/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180111.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, January 11, 2018, Vol. 19, No. 8 Headlines A R G E N T I N A CONVEXITY SGFCISA: Moody's Assigns B-bf GS Bond Fund Rating GPAT COMPANIA: Moody's Assigns B1 Rating to XXXI Series Notes PSA FINANCE: Moody's Rates Series 25th & 26th Debt Issue Ba3 QUINQUELA BALANCEADO: Moody's Assigns B-bf GS Bond Fund Rating ROMBO COMPANIA: Moody's Assigns Ba3 Rating to Cl. 41 & 42 Bonds B O L I V I A BOLIVIA: Moves Toward Goal of Being South America's Energy Center B R A Z I L HIDROVIAS DO BRASIL: Moody's Assigns (P)Ba3 CFR; Outlook Stable RIO GRANDE: Police End Strike After 20 Days E C U A D O R ECUADOR: Weighs Mediation to Resolve Julian Assange Issue M E X I C O SIXSIGMA NETWORKS: S&P Raises CCR from 'B+', Off Watch Positive P U E R T O R I C O BAILEY'S EXPRESS: Hires Capital Recovery as Auctioneer CHASE MONARCH: Hires Alberto Salva Javier as Accountant UNIVERSITY OF THE SACRED HEART: Moody's Confirms Ba3 Bond Rating WESTERN HIPERBARIC: Court Conditionally OK's Proposed Plan Outline V E N E Z U E L A VENEZUELA: Fund Managers Set to Mark Down Bond Holdings VENEZUELA: Gov't Cuts Off Contacts With Aruba, Curacao, Bonaire - - - - - ================= A R G E N T I N A ================= CONVEXITY SGFCISA: Moody's Assigns B-bf GS Bond Fund Rating ----------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo has assigned bond fund ratings to a new bond fund, Convexity Renta Plus (the Fund), managed by Convexity SGFCISA (Convexity) and domiciled in Argentina. The ratings assigned are: * Global scale bond fund rating: B-bf * National scale bond fund rating: Aa-bf.ar RATINGS RATIONALE "The B-bf global scale bond fund rating is based on Moody's expectation that the fund will have a high medium B credit profile supported by investments in Argentinian fixed-income securities. The Fund will mostly invest in fixed income securities, being now allocated in LEBACs, which are short term obligations issued by the Argentinian Central Bank.", said Carlos de Nevares, Moody's Vice President. The national scale ratings reflects a national scale mapping consistent for funds with a high B global scale credit profile. Convexity, the asset management arm of Advanced Capital Securities, a local brokerage group, is an independent asset manager in the Argentinean mutual fund Industry with a 0.4% market share. As of December 2017, Convexity AM manages approximately ARS2.43 billion or approximately $132.5 million. The principal methodology used in these ratings was Moody's Bond Fund Rating Methodology published in May 2013. GPAT COMPANIA: Moody's Assigns B1 Rating to XXXI Series Notes ------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo (MLA) has assigned a B1 global local currency senior debt rating and a Aa3.ar national scale local currency debt rating to GPAT Compania Financiera S.A (GPAT)'s XXXI series issuance. The notes will be issued in two tranches, A and B, which will be due in 12 months and 36 months respectively, in an aggregate amount of up to ARS 500 million. The ratings are on review for downgrade, in line with the review on GPAT's other ratings. The following ratings were assigned to GPAT Compania Financiera S.A: ARS500 million Senior Unsecured Debt Issuance: B1 Global Local Currency Debt Rating; Rating Under Review for Downgrade Aa3.ar Argentina National Scale Local Currency Debt Rating; Rating Under Review for Downgrade RATINGS RATIONALE GPAT's ratings incorporate strong credit linkages between the company and its parent, Banco Patagonia S.A.'s ratings (Patagonia, Ba3 on review, b2). These linkages include close operational links together with the probability that the company will receive financial support from Patagonia in an event of stress given its strategic importance to its parent. As the finance company of Patagonia, GPAT is primarily engaged in financing car sales of General Motors dealers through Patagonia's branch network, while Patagonia provides funding for dealers' floor plans. The ratings also consider Argentina's operating environment, which while improving has historically been very volatile, as well as the company's solid risk management policies and good asset quality, and high profitability. Key risks include the tight competition within the car-financing industry, the entity's monoline business orientation, and its largely wholesale funding structure, which is representative of other auto finance companies as well. Thanks to parental support, the company is one of the strongest credits in Argentina, as reflected by its Aa3.ar national scale rating. The Aa3.ar NSR is the lowest of the three alternatives on the Argentine national scale corresponding to GPAT's B1 global scale rating and reflects the review for downgrade of the issuer's global scale rating. In turn, the review for downgrade of GPAT's global scale ratings reflects the review of its parent's ratings. Driven by declining inflation and interest rates, GPAT 's loan book increased 69% in twelve months ended in September 2017, despite higher credit costs and narrower lending spreads. Notwithstanding GPAT's 89% share of the market for financing GM car sales, increasing competition has led to a decline in the company's net interest margin to below 4% in the nine months through September 2017, from 5.7% in calendar year 2016. While net income declined to 4.6% of tangible assets from 6% during the same period as a result, profitability remains high even by Argentine standards, which are distorted by the very high rate of inflation. Despite a gradual deterioration since year-end 2016, nonperforming loans remained moderate at 1.74% in September 2017, compared to industry average of 2%. Moreover, the company's high loan book granularity, the strong collateralization of its portfolio, and loan loss reserves at 2.32% of gross loans help to mitigate the increase in asset risk. Moody's expects to conclude the reviews on Patagonia and GPAT's ratings once there is greater certainty about the potential for changes to Patagonia's ownership structure and the extent of any new shareholders' willingness and ability to provide support to the bank, and hence GPAT as well. WHAT COULD CHANGE THE RATING UP/DOWN GPAT's ratings could face downward pressure if ratings of its parent, Patagonia, are downgraded, or if GPAT's financial fundamentals deteriorate. GPAT's global scale rating could decline by as two or more notches, and its NSR could fall by six or more notches, should Patagonia's parent, Banco do Brasil S.A. (BB), sell a portion of its stake in Patagonia such that there is no new controlling shareholder, or should the new controlling shareholder be either unrated or not rated as highly as BB. A downgrade of BB's ratings, which could be driven by a downgrade of Brazil's sovereign rating, would also put downward pressure on Patagonia and GPAT's local currency ratings as could a reduction in Moody's assessment of BB's willingness to provide support prior to an official announcement of the sale of its stake, or the identification of a buyer. Given the review for downgrade, upward pressure on GPAT's ratings is unlikely at this time. However, the ratings could be confirmed at the current level if and when Patagonia's ratings are confirmed, which could happened if BB announces the sale of its stake to another entity rated at least the same as BB and that exhibits a very high willingness to support Patagonia or if BB reasserts its commitment to the bank. The principal methodology used in these ratings was Finance Companies published in December 2016. GPAT Compania Financiera S.A is headquartered in Buenos Aires, Argentina, and reported ARS5,712 million of total assets and ARS1,007 million of shareholders' equity as of September 2017. PSA FINANCE: Moody's Rates Series 25th & 26th Debt Issue Ba3 ------------------------------------------------------------ Moody's Latin America Agente de Calificacion de Riesgo S.A assigned a Ba3 global local currency senior debt rating and a Aa1.ar national scale rating to PSA Finance Argentina Compania Financiera S.A.'s (PSA) twenty-fifth and twenty-sixth bond issuances, due in 12 and 24 months respectively, for a up to a combined amount of ARS 500 million. The rating outlook is stable. The following ratings were assigned to PSA Finance Argentina Compania Financiera S.A.: Series Twenty-Fifth senior unsecured debt issuance for up to ARS 500 million: Ba3 Global Local Currency Debt Rating Aa1.ar Argentina National Scale Local Currency Debt Rating Series Twenty-Sixth senior unsecured debt issuance for up to ARS 500 million: Ba3 Global Local Currency Debt Rating Aa1.ar Argentina National Scale Local Currency Debt Rating RATINGS RATIONALE PSA's ratings consider the high probability that it will receive financial support from its main co-parent Banque PSA Finance (BPF) (A3, stable) in an event of stress, which reflects PSA's key role as the financial agent for Peugeot Citroân Argentina S.A. (unrated), The ratings also consider Argentina's operating environment, which while improving has historically been very volatile, as well as PSA's its solid risk management policies and good asset quality, and very strong capitalization metrics. Key risks include the tight competition within the car-financing industry, the entity's monoline business orientation dedicated to the financing of Peugeot vehicles, and its largely wholesale funding structure. PSA Finance is owned 50%-50% by BPF, which in turn is owned by Peugeot S.A. (Ba1, stable), and Argentina's BBVA Banco FrancÇs (unrated). BPF's high willingness to provide financial support to its subsidiary in Argentina generates two notches of uplift from PSA's b2 BCA. Thanks to parental support, the company is one of the strongest credits in Argentina, as reflected by its Aa1.ar national scale rating. The company also benefits from very strong capitalization metrics, with a tangible common equity to risk weighted assets ratio of 19.05% as of 3Q2017. With net income equal to 2.82% of tangible assets on an annualized basis in the first nine months of 2017, the company's profitability is in line Argentine standards, which are distorted by the high rate of inflation. Moody's expects earnings will narrow as inflation continues to decline, even if business prospects are improving. Consistent with other automobile captive finance companies in Argentina, however, PSA's ratings also reflect risks associated with its weak liquidity position and liability structure mainly reliant on market funds. Interbank loans, including credit facilities provided by BBVA Banco Frances, account for 57% of PSA's liabilities. The rest of entity's funding largely consists of car dealer deposits and senior debt in the local market. While non-performing loans remain low at just 0.71% of gross loans thanks to the company's focus on middle and high-income individuals and solid risk management policies that are aligned to those of its parent, delinquency levels are likely to rise as the company's risk appetite increases in line with improving economic conditions. The stable outlook on PSA's ratings is aligned with the stable outlook on Argentina's government bond rating. WHAT COULD CHANGE THE RATING UP/DOWN The Ba3 global scale rating would face upward pressure if Argentina's sovereign rating were upgraded, in conjunction with an improvement of the company's capital, profitability, and/or liquidity. A significant improvement in the company's financial fundamentals could also put upward pressure on the national scale rating, even in the absence of a sovereign upgrade. Conversely, the global scale ratings would face downward pressure if the government of Argentina were to be downgraded, and both the global and national scale ratings could be lowered if the entity's capital base, profitability, and/or asset quality were to deteriorate significantly. The principal methodology used in these ratings was Banks published in September 2017. QUINQUELA BALANCEADO: Moody's Assigns B-bf GS Bond Fund Rating -------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo has assigned bond fund ratings to Quinquela Balanceado FCI (the Fund), a short-medium term bond fund domiciled in Argentina and managed by QM Asset Management S.G.F.C.I.S.A. The ratings assigned are: * Global scale bond fund rating: B-bf * National scale bond fund rating: Aa-bf.ar RATINGS RATIONALE "The B-bf global scale bond fund rating is based on Moody's expectation that the fund will have a high B credit quality profile supported by investments in Argentinian fixed-income securities. The Fund will continue investing in LEBACs, which are short term obligations issued by the Argentinian Central Bank.", said Carlos de Nevares, Moody's Vice President. The national scale ratings reflects a national scale mapping consistent for funds with a high B global scale credit profile. QM Asset Management is a medium Argentinian independent asset manager with a 1.6% of market share. As of December 2017, QM Asset Management had assets under management of approximately ARS 8.91 billion (USD 484 million). The principal methodology used in these ratings was Moody's Bond Fund Rating Methodology published in May 2013. ROMBO COMPANIA: Moody's Assigns Ba3 Rating to Cl. 41 & 42 Bonds --------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo S.A. assigned a Ba3 global local currency senior unsecured debt rating and Aa1.ar national scale local currency debt rating to Rombo Compania Financiera S.A.'s Class 41 and 42 bond issuances, due in 36 and 48 months respectively, for up to a combined amount of ARS 500 million. The rating outlook is stable. The following ratings were assigned to Rombo Compania Financiera S.A.'s expected issuances: Class 41 up to ARS 500 million: Ba3 Global Local Currency Debt Rating Aa1.ar Argentina National Scale Local Currency Debt Rating Class 42 up to ARS 500 million: Ba3 Global Local Currency Debt Rating Aa1.ar Argentina National Scale Local Currency Debt Rating RATINGS RATIONALE Rombo's ratings consider the high probability that it will receive financial support from its main parent, RCI Banque (RCI) (Baa1, stable) in an event of stress, which reflects the entity's key role as the financial agent for Renault. The ratings also consider Argentina's operating environment, which while improving has historically been very volatile, as well as the company's solid risk management policies and good asset quality, and strong capitalization metrics. Key risks include the tight competition within the car-financing industry, the entity's monoline business orientation dedicated to the financing of Renault vehicles, and its largely wholesale funding structure. Rombo, which is 60% owned by RCI Banque and 40% by BBVA Banco FrancÇs (unrated) and together with RCI Banque forms the principal financial arm of its ultimate owner, Renault S.A. (Baa3, stable) in Argentina, is responsible for nearly 50% of Renault's financed sales in the country. RCI's high willingness to provide financial support to its subsidiary in Argentina generates two notches of uplift from Rombo's b2 standalone credit profile. Thanks to parental support, the company is one of the strongest credits in Argentina, as reflected by its Aa1.ar national scale rating. Rombo's capitalization level is strong, with tangible common equity equal to 15.22% of adjusted risk-weighted assets as of September 2017. In addition, non-performing loans remain low at just 0.99% of gross loans thanks to the company's focus on middle and high-income individuals and solid risk management policies that are aligned to those of its parent, though delinquency levels are likely to rise as the company's risk appetite increases in line with improving economic conditions. With ROAA of just 0.59% and a ROE of 5.37% in the first nine months of 2017, however, the company's profitability is modest by Argentine standards, which are distorted by the high rate of inflation. This is partly explained by the fact that under Argentine GAAP, the company currently has to expense commissions paid to dealers at the moment of the loan origination, but it records interest income over the life of the loans. However, the company is slated to adopt IFRS in the first quarter of 2018, at which point it will be able to prorate commission expenses over the loan as well. As a result, its reported profitability should increase substantially. In addition, consistent with other automobile captive finance companies in Argentina, Rombo's ratings reflect risks associated with its weak liquidity position and liability structure mainly reliant on market funds. Interbank loans account for nearly 50% of its liabilities, and senior bond issuances represent another 28% of total liabilities. The stable outlook on Rombo's ratings is aligned with the stable outlook on Argentina's government bond rating. WHAT COULD CHANGE THE RATING UP/DOWN The Ba3 global scale rating would face upward pressure if Argentina's sovereign rating were upgraded, in conjunction with an improvement of the company's capital, profitability, and/or liquidity. A significant improvement in the company's financial fundamentals could also put upward pressure on the national scale rating, even in the absence of a sovereign upgrade. Conversely, the global scale ratings would face downward pressure if the government of Argentina were to be downgraded, and both the global and national scale ratings could be lowered if the entity's capital base, profitability, and/or asset quality were to deteriorate significantly. The principal methodology used in these ratings was Finance Companies published in December 2016. ============= B O L I V I A ============= BOLIVIA: Moves Toward Goal of Being South America's Energy Center ----------------------------------------------------------------- EFE News reports that Bolivia hopes to inaugurate in two or three months the largest solar energy plant in the country, the latest phase in an ambitious plan to become the energy center of South America, President Evo Morales said. The president visited several energy projects at the Uyuni Salt Flat in southeast Bolivia, which with almost 10,600 hectares (26,000 acres) is the world's largest, and at an altitude of 3,650 meters (12,000 feet), the world's highest, according to EFE News. As reported in the Troubled Company Reporter-Latin America on Aug. 3, 2017, Moody's Investors Service has changed the outlook on Bolivia's issuer and senior unsecured bond ratings to stable from negative, and has affirmed the ratings at Ba3. =========== B R A Z I L =========== HIDROVIAS DO BRASIL: Moody's Assigns (P)Ba3 CFR; Outlook Stable --------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P)Ba3 Corporate Family Rating to Hidrovias do Brasil S.A.("HBSA"). At the same time, Moody's assigned a (P)Ba3 rating to the proposed senior unsecured notes due in 7 years to be issued by Hidrovias International Finance S.ar.l., and fully and unconditionally guaranteed by HBSA and its fully-owned subsidiaries, except for the Bauxite operations subsidiaries (guarantor group), collectively responsible for 85% of the company's total EBITDA. This is the first time Moody's rates Hidrovias do Brasil. The outlook for the ratings is stable. The provisional designation for ratings will be removed once the notes have been issued and assuming no material changes have occurred to the draft documentation reviewed by Moody's. Ratings assigned: Hidrovias do Brasil S.A. - Corporate Family Rating: (P)Ba3 Hidrovias International Finance S.ar.l. - Proposed senior unsecured notes due in 7 years: (P)Ba3 The outlook for the ratings is stable. RATINGS RATIONALE HBSA's (P)Ba3 ratings reflect primarily the company's strong business model with over 90% of revenues and EBITDA ensured by long term take or pay agreements with strong off takers. The agreements contain minimum volumes guarantees and cost pass- through clauses, translating into predictable cash flows, high capacity utilization rates and high operating margins for the company. The positive outlook for agricultural production and waterborne transportation in Brazil and Paraguay, and HBSA's strategic location of operations also support the ratings. The ratings incorporate Moody's expectations that HBSA's credit metrics will improve from 2018 onwards with the ramp-up of its northern operations. Moody's expect the company's adjusted leverage to approach 4.0-4.5x by the end of 2018, and to gradually decline further to 3.0x by 2020 along with increased transportation volumes. Additionally, pro forma for the proposed issuance, HBSA will have a good liquidity profile, with a comfortable debt amortization schedule and a sizeable free cash flow generation related to a stable cash conversion cycle, limitations on dividend distributions and low capex needs going forward. Accordingly, Moody's estimate the company's cash position will increase to around BRL 1.0 billion in the next three years from BRL 189 million at the end of September 2017, providing it with solid financial flexibility. On the other hand, the ratings are constrained by the company's short track record of operations and by its small size relative to rated peers. The high degree of product and geographic concentration also constrain the ratings, as it exposes the company to adverse weather conditions that impact agricultural production and river navigability. There is also a high degree of client concentration, although the good credit quality of HBSA's clients provides some comfort to the future compliance of the take or pay agreements. Moody's view the company's strong ownership and the existence of committed equity injections as credit positives, although Moody's believe there is room for improvements in terms of corporate governance and internal controls. For example, the company recently restated its financials due to the non-disclosure of covenants breach. In this sense, Moody's would view as positive the implementation of internal audits and fiscal council, and a longer track record of stricter internal controls. The proposed issuance is part of HBSA's liability management strategy and proceeds will be used to refinance the totality of the guarantor group's project-finance debt, thus lengthening the company's debt amortization schedule and enhancing its financial flexibility. The guarantor group generates approximately 85% of HBSA's total EBITDA and holds 80% of the company's total debt. The rating of the proposed unsecured notes stands at the same level as the company's corporate family rating given that the instrument will represent 80% of the company's total debt, and the proportion of secured debt within HBSA's capital structure will not be relevant (approximately 20% of total). The stable outlook incorporates Moody's expectations that HBSA's operations will perform in line with the terms and conditions established by the existing take or pay agreements, and that the company will prudently manage dividends distribution and future investments to preserve its good liquidity profile. Although unlikely in the near term, an upgrade could occur if HBSA is able to increase in size and widen its client, product and geographic diversity, while maintaining the current business model and profitability near current levels. Quantitatively, a rating upgrade would require the maintenance of adjusted leverage (measured by debt/EBITDA) below 3.0x and of interest coverage (measured by adjusted FFO + interest / interest) above 4.5x on a consistent basis. The maintenance of a strong liquidity profile would also be required for an upgrade. The ratings could be downgraded if HBSA's operations or business profile deteriorate due to the loss of any existing take or pay agreement or due to a debt-financed expansion into the spot market. Quantitatively, a downgrade could occur if the company fails to reduce leverage overtime so that total adjusted debt to EBITDA remains above 4.5x and interest coverage below 3.5x without prospects for improvement. A deterioration in the company's liquidity profile derived from large shareholder distribution or aggressive financial policies would also result in a downgrade of the ratings. Headquartered in Sao Paulo, Brazil, HBSA is South America's largest independent provider of integrated logistics focused on waterway transportation. The company's operations include shipping, transshipment, storage and port services for dry bulk cargoes, including grains, iron ore, bauxite, fertilizers and pulp in the Hidrovia and Amazon river systems. In the LTM ending September 2017, the company generated BRL 634 million (USD200 million) in revenues with an adjusted EBITDA margin of 48.4%, coming mainly from shipping activities (80% of total) and other logistics services (20%). Grain transportation represents approximately 55% of the company's total EBITDA, followed by iron ore (30%), bauxite (12%) and other products (3%). Approximately 62% of the company's total EBITDA is generated in Brazil, with the remaining 38% generated in Paraguay and Uruguay. After 2018, Moody's expect HBSA's annual revenues to reach approximately BRL 1.0 billion (USD300 million) and EBITDA margins to remain at 50- 60% with the ramp-up of volumes of existing take or pay agreements. RIO GRANDE: Police End Strike After 20 Days ------------------------------------------- Business Standard reports that police officers in the Brazilian state of Rio Grande do Norte ended a strike that kept them off the job for 20 days, forcing officials to deploy army troops in the region following a spike in violent crime. The officers agreed to return to duty after state officials promised to pay some of the salary arrears, EFE reported, according to Business Standard. The civil police went on strike on December 20, a day after military police officers walked off the job, the report notes. On January 2, the military police decided on a gradual return to work once the strike was ruled illegal, while the civil force resolved to continue the stoppage, the report relays. Each of Brazil's 26 states has two police agencies, one military and one civil, the report says. While military police are responsible for maintaining public order, the civil force investigates crimes. Officers went on strike to demand payment of salary arrears and better working conditions. The strike prompted state officials to request the deployment of the army to maintain order, and some 2,800 soldiers have been on patrol in the principal cities of Rio Grande do Norte since last week, the report notes. The army plans to continue patrolling cities in Rio Grande do Norte until January 12, but Governor Robinson Faria said that he hoped the soldiers would remain longer, 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. ============= E C U A D O R ============= ECUADOR: Weighs Mediation to Resolve Julian Assange Issue --------------------------------------------------------- Business Standard reports that Ecuador's Foreign Minister said that Quito may pursue mediation to resolve the standoff between the South American nation and Britain over the fate of WikiLeaks founder Julian Assange, who has spent more than five years holed up at the Ecuadorian Embassy in London. "We have an enormous interest in reaching a definitive solution to the Assange case and to make that happen we are in permanent dialogue with the government of the United Kingdom," EFE quoted Maria Fernanda Espinosa as saying, according to Business Standard. "We are also considering and exploring the possibility of mediation," she said, adding that the role of mediator could be played by an individual or a third-country government, the report relays. The Australian citizen sought refuge at the Ecuadorian mission in June 2012 after losing a battle in the British courts to avoid extradition to Sweden, where prosecutors had been seeking to question him about rape allegations dating back to 2010, the report notes. The report notes that Mr. Assange, who denies all the accusations, said that once he was in Swedish custody the US would pressure Stockholm into handing him over for prosecution based on WikiLeaks' publication of classified documents, the report relays. Ecuador granted Mr. Assange's application for political asylum, but the UK government continues to deny him safe passage to the government, even after Swedish prosecutors' announcement last May that they were closing the original sexual assault investigation, the report relays. The report discloses that asked by a reporter about Ms. Assange's health, Mr. Espinosa replied: "How would you feel after 5 1/2 years of being in a small office, without being able to enjoy sunlight and without breathing fresh air?" "Even people in detention centers can go out to the yard, play sports," she said, notes the report. The Foreign Minister said that Ecuador remains committed to ensuing Assange's safety, according to Business Standard. "We are a country that defends human rights. A country, moreover, that respects international law," she said. Describing Assange's situation as unsustainable, she said that Ecuador will continue to approach the UK in a "very, very respectful way" to find a solution, the report relays. As reported in the Troubled Company Reporter-Latin America on Jan. 9, 2018, Egan-Jones Ratings Company, on Oct. 12, 2017, raised the foreign currency and local currency senior unsecured ratings on debt issued by the Republic of Ecuador to B+ from B. EJR also upgraded the ratings on the Company's commercial paper to B from C. Ecuador is a country straddling the equator on South America's west coast. =========== M E X I C O =========== SIXSIGMA NETWORKS: S&P Raises CCR from 'B+', Off Watch Positive ------------------------------------------------------------- S&P Global Ratings raised its corporate credit rating on Sixsigma Networks Mexico, S.A. de C.V. (KIO Networks) to 'BB-' from 'B+'. S&P also removed the ratings on the company from CreditWatch, where it had placed them with positive implications on Nov. 3, 2017. The rating outlook is stable. S&P said, "At the same time, we raised our issue-level rating on the company's senior unsecured debt to 'BB-' from 'B+'. We also revised the recovery rating to '3' from '4', indicating our expectation for meaningful recovery (50%-90%) in the event of a payment default." The upgrade reflects KIO Networks' sharp deleveraging, following the sale of its metropolitan fiber optic business for about $500 million to American Tower Corporation, because the company used the majority of its proceeds to pay down debt. S&P forecasts an improvement in the company's credit metrics--debt to EBITDA below 4.0x and funds from operations (FFO) to debt above 15% for the following two years--which leads it to revise the financial risk profile on the company to aggressive from highly leveraged. Debt reduction more than offsets the 20% EBITDA loss that the telecom asset generated. Although key credit metrics could qualify for a better financial risk profile assessment, our rating incorporates KIO Networks' financial sponsor ownership in which Tresalia Capital S.A. de C.V. (not rated), a private equity firm, owns the controlling interest. S&P assesses the financial-sponsor-owned companies as having aggressive financial risk profiles to incorporate the risk of subsequent leveraging, even if the current balance sheet indicates otherwise. ====================== P U E R T O R I C O ====================== BAILEY'S EXPRESS: Hires Capital Recovery as Auctioneer ------------------------------------------------------ Bailey's Express, Inc. has filed an amended application with the U.S. Bankruptcy Court for the District of Connecticut seeking approval to hire Capital Recovery Group, LLC, as auctioneer to the Debtor. Bailey's Express requires Capital Recovery to sell the Debtor's remaining personal property and inventory assets located at 61 Industrial Park Road, Middletown, Connecticut. Capital Recovery will be paid 18% buyer's premium on each items sold with 3% going to Capital Recovery's on-line auction provider and 15% to Capital Recovery. The buyer's premium is added to the final sale/hammer price on each item sold and is paid by the winning bidder and is not included as part of the gross auction sale proceeds. Capital Recovery will charge Bailey's a 10% seller's commission on total sale proceeds up to $30,000 and 5% commission on total sales proceeds in excess of $30,000. Stephen R. Papillo, partner of Capital Recovery Group, LLC, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Capital Recovery can be reached at: Stephen R. Papillo CAPITAL RECOVERY GROUP, LLC 1654 King Street Enfield, CT 06082 Tel: (860) 623-9060 Fax: (860) 623-9160 About Bailey's Express, Inc. Headquartered in Middletown, Connecticut, Bailey's Express -- http://www.baileysxpress.com/-- is a Connecticut-based less than truckload carrier. It provides service across the nation and is dedicated in helping Connecticut, Massachusetts and Rhode Island companies market their products throughout the U.S. including Hawaii and Alaska. It has distribution points in Charlotte, Dallas, Denver, Easton, Fontana, Indianapolis, Jacksonville, Memphis, Neenah, Phoenix, Salt Lake City and Toledo. It also provides service to Mexico, Puerto Rico & Canada. Bailey's Express filed for Chapter 11 bankruptcy protection (Bankr. D. Conn. Case No. 17-31042) on July 13, 2017, estimating its assets and liabilities at between $1 million and $10 million. The petition was signed by David Allen, chief financial officer. Judge Ann M. Nevins presides over the case. Elizabeth J. Austin, Esq., and Jessica Grossarth Kennedy, Esq., at Pullman & Comley, LLC, serve as the Debtor's bankruptcy counsel. No creditors' committee has yet been appointed in the case. CHASE MONARCH: Hires Alberto Salva Javier as Accountant ------------------------------------------------------- Chase Monarch International, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Alberto Salva Javier, as accountant to the Debtor. Chase Monarch requires Alberto Salva Javier to: a. review accounting record for preparation of month and year end accounting and financial reports; b. prepare estate returns and declarations, as long as these are deemed necessary; c. prepare monthly reconciliations of all bank accounts and any credit facilities if become in existence; d. prepare liquidation analysis, financial projections, claim reconciliations and related financial documents as support for a Plan of Reorganization. Alberto Salva Javier will be paid at $50 hourly rate and reimbursed for reasonable out-of-pocket expenses incurred. Alberto Salva Javier assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Alberto Salva Javier can be reached at: Alberto Salva Javier 605 Condado Street, Suite 601 San Juan, PR 00907 Tel: (787) 722-3308 Fax: (787) 724-1669 E-mail: ascompanysalva@yahoo.com About Chase Monarch International, Inc. Chase Monarch International, Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 16-06841) on November 14, 2017, disclosing under $1 million in both assets and liabilities. The Debtor is represented by Hector Juan Figueroa Vincenty, Esq. UNIVERSITY OF THE SACRED HEART: Moody's Confirms Ba3 Bond Rating ---------------------------------------------------------------- Moody's Investors Service has confirmed the Ba3 rating on University of the Sacred Heart, PR's (Universidad del Sagrado Corazon or Sagrado) General Revenue and Refunding Bonds, 2012A issued through Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Pollution Control Facilities Financing Authority. The rating outlook is negative. This concludes the rating review initiated on October 20, 2017. RATINGS RATIONALE The confirmation of University of the Sacred Heart's Ba3 reflects a demonstrated ability to sustain near term enrollment following Hurricane Maria, along with modest expected use of reserves for recovery. Sagrado reported a return of 96% of originally enrolled students, resulting in minimal loss of net tuition revenue for the first half of fiscal 2018. The campus suffered comparatively minor damage and the university will receive funds from insurance and possibly FEMA to cover a portion of the costs. The Ba3 rating favorably incorporates still adequate reserves with some enhanced flexibility due to the reclassification of certain funds previously considered permanently restricted. The university's strong management team has demonstrated a clear ability to control and adjust expenses to declining enrollment which should limit calls on cash to fund operations. However, for fiscal 2018 increased costs during recovery along with some reduction in revenue is expected to drive a modest reduction of liquidity. The rating is more fundamentally constrained by the university's very challenging market environment, with continued depopulation of Puerto Rico raising risks of ongoing enrollment declines and volatility. A small endowment, with modest fundraising and thin cash flow, limit its forward strategic position. RATING OUTLOOK The rating outlook is negative as the university works to stabilize operations and enrollment as Puerto Rico very slowly recovers from the hurricane's destruction. The current negative outlook reflects rating pressure if enrollment drops for spring 2018 or fall 2018 resulting in lower tuition revenues, or if fiscal 2018 operating results or liquidity are substantially weaker than fiscal 2017. Failure to achieve compliance on its financial covenants for fiscal 2018 could also pressure the rating. Prior factors driving a negative outlook, including the risk of heightened cash monitoring by the Department of Education, and certain covenant violations, were favorably resolved. FACTORS THAT COULD LEAD TO AN UPGRADE - Stabilized student demand with growing net tuition per student and higher non-resident enrollment - Substantial growth in balance sheet resources and liquidity FACTORS THAT COULD LEAD TO A DOWNGRADE - Fall 2018 enrollment and fiscal 2018 operating results weaker than planned, with rising risks of longer term fiscal imbalance - Failure to achieve covenant compliance for fiscal 2018 or beyond - Material decline in unrestricted liquidity LEGAL SECURITY The Series 2012A bonds are an unsecured general obligation of university. There is an additional bonds test and rate covenant. There is no debt service reserve fund. The Loan Agreement for the bonds has two financial covenants, a Debt Service Coverage covenant of more than 110% and an Expendable Financial Resources to Debt covenant of more than 35%. Sagrado reported full covenant compliance in fiscal 2017 of 388% and 65%, respectively. This follows failure of both covenants in fiscal 2015 and 2016. The failure was due to pension adjustments and charges related to its voluntary transition program for employee retirements, both reflected in the changes in unrestricted net assets and, consequently, in the debt service coverage calculation for the covenant. Moody's considers pension adjustments as non- operating expenses and, therefore, not included in Moody's debt service coverage calculation, resulting in a positive debt service coverage number. Due to failing to meet the financial covenants for 2015 and 2016, Sagrado retained a consultant to review its business operations and pricing and make recommendations for improved results. As long as the university was taking all lawful actions to comply with the recommendations, the covenant failure was not considered an Event of Default. On June 23, 2017, Sagrado filed disclosure on EMMA of the board's acceptance of the consultant's report and recommendations. As of June 30, 2017, Sagrado had regained full compliance with both financial covenants. USE OF PROCEEDS Not applicable PROFILE Universidad del Sagrado Corazon (University of the Sacred Heart) is a large, private Catholic liberal arts university founded in 1880 by the religious order of the Society of the Sacred Heart. In 1970 the Sisters of the Sacred Heart transferred the governance to a lay Board of Trustees. Sagrado is located in the Santurce section of San Juan, a historic area. The university is largely undergraduate and offers selected masters and post-graduate certificates programs. Notable programs include those in the communications major, including digital media. Headcount enrollment for fall 2017 was nearly 4,800 students. WESTERN HIPERBARIC: Court Conditionally OK's Proposed Plan Outline ------------------------------------------------------------------ Judge Edward A. Godoy of the U.S. Bankruptcy Court for the District of Puerto Rico conditionally approved Javier Sosa Faria and Western Hiperbaric Services P.S.C.'s disclosure statement, dated Dec. 28, 2017, in support of its plan of reorganization. Acceptances or rejections of the Plan may be filed in writing on/or before 14 days prior to the date of the hearing on confirmation of the Plan. Any objection to the final approval of the Disclosure Statement and/or the confirmation of the Plan must be filed on/or before 14 days prior to the date of the hearing on confirmation of the Plan. A hearing for the consideration of the final approval of the Disclosure Statement and the confirmation of the Plan will be held on Feb. 8, 2018 at 09:30 A.M. at the United States Bankruptcy Court, Southwestern Divisional Office, MCS Building, Second Floor, 880 Tito Castro Avenue, Ponce, Puerto Rico. About Western Hiperbaric Services P.S.C. Western Hiperbaric Services P.S.C., Hyperbarics and Wound Care Centers of Puerto Rico Corp., Outpatient Alternatives Corp., and Ponce Hyperbaric & Wound Care Center sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 17-04062 to 17-04065) on June 6, 2017. The petitions were signed by Javier Sosa Faria, president, who filed a Chapter 11 petition (Bankr. D.P.R. Case No. 17-03421) on May 16, 2017. The cases were substantially consolidated pursuant to an order entered on July 3, 2017. The Debtors employed Justiniano Law Offices as their bankruptcy counsel. At the time of the filing, the Debtors estimated their assets and liabilities of less than $1 million. ================= V E N E Z U E L A ================= VENEZUELA: Fund Managers Set to Mark Down Bond Holdings ------------------------------------------------------- Katia Porzecanski at Bloomberg News reports that fund managers holding Venezuela government bonds face a day of reckoning after months of waiting for more than half a billion dollars in late interest payments. Since November, investors following guidelines established by the Emerging Markets Traders Association have marked their Venezuela bond holdings to include all the interest they were owed, even though it hadn't shown up yet, according to Bloomberg News. The trade group decided to scratch that rule, and say that beginning Jan. 10 the nation's debt will trade flat, or without accrued interest, Bloomberg News notes. If the coupons are eventually paid, they'll go to whoever holds the bonds that day, Bloomberg News relays. The decision, which followed a week of talks with market participants, comes two months after rating companies deemed Venezuela to be in default, Bloomberg News says. Typically, defaulted bonds begin to trade flat after the grace period on missed debt payments expires, Bloomberg News notes. But with President Nicolas Maduro and his allies repeatedly saying the nation would honor its debt -- and with several delayed coupons on bonds issued by the state oil producer eventually making their way to creditors -- the market had given Venezuela the benefit of the doubt, Bloomberg News says. Recently, the government's gone silent on its bonds, spurring concern it's selectively defaulting, Bloomberg News relays. "It's pretty clear the government does not intend to make payments on Republic debt," Rich Cooper, a partner at Cleary Gottlieb Steen & Hamilton LLP, said in an interview with Bloomberg News. "You can talk about payments getting held up by financial intermediaries and the like, but at some point that becomes less credible and I think we are now comfortably past that point," he added. Bloomberg News relays that those creditors who'd been following EMTA guidelines will now have to write off the accrued interest they'd accounted for on Venezuelan notes from their net asset value. They should also write down any missed coupons they're entitled to reflect their expected recovery value, Bloomberg News says. By making these changes in January, money managers avoided suffering the loss in their 2017 performance, Bloomberg News discloses. The revaluation may be somewhat offset by the market rally, which was fueled in part by pent-up demand and the adjustment to a so- called all-in price, Bloomberg News says. Venezuela's $2.5 billion of notes due in 2019 climbed 2.6 cents to 22.75 cents on the dollar on Jan. 10 at 12:06 p.m. in New York, Bloomberg News says. The recommendation doesn't apply to debt issued by state-owned Petroleos de Venezuela, which will continue to trade with a payment for accrued and unpaid interest, Bloomberg News notes. The back-and-forth between EMTA, its board members -- which include representatives from Ashmore Group Plc, Loomis Sayles & Co., Barclays Plc and JPMorgan Chase & Co. -- and other players had caused trading to seize up this month, Bloomberg News relays. Traders have cited the lack of appetite by investors to pay for a bond knowing that at any moment, the rules could change, Bloomberg News notes. "If you change the convention too often the issue is it freezes the market and it creates a lot less liquidity, and makes bonds more volatile and keeps investors away," Yerlan Syzdykov, head of emerging-market debt at Amundi Asset Management, said in an interview with Bloomberg News. "It's been very unfortunate for the market because this confusion prevents the market from clearing buyers and sellers," he added. At the same time, the rule change has created a degree of chaos concerning bonds with missed coupons that have already been sold. Per the previous EMTA guidelines, stipulated on Nov. 15, a bond- seller kept the right to the missed coupon, in addition to receiving compensation for accrued interest, Bloomberg News relays. Because the new guidelines dictate that rights to a missed coupon go to the bond-buyer, the previous holder may be left chasing his or her claim to the missed interest payment, if and when it's ever paid, Bloomberg News notes. "There's no way the government, when and if it restructures or makes the relevant interest payment, can take responsibility for that -- it's got to pay the record owner as of such date," Cooper said, Bloomberg News notes. "Ultimately the responsibility for making good on any of these arrangements will be in the hands of the beneficial holders and whatever agreements or lack thereof exist between the parties or the broker-dealers who brokered the trade," he added. Another impact from the change may be that Venezuela's creditors that had patiently waited for their interest payments may now seek to demand immediate repayment of their principal -- a process known as acceleration, Bloomberg News discloses. Most bonds require holders of just 25 percent of an outstanding security to agree to do so, Bloomberg News relays. "Acceleration becomes the next step -- and a check to see if Venezuela will quickly cough up the money to pay the coupon and halt a potential acceleration," Russ Dallen, the managing director at Caracas Capital, wrote in a note to clients, Bloomberg News relates. "Venezuela's reaction to the potential acceleration could be the final clarification for still-hopeful bondholders about whether they were actually going to get paid or not," he added. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2017, Moody's Investors Service has withdrawn the Caa3 rating of the US$5 billion, 6.5% Government of Venezuela bond due on Dec.29, 2036 (ISIN USP97475AQ39). On Nov. 16, 2017, S&P Global Ratings lowered on Nov. 13, 2017, 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: Gov't Cuts Off Contacts With Aruba, Curacao, Bonaire --------------------------------------------------------------- EFE News reports that the government of Venezuela closed down contacts with Aruba, Curacao and Bonaire until a meeting is held with the authorities of those Caribbean islands to come up with a plan to fight their mafias, which, it said, are affecting the economy of the petroleum-producing country. "President @Nicolas Maduro has extended the measure of suspension of all kinds of air and sea traffic; as well as any trade with ARUBA, CURACAO and BONAIRE," Venezuela's Vice President Tareck el Aissami said on Twitter, according to EFE News. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2017, Moody's Investors Service has withdrawn the Caa3 rating of the US$5 billion, 6.5% Government of Venezuela bond due on Dec.29, 2036 (ISIN USP97475AQ39). On Nov. 16, 2017, S&P Global Ratings lowered on Nov. 13, 2017, 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'." *********** 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 2018. 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. . * * * End of Transmission * * *