/raid1/www/Hosts/bankrupt/TCRLA_Public/170526.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
Friday, May 26, 2017, Vol. 18, No. 104
Headlines
A R G E N T I N A
MAS CUOTAS VIII: Moody's Assigns B2(sf) Rating on Cl. C Debt
YPF SA: S&P Affirms Ratings 'B' LC, FC Ratings; Outlook Stable
B A R B A D O S
BARBADOS: Banks Refusing Deposits From Slot Machine Operators
CONSOLIDATED ENERGY: S&P Rates Proposed $500MM Sr. Notes 'BB-'
B R A Z I L
COMPANHIA ENERGETICA: S&P Puts 'BB' Rating on Watch Neg.
COMPANIA MINERA: S&P Puts 'BB+' CCR on CreditWatch Negative
ODEBRECHT OLEO: S&P Affirms 'D' Global Scale CCR
VOTO-VOTORANTIM: S&P Puts Notes' BB+ Rating on Watch Negative
B O L I V I A
BOLIVIA: Moody's Rates USD$1BB Bond Issuance; Outlook Negative
C A Y M A N I S L A N D S
CCI INTERNATIONAL: Shareholders' Meeting Set for June 1
ESTLANDER & PARTNERS: Shareholder to Hear Wind-Up Report on June 5
HSBC GUYERZELLER: Shareholders' Final Meeting Set for June 8
LIANGA INVESTMENTS: Sole Member to Hear Wind-Up Report on June 6
METISQ LIBRA: Shareholders' Final Meeting Set for June 1
NEZU ASIA: Shareholder to Hear Wind-Up Report on June 9
ODEBRECHT DRILLING: Fitch Cuts Rating on Secured Notes to C
PAWNEESE LIMITED: Shareholders' Final Meeting Set for June 6
Q DENMARK: Shareholders' Final Meeting Set for May 30
ZAI LABORATORY: Shareholders Receive Wind-Up Report
J A M A I C A
DIGICEL GROUP: Fitch Affirms 'B' Long-term IDR; Outlook Stable
JAMAICA: Decline Recorded in Mining & Quarrying Sector During 1Q
M E X I C O
BANCA MIFEL: Fitch Affirms BB Long-Term IDR; Outlook Stable
BANCO VE POR: Fitch Affirms BB Long-Term Issuer Default Ratings
MAXCOM TELECOMUNICACIONES: S&P Cuts CCR to 'SD' on Debt Repurchase
MEXICO: Cancelling NAFTA Would Be Lost Opportunity for 3 Countries
MEXICO: Ford CEO Says No Change in Plan to Scrap $1.6BB Investment
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A R G E N T I N A
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MAS CUOTAS VIII: Moody's Assigns B2(sf) Rating on Cl. C Debt
------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has rated
Fideicomiso Financiero Mas Cuotas Serie VIII. This transaction
will be issued by Banco de Galicia y Buenos Aires S.A. ("Banco
Galicia", LT Bank Deposits (Domestic) B3, Trustee Quality
Assessment TQ1-.ar) acting solely in its capacity as issuer and
trustee.
The securities for this transaction have not been placed in the
market yet. The transaction is pending for approval from the
Comision Nacional de Valores. If any assumption or factor Moody's
considers when assigning the ratings change before closing, the
ratings may also change.
The full rating action is:
- ARS743,664,933 in Class A Floating Rate Debt Securities (VDFA)
of "Fideicomiso Financiero Mas Cuotas Serie VIII", rated Aaa.ar
(sf) (Argentine National Scale) and Ba3 (sf) (Global Scale)
- ARS45,448,425 in Class B Floating Rate Debt Securities (VDFB)
of "Fideicomiso Financiero Mas Cuotas Serie VIII", rated Aa2.ar
(sf) (Argentine National Scale) and B1 (sf) (Global Scale)
- ARS4,524,733 in Class C Floating Rate Debt Securities (VDFC) of
"Fideicomiso Financiero Mas Cuotas Serie VIII", rated A1.ar (sf)
(Argentine National Scale) and B2 (sf) (Global Scale).
RATINGS RATIONALE
The rated securities are payable from the cash flow coming from
the assets of the trust, which is an amortizing pool of
approximately 650,053 eligible purchases in installments
denominated in Argentine pesos and originated by Cencosud
(Argentina) S.A. ("Cencosud Argentina"), the local subsidiary of
Cencosud S.A. ("Cencosud", Baa3, Stable), among Latin America's
largest retailers, with presence in Chile, Argentina, Peru,
Colombia and Brazil. Only installments payable after July 2, 2017
will be assigned to the trust.
The installments are originated through credit cards issued by
Cencosud Argentina. Clients of Cencosud credit cards can make
purchases in affiliated stores and split the payments in several
monthly installments bearing no interest rates. The monthly
installments are included in the cardholder's credit card balance.
Approximately 84.8% (measured in terms of nominal amount) of the
installments in the pool have a minimum payment lower than 100%.
Therefore, in situations with cardholders paying less than the
whole credit card balance, the transaction could be exposed to
delays in collections of the installment. In these situations,
Cencosud Argentina will advance to the trust the difference
between: (i) the full amount of the installment assigned to the
trust and (ii) the minimum payment. This feature of the
transaction increases dependence to the sponsor. As a mitigating
factor, Cencosud and Cencosud Argentina have a relatively strong
credit profile. Also, the credit card portfolio exhibits high
payment rates (71.4% average during the last twelve months as of
March 2017). For more details about this risk, please refer to the
"Loss and Cash Flow Analysis" section of this press release and/or
the Pre-Sale Report (in Spanish) which can be found at
www.moodys.com.
TRANSACTION STRUCTURE
The VDFA will bear a floating interest rate (BADLAR plus 150 bps).
The VDFA's interest rate will never be higher than 30.5% or lower
than 20.5%.
The VDFB will bear a floating interest rate (BADLAR plus 250 bps).
The VDFB's interest rate will never be higher than 31.5% or lower
than 21.5%.
The VDFC will bear a floating interest rate (BADLAR plus 450 bps).
The VDFC's interest rate will never be higher than 33.5% or lower
than 23.5%.
Overall credit enhancement is comprised of subordination,
transaction level overcollateralization and various reserve funds.
The transaction has initial subordination levels of 26.0% for the
VDFA, 21.5% for the VDFB and 21.1% for the VDFC, calculated over
the pool's undiscounted principal balance. Credit enhancement is
also comprised by the availability of a Liquidity Reserve Fund
covering the next two interest accruals for the VDFA and VDFB.
Finally, the transaction has an estimated 24.1% negative annual
excess spread, before considering losses, taxes or prepayments and
calculated at the interest rate cap for the notes.
The principal methodology used in these ratings was "Moody's
Approach to Rating Consumer Loan-Backed ABS" published in
September 2015.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may lead to a downgrade of the ratings include an
increase in delinquency levels beyond the level Moody's assumed
when rating this transaction. Although Moody's analyzed the
historical performance data of previous transactions and similar
receivables originated by Cencosud Argentina, the actual
performance of the securitized pool may be affected, among other
factors, by the level of economic activity, high inflation rates
compared with nominal salaries increases and the unemployment rate
in Argentina.
Another key factor that could lead to a rating downgrade would be
the deterioration of the sponsor's credit profile, as well as
changes in the sponsor's minimum payment policies.
Factors that may lead to an upgrade of the ratings include the
building of credit enhancement over time due to the turbo
sequential payment structure, when compared with the level of
projected losses in the securitized pool.
Loss and Cash Flow Analysis:
Moody's considered the credit enhancement provided in this
transaction through the initial subordination levels for each
rated class, as well as the historical performance of Cencosud
Argentina's portfolio and previous securitizations. In addition,
Moody's considered factors common to consumer loans and credit
card receivables securitizations such as delinquencies, charge-
offs, payment rates and losses; as well as specific factors
related to the Argentine market, such as the probability of an
increase in losses if there are changes in the macroeconomic
scenario in Argentina.
Moody's analyzed the historical performance data of previous
transactions and the dynamic credit card portfolio of Cencosud
Argentina, ranging from January 2012 to March 2017.
In assigning the rating to this transaction, Moody's assumed a
lognormal distribution of losses for the securitized pool with a
mean of 6.5% and a coefficient of variation of 50%.
The rating agency also analyzed the payment levels in the seller's
overall credit card dynamic portfolio, identifying a payment rate
(monthly payment / monthly balance) averaging 71.4% during the
last twelve months as of March 2017.
Additionally, in order to analyze a scenario of extreme dependence
to the sponsor of the transaction, Moody's assumed that all
cardholders in the pool will pay only the minimum payment.
To determine the rating assigned to the notes, Moody's has used an
expected loss methodology that reflects the probability of default
times the severity of the loss expected for each security. In
order to allocate losses to each Class in accordance with their
priority of payment and relative size, Moody's has used a cash-
flow model (ABSCORE) that reproduces many deal-specific
characteristics. Weighting each loss scenario's severity result
with its probability of occurrence, the model has calculated the
expected loss level for each security as well as the expected
average life. Moody's model then compares the quantitative values
to the Moody's Idealized Expected Loss table for each tranche.
Servicer default was modeled by simulating the default of Cencosud
Argentina as the servicer consistent with an internal assessment
of Cencosud Argentina's credit quality. In the scenarios where the
servicer defaults, Moody's assumed that the defaults will increase
by approx. 230% and that one full month of collections will be
lost. The increase of 230% reflects the risk that, for those
installments with a minimum payment of less than 100%, the amounts
between the whole installment and the minimum payment will be lost
without the support of the sponsor. In addition, the stress
multiple also incorporates the risk that, in such a scenario, the
credit card could stop working as a means of payment, reducing the
incentives to pay remaining balances for the credit card holders.
The model results showed 0.5% expected loss for the VDFA, 2.4% for
the VDFB and 3.0% for the VDFC.
Stress Scenarios
Parameter Sensitivities provide a quantitative, model-indicated
calculation of the number of notches that a Moody's-rated
structured finance security may vary if certain input parameters
used in the initial rating process differed. The analysis assumes
that the deal has not aged. It is not intended to measure how the
rating of the security might migrate over time, but rather, how
the initial rating of the security might differ as certain key
parameters vary.
Parameter sensitivities for this transaction have been calculated
in the following manner: Moody's tested twelve scenarios derived
from the combination of mean loss: 6.5% (base case), 9.0% (base
case + 2.5%), 11.5% (base case + 5%), 14% (base case + 7.5%) and
coefficient of variation (CoV) of losses: 40% (10% less than base
case), 50% (base case) and 60% (10% more than base case) The 6.5%
/50% represents the base case assumptions used in the initial
rating process.
At the time the rating was assigned, the model output indicated
that the VDFA would have achieved a B1 (sf) global rating model
output if mean loss was as high as 14.0% with a CoV of 60%. Under
the same assumptions, both the VDFB and VDFC would have achieved a
rating of Caa3 (sf).
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.
YPF SA: S&P Affirms Ratings 'B' LC, FC Ratings; Outlook Stable
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B' local and foreign currency
ratings on these companies:
-- Arauco Argentina S.A.;
-- AES Argentina Generaci¢n S.A (AES Argentina);
-- CAPEX S.A.;
-- Pampa Energia S.A. (Pampa);
-- Transportadora de Gas del Sur S.A. (TGS); and
-- YPF S.A.
S&P also affirmed its 'B+' local and foreign currency ratings on
Aeropuertos Argentina 2000 S.A. (AA2000). In addition, S&P
affirmed its 'B-' local and foreign currency ratings on CLISA-
Compania Latinoamericana de Infraestructura & Servicios S.A.
(CLISA).
The outlook on all these entities remains stable.
The rating actions follow the upward revision of the country risk
score for Argentina.
The upward revision of Argentina's country risk to '5' (high risk)
from '6' (very high risk) mainly reflects the improvement in
policy predictability and strengthening of institutions, that
paves the way for a gradual recovery of the country's credibility.
For instance, the government's announcement of medium-term fiscal
targets has increased transparency and accountability. The
central bank continues to regain its independence by reducing its
financing of the central government and implementing an inflation
target regime. At the same time, the government has bolstered the
credibility of the national statistical agency, INDEC, allowing
publication of reliable data on key economic variables.
In S&P's view, the better conditions for doing business in
Argentina have strengthened the business risk profiles, prompting
us to raise the SACP assessments on AA2000, Arauco, Pampa, and YPF
by one notch. Nevertheless, S&P affirmed its ratings on these
companies, along with those on TGS and AES Argentina whose
business risk remains unchanged. The 'B' ratings on Arauco, AES
Argentina, Pampa, TGS, and YPF are at the same level as the
ratings on the sovereign, because S&P believes that in a
hypothetical sovereign default scenario--high inflation, sharp
depreciation, and overall weaker macroeconomic conditions--their
financial flexibility would weaken and they won't be able to
continue honoring their obligations.
The 'B+' rating on AA2000 is one notch above that on the
sovereign, but remains the same as the T&C risk assessment on
Argentina. This is mainly due to the company's fairly low
leverage, a very robust cash flow generation and cash position,
and more importantly a limited exposure to movement in the
exchange rate given that the international aeronautical tariffs
are defined in dollars. Therefore, S&P envisions that the company
could still service its debt on a timely basis under a stressed
macroeconomic scenario, even assuming lower levels of passengers.
The upward revision of Argentina's country risk didn't improve the
business risk profile and SACP of CAPEX. S&P still would need to
see a certain track record in electricity prices under the
recently approved integral tariff reviews in order to consider an
improvement in CAPEX's business risk profile. S&P affirmed the
'B-' rating and kept the 'b-' SACP on CLISA unchanged because the
improvement in its business risk profile, following the country
risk revision isn't enough to compensate for the company's
significant currency mismatch between its dollar-denominated debt
and its domestic cash flow generation, which restrains financial
flexibility.
The stable outlook on AES Argentina, AA2000, Arauco, CAPEX, Pampa,
YPF, and TGS mirrors that on the sovereign and incorporates S&P's
expectation for broad continuity in Argentina's economic policies
in the next two years. The outlook also incorporates the
political challenges the current administration still faces. The
stable outlook on CLISA incorporates S&P's expectations that it
will maintain its debt to EBITDA below 5x.
In the next 12 months, S&P could upgrade AES Argentina, AA2000,
Arauco, Pampa, YPF, and TGS if S&P upgrades the sovereign. To
upgrade CAPEX, S&P would also need a certain track record in
collecting tariffs under the new framework. An upgrade of CLISA
would depend on an improvement in its financial risk profile which
might occur if the company starts generating sustained operating
cash flows, resulting in an operating cash flow to debt of more
than 25%.
A downgrade of the sovereign would most likely result in a
downgrade of AES Argentina, AA2000, Arauco, Pampa, YPF, CAPEX, and
TGS. S&P could lower the ratings on CLISA in the next 12 months
if S&P perceives that its capital structure is unsustainable if
its debt to EBITDA persistently exceeds 5x, for example.
RATINGS SCORE SNAPSHOT
Aeropuertos Argentina 2000 S.A.
Corporate Credit Rating B+/Stable/--
Business Risk Fair
Country Risk High
Industry Risk Low
Competitive Position Fair
Financial Risk Intermediate
Cash Flow/ Leverage Intermediate
Anchor bb+
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP bb+
AES Argentina Generaci¢n S.A
Corporate Credit Rating B/Stable/--
Business Risk Weak
Country Risk High
Industry Risk Very Low
Competitive Position Weak
Financial Risk Significant
Cash Flow/ Leverage Significant
Anchor bb-
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP bb-
Arauco Argentina S.A.
Corporate Credit Rating B/Stable/--
Business Risk Weak
Country Risk High
Industry Risk Moderately High
Competitive Position Weak
Financial Risk Aggressive
Cash Flow/ Leverage Aggressive
Anchor b+
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP b+
CAPEX S.A.
Corporate Credit Rating B/Stable/--
Business Risk Vulnerable
Country Risk High
Industry Risk Low
Competitive Position Vulnerable
Financial Risk Aggressive
Cash Flow/ Leverage Aggressive
Anchor b
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP b
CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.
Corporate Credit Rating B-/Stable/--
Business Risk Weak
Country Risk High
Industry Risk Intermediate
Competitive Position Weak
Financial Risk Highly Leveraged
Cash Flow/ Leverage Highly Leveraged
Anchor b-
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Negative (no impact)
Financial Policy Neutral (no impact)
Liquidity Less than adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP b-
Pampa Energia S.A.
Corporate Credit Rating B/Stable/--
Business Risk Weak
Country Risk High
Industry Risk Intermediate
Competitive Position Weak
Financial Risk Aggressive
Cash Flow/ Leverage Aggressive
Anchor b+
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP b+
Transportadora de Gas del Sur S.A. (TGS)
Corporate Credit Rating B/Stable/--
Business Risk Weak
Country Risk High
Industry Risk Low
Competitive Position Weak
Financial Risk Significant
Cash Flow/ Leverage Significant
Anchor bb-
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Neutral (no impact)
SACP bb-
YPF S.A.
Corporate Credit Rating B/Stable/--
Business Risk Fair
Country Risk High
Industry Risk Intermediate
Competitive Position Fair
Financial Risk Significant
Cash Flow/ Leverage Significant
Anchor bb
Modifiers
Diversification/ portfolio Effect
Neutral (no impact)
Capital Structure Neutral (no impact)
Financial Policy Neutral (no impact)
Liquidity Adequate (no impact)
Management & Governance Fair (no impact)
Comparable Rating Analysis Negative (-1 impact)
SACP bb-
RATINGS LIST
Arauco Argentina S.A.
Foreign Currency Rating B/Stable/--
Local Currency Rating B/Stable/--
Pampa Energia S.A.
Local Currency Rating B/Stable/--
Foreign Currency Rating B/Stable/--
Sr. Unsecured B
Aeropuertos Argentina 2000
Local Currency Rating B+/Stable/--
Foreign Currency Rating B+/Stable/--
Sr. Secured B+
AES Generacion Argentina S.A.
Local Currency Rating B/Stable/--
Foreign Currency Rating B/Stable/--
Sr. Unsecured B
Transportadora de Gas del Sur S.A
Local Currency Rating B/Stable/--
Foreign Currency Rating B/Stable/--
Sr. Unsecured B
CAPEX S.A.
Local Currency Rating B/Stable/--
Foreign Currency Rating B/Stable/--
Sr. Unsecured B
YPF S.A
Local Currency Rating B/Stable/--
Foreign Currency Rating B/Stable/--
Sr. Unsecured B
CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.
Local Currency Rating B-/Stable/--
Foreign Currency Rating B-/Stable/--
Sr. Unsecured B-
===============
B A R B A D O S
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BARBADOS: Banks Refusing Deposits From Slot Machine Operators
-------------------------------------------------------------
RJR News reports that commercial banks in Barbados are making it
clear they will not risk their relationship with corresponding
banks around the world to satisfy slot machine operators.
Donna Wellington, President of the Barbados Banking Association
(BBA), defended the rights of the financial institutions to refuse
large deposits from these operators, according to RJR News.
It was during the opening ceremony of a three-day anti-money
laundering workshop on May 22 that the country's Attorney General
Adriel Brathwaite disclosed that the banks were refusing to accept
cash from the slot machine operators, because the money was being
deemed proceeds from gambling, the report notes.
As reported in the Troubled Company Reporter-Latin America on
March 7, 2017, S&P Global Ratings lowered its long-term foreign
and local currency sovereign ratings on Barbados to 'CCC+' from
'B-'. The outlook is negative. S&P also lowered the short-term
ratings to 'C' from 'B.' At the same time, S&P lowered its
transfer and convertibility assessment for Barbados to 'CCC+' from
'B-'.
CONSOLIDATED ENERGY: S&P Rates Proposed $500MM Sr. Notes 'BB-'
--------------------------------------------------------------
S&P Global Ratings said that it had assigned its 'BB-' issue-level
rating to Consolidated Energy Finance S.A.'s (CEF) proposed
$500 million senior unsecured notes. The notes will be issued in
two tranches of floating and fixed rates with terms of five and
eight years respectively. CEF is a financing subsidiary of
Consolidated Energy Limited (CEL) (BB/Negative/--).
CEF plans to use the proceeds to partially refinance existing debt
consisting of senior unsecured notes for a total amount of
$1.250 billion due 2019. S&P expects the proposed transaction to
improve CEL's debt maturity profile by extending the average term
of its debt from approximately five to six years, further
supporting S&P's strong liquidity assessment on the company.
The issue-level rating is one notch below the corporate credit
rating, reflecting the subordination to Methanol Holding
(Trinidad) Ltd.'s (MHTL's) and Natgasoline project's debt of about
$290 million and $250 million secured notes, respectively. CEL's
ratio of priority obligations to net tangible assets is slightly
below 30%, creating a potential material disadvantage to
noteholders under a bankruptcy or liquidation scenario. Partly
mitigating this risk is the upstream guarantee from operating
subsidiaries on the issuance.
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B R A Z I L
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COMPANHIA ENERGETICA: S&P Puts 'BB' Rating on Watch Neg.
--------------------------------------------------------
S&P Global Ratings said that it has placed the corporate credit
and issue-level ratings on CESP-Companhia Energetica de Sao Paulo
(Cesp) and Companhia de Saneamento Basico do Estado de Sao Paulo
(Sabesp) on CreditWatch with negative implications following a
similar action on the state of Sao Paulo's 'BB' global scale and
'brAA-' national scale ratings.
The ratings on the Brazilian states usually pose a limitation on
the entities they control. S&P attributes varying degrees of
likelihood of support from the states to these utilities.
However, S&P also believes that states might intervene by
redirecting resources to the government, therefore weakening
credit quality of government-related entities (GREs), especially
amid challenging macroeconomic and fiscal conditions.
As a result, following the rating action on the state of Sao
Paulo, S&P placed the 'BB' global scale and 'brAA-' national scale
ratings on Cesp and the 'BB' and 'brA+' ratings on Sabesp on
CreditWatch negative. The rating action on the state of Sao Paulo
followed the CreditWatch listing on Brazil, which reflected
increased risk that a disruptive or slow resolution of recent
political developments could delay and undermine the ability of
Brazil's political class to advance corrective policy measures in
a timely fashion, jeopardizing the economic recovery.
COMPANIA MINERA: S&P Puts 'BB+' CCR on CreditWatch Negative
-----------------------------------------------------------
S&P Global Ratings said that it placed its 'BB+' corporate credit
and issue-level ratings on Compania Minera Milpo S.A.A. (Milpo) on
CreditWatch with negative implications.
The rating action follows a similar action on Votorantim S.A.,
which immediately affected the ratings on VM Holding S.A. (VMH),
Milpo's direct parent. S&P considers Milpo to be a core
subsidiary to VMH. As a result, the ratings on Milpo are the same
as the group credit profile (GCP). Therefore, a negative rating
action on VMH would result in a downgrade of Milpo.
S&P believes that Milpo is integral to the group's strategy and
that the group would provide timely and sufficient support under
any foreseeable circumstances. Milpo represents around 60% of
VMH's EBITDA generation and controls Cerro Lindo, the most
profitable production asset of the group. At the same time, Milpo
represents the largest source of growth for VMH, given that it
holds the Aripuana, Magistral and Shalipayco projects. In
addition, VMH recently issued $700 million in senior unsecured
notes including cross-default clauses with Milpo, which also fully
and unconditionally guarantees the issuance. S&P views this as a
central factor of Milpo's group status.
The CreditWatch placement reflects that of Milpo's parent, VM
Holding, and reflects a one-in-two likelihood of a negative rating
action within the next 90 days. S&P will determine the rating
action on Milpo once the CreditWatch of VM Holding is resolved,
which will follow the CreditWatch resolution on Votorantim S.A.'s
ratings, given its exposure to the Brazil's economic and political
cycles.
ODEBRECHT OLEO: S&P Affirms 'D' Global Scale CCR
------------------------------------------------
S&P Global Ratings affirmed its rating on Odebrecht Offshore
Drilling Finance Limited's (OODFL's) notes at 'CC'. At the same
time, S&P affirmed the 'D' global scale corporate credit rating on
Odebrecht Oleo e Gas S.A (OOG). S&P also affirmed its 'D' issue-
level rating on Odebrecht Oil & Gas Finance Limited. S&P also
removed its ratings on OODFL CreditWatch negative and assigned a
negative outlook.
The rating action follows OOG's May 23 announcement that it has
entered into an agreement with a group of creditors to restructure
its debt. This process will occur through an extrajudicial
reorganization pursuant to plans OOG filed at the Court of the
State of Rio de Janeiro.
According to the plans, OODFL's existing notes due 2021 and 2022
will be exchanged for new ones, with revised terms based on the
present cash flow of the assets, incorporating the cancelation of
ODN Tay IV charter agreement that occurred in September 2015.
Based on new conditions, the new notes will amortize quarterly in
two tranches. The first tranche (34% of the outstanding amount)
will have a fixed amortization schedule, and bear the same
interest rate and maturity as the current notes. However, the
second tranche that represents the vast majority of the nominal
value will be subordinated to the first one and will have a 100%
variable amortization, based on the cash surplus of the assets.
The second tranche will bear a marginally higher interest rate
(+1%from the one on the first tranche), but its maturity schedule
has been extended to 2026.
Likewise, OOG creditors will exchange their existing debt for new
perpetual participatory bonds, assuring their right to receive a
share of any dividend distributions of OOG.
S&P views the proposed transaction as a distressed exchange,
because investors will receive less than what was promised on the
original securities.
S&P affirmed its 'D' rating on OOG despite the announcement of its
intention to undertake the exchange offer, because S&P don't
expect to raise the rating unless the payments resume in
accordance with the original terms or after the new terms under
the exchange offer are amended and have become legally effective.
S&P still views default as virtually certain.
VOTO-VOTORANTIM: S&P Puts Notes' BB+ Rating on Watch Negative
-------------------------------------------------------------
S&P Global Ratings placed its ratings on 10 classes from
International Diversified Payment Rights Co. (Banco Bradesco) and
on Voto-Votorantim Overseas Trading Operations IV Ltd. on
CreditWatch with negative implications. Both of these deals are
Brazilian cross-border structured finance transactions.
The rating actions follow the May 23, 2017, placement of S&P's
long-term foreign credit ratings on Banco Bradesco S.A. and
Votorantim S.A. on CreditWatch with negative implications. The
rating actions on those entities follow the similar action on the
long-term foreign and local currency sovereign credit rating on
Brazil.
The CreditWatch Negative placement on Brazil reflects increased
risk that a disruptive or slow resolution of recent political
developments could delay and undermine the ability of Brazil's
political class to advance corrective policy measures in a timely
fashion, which would jeopardize the economic recovery and raise
risk for the financial sector.
If the rating on the Banco Bradesco were lowered, the ratings on
the series backed by diversified payment rights would be lowered
as well due to the three-notch rating cap above the issuer credit
rating on the originator. The ratings on these transactions
reflect Banco Bradesco's ability to generate the specific flow of
receivables that are being securitized, the transactions'
supportive structural features, and S&P's view of the
transactions' sovereign interference risk.
The rating on Voto-Votorantim Overseas Trading Operations IV Ltd.
is linked to the rating on Votorantim S.A.
S&P will continue to monitor the ratings on these structured
finance transactions and revise the ratings as necessary to
reflect any changes in the transactions' underlying credit
quality.
The resolution of these CreditWatch Negative placements will
follow the resolution of the CreditWatch Negative placements on
the relevant counterparties.
RATINGS PLACED ON WATCH NEGATIVE
Voto-Votorantim Overseas Trading Operations IV Ltd.
Rating
Series To From
Notes BB+ (sf)/Watch Neg BB+ (sf)
International Diversified Payment Rights Co. (Banco Bradesco)
Rating
Class To From
2008-2 BBB/Watch Neg BBB
2009-4 BBB/Watch Neg BBB
2010-1 BBB/Watch Neg BBB
2010-2 BBB/Watch Neg BBB
2011-1 BBB/Watch Neg BBB
2011-2 BBB/Watch Neg BBB
2015-1 BBB/Watch Neg BBB
2015-2 BBB/Watch Neg BBB
2016-1 BBB/Watch Neg BBB
2016-2 BBB/Watch Neg BBB
==============
B O L I V I A
==============
BOLIVIA: Moody's Rates USD$1BB Bond Issuance; Outlook Negative
--------------------------------------------------------------
On May 24, 2017, Moody's corrected its press release dated May 23,
2017 to change the bond maturity date to 2028 in the first
sentence of the press release:
The government of Bolivia issued a USD$1 billion bond issuance on
March 13th, 2017 and Moody's assigned a Ba3 rating to Bolivia's
government bond maturing in 2028 in line with the government's Ba3
issuer rating. Bolivia's rating has a negative outlook.
RATINGS RATIONALE
Bolivia's Ba3 ratings reflects the sovereign's underlying credit
strengths, including robust growth which compares favorably with
Ba-rated peers and relatively strong fiscal metrics, including
moderate debt burden with high debt affordability. Bolivia's
credit challenges relate primarily to a high degree of commodity
dependence, especially to natural gas exports, and relatively weak
institutional and policy frameworks - institutional weakness is
reflected by low rankings on the Worldwide Governance Indicators.
ISSUER RATING OUTLOOK
The negative outlook associated to Bolivia's Ba3 rating reflects
weakening fiscal and balance-of-payment trends. The latter is
evidenced by widening fiscal and current account deficits given
lack of fiscal adjustment measures to compensate for lower
hydrocarbon revenues. Moody's expects government and balance of
payments deficits to result in declining fiscal buffers and
international reserves, conditions which have weakened fiscal
strength and increased susceptibility to external shocks.
FACTORS THAT COULD LEAD TO UPGRADE/DOWNGRADE
Moody's could move the outlook to stable from negative upon
evidence that a sustained reversal of negative fiscal and external
balance trends has materially reinforced Bolivia's fiscal and
economic strength. Upward pressure on the rating could materialize
as a result of (1) a track record of sound fiscal management in
the context of lower hydrocarbon prices; (2) introduction of
fiscal adjustment measures that compensate for lower revenues and
improve medium-term fiscal prospects.
Bolivia's ratings could be downgraded in the event of (1)
continued material deterioration of fiscal accounts that lead
government debt metrics to diverge from those observed in Ba-rated
peers; (2) a continued and material depletion of fiscal and
external financial buffers; (3) a return of political instability
that negatively affects policy predictability.
==========================
C A Y M A N I S L A N D S
==========================
CCI INTERNATIONAL: Shareholders' Meeting Set for June 1
-------------------------------------------------------
The shareholders of CCI International Partners European Fund Ltd.
will hold their final meeting on June 1, 2017, at 10:00 a.m., to
receive the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Columbus Circle Investors
Metro Center
One Station Place
Stamford
Connecticut 06902
United States of America
Telephone: +1 (203) 353 6000
ESTLANDER & PARTNERS: Shareholder to Hear Wind-Up Report on June 5
------------------------------------------------------------------
The shareholder of Estlander & Partners Cayman SPC will hear on
June 5, 2017, at 10:00 a.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Aidan Brophy
St Galls House
Milltown
Dublin 14
Ireland
Telephone: 0035312989333
Facsimile: 0035312989366
HSBC GUYERZELLER: Shareholders' Final Meeting Set for June 8
------------------------------------------------------------
The shareholders of HSBC Guyerzeller Trust Company will hold their
final meeting on June 8, 2017, at 10:00 a.m., to receive the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Tian Peralto
Harneys Liquidation Services (Cayman) Limited
Telephone: (345) 949 - 8599
Harneys Services (Cayman) Limited
Harbour Place, 4th Floor
103 South Church Street
P.O. Box 10240 Grand Cayman KY1-1002
Cayman Islands
LIANGA INVESTMENTS: Sole Member to Hear Wind-Up Report on June 6
----------------------------------------------------------------
The sole member of Lianga Investments will hear on June 6, 2017,
at 10:00 a.m., the liquidator's report on the company's wind-up
proceedings and property disposal.
The company's liquidator is:
Cassava Company Limited
Lyford Cay House, 3rd Floor
P.O. Box N-3024, Nassau
Bahamas
Telephone: (242) 702-5900
Facsimile: (242) 702-5970
METISQ LIBRA: Shareholders' Final Meeting Set for June 1
--------------------------------------------------------
The shareholders of METISQ Libra Greater China Equity Fund Ltd
will hold their final meeting on June 1, 2017, at 10:10 a.m., to
receive 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
NEZU ASIA: Shareholder to Hear Wind-Up Report on June 9
-------------------------------------------------------
The shareholder of Nezu Asia Fund Japan Only Trading Ltd. will
hear on June 9, 2017, at 2:00 p.m., the liquidator's report on the
company's wind-up proceedings and property disposal.
The company's liquidator is:
Richard Kincaid
c/o Richard Bennett
Telephone: +852 3656 6069
Facsimile: +852 3656 6001
ODEBRECHT DRILLING: Fitch Cuts Rating on Secured Notes to C
-----------------------------------------------------------
Fitch Ratings has downgraded the senior secured notes issued by
Odebrecht Drilling Norbe VIII/IX Ltd. (ODN) to 'C' from 'CC' and
has affirmed the rating assigned to the senior secured notes
issued by Odebrecht Offshore Drilling Finance Ltd. (OODFL) at 'D'.
Fitch has also maintained its recovery estimate (RE) for ODN at
RE70% and for OODFL at RE60%. The outstanding balance on the OODFL
notes is approximately $1.9 billion and $1.1 billion on the ODN
notes.
The rating actions on the notes follow the announcement that
Odebrecht Oleo e Gas S.A. (OOG) and certain subsidiaries have
entered into an agreement with a group of creditors to restructure
their financial debt. According to the restructuring plan, the
notes issued by ODN and OODFL will be exchanged for new notes with
revised terms based on the present cash flow of the assets. Under
the terms of the new notes, amortizations will occur quarterly, in
two tranches.
KEY RATING DRIVERS
Debt Restructuring Announcement: In Fitch's opinion the
restructuring agreement will result in a distressed debt exchange
(DDE) as the restructuring will take place in order to avert a
probable payment default on the notes and the economic terms of
the issuances will be reduced. Since issuance, the operating
environment for the assets securing the 2021 and 2022 bonds has
changed and the targeted operating metrics have not been met.
Additionally, since issuance OOG has had to provide support
through CapEx/OpEx coverage, and without the restructuring ongoing
support would be necessary in order to meet timely debt service.
The restructuring of the notes will also increase their maturity,
which, according to Fitch's Global Structured Finance Rating
Criteria, translates into a reduction in the original economic
terms of the notes. The new notes that investors will receive will
have two tranches. The first tranche has a fixed amortization
schedule and bears the same interest rate (6.35% per annum for the
2021 notes and 6.72% per annum for the 2022 notes) and the
maturity (2021 and 2022) as the current notes. The second tranche
is subordinated to the first tranche and has a 100% variable
amortization based on the cash surplus of the projects. The second
tranche notes will bear interest at a rate 1% per annum higher
than the first tranche notes and mature in 2026.
The restructuring will be implemented through a single
extrajudicial restructuring (ER) procedure in Brazil comprised of
three different ER plans signed by creditors representing at least
60% of the total amounts of claims for each plan. After the ER
confirmation the company will enter into an ancillary Chapter 15
proceeding in the U.S. After the issuance of the U.S. bankruptcy
court recognition the company will conduct a mandatory exchange
and creditors will receive the new notes. The process is expected
to take approximately five to six months
Fitch downgraded the OODFL notes to 'D' on April 3, 2017 after a
missed interest payment. Fitch will maintain the 'D' rating until
the notes are restructured and the exchange is finalized.
RATING SENSITIVITIES
Once the restructuring is finalized Fitch expects to lower the ODN
note's rating to 'D'. This would reflect Fitch's view that a DDE
has occurred and that it regards the DDE as a default.
Immediately after the effective date of the DDE, the rating of the
extinguished notes, having been lowered to 'D' on the effective
date of the DDE (as described above), will be withdrawn.
Additionally, the new notes issued in exchange would be analysed
purely on the transaction's credit profile after the restructuring
or exchange, coupled with any structural and/or legal
considerations related to the specific issuance.
DUE DILIGENCE USAGE
No third-party due diligence was provided to or reviewed by Fitch
in relation to this rating action.
Fitch has taken the following rating actions:
Odebrecht Offshore Drilling Finance Ltd.
-- Series 2013-1 senior secured notes affirmed at 'D/RE60%';
-- Series 2014-1 senior secured notes affirmed at 'D/RE60%'.
Odebrecht Drilling Norbe VIII/IX Ltd.
-- Series 2010-1 senior secured notes downgraded to 'C/ RE70%'
from 'CC/ RE70%'.
PAWNEESE LIMITED: Shareholders' Final Meeting Set for June 6
------------------------------------------------------------
The shareholders of Pawneese Limited will hold their final meeting
on June 6, 2017, at 10:00 a.m., to receive the liquidator's report
on the company's wind-up proceedings and property disposal.
The company's liquidator is:
Cassava Company Limited
Lyford Cay House, 3rd Floor
P.O. Box N-3024, Nassau
Bahamas
Telephone: (242) 702-5900
Facsimile: (242) 702-5970
Q DENMARK: Shareholders' Final Meeting Set for May 30
-----------------------------------------------------
The shareholders of Q Denmark will hold their final meeting on
May 30, 2017, at 10:00 a.m., to receive the liquidator's report on
the company's wind-up proceedings and property disposal.
The company's liquidator is:
Walkers Liquidations Limited
Cayman Corporate Centre
27 Hospital Road
George Town Grand Cayman KY1-9008
Cayman Islands
ZAI LABORATORY: Shareholders Receive Wind-Up Report
---------------------------------------------------
The shareholders of Zai Laboratory Limited received the
liquidator's report on the company's wind-up proceedings and
property disposal.
The company's liquidator is:
Ying Du
1043 Halei Road, Bldg. 8, Suite 502
Zhangjiang Hi-tech Park, Pudong
New Area
Shanghai
China 201203
=============
J A M A I C A
=============
DIGICEL GROUP: Fitch Affirms 'B' Long-term IDR; Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed at 'B' the Long-term Foreign-currency
Issuer Default Ratings (IDR) of Digicel Group Limited (DGL) and
its subsidiaries, Digicel Limited (DL) and Digicel International
Finance Limited (DIFL), collectively referred to as Digicel. The
Rating Outlook is Stable. Fitch has also affirmed all existing
issue ratings of Digicel's debt instruments.
KEY RATING DRIVERS
Digicel is a diversified telecom operator, with its operational
footprints across the Caribbean and South Pacific regions. DGL is
the ultimate holding company within Digicel group's organization
structure, which owns an intermediate holding company, DL. DIFL is
an indirect 100% owned subsidiary of DL, and it owns operating
assets in 25 markets in the Caribbean region. The group's Pacific
operations are owned by DGL.
Under Fitch's approach to rating entities within a corporate group
structure, DGL's IDR and those of its subsidiaries, DL and DIFL,
are equal at 'B', based on a consolidated group credit profile,
given the strong strategic and financial linkages. Different
rating levels for each entity's debt instruments reflect varying
recovery prospects in case of default according to seniority of
the claims.
Digicel's ratings reflect the company's well-diversified
geographical operations with leading market positions, strong
network quality, and brand recognition, which support relatively
stable performance on a local-currency basis. This is tempered by
the company's high leverage, adverse FX volatility in the absence
of effective hedging, and its recent negative FCF generation and
low cash balance.
Digicel's medium-term refinancing risk for its senior notes from
FY21 remains a key credit concern. Continuing increases to the
U.S. Federal Reserve's benchmark rate will likely lead to higher
interest rates for the company's refinancing activities, and it
also could result in continued depreciation of local currencies of
Digicel's operational markets. The company needs to materially
improve EBITDA generation to be able to cope with these risks in
the short to medium term. Meaningful free cash flow generation due
to the investments made in cable and cost cutting initiatives
under its transformation projects will be key to rating stability
in the next two years.
Improved Financial Flexibility:
Digicel's financial flexibility was improved during May 2017,
following DIFL's refinancing of its existing credit facilities.
The company issued USD1.26 billion term loans through a five-year
USD300 million term loan A and a USD955 million seven-year term
loan B, to fully pay off its USD856 million credit facility loans,
which were originally scheduled to be amortized from March 2018 on
a semi-annual basis until March 2019. Digicel will also redeem
DL's USD250 million notes due in 2020 and the USD80 million debt
maturity from its Digicel Pacific Limited (DPL) facility loan with
the loan proceeds. Digicel will not face any sizable bond
maturities until FY21, which will end on March 31, 2021, when its
USD2 billion notes become due. The company will also have
additional USD100 million revolver, which will be undrawn at the
closing of the transaction.
High Leverage:
Digicel's leverage is high. The company's leverage has been
gradually trending up due to uncurbed negative FCF generation
since the FY12, caused by high capex, amid ongoing EBITDA
contraction. Digicel's adjusted net leverage was 6.4x including
off-balance sheet adjustment, with its gross debt amounted to
USD6.5 billion at Q3FY17, relatively unchanged from the end-FY16
level, while its EBITDA during the first nine month of FY17 has
fallen by 12% compared to the same period a year ago. Material
improvement in leverage ratios and FCF generation in the short to
medium term is critical for the company to mitigate a refinancing
risk ahead of its bond maturities of USD5.2 billion during FY21 -
FY23.
Negative FCF to Reverse:
Fitch forecasts Digicel's FCF generation will turn positive in
FY18 driven by gradual EBITDA improvement amid a lower capex
requirement. Digicel's FCF has remained in negative territory in
recent years mainly due to high capex for fiber network
investments. The company's capex soared to USD649 million and
USD607 million in FY15 and FY16, respectively, from just USD361
million in FY13, with the capital intensity ratio, measured by
capex-to-sales, rising to an average 23%, compared to just 13% in
FY13. FY17 Capex is forecast to close at about USD450 million,
resulting in continued negative FCF margin of around 3%, based on
Fitch's projections.
Negative FCF generation is likely to reverse from FY18 as major
investments for fiber are mostly completed. EBITDA is expected to
improve, mainly supported by first-time positive EBITDA
contribution from the cable segment and cost savings from the
transformation project, through which the company plans to enhance
its EBITDA margins by 2% to 4% by the end of FY18. Fitch estimates
that Digicel requires at least about USD1.1 billion of EBITDA to
achieve break-even FCF in FY18 and FY19, with about 10% reduction
in capex from the FY2017 level of USD450 million. Fitch forecasts
the company's EBITDA generation will gradually improve to above
USD1.2 billion by FY19, barring worse than expected local currency
depreciation against the U.S. dollar, which should support
positive FCF generation of close to USD100 million and gradual
deleveraging to below 5.5x by end-FY19. This compares to Digicel's
publicly announced target of positive FCF generation of at least
USD100 million in FY18 and reducing its gross leverage to below
5.25x by the end of FY18 and to 4.5x by the end of FY19.
Despite positive FCF generation, Fitch believes that the actual
net debt reduction would be slow due to cash outflows related to
Digicel Holdings Central America Ltd (DHCAL) investments, license
fees, and one-off cash outflows related with its transformation
project.
FX Threatens Stable Performance:
Digicel's relatively stable performance based on constant currency
terms have been beset by negative impact from the local currency
depreciation against the U.S. dollar. Digicel is subject to FX
mismatch as its debt is mostly denominated in U.S. dollar,
compared to 50% to 55% of EBITDA generation in U.S. dollars or
euros, or currencies pegged to the U.S. dollar. This could
continue to weigh on the company's cash flow generation and its
ability to service debt obligation, while the company's recent
tariff increases in its key markets should help mitigate the risk
to an extent.
Digicel has generated relatively stable operating results on a
local-currency basis in the first nine months of fiscal 2017
(9MFY17). During the period, the company's constant-currency-based
service revenue grew by about 1%, underpinned by increasing
revenue contributions from mobile data, cable and broadband, and
business solutions operations, which helped offset continued voice
revenue erosion. Negatively, this growth has been largely diluted
by ongoing FX volatility, which led to a 6% revenue contraction in
the reported U.S. dollar. Reported EBITDA has also deteriorated by
12% during 9MFY17, although it remained relatively unchanged under
the constant currency terms.
Positive Revenue Diversification:
Ongoing revenue diversification away from traditional mobile voice
is positive as the revenue proportion of mobile voice fell to 50%
during 9MFY17 from 56% a year ago. The contribution from mobile
data should continue to steadily increase over the medium term,
mitigating negative pressures on the voice ARPU, which has
suffered from competitive pressures and reduced mobile termination
rates in some markets. During 3QFY17, mobile data revenues grew by
7% from a year ago on a constant currency basis, accounting for
33% of total service revenues, driven by a steady increase in
smartphone penetration to 49% from 41% a year ago.
In addition, Digicel's recent strategic focus on cable/broadband,
along with business solutions, should enable further revenue
diversification as it continues to connect more homes on its
established networks. The company's total cable RGUs have
increased by 3.6 times in Q3FY17 compared to a year ago to 546,000
from 152,000 with the segmental revenues increasing by 106% to
USD43 million from USD21 million. Digicel's cable and business
solutions segments represented 7% and 8% of total service
revenues, respectively, during 3Q17. The cable segment reached
profitable EBITDA for the first time during 3QFY17, and Fitch
expects the segment to contribute to about USD40 million EBITDA
improvement in FY18.
DERIVATION SUMMARY
Digicel's solid business profile, with leading mobile market
shares in its well-diversified operational geographies supported
by network competitiveness, is considered strong for a 'B' rating.
Digicel's financial profile, mainly leverage, is materially weaker
than its regional diversified telecom peers in the sub-investment
grade rating categories, including Millicom International Celular
S.A., rated 'BB+', and Cable & Wireless, rated 'BB-'. Digicel's
financial leverage is one of the highest among the regional
telecom peers, reflected in its 'B' rating level. Strong parent-
subsidiary linkage exists among Digicel group companies based on
intra-group cash flow movement to service debt at its holding
company level, resulting in a same IDR level for DGL, DL, and
DIFL. No country ceiling or operating environment influence was in
effect for the ratings.
KEY ASSUMPTIONS
-- Low single-digit annual revenue growth in FY18 and FY19;
-- Gradual EBITDA margin improvement from FY18 backed by
profitable cable operations and transformation projects;
-- Positive FCF generation in FY18 and FY19 with an average
annual capex of USD420 million;
-- No dividend payments over the medium term;
-- Adjusted net leverage to fall to below 5.5x by FY19.
RATING SENSITIVITIES
A negative rating action could be considered if consolidated
leverage at DGL remains above 6.0x on a sustained basis, due to a
combination of competitive pressures, negative FX movement, high
capex, sizable acquisitions, and aggressive shareholder
distributions. FCF generation of less than USD200 million by end-
FY19 and its inability to proactively manage debt maturities would
be negative for the ratings.
A positive rating action would be limited in the short to medium
term, given the company's high leverage and low cash balance
compared to the historical levels.
LIQUIDITY
Digicel's liquidity profile is adequate as the company will not
face any sizable bond maturity until FY21, when its USD2 billion
notes become due, following the recent DIFL loans refinancing. The
company held USD201 million cash balance at Dec. 31, 2016, and
Fitch expects USD80 million of DPL loan, originally due in August
2017, to be paid off with the refinancing proceeds. Digicel also
has access to its USD100 million revolving credit facility.
FULL LIST OF RATING ACTIONS
Fitch has affirmed Digicel's ratings:
Digicel Group Limited
-- Long-Term Issuer Default Rating (IDR) at 'B'; Outlook Stable;
-- USD 2 billion 8.25% senior subordinated notes due 2020 at 'B-
/RR5';
-- USD 1 billion 7.125% senior unsecured notes due 2022 at 'B-
/RR5'.
Digicel Limited
-- Long-Term IDR at 'B'; Outlook Stable;
-- USD 250 million 7% senior notes due 2020 at 'B/RR4';
-- USD 1.3 billion 6% senior notes due 2021 at 'B/RR4';
-- USD 925 million 6.75% senior notes due 2023 at 'B/RR4'.
Digicel International Finance Limited
-- Long-Term IDR at 'B'; Outlook Stable;
-- Senior secured term loans and USD100 million revolving
credit facility at 'B+/RR3'.
JAMAICA: Decline Recorded in Mining & Quarrying Sector During 1Q
----------------------------------------------------------------
RJR News reports that Jamaica's Mining and Quarrying sector
suffered a decline during the January to March quarter.
The Bank of Jamaica said this reflected contractions in alumina
and crude bauxite production and this was due to lower capacity
utilization, according to RJR News.
According to the Central Bank's quarterly monetary policy report,
the decline in alumina production was largely due to operational
challenges at some of the mining plants, the report relays. It
added that the contraction in bauxite was due to a reduction in
demand, the report notes.
Meanwhile, the four biggest aluminum companies in the world: UC
Rusal -- which has operations in Jamaica; Alcoa, Norsk Hydro and
Rio Tinto had a good start to 2017.
Due to higher aluminum and alumina prices, all four registered
significantly higher net profits during the January to March
quarter compared to the previous three months, the report relays.
Rusal is the largest producer of primary aluminum, Rio Tinto is
the biggest producer of bauxite, while Alcoa is the leading
producer of alumina, the report notes.
A report on the website aluminiuminsider.com said with average
price of aluminum on the London Metals Exchange expected between
one thousand US$850 and US$1,900 per ton this year the companies
may see significant profit increases, RJR News adds.
As reported in the Troubled Company Reporter-Latin America on
Feb. 9, 2017, Fitch Ratings affirmed Jamaica's Long-Term Foreign
and Local Currency Issuer Default Ratings (IDRs) at 'B' with a
Stable Outlook. The issue ratings on Jamaica's senior unsecured
Foreign and Local Currency bonds are also affirmed at 'B'. The
Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is
affirmed at 'B' and the Short-Term Foreign Currency and Local
Currency IDRs at 'B'.
===========
M E X I C O
===========
BANCA MIFEL: Fitch Affirms BB Long-Term IDR; Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Banca Mifel's Viability Rating (VR) at
'bb' and its Long- and Short-Term Foreign and Local Currency
Issuer Default Ratings (IDRs) at 'BB/B'. The Rating Outlook on the
Long-Term ratings is Stable.
KEY RATING DRIVERS
VR, IDRS AND NATIONAL RATINGS
Mifel's IDRs and National ratings are driven by its intrinsic
creditworthiness, as reflected in its VR. Mifel's VR is highly
influenced by its modest franchise in the Mexican banking system,
less diversified business model oriented to medium and big
enterprises. Its VR also considers its adequate asset quality, the
improved profitability that supports its adequate capitalization
metrics, which compares well to that shown by its closest peers
with similar ratings. The ratings also factor in the bank's higher
risk appetite reflected in elevated credit concentrations and high
growth which can occasionally overcome the institution's capital
generation.
Mifel's delinquency levels have improved since 2013 overcoming the
problems of government loans exposure in the past. Its impaired
loan ratio has been controlled at levels below 2%. The improvement
in delinquency levels reflected its adequate loan origination
process and its strategy oriented toward proven economic sectors
by the bank. However, asset quality also factors in Mifel's high
credit concentration, where the 20 largest creditors at first
quarter 2017 (1Q17) accounted for 25.7% of total loans and 2.1x
the bank's Fitch Core Capital (FCC). Fitch considers that the
usage of guarantees granted by developments entities and the
bank's good collateral schemes, partially mitigate its risk
concentration and offset the bank's lower reserve coverage than
its closest peers.
Mifel's profitability has shown improvement since 2014. Its
operating return on risk weighted assets increased to 2.3% at the
1Q17, compared with the three year average of 1.5%, and well above
from those registered in 2013 when the bank faced high operating
costs and greater impairment charges explained by two government
creditors. This positive trend in Mifel's profitability is
underpinned by higher revenues and the bank's efforts to maintain
controlled operating and credit costs.
Loans impairment charges as a percentage of pre-impairment
operating profit stood at 42.4% during 1Q17, slightly lower than
the 52.8% averaged of the last three years, reflecting
provisioning as a result of loan growth. Fitch considers that the
bank's profitability will remain relatively stable or improve
moderately depending on the successful execution of its growth
strategy amid complicated economic environment and competitive
sector; and the ability to benefit from higher interest rates
while maintaining controlled funding and risk costs.
In Fitch's opinion, Mifel's capitalization metrics are adequate
and are underpinned by its ability to internally generate capital.
Prior 2015 capital metrics were relatively tighter and lower than
its closest peers, but the capital injection received by Advent
(one of Mifel's institutional shareholder) coupled with its
adequate ability to internally generate capital, have been
strengthening its capitalization levels in recent years. As of
1Q17, its FCC ratio and internal capital generation stood at 12.0%
and 16.5% respectively.
Fitch considers that the bank's liquidity and funding position is
adequate. Deposits are the bank's primary funding source, 49.8% of
total funding as of March 2017. Concentrations among Mifel's
depositors continues at relatively low levels, the 20 major
clients at March 2017 represented 15.9% of total deposits, most of
them institutional, which have proven stable historically. The
bank's loans to deposits ratio deteriorated to 156.4% during 1Q17,
up from 155% and 130% in 2016 and 2015 respectively. This increase
is driven by higher loan growth compared to deposit growth. Its
liquidity position is adequate, reflected in sufficient liquid
assets and a Liquidity Coverage Ratio (LCR) consistently above
100%.
SUPPORT RATING
Mifel's Support Rating and Support Rating Floor were affirmed at
'5' and 'NF', respectively, in view of the bank's low systemic
importance, which indicates that although possible, external
support cannot be relied upon.
SUBORDINATED NOTES
The bank's global subordinated securities were affirmed at 'B+',
two notches below the applicable anchor rating, Mifel's VR of
'bb'. The ratings are driven by Fitch's approach to factoring
certain degrees of subordination. Similar securities would
typically be two notches lower for non-performance risk and an
additional notch lower for loss severity. However, in Mifel's
case, the overall notching is limited to two notches, due to
compression considerations (as per Fitch's existing criteria).
The notching factor in its non-performance risk (-1) since Fitch
considers that the triggers for coupon deferrals or cancellations
are relatively high, according to applicable local regulations and
an additional (-1) for loss severity, which reflects that these
securities are plain-vanilla subordinated debt (subordinated
preferred, under the local terminology).
This issue receives no equity credit under Fitch's approach, since
these are dated securities without a loss absorbing feature that
triggers before the point of non-viability.
RATING SENSITIVITIES
VRs, IDRS AND NATIONAL RATINGS
Mifel's ratings could be upgraded if the bank continues
consolidating its franchise and financial performance;
specifically, if the bank shows sustained operating ROA to RWAs
ratio above 2%, together with a consistent FCC to RWAs of 13%,
while maintaining adequate asset quality.
The ratings could be affected negatively from a material
deterioration of its financial profile. Fitch believes a downgrade
could be occur if operating ROA returns to levels below 1% and if
the FCC to RWAs ratio falls below 10%. Material deteriorations on
Mifel's asset quality metrics and pressures on its liquidity
profile could also trigger a downgrade.
SUPPORT RATING
A potential upgrade of Mifel's Support Rating and Support Rating
Floor is limited at present, since external support cannot be
relied upon.
SUBORDINATED NOTES
The bank's subordinated debt ratings will likely mirror any change
in the bank's VR, as these are expected to maintain the same
relation to Mifel's intrinsic profile.
Fitch affirms the following ratings:
Banca Mifel, S.A.
-- Long-Term Foreign and Local Currency IDRs at 'BB'; Outlook
Stable;
-- Short-Term Foreign and Local Currency IDRs at 'B';
-- Viability Rating at 'bb';
-- Support Rating at '5';
-- Support Rating Floor at 'NF';
-- National scale long-term rating at 'A(mex)'; Outlook Stable;
-- National scale short-term rating at 'F1(mex)';
-- Long-term cumulative subordinated preferred notes at 'B+'.
BANCO VE POR: Fitch Affirms BB Long-Term Issuer Default Ratings
---------------------------------------------------------------
Fitch Ratings has affirmed the foreign and local currency long-
and short-term Issuer Default Ratings (IDRs) at 'BB' and 'B',
respectively, of Banco Ve por Mas, S.A. Institucion de Banca
Multiple (BBX+). Fitch also affirmed BBX+'s Viability Rating (VR)
at 'bb' and its national scale ratings at 'A(mex)/F1(mex)'.
Simultaneously, Fitch has affirmed the national scale ratings of
Casa de Bolsa Ve por Mas, S.A. de C.V. (CBBX+) and Arrendadora Ve
por Mas, S.A. de C.V. Sofom E.R. (AXB+) at 'A(mex)/'F1(mex)'.
The Rating Outlook on the long-term ratings is Stable.
KEY RATING DRIVERS
IDRS, NATIONAL RATINGS AND SENIOR DEBT
BBX+'s IDRs and national scale ratings are driven by its VR of
'bb', which reflects the bank's less diversified business model
and low sized franchise, its stable asset quality, and its
liquidity profile that compares better than its closest peers, as
well as its adequate capital metrics despite the last two years of
accelerated loan growth. BBX+'s ratings also reflect profitability
that is weaker than its closest peers; the bank's ongoing
expansion phase has accelerated growth but also increased
operating expenses.
Despite the rapid loan portfolio growth, BBX+ maintains acceptable
asset quality in both its banking and trading book. The bank's
non-perming loan ratios (NPL) remain low and the loan loss
reserves stands at reasonable levels. As of March 2017, the NPL
ratio including charge-offs stood at 1.3% (1.3% for the average of
the last three years), while the loan loss reserve stood at 1.3%
of gross loans. Credit concentrations are high. As of the same
date, the 20 largest borrowers represented 2x the bank's Tier I
equity, levels that are aligned with its business model and
closest peers. BBX+'s asset quality is also supported by its low
risk profile on its trading book, 27.6% of total assets, mainly
local government securities or bank securities with adequate
credit quality.
In Fitch's view, BBX+'s good liquidity profile is supported by a
stable and relatively diversified customer deposits base. The
bank's liquidity profile also benefits from customer deposits that
have increased to healthy and sustainable levels that match the
growth of its loans. Liquidity is also supported by the use of
other long-term funds that help the bank carefully manage its
balance sheet. BBX+ has access to interbank fund and long-term
debt in the local capital markets in order to match the tenure of
its balance sheet. However, its loan to deposit ratio stood at
142.2%, a higher level than its closest peers.
As expected, BBX+'s capital ratios have declined due to the bank's
strategy of aggressive expansion (loan growth of 25.3% at YE
2016). However, actual ratios are still adequate because of the
shareholder's propensity to support the bank's growth through
capital infusions. At the end of March 2017, the bank's Fitch Core
Capital (FCC) to risk weighted assets (RWA) stood at 12.8%. Fitch
expects BBX+'s capital ratios will be constrained as the growth
strategy develops, with a FCC to RWA around 13%. The bank's main
challenge will be to compensate for the decline with more solid
internal capital generation.
As the bank is in the middle phase of the expansion strategy, its
profitability metrics are weaker compared to its local and
international closest peers. In 2016, the bank's operating profit
to RWA was 0.7%, considerably lower than the average of the last
three years (1.2%). The results are pressured by growing operating
expenses related to infrastructure expansion; however the bank has
almost reached its goal of infrastructure expansion, and such
expenses will be much lower than the viewed the last two years.
Fitch expects BX+ will be challenged to compensate for the high
growth with higher profits and for the bank's operating profit to
RWA and its operating ROA will remain under 1% for at least the
next two years.
CBBX+'s and ABX+'s national ratings are derived from the support
they would receive, if needed, from their ultimate parent, Grupo
Financiero Ve por Mas (GFBX+). The group has a legal commitment
with its subsidiaries according to local regulation. GFBX+'s
creditworthiness is associated with its main subsidiary, BBX+,
whose national scale rating stands at 'A(mex)' with a Stable
Outlook. Both CBBX+ and ABX+ are core to the group, which is
reflected in the operative synergies (crossed sales and
integration) and in the strategic alignment.
The bank has local senior unsecured debt, which was also affirmed
at the level of its national scale rating given Fitch's assessment
that the likelihood of default of any given senior unsecured
obligation is the same as the likelihood of default of the bank.
SUPPORT RATING AND SUPPORT RATING FLOOR
BX+'s Support Rating and Support Rating Floor of '5' and 'NF',
respectively, reflect the bank's low systemic importance,
indicating that, although possible, external support cannot be
relied upon.
RATING SENSITIVITIES
IDRS, NATIONAL RATINGS AND SENIOR DEBT
BBX+'s ratings could be upgraded in the medium term if the bank
achieves a sustained higher profitability maintaining its current
good asset quality, adequate liquidity profile and reasonable
capital metrics. Fitch believes this process will likely take time
as the development of those factors requires a consolidation
period. Specifically, the bank's ratings would benefit from an
operating profit to RWA consistently above 2% and a sustained FCC
to RWA ratio over 13%.
In turn, BBX+'s ratings could be negatively affected by a
significant deterioration of its financial profile, specifically
if the bank shows a FCC to RWA ratio consistently below 10% and
operating profit to RWA ratio under 1%. A deterioration of its
liquidity profile could also push the ratings down.
The bank's senior debt ratings would mirror any change in the
bank's national scale ratings.
CASA DE BOLSA Y ARRENDADORA
CBBX+'s and ABX+'s ratings will be aligned with their ultimate
parent (GFBX+), whose credit quality is reflected in BBX+. Any
change in the bank's ratings would have a similar effect on the
ratings of both CBB+ and ABX+.
SUPPORT RATING AND SUPPORT RATING FLOOR
Upside potential for the SR and SRF is limited and can only occur
over time with a material growth of the bank's systemic
importance.
Fitch has affirmed the following ratings:
BBX+
-- Foreign currency long-term IDR at 'BB'; Outlook Stable;
-- Foreign currency short-term IDR at 'B';
-- Local currency long-term IDR at 'BB'; Outlook Stable;
-- Local currency short-term IDR at 'B';
-- Viability Rating at 'bb';
-- Support Rating at '5';
-- Support Rating Floor at 'NF'.
-- National Long Term Rating at 'A(mex)';Outlook Stable;
-- National Short Term Rating at 'F1(mex)'.
-- Senior Unsecured Long Term Debt at 'A(mex)'.
CBBX+
-- National Long Term Rating at 'A(mex)'; Outlook Stable;
-- National Short Term Rating at 'F1(mex)';
ABX+
-- National Long Term Rating at 'A(mex)'; Outlook Stable;
-- National Short Term Rating at 'F1(mex)'.
MAXCOM TELECOMUNICACIONES: S&P Cuts CCR to 'SD' on Debt Repurchase
------------------------------------------------------------------
S&P Global Ratings lowered its corporate credit rating on Maxcom
Telecomunicaciones S.A.B. de C.V. to 'SD' (selective default) from
'CC'. At the same time, S&P lowered its issue-level ratings on
the company's senior secured step-up notes to 'D' from 'CC'. The
recovery ratings on the notes remain at '4', indicating S&P's
expectation for average (30%-50%) recovery to creditors if a
payment default occurs.
The rating action follows the company's announcement that it has
completed a repurchase of a portion of its senior secured step-up
notes due 2020. S&P views the repurchase as distressed because
investors will receive significantly less than what was promised
on the original securities and because S&P is concerned about
Maxcom's current business model sustainability due to high
competitive pressures from larger and better capitalized telecom
and cable companies. While the repurchase will somewhat improve
the debt-to-EBITDA ratio, it will remain above 7.0x and will
weaken the company's cash position. However, the latter is still
sufficient to cover Maxcom's short-term obligations. S&P expects
to raise the corporate credit and issue-level ratings to 'CCC+'
over the next few days, given that the company doesn't face any
significant maturity until 2020.
MEXICO: Cancelling NAFTA Would Be Lost Opportunity for 3 Countries
------------------------------------------------------------------
EFE News reports that Mexican Foreign Minister Luis Videgaray said
that cancelling the North Atlantic Free Trade Agreement would be a
"lost opportunity" for the US, Canada and Mexico, but he
reiterated that his country is "ready" for negotiations to update
it.
A potential cancellation of the treaty would be "above all, a lost
opportunity . . . . (because) NAFTA is good for the three
economies, although there is no doubt it can be improved," said
the minister in response to reporters' questions, according to EFE
News.
MEXICO: Ford CEO Says No Change in Plan to Scrap $1.6BB Investment
------------------------------------------------------------------
EFE News reports that New Ford Motor Co. Chief Executive Officer
Jim Hackett said that the automaker did not plan to reverse the
decision to scrap $1.6 billion in investments in Mexico.
The 62-year-old Hackett said during a press conference that his
goal was to change Ford's culture to compete in the rapidly
evolving automotive industry, according to EFE News.
Ford Motor's executive chairman, Bill Ford, said Hackett had
already made his mark while running the automaker's self-driving
vehicle unit, the report notes.
"(Hackett) will continue to transform the culture of Ford," the
executive chairman said, the report relays.
The report notes that the automaker said that Chief Executive
Officer Mark Fields was retiring and would be replaced by Hackett,
a former University of Michigan football player who served as CEO
of furniture company Steelcase for nearly two decades and was
later interim athletic director at his alma mater.
Mr. Hackett, who was not involved in the decision to shelve the
investment plans for Mexico, said Ford made the decision for
business and not political reasons, the report relays.
Ford's board of directors had questioned the 56-year-old Fields's
business plan in recent weeks amid a sharp drop in the automaker's
share price, the report says.
The automaker announced several other executive appointments,
naming Jim Farley executive vice president and president of global
markets; Joe Hinrichs executive vice president and president of
global operations; and Marcy Klevorn executive vice president and
president of mobility, the report relays.
***********
Monday's edition of the TCR-LA delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-LA editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Monday
Bond Pricing table is compiled on the Friday prior to publication.
Prices reported are not intended to reflect actual trades. Prices
for actual trades are probably different. Our objective is to
share information, not make markets in publicly traded securities.
Nothing in the TCR-LA constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR-LA editor holds some position in the
issuers' public debt and equity securities about which we report.
Tuesday's edition of the TCR-LA features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
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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
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