/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180206.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 Tuesday, February 6, 2018, Vol. 19, No. 26 Headlines B R A Z I L COMPANHIA SIDERURGICA: S&P Hikes Global Scale Ratings to CCC+ D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Lags Behind in Exports to US Market E C U A D O R ECUADOR: Voters Block Former President's Return to Power G U Y A N A GUYANA POWER: Former OUR Head Appointed CEO J A M A I C A CABLE & WIRELESS: S&P Rates Subsidiary's $1.825MM Term Loan 'BB-' P U E R T O R I C O CATHOLIC SCHOOL: Hires Vilarino & Associates as Attorney CHASE MONARCH: Must Surrender Premises to Cherif Medawar LABORATORIO CLINICO: Seeks Feb. 19 Plan Filing Extension RYDER MEMORIAL: S&P Lowers Rating on 1994A Bonds to CCC+ T R I N I D A D & T O B A G O CARIBBEAN AIRLINES: To Offer Non-Stop Service Between SVG and JFK U R U G U A Y COOPERATIVA DE AHORRO: Fitch Affirms 'B' LT Issuer Default Rating HSBC BANK: Fitch Affirms 'bb-' Viability Rating PROVINCIA CASA: Fitch Affirms 'B' Long-Term IDR; Outlook Stable SCOTIABANK URUGUAY: Fitch Affirms bb- Viability Rating V E N E Z U E L A VENEZUELA: Colombia Opens Border Shelter for Locals Fleeing Crisis - - - - - =========== B R A Z I L =========== COMPANHIA SIDERURGICA: S&P Hikes Global Scale Ratings to CCC+ ------------------------------------------------------------- Brazil-based steel company CSN has announced the debt refinancing of about R$12 billion, a significant part of which is maturing in the next three years. This, along with better industry fundamentals, the company's release of audited financial statements, and other efforts to preserve cash such as no dividend distribution, will significantly reduce liquidity pressures for the next 12-18 months, according to S&P Global Ratings. S&P Global Ratings raised its global scale ratings on Companhia Siderurgica Nacional (CSN) to 'CCC+' from 'CCC'. S&P has also raised its Brazilian national scale ratings to 'brB' from 'brCCC' on the company. At the same time, S&P has raised the issue-level ratings on CSN Islands XI Corp., CSN Islands XII Corp., and CSN Resources S.A.'s senior unsecured notes to 'CCC+' from 'CCC'. S&P has removed the ratings on CSN from CreditWatch with negative implications. The outlook on both scale corporate credit ratings is now positive. The issue-level ratings remain at the same level as the corporate credit ratings, which reflect the unconditional guarantee by the holding company and the recovery rating of '4', given the expected average recovery of 40% (rounded estimate). The upgrade reflects the successful negotiations to refinance a large portion of the company's debts, including R$6.5 billion that matures in the next three years, reducing short-term liquidity pressures. The extended debt amortization profile, lower interest expense, due to the sharp decline of the base interest in Brazil in 2017, and absence of covenant breach risk following the presentation of the 2016 financial statements in late 2017 underpin our view of CSN's cash flow relief. Nonetheless, the 'CCC+' ratings continue to reflect the significant amount of debt coming due in 2019 and 2020, especially the $750 million and $1.2 billion senior unsecured notes, which requires the company to rely on favorable external conditions such as better prices and volumes and on ongoing refinancing needs for the sustainability of its capital structure in the intermediate term. The positive outlook means that S&P may raise the ratings in the next 12 months if CSN benefits from the improved market conditions and from reduced short-term cash flow pressures to continue searching for alternatives to implement its debt refinancing strategy, such as additional long-term debt placements and asset sales. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Lags Behind in Exports to US Market ------------------------------------------------------- Dominican Today reports that The Dominican Republic has lagged behind in exports to the US market, compared to its counterparts, Costa Rica and Honduras, from 2007 to 2016. The report Monitor of Industry and Commerce Ministry notes that the country hasn't expanded "its slice in that important pie that is the United States market," according to Dominican Today. The report, which compares the participation of DR-Cafta members in their exports to the United States, says that the Dominican Republic reached only 17%, to Costa Rica's 29% of DR-Cafta countries' exports to the US market, followed by Honduras 18%, Guatemala 16%, Nicaragua 10% and El Salvador 10%, Dominican Today notes. The slump occurs despite that the country's growing exports and expectation to continue, Dominican Today relays. Dominican Today discloses that Central Bank preliminary figures for 2017 show a 2.9% climb in the export of goods, of US$281.1 million, compared to 2016. During 2007-2016, within DR-Cafta, Dominican exports grew at an average rate of 3.8% per year and imports 7.1%, according to the Monitor, Dominican Today relays. "The 'blip' in the trade balance with the US is obvious," the report said, Dominican Today notes. "The US sold over US$9.5 billion in goods and services to the country in 2016, and imported more than US$9.2 million, for US$298.0 million a trade surplus," the report added, Dominican Today relays. Figures From the US Trade Office Data from the Office of the US Trade Representative indicate that the trade of goods and services of the United States with the Dominican Republic was estimated at US$18.8 billion in 2016, Dominican Today relays. The exports of US goods to the RD topped US$7.0 million, while imports reached US$4.7 billion. The US trade surplus with the Dominican Republic was US$3.1 billion in 2016, Dominican Today 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. ============= E C U A D O R ============= ECUADOR: Voters Block Former President's Return to Power --------------------------------------------------------- Juan Forero at The Wall Street Journal reports that voters in Ecuador on Sunday approved a referendum that all but blocks Rafael Correa, a former president and leftist firebrand, from returning to power. With nearly all the votes counted, the National Electoral Council said two out of every three voters had approved a ballot initiative that limits presidents to two terms, according to The Wall Street Journal. That is a victory for its main proponent, current President Lenin Moreno, and a reversal for Mr. Correa, who feverishly campaigned against the referendum, the report notes. Mr. Correa ruled from 2007 to 2017 and had been, along with the late Venezuelan leader Hugo Chavez, among the flag bearers of 21st-century socialism, the report relays. That movement, pushed by several allied Latin American countries, opposed U.S. policies in the region, forged ties to authoritarian governments like Cuba's and curbed some civil liberties, the report notes. The results in Ecuador on Sunday bucked a trend in Latin America that has seen Mr. Correa's old allies seek to remain in office in coming elections, the report discloses. In Venezuela, President Nicolas Maduro said he would run for re- election in a vote that is expected before the end of April, an election the U.S. and other countries say they won't recognize, the report says. In Bolivia, the highest court has said President Evo Morales can run for a fourth term next year, even though Bolivians voted in a referendum to prevent him from doing so, the report relays. In Ecuador, though, voters turned out to support Mr. Moreno, who was narrowly elected to office last year, when he was considered a placeholder until Mr. Correa's return in 2021, the report notes. "Today, democracy has triumphed in a convincing way with the yes vote," Mr. Moreno said via his Twitter account. "We all manifested ourselves clearly and forcefully, freely and democratically, about the future we want," he added. Though he served for six years as Mr. Correa's vice president, Mr. Moreno shocked Ecuadoreans by turning against his former boss nearly as soon as he took office, the report relays. He has worked to smooth relations with business leaders, journalists and indigenous groups, sectors that bristled during Mr. Correa's presidency, the report notes. He has also worked to improve relations with the U.S. and said he would like to wash his hands of Julian Assange, the WikiLeaks founder, whom Mr. Correa allowed to take refuge in Ecuador's embassy in London, the report discloses. Mr. Moreno, a 64-year-old former tourism guru who was paralyzed from the waist down in a carjacking two decades ago, pushed for seven constitutional changes in Sunday's referendum, most of which scuttle key policies of the Correa administration, the report notes. Those reforms received from 63% to 74% support, the report says. Ecuadorean voters were also supporting moves to limit mining in protected areas, including Yasuni National Park. and to overhaul how officials are appointed to watchdog agencies, like the attorney general's office, the report relays. Mr. Correa, who recently returned to Ecuador from his wife's native Belgium to oppose the election referendum, said his former ally had used all the powers of the state to run an unfair campaign, the report discloses. Via his Twitter account, Mr. Correa said earlier Sunday that rejecting the referendum wasn't necessarily a show of support for his return to power, the report notes. "This isn't supporting any one person," Mr. Correa wrote. "It is support for the fatherland. You know that the referendum is unconstitutional," he added. But Mr. Moreno, campaigning from his wheelchair, said approving the referendum would cut into corrupt practices and make Ecuador more democratic, the report relays. His arguments found support among Ecuadoreans weary of an economy that began faltering under Mr. Correa and a range of corruption scandals, the report notes. Among the more serious revolved around a close aide to Mr. Correa, Jorge Glas, who briefly served as Mr. Moreno's vice president before being sentenced to six years in prison for accepting $13.5 million in bribes from a construction company, the report discloses. The results don't mean political death for Mr. Correa, the report relays. He could be elected to Congress or serve as mayor of Guayaquil, giving him an important public platform, the report notes. A similar scenario played out in Colombia, where President Juan Manuel Santos broke with his mentor and predecessor, Alvaro Uribe, who then won a Senate seat and became a major obstacle to the Santos administration, the report relays. As reported in the Troubled Company Reporter-Latin America on Jan. 24, 2018, Fitch Ratings has assigned a 'B' rating to Ecuador's USD3 billion notes maturing Jan. 23, 2028. The notes have a coupon of 7.875%. =========== G U Y A N A =========== GUYANA POWER: Former OUR Head Appointed CEO ------------------------------------------- RJR News reports that former head of the Office of Utilities Regulation (OUR) Albert Gordon is the new Chief Executive Officer of Guyana Power and Light. His appointment comes as the utility company faces criticism from customers due to constant and prolonged blackouts, according to RJR News. According to a statement from the power company, Gordon's appointment forms part of GPL's plans to modernize, expand and improve electricity supply, the report notes. Mr. Gordon, who also served as President of the National Water Commission, took up the post, the report says. GPL had been without a Chief Executive Officer since February 2016 when the CEO Colin Welch was fired, the report adds. ============= J A M A I C A ============= CABLE & WIRELESS: S&P Rates Subsidiary's $1.825MM Term Loan 'BB-' ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating on Coral- US Co-Borrower LLC's new $1.825 million secured term loan due 2026. Coral-US Co-Borrower is a subsidiary of Cable & Wireless Communications Limited (CWC; BB-/Negative/B). S&P said, "We view the transaction to be debt neutral because CWC will use proceeds to repay the existing secured term loan for the same amount -- $1.825 million -- and pay any fees in connection with the new loan. The new loan will have several incurrence covenants in line with previous one: net senior debt incurrence ratio of maximum of 4.0x and net total debt ratio maximum of 5.0x. "We believe the new term loan will somewhat improve CWC's maturity debt profile to 7.2 years from 6.8 years, and we expect the company to be able to reprice its new loan with a lower interest rate and generate some interest savings in the future." S&P related, "Our ratings on CWC reflect its leading position as a wireline and wireless telecommunications and cable TV provider in most of the markets in which it operates; solid profitability; wide geographic, product, and customer diversification; intense competitive pressures; and overall relatively high country risk. The ratings and negative outlook on the company also reflect our concerns regarding the macroeconomic and competitive conditions in the Caribbean and Latin America, which could continue reducing the average revenue per user (ARPUs) and increase churn, hampering the company's future growth. We're also concerned about the impact of hurricanes Maria and Irma on CWC's 2017 and 2018 EBITDA generation, preventing the company from meeting a proportionate adjusted debt-to-EBITDA ratio below 5.0x for the next few years." RATINGS LIST Cable & Wireless Communications Limited Corporate credit rating BB-/Negative/B Rating Assigned Coral-US Co-Borrower LLC Secured term loan BB- ====================== P U E R T O R I C O ====================== CATHOLIC SCHOOL: Hires Vilarino & Associates as Attorney -------------------------------------------------------- Catholic School Employees Pension Trust seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ the Law Firm of Vilarino & Associates, as attorney to the Debtor. Catholic School requires Vilarino & Associates to: a. advise the Debtor with respect to its duties, powers and responsibilities in the bankrupty case under the laws of the U.S. and Puerto Rico in which the debtor in possession conducts its operations, do business, or is involved in litigation; b. advise the Debtor in connection with a determination whether a reorganization is feasible and, if not, help the Debtor in the orderly liquidation of its assets; c. assist the Debtor with respect to negotiation with creditors for the purpose of arranging the orderly liquidation of assets and propose a viable plan of reorganization; d. prepare, on behalf of the Debtor, the necessary complaints, answers, orders, reports, memoranda of law and any other legal paper of documents; e. appear before the bankruptcy court, or any court in which the Debtors assert a claim interest or defense directly or indirectly related to the bankruptcy case; f. perform such other legal services for the Debtors as may be required in these proceedings or in connection with the operation of and involvement with the Debtor's business, including but not limited to notarial services; and g. employ other professional services, if necessary. Vilarino & Associates will be paid at these hourly rates: Senior Attorneys $275 Associates $175 Law Clerks $100 Paralegals $85 Vilarino & Associates will be paid a retainer in the amount of $9,000. Vilarino & Associates will also be reimbursed for reasonable out-of-pocket expenses incurred. Javier Vilarino, principal of the Law Firm of Vilarino & Associates, 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. Vilarino & Associates can be reached at: Javier Vilarino, Esq. LAW FIRM OF VILARINO & ASSOCIATES PO Box 9022515 San Juan, PR 00902-2515 Tel: (787) 565-9894 E-mail: jvilarino@vilarinolaw.com About Catholic School Employees Pension Trust The Catholic School Employees Pension Trust is a business trust duly constituted under the laws of the Commonwealth of Puerto Rico. The Pension Trust filed a Chapter 11 petition (Bankr. D.P.R. Case No. 18-00108) on Jan. 11, 2018. In the petition signed by Ramon Guzman, president of Board of Trustees, the Debtor estimated $1 million to $10 million to $1 million to $10 million in assets and liabilities. The Hon. Enrique S. Lamoutte Inclan presides over the case. Javier Vilarino, Esq., at the Law Firm of Vilarino & Associates, serves as bankruptcy counsel. CHASE MONARCH: Must Surrender Premises to Cherif Medawar -------------------------------------------------------- Judge Brian K. Tester of the U.S. Bankruptcy Court for the District of Puerto Rico granted creditor Cherif Medawar's urgent motion for immediate surrender of premises being held by Debtor Chase Monarch International, Inc. On Sept. 5, 2017, Debtor and Mr. Medawar executed a Lease Contract Agreement with Option to Purchase with Debtor. On Oct. 23, 2017, Mr. Medawar sent an email to the Tenant's email address, as stated in the Lease, indicating that the October 2017 rent payment had not been received and requesting that Debtor deliver the rent payment on that date. On Oct. 31, 2017, eight calendar days after the email was sent to Debtor, a letter was sent by a legal representative of Mr. Medawar in effect terminating the Lease for Tenants "due to tenant's noncompliance with the terms of the same???." On Nov. 14, 2017, Debtor filed its bankruptcy petition under chapter 11 of the Code. Debtor argues that Mr. Medawar unilaterally terminated the Lease and cites Andreu v. Popular Leasing, Inc., and Article 1208, 31 L.P.R.A. section 3373, as support. The present case is inapposite to the issue at hand, and Debtor misconstrues and misapplies the purpose of Article 1208 for its benefit. Andreu Fuentes dealt with the lease of a vehicle, which the Supreme Court of Puerto Rico described as a type of lease agreement where one party, the lessor, purchases a vehicle from a seller and then leases the same to a third party. In Andreu Fuentes, Mr. Andreu (the third party lessee) signed receipts and releases acknowledging that he would still be responsible for all the monthly payments even if the vehicle suffered damages or was lost. Thereafter, lessee Andreu unilaterally canceled the lease agreement after the vehicle was not operating correctly, going against the letter of the agreements he had signed with Popular Leasing. The Lease, which this court finds was legally binding under state law, and legally terminated on Oct. 31, 2017, is not property of the Debtor's estate pursuant to 11 U.S.C. section 541(b)(2). Therefore, the Debtor and Medawar will coordinate a date within the next 10 days for Debtor to surrender and vacate the premises. A full-text copy of Judge Tester's Jan. 24, 2018 Opinion and Order is available at: http://bankrupt.com/misc/prb17-06841-11-91.pdf 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. LABORATORIO CLINICO: Seeks Feb. 19 Plan Filing Extension -------------------------------------------------------- Laboratorio Clinico Los Robles, Inc., asks the U.S. Bankruptcy Court for the District of Puerto Rico to allow the extension of time until Feb. 19, 2018 to file the Disclosure Statement and the Chapter 11 Small Business Plan. The Court has previously granted the Debtor's motion for extension of time to file the Disclosure Statement and the Chapter 11 Small Business Plan to Jan. 29, 2017. The Debtor has previously informed the Court that due to the damages caused by Hurricane Irma and later with Hurricane Maria, electricity was connected only until January 26, 2018. The situation with the electricity has impaired the Debtor's ability to complete the Disclosure Statement, the Chapter 11 Small Business Plan and other documents that need to be revised and filed. Now, the Debtor is still trying to complete all the requirements in order to be ready to file the Disclosure and the plan. As such, the Debtor request an extension of time until February 19, 2017 due to this exigent situation that it is more likely than not that the Court will confirm the plan within a reasonable period of time. About Laboratorio Clinico Los Robles Laboratorio Clinico Los Robles, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 17-03196) on May 5, 2017. The petition was signed by the Debtor's president, Luis Armando Berrios Diaz. At the time of filing, the Debtor estimated $500,000 to $1 million in assets and $100,000 to $500,000 in liabilities. Ada M. Conde, Esq., at Estudio Legal 1611 Corp, is the Debtor's bankruptcy counsel. RYDER MEMORIAL: S&P Lowers Rating on 1994A Bonds to CCC+ -------------------------------------------------------- S&P Global Ratings lowered its bond ratings on Puerto Rico Industrial Medical & Higher Education & Environmental Pollution Control Facilities Finance Authority's series 1994A bonds, issued for Ryder Memorial Hospital, to 'CCC+' from 'B+'. S&P Global Ratings removed the ratings from CreditWatch, where they were placed with negative implications Oct. 31, 2017. The outlook is negative. S&P said, "The downgrade reflects our view of Ryder's weakened operating and financial profiles and ongoing uncertainty related to the hospital's ability to return to full operations following the devastating impact of Hurricane Maria. Management indicates Ryder's main hospital is significantly damaged, having been closed since the storm. Working from a temporary location, outpatient services are open, but inpatient services have been very limited. Ryder continues to rely on generators for power, because there is still no electricity across much of the island, especially in the hospital's service area. In addition, management has been unable to provide us with updated financial statements. Management has indicated it will pay its next debt service payment through its debt service reserve fund. We believe Ryder is vulnerable to default given the catastrophic damage to the hospital's operations and cash flow, combined with the very limited liquidity. In our view, there is a moderate likelihood that Ryder will not make debt service payments in the next two years, because the recovery will be long and volumes and cash flow are very weak." The hospital's operating profile includes a dominant market share across a large primary service area, although its population continues to decline and carries weak wealth and income indicators. In recent years, Ryder's financial profile has been vulnerable, with weak financial operating performance and thin balance-sheet metrics for the rating level. The hospital's revenue base is small and relies heavily on government reimbursement. Although insurance is covering hurricane damage, management indicated there are potential delays in the payment of proceeds, which could affect the timing of the facility's repairs and further stress Ryder's operating profile. Given these expected delays, overall liquidity has declined to the point where management will pay debt service from the debt service reserve. Although it has not seen formal financial results, S&P believes the draw means the hospital has a bare minimum of working capital and little-to-no reserves. The negative outlook reflects the uncertainty of Ryder's ability to resume historical operations and volumes, both of which were strained prior to the hurricane. Furthermore, delays in insurance proceeds and government aid, coupled with extensive repairs to the facility, will likely mean liquidity and operational capacity will remain at dangerously low levels indefinitely. Together, these factors threaten the hospital's ability to pay its debt service payments. S&P said, "We could lower the rating if Ryder's financial profile indicates a greater likelihood of default on its bond obligations." While a higher rating is unlikely in the outlook period, an outlook revision to stable is possible if Ryder stabilizes factors that will lead to a near-term rebound of volumes, revenue, and operations. In addition, if the hospital generates even a modest increase in unrestricted reserves, S&P would view this favorably in combination with stabilized operations. ================================ T R I N I D A D & T O B A G O ================================ CARIBBEAN AIRLINES: To Offer Non-Stop Service Between SVG and JFK ----------------------------------------------------------------- RJR News reports that Caribbean Airlines Limited disclosed the start of non-stop service between St. Vincent and the Grenadines' Argyle International Airport and John F. Kennedy International Airport in New York. The weekly service will operate every Wednesday beginning on March 14, according to RJR News. Caribbean Airlines says customers will now benefit from the non- stop service between St. Vincent and the Grenadines and Caribbean Airlines' other international and regional destinations, the report notes. Caribbean Airlines Chief Executive Officer, Garvin Medera, says the aim is to provide closer links for travel and commerce between the eastern Caribbean and North America, the report adds. Caribbean Airlines Limited -- http://www.caribbean-airlines.com/ -- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. As reported in the Troubled Company Reporter-Latin America on November 2, 2015, RJR News said that Michael DiLollo, Chief Executive Officer of Caribbean Airlines Limited has quit after just 17 months on the job. The 48-year-old Canadian national, citing personal reasons, resigned with immediate effect. His resignation was accepted by the airline's board of directors. Mr. DiLollo was appointed Caribbean Airlines CEO in May 2014, following the sudden resignation of Robert Corbie in September 2013. In early February 2015, Larry Howai, then Finance Minister, told Parliament that unaudited accounts for 2014 showed the airline made a loss of US$60 million, inclusive of its Air Jamaica operations, and the airline planned to break even by 2017. Mr. Howai told the Parliament that a five-year strategic plan had been completed and was in the process of being approved for implementation. In an interview with the Trinidad & Tobago Guardian in early November 2015, Mr. DiLollo said CAL did not need a bailout just yet. Mr. DiLollo said the airline had benefited from extremely patient shareholders for years and he believed the airline was strategically positioned to break even in three years. ============= U R U G U A Y ============= COOPERATIVA DE AHORRO: Fitch Affirms 'B' LT Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed Cooperativa de Ahorro y Credito's (FUCEREP) Long-Term Issuer Default Ratings (IDRs) at 'B' and Viability rating (VR) at 'b'. The Rating Outlook remains Negative. KEY RATING DRIVERS - IDR and VR FUCEREP's IDR and VR are highly influenced by its small size within the financial system and the challenges the cooperative faces to improve its overall financial performance. The company's performance has been weak, posting net losses for four years in a row, and this has affected its capital levels. Additionally, the ratings also consider Fitch's perception of a higher risk appetite as the cooperative diversifies its operations into riskier businesses, and the entity's deteriorating asset quality. FUCEREP's capital ratios have declined strongly in the last four years as a consequence of the losses and the increase in intangible assets (largely IT investments) since 2015. Its Fitch Core Capital (FCC) ratio remains adequate for its business model and rating level (15.16% at Sept. 30, 2017), supported by the annual capital contributions made by its members, which partly compensates for the losses. Fitch estimates FUCEREP's capital adequacy will continue to be pressured in the medium term given the expected portfolio growth and low results, although these will be partly offset by the capital contributions made by the members and the positive impact on equity from the adoption of IFRS from January 2018, which will be of around 20% of equity. In May 2017 the Central Bank of Uruguay reduced the minimum regulatory capital requirement to the level in place until 2013 (12% of risk weighted assets), which eased the pressure on its regulatory capital, which had restricted its growth capacity. FUCEREP's financial performance has been weak in the past four years. While its operating revenues have increased somewhat, the entity has registered operational losses due mainly to low growth, rising loan loss provisions, and a hefty cost base, which has grown as a result of the large IT investments. Although FUCEREP is a not-for-profit entity, profitability is important as a source of internal capital generation. FUCEREP's asset quality had historically been adequate, benefitting from the payroll deduction mechanism of 75% of its portfolio. However, asset quality has rapidly deteriorated since 2014 and its past-due loans ratio rose to 13.83% at Dec. 31, 2017 (down from 15.49% at Sept. 30, 2017), affected by the economic slowdown, the slight decline in total loans since 2015 and the operational problems generated by the difficult implementation of the new core system. Fitch expects this trend to continue as the entity expands into riskier segments, although this should be partly mitigated by the measures taken to control the rise in NPLs and improve collections, together with the expected improvement in the local economy. KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR FUCEREP's Support and Support Rating Floor of '5' and 'NF', respectively, reflect Fitch's opinion that extraordinary government support if needed, while possible, cannot be relied upon given its small size and deposit market share. RATING SENSITIVITIES IDRs AND VR FUCEREP's VR and IDR have a Negative Outlook reflecting the challenges to meet regulatory capital requirements in times when its overall financial performance has been weak. FUCEREP's ratings could be downgraded if it consistently fails to meet the capital requirements or if its weak profitability together with further material deterioration in asset quality lead to its FCC ratio falling and remaining below 15%. The Outlook on FUCEREP's IDRs could return to Stable if the entity consistently meets its regulatory capital requirements and improves its profitability. Sustained progress in its profitability metrics, with ROA consistently remaining above 1%, together with asset quality and capitalization remaining at adequate levels could lead to positive rating actions. RATING SENSITIVITIES -SUPPORT AND SUPPORT RATING FLOOR Changes in FUCEREP's SR and SRF are highly unlikely in the foreseeable future. Fitch has affirmed the following ratings: -- Long-Term Foreign and Local Currency IDRs at 'B'; Outlook Negative; -- Viability rating at 'b' -- Support rating at '5'; -- Support rating floor at 'NF'. HSBC BANK: Fitch Affirms 'bb-' Viability Rating ----------------------------------------------- Fitch Ratings has affirmed HSBC Bank (Uruguay) S.A.'s long-term Foreign and Local Currency Issuer Default Rating (IDR) at 'BBB+', with a Stable Outlook, and the bank's Support Rating (SR) at '2'. Fitch has also affirmed the Viability Rating (VR) at 'bb-'. KEY RATING DRIVERS IDRS AND SUPPORT RATING HSBC Uruguay's LC and FC IDRs, as well as its Support Rating are driven by the strong ability and propensity of its ultimate parent; HSBC Holdings plc (HSBC; rated AA-/Stable/VR aa-) to provide support to HSBC Uruguay, if it would be required. HSBC Uruguay's FC IDR of 'BBB+' is at the Country Ceiling. Even though the Uruguayan bank does not operate in a core market for HSBC, HSBC Uruguay's IDRs and Support Rating remain linked to those of its ultimate parent, reflecting Fitch's view that there is a high probability of support due to reputational considerations and the potential negative impact this could have on other subsidiaries. Additionally, Fitch affirmed HSBC Uruguay's Support Rating at '2' as required support would be immaterial relative to ability of parent to provide it. Given the above, it is expected that HSBC Uruguay would receive timely support from its parent, if required. The above also is supported by the decision of HSBC to maintain its operations in Uruguay. VR HSBC Uruguay's business model and weaker competitive position, as well as its low capitalization highly influence its VR. HSBC Uruguay's market share is still moderate and does not represent a clear competitive advantage. Additionally, the bank's business model results in relatively high loan and deposit concentrations. The bank's capitalization ratios are low relative to similarly rated peers (emerging market commercial banks with bbb category VR), partly due to the HSBC Group's capital allocation policy that allows subsidiaries to work with minimal regulatory capital levels. However, the agency believes that the bank will finance its expansion with its profits and, should this not be enough, it will continue to receive the capital injections it needs to finance its expansion. As of June 2017, HSBC Uruguay's and tangible equity to tangible assets was 6.47%. The bank's operating revenues have grown along with its expansion since 2008. From 2012 to 2015, HSBC Uruguay's performance was driven by the increase in the level of activity, as well as the income resulting from the depreciation of the exchange rate on its position in U.S. dollars, as the bank follows a policy of maintaining its capital in dollars. During 2017, the improvements in operational revenues were offset by the higher administrative expenses. Profitability improved on the back of regulatory changes which eased the burden of inflation adjustments on the bank's operating results. The bank's loan quality indicators have historically been sound, underpinned by its corporate nature. However, as other banks, the loan portfolio quality began deteriorating in 2016 and has remained at elevated levels due to the economic slowdown. The non- performing loans (NPLs; credits with more than 60 days overdue) increased to 2.9% of the total portfolio at June 2017, compared to 2.28% in December 2016, affected mainly by a major credit problem. Loan loss reserve coverage remained high (142% of the NPLs in June 2017 and 160% in 2016), but has declined with the larger volume of problem loans. The bank's main source of funding is deposits from the non- financial sector, which accounted for 81% of assets at June 2017. The bank's liquidity is sound, but declining as a result of the loan growth over the past year. At end-June 2017, liquid assets (cash and equivalents and loans to the financial sector) covered 32% of deposits. The bank's assets and liabilities, like the financial system, are highly dollarized. While declining, Fitch believes that dollarization will remain high over the long term due to the Uruguayan economy culture and the type of clientele HSBC Uruguay serves. While HSBC Uruguay's open foreign exchange positions are commonly high, resulting in volatile earnings, it is shareholder policy to hold the bank's equity in U.S. dollars. RATING SENSITIVITIES IDRS AND SUPPORT RATING HSBC Uruguay's IDRs are limited by the Country Ceiling, which is two notches above the sovereign rating. Additional rating actions on HSBC Uruguay's IDRs are subject to changes in the sovereign rating. Changes in its controlling shareholder's ability or willingness to provide support would also negatively affect HSBC Uruguay's ratings, but these scenarios are considered unlikely. VR HSBC Uruguay's VR could eventually be upgraded if the bank achieves and maintains a FCC ratio of at least 10% through sustainable earnings and profitability, i.e. an operating profit/risk weighted asset ratio above 1.3%. Better diversification of the bank's balance sheet would also be positive for creditworthiness. In turn, the bank's VR could be negatively affected if the bank fails to sustain recent improvements in profitability metrics and FCC ratio. Fitch has affirmed the following ratings: HSBC Uruguay -- Long-term Foreign Currency IDR at 'BBB+'; Outlook Stable; -- Long-term Local Currency IDR at 'BBB+'; Outlook Stable; -- Support Rating at '2'; -- Viability Rating at 'bb-'. PROVINCIA CASA: Fitch Affirms 'B' Long-Term IDR; Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Provincia Casa Financiera's Long-Term Foreign Currency and Long-Term Local Currency Issuer Default Ratings (IDRs) at 'B'. KEY RATING DRIVERS - IDRs Provincia is a branch of Banco de la Provincia de Buenos Aires (BAPRO) and part of the same legal entity. Therefore, Provincia's IDRs reflect Fitch's opinion of BAPRO's financial and business profile, which are highly influenced by its leading franchise and systemic importance as the second largest bank in terms of deposits and the third in loans in Argentina. Fitch also considers the bank's good asset quality, ample liquidity, moderate profitability and low capital base. In addition, BAPRO and Provincia are wholly-owned by the government of the Province of Buenos Aires. BAPRO's liabilities (including those of its branches abroad) are fully guaranteed by the government of the Province of Buenos Aires. In Uruguay, Provincia is small due to its narrow business focus. Its legal status is a casa financiera, which differs from a banking license because it is not allowed to raise resident's deposits and has much lower regulatory costs. However, in terms of regulatory capital limits, Provincia has to comply with the rules applied to banks. Provincia is fully integrated with its head office's strategies, corporate governance practices and risk management procedures. It operates through one office and reports to the International Division of BAPRO. Provincia has an improving profitability, low credit risk, a highly liquid balance sheet and adequate capitalization metrics. The branch's current business plan aims to improve its profitability mainly through a more active pricing policy, improving its cost efficiency, a more active management of its trading portfolio and loan growth. KEY RATING DRIVERS - SUPPORT RATING The Support Rating of '5' reflects that, although possible, external support for this bank, as with most Argentine banks, cannot be relied upon given the ample economic imbalances. In turn, the sovereign ability and willingness to support banks is highly uncertain. RATING SENSITIVITIES IDRs Provincia's IDRs are sensitive to changes in BAPRO's financial and business profile. RATING SENSITIVITIES - SUPPORT RATING Changes in Provincia's Support Rating are unlikely in the foreseeable future. Fitch has affirmed the following ratings: Provincia Casa Financiera: -- Long-Term Foreign Currency IDR at 'B'; Outlook Stable; -- Long-Term Local Currency IDR at 'B'; Outlook Stable; -- Support Rating at '5'. SCOTIABANK URUGUAY: Fitch Affirms bb- Viability Rating ------------------------------------------------------ Fitch Ratings has affirmed Scotiabank Uruguay S.A.'s Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) at 'BBB+'. Fitch has also affirmed the bank's Viability rating (VR) at 'bb-' and its Support Rating (SR) at '2'. The Rating Outlook is Stable. KEY RATING DRIVERS IDRS AND SUPPORT RATING Scotiabank Uruguay's IDRs and SR are driven by the support that Fitch believes the bank would receive from its parent, Bank of Nova Scotia (BNS; AA-/aa-/Stable). Scotiabank Uruguay's LT IDRs are constrained by Uruguay's Country Ceiling, which is two notches above the sovereign's LT IDR. As per Fitch's criteria, the Country Ceiling captures transfer and convertibility risks and limits the extent to which support from foreign shareholders can be factored into the rating. Fitch's affirmation of Scotiabank Uruguay's SR at '2' reflects the high probability of support to the bank from BNS, if needed. In Fitch's view, the Uruguayan subsidiary is a strategic operation for BNS with respect to consolidating its footprint in Latin America and corresponds well to the parent's earnings diversification strategy. One example of this is the capital injection (approximately USD90 million) into Scotiabank Uruguay for the acquisition of Discount Bank. The Uruguayan subsidiary has strong strategic and administrative synergies with the parent, besides sharing the same brand. Risk management policies are also aligned to those at the parent level and to local regulatory practices. Scotiabank Uruguay is also small relative to the consolidated group, suggesting that supporting the subsidiary would be relatively easy for BNS. The Stable Outlook on the IDRs is in line with that of the bank's parent, BNS, and is limited by Uruguay's sovereign Outlook. BNS's ratings reflect the company's strong and stable operating performance over an extended period, its strong capital ratios, and good funding profile. VR Fitch affirmed Scotiabank Uruguay's VR at 'bb-', reflecting the bank's still modest profitability and the need to further consolidate its franchise after several acquisitions in order to achieve adequate and recurring profitability. The bank's VR is highly influenced by its competitive stance in the Uruguayan corporate and retail credit market, which is offset by its weak and volatile profitability. Scotiabank Uruguay's VR also considers its diversified and ample funding profile, adequate asset quality and capitalization levels in light of ordinary support from BNS. Scotiabank's earnings have been volatile since 2012, when BNS first entered the Uruguayan banking sector. The acquisition of Discount Bank in 2015, which involved some nonrecurring expenses and integration process costs, negatively affected the bank's profitability. During 2017, profitability improved on the back of regulatory changes, which eased the burden of inflation adjustments on Scotiabank's operating results. At 6.2%, the bank's Tangible Common Equity/Tangible Assets ratio remained low but is in line with its shareholder's strategy to optimize capital utilization at the subsidiary level. As observed with other foreign banks operating in the region, Scotiabank Uruguay does not operate with high capital margins. Depending on growth, the bank could receive capital injections from its parent, as evidenced by past capital injections. Scotiabank Uruguay shows a growing, diversified, and stable funding structure. The bank's liabilities are largely made up of deposits, which have grown consistently over the last two years. While Scotiabank Uruguay operates on mostly short-term funding, its ample liquidity, relatively short-term nature of its loan portfolio, and potential for support from BNS facilitates asset liability management. The bank's asset quality indicators remained in line with its current VR. RATING SENSITIVITIES IDRS AND SUPPORT RATING Positive rating actions are contingent upon upgrades in Uruguay's sovereign ratings and country ceiling. In turn, any downgrade of Uruguay's sovereign rating and/or a reduction in Scotiabank Uruguay's shareholder's ability or propensity to provide support could negatively affect its ratings. VIABILITY RATING (VR) Scotiabank Uruguay's VR could be downgraded if the bank does not improve its profitability and capital ratios in the short term. In turn, the VR could be positively affected if Scotiabank Uruguay shows sustained operating profits/risk weighted assets above 1.25% and FCC/RWAs ratios above 9%.] Fitch has affirmed Scotiabank Uruguay's ratings: -- Long-Term Foreign and Local Currency IDRs at 'BBB+'; Outlook Stable; -- Support Rating at '2'; -- Viability rating at 'bb-'. ================= V E N E Z U E L A ================= VENEZUELA: Colombia Opens Border Shelter for Locals Fleeing Crisis ------------------------------------------------------------------ Associated Press reports that Colombia's government has opened its first shelter for Venezuelans who are pouring across the border in increasing numbers to escape their nation's economic crisis. The facility, opened Saturday near the border city of Cucuta, is expected to provide shelter of up to 48 hours for 120 people a day, according to Associated Press. Pregnant mothers, the elderly and minors who entered the country legally will be given priority. It will be administered by the Red Cross, the report notes. In recent weeks, an increasing exodus of Venezuelan migrants has overwhelmed Cucuta, with many sleeping on the streets. Crime in the city has grown as gangs recruit and take advantage of the desperate migrants, the report relays. Some 35,000 Venezuelans cross into Colombia each day, many of them settling in with relatives or making short trips to buy food and medicine that has been scarce back home, the report adds. As reported in the Troubled Company Reporter-Latin America on Jan. 12, 2018, S&P Global Ratings lowered its issue rating on the Bolivarian Republic of Venezuela's global bond due 2020 to 'D' from 'CC'. At the same time, S&P affirmed its long- and short-term foreign currency sovereign issuer credit ratings at 'SD/D'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications, where S&P placed them on Nov. 3, 2017. Other foreign currency senior unsecured debt issues not currently rated 'D' are rated '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 * * *