/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/170925.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, September 25, 2017, Vol. 18, No. 190 Headlines B R A Z I L GENERAL SHOPPING: Fitch Affirms 'CC' Long-Term IDR OURO VERDE: Fitch Retains BB- Long-Term IDR on Negative Watch D O M I N I C A N R E P U B L I C AES ANDRES: Fitch Affirms BB- Long-Term IDR; Outlook Stable EMPRESA GENERADORA: Fitch Affirms BB- Long-Term IDR M E X I C O CYDSA SAB.: Fitch Rates Proposed Sr. Unsecured Notes BB+ CYDSA SAB: S&P Rates $370MM Senior Unsecured Notes Rated 'BB' CYRELA COMMERCIAL: Fitch Affirms & Withdraws BB- IDR DOCUFORMAS SAPI: S&P Rates Proposed Senior Unsecured Notes 'B+' OFFSHORE DRILLING: S&P Downgrades CCR and Debt Rating to 'CCC-' P U E R T O R I C O CAPARRA HILLS: Fitch Puts B+ IDR on Rating Watch Negative V E N E Z U E L A DOCUFORMAS SAPI: Fitch Rates New US$175MM Sr. Notes B+ X X X X X X X X X * BOND PRICING: For the Week From Sept. 18 to Sept. 22, 2017 - - - - - =========== B R A Z I L =========== GENERAL SHOPPING: Fitch Affirms 'CC' Long-Term IDR -------------------------------------------------- Fitch Ratings has affirmed General Shopping Brasil SA's (GSB) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'CC' and its National Scale rating at 'CC (bra)'. KEY RATING DRIVERS Unclear Strategy on Capital Structure: Despite the company's efforts to reduce its financial leverage during 2015-2016, GSB's capital structure remains weak due to limited capacity to service its debt. During 2015-2016, GSB launched a debt exchange offer for its perpetual notes, completed an equity injection of around BRL57 million and launched a debt exchange offering for its subordinated perpetual notes. During this period, GSB decided to defer interest payments corresponding to its subordinated perpetual notes and executed several asset sales, resulting in net proceeds of approximately BRL70 million. High Leverage: Fitch continues to see GSB's financial leverage as high and capacity to service its debt as limited. The company's total debt is BRL1.8 billion as of June 30, 2017. It consists primarily of BRL645 million in real estate credit bills, BRL141 million in secured loans and financing, BRL551 million in perpetual notes, BRL489 million in subordinated perpetual notes, and BRL31 million in new secured notes. When considering the 50% credit on the subordinated perpetual notes, GSB's net leverage was 9.2x as of June 30, 2017. Fitch's rating case incorporates the expectation that GSB's net leverage ratio will be about 10.5x during 2017-2018, and assumes the company will require refinancing debt due during 2017-2018. Lower Revenues, Operational Performance Stable: Fitch expects the company's total revenues to decline at around 9% during 2017 reflecting lower rental and service income as the company continues to face a challenging business environment. It also reflects a lower GLA base in 2017 versus 2016 as the company sold some assets during the period. Despite the weakening in some operational indicators, GSB's operational performance has remained relatively stable during 2016-2017. Fitch expects GSB to maintain EBITDA margins of around 65%, occupancy levels around 94%, and rental services revenues per square meter with negative-to-flat variations during 2017-2018. Fitch projects GSB's annual average net revenues at around BRL240 million during this period. Equity Treatment for Subordinated Perpetual Notes Given Equity- Like Features: GSB's subordinated perpetual notes qualify for 50% equity credit as they meet Fitch's criteria with regard to deep subordination, with an effective maturity of at least five years, full discretion to defer coupons for at least five years and limited events of default. These are key equity-like characteristics. Equity credit is limited to 50% given the hybrid's cumulative interest coupon, a feature considered more debt-like in nature. Subordination Incorporated in Debt Recovery: As of June 30, 2017, GSB's total assets were valued at an estimated BRL2.9 billion, with encumbered and unencumbered assets representing approximately 87% and 13%, respectively, of the company's total asset value. Fitch's expectation in the recovery prospects on GSB's notes reflect the view that an ongoing concern scenario is more likely to occur than a liquidation scenario if GSB's financial distress results in a debt restructuring process. The Recovery Rating (RR) of 'RR4' for the USD250 million perpetual notes reflects the average recovery prospects (the 31%-50% range) in an event of default. The 'RR5' for the USD150 million subordinated perpetual notes reflects below average recovery prospects of approximately 11%-30%. The 'RR3' for the USD8.9 million new secured notes reflects good recovery prospects (the 51%-70% range) in an event of default. GSB's new secured notes were assessed as benefiting from higher recovery prospects but reduced to 'RR3' because of Brazil's specific recovery rating caps. DERIVATION SUMMARY GSB's 'CC' rating reflects its high financial leverage, negative free cash flow (FCF) and weak liquidity. Fitch views GSB's credit risk as high and expects the company's financial strategy to continue focusing on preserving liquidity during 2017-2019. Despite the company's efforts to reduce its financial leverage during 2015-2017, Fitch views GSB's capital structure as unsustainable due to limited capacity to service its debt. During 2015-2016, GSB launched a debt exchange offer for its perpetual notes, completed an equity injection of around BRL57 million and launched a debt exchange offering for its subordinated perpetual notes. During 2016-2017, GSB decided to defer the interest payments corresponding to its subordinated perpetual notes and executed several asset sale transactions resulting in net process for approximately BRL70 million. Fitch views GSB's capital structure as weaker than regional peers such as BR Malls Participacoes S.A. (BB+/Negative) and InRetail Real Estate S.A. (BB+/Stable) due to its higher financial leverage and continued negative FCF from excessive levels of interest expense. GSB's 'CC' rating also reflects weakness in several rating considerations. In terms of net leverage, measured as the net debt/EBITDA, BR Malls and InRetail Real Estate had ratios of 2.8x and 4.1x, respectively, during the latest 12 months (LTM) ended June 30, 2017. In terms of liquidity and capacity to consistently cover interest expenses paid with recurrent cash flow generation, BR Malls and InRetail Real Estate had coverage ratios of 1.9x and 2.8x, respectively, during the period. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: -- The company's capacity to cover cash interest payments and cash taxes is very limited, below 1.0x, during 2017-2018; -- The company continues refinancing its debt due during 2017- 2018, and increases some revolving debt to maintain liquidity; -- EBITDA margin around 65% during 2017-2019; -- The company continues deferring interest payments on the subordinated perpetual notes during 2017-2019; -- No capex during 2017-2019. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Material improvement in the company's liquidity and financial leverage through some combination of the following actions: equity injection, asset sales with limited impact on cash flow generation, and lower FX exposure. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Further deterioration of GSB's liquidity position; -- Execution of a distressed debt exchange; -- Defaults on scheduled amortization/interest payments and/or formally filing for bankruptcy protection. LIQUIDITY Weak Liquidity: Fitch views GSB's liquidity under pressure due to its high financial leverage. The company's total cash flow from operations for LTM June 2017 was negative at BRL18 million. Without a material change in the company's capital structure, GSB's limited capacity to cover interest expenses and taxes with its operational cash flow is expected to result in continued deterioration of its liquidity position during 2017-2018. The company's interest coverage ratio - measured as the EBITDA/Interest Paid ratio, is estimated to remain around 0.8x during 2017-2018. GSB's FCF is expected to remain negative due to excessive cash interest payments during 2017-2018. The company's high leverage has resulted in excessive cash interest payments and declining interest coverage. GBS has a cash position and short-term debt of BRL90 million and BRL110 million, respectively, and approximately BRL375 million in unencumbered assets as of June 30, 2017. Since the second half of 2015, the company has exercised its right to defer the payment of interest under its USD150 million 10% perpetual subordinated notes. The interest payment deferral does not constitute an event of default under the indenture; however, it points to GSB's choice to preserve liquidity in this stressful environment. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: General Shopping Brasil S.A. (GSB) -- Long-Term Foreign Currency IDR at 'CC'; -- Long-Term Local Currency IDR at 'CC''; -- National Scale rating at 'CC (bra)'. General Shopping Finance Limited (GSF) -- USD250 million perpetual notes at 'CC/RR4'. General Shopping Investment Limited (GSI) -- USD150 million subordinated perpetual notes at 'C/RR5'; -- USD8.9 million of senior secured notes due 2026 at 'CCC-/RR3'. OURO VERDE: Fitch Retains BB- Long-Term IDR on Negative Watch ------------------------------------------------------------- Fitch Ratings has maintained Ouro Verde Locacao e Servico S.A.'s (Ouro Verde) 'BB-' Long-Term Foreign and Local-Currency Issuer Default Ratings (LT FC/LC IDR) and National Scale Rating 'A(bra)' on Rating Watch Negative. The maintenance of the Negative Watch reflects Ouro Verde's high financing costs, limited market access and short-dated debt amortization schedule when compared to its peers in the rating category. As of June 30 2017, Ouro Verde had BRL546 million of debt maturing during 2017, BRL703 million in 2018, BRL341 million in 2019 and BRL148 million in 2020-22. This compares with a cash position of BRL291 million and cash flow generation from operations (CFFO) of BRL480 million. The ratio of short-term debt coverage, as measured by cash plus CFFO-to-short-term debt, was extremely weak at 0.8x. Over the past few quarters, the Brazilian local credit market remained quite selective and costly for medium-size issuers. Since June 2017, however, the domestic credit market has started to give signals of recovery with more credit lines available and financial spreads on a declining trend. Ouro Verde is expected to issue a debenture due in 2022 for around BRL270 million in the near term. The cost of this debt obligation is expected to be around CDI plus 5%, which is considered expensive in Brazil. The company's ongoing efforts to further improve its debt profile, lengthen amortization, and reduce financial spreads will be key to avoiding a rating downgrade in the next six months. Operationally, the company continues to report stable margins, solid CFFO and positive FCF. Ouro Verde's business is capital intensive and given the lack of adequate funding the company has had to reduce its growth. This has elevated Fitch's concerns as to the business' sustainability in the medium- to long-term. Ouro Verde's leverage, measured by cash flow-based FFO adjusted leverage, should be maintained in the range of 2.0x to 2.5x during the next three years, according to Fitch's projections. The company's FFO interest coverage has been solid at 3.4x during 2014-16. KEY RATING DRIVERS Medium-Size Player; Business Predictability: Ouro Verde has an above-average business profile due to a reasonably predictable cash flow, which is based on long-term contracts for fleet rental of light vehicles and heavy machinery and equipment, as well as a diversified customer base. Key rating constraints include an intense competitive environment, due to pressures from larger players with stronger financial profiles, and the high capital intensity of the business amidst the unfavorable financing conditions in Brazil. Operating Cash Flow to Remain Solid; Declining Local Interest Rate: Between 2013 and LTM June 2017, Ouro Verde's net revenue increased by 51% to BRL957 million while its EBITDA grew to BRL481million from BRL326 million. During the same period, FFO strengthened to BRL515 million from BRL190 million, despite increasing interest costs. Operating margins are expected to remain stable at about 50% in the next two years, while FFO should benefit from lower interest expenses. Unlike other key players in the industry, Ouro Verde is less dependent on the sale of used assets at the end of the contract due to the relatively long life of its heavy fleet and equipment rentals. Fleet Reduction Allowed Deleveraging; Adequate Funding Remains a Challenge: Ouro Verde reported positive FCF of BRL146 million during 2016 and BRL121 million at LTM June 2017, as a result of lower capex. In 2016, Ouro Verde invested BRL325 million, compared with BRL446 million in 2015 and BRL779 million in 2014. Fitch expects around BRL70 million of positive FCF in 2017 after around BRL400 million in capex. Ouro Verde has the flexibility to improve FCF by reducing growth in capex, as most of its capital investments are geared toward increasing the size of its fleet/equipment and are linked to a contract. Depending on the company's ability to access funding for growth, FCF should range from neutral to negative BRL150 million in the next two years. Ouro Verde's leverage, relative to its fleet market value, is deemed adequate. The company reports a fleet market value of approximately BRL1.4 billion, which equals its net debt position (BRL1.4 billion). Negatively, the company's financial flexibility is limited, as most of its fleet serves as collateral for some of its debt, such as FINAME operations and leasing. DERIVATION SUMMARY Ouro Verde has a weaker competitive position compared to its main domestic peers, such as JSL S.A. (LT FC IDR BB/Stable; National LT rating AA-(bra)/Stable) based on business scale, access to funding, and cost of capital. Those last two are key variables in this capital-intensive industry. No country-ceiling, parent/subsidiary or operating environment aspects impact the rating. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: -- Slight decline in revenue in 2017 with a recovery from 2018 on, given an improvement in local funding; -- Capex at around BRL400 million in 2017 and increasing to around BRL450 million in 2018; -- Success in ongoing short-term debt refinancing; -- Dividends at 25% of net income (2017 and 2018 dividends are expected to be returned to the company as part of a deal with its shareholder to help to amortize a related debt credit of BRL135 million); -- No large-scale M&A activity. RATING SENSITIVITIES Factors that could lead to Fitch resolving the Negative Watch and assigning a Stable Outlook include: -- The company successfully improves its debt profile amortization, reinforcing liquidity with cash/short-term debt around 0.7x and cash+CFFO/short-term debt above 1.5x on sustainable basis. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Inability to access funding at more reasonable costs; -- Maintenance of current debt profile amortization in the next six months will lead to a rating downgrade; LIQUIDITY Ouro Verde has a track record of weak liquidity. Over the last 18 months, the local credit market had become more costly and the company started to face more difficulty in accessing credit lines. As of June 30, 2017, the company reported total debt of BRL1.7 billion, of which BRL917 million was short-term debt. This level of short-term debt compares with BRL212 million of readily available cash (not including long-term restricted cash tied to working capital in the amount of BRL79 million). The ratio of short-term debt coverage, as measured by cash plus CFFO-to-short- term debt, was weak at 0.8x. About 47% of Ouro Verde's debt is secured. The company's debt profile is mainly composed of FINAME operations and leasing (36%), banking credit lines (37%) and debentures (27%). FULL LIST OF RATING ACTIONS Fitch has maintained the following ratings on Rating Watch Negative: Ouro Verde Locacao e Servico S.A. -- Long-Term Foreign Currency IDR 'BB-'; -- Long-Term Local Currency IDR 'BB-'; -- National Long-Term rating 'A(bra)'; -- Local Debentures due 2018 and 2019 'A(bra) =================================== D O M I N I C A N R E P U B L I C =================================== AES ANDRES: Fitch Affirms BB- Long-Term IDR; Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed AES Andres B.V.'s (Andres) Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. This rating affects USD270 million of notes due 2026. Fitch has also affirmed the company's National Scale Long- Term Rating at 'AA(dom)' with a Stable Outlook. Andres's ratings reflect the high dependency of the Dominican Republic's electric sector on transfers from the central government to service the sector's financial obligations, a condition that links the credit quality of the distribution companies and generation companies to that of the sovereign. Low collections from end-users, high electricity losses and subsidies have undermined distribution companies' cash generation capacity, exacerbating generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies. The ratings also consider the companies' solid asset portfolio, strong balance sheet, and well-structured purchase power agreements (PPAs). The notes' rating considers the combined operating assets of Andres and Dominican Power Partners (DPP), which is a joint obligor of AES Andres's USD270 million notes due 2026. These notes are also attached to Empresa Generadora de Electricidad Itabo's USD100 million notes, also rated 'BB-'. The notes were primarily intended to repay a bridge taken to call similarly structured bonds last year. DPP currently contributes only about 10% of combined Andres/DPP EBITDA. In 2H17, DPP completed a significant capacity expansion by converting to a combined-cycle plant, substantially increasing its proportional revenue and EBITDA contribution to the combined results of the Andres/DPP. KEY RATING DRIVERS Sector's Dependence on Government Transfers High energy distribution losses (above 30% in last five years), low level of collections and important subsidies for end-users have created a strong dependence on government transfers. This dependence has been exacerbated by the country's exposure to fluctuations in fossil-fuel prices and energy demand growth (3.4% CAGR in 2009-2015). The regular delays in government transfers have pressured the working capital needs of generators and add volatility to cash flows. This situation increases the risk of the sector, especially at a time of rising fiscal vulnerabilities affecting the Central Government's finances. High-Quality Asset Base AES Andres has the Dominican Republic's most efficient power plant, and ranks among the lowest-cost electric generators in the country. Andres' combined-cycle plant burns natural gas and is expected to be fully dispatched as a base-load unit as long as the liquefied natural gas (LNG) price is not more than 15% higher than the price of imported fuel oil No. 6. Moreover, AES Andres operates the country's sole LNG port, offering regasification, storage, and transportation infrastructure. In the medium term, the company is also looking to expand its transportation network and processing capacity for its LNG operations. As of July 2017, the aggregate capacity of AES Dominicana increased by approximately 122MW as result of the development of a DPP's combined cycle facility. Strong Credit Metrics The combined credit metrics for Andres and DPP are strong for the rating category. EBITDA of USD149 million reflected major maintenance in the first half of 2016 and lower gas prices. As of YE16, companies' total gross leverage was 3.4x, while total net debt-to-EBITDA stood at 2.9x, significantly higher than historical levels but well within the thresholds for the rating category. The deterioration in leverage reflected the full drawdown on DPP's USD260 million credit facility and a USD100 million net debt increase from Andres's issuance in 2Q16. DPP's combined cycle plant was brought online in 3Q17, which should result in a positive impact on EBITDA in 2017 and 2018, and reduce leverage to around 2.5x in the medium term. Cash Flow Volatility Persists LTM Cash Flow from Operations (CFFO) for AES Andres and DPP combined was USD12 million at 4Q16, compared to USD218 million at year-end 2015. Average accounts receivable days increased to 98 days versus 49 days at YE2015. This is in line with Fitch's previously stated expectations, with receivable days returning to the 100-day level, barring another factoring agreement similar to the one the company executed in 3Q15. DERIVATION SUMMARY AES Andres B.V.'s ratings are linked to and constrained by the ratings of the government of the Dominican Republic, from whom it indirectly receives a sizable portion of its revenues. As a result, Andres's capital structure is strong relative to similarly rated, unconstrained peers. Orazul Energy Egenor S. en C. por A.('BB/Stable') (whose ratings reflects combined results that include its sister company, Aguaytia Energy del Peru S.R.L.) has similar installed capacity and is expected to generate around USD100 million in EBITDA annually, with estimated leverage of approximately 5.0x. Egenor benefits from the stability conferred by its asset diversification and the flexibility allowed by its vertical integration. By comparison, the combined Andres/DPP operations are expected to generated above USD200 million in EBITDA, with leverage around 2.5x in the medium term. Other regional peers include Albanesi S.A. (B/Stable) and Fenix Power Peru S.A. (BBB-/Stable). As an Argentine corporate, Albanesi is similarly constrained by its operating environment, but it shows a comparable deleveraging trajectory, from around 4.0x to 2.5x in the medium term. Its strong capital structure is reflected in its Long Term Local Currency rating of 'BB-/Stable'. Fenix shows high leverage, similar to Egenor, but benefits from its strategic linkage to its parent company, Colbun S.A. (BBB/Stable), as well as a steady deleveraging trajectory in the medium term as its international bond amortizes. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: -- Demand growth in line with GDP growth; -- DPP's open cycle is operation in 2H17; -- 100% of previous year's net income to be distributed as dividends; -- Receivable days continue to climb to around 100; -- NG prices follow Fitch Price deck. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action could follow if the Dominican Republic's sovereign ratings are upgraded or if the electricity sector achieves financial sustainability through proper policy implementation. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A negative rating action to AES Andres would follow if the Dominican Republic's sovereign ratings are downgraded, if there is sustained deterioration in the reliability of government transfers, and financial performance deteriorates to the point of increasing the combined Andres/DPP ratio of debt-to-EBITDA to 4.5x for a sustained period. LIQUIDITY Andres and DPP have historically reported very strong combined credit metrics for the rating category. Both companies have financial profiles characterized by low to moderate leverage and strong liquidity. Combined EBITDA as of 4Q16 totalled USD149 million (vs. USD141 million at year-end 2015), with gross leverage of 3.4x and gross interest coverage of 10.4x. The companies' strong liquidity position is further supported by the 2026 bond, which extended most of their maturities by eight years. Currently, the company has a credit facility of 260m, of which approximately USD209 million had been drawn upon as of 4Q16. This loan is scheduled to begin amortizing in 4Q17 over nine equal quarterly payments. However, Fitch also expects this loan to be replaced by long-dated notes to be place in 4Q17. FULL LIST OF RATING ACTIONS AES Andres B.V. Fitch has affirmed the following ratings: -- Foreign Currency Long-term IDR at 'BB-'; -- National Scale Long-Term Rating at 'AA(dom)'; -- Senior unsecured notes due 2026 at 'BB-'. The Rating Outlooks are Stable. EMPRESA GENERADORA: Fitch Affirms BB- Long-Term IDR --------------------------------------------------- Fitch Ratings has affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of Empresa Generadora de Electricidad Itabo S.A. (Itabo) at 'BB-'. The Rating Outlook is Stable. This affirmation affects approximately USD100 million notes due 2026 with a rating of 'BB-'. Itabo's ratings reflect the electric sector's high dependency on transfers from the central government to service its financial obligations, a condition that links the credit quality of the distribution companies and generation companies to that of the sovereign. Low collections from end-users, high electricity losses and subsidies have undermined distribution companies' cash generation capacity, exacerbating generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies. Itabo's ratings also consider its low cost generation portfolio, strong balance sheet and well-structured power purchase agreements (PPAs), which contribute to strong cash flow generation and bolster liquidity. KEY RATING DRIVERS Sector's Dependence on Government Transfers: Energy distribution losses above 30% in last five years, low levels of collections and important subsidies for end-users have created a strong dependence on government transfers. This dependence has been exacerbated by the country's exposure to fluctuations in fossil-fuel prices and energy demand growth (3.4% compound annual growth rate [CAGR] in 2009-2015). The regular delays in government transfers pressure working capital needs of generators and add volatility to their cash flows. Working Capital Pressure & Lower Realized Prices: As of the first quarter of 2017 (1Q17), Itabo generated USD71 million of cash flow from operations (CFFO), compared to USD114 million at year-end 2015. In 3Q15, the company sold USD100 million of accounts receivable through factoring agreements, bringing receivable days down below one month. Fitch expects receivable days to gradually return to historical levels over the medium term. The low price environment could expose the company to both spot sale vulnerability in the short term, and lower negotiated PPAs through the medium term. Low Cost Asset Portfolio: Itabo's ratings incorporate its strong competitive position as one of the lower cost thermoelectric generators in the country, ensuring the company's consistent dispatch of its generation units. The company operates two low cost coal fired thermal generating units and a third peaking plant that runs on Fuel Oil #2 and sells electricity to three distribution companies in the country through long term U.S. dollar denominated PPAs. The company expects to remain as a base load generator even after a 700 MW coal generation project starts operations by 2017. Adequate Credit Metrics: Itabo presents strong credit metrics for the rating category. Latest 12 months (LTM) leverage as of 1Q17 stood at 1.2x from 1.0x at December 2015. In the same period, EBITDA rose to USD80 million from USD68 million reflecting recovery in fuel prices, to which PPAs are linked. In May 2016, the company issued approximately USD100 million of debt to repay the outstanding bridge loan used to call the company's earlier bond due in 2020. Fitch expects continued softness in EBITDA and the moderate debt increase to result in leverage of around 1.5x through the medium term. DERIVATION SUMMARY Itabo's ratings are linked to and constrained by the ratings of the government of the Dominican Republic, from whom it indirectly receives its revenues. As a result, Itabo's capital structure is strong relative to similarly rated, unconstrained peers. Orazul Energy Egenor S. en C. por A.(BB/Stable) (whose ratings reflects combined results that include its sister company, Aguaytia Energy del Peru S.R.L.) has similar installed capacity and is expected to generate around USD100 million in EBITDA annually, with estimated leverage of approximately 5.0x. Egenor benefits from the stability conferred by its asset diversification and the flexibility allowed by its vertical integration. By comparison, Itabo is expected to generated approximately USD75 million, with leverage below 1.5x through the medium term. Other regional peers include Albanesi S.A. (B/Stable) and Fenix Power Peru S.A. (BBB-/Stable). As an Argentine corporate, Albanesi is similarly constrained by its operating environment, but it shows a deleveraging trajectory from around 4.0x to 2.5x in the medium term. Its strong capital structure is reflected in its Long-Term Local Currency rating of BB-/Stable. Fenix shows high leverage, similar to Egenor, but benefits from its strategic linkage to its parent company, Colbun S.A. (BBB/Stable), as well as a steady deleveraging trajectory in the medium term as its international bond amortizes. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: -- No material unplanned stoppages in 2017; possibility of continued climatological impacts on an annual basis; -- Demand growth of approximately 2%; -- Fuel prices to remain low in the near to medium term; -- 100% of previous year's net income paid as dividends. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action could follow if the Dominican Republic's sovereign ratings are upgraded or if the electricity sector achieves financial sustainability through proper policy implementation. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A negative rating action would follow if the Dominican Republic's sovereign ratings are downgraded, if there is sustained deterioration in the reliability of government transfers, and if financial performance deteriorates to the point of increasing the ratio of debt-to-EBITDA to 4.5x for a sustained amount of time. LIQUIDITY In May 2016, the company issued attached 10-year notes with its sister companies AES Andres and DPP to repay existing debt and extend its maturity profile. The tranche assigned to Itabo totaled USD99.9 million. Fitch expects that lower coal prices (to which contract prices are indexed) coinciding with the expiration of its existing PPAs to limit medium term growth recovery prospects in Itabo's EBITDA. Nevertheless, the company's conservative capital structure with total leverage of 1.2x and coverage of 13.1x confers substantial cushion within its rating category. The company currently holds approximately two thirds of its cash (USD63 million as of YE2016) in USD. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Empresa Generadora de Electricidad Itabo S.A. -- Foreign Currency Long-Term IDR at 'BB-'; -- Local Currency Long-Term IDR at 'BB-'; -- Senior unsecured notes due 2026 at 'BB-'. The Rating Outlook is Stable. =========== M E X I C O =========== CYDSA SAB.: Fitch Rates Proposed Sr. Unsecured Notes BB+ -------------------------------------------------------- Fitch Ratings has assigned a 'BB+' Issuer Default Ratings (IDRs) to Cydsa, S.A.B. de C.V. (Cydsa). Fitch has also assigned a 'BB+(EXP)' rating to Cydsa's proposed senior unsecured debt issuance of up to USD370 million with an up to a 10-year maturity. A complete list of rating actions follows at the end of this press release. The ratings reflect Cydsa's diversified business profile, its low cost position resulting from recent investments, vertical integration, and strong brand recognition in table salt. The ratings also reflect Fitch's expectation that consolidated net leverage will decrease to below 3.0x over the intermediate term and that Cydsa's underground storage business will further diversify its cash flow sources. The ratings are tempered by Cydsa's limited geographic diversification, price volatility of its chlorine and caustic soda business and the capital intensity of its business lines relative to EBITDA generation. KEY RATING DRIVERS Diversified Business Profile: Cydsa manufactures and commercializes salt for household and food industry use as well as chemicals and refrigerant gases. The company produces primarily caustic soda, chlorine, sodium hypochlorite, salt and refrigerant gas HCFC-22. It also commercializes refrigerant gases and other chemicals. The company's main household salt brand, La Fina, is the leading salt brand in Mexico with very strong top of mind awareness among Mexican consumers. Cydsa is also in the process of conditioning a salt cavern, which will be used to provide liquefied petroleum gas (LPG) storage services to a subsidiary of Pemex ('BBB+'/Stable Outlook) beginning fourth-quarter 2017. EBITDA to Strengthen: Cydsa will have deployed about USD600 million by the end of 2017 to investments aimed at improving its cost efficiency, expanding capacity and diversifying its business profile. These investments include upgrading and expanding Cydsa's salt production capacity by 67% to meet market demand, construction of a 128KT chlorine/caustic soda facility and two 57MW cogeneration plants, which can supply substantially all the electricity and steam needs of the company. The company is also close to completing an underground LPG storage facility. These investments are positive for the cost competitiveness of the company and should result in Cydsa growing its EBITDA to about MXN2.5 billion in 2018 from the MXN1.9 billion registered as of the latest 12-months ended June 30, 2017. Domestic Participant: The company derives over 90% of its revenue domestically with substantially all of its assets located in Mexico. Consequently, Cydsa's financial performance is tied to Mexico's political and economic developments. Further, the company has limited ability to influence prices of chlorine and caustic soda, which are volatile and significantly influenced by global supply and demand dynamics. These co-products represent about 50% of Cydsa's chemical portfolio and to some extent are influenced by demand for polyvinyl chloride (PVC) resin, which is widely used in construction and infrastructure and whose demand can be volatile. Under Ground Storage: Cydsa has begun to develop its salt caverns with the technical features needed to provide for the underground storage of hydrocarbons. The company entered into a 30-year agreement with a subsidiary of Pemex for the storage of LPG; the storage facility is nearly complete and will begin operating in the early part of the fourth quarter. The company has made initial investments to fit three other caverns to provide hydrocarbon storage services to future interested third parties. Cydsa expects future investment needs for these projects to be funded through a combination of debt and equity, and possibly through the use of non-recourse project finance debt. The development of these remaining three caverns for hydrocarbon storage could pressure credit quality depending on the speed of investment and the funding strategy used by Cydsa. DERIVATION SUMMARY Cydsa is well positioned against small scale chemical producers with limited regional diversification which are typically rated in the low 'BB' or below rating categories. Cydsa's business profile is more diversified and its cash flows are more stable than companies such as Grupo IDESA (B/Stable Outlook). Cydsa's diversified business profile is supported by the strong brand recognition of its household salt products and its cost position in its chlorine-alkali chain segment benefits from important investments in technology. Larger more diversified chemical companies with lower leverage such as Mexichem, S.A.B. de C.V. (BBB/Negative Outlook) or Braskem (BBB-/Stable Outlook) are typically rated in the low to mid 'BBB' category. KEY ASSUMPTIONS Fitch's key assumptions within the agency's rating case for the issuer include: -- Cydsa issues up to USD370 million in international capital market debt and uses the proceeds to refinance all its debt outstanding. -- The Pemex project starts-up as scheduled. -- Excess cash flow is used to fund growth capex and to lesser extent pay dividends. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A rating upgrade is unlikely in the medium term considering the company's business profile and expected diversification into underground storage. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Expectation of sustained Fitch adjusted net debt/EBITDA above 3.5x inclusive of off-balance sheet/ non-recourse debt. -- A steep decline of chlorine and caustic soda prices that erode Cydsa's EBITDA or competitive dynamics that weaken Cydsa's salt business. -- Large debt financed acquisitions or investments. LIQUIDITY Adequate Liquidity: Proforma after the proposed notes issuance the company would face no near-term maturities. Fitch estimates that the company should generate about MXN400 million of free cash flow after maintenance capex and dividends. Completed investments in salt and chemicals have reduced committed capex and should provide the company with FCF to partially fund investments in the capital intensive chemicals or underground storage business lines. Cydsa's adjusted net debt /EBITDA as of the latest twelve months ended June 30, 2017 was 3.1x. FULL LIST OF RATING ACTIONS Fitch has assigned the following ratings to Cydsa, S.A.B. de C.V.: -- Long-Term Foreign Currency Issuer Default Rating (IDR) 'BB+'; -- Local Currency Long-Term IDR 'BB+'; -- Proposed up to USD370 million senior unsecured notes with a maturity of up to ten years 'BB+(EXP)'. The Rating Outlook is Stable. CYDSA SAB: S&P Rates $370MM Senior Unsecured Notes Rated 'BB' ------------------------------------------------------------ S&P Global Ratings assigned its 'BB' issue-level rating on CYDSA S.A.B. de C.V.'s (CYDSA) proposed up to $370 million (up to about MXN7.123 billion) 144 A / Reg. S up to 10-year senior unsecured notes bearing a fixed interest rate subject to market conditions. At the same time, S&P is assigning a recovery rating of '4' on the notes, indicating its expectation for a meaningful (30% to 50%) recovery in the event of a payment default. S&P's ratings on CYDSA, including its long-term and short-term corporate credit ratings, are unchanged. CYDSA plans to use most of the proceeds to refinance the entirety of its outstanding debt, including its syndicated loan due 2022 and a bridge loan granted by Goldman Sachs. S&P said, "We expect the proposed transaction to improve CYDSA's debt maturity profile, extending the average lifespan of its debt from about three years to about 10 years, further supporting our assessment of the company's adequate liquidity. Additionally, we consider that the transaction will set all CYDSA's debt at a fixed rate, thus eliminating its exposure to a fluctuation in interest rates. "In connection with the note offering, we're assigning a '4' recovery rating on CYDSA's outstanding senior unsecured notes, indicating our expectation for an average (30% to 50%; rounded estimate: 40%) recovery in the event of payment default. The issue-level rating on the company's senior unsecured notes is 'BB', the same as the corporate credit rating. Further to its credit, CYDSA's debt instruments are fully unconditionally and irrevocably guaranteed on a senior unsecured basis by its most important subsidiaries, which accounted for most of the company's consolidated fixed assets and EBITDA, respectively, as of Jun. 30, 2017." Key analytical factors -- S&P is assigning issue-level and recovery ratings on the proposed issuance of up to $370 million (up to about MXN7.123 billion) 144 A / Reg. S up to 10-year senior unsecured notes. -- S&P has valued the company on a going-concern basis using a 5.0x multiple of our projected emergence EBITDA. -- S&P estimates that, for the company to default, EBITDA would need to decline significantly, representing a material deterioration of the business. Simulated default assumptions -- Simulated year of default: Our scenario contemplates a default in 2022 caused by weaker demand from end markets; higher raw material prices volatility; depressed product prices; macroeconomic deterioration; increased competition; soft consumption patterns in Mexico, given macroeconomic deterioration with heightened peso devaluation; and the company's ultimate inability to control costs. -- EBITDA at emergence: MXN 692 million. -- EBITDA multiple 5.0x. Simplified waterfall -- Net enterprise value (EV: after 5% admin. costs): MXN 3,287 million. -- Recovery rating: '4' -- Recovery expectations: 30% to 50% (rounded estimate: 40%). For the complete corporate credit rating rationale, please see S&P's research update on CYDSA published on Sept. 18, 2017. RATINGS LIST CYDSA S.A.B. de C.V. Corporate Credit Rating BB New Rating CYDSA S.A.B. de C.V. Senior Unsecured Notes BB CYRELA COMMERCIAL: Fitch Affirms & Withdraws BB- IDR ---------------------------------------------------- Fitch Ratings has affirmed Cyrela Commercial Properties S.A. Empreendimentos e Participacoes' (CCP) Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'BB-'/Stable and its National Long-Term rating at 'A(bra)'/Stable. At the same time, Fitch has withdrawn the ratings. Fitch has chosen to withdraw the ratings of CCP for commercial reasons. Fitch will no longer provide ratings or analytical coverage for the company. KEY RATING DRIVERS Key Rating Drivers are not applicable as the ratings have been withdrawn. DERIVATION SUMMARY Derivation Summary is not applicable as the ratings have been withdrawn. KEY ASSUMPTIONS Key Assumptions are not applicable as the ratings have been withdrawn. RATING SENSITIVITIES Rating Sensitivities are not applicable as the ratings have been withdrawn. LIQUIDITY CCP's liquidity will improve with the proceeds from the sale of assets, and part of the proceeds will be used to prepay about BRL1 billion of debt, materially minimizing refinancing pressure during the next couple of years. As of June 30, 2017, cash and marketable securities totalled BRL330 million and total debt was BRL2.4 billion. The company has BRL507 million of debt maturing in the short term and BRL262 million in second-half 2018. FULL LIST OF RATING ACTIONS Fitch has affirmed and withdrawn the following ratings: Cyrela Commercial Properties S.A. Empreendimentos e Participacoes -- Long-term Foreign Currency IDR at 'BB-'; -- Long-term Local Currency IDR at 'BB-'; -- Long-term National Scale rating at 'A(bra)'; -- Fifth debenture issuance, in the amount of BRL200 million, due in 2019, at 'A(bra)'; -- Eighth debenture issuance, in the amount of BRL200 million, due in 2020, at 'A(bra)'. The Rating Outlook for the corporate ratings was Stable when the rating was withdrawn. DOCUFORMAS SAPI: S&P Rates Proposed Senior Unsecured Notes 'B+' ------------------------------------------------------------ S&P Global Ratings assigned its 'B+' issue-level rating to Docuformas S.A.P.I. de C.V.'s (B+/Stable/--) proposed senior unsecured notes for up to $175 million. The tenure of the notes will be five years and will bear a fixed rate. S&P said, "Our 'B+' rating on the proposed debt is at the same level as the issuer credit rating. The debt rating reflects the lender's secured debt that we expect will represent less than 15% of adjusted assets by the end of 2017 and around 11% by the end of 2018, and its unencumbered assets will cover the unsecured debt by 1x (at the end of 2017) and 1.4x (at the end of 2018)." Furthermore, the rating indicates that the notes will rank equally in right of payment with all of Docuforma's existing and future senior unsecured debt. The issuance will have a full cross-currency swap to hedge against currency exchange fluctuations. The derivative will cover the notes' complete amount during the time of the issuance. S&P said, "We expect the lender to use the proceeds to repay a significant amount of outstanding market/banking debt--MXN1.66 billion that's mostly short-term debt--and shift to a more stable funding structure with improved maturity profile. Such debt repayment will release MXN1.3 billion of encumbered assets. Docuformas will use the remainder of the proceeds (MXN1.3 billion) for organic growth for the next 12-24 months. "As a result of the issuance, we're reassessing our funding assessment on the company to moderate from adequate and liquidity to adequate from moderate, which affected neither Docuformas' stand-alone credit profile (SACP) nor the ratings. We expect Docuformas' stable funding ratio to improve to an average of 64% in 2017 and 2018 (from an average of 52% in 2014-2016) given that the new issuance will increase the company's available stable funding at a higher pace with respect to stable funding needs. In this sense, given that we expect Docuformas' stable funding ratio to remain below 90% and that the proposed notes would represent around 70% of total debt in 2017 and 2018, we now expect significant maturities or single-creditor concentrations that could cause a substantial refinancing risk in the future. Despite a potential release of up to MXN1.3 billion in encumbered assets related to the debt prepayment, Docuformas' funding structure will be concentrated in market debt--estimated at about 64% of total liabilities for 2017 and 2018. The company's remaining funding sources will be banking credit facilities (Credit Suisse; 18%) and other liabilities (18%). Therefore, we believe Docuformas' funding structure will be more concentrated with respect to other finance companies we rate. "The issuance will increase Docuformas' broad liquid assets significantly in 2017 and will reduce sharply the portion of short-term wholesale debt to total debt for the next few years. However, under such a scenario, we expect the company's liquidity coverage metric to pick up to 2.80x in 2017 and drop to 0.85x in 2018. Liquid assets increase in 2017, given that Docuformas will mainly use the proceeds to repay a significant amount of outstanding market/banking debt and the remainder for organic growth. "We base our assessment of Docuformas' capital and earnings through our risk-adjusted capital (RAC) ratio, our independent assessment of asset risk relative to capital. This is because we believe it best represents our forward view of Docuformas' capital sufficiency to protect obligors, given the company's projected asset and operational risks. "After incorporating the new issuance in our capital and earnings assessment, our assessment remains unchanged. As of the end of 2016, Docuformas' RAC ratio was 8.0%, and considering the proposed debt issuance, we expect the ratio to at around 7.4%-8.4% in 2017 and 2018. Such capitalization level will remain consistent with the adequate category, according to our criteria. S&P's base-case scenario, for 2017 and 2018, considers the following assumptions: -- Mexico's GDP growth of 1.9% in 2017 and 2.2% in 2018, according to S&P's latest regional overview, "Credit Conditions: Political Uncertainty Hinders Improving Credit Conditions In Latin America," published June 30, 2017. -- Issuance of $175 million senior secured notes, with a five- year tenor at fixed rate, which will be hedged by a full cross-currency swap. -- Proceeds for repaying MXN1.66 billion in outstanding market/banking debt and to use MXN1.3 billion for organic growth, the latter of which will appear as cash on the balance sheet in 2017, while Docuformas substitutes those resources by loans. -- Docuformas' gross receivables to grow at 35% and 20%, in 2017 and 2018, respectively. -- Total debt to increase by more than 50% in 2017, with the proposed issuance representing around 70% of total debt. -- Nonperforming assets of about 4.5% in 2017 and 2018, which S&P expect to be fully covered by reserves. S&P estimates credit losses to represent about 1.5% of Docuformas' gross receivables. -- Net income of MXN171.5 million and MXN325.8 million in 2017 and 2018, respectively. Moreover, the company's net interest margin to drop to 12% in 2017 from 13% in 2016, and picking up to 14% in 2018. Therefore, return on assets would be at about 2.75% and 4.50% for each year, respectively. -- Goodwill of MXN116 million for the forecasting period. -- S&P doesn't expect changes in Docuformas' dividend policy during this time frame. -- Total adjusted capital of about MXN462 million in 2017 and MXN651 million in 2018. The rating constraint is the company's weaker asset quality than those of domestic peers, stemming from above-average delinquency ratios and charge-offs that limit Docuformas' risk position. The rating, on the other hand, is supported by the company's stable and increasing operating revenue from its leasing business that support Docuformas' business position. Despite the synergies from past acquisitions, the company still has some sector and geographic concentrations. The rating also incorporate an adequate capital and earnings assessment, based on our forecasted RAC ratio at about 7.4%-8.4% in 2017 and 2018. Finally, the rating also reflects our moderate funding and adequate liquidity assessment on the company. Docuformas' SACP remains at 'b+'. RATINGS LIST Docuformas S.A.P.I. de C.V. Counterparty Credit Rating B+/Stable/-- CaVal (Mexico) National Scale mxBBB/Stable/mxA-3 New Rating TO Docuformas S.A.P.I. de C.V. Senior Unsecured B+ OFFSHORE DRILLING: S&P Downgrades CCR and Debt Rating to 'CCC-' --------------------------------------------------------------- S&P Global Ratings lowered its corporate credit and senior secured debt ratings on Offshore Drilling Holding S.A. (ODH) to 'CCC-' from 'CCC'. The outlook is negative. S&P said, "In addition, we affirmed the '4' recovery rating on the issue-level ratings, indicating our expectation for average recovery (30%-50%) of the notes under a default scenario. "The rating action reflects our expectation that ODH will likely default in the next six months, absent unanticipated significantly favorable changes in the issuer's circumstances. On Sept. 20, 2017, ODH used its interest reserve account to fully cover its $39.7 million semi-annual interest payment on its $950 million 2020 bullet bond. We believe that ODH will serve the interest payment in March 2018, with EBITDA generation for the next six months, along with existing cash generation, totaling around $42 million. However, we believe that the company will not have enough cash available to replenish its debt service reserve account (DSRA) within the expected timeframe of 179 days in order to avoid an immediate event of default without further action or notice. As such, in our view, conventional default is likely to occur by March 2018." ====================== P U E R T O R I C O ====================== CAPARRA HILLS: Fitch Puts B+ IDR on Rating Watch Negative --------------------------------------------------------- Fitch Ratings has placed the ratings for Caparra Hills LLC and Liberty Cablevision of Puerto Rico LLC on Rating Watch Negative due to the uncertainty of the impact of the devastation caused by Hurricane Maria on Puerto Rico. Early reports indicate that the extensive damage to the island may cause power to be lost for weeks, if not months. Fitch currently rates Liberty Cablevision of Puerto Rico, LLC (LCPR) 'B+'. Its credit protection measures are considered strong for the rating level, as net leverage was 4.3x as of June 30, 2017. Fitch expects the company's insurance to cover damage to its physical assets, as well as losses due to service interruption. The Rating Watch Negative reflects concern that the storm will impact LCPR's customers' financial conditions so severely that their payments to the company will be delayed or discontinued during the upcoming weeks. A secondary concern is that the weak economic conditions in Puerto Rico will lead to the continued decline in the island's population. Fitch's 'B+' rating of Caparra Hills reflects the company's small size and limited property diversification. Leverage, as measured by total debt to EDITDA, is viewed to be high at 9.5x as of June 30, 2017. The key risks for this issuer are the financial health of its clients and downward pressure on lease rates that could result from the storm. Within the next 12 months, 22% of the company's leases expire. Caparra's liquidity position is supported by its cash position of USD4.5 million and an unused unsecured line of credit for USD1 million. As of June 30, 2017, Caparra Hills' short-term debt obligation was USD1.6 million. The company also maintains a debt service reserve fund of approximately USD9 million, held by the trustee, covering 20 months of debt service (interest and principal). FULL LIST OF RATING ACTIONS Fitch has placed the following ratings on Rating Watch Negative: Caparra Hills LLC -- Long-Term Foreign Currency IDR 'B+'; -- Senior secured debt 'BB/RR2'; Liberty Cablevision of Puerto Rico, LLC. -- Long-Term Foreign Currency IDR 'B+'; -- Senior Secured Revolver 'BB-/RR3'; -- Senior Secured 1st Lien Term Loan B due 2022 'BB-/RR3'; -- Senior Secured 2nd Lien Term Loan C due 2023 'B-'/'RR6' ================= V E N E Z U E L A ================= DOCUFORMAS SAPI: Fitch Rates New US$175MM Sr. Notes B+ ------------------------------------------------------ Fitch Ratings has assigned ratings to Docuformas S.A.P.I. de C.V. (Docuformas) including its Long-term Local and Foreign Currency Issuer Default Ratings (IDRs) of 'B+' and Short-term Foreign and Local Currency Ratings of 'B'. The Rating Outlook for the long- term ratings is Stable. At the same time, Fitch has assigned Docuformas' upcoming issue of up to USD175 million Reg S/144A senior notes an expected long-term rating of 'B+(EXP)', reflecting that these are senior unsecured obligations that rank pari passu with other senior indebtedness, and therefore, the rating is aligned with the company's IDRs. The notes will pay interest semi-annually in arrears and may be redeemed at the option of the issuer. The Recovery Ratings is 'RR4', which denotes average recovery prospects in the event of default. The final rating is contingent upon the receipt of final documents conforming to information already received. Docuformas will use the net proceeds of the offering to refinance approximately USD97 million of existing debt, while the rest will be used for growth. There will be no increased exposure to market risk as a result of the issuance, as it will be fully hedged with a cross currency swap. The notes will be unconditionally guaranteed by three subsidiaries of the company: Analistas de Recursos Globales, S.A.P.I. de C.V.; ARG Fleet Management, S.A.P.I. de C.V. and Rentas y Remolques de M?xico, S.A. de C.V. The notes and the subsidiary guarantees will be Docuformas' and the guarantors' senior unsecured obligations. KEY RATING DRIVERS IDRS AND SENIOR DEBT Docuformas' ratings are highly influenced by its company profile due to its moderate franchise and specialization in the leasing segment in Mexico and its tight tangible capital metrics. The ratings also consider its consistent and ample profitability, a relatively well diversified funding base and an adequate liquidity position reflected in positive maturity gaps. Its ratings also factor in its levels of non-performing loans (NPLs) that compare unfavourably against those of its peers; however, charge-offs have been low historically. Key man risk and some corporate governance considerations are also reflected in the ratings. Docuformas has recognition as the second largest independent leasing company in Mexico (not related to a financial group), which drives its moderate franchise in the sector, although its participation in the national financial system is very low. After the acquisition of Analistas de Recursos Globales, S.A.P.I. de C.V. (ARG) in 2014, it increased its market share, diversified its product offering and expanded its client base. The planned issuance of USD175 million senior unsecured notes will impact its capitalization ratios and funding profile. Fitch estimates that its debt to tangible capital ratio would increase to levels around 9x immediately after the issuance. Nevertheless, the shareholders have formally agreed to retain all of the earnings generated during 2017 and 2018, which together with its current growth and income generation forecasts, should drive its debt to tangible equity ratio to levels around 7.5x at the close of 2017. Post-issuance, Docuformas' funding mix will consist solely of a secured bank facility (approximately 26% of funding) and the international issuance. After the issuance, unpledged lease receivables will cover approximately 1.3x the balance of unsecured funding. In Fitch's opinion, this plan will improve funding costs and provide longer term resources; however, it will increase Docuformas' refinancing risk, as the maturity of its debt will concentrate in a bullet payment in five years. However, the company will aim to maintain its current credit facilities unused and ready for disposal; which, along with adequate liquidity management should mitigate this risk. The company's adequate liquidity position is also reflected in its positive cumulative liquidity gap. Docuformas' non-performing Loan (NPL) metrics compare unfavorably against its closest peers. Nevertheless, they have remained stable despite their relatively high levels. The impaired loan ratio stood at 6.6% at the close of the second quarter of 2017 (2Q17), compared with the 5.9% average registered over the past four years. Like some of its leasing peers, reserves do not fully cover the amount of NPLs (2Q17: 62.2%); this is a result of the collateralized nature (asset ownership) of the majority of its portfolio, which translates into low historical charge-offs (less than 1% of gross loans on average over the past four years). Borrower concentrations are considered moderate and compare favourably against its closest peers (Top 20 concentrations: 1.4x its equity as of March 2017). In Fitch's opinion, Docuformas has a track record of relatively high and consistent earnings generation and has proven to be resilient to tougher economic conditions in Mexico in recent years. Docuformas' profitability ratios are underpinned by its adequate interest margins albeit pressured recently by the increasing cost of funds. This, coupled with lower income volumes during the first two quarters, reduced its operating return on assets to 4% at the close of June 2017, from 6.4% registered on average over the past four years. The company's performance is affected by cyclicality, for which if its growth plans materialize, its profitability should recover during 2017 to levels similar to those registered in 2016. Fitch considers that exposure to key man risk is relatively high in relation to the company's founder, who currently acts as the CEO and chairman of the board and whose personal expertise and involvement in the company's strategy and operations has been determinant of its track record. The latter is relatively common in small and medium size non-bank financial institutions. Its corporate governance practices have room for improvement in terms of strengthening the composition of relevant committees and in terms of related party transactions and its aggressive dividend policy. RATING SENSITIVITIES IDRS AND SENIOR DEBT Docuformas' ratings could be upgraded in the medium term if it exhibits orderly growth, while it strengthens its internal capital generation and materially improves its loss absorption capacity, reflected in a debt to tangible equity ratio consistently below 6x or in a relevant increase of its loan loss reserves. This while it maintains strong profitability ratios, adequate funding and liquidity sources, and strengthens its corporate governance practices. Ratings could be downgraded if its financial profile considerably deteriorates as a result of an increase in its NPLs or if its debt to tangible equity ratio increases above 9x consistently. The ratings of the notes will mirror any movement in the company's long-term IDRs, reflecting their senior unsecured nature. However, the rating of the notes may diverge from the IDRs if asset encumbrance increases to the extent that it materially deteriorates the effective recovery for the senior unsecured bondholders. Fitch has assigned the following ratings: Docuformas S.A.P.I. de C.V. -- Foreign Currency Long-term IDR 'B+'; -- Local Currency Long-term IDR 'B+'; -- Foreign Currency Short-term IDR 'B'; -- Local Currency Short-term IDR 'B'; -- USD175 million Regs/144A senior unsecured notes 'B+/RR4(EXP)'. ================= X X X X X X X X X ================= * BOND PRICING: For the Week From Sept. 18 to Sept. 22, 2017 ------------------------------------------------------------ Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- BA-CA Finance Cayman Lt 0.518 62.07 KY EUR AES Tiete Energia SA 6.7842 1.109 4/15/2024 BR BRL Argentina Bogar Bonds 2 39.36 2/4/2018 AR ARS Automotores Gildemeister 8.25 73.25 5/24/2021 CL USD Automotores Gildemeister 6.75 67 1/15/2023 CL USD Automotores Gildemeister 8.25 73.25 5/24/2021 CL USD Automotores Gildemeister 6.75 65.5 1/15/2023 CL USD CA La Electricidad 8.5 63.664 4/10/2018 VE USD Caixa Geral De Depositos 1.439 63.167 KY EUR Caixa Geral De Depositos 1.469 KY EUR CSN Islands XII Corp 7 68 BR USD CSN Islands XII Corp 7 66.266 BR USD Decimo Primer Fideicomiso 6 53.225 10/25/2041 PA USD Decimo Primer 4.54 43.127 10/25/2041 PA USD Dolomite Capital 13.217 73.108 12/20/2019 CN ZAR Enel Americas SA 5.75 56.172 6/15/2022 CL CLP Gol Linhas Aereas SA 10.75 35.861 2/12/2023 BR USD Gol Linhas Aereas SA 10.75 35.601 2/12/2023 BR USD Inversora Electrica 6.5 67.625 9/26/2017 AR USD Inversora Electrica 6.5 67.625 9/26/2017 AR USD MIE Holdings Corp 7.5 64.78 4/25/2019 HK USD MIE Holdings Corp 7.5 64.982 4/25/2019 HK USD NB Finance Ltd 3.88 61.816 2/7/2035 KY EUR Noble Holding 7.7 74.433 4/1/2025 KY USD Noble Holding 5.25 56.279 3/15/2042 KY USD Noble Holding 8.7 71.881 4/1/2045 KY USD Noble Holding 6.2 60.129 8/1/2040 KY USD Noble Holding 6.05 58.38 3/1/2041 KY USD Odebrecht Finance Ltd 7.5 42.5 KY USD Odebrecht Finance Ltd 5.125 56.938 6/26/2022 KY USD Odebrecht Finance Ltd 7 68.053 4/21/2020 KY USD Odebrecht Finance Ltd 7.125 41.366 6/26/2042 KY USD Odebrecht Finance Ltd 4.375 40.002 4/25/2025 KY USD Odebrecht Finance Ltd 5.25 39.211 6/27/2029 KY USD Odebrecht Finance Ltd 6 44.75 4/5/2023 KY USD Odebrecht Finance Ltd 5.25 39.018 6/27/2029 KY USD Odebrecht Finance Ltd 7.5 42.95 KY USD Odebrecht Finance Ltd 4.375 40.363 4/25/2025 KY USD Odebrecht Finance Ltd 7.125 41.635 6/26/2042 KY USD Odebrecht Finance Ltd 6 52.625 4/5/2023 KY USD Odebrecht Finance Ltd 5.125 55.873 6/26/2022 KY USD Odebrecht Finance Ltd 7 67.368 4/21/2020 KY USD Petroleos de Venezuela 8.5 74.5 10/27/2020 VE USD Petroleos de Venezuela 6 30.458 5/16/2024 VE USD Petroleos de Venezuela 6 30.517 11/15/2026 VE USD Petroleos de Venezuela 9.75 35.677 5/17/2035 VE USD Petroleos de Venezuela 9 39.279 11/17/2021 VE USD Petroleos de Venezuela 5.375 30.267 4/12/2027 VE USD Petroleos de Venezuela 8.5 72.5 10/27/2020 VE USD Petroleos de Venezuela 12.75 45.278 2/17/2022 VE USD Petroleos de Venezuela 6 30.367 5/16/2024 VE USD Petroleos de Venezuela 6 30.387 11/15/2026 VE USD Petroleos de Venezuela 9 39.316 11/17/2021 VE USD Petroleos de Venezuela 9.75 35.893 5/17/2035 VE USD Petroleos de Venezuela 6 28.346 10/28/2022 VE USD Petroleos de Venezuela 5.5 30.123 4/12/2037 VE USD Petroleos de Venezuela 12.75 45.23 2/17/2022 VE USD Polarcus Ltd 5.6 75 3/30/2022 AE USD Provincia del Chubut 4 10/21/2019 AR USD Siem Offshore Inc 4.04527 69.5 10/30/2020 NO NOK Siem Offshore 3.75176 65.75 12/28/2021 NO NOK STB Finance 2.05771 56.243 KY JPY Sylph Ltd 2.367 64.438 9/25/2036 KY USD US Capital 1.63611 54.774 12/1/2039 KY USD US Capital 1.63611 54.774 12/1/2039 KY USD USJ Acucar 9.875 67 11/9/2019 BR USD USJ Acucar 9.875 67 11/9/2019 BR USD Venezuela 13.625 68.25 8/15/2018 VE USD Venezuela 7.75 44.065 10/13/2019 VE USD Venezuela 11.95 40.785 8/5/2031 VE USD Venezuela 12.75 45.19 8/23/2022 VE USD Venezuela 9.25 39.645 9/15/2027 VE USD Venezuela 11.75 40.005 10/21/2026 VE USD Venezuela 9 36.285 5/7/2023 VE USD Venezuela 9.375 37.69 1/13/2034 VE USD Venezuela 13.625 72.25 8/15/2018 VE USD Venezuela 7 34.23 3/31/2038 VE USD Venezuela 7 59.19 12/1/2018 VE USD *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2017. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *