/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/171127.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, November 27, 2017, Vol. 18, No. 234 Headlines B R A Z I L BANCO DE LA NACION: Fitch Affirms B IDR; Revises Outlook to Pos. BRAZIL: Administration Scales Back Scope of Prop. Pension Reform CEMIG GERACAO: Fitch Rates Proposed US$1BB Sr. Eurobonds B(EXP) CENTRAIS ELETRICAS: Fitch Affirms BB- IDR; Revises Outlook to Neg. D O M I N I C A N R E P U B L I C DOMINICAN REP: Exports Didn't Sustain 6.3% Jump From 2010 to 2016 M E X I C O CHIHUAHUA: Moody's Assigns Ba3 Global Scale Issuer Ratings DEUTSCHE BANK: Moody's 'Ba1' Rating Under Review for Downgrade MEXICO: Central Bankers Uneasy About Inflation Outlook NEMAK SAB: Fitch Affirms BB+ Long-Term IDR; Outlook Positive P U E R T O R I C O COLONIAL MEDICAL: Case Summary & 20 Largest Unsecured Creditors S U R I N A M E SURINAME: Moody's Puts B1 Issuer Rating on Review for Downgrade V E N E Z U E L A VENEZUELA: Creditors Begin Organizing Among Themselves VENEZUELA: Some Bondholders Joust for Advantage X X X X X X X X X * BOND PRICING: For the Week From November 20 to Nov. 24, 2017 - - - - - =========== B R A Z I L =========== BANCO DE LA NACION: Fitch Affirms B IDR; Revises Outlook to Pos. ---------------------------------------------------------------- Fitch Ratings has revised Banco de la Nacion Argentina (Sucursal Uruguay)'s (BNAUY) Outlooks to Positive from Stable. The bank's Long-Term Foreign and Long-Term Local Currency Issuer Default Ratings (IDRs) have been affirmed at 'B' and Support Rating (SR) at '4'. KEY RATING DRIVERS IDRs The revision of the Outlook to Positive is driven exclusively by the same action on Argentina's sovereign rating (B/Positive) on 7 November 2017. BNAUY is a fully integrated branch of Banco de la Nacion Argentina (BNA). BNA's creditworthiness is intrinsically aligned with that of the sovereign, not only because of the existing explicit guarantee provided by the government, but also given BNA's systemic importance as the largest bank in Argentina. BNA's liabilities, including its branches abroad, are fully guaranteed by the government. Given BNA's total ownership by the Argentinean government, the bank's liabilities (including BNA branches abroad) are fully guaranteed by the government. BNA has a leading franchise in Argentina, being the largest bank in terms of loans and deposits. It has a presence in nine countries, through branches and representation offices to address the domestic needs regarding international trade to support trade activity of Argentina in the region. BNAUY is the smallest bank in the country given its narrow business focus, with a market share lower than 1% in terms of total assets and deposits in private banking. The franchise of the group BNA is strongly influenced by the Argentinean economic and operational environment, which remains unstable, despite an improving policy outlook, including high inflation, a large fiscal deficit, and heavy sovereign reliance on external financing that render it vulnerable to shocks. BNAUY is fully integrated with the head office's strategies, corporate governance practices and risk management procedures. BNAUY operates through only one main office and its activities are reported to the international banking division of BNA. BNAUY has modest profitability, a fairly liquid balance sheet and adequate capitalisation metrics. SUPPORT RATING BANUY's SR '4' reflects the significant uncertainties regarding the sovereign's ability to provide support, given Argentina's weak credit profile, which results in limited probability of support. RATING SENSITIVITIES IDRs & SUPPORT RATING BNAUY's ratings continue to be sensitive to the sovereign rating and Argentina's capacity and willingness to provide support to BNA and its branches. BRAZIL: Administration Scales Back Scope of Prop. Pension Reform ---------------------------------------------------------------- Paulo Trevisani at The Wall Street Journal reports that Brazil's government is scaling back a proposal to overhaul the country's insolvent pension system, part of a last-ditch effort to get congressional support for the unpopular bill ahead of general elections next year. Pension reform has proved particularly difficult in Brazil, where corruption scandals and political stalemate have been the norm for the past few years, according to The Wall Street Journal. President Michel Temer's administration is urging Congress to overhaul a pension system that consumes nearly half of the national budget and is set to have a $56 billion deficit this year, the report notes. The shortfall saps funds that could be used to improve the country's depleted infrastructure, health and education, officials said, the report relays. Investors worry the country's growing debt load could spiral out of control if nothing is done. "This is a very slow-motion train wreck," said Robert Abad, founder of the emerging markets advisory firm EM+BRACE, the report relates. The report discloses that the new plan, submitted to Congress, trims contribution periods for pension eligibility and maintains other benefits that the government initially sought to reduce. The changes aim at getting enough votes to approve a minimum retirement age of 65 years for men and 62 for women. Current rules allow Brazilians to retire in their late 50s, the report relays. Finance Minister Henrique Meirelles said the watered-down proposal would still save nearly $150 billion in taxpayer money over the next decade, roughly 60% of what the government intended to save in its initial plan, the report notes. The new proposal "has a very relevant fiscal impact," Mr. Meirelles said. "It solves the problem," Mr. Meirelles added, WSJ relates. The new plan sets a minimum contribution period of 15 years for private-sector workers eligible for pension benefits, down from 25 years in an earlier plan presented by the government, the report relays. Other costly benefits the government wanted to change, such as a pension plan for rural workers too poor to make social security payments, would also be preserved, the report notes. "The changes are aimed at the lowest-income groups, so they are good" said Social Security Secretary Marcelo Caetano, who crafted the government's initial reform plan, the report says. Mr. Temer wants the Lower House to pass the slimmed-down version of the bill before a recess in late December, the report notes. By the time lawmakers return in February, Congress likely would avoid voting on sensitive topics ahead of general elections in October, the report discloses. But it isn't clear whether the government's efforts will be enough to sway a Congress increasingly worried about siding with a president whose approval rates are as low as 3%, the report relays. "Everything this administration proposes is seen as a bad thing," said Rep. Daniel Coelho, from the Brazilian Social Democracy Party, a key ally of Mr. Temer. "I don't see how this reform could possibly be approved," he added. The Temer administration also is using television ads to convince a skeptic public angered with costly pension perks given to public servants, the report relays. "A lot of people in Brazil work little, earn much and retire early," says one of the ads. "We want to put an end to such privileges," it added, notes the report. The World Bank estimates that 35% of pension subsidies benefit only the 20% richest Brazilians, while just 18% of subsidies go to the 40% poorest, the report relays. The leftist Workers' Party, or PT, which ruled Brazil from 2003 until last year's impeachment of former President Dilma Rousseff, has strongly campaigned against the pension overhaul, the report notes. With deep roots among public workers, the PT and its allies say the overhaul would make retirement harder for everyone, the report relays. "The pension reform will only hit the neediest ones," the report quoted PT Sen. Paulo Paim as saying. A budding economic recovery also could reduce pressure on Congress for a fast decision on pension reform, the report relays. Brazil's economy is forecast to grow 0.7% this year and 2.5% in 2018 after two consecutive years of contraction, the report notes. "Brazilian policymakers operate well under the gun," said Edwin Gutierrez, head of emerging-markets sovereign debt at Aberdeen Asset Management, the report notes. "But not so well when the gun is taken off," he added. "Everything is running against pension reform," said political consultant Leonardo Barreto, noting that legislators see retirement perks as an easy fix for social inequality, the report relays. Corrections & Amplifications Brazil's pension system consumes nearly half of the national budget and is set to have a $56 billion deficit this year, the report relays. An earlier version of this story incorrectly said that the deficit was nearly half of the budget, the report adds. As reported in the Troubled Company Reporter-Latin America on Nov. 14, 2017, Fitch Ratings has affirmed Brazil's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Negative Outlook. CEMIG GERACAO: Fitch Rates Proposed US$1BB Sr. Eurobonds B(EXP) --------------------------------------------------------------- Fitch Ratings has assigned a 'B(EXP)'/'RR3' rating to Cemig Geracao e Transmisao S.A. (Cemig GT)'s proposed USD1 billion senior unsecured Eurobonds due 2024. The proposed Eurobonds are guaranteed by the holding company Companhia Energetica de Minas Gerais (Cemig) and the proceeds will be used to prepay existing debt. Cemig GT's and Cemig Distribuicao S.A.'s (Cemig D) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) are currenty rated 'B-' and the National Scale rating 'BB-(bra)'. All the ratings are on Negative Watch, including the proposed issuance. The ratings reflect Cemig group's deteriorated credit profile, as Fitch believes that the company's financial flexibility has materially worsened and net adjusted leverage will be in the range of 5.0x to 6.0x in the next two years. Delays in completing its strategy for asset disposal along with significant financial expenses on its debt are having a negative impact on the group's ability to improve its financial metrics, including liquidity ratios. Expected free cash flow (FCF) of around BRL900 million in 2017 and BRL100 million in 2018 are viewed as positive. Cemig and its subsidiaries' credit profiles are analyzed on a consolidated basis due to cross default clauses and cash dynamics. The group's aggressive financial profile is partially offset by its low to moderate business risks, supported by low competition and positive diversification mainly into power generation, transmission and distribution segments, being the latter the most volatile. Positively, Cemig has a relevant asset base in the Brazilian electric sector, including shared control in several companies with relevant market value. The IDRs also factor in the existence of political risk, due to Cemig's condition as a state owned company, as well as a moderate regulatory risk for the Brazilian power sector and a hydrology risk currently above historical average. The ratings are on Negative Watch and reflect Cemig group's challenges in addressing future debt payments, even considering the closing of the BRL4 billion in debt renegotiations with its main creditors and the likely sale of some of its Transmissora Alianca de Energia Eletrica S.A.'s (Taesa) shares to meet part of the BRL1.7 billion put option related to Light S.A.'s (Light) shares. An equity increase of BRL1.3 billion and success on this USD1 billion Eurobond issuance are important actions that may occur, but not enough to solve all the liquidity issues. Fitch expects to assign a 'RR3' Recovery Rating to Cemig GT's proposed issuance, which reflects recovery prospects at the range of 51% to 70% in the event of default, given the group's cash flow generation and strong assets portfolio. KEY RATING DRIVERS Positive FCF: Fitch believes that Cemig's consolidated FCF will be positive at around BRL900 million in 2017 as the group is exhibiting more robust cash flow from operations (CFFO), and capex and dividends have been limited in order to address liquidity issues. In 2018, FCF should be modest at around BRL100 million, which is low compared to debt maturities. In the latest-12-month (LTM) ended September 2017, consolidated CFFO of BRL2.7 billion was crucial to support a FCF of BRL900 million, after BRL1.0 billion in capex and BRL832 million in dividends was paid out. Fitch views Cemig's willingness to reduce dividend payments since 2015 to the legal limit of 25% of net income as positive. Higher Leverage: Fitch expects Cemig's consolidated net adjusted leverage to be in the range of 5.0x to 6.0x in the next two years. In the LTM ended September, 2017, Cemig reported net adjusted debt/adjusted EBITDA of 7.2x, the highest in the last five years. Fitch includes the guarantees of BRL5.9 billion to non- consolidated companies, mainly to Belo Monte and Santo Antonio hydro plants, and the exercised put option in the total adjusted debt. On the other hand, dividends received from non-consolidated investments in the amount of BRL485 million are added to the EBITDA. Favorable Business Model: The group benefits from its diversification in terms of segments and assets, which mitigates operational risks and reduces cash flow volatility. Cemig is one of the largest power companies in Brazil, with 12.7 million clients served in the distribution segment, 8.4 GW of power generation installed capacity and 8.2 thousand km of transmission lines. The company is expected to reduce its activity in greenfield projects and in the acquisition of existing assets, after being very aggressive historically. The debt associated with the acquisitions at relevant levels and strong dividend payments in the past, have significantly affected the group's credit quality. DERIVATION SUMMARY Cemig's financial risk profile is more aggressive, with weaker liquidity and higher leverage compared to Eletropaulo Metropolitana de Eletricidade de Sao Paulo (Local Currency IDR: 'BB'/Stable Outlook, National Scale Rating 'AA-bra'). When assessing the Latin American energy peers in the 'B' category, although Cemig has larger revenue base, its coverage ratios compare unfavorably. AES Argentina and Genneia's ratings are constrained by Argentina's Sovereign Ceiling of 'B' and the high regulatory risk environment while the Brazilian peers operate with moderate regulatory risk. Cemig's business credit profile compares better than Eletropaulo's with a diversified assets portfolio, as it is an integrated energy company. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Cemig D consumption increase of 0.7% in 2017, and 2.4% during 2018. -- Average consolidated capex of BRL1.2 billion during 2017-2020; -- Dividend payout of 25% (minimum legal limit); -- BRL1.2 billion disbursement on Light's partners put; -- BRL800 million sale of Taesa's shares; -- Issuance of USD1 billion in Eurobonds. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action: - Positive rating actions are unlikely in the short to medium term. The Watch Negative may be removed if the group improves its liquidity profile and its financial flexibility to meet future financial obligations. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action: - Failure to sell Taesa's shares and/or conclude the expected equity injection; - Failure to issue the USD1 billion Eurobond; - Continuing deterioration on financial flexibility; - Difficulties to conclude asset sales in relevant amounts. LIQUIDITY Challenging Liquidity Profile: Cemig has an aggressive liquidity profile, which may be partially mitigated if the equity injection, the USD1 billion Eurobond issuance and the sale of Taesa's shares are concluded. Even in this positive scenario, Fitch understands that Cemig would still need to roll over around BRL500 million - BRL 1 billion in debt until the end 2018. In September 2017, Cemig group reported total adjusted debt of BRL21.2 billion, including off-balance sheet debt of BRL5.9 billion, while cash and equivalents were BRL1.3 billion. The debt maturing in the short term was BRL6.4 billion including BRL1.2 billion of the put option (net of approximately BRL400 million in cash reserved for this purpose), but should reduce as the BRL4 billion debt refinancing with the group's four major creditors was concluded recently. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that Cemig would be considered a going concern in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. -- Cemig's going-concern EBITDA of BRL3.1 billion is based on the EBITDA expected in 2017. Fitch understands 2017 EBITDA reflects the reduced results from the generation segment after the return of important concessions and the distribution segments still adverse scenario; -- An EV multiple of 6x is used to calculate a post-reorganization valuation and reflects a mid-cycle multiple for the sector. -- Cemig's non-consolidated investments were also considered in the analysis. The company has valuable assets in its non- consolidated portfolio, which includes 35% of Light's and 32% of Taesa's total shares. Liquidation Value Fitch excluded the liquidation value (LV) approach because Brazilian bankruptcy legislation tends to favor the maintenance of the business in order to preserve direct and indirect job positions. Moreover, in extreme cases where LV was necessary, the recovery of the assets has been proved very difficult for lenders. FULL LIST OF RATING ACTIONS Fitch has taken the following rating actions: Cemig GT -- USD1,000 million proposed Eurobonds due 2024 guaranteed by Cemig assigned 'B(EXP)'/'RR3'; Rating Watch Negative. Fitch also currently rates the Cemig's group entities as follows: Cemig -- Long-Term Foreign Currency IDR 'B-'; -- Long-Term Local Currency IDR 'B-'; -- Long-Term National scale rating 'BB-(bra)'. Cemig D -- Long-Term Foreign Currency IDR 'B-'; -- Long-Term Local Currency IDR 'B-'; -- Long-Term National scale rating 'BB-(bra)'; -- BRL400 million senior unsecured debentures due 2017 'BB-(bra)'; -- BRL1,615 million senior unsecured debentures due 2018 'BB-(bra)'. Cemig GT -- Long-Term Foreign Currency IDR 'B-'; -- Long-Term Local Currency IDR 'B-'; -- Long-Term National scale rating 'BB-(bra)'; -- BRL1,350 million senior unsecured debentures, with two outstanding series due 2019 and 2022, 'BB-(bra)'. All the ratings are on Rating Watch Negative. CENTRAIS ELETRICAS: Fitch Affirms BB- IDR; Revises Outlook to Neg. ------------------------------------------------------------------ Fitch Ratings has revised the Outlooks on Centrais Eletricas Brasileiras S.A.'s (Eletrobras) and its wholly owned subsidiary, Furnas Centrais Eletricas S.A.'s (Furnas) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to Negative from Stable and affirmed the IDRs at 'BB-'. Fitch has also affirmed the companies' Long-Term National Scale Ratings at 'AA-(bra)' and revised the Outlooks to Negative from Stable. The Outlook revision reflects Fitch's view that the expected increase of the Brazilian Federal Government's support to Eletrobras may not occur, considering its announced intention to privatize the power company through the dilution of its shareholding participation. Based on this, Fitch considers that a one-notch difference between the Brazilian sovereign IDR (BB/Negative) and Eletrobras is more appropriate. This means that changes to the sovereign IDR or Outlook should trigger the same action on Eletrobras to maintain the distance in the IDRs. Fitch considers that Eletrobras privatization would potentially be positive for the company, but due to the high uncertainties remaining in this process, we have not incorporated it into the ratings. Eletrobras' IDRs benefit from its strategic importance to the country due its prominent position within the Brazilian power sector. The sovereign directly holds directly 51% of company voting shares and guarantees around 30% of its consolidated on- balance sheet debt. On a standalone basis, Eletrobras' IDRs would be lower due to its still weak operational cash flow generation and high leverage. Management's initiatives to reduce costs and capital expenditures, as well as sell assets in order to improve the group's capital structure are positive, but will take time to improve the group's current situation. KEY RATING DRIVERS Federal Government Support: Fitch considers any additional support from the Brazilian Federal Government to Eletrobras as uncertain, as the sovereign intends to privatize the company in the near future. In the last couple of years, the Brazilian government has shown increasing commitment to Eletrobras' turnaround, supporting management's decision to cut costs and reduce investments, as well as through the National Treasury increasing participation as guarantor of loans to 30% of total consolidated on-balance sheet debt and equity injections of BRL2.9 billion .Federal banks are the counterparty to 38% of the group's debt. High Importance to Brazil: Eletrobras has a strong position as the largest electricity generation and transmission company in Brazil, with 32% of installed generation capacity and 47% of transmission lines as of September 2017. Its size and active presence in the most relevant energy projects under construction in Brazil make it strategically important to the country's economy and development. Negative Free Cash Flow: We expect Eletrobras' free cash flow (FCF) generation to remain negative, even though capex has been reduced as part of a new business plan. Fitch views positively that the company's subsidiaries did not participate in the recent transmission and generation bids promoted by the government. The Strategic Plan for 2017-2021 contained investments of BRL35.8 billion, but the group has already reduced this, executing around 42% (BRL3.7 billion) of the budget for this year. In the last 12 months (LTM) ending September 2017, the consolidated cash flow from operations (CFFO) was negative BRL2.1 billion, while FCF was negative BRL4.8 billion. Cash Generation to Improve: EBITDA generation should achieve an annual average of BRL5.0 billion in 2017-2019, according to Fitch's projections, considering the cash inflow from compensation revenues of the transmission concessions renewed early in 2013. In the LTM ending in September 2017, EBITDA amounted to BRL5.4 billion, having been positively impacted by the booking of additional compensation revenues, which started to be received in July 2017, for BRL900 million per quarter. High Leverage: Fitch expects Eletrobras' adjusted leverage ratios to remain high in the coming years, with net adjusted debt/EBITDA above 10x. As a mitigating factor, Eletrobras' consolidated risk profile benefits from an extended debt maturity schedule. For the LTM ended on September 2017, total adjusted debt-to-EBITDA and net adjusted debt-to-EBITDA ratios were 12.3 and 11.0, respectively. Total adjusted debt of BRL77.4 billion includes Reserva Global de Reversao (RGR) of BRL6,6 billion and off-balance sheet debt of BRL31.6 billion related to guarantees provided to non-consolidated subsidiaries. If these debts are excluded, net leverage would remain high at 7.2x. DERIVATION SUMMARY Eletrobras' 'BB-'/Negative IDRs derive from the Brazilian sovereign rating of 'BB'/Negative, considering its linkage with the government and high importance of its business to the country, and despite its weak financial metrics. Compared with other state- owned electric utility companies in Latin America, Eletrobras' ratings are lower than the Mexican company Comission Federal de Electricidad (CFE; BBB+/Stable) and the Colombian group Interconexion Electrica S.A. E.S.P (BBB+/Stable). CFE's ratings are fully supported by the Mexico sovereign rating of 'BBB+'/Stable, while ISA's ratings are above the Colombian sovereign 'BBB' and capped by the Country Ceiling of 'BBB+', reflecting its asset base diversification in terms of segments and geographic operation, and adequate credit metrics and liquidity. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: - Receipt of BRL 27.8 billion from compensation value for the transmission concession renewal over eight years, starting in July 2017 (inflation adjusted); - Average annual capex of BRL 4.4 billion from 2017 to 2019; - Dividends corresponding to 25% of net profit in the coming three years; - Privatization of distribution companies in 2018. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Improvements on Eletrobras' standalone credit profile; - Positive rating action on the sovereign. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - Negative rating action on the sovereign; - Perception of a weakening on the Brazilian government support; - Significant deterioration on the company's credit profile on a standalone basis. LIQUIDITY Strong Liquidity to Continue: Eletrobras has historically maintained a strong liquidity position and a manageable debt amortization schedule. As of September 30, 2017, the company's consolidated cash and marketable securities of BRL8.4 billion compared favorably with BRL 6.1 billion in December 2016and represented 1.6x its short-term debt of BRL5.2 billion. This high liquidity position is important for expected negative FCF and the more uncertain support coming from the Federal Government through equity injections and guarantees. FULL LIST OF RATING ACTIONS Eletrobras -- Long-Term Foreign-Currency IDR affirmed at 'BB-'; Outlook revised to Negative from Stable -- Long-Term Local-Currency IDR affirmed at 'BB-'; Outlook revised to Negative from Stable -- National Long-Term rating affirmed at 'AA-(bra)'; Outlook revised to Negative from Stable -- USD1 billion senior unsecured notes due 2019 affirmed at 'BB-' -- USD1.75 billion senior unsecured noted due 2021 affirmed at 'BB-' Furnas -- Long-Term Foreign-Currency IDR affirmed at 'BB-'; Outlook revised to Negative from Stable -- Long-Term Local-Currency IDR affirmed at 'BB-'; Outlook revised to Negative from Stable -- National Long-Term rating affirmed at 'AA-(bra)'; Outlook revised to Negative from Stable =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REP: Exports Didn't Sustain 6.3% Jump From 2010 to 2016 ----------------------------------------------------------------- Dominican Today reports that the 6.3% jump in Dominican Republic's exports from 2010 to 2016 wasn't sustained since the trend was sluggish year on year, even taking into account the high downward rates (above 20%) posted after the recovery from the "big contraction" of 2009. The figures are from the Industry and Commerce Ministry's Monitor, a new tool to analyze the prospects of the country's economy and the performance of industry and commerce, according to Dominican Today. "From an extraordinary expansion of exports (23%, 2010), we moved to a phase in which the value of merchandise exports sustained a sharp decline, with 2015 being the most critical year, with a contractionary performance (-5.1%), the report notes. The recovery of growth in commerce returned to the scene in 2016," the Monitor said, the report relays. Also reported during the presentation of the mechanism was that, in terms of value, the Monitor noted a climb to US$3.0 billion over seven years, the report relays. "In contrast, in the same period, the region of Latin America and the Caribbean as a whole accumulated four years of negative growth (2013-2016) in its exports of merchandise," the report adds. As reported in the Troubled Company Reporter-Latin America on Nov. 20, 2017, Fitch Ratings has affirmed Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. =========== M E X I C O =========== CHIHUAHUA: Moody's Assigns Ba3 Global Scale Issuer Ratings ----------------------------------------------------------- Moody's de Mexico assigned Ba3 (Global Scale, local currency) and A3.mx (Mexico National Scale) issuer ratings to the State of Chihuahua. The outlook is negative. RATINGS RATIONALE The issuer ratings reflect Chihuahua's high debt levels and its large, recurring cash financing deficits, as well as Moody's expectation that efforts to contain spending will help reduce these deficits over the coming year. The ratings also incorporate Chihuahua's adequate liquidity position and its diversified economic base, which has allowed the state to collect high levels of own source revenues that are more than double the median of Ba3 rated Mexican peers. Chihuahua's cash financing deficits averaged 9.7% of total revenues over the 2012-2016 period, reflecting a high cost structure resulting from rigid recurring outlays for education, public security and pensions. However, thanks to a series of cost control measures implemented by a new administration in late 2016, Moody's expect the state will post somewhat smaller deficits in 2017 and 2018 equal to around 4% of total revenues. The most important change was a decree that prevents the state from increasing spending beyond its original budget, which had historically been a common practice. The measures took effect this year and will remain in force throughout the current administration, helping to curb deficit spending. Chihuahua financed a significant portion of its large deficits in previous years with long-term bank loans, leaving the state with high levels of net direct and indirect debt. As of December 2016, debt was equivalent to 45.1% of total revenues, compared with the 21% median for Mexican states. Given that the state hasn't contracted any additional debt this year and doesn't plan to before the end of December, Moody's expect debt levels to decrease to a 41% of total revenues at the end of 2017. Chihuahua is currently planning to refinance part of its outstanding debt, which Moody's expect will help reduce its debt service to 2.7% of total revenues in 2018, compared to an expected 3.5% in 2017. Although Chihuahua has tight liquidity metrics, the state's liquidity position is slightly higher than the median for Ba3 rated Mexican peers, with cash equaling 0.5 times current liabilities in December 2016. Liquidity is already improving as a result of the measures taken to rebalance the state's cash financing results, with cash and equivalents rising to 1.0 times current liabilities in September. RATIONALE FOR THE NEGATIVE OUTLOOK The negative outlook on the ratings reflects the negative outlook of Mexico's sovereign bond rating (A3 negative), given the state's significant dependence on federal transfers (83.7% of total revenues in 2016). WHAT COULD CHANGE THE RATING UP/DOWN If the administration continues implementing measures that effectively offset Chihuahua's growing expenditure pressures leading to lower-than-expected cash financing deficits along with decreasing debt levels and a stronger liquidity position, the ratings could face upward pressure. Conversely, the ratings could face downward pressure if Chihuahua's consolidated financial results deteriorate, leading to higher debt levels and weaker liquidity. The principal methodology used in this rating was Regional and Local Governments published in June 2017. The period of time covered in the financial information used to determine State of Chihuahua's rating is between 01/01/2012 and 31/12/2016. (source: financial statements of State of Chihuahua) 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. DEUTSCHE BANK: Moody's 'Ba1' Rating Under Review for Downgrade -------------------------------------------------------------- Moody's de Mexico S.A. de C.V. said that the ratings of Deutsche Bank Mexico, S.A. (Deutsche Bank Mexico) and of Deutsche Securities Mexico, S.A. de C.V. (Deutsche Securities Mexico) remain under review for downgrade pending regulatory approval of the sale of these entities to Mexico's Investa Bank, S.A. (Investabank, unrated). The review was initiated on November 4, 2016. The following ratings and assessments remain on review for downgrade: Deutsche Bank Mexico, S.A. (600069090): -- Baseline credit assessment of ba2 -- Adjusted baseline credit assessment of ba1 -- Long-term global local currency deposit rating of Ba1 -- Long-term global foreign currency deposit rating of Ba1 -- Long-term Mexican National Scale deposit rating of A1.mx -- Short-term Mexican National Scale deposit rating of MX-1 -- Long and short term Counterparty Risk Assessments of Baa3(cr) and Prime-3(cr) Deutsche Securities Mexico, S.A. de C.V. (821503957): -- Long-term global local currency issuer rating of Ba1 -- Long-term Mexican National Scale issuer rating of A1.mx -- Short-term Mexican National Scale issuer rating of MX-1 RATINGS RATIONALE The ratings of Deutsche Bank Mexico and Deutsche Securities Mexico were placed under review following the signing of an agreement by the companies' ultimate parent, Deutsche Bank AG (Deutsche AG, baseline credit assessment of ba1), to sell these operations to Investabank as part of a broader scaling back of its global operations pursuant to its 2020 strategic plan. Barring a significant deterioration in the entities' standalone creditworthiness prior to the closing of the sale, the conclusion of the reviews is dependent upon receipt of regulatory approval of the deal. Once the transaction closes, Deutsche Bank Mexico and Deutsche Securities Mexico will no longer benefit from support from Deutsche AG. Despite the marginal business importance of the Mexican bank to its parent, Moody's assesses a high likelihood of parent support given their shared brand name, which results in one notch of ratings uplift from Deutsche Bank Mexico's baseline credit assessment. In turn, as a highly integrated and harmonized entity, Deutsche Securities Mexico's ratings are in line with those of Deutsche Bank Mexico. Until regulatory approval is received, the reviews for downgrade will also consider the impact on the two entities' creditworthiness of the progressive decrease in earnings generation and business diversification that is already occurring as the entities continue to wind down business that will not be part of the sale, and their balance sheets continue to shrink through the transaction's closing date. Moody's expects that at the sale's closing, the business being acquired by Investabank will largely consist of the trustee division of Deutsche Bank Mexico. The companies have already begun to exit or transfer to their parent certain operations that will not be sold to Investabank. As of September 2017, the bank's total assets had shrunk 81% vis- a-vis December 2016 as the entity unwound its derivative positions. The bank posted a profit after taxes of just 0.5% of total assets during the first nine months of 2017, largely composed of interest income from its investment portfolio. Despite the sharp contraction of the balance sheet and the weak reported profitability, however, the bank's ba2 baseline credit assessment remains appropriate. As a result of the deleveraging, the bank reported a strong adjusted tangible capital ratio as of September 2017. Currently, the bank's assets largely consist of investments in securities, while liabilities are mostly comprised of accounts payable. If the sale unexpectedly falls through, Moody's expects an orderly wind down of the Mexican entities' remaining lines of business, which are not currently under stress. Should their situation suddenly deteriorate before the parent can finish winding them down, however, Moody's expects that Deutsche AG would provide the necessary financial support to avoid a failure as the reputational cost for Deutsche AG's global business of allowing these entities to fail would likely outweigh the costs of bailing them out. WHAT COULD MOVE THE RATINGS DOWN The ratings will likely be downgraded when regulatory approval of the transaction is received and/or it reaches financial close. They could be downgraded before if the companies' standalone credit profiles deteriorate significantly as a result of preparations for their upcoming sale. This may include a significant drop in capitalization or profitability. The ratings could be confirmed if the sale falls through and Deutsche AG consequently retains ownership of the Mexican subsidiaries until they are completely wound down, or until a sale to another party is announced. The long-term Mexican National Scale ratings of A1.mx indicate issuers or issues with above-average creditworthiness relative to other domestic issuers. The short- term Mexican National Scale ratings of issuers rated MX-1 indicate the strongest ability to repay short-term senior unsecured debt obligations relative to other domestic issuers. The principal methodology used in rating Deutsche Bank Mexico, S.A. was Banks published in January 2016. The principal methodology used in rating Deutsche Securities, S.A. de C.V. was Securities Industry Market Makers published in September 2017. MEXICO: Central Bankers Uneasy About Inflation Outlook ------------------------------------------------------ Anthony Harrup at The Wall Street Journal reports that although the Bank of Mexico is sticking to its forecast that inflation will return to its 3% target by the end of next year, several board members questioned the likelihood of that happening when they agreed in early November to leave interest rates unchanged, minutes to the meeting showed. The central bank voted unanimously on Nov. 9 to keep the overnight interest-rate target at 7%, noting that risks for both inflation and for economic growth had increased since the previous decision, according to The Wall Street Journal. The report notes that several of the five voting board members said that a return to the 3% inflation target next year assumes minimal increases in noncore items, such as energy and fresh produce, a strengthening of the Mexican peso against the U.S. dollar, and a modest increase in the minimum wage. Another member said inflation expectations gleaned from surveys and financial markets suggest the central bank's scenario "isn't altogether credible," the report relays. Risks the bank sees for the peso include possible interest-rate increases by the Federal Reserve, an unfavorable outcome for Mexico in negotiations to redraw the North American Free Trade Agreement, and Mexico's 2018 presidential elections, the report discloses. Since the last policy meeting, labor, government and business representatives on the minimum wage commission agreed to raise the minimum wage by 10% as of Dec. 1, and inflation in the first half of November rebounded to 6.6% from 6.4% at the end of October, the report relays. Bank of Mexico Gov. Agustin Carstens, who is leaving at the end of this month to head the Bank for International Settlements in Switzerland, said that the minimum wage increase is likely to have an inflationary effect, but not enough to cancel out the wage increase, the report relays. The central bank sees keeping low, stable inflation as its best contribution to raising real wages, the report notes. "For some companies, an increase in the minimum wage will imply a significant increase in costs and that could be reflected in increases in different prices," Mr. Carstens said, the report relays. Capital Economics said the surprising and broad-based pickup in inflation in the first half of November, reported, "will have spooked the more hawkish members of the board," the report discloses. Markets have begun pricing in a good chance of an interest-rate increase in coming months, although inflation is still likely to ease over the next three to six months, the research firm said in a note, the report relays. "So while rate cuts are clearly not coming onto the agenda anytime soon, we expect the central bank to look through the latest rise in inflation and keep rates unchanged at 7% over the coming months," the report adds. NEMAK SAB: Fitch Affirms BB+ Long-Term IDR; Outlook Positive ------------------------------------------------------------ Fitch Ratings has affirmed Nemak, S.A.B. de C.V.'s (Nemak) Long- term Issuer Default Ratings (IDRs) at 'BB+' and its long-term national scale rating at 'AA-(mex)'. The Rating Outlook is Positive. Nemak's increasing product and geographic diversification, improving financial structure and implicit parent support from Alfa, S.A.B. de C.V. (BBB-) lead to investment grade characteristics. These factors complement Nemak's strong technological competencies, which have given it a very strong competitive position in North America and Europe. Nemak's ratings are constrained by the ongoing negotiations of NAFTA, which threaten the continuity of the North American auto industry. Satisfactory resolution of on-going NAFTA talks could result in a rating upgrade. Conversely, an unfavourable outcome from negotiations that disrupts North America's intricate supply chains would lead to lower industry profitability and likely set back Nemak's financial improvements, and could cause Fitch to revise the Outlook to Stable. KEY RATING DRIVERS Adverse U.S. Trade Policy: Nemak's 'BB+' credit profile should endure the near-term threats that protectionist policies in the U.S. could bring to the North American automotive industry. The company is the sole global supplier in about 85% of the products they sell. It is also the main supplier of aluminum cylinder heads and engine blocks in both the U.S. and Mexico. Competitive threats that could substitute Nemak's products are not likely to arise in the near term due to the company's strong competitive position and expertise in producing cylinder heads and engine blocks using aluminum castings. Strong Global Business Position: Nemak's presence in high-growth regions, such as Asia and its high percentage of installed capacity in low-cost countries, complements its strong business position in Europe and the Americas. The company's long-term customer relationships, its use of aluminium price pass through contracts that reduce raw material volatility, its position as an essential supplier for Detroit's OEMs and its participation in several of the largest global engine platforms are also reflected in the ratings. North America Slowing Down: The company derives about two thirds of its EBITDA from North America, primarily through the sale of components used in the assembly of vehicles sold in the U.S. where total light vehicle sales grew strongly during 2009-2015. Fitch believes U.S. vehicle sales should remain at mid-16 million to low-17 million over the intermediate term. Nemak has continued to gain incremental business, primarily in engine blocks, structural components and electric vehicle components, which should position the company well to continue to grow volumes despite slower industry tailwinds in the U.S. New Contracts Boost Growth: Nemak has been awarded new contracts for about USD300 million in annual revenues for its structural and electric and hybrid vehicle aluminium components. The bulk of these contracts is expected to come online in 2018-2019. As a result, compound annual consolidated equivalent volume growth is expected at around 3%.This compares positively to relatively flat vehicle production growth expected in North America, Nemak's main market, and is a positive factor supporting the Positive Outlook. Operating Performance Should Recover: Nemak's financial performance suffered in 2017 primarily due to weaker volumes from one of its customers and sharply higher aluminium prices. Nemak's near-term operating performance suffers when there are sharp increases in the price of aluminium as there is a time lag until price fluctuations are passed through to its customers as per established contracts. Nemak's EBITDA is expected to be around USD750 million in 2017 compared to USD796 million in 2016. Fitch is projecting that Nemak's EBITDA will approach USD800 million in 2018 boosted by increased vehicle production and new product launches in Europe and Asia. Leverage Expected to Trend Down: Nemak's credit metrics should strengthen over the next two years, as demand for the company's high value-added aluminum engine blocks and structural products grow. Fitch expects Nemak to generate neutral to positive FCF in 2017 and 2018 as the company continues to invest in expanding its casting and machining capabilities to serve new programs awarded and pay dividends. Nemak's FCF was USD60 million during 2016 and USD39 million during 2015. Fitch expects Nemak's net leverage to be around 1.7x in 2017 and close to 1.5x in 2018. Nemak's gross leverage is expected to strengthen below 2x over the intermediate term. DERIVATION SUMMARY Nemak's business profile is one of the strongest Latin America auto suppliers. The high complexity and technological innovation of the company's aluminium castings, has given it a very strong competitive position which has allowed Nemak to become a sole supplier to OEMs in 85% of the products it sells. Nemak's business profile compares well against Metalsa's (BBB-) as Metalsa has a less dominant position in its core businesses and against Tupy (BB), which has much smaller scale as it is a niche producer of iron engine blocks and heads predominantly used in commercial off- road vehicles and less geographic diversification. Nemak's business profile is similar to that of European peer GKN Holding's (BBB-) in terms of completive position, albeit GKN enjoys a larger scale and a more diversified profile in terms of product segments, customers and geography of cash flow. Nemak's financial profile is strong for its BB+ rating, but relatively weak at this point in the cycle when compared to higher rated GKN Holdings and Metalsa. Nemak's adjusted FFO net leverage is projected by Fitch at around 1.8x in 2018, which compares with expectations of about 1.5x for GKN and about 1x for Metalsa, which has very conservative financial policies. Tupy's adjusted FFO net leverage has typically been around 2x although this metric is not directly comparable as Nemak's business profile is stronger. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- North America auto production flattens-out over the intermediate term. -- Equivalent unit volume grows low to mid-single digits over the intermediate term. -- Capex of around 9% of sales over the intermediate term. -- Dividends of about USD170 million per year. -- The U.S. dollar exchange rate against the Mexican peso does not weaken significantly below MXN18:USD1. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A favorable outcome from NAFTA negotiations that does not undermine North America auto supply chains; -- Continued expectations of gross leverage strengthening below 2x. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A severe decline in North American vehicle production that leads to reduced demand for Nemak's products; -- A reduction in EBITDA generation resulting in total debt/EBITDA above 3x for a sustained period of time; -- Sustained negative FCF; -- Sustained weak liquidity relative to upcoming debt obligations; -- Large acquisitions or investments financed mostly with debt resulting in an expectation of higher leverage levels in the mid- to long term. LIQUIDITY Sound Liquidity: Nemak's liquidity position is considered sound. As of third quarter 2017, the company's short-term debt was USD156 million. This debt is mostly composed of working capital financing and bank debt amortizations, which favorably compares to USD130 million of non-restricted cash and USD349 million in undrawn committed credit lines maturing predominantly in 2018-2020. Fitch projects Nemak's cash flow from operations (CFFO) should remain strong at around USD600 million. FULL LIST OF RATING ACTIONS Fitch has affirmed Nemak's ratings as follows: -- Long-term Foreign currency Issuer Default Rating (IDR) at 'BB+'; -- Long-term Local currency IDR at 'BB+'; -- Long-term national scale rating at 'AA-(mex)'; -- USD500 million senior unsecured notes due 2023 at 'BB+'. -- EUR500 million senior unsecured notes due 2024 at 'BB+' ====================== P U E R T O R I C O ====================== COLONIAL MEDICAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Colonial Medical Management Corp PO Box 1716 Anasco, PR 00610 Business Description: Colonial Medical Management Corp is an ambulatory health care clinic located in Anasco, Puerto Rico. Colonial Medical Management Corp's practice location is listed as Carretera 402 Km 1.8 Bo. Marias Anasco, PR 00610. The company previously sought bankruptcy protection on March 13, 2014 (Bankr. D. P.R. Case No. 14-01922). Chapter 11 Petition Date: November 21, 2017 Case No.: 17-06925 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Hon. Brian K. Tester Debtor's Counsel: Ada M Conde, Esq. 1611 LAW AND JUSTICE FOR ALL, INC. PO Box 11674 San Juan, PR 00910 Tel: 787-721-0401 Email: 1611lawandjustice@gmail.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Luis Jorge Lugo Velez, president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/prb17-06925.pdf =============== S U R I N A M E =============== SURINAME: Moody's Puts B1 Issuer Rating on Review for Downgrade --------------------------------------------------------------- Moody's Investors Service has placed the B1 long-term issuer rating and senior unsecured notes of the government of Suriname on review for downgrade. The decision to initiate the review for downgrade was prompted by the following: 1) Significant deterioration in the government's fiscal position, as reflected in debt ratios that are at higher levels than previously expected 2) The likelihood that fiscal reforms will proceed more slowly in the absence of an IMF program 3) Increasing government liquidity risks because financing has shifted toward short-term domestic debt issuance Moody's review will focus on assessing: 1) Suriname's medium-term fiscal outlook, likely fiscal policy and the expected trajectory for revenues, primary spending, and debt affordability 2) The government's funding options for 2018 and policies to increase resiliency to external shocks 3) The outlook for growth, particularly in the mining sector, and its fiscal and balance-of-payment implications During the review, Moody's will also assess how Suriname's overall credit profile will evolve compared with those of other sovereigns rated in the B category. RATINGS RATIONALE RATIONALE FOR INITIATING THE REVIEW FOR DOWNGRADE FIRST DRIVER: FISCAL METRICS HAVE WEAKENED MORE THAN PREVIOUSLY EXPECTED Moody's expects that Suriname's government debt burden will have peaked in 2017 at 70.5% of GDP, up from 26% of GDP in 2014, and that it will stabilize around 60% of GDP, higher than the rating agency had previously expected. Revisions to the 2017 budget along with a draft 2018 budget point to a slower pace of fiscal consolidation, with larger fiscal deficits envisioned in both years compared with earlier expectations. In its draft 2018 budget (published in September 2017) and its medium-term government finance framework, the government revised its 2017 deficit target to 6.0% of GDP, from 4.0% previously, and stated that it expects the deficit to narrow to 5.5% of GDP in 2018. In Moody's opinion, these revisions represent a slower place of consolidation, even compared with the rating agency's previously conservative forecasts. Moreover, the combination of interest payments and public wages will equal 60% of total revenues, leaving limited flexibility to adjust to shortfalls in revenues or financing. Without the introduction of measures to increase non-mining revenues, Suriname's fiscal position will remain susceptible to commodity price volatility. Through the first seven months of 2017, non-mining revenue collection has pointed to a weak economic recovery, while mining- related revenue have increased as expected, benefiting from increased gold production and prices. Revenues, both mining and non-mining, have not recovered to levels recorded earlier in the decade. In addition, as still weak domestic economy has contained growth in non-mining revenues. Despite a reduction in recurring government expenditures in recent years, Moody's expect some fiscal slippage to result in a fiscal deficit somewhat larger than the government's target of 6.0% in 2017. Debt affordability metrics have deteriorated as a result of an increase in interest expenditures in combination with lower government revenue intake, with interest payments expected to reach 3.5% of GDP in 2017. Moody's expects interest expenditures to take up 19% of revenues in 2017, compared with less than 5.0% in 2012, and above the median for B-rated sovereigns. The rating agency notes that the deterioration in these fiscal metrics could erode Suriname's fiscal strength, exerting downward pressure on its credit profile. SECOND DRIVER: UNCERTAINTY OVER PACE AND EXTENT OF FISCAL REFORMS IN THE ABSENCE OF AN IMF PROGRAM A reversal of fiscal deterioration is unlikely without effective measures to significantly narrow fiscal deficits, and diversify the government's revenue base to increase its resilience to future shocks. Moody's had viewed the government's Stand By Arrangement with the IMF, initiated in April 2016, as an anchor for Suriname's public accounts management and its efforts to repair government finances. However, in May 2017, the government's program with the IMF was canceled, which, along with larger-than-expected fiscal deficits this year, increases the uncertainty around the content, pace and implementation of reforms aimed at increasing fiscal flexibility and resiliency to fluctuations in government revenues. Moody's review for downgrade will focus on the government's own plans for fiscal consolidation and the extent to which their implementation can arrest or reverse the deterioration in debt metrics over the last two years. The government is considering the introduction of a value-added tax (VAT) in 2018, a plan to address energy subsidies, along with the creation of a sovereign wealth fund to accumulate excess commodity revenues. If implemented, such measures could support Suriname's fiscal strength. The beginning of mining operations at Newmont's Merian mine has already contributed to an improvement in Suriname's external accounts, and Moody's still expect to see further increases in mining-related government revenue. The announcement of a significant gold discovery at the Saramacca project, located 25 kilometers from the existing Rosebel gold mine, could facilitate additional revenue growth and upside to Moody's assessment of economic strength. While the exact implications for government finances and the economy will hinge on the timeline and outlook for exploitation and production, the latest discovery could provide significant support to both the government's fiscal prospects and Suriname's economic outlook starting in 2019. THIRD DRIVER: INCREASING GOVERNMENT LIQUIDITY RISKS AS FINANCING HAS SHIFTED TO SHORT-TERM DOMESTIC DEBT ISSUANCE The cancelation of the IMF program has resulted in delays in funding from multilateral donors which had pledged budget support conditional on the successful implementation of the IMF program. As a result, the government has relied more heavily on domestic financing of the deficit this year. In addition to drawing down the unused portion of proceeds for its 2016 Eurobond issuance, the government has relied on Treasury bills to finance its deficit in 2017. Short-term domestic debt has increased from 19% of total domestic debt at the end of 2016 to 27% as of June 2017. The government's deficit financing needs along with the roll-over of short-term domestic debt will keep gross funding needs above 10% of GDP in 2018. A lack of visibility into 2018 financing options heightens government liquidity risk. While Suriname benefits from a favorable debt structure, and the government has cleared previously accumulated non-debt related arrears, it has a very limited track record in covering debt-servicing costs to private creditors while staying current on other expenditures. Moody's review will seek to ascertain how Suriname's financing needs will be met over the near and medium term. The rating agency will also explore the domestic financial system's capacity to finance government debt and assess the extent to which multilateral and bilateral external borrowing can meet the government's borrowing needs. WHAT COULD CHANGE THE RATING -- DOWN Moody's could downgrade the rating if the review were to conclude that Suriname's government's fiscal strength has eroded to levels no longer consistent with B1 rated peers. In arriving at its conclusion, the rating agency will assess the likely effectiveness of the government's fiscal policy response as well as the near- and medium-term growth outlook, and its impact on fiscal and balance of payments metrics. WHAT COULD LEAD TO A CONFIRMATION OF THE RATING AT THE CURRENT LEVEL Moody's would confirm the rating at B1 if its review were to conclude that the government's planned reforms, including the introduction of a VAT and plan for electricity tariff increases, among others, will not only increase the revenue base, reduce fiscal deficits and debt levels but also reduce the fiscal position's vulnerability to commodity price shocks in the future. GDP per capita (PPP basis, US$): 15,633 (2015 Actual) (also known as Per Capita Income) Real GDP growth (% change): -2.7% (2015 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 25.1% (2015 Actual) Gen. Gov. Financial Balance/GDP: -10.6% (2015 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -16.5% (2015 Actual) (also known as External Balance) Level of economic development: Low level of economic resilience Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On November 20, 2017, a rating committee was called to discuss the rating of the Government of Suriname. The main points raised during the discussion were: The issuer's fiscal or financial strength, including its debt profile, has materially decreased. The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable. ================= V E N E Z U E L A ================= VENEZUELA: Creditors Begin Organizing Among Themselves ------------------------------------------------------ Katia Porzecanski at Bloomberg News reports that as Venezuela struggles to make bond payments on time, about a dozen institutions holding the country's debt are in the early stages of organizing themselves and meeting with attorneys, according to people with knowledge of the matter. The group -- which isn't yet an official committee -- includes mutual-fund managers Pacific Investment Management Co., T. Rowe Price Group Inc., Amundi Pioneer, Ashmore Group Plc, AllianceBernstein Holding LP, Fidelity Investments, BlackRock Inc. and Allianz SE, as well as the asset-management arms of Goldman Sachs Group Inc. and HSBC Holdings Plc, according to Bloomberg News. It also includes hedge-fund firms Greylock Capital Management, Autonomy Capital, and Warlander Asset Management, said the people, who asked not to be identified because the talks are private, the report discloses. The mutual-fund investors are among the biggest holders of debt issued by either Venezuela or its state oil company, Petroleos de Venezuela, according to filings compiled by Bloomberg, which represent about a fifth of the total debt outstanding. Both Ashmore and Autonomy have funds that are specifically dedicated to investments in Venezuela, Bloomberg News relates. Bloomberg News discloses that the efforts to organize come amid significant bond payment delays that led ratings companies to declare the nation and its state oil company in default. While the government said earlier this month that it will seek to restructure its debt with global investors, officials have also insisted that the nation will keep paying its obligations while it sorts out a plan with creditors, Bloomberg News relays. Coming up with a solution will be particularly challenging because of U.S. sanctions that restrict investors from engaging with some top officials and purchasing new debt, Bloomberg News notes. The group met Nov. 20 with Rich Cooper, a partner at Cleary Gottlieb Steen & Hamilton LLP, and Mark Walker, the head of sovereign advisory at Millstein & Co., and is entertaining proposals from other attorneys as well, Bloomberg News relays. The Institute for International Finance, which hosted a call for creditors earlier this month, has begun to serve as liaison between the group and the U.S. Treasury Department, Bloomberg News notes. * * * As reported in the Troubled Company Reporter-Latin America, Robin Wigglesworth at The Financial Times related that Venezuela appeared to have made a crucial bond repayment in late October. The Latin American country and its state oil company PDVSA have failed to make several debt payments in recent weeks, the report noted. But the most important one was an $842 million instalment due Oct. 29 on a PDVSA bond maturing in 2020, which, unlike most of the other overdue debts, had no 'grace period' that allowed for 30 days to clean up any arrears without triggering a default, the report notes. As reported in the Troubled Company Reporter-Latin America on Nov. 16, 2017, On Nov. 13, 2017, S&P Global Ratings lowered its long- and short-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela to 'SD/D' from 'CC/C'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications. S&P said, "At the same time, we lowered our issue ratings on Venezuela's global bonds due 2019 and 2024 to 'D' from 'CC'. Our issue ratings on the remainder of Venezuela's foreign currency senior unsecured debt remain at 'CC'. Finally, we affirmed our transfer and convertibility assessment on the sovereign at 'CC'." VENEZUELA: Some Bondholders Joust for Advantage ----------------------------------------------- Dion Rabouin, Maiya Keidan, Corina Pons at Reuters report that Venezuela's efforts to restructure its debt may have triggered an initial stampede for the exits, but some investment funds are maintaining their portfolios or even beefing them up, betting that other investors' distress could spell opportunity. President Nicolas Maduro spooked bondholders this month when he announced plans to restructure some $60 billion in bonds as his socialist government struggles with an economic crisis brought on by years of mismanagement, according to Reuters. Yet, President Maduro also said the country would keep servicing its obligations for now, the report notes. That has given a modicum of comfort to investors wagering on Venezuela's junk bonds, some of whom are content to reap the massive yields they offer, the report relays. Others are actively positioning for large windfall profit similar to what a group of Argentine creditors reaped last year after more than a decade of litigation with Argentina's government, the report notes. Senior Venezuelan officials gave no clarification on the government's strategy in a short and confused meeting with creditors in the Venezuelan capital, says the report. In the meantime, creditors have been organizing conference calls, holding improvised meetings in Caracas hotels and discussing the creation of groups that could represent bondholders in the event of a default, the report relays. "There are a lot of different conversations, a lot of lawyers, financial advisers who are trying to solicit that dialogue," said Diego Ferro, co-chief investment officer at Greylock Capital, which focuses on high-yield and distressed assets, the report relays. Ferro said that for the past few weeks, he has been buying both bonds issued by Venezuela's government as well as those sold by its state-owned oil company PDVSA, with a preference for the country's 2027 bond, the report notes. Both the 2027 bond and all of those issued by PDVSA share a common characteristic: They lack a clause that can force all bondholders to accept a restructuring pact as long as 75 percent sign off on the deal, the report relays. The absence of such collective action clauses, or CACS, can allow a small group of investors to hold out for better terms, as famously happened after Argentina defaulted in 2001, the report notes. Echoes of Argentina Distressed fund managers including Elliott Management and Aurelius Capital Management reaped billions of dollars last year when they negotiated a settlement with Argentina's newly elected government, which was anxious to end more than a decade of legal battles with bondholders, the report says. "We're basically thinking of eventually going into a restructuring not too dissimilar from what Argentina went through in 2001-2005," said Nicolas Galperin, founder of Onslow Capital Management, the report notes. The report relays that Mr. Galperin said his firm is looking to buy the bonds for around 20 cents on the dollar and earn pass- through interest with the hope of eventually selling them at a profit through a future restructuring. Mr. Galperin said he envisioned it as a two to three-year trade and was employing the strategy on both PDVSA and Venezuela bonds, the report relays. But an Argentina-like solution is effectively impossible in the short term, the report notes. Sanctions imposed on Venezuela this year by the government of U.S. President Donald Trump, in response to accusations that Maduro is creating a dictatorship, block U.S. banks from acquiring newly issued Venezuelan debt, Reuters discloses. Investors would be unable to negotiate a settlement like the one bondholders reached with Argentina because they cannot exchange the bonds they hold for new debt, the report notes. Sanctions against specific Venezuelan officials bar investors from even sitting at the table with Vice President Tareck El Aissami and Economy Minister Simon Zerpa, two prominent members of Venezuela's debt negotiation commission, the report relays. That means long-term investments are clouded by the possibility that sanctions could impede a successful debt restructuring for years, particularly if the opposition continues struggling to make any headway at removing President Maduro, the report says. Even though President Maduro is widely unpopular, the opposition remains divided and in disarray, with its most prominent leaders jailed, exiled or barred from holding public office, the report relays. Presidential elections are expected next year, the report notes. Nonetheless, investors continue to be attracted to lucrative short-term returns, the report says. A holder of Venezuela's most-traded bond, the 2027 maturity VENGLB27=RR, would get a 34 annual percent return from interest payments alone, the report relays. That is 15 times what the same investor would collect on a 10-year U.S. Treasury note, it adds. Investors for now appear more interested in collecting those outsized returns than initiating an Argentina-style battle -- though many believe Venezuela will eventually halt payments and creditors will sue to pressure the government into a settlement, according to the report. Reuters says Bondholders walked away from the meeting in Caracas with a clear message from Vice President El Aissami: Venezuela "has hired the best lawyers." Venezuela has appointed lawyer David Syed to advise it, working alongside a team at global law firm Dentons, according to IFR, a Thomson Reuters news service, the report notes. Many saw El Aissami's words as a warning that, despite the increasingly complex financial gymnastics, Caracas is preparing for a battle, and that creditors should do so as well, the report adds. * * * As reported in the Troubled Company Reporter-Latin America, Robin Wigglesworth at The Financial Times related that Venezuela appeared to have made a crucial bond repayment in late October. The Latin American country and its state oil company PDVSA have failed to make several debt payments in recent weeks, the report noted. But the most important one was an $842 million instalment due Oct. 29 on a PDVSA bond maturing in 2020, which, unlike most of the other overdue debts, had no 'grace period' that allowed for 30 days to clean up any arrears without triggering a default, the report notes. As reported in the Troubled Company Reporter-Latin America on Nov. 16, 2017, On Nov. 13, 2017, S&P Global Ratings lowered its long- and short-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela to 'SD/D' from 'CC/C'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications. S&P said, "At the same time, we lowered our issue ratings on Venezuela's global bonds due 2019 and 2024 to 'D' from 'CC'. Our issue ratings on the remainder of Venezuela's foreign currency senior unsecured debt remain at 'CC'. Finally, we affirmed our transfer and convertibility assessment on the sovereign at 'CC'." ================= X X X X X X X X X ================= * BOND PRICING: For the Week From November 20 to Nov. 24, 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 * * *