/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/170713.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, July 13, 2017, Vol. 18, No. 138 Headlines A N T I G U S A N D B A R B U D A * ANTIGUA & BARBUDA: Credit Reporting Bill Passed But Put on Hold A R G E N T I N A ACINDAR PYMES: Moody's Withdraws B2 IFS Rating TINUVIEL SERIE XXIII: Moody's Rates ARS1.445MM Certificates C(sf) B R A Z I L BANCO DO ESTADO: S&P Maintains Watch Neg. on 'BB-/B' Ratings ODEBRECHT SA: Pemex Cancels $100 Million Contract C A Y M A N I S L A N D S LIFE PREMIUM: Chapter 15 Case Summary C H I L E VTR FINANCE: Fitch Affirms BB- Long-Term IDR, Outlook Stable C O L O M B I A COLOMBIA: Fiscal Slippage Could Risk Outlook, Fitch Says C U R A C A O PUBLE NV: Unsecureds to Recoup 100% Under Plan D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Coffee Sector at Edge of Collapse P U E R T O R I C O HAIRLAND CORP: Unsecured Creditors to be Paid 3% Under Exit Plan LIBERTY CABLEVISION: Fitch Affirms B+ IDR, Outlook Stable MINI MASTER: Unsecureds to Get Paid from $50K Carve-Out MOTEL TROPICAL: Disclosures OK'd; Plan Hearing on Aug. 23 V E N E Z U E L A PDVSA: Could Seek to Renegotiate October Bond Payment VENEZUELA: S&P Lowers Sovereign Credit Ratings to 'CCC-' X X X X X X X X X * Cigarette Black Market Costing Governments Billions in Losses - - - - - =================================== A N T I G U S A N D B A R B U D A =================================== * ANTIGUA & BARBUDA: Credit Reporting Bill Passed But Put on Hold ----------------------------------------------------------------- The Daily Observer reports that a new legislation that will make it harder for bad debtors to obtain loans from financial institutions in Antigua & Barbuda has been passed in parliament but its enforcement was placed on hold pending further amendments. The Credit Reporting Bill of 2017, which seeks to establish the legal framework for credit reporting in members of the Currency Union was passed on July 10, the report relates. It will do so through "reasonable" procedures that meet the needs of commerce for credit information in a manner that is said to be fair and equitable to borrowers, the Daily Observer says. Simply put, the new system will capture the credit information of residents, which will then be made available to lending agencies and credit facilities, says the report. It clears the way for banks or credit institutions to contact the credit bureau to get information about one's credit and if there is any derogatory information their loan request will be declined, according to the report. However, when PM Browne spoke about the Bill in Parliament, he said its amendment will be delayed because of concerns about the privacy of citizens, which he said will be placed on the table when the Monetary Council meets soon, the report relays. The Daily Observer adds that while admitting that the Antigua & Barbuda government is not at liberty to make any changes to the bill at this stage, "because it is a harmonised bill", Browne said the concerns will be made to the heads of government. ================= A R G E N T I N A ================= ACINDAR PYMES: Moody's Withdraws B2 IFS Rating ---------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo S.A. has withdrawn Acindar Pymes S.G.R.'s B2 global local currency insurance financial strength (IFS) rating, with positive outlook, and its A2.ar Argentine national scale IFS rating, with stable outlook. RATINGS RATIONALE Moody's has withdrawn the ratings for its own business reasons. 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. TINUVIEL SERIE XXIII: Moody's Rates ARS1.445MM Certificates C(sf) ----------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo has rated Fideicomiso Financiero Tinuviel Serie XXIII. This transaction will be issued by TMF Trust Company (Argentina) S.A. -- acting solely in its capacity as issuer and trustee. This credit rating is subject to the fulfillment of contingencies that are highly likely to be completed, such as finalization of documents and issuance of the securities. This credit rating is based on certain information that may change prior to the fulfillment of such contingencies, including market conditions, financial projections, transaction structure, terms and conditions of the issuance, characteristics of the underlying assets or receivables, allocation of cash flows and of losses, performance triggers, transaction counterparties and other information included in the transaction documentation. Any pertinent change in such information or additional information could result in a change of this credit rating. - ARS 32,369,442 in Class A Floating Rate Debt Securities (VDFA) of "Fideicomiso Financiero Tinuviel Serie XXIII", rated Aaa.ar (sf) (Argentine National Scale) and Ba3 (sf) (Global Scale) - ARS 4,335,193 in Class B Floating Rate Debt Securities (VDFB) of "Fideicomiso Financiero Tinuviel Serie XXIII", rated Baa2.ar (sf) (Argentine National Scale) and B3 (sf) (Global Scale) - ARS 19,652,875 in Class C Fixed Rate Debt Securities (VDFC) of "Fideicomiso Financiero Tinuviel Serie XXIII", rated Ca.ar (sf) (Argentine National Scale) and Ca (sf) (Global Scale) - ARS 1,445,064 in Certificates (CP) of "Fideicomiso Financiero Tinuviel Serie XXIII", rated C.ar (sf) (Argentine National Scale) and C (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 5,532 eligible personal loans denominated in Argentine pesos. The loans bear a fixed interest rate and are originated by Tinuviel, a non-regulated financial company based in Argentina. Only the installments due after April 20th, 2017 are assigned to the trust. The VDFA will bear a floating interest rate (BADLAR plus 300bps) with the first coupon payment date in August 2017. The VDFA's interest rate will never be higher than 31% or lower than 22%. The VDFB will bear a floating interest rate (BADLAR plus 400bps) from the issue date which will never be higher than 32% or lower than 23%. The VDFC will bear a fixed interest rate of 39%. Overall credit enhancement is comprised of subordination, various reserve funds and excess spread. The transaction has initial subordination levels of 20.8% for the VDFA and 8.8% for the VDFB, based on the pool's principal balance as of April 20th, 2017. The subordination levels will increase overtime due to the turbo semi- sequential payment structure. The transaction also benefits from an estimated 32.6% annual excess spread, before considering losses, taxes or prepayments and calculated at the caps of 31% and 32% for the VDFA and VDFB respectively. The securitized loans are primarily granted to pensioners and retirees domiciled in Argentina. Tinuviel has signed different agreements with local banks to deduct the installments directly from the borrower's bank accounts. Tinuviel has also entered into a special agreement with Cooperativa de CrÇdito, Consumo y Vivienda 20 de Julio Ltda. (Cooperative) to act as complementary collection agent. Through this agreement, Tinuviel can deduct the loan installments from borrowers with accounts in Banco de la Nacion Argentina (BNA). The percentage collected by the cooperative accounts for 83% of the pool. Tinuviel has signed agreements with Banco Patagonia (Patagonia) and Banco Meridian (Meridian) to deduct the loans installments from the borrower's account for the other 17% of the securitized pool. Factors that would lead to an upgrade or downgrade of the ratings: Although Moody's analyzed the historical performance data of previous transactions and similar receivables originated by Tinuviel, the actual performance of the securitized pool may be affected, among others, by economic activity, high inflation rates compared to nominal pensions increases in Argentina, the operational and financial strength of Tinuviel (and the cooperative), as well as any change in the agreements with the collecting banks. 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. Delinquency levels can be affected by changes in the macroeconomic variables that impact the borrower's credit profile. Serious operational disruption that affects Tinuviel, the cooperative and/or the bank agreements may also lead to an increase in delinquency levels. Factors that may lead to an upgrade of the ratings include the building of credit enhancement over time due to the turbo semi- sequential payment structure. Loss and Cash Flow Analysis: Moody's considered the credit enhancement provided in this transaction through the initial subordination levels for each rated class, the historical performance of Tinuviel's portfolio and performance of previous series. In addition, Moody's considered the impact of any change/issue in the role played by the cooperative as complementary collection agent, Tinuviel's role as servicer and the bank agreements as the main collection mechanism. Considering the above factors, Moody's determines its assumptions of default levels, prepayments and losses upon the default of counterparties. These factors were incorporated in a cash flow model that takes into account all the relevant features of the transaction's assets and liabilities. Monte Carlo simulations were run, which determine the expected loss for the rated securities. In assigning the rating to this transaction, Moody's assumed a lognormal distribution for defaults on the main pool with a mean of 12.9% and a coefficient of variation of 60%. Also, Moody's assumed conditional prepayment rate (CPR) of 6.0%. Moody's modelled scenarios in which the counterparties default, assuming that the defaults on the pool would increase by three times as well as one month of collection lost due to commingling risk. To determine the rating assigned to the notes, Moody's has used an expected loss methodology that reflects the probability of default multiplied by 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. The model results showed 1.1% expected loss for the VDFA, 6.2% for the VDFB, 46.6% for the VDFC and 100.0% for the Certificates. Stress Scenarios: Moody's ran several stress scenarios, including increases in the default rate assumptions. If default rates were increased by 3 percentage points from the base case scenario, the ratings of the VDFA Floating Rate Securities would likely be downgraded to B1 (sf), the VDFB Floating Rate Securities would likely be downgraded to Caa1 (sf), whereas the VDFC and the Certificates would remain unchanged. The principal methodology used in these ratings was "Moody's Approach to Rating Consumer Loan-Backed ABS" published in September 2015. 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. =========== B R A Z I L =========== BANCO DO ESTADO: S&P Maintains Watch Neg. on 'BB-/B' Ratings ------------------------------------------------------------ S&P Global Ratings maintained its 'BB-/B' global scale and 'brA/brA-2' national scale ratings on Banco do Estado do Para S.A.(Banpara) on CreditWatch negative. The bank's stand-alone credit profile (SACP) remains at 'bb-'. S&P's ratings on Banpara reflect its narrow business lines -- it mainly offers payroll deductible lending to the state's public employees and retirees -- and our expectation that current economic conditions constrain diversification. The ratings also reflect the bank's adequate capitalization levels, due to an average risk-adjusted capital (RAC) ratio of 8.0%-8.5% for the next 18-24 months, supported by strong profitability metrics and historically stable dividend payouts. Banpara has improved its asset quality metrics in light of the reduction in its exposure to small and medium enterprises (SMEs) lending. S&P said, "We currently view its payroll loans as less vulnerable to the country's economic downturn than corporate lending activities, which should continue supporting low delinquency levels. Still, the bank is highly exposed to counterparty concentration, given that its payroll portfolio performance relies on the state to provide timely payments to its employees. Banpara also has abundant access to retail funding thanks to its widespread branch network across the state, its well-recognized regional brand, and its position as the state's financial agent. Its stable and diverse deposits are crucial for the bank's strong liquidity position, which provides a comfortable cushion against financial obligations in the next 12 months. Additionally, we don't incorporate any notching of government support into the bank's SACP." The state of Para owns 99.98% of Banpara. S&P said, "We view the likelihood of government support to the bank as moderate, given the latter's limited importance to, and its strong link with, the government. We base this assessment on the state government's majority control of the bank, Banpara's role as the state's financial agent, and the bank's mission to expand banking services to Para's isolated municipalities. On the other hand, we believe Banpara's services could eventually be replaced by another lender, limiting the likelihood of government support." ODEBRECHT SA: Pemex Cancels $100 Million Contract ------------------------------------------------- Reuters reports that Mexican state-owned oil company Pemex said in a filing on July 11 it canceled a 1.8-billion peso ($100-million) contract with Odebrecht SA, a Brazilian engineering company that has admitted paying bribes in a dozen countries in recent years. According to Reuters, Pemex said it notified Odebrecht in mid-June that it was canceling the 2015 engineering, procurement and construction contract at the Miguel Hidalgo refinery in Tula, Hidalgo state, following an investigation into "administrative irregularities." Odebrecht has admitted in a settlement with U.S. and Brazilian prosecutors to paying bribes across 12 countries to win contracts, the report notes. According to the U.S. court ruling, between 2001 and 2016, Odebrecht paid about $788 million in bribes in countries including Brazil, Argentina, Colombia, Mexico and Venezuela, Reuters relates. In Mexico, Odebrecht paid $10.5 million to obtain public works contracts between 2010 and 2014, which generated more than $39 million in profits, according to the U.S. ruling cited by Reuters. Since settling in the United States, Brazil and Switzerland for a record $3.5 billion, Odebrecht has sought to negotiate leniency deals that would allow it to keep operating in other countries across Latin America, Reuters adds. As reporter in the Troubled Company Reporter-Latin America on Dec. 2, 2016, The Wall Street Journal related that Marcelo Odebrecht, the jailed former head of Brazilian construction giant Odebrecht SA, agreed to sign a plea-bargain agreement in connection with Brazil's largest corruption probe ever, according to a person close to the negotiations. The move could roil the nation's political class yet again. The testimony of the former industrialist, which is part of the deal, has the potential to implicate numerous politicians who allegedly took kickbacks from contractors as part of a years-long graft ring centered on Brazil's state-run oil company, Petroleo Brasileiro SA, known as Petrobras, according to The Wall Street Journal. ========================== C A Y M A N I S L A N D S ========================== LIFE PREMIUM: Chapter 15 Case Summary ------------------------------------- Chapter 15 Petitioner: Andrew Richard Victor Morrison FTI Consulting (Cayman) Limited 53 Market Street, Suite 3212 P.O. Box 30613 Camana Bay Grand Cayman, KY1-1203 Cayman Islands Tel: 212-488-1200 Foreign Proceeding in which appointment of the foreign representative occurred: Fin. Servs. Div. of the Grand Ct. Cayman Is., Cause No. FSD 3 of 2015 (AJJ) Chapter 15 Debtor: Life Premium Fund, SPC FTI Consulting 53 Market Street, Suite 3212 P.O. Box 30613 Camana Bay Grand Cayman KY1-1203 Cayman Islands Chapter 15 Case No.: 17-11899 About the Debtor: Life Premium Fund was incorporated on May 8, 2007, in the Cayman Islands as a closed-ended exempted segregated portfolio company under the laws of the Cayman Islands. The Company has an authorized share capital of $50,000 divided into 100 "voting shares" and 4,999,900 "non-voting participating shares", with all shares having a nominal value of $0.01 each. The Company carried on business as an investment fund. It was formed to procure and pool: (1) life insurance policies that insure the lives of elderly persons who were either terminally or chronically ill; and (2) rights to receive death benefits that would otherwise have been paid to the beneficiary of the insured or the original owner, capitalizing on their maturity, or selling the assets prior to their maturity. The Company initially established and operated three segregated portfolios denominated as LS1, LS2 and LS3. An additional portfolio, LS4, was later established in or around August 2011. A winding up order was made in relation to Life Premium Fund, SPC on March 6, 2015. In accordance with the provisions of the Order, David Griffin and Andrew Morrison (FTI Consulting (Cayman) Ltd) were appointed as Joint Official Liquidators. Website: http://www.lpfliquidation.com Chapter 15 Petition Date: July 10, 2017 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Hon. Stuart M. Bernstein Chapter 15 Petitioner's Counsel: David Farrington Yates, Esq. KOBRE & KIM LLP 800 Third Avenue New York, NY 10022 Tel: (212) 488-1211 Email: farrington.yates@kobrekim.com Estimated Assets: Not Indicated Estimated Debts: Not Indicated A full-text copy of the Chapter 15 petition is available at: http://bankrupt.com/misc/nysb17-11899.pdf ========= C H I L E ========= VTR FINANCE: Fitch Affirms BB- Long-Term IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed VTR Finance B.V. (VTR) Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDR) at 'BB-'. The Rating Outlook is Stable. Fitch has also affirmed the company's USD1.4 billion senior secured notes due 2024 and revolving credit facility at 'BB-'. KEY RATING DRIVERS VTR's ratings reflect its strong market position in the Chilean telecom industry, primarily in pay-TV and Internet services. VTR's ratings are supported by its competitive network quality, brand recognition, and successful commercial strategy for its bundled services offerings. The company's cash flow generation is relatively stable, despite a highly competitive environment, and it boasts strong financial flexibility underpinned by its long debt maturity profile and committed credit facility. The ratings are tempered by VTR's moderately high leverage for the rating level, pressured free cash flow (FCF) generation in the short to medium term due to high capex, a mature and highly competitive industry backdrop, and a lack of service diversification compared to the other integrated telecom operators with established mobile services in the country. VTR is a wholly owned subsidiary of Liberty Global plc (LG), and is a part of the LiLAC Group (LiLAC), which represents LG's Latin America and Caribbean operations. The company benefits from the strategic oversight by LG and its management expertise, as well as procurement and operating synergies. LiLAC operating entities are separately capitalized and operations are managed independently. LG maintains the common group leverage target of 4.0x-5.0x for its subsidiaries. Fitch believes that any material improvement in the company's financial profile from the current level would be difficult as any significant deviation from the group's financial target could be limited. LiLAC group has a share buyback program with USD260 million remaining until 2019, which Fitch expects to be partially funded by VTR given its stable operational performance and cash flow generation. Strong Market Position: VTR is the leading provider of pay TV and broadband services in Chile, with subscriber market shares of 34% and 37% on a national basis, respectively, followed closely by its main incumbent competitor, Telefonica Chile S.A., as of Dec. 31, 2016. VTR is also the second largest fixed-line telephony service provider, with a 20% of subscriber market share during the same period. The company has consistently increased its overall revenue generating units (RGU) in recent years, backed by its effective bundled product strategy based on network and service competitiveness. In mobile, the company operates as a virtual network operator (MVNO) with a low market share of just 1%. Fitch does not expect any material cash flow contribution from this segment in the short to medium term. Stable Operating Performance: VTR's performance has remained solid through the combination of continued ARPU growth and subscriber expansion. The company's revenue growth averaged 6.1% during 2013- 2016 period with solid EBITDA margin around 39%, and the trend has continued during the first three months of 2017. This has been achieved mainly by growth in its Internet and pay TV services, which have fully offset revenue contraction in its fixed-line telephony services due to the ongoing mobile-fixed substitution trend. Fitch expects the company's steady revenue growth to continue over the medium term, with relatively stable EBITDA margins of around 38%-39% over the medium term. High Capex: Fitch does not expect any meaningful FCF generation over the medium term due to high capex and cash upstream to support LiLAC's buyback program. Fitch expects the company's capital intensity, measured by cable to sales, to remain at the higher end of the 21%-23% range of LiLAC's guidance, given investments for consumer premise equipment as it continues to grow the subscriber base, and networks new builds and upgrades. Fitch does not foresee any net debt reduction over the medium term. Stable Leverage: VTR's adjusted financial leverage is deemed moderately high for the rating category. The company's debt is mostly comprised of its USD1.4 billion senior secured notes due 2024, which were issued in 2014. The company's adjusted debt to EBITDAR was 3.9x, including the net fair value of hedge derivatives, as of March, 2017, which was a modest improvement from 4.2x at end-2014 due to EBITDA improvement. Fitch expects the company's leverage to remain stable during 2016-2018, barring any material amounts of cash upstream, as its suppressed FCF generation to be offset to a degree by continued modest growth in EBITDA. DERIVATION SUMMARY VTR's lack of service diversification into mobile amid the mature market conditions in Chile, and its moderately high leverage compared to the more diversified competitors in Chile and the regional peers in the 'BB' rating category are credit negatives. The company's financial profile is weaker than Millicom's operating subsidiaries in the region, such as Comcel Trust ('BB+/Stable), and Telefonica Celular del Paraguay ('BB+'/Stable), and is deemed in line with Axtel S.A.B. de C.V. ('BB-'/Stable). Also, LG's group financial policy is a constraint on VTR's ratings. These weaknesses are mitigated to a degree by its leading market positions and solid network competitiveness, and financial flexibility, all of which are deemed solid for the rating level. No country ceiling, parent-subsidiary linkage, or operating environment aspects impact. KEY ASSUMPTIONS Fitch's projections assume the follow assumptions: -- Mid-single digits revenue growth over the medium term, with strong growth in Internet services and Pay TV; -- Capex-to-sales ratio to remain at around 23%; -- No meaningful FCF generation in 2017-2019; -- EBITDA margin in the range of 38%-39% during 2017-2019. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Deterioration in operating performance leading to muted revenue growth amid margin erosion; -- Sustained negative FCF generation amid higher-than-expected capex requirement; -- Any material cash flow upstream to LG; -- Adjusted net leverage increasing toward 4.5x on a sustained basis. Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Continued solid top-line growth along with margin expansion, and positive FCF generation; -- Clear commitment for deleveraging in the absence of any material cash flow upstream to LG, resulting in its adjusted net leverage falling well below 3.5x on a sustained basis. LIQUIDITY VTR's liquidity profile is sound as the company does not face any debt maturity until 2024 when its senior secured notes become due. The company's cash balance amounted to CLP65 billion by end-March 2017, and its operational cash flow generation is relatively stable. In line with other LG operating subsidiaries, the Chilean operating subsidiaries of VTR has a senior secured credit facility of USD160 million and CLP22 billion in place, which remains undrawn and supports financial flexibility, if necessary. FULL LIST OF RATING ACTIONS Fitch has affirmed VTR Finance B.V.'s ratings as follows: -- Long-Term Foreign Currency and Local Currency IDRs at 'BB-', Outlook Stable; -- USD1.4 billion senior secured notes 'BB-'; -- Secured revolving credit facility 'BB-'. =============== C O L O M B I A =============== COLOMBIA: Fiscal Slippage Could Risk Outlook, Fitch Says -------------------------------------------------------- Colombia's creditworthiness could be pressured if growth is lower than expected and higher fiscal deficits undermine efforts to stabilize and gradually reduce the government's debt burden, Fitch Ratings says. The government's recently published Medium Term Fiscal Framework forecasts a lower GDP and a slower reduction of the fiscal deficit to 3.1% of GDP in 2018, up from a 2.7% forecast a year earlier. As a result, debt to GDP is expected to stabilize in 2018 instead of beginning to fall, as expected in the 2016 report. The changed fiscal targets do not jeopardize the overall trend toward reducing the debt burden in the medium term, but they do highlight risks of fiscal slippage. Colombia's gross debt burden, at just under 50% of GDP, is nearly 10 percentage points higher than the 'BBB' median. According to the framework, the 0.5% of GDP adjustment in the 2018 fiscal deficit will rely more on cutting capital expenditures than increasing government revenues. These cuts will prove difficult with congressional elections set for March 11 and the presidential election on May 27. There are also additional spending pressures resulting from the 2016 Peace Accord with the FARC rebels. The 2019 target remains unchanged at a deficit of 2.2% of GDP, converging to the structural fiscal deficit target of 1% of GDP by 2022. The nearly 1% of GDP adjustment needed to reach the 2019 target is ambitious without additional tax revenue measures, and relies on additional spending cuts and anti-tax evasion measures earned by beefing up the tax authority's capacities. Fitch recently revised its 2017 growth forecast to 2% from 2.3% given slower than expected execution of Fourth Generation (4G) road infrastructure projects and a decline in oil production. Our forecast for 2018 remains unchanged at 3.2%. Monetary easing currently underway will likely boost domestic demand, infrastructure bottlenecks are likely to be resolved beginning in 2H17, and oil production should stabilize. Colombia's growth and fiscal metrics remain at risk from the oil sector outlook. Colombia's oil production fell to 840,000 barrels per day in 1Q17 from over one million in 2015. The government expects oil production to stabilize in 2018 and only gradually fall afterwards. Further significant falls in oil production would undermine overall growth prospects as well as oil revenues, which are expected to reach 0.3% of GDP in 2018 and 0.5% in 2019. Delays in the completion of 4G infrastructure projects would also undermine medium-term growth. Annualized inflation fell below 4% in June 2017, within the central bank's target for the first time since January 2015 and significantly below its peak of 8.9% in July 2016. We expect it to increase to 4.2% at year-end. While that is slightly above the central bank's upper limit, inflation should converge toward the midpoint of the 3 +/-1% target in 2018. Since December 2016, the central bank has lowered the policy rate by 175bps as the actual inflation rate and the central bank's target began to converge. Fitch expects further rate cuts in 2017 but expects the pace of the cuts will be data dependent. Fitch revised its outlook on Colombia's 'BBB' rating to stable from negative last March. The change reflected a tax reform package passed in December 2016 to reduce the fiscal deficit and a reduction in the country's economic imbalances, notably a sharply lower current account deficit at 4.4% of GDP in 2016 from 6.4% a year earlier. The 2018 budget will be presented to the Congress by end-July for passage by end-October. ============= C U R A C A O ============= PUBLE NV: Unsecureds to Recoup 100% Under Plan ---------------------------------------------- Puble NV and Scotia Valley NV filed with the U.S. Bankruptcy Court for the Southern District of New York a disclosure statement dated June 26, 2017, in connection with their joint Chapter 11 plan of reorganization dated June 26, 2017. The Debtors will (a) pay holders of Class 3A General Unsecured Claims against Puble 100% of the amount of their allowed claim in full, in cash, with interest from the Petition Date to the Confirmation Date at the contract rate to the extent the underlying agreement or instrument giving rise to the Allowed Class 3B Claim provides for interest, within 30 days of the Effective Date, from the Plan Distribution Fund, or (b) satisfy Allowed Class 3A Claim on other terms and conditions as the holder of an Allowed Class 3A Claim and Puble will agree, in full and final satisfaction of such Claims as against Puble. Class 3A Claims are not impaired under the Plan and are deemed to accept the Plan. The Debtors will (a) pay holders of Class 3B General Unsecured Claims Against Scotia Valley 100% of the amount of their allowed claim in full, in cash, with interest from the Petition Date to the Confirmation Date at the contract rate to the extent the underlying agreement or instrument giving rise to the Allowed Class 3B Claim provides for interest, within 30 days of the Effective Date, from the Plan Distribution Fund, or (b) satisfy Allowed Class 3B Claims on other terms and conditions as the holder of an Allowed Class 3B Claim and Scotia Valley will agree, in full and final satisfaction of claims as against Scotia Valley. Class 3B Claims are not impaired under the Plan and are deemed to accept the Plan. Distributions under the Plan will be paid from the Plan Distribution Fund, which will be funded by the Transaction Proceeds, but only to the extent those proceeds are needed to satisfy allowed claims after giving effect to the Debtors' cash on hand on the Effective Date. The Transaction Proceeds will be the primary source of distributions under the Plan. The Plan Distribution Fund will be administered by Togut, Segal & Segal LLP, solely in its capacity as disbursing agent, in accordance with the terms of the Plan. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/nysb17-10747-48.pdf About Puble & Scotia Valley Scotia Valley NV, which was initially incorporated in Curacao, Netherlands Antilles in 1979, owns and operates the real property located in Washington, DC, known as 1737 H Street NW, an approximately 17,800-square foot, five-story office building that has been leased to commercial tenants over the years. Puble NV, initially formed in Curacao, Netherlands Antilles in 1985, owns and operates the real property located in New York City known as 67-69 Irving Place, a 3,933-square foot parcel of land with a 12-story commercial office building. Puble NV (Bankr. S.D.N.Y. Case No. 17-10747) and Scotia Valley NV (Bankr. S.D.N.Y. Case No. 17-10748) filed Chapter 11 petitions on March 28, 2017. The Chapter 11 cases are jointly administered. The Hon. Michael E. Wiles presides over the cases. Togut, Segal & Segal LLP represent the Debtors as counsel. Tramonte, Yeonas, Martin & Roberts PLLC, serves as the Debtors' real estate counsel. In its petition, Puble estimated $10 million to $50 million in both assets and liabilities, while Scotia Valley estimated $1 million to $10 million in both assets and liabilities. The petitions were signed by Charis Lapas, president/treasurer. ================================== D O M I N I C A N R E P U B L I C ================================== DOMINICAN REPUBLIC: Coffee Sector at Edge of Collapse ----------------------------------------------------- Dominican Today reports that over 90% of Dominican Republic's coffee growers have gone broke as coffee rust hobbles production and decimates plantations across the country during the last four years. The report relays that San Juan Valley coffee growers and farmers grouped in FECADESJ said that most of the country's 30,000 coffee- growing families "have fallen into indigence because of the decline in production as a result of rust, which has resulted in losses for grain farmers of around 18.0 billion pesos (US$375.0M) in only four years." They ask the Chamber of Deputies to hold public hearings and create the Dominican Coffee Institute (INDOCAFE) to replace CODOCAFE, because it's their view the latter would end up ruining their sector, notes the report. FECADESJ president Meraris Sanchez said production has plunged dramatically during the last two years, "due to the damages caused by the spread of rust and the Agriculture Ministry's lack of action," reports Dominican Today. ==================== P U E R T O R I C O ==================== HAIRLAND CORP: Unsecured Creditors to be Paid 3% Under Exit Plan ---------------------------------------------------------------- Unsecured creditors of Hairland Corporation will be paid 3% of their claims under the company's proposed plan to exit Chapter 11 protection. Under the restructuring plan, creditors holding Class 1 general unsecured claims will receive a monthly payment of $35.74 over 60 months or a total of $2,144. Payments will start 30 days after the plan is confirmed. General unsecured creditors assert a total of $71,473 in claims. Payments under the plan will be funded from the collection of fees for services provided by the company, according to its disclosure statement filed on June 27 with the U.S. Bankruptcy Court in Puerto Rico. A copy of the disclosure statement is available for free at https://is.gd/ZgIN6a Hairland is represented by: Emily Darice Davila Rivera, Esq. Law Office Emily D. Davila Rivera 420 Ponce de Leon Avenue Midtown, Suite 311 San Juan, PR 00918 Phone: 787-759-8090 Email: davilalawe@prtc.net About Hairland Corporation Hairland Corporation operates a barber shop located at Plaza Las Americas in Puerto Rico. The Debtor sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 17-00286) on January 23, 2017. Liza Diou, president, signed the petition. At the time of the filing, the Debtor estimated less than $50,000 in assets and less than $500,000 in liabilities. The Law Office Emily D. Davila Rivera represents the Debtor as bankruptcy counsel. LIBERTY CABLEVISION: Fitch Affirms B+ IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Liberty Cablevision of Puerto Rico's (LCPR) Long-term Foreign-Currency Issuer Default Ratings (IDR) at 'B+'/Stable Outlook. Fitch has also upgraded the company's senior secured revolver and its first lien term loan B to 'BB-'/'RR3' from 'B+'/'RR4' and affirmed the company's senior secured second lien term loan C at 'B-'/'RR6'. KEY RATING DRIVERS LCPR's ratings reflect the company's strong business position as the leading pay-tv and broadband services provider in Puerto Rico. The company has extensive network coverage and quality, and strong brand recognition. The ratings also incorporate the company's improved scale and cash flow generation following the acquisition of Choice in 2015, and adequate liquidity. The ratings are tempered by LCPR's lack of diversification in its service offerings, with no presence in mobile, and operating geography, making it vulnerable to the weak macroeconomic conditions in Puerto Rico. LCPR is 60% owned by Liberty Global plc (LG) and 40% owned by Searchlight Capital Partners, and is a part of the LiLAC Group (LiLAC), which represents LG's Latin America and Caribbean operations. LCPR benefits from LG 's strategic oversight and its management expertise, as well as the procurement and operating synergies that come from being part of a larger operational group. LiLAC operating entities are separately capitalized and managed independently; LG maintains a group leverage target of 4.0x to 5.0x for its subsidiaries. LCPR's leverage level is currently aligned with that target. Fitch forecasts that the company will maintain relatively stable leverage based on its operational fundamentals over the medium term, while any potential material improvement in the financial profile could be difficult, as any significant deviation from the group's financial target could be limited. The upgrade of LCPR's Senior Secured Revolver and its First Lien Term Loan 'B' to 'BB-'/'RR3' reflects Fitch's expectation of good recovery prospects in the event of default and as a result the first lien facilities are rated one notch above the IDR. 'RR3' rated securities have characteristics consistent with historical recoveries between 51% to 70% of current principal and related interest. Based on Fitch's recovery analysis, the agency has affirmed the company's second lien term loan at 'B-'/'RR6', indicating below average recovery prospects in the event of default and as a result the company's second lien term loan is rated two notches lower than the company's IDR. Strong Business Position: Fitch expects LCPR's market leadership to remain intact, supported by its extensive network coverage and quality. LCPR is the leading pay-tv and broadband provider in Puerto Rico with subscriber market shares of 42% and 49%, respectively. Competitive pressures are high in the broadband and pay-tv segments, and the fixed-voice service continues to suffer from the unfavourable industry trend of mobile-fixed substitution. This trend should continue to limit any material growth in average revenue per user (ARPU) and operating margins in the short-to- medium term. Positively, Fitch believes that LCPR's competitive advantages should enable the company to maintain its leading market shares. Weak Operating Environment: Economic conditions in Puerto Rico continue to be negative for LCPR. The company's lack of geographic diversification exposes it to Puerto Rico's struggling economy, which is undergoing a declining population, low GDP per capita, and high unemployment rates. Despite the company's stable performance in recent years, these factors could begin to erode service affordability and negatively affect LCPR's cash flow generation going forward. Fitch forecasts LCPR's revenue growth to be in the low single digits in the short-to-medium term, reflecting the weak macro environment and a high level of market competition. Financial Profile Improvement: LCPR's cash flow from operations (CFFO) has grown consistently in recent years due to continued expansion of its subscriber base and the acquisition of Choice. During the LTM ended March 31, 2017, the company generated CFFO of USD140 million, which favourably compares to the 2015 level of USD113 million. LCPR's improving operational cash flow generation has provided the company with comfortable headroom to cover its capex, averaging approximately USD80 million annually during 2015 and 2016. While Fitch expects the company's pre-dividend FCF generation to remain solid over the medium-term, FCF generation after cash upstream should remain limited to support LiLAC's share buyback program. Stable Leverage: Fitch expects LCPR's total adjusted net leverage to remain comfortably below 5x over the medium-to-long term in line with the group's leverage target. The company's net leverage declined to 4.4x a year-end 2016, in line with Fitch's base case scenario, which positively compares to 5.3x at year-end 2015. Leverage improved during that period as a result of the improved EBITDA following a full year of Choice subscribers. EBITDA improved to USD199 million during 2016 from USD167 million during 2015, excluding non-recurring item adjustment, such as reimbursement of legal fees. Fitch expects only modest improvement in the company's EBITDA generation going forward, reflecting the economic constraints of the economy in which it operates. DERIVATION SUMMARY LCPR's credit weaknesses, compared to its regional peers in the 'BB' rating category, include its relatively small scale of operations and lack of diversified service offerings, with no mobile operation. In addition, the company's operating environment in Puerto Rico, which has undergone tough economic challenges, is also a key credit concern. These weaknesses offset LCPR's leading market position and network competitiveness, which are broadly in line with VTR Finance, a Chilean cable operator of LiLAC group and rated 'BB-'/Stable Outlook. The company's financial profile is stronger than Digicel Group Limited, which is an integrated telecom operator and is rated 'B'/Stable Outlook. Parent/Subsidiary Linkage is not applicable and the ratings are not constrained by the country ceiling. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: -- Low-single digits revenue and EBITDA growth from 2017 and beyond; -- Capex to sales to remain in the range of 21% to 23% in the short-to-medium term; -- Limited FCF generation due to cash upstream to support LiLAC share buyback program; -- Total adjusted net leverage to remain in the range of 4.0x to 4.5x over the short-to-medium term. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Continued solid top-line growth along with margin expansion, and positive FCF generation; -- Clear commitment for deleveraging in the absence of any material cash flow upstream to LG, resulting in its adjusted net leverage falling well below 4.0x on a sustained basis. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Deterioration in operating performance caused by unfavorable macroeconomic conditions and competitive landscape; -- Sustained negative FCF generation amid higher-than-expected capex requirement; -- Any material cash flow upstream to LG; -- Adjusted net leverage increasing to above 5.0x on a sustained basis. LIQUIDITY Adequate Liquidity: Fitch does not foresee any liquidity problem for LCPR in the short to medium term since the company does not face any sizable debt maturities until 2022, when its first lien term loan B becomes due. LCPR's liquidity is adequate given its cash balance of USD46 million and USD0.1 million in short term debt as of March 31, 2017. The company's liquidity position is further strengthened by its USD40 million undrawn credit facility, good access to local financing as well as shareholder support in the form of subordinated shareholder loans and equity injections. FULL LIST OF RATING ACTIONS Liberty Cablevision of Puerto Rico, LLC. -- Long-Term Foreign Currency IDR affirmed at 'B+'; Outlook Stable; -- Senior Secured Revolver upgraded to 'BB-/RR3' from 'B+/RR4'; -- Senior Secured 1st Lien Term Loan B due 2022 upgraded to 'BB- /RR3' from 'B+/RR4'; -- Senior Secured 2nd Lien Term Loan C due 2023 affirmed at 'B- '/'RR6' MINI MASTER: Unsecureds to Get Paid from $50K Carve-Out ------------------------------------------------------- Mini Master Concrete Services, Inc., filed with the U.S. Bankruptcy Court for the District of Puerto Rico a first amended disclosure statement to accompany its plan of reorganization. Under this amended plan, Class 4 Allowed General Unsecured Claimants, excluding the claim of Mrs. Bess M. Taylor Mitchell, who will not receive any dividends under the Plan, but including ESSROC's San Juan, Inc.'s claim, will be paid in full satisfaction of their claims, their pro-rata share from a $50,000 carve-out to be reserved from the proceeds of the sale of Debtor's assets. The estimated amount of allowed claim for this class is now $932,374, 48. The previous estimated amount was $897,123.63 The original version of the plan asserted that Class 4 Allowed General Unsecured Claimants, excluding the claim of Mrs. Bess M. Taylor Mitchell, who will not receive any dividends under the Plan, but including the Claims of ESSROC San Juan, Inc. and Economic Development Bank of P.R's and Wells Fargo Financial Leasing's deficiency claims, shall be paid in full satisfaction of their claims, approximately 1.75%, from a $50,000 carve out to be reserved from the proceeds of the sale of Debtor's assets. The Plan contemplates that substantially all of Debtor's assets securing the claims will be sold, excepting the real properties of both Debtor and those of the estate of Victor Maldonado Davila to be transferred to EDB. With the proceeds of the sale to Master Group P.R. Holdings, LLC and the other sales, the Debtor will be able to make the payments to Holders of Allowed Administrative Expense Claims, Holders of Allowed Priority Tax Claims, Holders of Other Priority Tax Claims and to Classes 1, 2, 3, and 4. A copy of the First Amended Disclosure Statement is available at: http://bankrupt.com/misc/prb16-09956-11-145 About Mini Master Concrete Services Mini Master Concrete Services, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 16-09956) on December 22, 2016. The Hon. Mildred Caban Flores over the case. Charles A. Cuprill, PCS Law Offices represents the Debtor as counsel. The Debtor disclosed total assets of $15.78 million and total liabilities of $5.46 million. The petition was signed by Carmen M. Betancourt, president. MOTEL TROPICAL: Disclosures OK'd; Plan Hearing on Aug. 23 --------------------------------------------------------- The Hon. Brian K. Tester of the U.S. Bankruptcy Court for the District of Puerto Rico has approved Puerto Rico Tourism Co.'s disclosure statement dated May 25, 2017, referring to the Chapter 11 plan dated May 25, 2017. A hearing for the consideration of confirmation of the Plan will be held on Aug. 23, 2017, at 2:00 p.m. Objections to claims must be filed prior to the hearing on confirmation. The Debtor will include in its objection to claim a notice that if no response to the objection is filed within 30 days, the motion will be considered and decided without the actual hearing. If a written response or opposition to the objection to claim is timely filed, the contested matter will be heard on the date that the hearing on confirmation has been scheduled and the next available hearing date. Any objection to confirmation of the Plan must be filed on or before seven days prior to the date of the hearing on confirmation of the Plan. As reported by the Troubled Company Reporter on June 12, 2017, the Debtor's priority claim will be paid in full under the latest plan proposed by the Debtor to exit Chapter 11 protection. According to the latest plan, Motel Tropical will pay the agency's priority claim of $46,611.67 in its entirety on or before February 2022 or within 72 months from the petition date. About Motel Tropical Motel Tropical Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 16-00966) on Feb. 11, 2016, disclosing under $1 million in both assets and liabilities. The Debtor is represented by Isabel M. Fullana, Esq., at Garcia-Arregui & Fullanan PSC. The Debtor manages a motel business located at Carr 2.KM 110.7 Ave. Militar, Isabel Puerto Rico. The property on which the Debtor operates is leased to Manuel Gonzalez Valeting. No official committee of unsecured creditors has been appointed in the case. On July 14, 2016, the Debtor filed a disclosure statement, which explains its proposed Chapter 11 plan of reorganization. ================= V E N E Z U E L A ================= PDVSA: Could Seek to Renegotiate October Bond Payment ----------------------------------------------------- Reuters reports that Venezuelan state oil producer Petroleos de Venezuela, S.A. (PDVSA) could seek to renegotiate a looming October bond payment given low oil prices, Hector Andrade, PDVSA's managing director for planning, said on July 11. "I guess there are a lot of chances of that," Reuters quotes Andrade as saying when asked about a possible payment renegotiation. "Right now it's not just about the cooperation between producers . . . (but) cooperation between producer and consumer." Reuters relates that the firm also expects to invest $50 billion over the next 7 years to raise capacity by 1 million barrels per day, Andrade told reporters on the sidelines of an energy conference in Istanbul. Venezuela currently produces about 2 million barrels per day, the report notes. Reuters says struggling under triple-digit inflation and Soviet- style product shortages as its socialist economy unravels, Venezuela has been hit hard by low prices for oil, its economic lifeline. The OPEC nation's oil output has slipped and PDVSA is struggling to maintain investment in its oilfields, which hold the world's largest crude reserves, the report notes. Petroleos de Venezuela, S.A. (PDVSA) is a Venezuelan state-owned oil producer. VENEZUELA: S&P Lowers Sovereign Credit Ratings to 'CCC-' -------------------------------------------------------- On July 11, 2017, S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on the Bolivarian Republic of Venezuela to 'CCC-' from 'CCC'. The outlook on the long-term ratings is negative. S&P said, "We affirmed our 'C' short-term foreign and local currency sovereign ratings. In addition, we lowered our transfer and convertibility assessment on the sovereign to 'CCC-' from 'CCC'." RATIONALE The downgrade reflects continued deterioration in economic conditions, rising political tensions, including within the Chavista government base, and the government's worsening liquidity position. Economic policy continues to be erratic, in a context of very high inflation; severe fiscal, monetary, and exchange-rate rigidities; and draconian controls on imports. Recent developments have raised the risk of default, including through a debt exchange that we would view as a distressed exchange, within the next six months, absent unanticipated significant improvement in Venezuela's economic and political conditions. In March 2017, Venezuela's Supreme Tribunal of Justice (TSJ, Spanish acronym) passed a ruling to transfer the legislative powers of the opposition-led National Assembly to the TSJ and to President Nicol†s Maduro. This ruling, which was later revoked, contributed to further political polarization and increased public demonstrations against the government. Amid this turmoil there have been nearly 100 deaths. Moreover, the country continues to suffer from severe shortages of basic goods given the controls on imports and higher levels of violence, exacerbating political tensions. Amid the increased social unrest, President Maduro and his supporters are seeking to rewrite the country's constitution. This political strategy is perceived by many as an effort to concentrate more power in the presidency. The government has scheduled elections for a National Constitutional Assembly (ANC, Spanish acronym) on July 30. Several prominent members of the government and the dominant Chavista political movement have spoken out against the TSJ ruling and the proposed ANC. We expect internal divisions within the Chavista movement could sharpen. Ongoing social unrest could also deepen divisions within the country's military, which has supported the government thus far. After three years of economic contraction, S&P Global Ratings expects Venezuela's economy to contract again by at least 6% in 2017 and real GDP per capita by 7.2%. Based on our oil price deck forecast (see "S&P Global Ratings Raises Its Oil And Natural Gas Prices Assumptions For 2017," published Dec. 14, 2016), we would expect Venezuelan oil exports to enjoy higher prices on average in 2017, but output is likely to decline toward an average of 2 million barrels per day from 2.4 million barrels per day in 2016. In S&P's opinion, the level of GDP per capita in dollar terms is currently a misleading indicator given severe distortion on exchange rates. Shrinking oil output, which represents 95% of Venezuela's exports, will result in a current account deficit of around 4% of GDP this year, contributing to deteriorating external liquidity (in the absence of new external funding). Therefore, S&P said, "we expect the government to maintain import controls to try and preserve the level of international reserves. According to Venezuela's central bank, the country's foreign exchange reserves stood at US$10 billion as of June 2017, but we estimate non-gold reserves between US$3 billion and US$4 billion. There is no updated information about other government funds denominated in foreign currency; we believe other significant noncash assets may already have been used as collateral for existing debt. Absent significant new external funding, we expect the government to have difficulty paying debt service of around US$2.8 billion in the second half of 2017 and around US$7 billion in 2018." Moreover, the state-owned energy company, Petr¢leos de Venezuela S.A. (PDVSA), faces US$4 billion of external debt maturities during the remainder of 2017. PDVSA's debt is not guaranteed by the government, and the government's debt does not have cross- default clauses connected with the debt of the national oil company. However, S&P expects PDVSA's debt service needs will put pressure on Venezuela's international reserves and external liquidity. The combination of poor monetary, fiscal, and other policies has resulted in rising inflation. The latest published information shows a 180% inflation rate in 2015. Doubts about the accuracy of reported economic data (whose disclosure has decreased, and delays in reporting have mounted since early 2016) have weakened market confidence and made it more difficult to make inflation forecasts. S&P estimates inflation was 500% in 2016, and S&P expects it to be 950% in 2017. With around 50% of the government's revenues coming from the oil sector, low oil prices have undermined fiscal policy, resulting in large budget deficits and increased recourse to inflationary financing from the central bank. Official data on fiscal balances have not been published since 2014, but estimates from private sources and the International Monetary Fund suggest that the general government deficit was around 20%-25% of GDP in 2016. S&P expects it to be at a similar level in 2017. General government debt was 2% of GDP as of year-end 2016. However, Venezuela's reported low debt stocks and interest burden are misleading as the government uses the preferential foreign exchange rate of 10 bolivares (VEF) per $US1 to account for external debt. S&P said, "Venezuela's fiscal deficits will be mostly financed by domestic sources, but if the preferential exchange rate were to depreciate at the same pace as our inflation forecast, as our base-case scenario suggests, the increase in Venezuela's net general government debt could be as much as 40% of GDP in 2017. Under our base-case scenario, net general government debt would rise toward 45% of GDP and interest payments toward 25% of general government revenue in 2017." The government has not published balance of payments and international investment position data since September 2015. S&P said, "We estimate the country's gross external financing needs in 2017 at around 200% of current account receipts (CAR) plus usable reserves, a similar level to our estimate for 2016 but twice the level in 2013. We expect Venezuela to finance this need by the public sector running arrears with most of its suppliers and noncommercial creditors, and liquidating external assets. We expect Venezuela's external debt net of reported public- and financial-sector assets will remain around 250% of CAR during 2017-2019." OUTLOOK The negative outlook reflects the heightened risk of the Venezuelan government defaulting, including through undertaking a distressed debt exchange, in the next six months. Failure to introduce substantial corrective measures to stabilize the economy, alleviate shortages, and reverse the recent growth in political polarization could lead to worsening external liquidity and debt default. Steps to defuse the heightened political tensions in Venezuela would reduce the risks of eroding governability and high volatility in economic policies. That, along with prompt, corrective reforms that begin to address the country's economic imbalances and to strengthen its external liquidity, could lead us to affirm the ratings at their current level. A list of the Affected Ratings is available at: http://bit.ly/2tI6xpb ================= X X X X X X X X X ================= * Cigarette Black Market Costing Governments Billions in Losses --------------------------------------------------------------- Trinidad and Tobago Newsday reports that an estimated 600 billion cigarettes currently under the contraband scheme represents a loss of between US$50 billion and $60 billion for governments in tax revenues. This is according to Cesar Agurcia, a senior manager for the British American Tobacco's interests in the Caribbean and Central America who told a recent conference on anti-illicit trade in tobacco conference in Georgetown, Guyana that the illicit economy affects businesses, governments, civil society and individuals, notes the report. The conference held on June 29 was sponsored by British American Tobacco, West Indian Tobacco Company, Demerara Tobacco Company and Crime Stoppers International, says Newsday. According to the report, participants which included law- enforcement, industry and customs officials from Trinidad and Tobago, Guyana, Jamaica, Costa Rica, and Suriname focused on modern trendsetting tactics and strategies of illicit traders, and key characteristics and tools used by tax evaders attempting to smuggle cigarettes into Caribbean countries. A release from the West Indian Tobacco said there was need to curb the growing illegal activity, reports Newsday. "This is a national security issue, because it has been globally proven that the profits of illicit trade are going to criminal organisations around the world," the report quoted the release as saying. Trinidad and Tobago Newsday relates that Darrin Carmichael, consultant for Crime Stoppers International, called on public and private institutions to work together to take swift action against the illicit trade. Crime Stoppers International, he said, "recognises that illicit trade is a growing problem worldwide, be it smuggling, counterfeiting, or tax evasion." While governments are losing billions of dollars in tax revenues, he said, "Legitimate businesses are being undermined and consumers in all our communities are exposed to unregulated, poor made and inferior products." Attendees praised the hosting of the event and expressed the need for government and industry officials to work together to tackle the issue, it notes. The organisers of the event voiced their hope that greater relationships would be formed between the customs and law enforcement officials in attendance and that "formal bilateral and inter-customs arrangements can be established to collaborate and share intelligence and track, disrupt, and confiscate the illicit products across these countries," notes the report. *********** 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. 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