating is
potentially sensitive to any change in assumptions around the
propensity or ability of Arab Banking Corporation to provide
timely support to the bank.
Fitch has affirmed the following ratings:
Banco ABC Brasil:
-- Long-Term Foreign and Local Currency IDRs at 'BB+', Outlook
Negative;
-- Short-Term Foreign and Local Currency IDRs at 'B';
-- Viability Rating at 'bb';
-- Long-Term National rating at 'AA+(bra)', Outlook Stable;
-- Short-Term National rating at 'F1+(bra)';
-- Support Rating at '3'.
BANCO DAYCOVAL: Fitch Affirms BB Long-Term Issuer Default Ratings
-----------------------------------------------------------------
Fitch Ratings has affirmed Banco Daycoval S.A.'s Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB'.
The Rating Outlook is Negative. Daycoval's IDRs are driven by its
Viability Rating (VR), which Fitch also affirmed at 'bb'. The
Negative Outlook of the IDRs mirrors the Negative Outlook assigned
to Brazil's sovereign rating ('BB'/Outlook Negative). Fitch also
affirmed Daycoval's Long-Term National Rating at 'AA(bra)' with a
Stable Outlook.
KEY RATING DRIVERS - VR, IDRS, NATIONAL RATINGS
The affirmation of Daycoval's VR, IDRs and National Ratings
reflect the bank's consistent and solid performance track record
maintained through the cycles, business diversification that is
relatively higher than other midsized banks in the region, and
comfortable capitalization. It also reflects the bank's
conservative asset and liability management and strong liquidity,
which would mitigate risks arising from a potential volatility in
its wholesale based funding structure. Daycoval and its peers
remain under pressure from the still ongoing operating environment
challenges that could exacerbate downside risks to asset quality
and profitability in the remainder of 2017.
Daycoval's main focus remains SME lending and payroll deductible
loans, which made up 58% and 37% of total loans, respectively, as
of March 2017. The bank's asset quality indicators have remained
largely stable through the cycles, including during the 2015-16
recession, when most sectors were significantly hit resulting in a
very large increase in companies seeking bankruptcy protection.
Impaired loans (those classified in the D-H range of the central
bank's risk scale) increased to 9% as March 2017 (7.5% in 2016 and
9.5% in 2015), while non-performing loans (NPLs) above 90 days
remained very low at 1.1% in the same period (0.7% in 2016 and
0.9% in 2015), and loan impairment charges (in proportion to gross
loans) remained broadly stable at 2.40% (3.5% in 2016 and 4.3% in
2015).
Daycoval continued to post solid profitability through March 2017,
despite the significantly challenging operating environment
prevailing since the end of 2014. Its bottom-line profitability
ratios are higher than the average of similarly rated peers, due
to its higher net interest margin that comfortably offsets its
relatively higher impairment charges. Fitch expects the bank's
solid performance to continue in 2017 and operating profit/risk
weighted assets (RWA) ratio not to deviate significantly from the
3.3% average observed in 2014-2016. As of March 2017, operating
profit/RWA rose to a high 4.6% (3.5% in 2016 and 2015) as a result
of a large drop in loan impairment charges, which equaled 31% of
pre-impairment operating profits (44% in 2016 and 48% in 2015).
Daycoval has a strong capital structure that is entirely made up
of Core Equity Tier 1 capital. The effect of the gradual
implementation of Basel III requirements has been immaterial. The
bank's Fitch core capital (FCC) ratio remained broadly stable at
17.60% between 2012 and 2015, and then dropped to 15.70% in 2016.
This was mainly a result of the controlling shareholders'
acquisition of minority shareholders' shares in the bank and
cancellation of a small part of the shares that led to a decline
in equity by BRL367 million, offsetting a large part of the net
income of the year of BRL407 million. Dividend payout remained
unchanged from previous years. As of March 2017, FCC ratio
recovered to 17.00% as a result of robust internal capital
generation, and decline in outstanding loans. Fitch expects, FCC
ratio to remain adequate over the one- to two-year time horizon,
due to robust internal capital generation and moderate asset
growth.
Daycoval has a wholesale based but highly stable and relatively
diversified funding base. As of March 2017, local funding (mainly
deposits and financial bills (letras financeiras)) made up 76% of
total funding. Daycoval's liquidity has historically been very
comfortable, and free liquid assets increased further in the first
quarter of 2017 reaching BRL5.4 billion (BRL3.1 billion in 2016).
This was due to the repayment of loans, as well as a new USD275
million syndicated loan issue led by International Finance
Corporation (IFC). In 2016, liquidity was also boosted by the
fifth financial bill issuance of BRL400 million in the last
quarter. The bank's free liquid assets corresponded to 35% and 48%
of total and local funding, respectively, as of March 2017.
Daycoval's asset and liability management is also adequate. As of
March 2017, the average maturity of the loan portfolio was 305
days, compared to 414 days of the funding base and there was a
significant positive gap of BRL2.8 billion in the first three
months, without considering the liquid assets.
KEY RATING DRIVERS - SUPPORT RATING, SUPPORT RATING FLOOR
Daycoval's Support Rating and Support Rating Floor were affirmed
at '5' and 'NF', respectively, reflecting the bank's low systemic
importance and Fitch's view that external support, should the need
arise, cannot be relied upon.
RATING SENSITIVITIES
VR, IDRS, NATIONAL RATINGS
Changes in sovereign ratings and outlook: Daycoval's VR, and
consequently IDRs, remain constrained by the sovereign ratings,
which currently have a Negative Outlook. A further sovereign
rating downgrade would result in a similar action on Daycoval's VR
and long-term IDRs. Likewise, revision of the sovereign Outlook
would lead to a similar revision for Daycoval's long-term IDRs.
Deterioration in profitability and capitalization: Daycoval's
IDRs, VR and National Ratings would be negatively affected by a
severe deterioration in earnings that lead to a fall in the
operating profit/RWA ratio to below 2% and/or a decline in its FCC
ratio to less than 13%.
SUPPORT RATING, SUPPORT RATING FLOOR
A potential upgrade of Daycoval's Support Rating and Support
Rating Floor is unlikely in the foreseeable future, reflecting the
low probability that the bank's systemic importance would increase
materially.
Fitch has affirmed Daycoval's ratings:
-- Long-Term Foreign- and Local-Currency IDRs at 'BB'; Outlook
Negative;
-- Short-Term Foreign- and Local-Currency IDRs at 'B';
-- Viability Rating at 'bb';
-- Long-Term National Rating at 'AA(bra)'; Outlook Stable;
-- Short-Term National Rating at 'F1+(bra)';
-- Support Rating at '5';
-- Support Rating Floor at 'NF';
-- Long-Term Rating of senior unsecured USD notes due 2019 at
'BB';
-- Long-Term National Rating of senior unsecured BRL bonds
(letras financeiras) due 2017 at 'AA(bra)'.
BANCO INDUSTRIAL: Fitch Affirms BB Long-Term IDRs
-------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) of Banco Industrial do
Brasil SA (BIB) at 'BB'. The IDR Outlook is Negative. Fitch also
affirmed the bank's National long-term rating at 'AA-(bra)', as
well as its other ratings. The National rating Outlook is Stable.
KEY RATING DRIVERS
The affirmation of the IDRs of the BIB follows the affirmation of
the bank's Viability Rating (VR) at 'bb'. The VR considers the
bank's experience and continuous focus on small- and medium-sized
enterprises (SMEs), a segment in which the bank has managed to
operate with relatively low losses even considering Brazil's
current challenging operating environment. The ratings also take
into account the institution's adequate financial performance,
which is above its peers' average, notably evidenced by
maintenance of the good asset quality, liquidity and
capitalization throughout different cycles of the Brazilian
economy. On the other hand, the ratings are limited by the BIB's
size and by concentrations of assets and liabilities inherent to
its business model.
The Negative Outlook for the IDRs reflects the strong influence of
a more challenging operating environment on the main indicators of
credit quality and profitability of medium-sized banks such as
BIB.
BIB has a stable business model, characterized by the maintenance
of low leverage, strictness and conservatism in terms of risk
appetite, and retaining its high liquidity position. Generally,
BIB avoids positioning itself as the first-choice bank of its
clients, considering its size. The bank has been relatively
successful in finding better structures for SME lending
operations, with additions of new guarantees in order to reduce
risks in a more challenging economic environment, and seized
opportunities to buy its portfolio of companies with low risk
profile. BIB's strategic objectives have been consistent over the
years; 89% of the total portfolio is in the SME segment and only
11% in payroll loans in 2016 (14% in 2015), a segment in which it
mainly operates in loan renewals, with no plans to expand the
portfolio into new customers.
In Fitch's view, BIB's underwriting standards are sound, with
credit the main risk to operations. BIB has an adequate risk
control structure, reflected by its good asset quality indicators.
Even with the more challenging economic environment, BIB has
maintained credit quality indicators in the past three years. The
index of loans with arrears of more than 90 days was only 2.6% in
December 2016 and 1.0 % of the total in 2015 and 2014. The
concentration of the bank's credit portfolio remained high, but
controlled: the 20 largest clients accounted for 26% in 2016
versus around 30% of the portfolio in 2015 and 2014. Credits
classified in "D-H" categories represented 1.1% in 2016 (3.4% in
2015 and 1.8% in 2014) - a better result than the average of its
peers.
BIB reported more favorable results even in the face of a weak
macroeconomic performance scenario. This was because financing
costs improved, and competition in the SME segment was more
moderate, which contributed to the generation of good spreads.
Fitch expects BIB's profitability to remain adequate in the coming
years.
BIB has a comfortable capital base, which is reflected in its FCC
index (15.7% in 2016, 16.0% in 2015 and 16.3% in 2014). In Fitch's
view, the bank has good-quality capital, basically composed of
Tier I capital. With regard to funding, BIB has diversified its
base since it has been able to access foreign trade lines with
multilateral agencies, but still maintains term deposits as its
main source of funding, with competitive costs and terms. The bank
kept a comfortable liquidity position in the first quarter of
2017.
RATING SENSITIVITIES
BIB's VR and its IDRs are constrained by Brazil's operating
environment; as a result, an upgrade of these ratings is very
unlikely in the near future. The Outlook of the Long-Term IDRs
could be revised to Stable when/if Fitch makes a similar revision
to its Outlook for the banking system's operating environment,
which in turn is highly influenced by the sovereign rating
outlook, currently Negative.
Ratings may be negatively affected by a deterioration in the
quality of the bank's assets (i.e. NPLs more than 90 days above
5.0%) and consequent decline in its performance (operating ROAA
below 1.0%).
Fitch has affirmed the following ratings:
-- Long-term Foreign and Local Currency IDRs at 'BB'; Negative
Outlook;
-- Short-term Foreign and Local Currency IDR at 'B';
-- Viability Rating at 'bb';
-- Support Rating at '5';
-- Support Rating Floor at 'NF';
-- National Long-Term Rating at 'AA-(bra)'; Stable Outlook;
-- National Short-Term Rating at 'F1+ (bra)'.
BRAZIL: S&P Puts 'BB' Sovereign Credit Rating on Watch Negative
---------------------------------------------------------------
S&P Global Ratings placed its 'BB' long-term foreign and local
currency sovereign credit ratings on the Federative Republic of
Brazil on CreditWatch with negative implications. S&P also
affirmed the short-term foreign and local currency ratings at 'B'.
The transfer and convertibility assessment is unchanged at 'BBB-'.
In addition, S&P placed the 'brAA-' national scale rating on
CreditWatch with negative implications.
RATIONALE
The political dynamics in Brazil have worsened following recent
allegations of corruption against President Michel Temer during
the course of the ongoing Lavo Jato investigations. The former
negative outlook on the long-term rating, which S&P affirmed in
February 2017, reflected the risk that the government's strategy
to stabilize the economy and its fiscal position could be
undermined by fluid political dynamics following three years of
recession and by potential fallout from corruption investigations.
However, should these recent allegations against President Temer
be corroborated, the president's ability to remain in office and
govern effectively would likely become untenable. This could set
in motion a transition process that has not been tested before.
Near-term uncertainties around President Temer's political
viability and the potential for a prolonged or disruptive
transition process have heightened downside risk to the rating.
Governability has already been compromised because the president
has lost some cross-party support, and a scheduled upcoming vote
on pension reform is now likely to be postponed. An extended
period of policy paralysis amid a weakened president, a long
transition process, or the absence of a coherent and well-
articulated political support base to advance reform following a
quick political transition would likely weigh on S&P's view of
Brazil's institutional and governance effectiveness. The negative
CreditWatch listing signals the risk of a downgrade over the next
three months under such a scenario.
S&P's base case has been one of a prolonged economic adjustment
process with a slow correction in fiscal policy amid modest growth
this year and subdued growth over the next several years.
However, it also assumed ongoing strong policy articulation from
the Temer Administration. Indeed, the Administration leveraged
the strength of its Congressional base and economic team to pass a
constitutional amendment to cap spending growth over the coming
decade, the first phase of labor reform, a reopening of the oil
sector to private investment, and a fiscal recovery plan for
highly indebted, cash-strapped states willing to undertake
spending reform. In addition, it has articulated a microeconomic
policy agenda besides trying to stem macroeconomic deterioration.
However, additional measures are needed sooner rather than later.
The government was close to advancing pension reform in the House
in the coming weeks. Even in the best of circumstances, there is
a limited window to advance legislation ahead of the October 2018
presidential and legislative elections, which in and of itself
could generate some policy uncertainty owing to the prevalence of
discredited traditional politicians and setting the stage for
competitive "outsider" candidates. Given the magnitude of the
fiscal and economic challenges, in S&P's view, further signs of
delay in approving meaningful corrective policy steps would be
consistent with a lesser ability by Brazil's political class to
advance policies to support economic prosperity and sustainable
fiscal policies.
Brazil's fiscal trajectory is one of continued primary deficits
and a high level of debt. In 2017, S&P expects a general
government deficit of 8.8% of GDP to decline to 6.6% by 2019.
This is consistent with a general government primary deficit that
averages 1.7% in 2017-2019. The slightly larger change in general
government debt to GDP vis-a-vis the headline deficit incorporates
some fluctuations in central bank repurchase operations and an end
to off-budget (below-the-line) spending. S&P expects general
government debt, net of liquid assets (not including international
reserves), to rise to 69% of GDP by 2019 from 52% in 2016. S&P
expects interest to revenues to average 18% during 2017-2019 given
still-high interest rates despite expected monetary easing. S&P
assess contingent liabilities from the financial sector and all
Brazilian nonfinancial public enterprises (including Petrobras) as
limited.
The depth and persistence of the contraction in real GDP is
pronounced. With per capita GDP expected at US$9,906 for 2017
following two years of GDP contraction, Brazil's growth prospects
are, in S&P's opinion, below that of other countries at a similar
stage of development. S&P expects growth of 0.5% in 2017 and an
average of 2.1% over the next several years. The risks are now
tilted toward even lower growth amid heightened political
uncertainties of the spillover effects associated with the
corruption investigations and reversal of some improvement in
private-sector sentiment. With the high level of indebtedness of
households, key corporations, and the government, S&P expects a
slow pickup in growth. Continued timely efforts to restore a
macroeconomic balance are critical, as is advancing microeconomic
reform to support investment and growth.
Inflation dynamics, however, continue to be favorable. S&P
expects consumer price inflation to decline further to 4.2% at
year-end 2017, from 6.3% and 10.7% at year-end 2016 and 2015,
respectively. Besides the large negative output gap, the
credibility of the team at the central bank has re-anchored
inflation expectations.
S&P expects the current account deficit to average about 1.8% of
GDP in 2017-2019 and be fully financed by foreign direct
investment (FDI). S&P do, however, expects narrow net external
debt to increase and average 9% of current account receipts in
2017-2019 as the private sector taps global markets and reserve
accumulation slows amid increased global market uncertainty. S&P
calculates its estimates of external debt on a residency basis.
They include nonresident holdings of locally issued real-
denominated government debt estimated at about US$132 billion as
of December 2016 (about 56% of current account receipts), down
from the peak of US$153 billion in 2014. This reflects
depreciation of the real since that time. (At year-end 2016, these
holdings were still higher in real terms vis-a-vis 2014, though
lower than in 2015.)
S&P's external debt data, however, do not include debt of
approximately 40% of current account receipts raised offshore by
Petrobras and transferred in the form of FDI to the head office.
S&P do include it in Brazil's net external liability position of
306% of current account receipts in 2016. This ratio is one of
the largest among the sovereigns S&P rates, suggesting that there
are greater risks to Brazil's external accounts should market
conditions deteriorate than it would appear looking at debt
indicators alone. The Brazilian real is an actively traded
currency, and Brazil has lower external financing needs compared
with its current account receipts and a high level of
international reserves relative to some of its peers.
S&P's 'BB' local currency rating is the same as the foreign
currency rating. This results from the weaknesses in Brazil's
fiscal position, which include high deficits and a high debt and
interest burden that impede policy flexibility.
CREDITWATCH
The CreditWatch listing with negative implications reflects the
risk that S&P could lower the ratings over the next three months
amid more stressed political dynamics. A weakened President
Temer, a long or disruptive transition process, or a caretaker
president with diminished ability and willingness to advance
reforms would likely further delay economic recovery and the
passage of proactive fiscal and economic policies and could lead
to a downgrade.
S&P could affirm the ratings under a scenario where the uptick in
political uncertainties is short-lived, and under an
Administration and economic team that has sufficient support in
Congress to continue advancing corrective and timely policy
measures to stanch fiscal deterioration and strengthen GDP growth
prospects.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee agreed that key rating factors were unchanged.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
RATINGS LIST
Ratings Placed on CreditWatch
To From
Brazil (Federative Republic of)
Sovereign Credit Rating BB/Watch Neg/B BB/Neg./B
Brazil National Scale brAA-/Watch Neg/-- brAA-/Neg./--
Ratings Affirmed
Brazil (Federative Republic of)
Senior Unsecured BB
Senior Unsecured brAA-
Transfer & Convertibility Assessment BBB-
CONCESSIONARIA RODOVIAS: Moody's Cuts Sr. Secured Rating to Caa1
----------------------------------------------------------------
Moody's America Latina has downgraded Concessionaria Rodovias do
Tiete S.A.'s senior secured ratings to Caa1/B3.br from B2/Ba2.br
on the global and the Brazilian national scales (NSR)
respectively. At the same time, Moody's assigned Caa1/B3.br
corporate family ratings (CFR) to Rodovias do Tiete and withdrew
its B2/Ba2.br issuer ratings. The outlook remains negative.
RATINGS RATIONALE
The downgrade reflects Rodovias do Tiete increasing liquidity
pressures resulting from the company's growing amortization
schedule and high mandatory capital investments of BRL 400-500
million within the next three years. The company's liquidity
pressures are exacerbated by Moody's perception of a much weaker
support from Rodovias do Tiete's shareholders. The company's high
leverage structure and weakening financial policy could result in
a debt restructuring in the short to medium term.
The uncertainties around the outcome of covenant waiver
negotiations with creditors as well as the ongoing renegotiation
of the investment plan with the State of Sao Paulo's Regulatory
Agency (ARTESP) also weigh on the downgrade. Moody's believes,
however, that Rodovias do Tiete's management remains fully
committed to finding a solution to its unsustainable capital
structure and is pursuing options to improve its liquidity that
could reverse the downward trend embedded in the negative outlook.
What Could Change the Rating - Up /Down
In light of the latest rating action and the negative outlook, an
upgrade of the ratings is unlikely in the near term. While
unexpected, if the company is able to significantly improve its
debt/capital position without inferring any losses to the
creditors, the ratings could be reviewed. A significant
improvement in the company's liquidity and leverage levels that
offset the negative cash flows from the debt amortization schedule
and the required capex, could drive an outlook stabilization.
Further downward pressure on the ratings would arise from the
deterioration in the company's liquidity position or from any
negative outcome in the negotiation with creditors that results in
deferral or non-payment of any interest or debt amortization.
Under such scenario, Moody's would assess the expected loss for
creditors in a potential debt restructuring. The ratings could be
further downgraded if there are material delays or costs overruns
on the capital expenditure program that negatively impact revenues
or lead to non-compliance with ARTESP's schedule. A rapid or
significant downturn in the company's overall credit quality and
metrics so FFO to Debt ratio stays below 5% on a sustainable basis
or DSCR below 1x would also weigh on the ratings.
Rodovias do Tiete holds a 30-year toll road concession granted by
ARTESP in April 2009 to expand, operate and maintain a 415 km toll
road system composed by five roads located in the State of Sao
Paulo: SP-101 (Rodovia Jornalista Francisco Aguirra Proenáa), SP-
113 (Rodovia Dr. Joao Jose Rodrigues), SP-308 (Rodovia Comendador
Mario Dedini), SP-300 (Rodovia Marechal Rondon) e SP-209 (Rodovia
Prof. Joao Hipolito Martins). The service area includes 25
municipalities, where the largest cities are Bauru, Campinas, and
Piracicaba, with a diversified traffic profile, mainly composed by
agricultural, industries and commuters. Heavy traffic accounts for
55% of total equivalent vehicles (VEQ) with light vehicles
representing the remaining 45%.
In the FY2016, the company registered Moody's- adjusted BRL 194
million Net Sales and EBITDA of BRL 158 million with total debt of
BRL1.4 billion. Rodovias do Tiete is owned by a joint venture of
Atlantia Bertin Concessoes S.A. (50%) and the Portuguese ASCENDI
International Holdings B.V. (50%). Atlantia-Bertin Concessoes is a
joint venture between Italian toll-road operator Atlantia S.P.A
(Baa2, negative) and Brazil's Grupo Bertin (not rated).
The principal methodology used in these ratings was Privately
Managed Toll Roads published in May 2014.
Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable with
the full universe of Moody's rated entities, but only with NSRs
for other rated debt issues and issuers within the same country.
NSRs are designated by a ".nn" country modifier signifying the
relevant country, as in ".za" for South Africa. For further
information on Moody's approach to national scale credit ratings,
please refer to Moody's Credit rating Methodology published in May
2016 entitled "Mapping National Scale Ratings from Global Scale
Ratings". While NSRs have no inherent absolute meaning in terms of
default risk or expected loss, a historical probability of default
consistent with a given NSR can be inferred from the GSR to which
it maps back at that particular point in time. For information on
the historical default rates associated with different global
scale rating categories over different investment horizons.
JBS SA: Moody's Lowers Corporate Family Rating to Ba3
-----------------------------------------------------
Moody's Investors Service has downgraded by one notch the ratings
of JBS S.A. and of its wholly-owned subsidiary JBS USA Lux S.A.
("JBS USA") and placed the ratings of both companies under review
for further downgrade. The rating downgrades include JBS S.A.'s
Corporate Family Rating to Ba3 from Ba2, JBS USA's senior secured
rating to Ba2 from Ba1, and JBS USA's senior unsecured rating to
Ba3 from Ba2. This action follows confirmation by JBS S.A. that
seven executives of the company and its controlling entity, J&F
Investimentos, entered into a plea bargain agreement with the
Federal Public Prosecutor's Office concerning allegations of
corruption.
The ratings downgrade reflects increased risks related to
potential future litigation cases, governance of the company, and
liquidity, on which there is currently limited visibility. These
risks, in addition to JBS S.A.'s high financial leverage,
warranted an immediate one-notch downgrade. The review process
will focus on obtaining further details about the disclosed
settlement along with information about any ongoing criminal
investigations, including potential fines, executives involved,
other possible liabilities and ramifications.
If liquidity deteriorates as a consequence of these developments,
Moody's could take further rating action prior to the final
conclusion of its review process. JBS's liquidity profile is
currently adequate. The company's BRL10.7 billion of consolidated
cash combined with BRL4.3 billion (USD1.6 billion) in lines under
revolving credit facilities provides 0.87x coverage of its BRL18.1
billion of short-term debt as of March 2017. Around 75% of this
short-term debt relates to trade-finance loans that typically
mature in six to 12 months, and banks tend to renew them readily
based on future exports.
On May 18, 2017 JBS S.A. announced that seven executives of the
company and its controlling entity, J&F Investimentos, entered
into a plea bargain agreement with the Federal Public Prosecutor's
Office, which was ratified by the Supreme Court. The agreement
establishes the payment of a fine totaling R$225 million by these
executives, as well as their cooperation with the Public
Prosecutor's Office regarding all matters disclosed to the
authorities, amongst other obligations.
Ratings downgraded:
Issuer: JBS S.A.
LT Corporate Family Ratings to Ba3 from Ba2
Issuer: JBS USA Lux S.A.
$700mm GTD GLOBAL NOTES due 2020: to Ba3 from Ba2
$1150mm GTD GLOBAL NOTES due 2021: to Ba3 from Ba2
$2800mm SR SEC TERM LOAN B due 2022: to Ba2 from Ba1
$750mm SR GLOBAL NOTES due 2024: to Ba3 from Ba2
$900mm GTD GLOBAL NOTES due 2025: to Ba3 from Ba2
All Ratings were placed under review for Downgrade
RATINGS RATIONALE
JBS S.A's ratings incorporate the strength of its global
operations as the world's largest protein producer and its good
diversification of protein products, raw material sourcing and
sales. The company's strategy to increase its global footprint in
higher value added and processed food segments has been improving
its business profile and should support higher and more stable
margins over time.
Offsetting these positive attributes is the inherent volatility of
the protein industry, which is subject to risk factors such as
weather conditions, diseases, supply imbalances, and global trade
variables, along with a history of aggressive growth via
acquisitions. The current high leverage ratio is an additional
negative consideration.
Headquartered in Sao Paulo, Brazil, JBS S.A. ("JBS") is the
world's largest protein producer in terms of revenues, slaughter
capacity and production. It is the leader in beef, chicken and
leather and one of the leading lamb producers on a global basis,
and the second largest pork producer in the USA. In the LTM March
2017 it generated BRL 166.3 billion (USD 50 billion) in sales, its
production units are spread out in five continents and it exports
to more than 150 countries. No single country represents more than
14% of total export revenues.
The principal methodology used in these ratings was Global Protein
and Agriculture Industry published in May 2013.
JBS SA: Fitch Lowers Issuer Default Ratings to 'BB'
---------------------------------------------------
Fitch Ratings has downgraded JBS S.A's (JBS) Long-term Foreign and
Local Currency Issuer Default Ratings (IDRs) and senior unsecured
notes to 'BB' from 'BB+'. Fitch has also downgraded the company's
National Scale rating to 'AA'(bra) from 'AA+'. All of the
aforementioned ratings have been placed on Rating Watch Negative.
KEY RATING DRIVERS
The downgrades follow the announcement that some of JBS's
executives had signed a plea bargain with the Brazilian Federal
Public Prosecutor's Office, which was ratified by the country's
supreme court. The agreement establishes the payment of a fine
totaling BRL225 million to be paid by these executives. This plea
bargain agreement does not incorporate potential fines or other
actions against JBS.
The magnitude of this agreement, which included admitting payments
of bribes to various politicians, is likely to hurt JBS's
diversity of funding sources and is expected to result in the
cancelation or delay of the initial public offer of its
international unit.
In the near-term, the announcement is anticipated to hurt the
company's ability to expand its business and deleverage its
capital structure, which was weak for the rating category with net
leverage at 4.4x during 2016.
The Negative Watch reflects the uncertainty surrounding the legal
outcome and financial impact of the ongoing investigations.
RATING SENSITIVITIES
An upgrade is not considered at the moment.
Large legal fines that would put pressure on the company's
liquidity and deleverage in the near-term could trigger a
downgrade.
LIQUIDITY
As of March 31, 2017, the company had BRL10.7 billion of cash and
cash equivalents and committed undrawn bank lines of BRL4.4
billion. The total amount of short-term debt amounted to BRL17.9
billion, mainly traded finance and working capital lines.
FULL LIST OF RATING ACTIONS
Fitch downgrades and places the following ratings on Negative
Watch
JBS S.A.:
-- Long-Term Foreign & Local Currency IDR to 'BB' from 'BB+';
-- National Scale rating to 'AA (bra)' from 'AA+(bra)'.
JBS USA Lux S.A.:
-- Long-Term Foreign and Local Currency IDR to 'BB' from 'BB+';
-- Notes due 2020, 2021 downgraded to 'BB' from 'BB+'.
JBS USA Finance, Inc:
-- Notes due 2020, 2021 to 'BB' from 'BB+'.
JBS Investments GmbH
-- Notes due 2020, 2023, 2024 downgraded to 'BB' from 'BB+'.
USJ ACUCAR: Fitch Affirms 'CCC' Long-Term Issuer Default Ratings
-----------------------------------------------------------------
Fitch Ratings has affirmed U.S.J. Acucar e Alcool S.A.'s (USJ)
foreign and local currency long-term Issuer Default Ratings (IDRs)
at 'CCC' and its National Scale Rating at 'CCC(bra)'. Fitch has
also affirmed USJ's USD197 million senior secured notes due 2021
at 'CCC+/RR3' and upgraded the company's USD29 million senior
unsecured notes due 2019 to 'CCC+/RR3' from 'CCC/RR4'.
KEY RATING DRIVERS
The rating affirmation incorporates Fitch's concerns about USJ's
ability to meet its financial obligations as access to long-term
funding remains scarce for distressed Brazilian Sugar and Ethanol
(S&E) companies. The sale of land that could alleviate liquidity
pressures has not materialized as anticipated. Fitch expects USJ
to generate neutral-to-positive free cash flows (FCF) in fiscal
2017 and 2018, due mostly to satisfactory sugar prices and
deferral of coupon payments that followed the debt exchange offer
in May 2016.
The upgrade of the rating on the unsecured notes reflects the good
recovery prospects that stems from USJ's unique position as one of
the largest land owners in the S&E sector. The company has land
properties worth BRL1 billion in the State of Sao Paulo, of which
70% is unencumbered. It also counts on operating assets such as
sugar cane and readily marketable inventories that could be used
for collateral to improve its financial position.
High Leverage and FX Risk
Fitch forecasts leverage to remain at current levels at 4.5x in
fiscal 2017 and 2018, respectively. USJ's leverage remains high
for the industry, despite the implied 25% haircut on the debt
exchange offer concluded in May 2016. The company's total adjusted
debt as per Fitch's internal criteria amounted to BRL1.3 billion
as of Dec. 31 2016, which is a decrease from BRL1.5 billion in
March 31, 2016. In the LTM, ended Dec. 31, 2016, the USJ's
consolidated net adjusted debt/EBITDAR ratio was 4.5x, comparing
favourably with 6.5x for fiscal 2016.
Fitch believes USJ's FX risk is partially mitigated by exports,
hedging instruments, and the stretched maturity scheduled of its
USD-debt. The company's debt is 80% USD-denominated, partially
covered by exports of 25% of revenues. The company's total
adjusted debt consists of the following obligations: USD197
million secured and USD29 million unsecured senior notes due 2021
and 2019, respectively (58%); working capital lines (12%); land
lease agreements as per Fitch's internal criteria and guarantees
issued in favor of BNDES under loan agreements with SJC (16%);
exports pre-payments and other trade finance facilities (6%);
subsidized loans FINAME and FINEM (4%) and others with the
balance.
Positive FCF
Fitch expects USJ to report positive FCF of BRL38 million and
BRL58 million in fiscal 2017 and 2018, respectively, helped by
higher sugar prices, deferral of coupon payments, and capex
reduction. In the last 12 months (LTM), ended Dec. 31 2016, the
company posted cash flow from operations (CFFO) of BRL125 million,
which covered capital expenditures of the same amount, leaving FCF
at a break-even level. Fitch expects USJ's capex to be reduced to
around BRL115 million in FY17 and FY18, favorably comparing to
BRL125 million in FY16. Fitch expects USJ to report EBITDAR
margins at over 50% in fiscal 2017 and 2018, favorably comparing
to 48% in fiscal 2016 due to higher sugar prices, increase in
industrial yields and the positive impact of energy sales.
Strong Recovery Prospects
USJ's Recovery Ratings have been capped at 'RR3' due to Fitch's
Country Ceiling Specific Treatment of Recovery Ratings Criteria
that caps the Recovery Rating of Brazilian issuers at 'RR3'. If
not for this criteria, the notes would have been rated higher.
Fitch's recovery calculations for USJ's notes include liquidation
assets of BRL1.5 billion, which compares favorably versus secured
debt of BRL997 million and unsecured debt of BRL95 million.
The basis for the high indicated recovery for both the unsecured
and secured creditors in the bespoke analysis is due to BRL1
billion in land properties. USJ has approximately 25,000 hectares
of land, including properties in both arable and urban areas.
Around 70% of these assets at market value are unencumbered. Part
of these land properties surround the Sao Joao mill which is
strategically located near food and beverage companies, the Santos
port terminal (247 km) and Paulinia (70 km), a distribution hub
for most of the fuel produced in the State of Sao Paulo.
KEY ASSUMPTIONS
-- Sugar prices of USD 18 cents/pound for 2016/2017 are based on
hedged prices and volumes as of Dec. 31, 2016. Fitch assumes
that in the following years prices will move towards the 10-
year average of USD17 cents/pound;
-- The combination of oil prices and the FX rate will lead
Petrobras to keep increasing domestic gasoline prices, paving
the way for a gradual increase in hydrous ethanol prices;
-- Flat crushed volumes of 3.5 million tons in 2016/2017 and
following years;
-- FX rate assumed to be BRL3.50/USD as from fiscal 2017;
-- No dividends coming from SJC in the next two fiscal years;
-- No land sales.
RATING SENSITIVITIES
The company's ratings could be downgraded if liquidity
deteriorates further and/or the expected positive FCF for fiscal
2018 does not materialize. Ratings will be downgraded to 'D' and
D(bra) if the company formally files for bankruptcy protection.
An upgrade is unlikely in the short term given USJ's persistently
high refinancing risks.
LIQUIDITY
Fitch expects USJ to report cash to short-term debt coverage
ratios of less than 0.2x in fiscal 2017 and 2018. USJ's liquidity
remains pressured as availability of long-term finance is scarce
for financially-distressed S&E players, forcing USJ to rollover
debt on a short-term basis mostly. As of Dec. 31, 2016, USJ's cash
position of BRL28 million represented only 0.1x of the short-term
debt of BRL210 million. This ratio is in line with the one
reported for Dec. 31, 2015 when USJ held cash and short-term debt
positions of BRL52 million and BRL333 million, respectively.
Fitch believes the sale of USJ's land bank is conditioned to
macroeconomic recovery. USJ's financial strategy to monetize part
of its large land bank in the state of Sao Paulo has not
materialized as Fitch expected due to unfavorable macroeconomic
conditions in Brazil. The amounts of arable land sold in the State
of Goias in fiscal 2016 were not enough to change the company's
liquidity position.
FULL LIST OF RATING ACTIONS
Fitch has taken the following rating actions:
U.S.J. - Acucar e Alcool S.A
-- Foreign and local currency Long-Term IDRs affirmed at 'CCC';
-- Long-Term National Scale rating affirmed at 'CCC(bra)';
-- USD197 million senior secured notes, due 2021, affirmed at
'CCC+/RR3';
-- USD29 million senior unsecured notes due 2019 upgraded to
'CCC+', revised to 'RR3' from 'RR4'.
* Brazil Probes Alleged Graft in World Cup Stadium Construction
---------------------------------------------------------------
Jeffrey T. Lewis at The Wall Street Journal reports that Brazilian
authorities launched a new investigation, this time targeting
construction companies that allegedly paid bribes to win the
contract to build a stadium in Bras°lia where World Cup matches
were played in 2014.
Police executed search and arrest warrants, aimed at people
allegedly involved in the scam, according to WSJ. The probe is
under seal, so the names of those investigated weren't revealed by
police, the report notes.
Local news media reported that two former governors of the Federal
District, where Bras°lia is located, are among those under
investigation, as is an adviser to President Michel Temer, the
report relays.
The president's office had no immediate comment.
The news comes at a challenging time for the embattled Mr. Temer,
who is himself under investigation for his alleged involvement in
a different corruption case and faces calls for his resignation or
impeachment, the report discloses. Mr. Temer has repeatedly
denied any wrongdoing.
Police said they are looking for evidence that a group of builders
made illicit payments to "political and public agents" to come out
on top in the bidding for the contract to build the stadium, the
report notes. A judge ordered the freezing of assets of up to a
combined BRL60 million ($18.4 million) belonging to 13 of the
people allegedly involved, according to prosecutors, the report
notes.
Construction of the National Stadium of Bras°lia was originally
estimated to cost BRL690 million, but the final price tag rose to
BRL1.5 billion, making it the most expensive of the 12 Brazilian
stadiums that hosted World Cup games, the police said, the report
adds.
* Fitch Affirms Ratings of Five Brazilian Midsized Banks
--------------------------------------------------------
Fitch Ratings has affirmed the ratings on the following Brazilian
midsized banks:
-- Banco ABC Brasil S.A. (ABC Brasil)
-- Banco Alfa de Investimento S.A. (Alfa)
-- Banco Daycoval S.A. (Daycoval)
-- Banco Industrial do Brasil S.A. (Industrial)
-- Parana Banco S.A. (Parana)
Fitch has affirmed the following ratings:
ABC Brasil
-- Long-Term Foreign and Local Currency IDRs at 'BB+'; Outlook
Negative;
-- Short-Term Foreign and Local Currency IDRs at 'B';
-- Viability Rating at 'bb';
-- Long-Term National Rating at 'AA+(bra)'; Outlook Stable;
-- Short-Term National Rating at 'F1+(bra)';
-- Support Rating at '3'.
Alfa
-- Long-Term National Rating at 'AA(bra)'; Outlook Stable;
-- Short-Term National Rating at 'F1+(bra)'.
Daycoval
-- Long-Term Foreign and Local Currency IDRs at 'BB'; Outlook
Negative;
-- Short-Term Foreign and Local Currency IDRs at 'B';
-- Viability Rating at 'bb';
-- Long-Term National Rating at 'AA(bra)'; Outlook Stable;
-- Short-Term National Rating at 'F1+(bra)';
-- Support Rating at '5'.
-- Support Rating Floor at 'NF';
-- Senior unsecured USD notes due 2019, foreign currency rating
at 'BB';
-- Senior unsecured BRL letras financeiras due 2016 and 2017 at
'AA(bra)'.
Industrial
-- Long-Term Foreign and Local Currency IDRs at 'BB'; Outlook
Negative;
-- Short-Term Foreign and Local Currency IDRs at 'B';
-- Viability Rating at 'bb';
-- Support Rating at '5';
-- Support Rating Floor at 'NF';
-- Long-Term National Rating at 'AA-(bra)'; Outlook Stable;
-- Short-Term National Rating at 'F1+(bra)'.
Parana
-- Long-Term National Rating at 'AA-(bra)'; Outlook Stable;
-- Short-Term National Rating at 'F1+(bra)'.
==========================
C A Y M A N I S L A N D S
==========================
ARES INVESTMENT: Creditors' Proofs of Debt Due June 8
-----------------------------------------------------
The creditors of Ares Investment Funds SPC are required to file
their proofs of debt by June 8, 2017, to be included in the
company's dividend distribution.
The company commenced liquidation proceedings on March 28, 2017.
The company's liquidator is:
Highwater Limited
Nicole Gagliano
Grand Pavilion Commercial Centre, 1st Floor
802 West Bay Road
P.O. Box 31855 Grand Cayman KY1-1207
Cayman Islands
Telephone: (345) 640 2279
Facsimile: (345) 943 2294
ATMU INC: Court Enters Wind-Up Order
------------------------------------
The Grand Court of Cayman Islands, on April 26, 2017, entered an
order to wind up the operations of ATMU Inc.
The company's liquidator is:
Simon Conway
c/o Ruth Simpson
P.O. Box 258 Grand Cayman KY1-1104
Cayman Islands
Telephone: (345) 914 8734
Facsimile: (345) 945 4237
GORHAM FUNDAMENTAL: Commences Liquidation Proceedings
-----------------------------------------------------
The sole shareholder of Gorham Fundamental Value Fund, Ltd., on
April 25, 2017, passed a resolution to voluntarily liquidate the
company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Andrew Childe
c/o Trudy-Ann Scott
FFP Limited
Harbour Centre, 2nd Floor
42 North Church Street,
George Town, Grand Cayman
Cayman Islands
Telephone: +1 (345) 947 5854
KALIS CAPITAL: Appoints Stower and Blake as Liquidators
-------------------------------------------------------
J. Stower and K.D. Blake of KPMG, on April 13, 2017, were
appointed as liquidators of Kalis Capital Corporate Master Fund,
in place of Marc Randall and Natasha Morgan.
The Liquidators can be reached at:
J. Stower
K.D. Blake
KPMG
Century Yard Cricket Square
P.O. Box 493 Grand Cayman KY1-1106
Cayman Islands
MSREF VII JAPAN XIV: Commences Liquidation Proceedings
------------------------------------------------------
The sole shareholder of MSREF VII Japan Asset XIV GP Ltd, on
April 25, 2017, passed a resolution to voluntarily liquidate the
company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Stephen Nelson
Collas Crill Willow House, Cricket Square
P.O. Box 709 Grand Cayman KY1-1107
Cayman Islands
Telephone: (345) 949.4544
Facsimile: (345) 949.8460
MSREF VII JAPAN XXIII: Commences Liquidation Proceedings
--------------------------------------------------------
The sole shareholder of MSREF VII Japan Asset XXIII GP Ltd, on
April 25, 2017, passed a resolution to voluntarily liquidate the
company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Stephen Nelson
Collas Crill Willow House, Cricket Square
P.O. Box 709 Grand Cayman KY1-1107
Cayman Islands
Telephone: (345) 949.4544
Facsimile: (345) 949.8460
SHANGHAI (Z.J.): Creditors' Proofs of Debt Due May 29
-----------------------------------------------------
The creditors of Shanghai (Z.J.) Industry Limited are required to
file their proofs of debt by May 29, 2017, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on April 28, 2017.
The company's liquidator is:
Wang Fahua
B Building, 213 Room, 563 Songtao Road
Pudong, Shanghai
China
Telephone: +8621 3870 1553/8001
Facsimile: +8621 5856 1927
TIMES FILMS: Commences Liquidation Proceedings
----------------------------------------------
The shareholders of Times Films Limited, on April 27, 2017, passed
a resolution to voluntarily liquidate the company's business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Ge, Hui
Arun Abraham or Michael Crothers
Harbour Centre, George Town
P.O. Box 61 Grand Cayman KY1-1102
Cayman Islands
Telephone: (345) 814-2873
Facsimile: 345-949-8635
VINCI CORPORATE: Placed Under Voluntary Wind-Up
-----------------------------------------------
The sole shareholder of Vinci Corporate Bonds Fund, on April 28,
2017, passed a resolution to voluntarily wind up the company's
operations.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Vinci Gestora De Recursos Ltda.
c/o Tim Cone
Ogier
89 Nexus Way, Camana Bay
Grand Cayman KY1-9009
Cayman Islands
Telephone: +1 (345) 949 9876
Facsimile: +1 (345) 949-9877
WORLDWIDE AGGRESSIVE: Commences Liquidation Proceedings
-------------------------------------------------------
The sole shareholder of Worldwide Aggressive Growth Fund, on
April 26, 2017, passed a resolution to liquidate the company's
business.
Creditors are required to file their proofs of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road, George Town
Grand Cayman KY1-9008
Cayman Islands
Telephone: +1 (345) 949 0100
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REP: Bill for Law That Preserves Banking Secret Advances
------------------------------------------------------------------
Dominican Today reports that the Commercial Banks Association
(ABA) disclosed that a public-private inter-institutional
commission succeeded in a new wording of article 362 of the bill
for the Stock Market Law to comply with the requirements of
international agreements signed by the country and also preserve
confidentiality of the financial information of bank customers.
It said representatives from the Central Bank, the Finance
Ministry, the Securities Superintendence and the ABA participated
in drafting the proposal, according to Dominican Today. "The new
text maintains the provisions of the Monetary and Financial Law
regarding the obligation of confidentiality on deposits,
investments and other financial transactions made with the public,
the identity of the clients and the details of the transactions,"
the report notes.
The ABA said the proposed legislation also preserves the power to
request information, on a case-by-case basis, from authorized
entities such as the courts, the tax collection, money laundering
and antiterrorism financing enforcement agencies, such as the
Central Bank's Financial Analysis Unit, Banks Superintendence and
the Securities Superintendence, the report notes.
It adds that the bill's provision meets the requirements of the
International Organization of Securities Commissions (IOSCO), the
International Financial Action Task Force (FATF), the Foreign
Accounts Tax Compliance Act (FATCA) and the Global Forum on
Transparency and Exchange of Information, among other treaties and
agreements signed by the country, the report relays.
As reported in the Troubled Company Reporter-Latin America on
May 1, 2017, S&P Global Ratings affirmed its 'BB-/B' long- and
short-term sovereign credit ratings on the Dominican Republic.
The outlook remains stable. The transfer and convertibility (T&C)
assessment is unchanged at 'BB+'.
DOMINICAN REPUBLIC: Haiti Again Bars Local Products
---------------------------------------------------
Dominican Today reports that after the apparent normal start of
trade, Haitian officials again barred Dominican products from
entering their country.
In the heels of the unannounced ban, Dominican and Haitian
officials will meet in the border city to clarify the development,
which Dominican merchants blame for the millions of pesos in
losses from the barred products, the report adds.
As reported in the Troubled Company Reporter-Latin America on
May 1, 2017, S&P Global Ratings affirmed its 'BB-/B' long- and
short-term sovereign credit ratings on the Dominican Republic.
The outlook remains stable. The transfer and convertibility (T&C)
assessment is unchanged at 'BB+'.
===========
M E X I C O
===========
GRUPO GICSA: Fitch Affirms and Withdraws BB- IDR
------------------------------------------------
Fitch Ratings has affirmed and simultaneously withdrawn Grupo
GICSA, S.A.B. de C.V.'s Foreign and Local Currency Issuer Default
Ratings (IDRs) at 'BB-'. Fitch has also withdrawn the 'BB-(EXP)'
expected rating on Grupo GICSA's proposed senior unsecured notes,
as the company does not expect to proceed with the bond issue
within the previously envisaged timeline.
The withdrawal of the ratings is due to commercial reasons. Grupo
GICSA's ratings are no longer considered relevant to Fitch's
analytical coverage. Fitch will no longer provide ratings or
analytical coverage of the company.
RATING SENSITIVITIES
Rating Sensitivities are not applicable as the ratings have been
withdrawn.
FULL LIST OF RATING ACTIONS
Fitch has affirmed and withdrawn the following ratings:
Grupo GICSA, S.A.B. de C.V.
-- Foreign Currency Long-Term IDR at 'BB-';
-- Local Currency Long-Term IDR at 'BB-'.
Fitch has also withdrawn the following rating:
-- Proposed senior unsecured notes 'BB-(EXP)'.
VALUE S.A.: Moody's Lowers Global Long-Term Issuer Rating to B1
---------------------------------------------------------------
Moody's de Mexico has downgraded Value, S.A. de C.V., Casa de
Bolsa (Value Casa de Bolsa)'s global long-term local currency
issuer rating to B1 from Ba3, as well as its long and short-term
Mexican national scale issuer ratings to Baa2.mx from A3.mx and to
MX-3 from MX-2, respectively. The outlook on the company's global
rating is stable.
This rating action follows the implementation in Mexico of Moody's
new securities industry market makers rating methodology, which
now is the primary methodology that Moody's uses to rate
securities industry market makers globally.
LIST OF AFFECTED RATINGS
Value, S.A. de C.V., Casa de Bolsa
The following ratings were downgraded:
Long-term global local currency issuer rating to B1 from Ba3,
stable outlook
Long-term Mexican national scale issuer rating to Baa2.mx from
A3.mx
Short-term Mexican national scale issuer rating to MX-3 from MX-2
Outlook, remains stable
RATINGS RATIONALE
Moody's rating action on Value Casa de Bolsa follows the
publication of Moody's new securities industry market makers
rating methodology, which incorporates a number of significant
changes and enhancements from Moody's previous rating methodology
for rating these securities firms. These changes and enhancements
for rating market makers include the introduction of new financial
ratios such as a balance sheet leverage metric and stressed
liquidity and funding ratios; the dynamic weighting of operating
environment conditions that can adversely influence firms'
creditworthiness; incorporation of specific qualitative factors as
direct notching adjustments to ratings; and the incorporation of
Moody's joint default analysis (JDA) framework to consider
affiliate and government support (if any).
In downgrading the ratings of Value Casa de Bolsa, Moody's
considered the company's relatively high risk appetite, limited
business and geographic diversification, potential key-man risks
that may result from the concentration of decision-making
processes in a handful of key executives, and the absence of a
fully-independent board of directors.
The rating action also considers the competitive dynamics of the
market-making sector in Mexico, which are characterized by limited
barriers to entry and a heightened risk of adverse secular
changes, as well as the limited maturity of Mexico's capital
markets, which constrains Value's intrinsic business generation
capacity and can trigger, amplify, and prolong adverse economic
events and trading losses, increasing the risk of a prolonged loss
of confidence among market participants. The assessment of the
maturity of Mexico's capital market considers its depth and
breadth in terms of the magnitude and frequency of transactions,
underlying liquidity, and the level of sophistication and
diversification of market participants.
Value's business focuses on underwriting a limited number of
Mexican project finance bonds and selling them to a relatively
small group of customers in the city of Monterrey. Moody's expects
profitability to decline during 2017 driven by a drop in gains
from intermediation, as debt issuances of infrastructure projects
decline in line with an expected slowdown in overall investment
and economic activity. Nevertheless, earnings should remain
relatively strong compared to global and regional peers. Further,
liquidity, funding and leverage metrics should stabilize following
two years of decline, as the company slows its previously very
high pace of asset growth.
The Baa2.mx Mexican national scale issuer rating is the highest of
the two alternatives corresponding to the B1 global issuer rating
and reflects Value Casa de Bolsa's still strong profitability and
well-established niche business.
WHAT COULD CHANGE THE RATINGS UP OR DOWN
Ratings could face upward pressure if the company exhibits
increased business diversification in terms of securities
holdings, particularly by industry and geography, and if it
significantly expands its business outside of the Monterrey
region. Value Casa de Bolsa's ratings could be downgraded further
if profitability deteriorates more than expected and if leverage
increases significantly, amid a reduction in liquidity buffers.
The principal methodology used in these ratings was Securities
Industry Market Makers published in February 2017.
The period of time covered in the financial information used to
determine Value, S.A. de C.V., Casa de Bolsa's ratings is between
01/01/2012 and 12/31/2016 (source: Moody's, Value Casa de Bolsa's
financial statements).
The sources and items of information used to determine the ratings
include 2015 and 2016 interim financial statements (source:
Moody's and Value Casa de Bolsa's financial statements); year-end
2015 and 2016 audited financial statements (source: Moody's and
Value Casa de Bolsa's annual audited financial statements).
Moody's National Scale Credit Ratings (NSRs) are intended as
relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs differ from Moody's global
scale credit ratings in that they are not globally comparable with
the full universe of Moody's rated entities, but only with NSRs
for other rated debt issues and issuers within the same country.
NSRs are designated by a ".nn" country modifier signifying the
relevant country, as in ".za" for South Africa. For further
information on Moody's approach to national scale credit ratings,
please refer to Moody's Credit rating Methodology published in May
2016 entitled "Mapping National Scale Ratings from Global Scale
Ratings". While NSRs have no inherent absolute meaning in terms of
default risk or expected loss, a historical probability of default
consistent with a given NSR can be inferred from the GSR to which
it maps back at that particular point in time. For information on
the historical default rates associated with different global
scale rating categories over different investment horizons.
The long term Mexican National Scale rating of Baa2.mx represents
average creditworthiness relative to other domestic issuers.
Value Casa de Bolsa is headquartered in Monterrey, Mexico. As of
December 2016, the company reported MXN10 billion in on-balance
sheet assets (source: Value Casa de Bolsa financial statements).
=======
P E R U
=======
BANCO INTERNACIONAL: S&P Affirms 'BB+' Rating on Sub. Bonds
-----------------------------------------------------------
S&P Global Ratings Services affirmed its 'BBB' long-term issuer
credit rating on Banco Internacional del Peru-Interbank
(Interbank). The outlook remains stable. At the same time, S&P
affirmed its 'BB+' issue-level rating on the bank's subordinated
bonds.
The rating on Interbank reflects its significant market share as
the fourth-largest financial institution in Peru; improving
capitalization levels with average projected risk-adjusted capital
(RAC) of 8.0%-8.5% due to sound internal capital generation
despite recent weakening in asset quality, which remains in line
with the industry; funding structure that leverages on a high
deposit base with a sound component of retail deposits; and its
liquidity position that provides adequate cushion to cope with
unexpected cash outflows over the next 12 months. The rating on
the bank also reflects one-notch uplift due to government support
because S&P deems Interbank as a systemically important bank to
the Peruvian financial system. In addition, the rating on
Interbank's subordinated debt is two notches below the credit
rating because the starting point for notching is the bank's
'bbb-' stand-alone credit profile (SACP), and S&P deducts one
notch for subordination risk.
======================
P U E R T O R I C O
======================
PUERTO RICO: CCI Seeks Appointment of Unsecured Creditors Panel
---------------------------------------------------------------
BankruptcyData.com reported that Cesar Castillo (CCI) filed with
the U.S. Bankruptcy Court a motion requesting Court appointment of
an official unsecured creditors' committee. CCI is listed on
Schedule B to the petition with an unsecured claim of
$6,008,917.52. The motion explains, "As noted in Debtor's
Petition, CCI is listed as one of Debtor's twenty largest
unsecured Creditors. Pursuant to 11 U.S.C. 1102(a)(1), made
applicable to this proceeding by Title III, Section 301 of
PROMESA, as soon as practicable after the Order of relief has been
entered, the U.S. Trustee shall appoint a committee of creditors
holding the largest unsecured claims. Title III, Section 304(c) of
PROMESA provides that the commencement of a case under PROMESA
does constitute an order for relief. In view of the foregoing, CCI
hereby informs the Court of its availability and willingness to
serve in the unsecured creditors' committee, and requests the
Court to order the appointment of an Unsecured Creditors
Committee."
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the
son of former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto
Rico's PROMESA petition is available at
http://bankrupt.com/misc/17-01578-00001.pdf
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose LLP and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are on board as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
Marcia Goldstein, Esq., at Weil, Gotshal & Manges, represents
MBIA's National Public Finance Guarantee unit, which insures
nearly $2 billion in combined GO and COFINA debt.
================================
T R I N I D A D & T O B A G O
================================
TRINIDAD & TOBAGO: Gloomy Days Ahead for Economy
------------------------------------------------
Trinidad Express reports that less than 24 hours after Finance
Minister Colm Imbert delivered his 2017 Mid-Year Budget Review in
which Government borrowings and the public sector debt loomed
large, Express columnist Sir Ronald Sanders wrote an article
titled "Debt danger for a generation".
Its contents were based on a study of several Caribbean countries
that have huge debts, according to Trinidad Express.
The report notes that Mr. Imbert, in his media-combative mode,
introduced the rising debt issue thus: " . . . With respect to the
public debt, about which there is much misinformation and
misplaced commentary. . ."
The report relays that he proceeded to point out that ". . . the
net public sector debt, exclusive of Central Bank open market
operations, at the end of fiscal 2010 (when the PP took office)
was $45.4 billion, (and) by the end of fiscal 2015 (when the PP
lost the election), the net public sector debt stood at $76.5
billion with a resulting debt-to-GDP ratio of 50.9 percent . . ."
TRINIDAD & TOBAGO: Private Sector Not Up to The Task, IDB Says
--------------------------------------------------------------
Trinidad Express reports that the Inter-American Development Bank
(IDB) Economist Dr. Jeetendra Khadan believes the private sector,
in its current form, is not up to the task of driving economic
growth in Trinidad and Tobago.
"It could if it were dynamic, employment generating, innovative
and export oriented (it could), but it's not," he told an economic
forum hosted by the Trinidad and Tobago Chamber of Industry and
Commerce.
Presenting excerpts from his recently released report Are Oil and
Gas Smothering the Private Sector in Trinidad and Tobago?, Khadan
noted that the average local firm is old, are domestic importers
and "probably family-owned," the report adds.
***********
Monday's edition of the TCR-LA delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-LA editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Monday
Bond Pricing table is compiled on the Friday prior to publication.
Prices reported are not intended to reflect actual trades. Prices
for actual trades are probably different. Our objective is to
share information, not make markets in publicly traded securities.
Nothing in the TCR-LA constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR-LA editor holds some position in the
issuers' public debt and equity securities about which we report.
Tuesday's edition of the TCR-LA features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
Submissions about insolvency-related conferences are encouraged.
Send announcements to conferences@bankrupt.com
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Valerie U. Pascual, Julie Anne L. Toledo, 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 Joseph Cardillo at
856-381-8268.
* * * End of Transmission * * *