/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180208.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, February 8, 2018, Vol. 19, No. 28 Headlines A R G E N T I N A ARGENTINA: Signs Pact with Europe to Make Getting Patents Easier ARGENTINA: Strengthen Economic, Security Links with Eye on G20 B R A Z I L BANCO DO NORDESTE: S&P Affirms 'BB-/B' Global Scale ICRs BANCO SAFRA: S&P Rates New Sr. Unsecured Notes 'BB-' CSN RESOURCES: Moody's Rates Proposed Sr. Unsecured Notes B3 CSN RESOURCES: Fitch to Rate Proposed Senior Unsecured Notes B- SUZANO PAPEL: Forests Acquisition Credit Pos., Moody's Says D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: 25% of Energy From Renewables by 2025 DOMINICAN REPUBLIC: ADIE Hails Push to Fuel Natural Gas Plants H O N D U R A S INVERSIONES ATLANTIDA: Fitch Affirms 'B' IDR; Outlook Stable P U E R T O R I C O ROBERTO KUPERMAN: KC5 Buying San Juan Property for $325K V E N E Z U E L A VENEZUELA: Government & Opposition Resume Dialogue - - - - - ================= A R G E N T I N A ================= ARGENTINA: Signs Pact with Europe to Make Getting Patents Easier ---------------------------------------------------------------- EFE News reports that Argentina and Europe signed an accord to follow the Cooperative Patent Classification System (CPC), a procedure aimed at providing an easier, faster way for inventors to obtain patents. The measure will allow investigators who approve patents for original research and inventions to have access to a vast database of exclusive international documents registered at the European Patent Office (EPO) and the US Patent and Trademark Office (USPTO) in order to speed up the process, according to EFE News. * * * As reported in the Troubled Company Reporter-Latin America on December 4, 2017, Moody's Investors Service has upgraded the Government of Argentina's local and foreign currency issuer and senior unsecured ratings to B2 from B3. The senior unsecured shelves were upgraded to (P)B2 from (P)B3. The outlook on the ratings is stable. At the same time Argentina's short-term rating was affirmed at Not Prime (NP). The senior unsecured ratings for unrestructured debt were affirmed at Ca and the unrestructured senior unsecured shelf affirmed at (P)Ca. Moody's said the key drivers of the upgrade of the rating to B2 are: (1) a record of macro-economic reforms that are beginning to address long existing distortions in Argentina's economy; and (2) the likelihood that reforms will continue and in turn sustain the recent return to positive economic growth. The stable outlook on Argentina's B2 ratings balances Argentina's credit strengths of its large, diverse economy and moderate income levels against the credit challenges posed by still high fiscal deficits and a reliance on external financing, which increases its vulnerability to external event risk, said Moody's. On Nov. 10, 2017, Fitch Ratings revised Argentina's Outlook to Positive from Stable and has affirmed its Long Term Foreign- Currency Issuer Default Rating (IDR) at 'B'. On Oct. 30, 2017, S&P Global Ratings raised its long-term sovereign credit ratings on the Republic of Argentina to 'B+' from 'B'. The outlook on the long-term ratings is stable. S&P also affirmed its short-term sovereign credit ratings on Argentina at 'B'. At the same time, S&P raised its national scale ratings to 'raAA' from 'raA+'. In addition, S&P raised its transfer and convertibility assessment to 'BB-' from 'B+', in line with its assessment of sustained local access to foreign exchange. As previously reported by the TCR-LA, Argentina defaulted on some of its debt late July 30, 2014, after expiration of a 30-day grace period on a US$539 million interest payment. Earlier that day, talks with a court-appointed mediator ended without resolving a standoff between the country and a group of hedge funds seeking full payment on bonds that the country had defaulted on in 2001. A U.S. judge had ruled that the interest payment couldn't be made unless the hedge funds led by Elliott Management Corp., got the US$1.5 billion they claimed. The country hasn't been able to access international credit markets since its US$95 billion default 13 years ago. On March 30, 2016, Argentina's Congress passed a bill that will allow the government to repay holders of debt that the South American country defaulted on in 2001, including a group of litigating hedge funds that won judgments in a New York court. The bill passed by a vote of 54-16. ARGENTINA: Strengthen Economic, Security Links with Eye on G20 -------------------------------------------------------------- EFE News reports that Argentine President Mauricio Macri and US Secretary of State Rex Tillerson met in Buenos Aires to discuss bilateral economic and security cooperation, along with the G20 agenda for 2018. "The U.S. is committed to our joint economic and trading relationship with Argentina. We see many, many areas for continuing to grow this relationship," said the top US diplomat after meeting with the Argentine leader, according to US government officials, according to EFE News. * * * As reported in the Troubled Company Reporter-Latin America on December 4, 2017, Moody's Investors Service has upgraded the Government of Argentina's local and foreign currency issuer and senior unsecured ratings to B2 from B3. The senior unsecured shelves were upgraded to (P)B2 from (P)B3. The outlook on the ratings is stable. At the same time, Argentina's short-term rating was affirmed at Not Prime (NP). The senior unsecured ratings for unrestructured debt were affirmed at Ca and the unrestructured senior unsecured shelf affirmed at (P)Ca. Moody's said the key drivers of the upgrade of the rating to B2 are: (1) a record of macro-economic reforms that are beginning to address long existing distortions in Argentina's economy; and (2) the likelihood that reforms will continue and in turn sustain the recent return to positive economic growth. The stable outlook on Argentina's B2 ratings balances Argentina's credit strengths of its large, diverse economy and moderate income levels against the credit challenges posed by still high fiscal deficits and a reliance on external financing, which increases its vulnerability to external event risk, said Moody's. On Nov. 10, 2017, Fitch Ratings revised Argentina's Outlook to Positive from Stable and has affirmed its Long Term Foreign- Currency Issuer Default Rating (IDR) at 'B'. On Oct. 30, 2017, S&P Global Ratings raised its long-term sovereign credit ratings on the Republic of Argentina to 'B+' from 'B'. The outlook on the long-term ratings is stable. S&P also affirmed its short-term sovereign credit ratings on Argentina at 'B'. At the same time, S&P raised its national scale ratings to 'raAA' from 'raA+'. In addition, S&P raised its transfer and convertibility assessment to 'BB-' from 'B+', in line with its assessment of sustained local access to foreign exchange. As previously reported by the TCR-LA, Argentina defaulted on some of its debt late July 30, 2014, after expiration of a 30-day grace period on a US$539 million interest payment. Earlier that day, talks with a court-appointed mediator ended without resolving a standoff between the country and a group of hedge funds seeking full payment on bonds that the country had defaulted on in 2001. A U.S. judge had ruled that the interest payment couldn't be made unless the hedge funds led by Elliott Management Corp., got the US$1.5 billion they claimed. The country hasn't been able to access international credit markets since its US$95 billion default 13 years ago. On March 30, 2016, Argentina's Congress passed a bill that will allow the government to repay holders of debt that the South American country defaulted on in 2001, including a group of litigating hedge funds that won judgments in a New York court. The bill passed by a vote of 54-16. =========== B R A Z I L =========== BANCO DO NORDESTE: S&P Affirms 'BB-/B' Global Scale ICRs -------------------------------------------------------- S&P Global Ratings affirmed its long-term 'BB-' and short-term 'B' global scale and its 'brAA-' national scale issuer credit ratings on Banco do Nordeste do Brasil S.A. (BNB). The outlook remains stable. The bank's stand-alone credit profile (SACP) is 'bb'. S&P said, "We base our ratings on BNB on its important market position in the country's northeast region, our forecasted risk- adjusted capital (RAC) ratio of 6.1% for the next two years, and our belief that the bank will continue to be exposed to riskier segments than the industry on average (such as loans to small- to mid-size enterprises [SMEs] and microcredit). We also incorporate into our analysis the bank's long-term and stable funding base, as well as its sound liquidity metrics. In addition, we believe BNB has a very high likelihood of receiving extraordinary support from the government of Brazil if needed. "Under our bank criteria, we use our Banking Industry Country Risk Assessment's (BICRA) economic and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. Our anchor for a bank operating only in Brazil is 'bb+', based on the country's economic risk score of '7' and an industry risk score of '5'." BANCO SAFRA: S&P Rates New Sr. Unsecured Notes 'BB-' ---------------------------------------------------- S&P Global Ratings said that it assigned its 'BB-' issue-level rating to Banco Safra S.A.'s (Safra; global scale: BB-/Stable/B; national scale: brAA-/Stable/brA-1+) new senior unsecured notes. "The rating on the notes reflects their pari passu ranking with the bank's other senior unsecured debt obligations, and as a result, they have the same rating as the long-term issuer credit rating on the bank," said S&P credit analyst Edgard Dias. The notes should represent less than 1% of Safra's total funding base. Therefore, S&P doesn't this issuance to change its view of the bank's funding as above average. Safra will use the proceeds for general financing of its operations. Safra has a leading market position among niche banks serving large corporations and small and midsize enterprises (SMEs), with a record of strong management, long expertise in its main lending segments, and conservative strategy. All these factors support the bank's business and revenue stability. The presence of the bank's shareholders in daily decision-making is key for the bank's performance -- shareholders have always shown a very strong commitment to the bank and steered it towards continuous positive performance for the last 40 years. Safra manages its capitalization with the aim of maximizing returns, so its Basel ratios should remain close to regulatory limits. The bank has a history of strong internal capital generation and has flexibility on dividend payments if needed for the implementation of Basel III in Brazil. Safra's capitalization is also of better quality than peers, with much lower amounts of deferred tax assets in its net worth. The bank has historically presented positive results even during economic downturns, as seen in 2015 and 2016. Its risk controls are better than the industry average among SMEs and large corporate customers, because it has better asset quality metrics than those of peers and lower refinancing of bad debts. Its funding has consistently improved recently with increased access to private banking clients, but still depends on institutional investors. RATINGS LIST Banco Safra S.A. Issuer credit rating Global scale BB-/Stable/B National scale brAA-/Stable/brA-1+ Rating Assigned Banco Safra S.A. Senior unsecured BB- CSN RESOURCES: Moody's Rates Proposed Sr. Unsecured Notes B3 ------------------------------------------------------------ Moody's Investors Service assigned a B3 rating to the proposed senior unsecured notes that will be issued by CSN Resources S.A. and fully guaranteed by Companhia Siderurgica Nacional S.A. - CSN (CSN). Net proceeds will be used for liability management, primarily the tender offer for the 2019 and 2020 senior unsecured notes, which together have a total amount outstanding of USD1.95 billion. The outlook is stable. The rating of the notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and that these agreements are legally valid, binding and enforceable. Rating assigned: - Issuer: CSN Resources S.A. (Luxembourg) Proposed senior unsecured notes: B3 RATINGS RATIONALE CSN's B3 ratings reflect primarily the conclusion of the refinancing of CSN's bank debt with Banco do Brasil S.A. ("BB", Ba2 negative) and the expectation that the company will conclude the refinancing of its maturities with Caixa Economica Federal (CAIXA) ("CEF", Ba2 negative) soon. Together, both banks hold a substantial portion of CSN' bank debt (about BRL 14 billion or 48% of the total reported debt). The debt refinancing removes more immediate liquidity pressures and allows CSN to focus on additional measures to address the upcoming debt maturities. At the end of September 2017, about 75% of CSN's BRL 29 billion in reported debt was due in the 2018-2020 period. In this context, proceeds from the proposed bond issuance will be mainly used for liability management purposes. On February 1, 2018, CSN has announced that its subsidiary CSN Resources has commenced a tender offer for the 6.875% senior unsecured notes due 2019 issued by CSN Islands XI Corporation (USD750 million outstanding) and for the 6.5% senior unsecured notes due 2020, issued by CSN Resources S.A. (USD1.2 billion outstanding), for an aggregate amount of USD750 million. Accordingly, the proposed notes and the tender offer will not have any material effect on CSN's leverage but will allow the company to lengthen its debt maturity schedule and increase its financial flexibility. The ratings incorporate the company's position as a leading manufacturer of flat-rolled steel in Brazil, with a favorable product mix focused on value-added products. Historically, the company has reported a strong EBITDA margin (as defined by Moody's) in the 20-30% range, supported by its solid domestic market position, wide range of products through different segments and globally competitive production costs both in steel and iron ore. The B3 ratings incorporate the expectation that credit metrics will gradually improve in the next 12 to 18 months, supported by a steady recovery in Brazil's steel industry, and the company will be able to generate positive free cash flows through 2019. However, the ratings continue to reflect its weakened credit metrics, namely high leverage, low interest coverage and deteriorated cash flow metrics. CSN's unsustainable capital structure remains an important constraint to the ratings. Despite the debt refinancing that addresses short to medium-term maturities and the expected improvement in cash flows, leverage (gross debt to EBITDA) will remain in the 4.5x to 5.5x range until 2019. CSN will need to rely on asset sales or a capital increase to be able to reduce debt levels in a more meaningful magnitude. The stable outlook reflects Moody's expectations that CSN's will be able to conclude the debt refinancing with CEF and that liquidity will remain adequate to service its debt obligations. It also reflects Moody's expectation that market conditions for steel producers in Brazil will gradually recover, allowing CSN to direct cash flows from operations to reduce debt levels. An upward rating movement would require additional improvements in liquidity profile and recovery in operating performance. An upgrade would also be dependent on further adjustments in CSN's capital structure, with total leverage trending towards 4.5x total adjusted debt to Ebitda and interest coverage ratios (measured by EBIT to Interest expenses) above 2.0x on a sustainable basis. The ratings would suffer additional negative pressure if the company is not able to conclude the debt refinancing with CEF, and its liquidity position deteriorates, reducing CSN's ability to address upcoming debt maturities, in particular the 2019 and 2020 bonds. The ratings could be downgraded if performance over the next 12 to 18 months does not improve such that leverage does not moderate to at least 5.5x and EBIT/interest remains below 1.5x. The principal methodology used in this rating was Steel Industry published in September 2017. With an annual capacity of 5.9 million tons of crude steel, Companhia Sider£rgica Nacional S.A. - CSN ("CSN") is a vertically integrated, low cost producer of flat-rolled steel, including slabs, hot and cold rolled steel, and a wide range of value-added steel products, such as galvanized sheet and tinplate. In addition, the company has downstream operations to produce customized products, pre-painted steel and steel packaging. CSN sells its products to a broad array of industries, including the automotive, capital goods, packaging, construction and home appliance sectors. CSN owns and operates cold rolling and galvanizing facilities in the U.S. and Portugal, along with long steel assets in Germany through its subsidiary Stahlwerk ThÅringen GmbH (SWT). The company also has a long steel line (500,000 tons capacity) in the Volta Redonda plant. CSN reported revenues of BRL18 billion (USD5.6 billion) in the last twelve months ended in September 2017. CSN RESOURCES: Fitch to Rate Proposed Senior Unsecured Notes B- --------------------------------------------------------------- Fitch Ratings has assigned a 'B-/RR4(EXP)' rating to the proposed benchmark-sized senior unsecured notes to be issued by CSN Resources S.A (CSN Resources). The notes are unconditionally and irrevocably guaranteed by Companhia Siderurgica Nacional (CSN). They will rank pari passu with CSN's existing unsecured debt. Net proceeds will be used to complete a tender offer for all of the company's 2019 notes and a portion of its 2020 notes. Fitch currently rates CSN's Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) 'B-'/ Negative Watch. The 'B-' rating reflects CSN's stressed financial profile during the past few years due to high leverage and elevated refinancing risks. Weak iron ore prices during 2015/2016, the severe macroeconomic recession in Brazil that led to soft demand for steel products and high interest rates hurt CSN's cash flow and led to an unsustainable capital structure. The Negative Watch reflects CSN's elevated refinancing risks in the short term. If the company is successful in refinancing its bank debt with Banco do Brasil and Caixa Economia Federal and its 2019 notes, the Negative Watch would be removed. KEY RATING DRIVERS Improvement in Sector Fundamentals: Higher global iron ore and steel prices correspond with an upward trend in domestic steel prices, and some recovery in volumes has benefited CSN's operating cash flow generation. Fitch projects that CSN's local steel sales volumes will increase by 10% in 2018, after growing 4% in 2017, mostly reflecting the strong rebound in automobile production in Brazil. As a result, local steel producers have been able to apply several price increases since the mid-2016 due to strong international prices. Fitch expects price increases of approximately 5% during 2018, excluding a more meaningful double- digit increase to automakers. Operating Cash Flow Recovery: CSN's operating cash flow (CFFO) recovery relies on increasing flat steel sales, the ability to continue passing along price increases in the domestic steel segment, manageable coal costs, and sustained iron ore prices above USD60 per ton. Fitch's base case scenario projects CSN's EBITDA at approximately BRL4.4 billion for 2017 and BRL4.4 billion in 2018, considering Fitch's iron ore price deck of USD55 for 2018. If iron ore prices, which are currently around USD74, remain robust and average USD60 during 2018, the company's EBITDA would be BRL4.9 billion. At USD70, EBITDA would be BRL6 billion. During the LTM ended Sept. 30, 2017, CSN generated BRL3.9 billion of EBITDA and BRL686 million of CFFO; free cash flow (FCF) was negative BRL479 million, per Fitch's calculation. These results compare with BRL3.4 billion, BRL276 million and negative FCF of BRL1.4 billion, respectively, in 2016. Neutral Free Cash Flow: Considering the current capital structure and the annual BRL2.5 billion interest burden CSN faces, Fitch estimates CSN's FCF to be neutral during 2018, considering Fitch's iron ore price deck of USD55 per ton. At USD60 per ton, FCF would be positive by BRL450 million and at USD70 per ton it would be BRL1.3 billion. Fitch's base case scenario considers capex of BRL1.3 billion in 2018, which represents a steady decline from BRL1.6 billion in 2016 and 2015. Going forward, working capital requirements will return, as inventories are already at low levels, and accounts receivable are pressured in order to support continued sales expansion. Fitch's base case considers dividends distribution only from 2019 on. Leverage to Decline: For 2018, net leverage is expected to be stable at 5.7x with an iron ore price deck assumption of USD55 per ton. Net leverage would decline to 5.0x in 2018 under a scenario of iron ore price at USD60 and would be 4.0x if prices averaged USD70/ton. These ratios decrease further if the company is able to sell BRL1 billion of non-core assets. Fitch does not envisage a more material asset sale at this moment, but considers that non- core asset sales of BRL1 billion would be considered positive by creditors and could help the company in its refinancing discussions. CSN's net leverage was 6.3x as of the LTM period ended Sept. 30 2017. Elevated Refinancing Risks: The recurring negative free cash flow generation has deteriorated CSN's historical robust cash position. CSN's debt amortization schedule is highly skewed to the short-to- medium term with amortization of BRL1.7 billion during 2017, BRL5.5 billion in 2018 and BRL15.1 billion between 2019 and 2020 (BRL6.6 billion of cross-border issuances). Fitch's base case scenario assumes CSN will rollover the BRL14.2 billion of local banks debt during first months of 2018 and complete the refinancing of the 2019 and/or part of its 2020's international bonds. Corporate Governance and Event Risks: CSN's delay in releasing audited financial statements during 2017, ongoing disagreements with independents auditors, internal corruption investigation (so far concluded, with no evidence of wrongdoing), shareholders disputes, no clear strategy for the Transnordestina asset and discussion of environmental licenses for its major facility, reflect weak corporate governance practices compared to other issuers in Fitch's corporate rated universe in Brazil. The probability of event risks for CSN is above average. Leverage, which is believed to be high at the shareholder's level, is also a concern. Good Business Position: CSN's business position as an integrated steelmaker remains solid, underpinned by captive access to raw materials (iron ore/energy), high value-added portfolio of products and an important share in the flat steel industry in Brazil. The company has a diversified portfolio of assets with operations in the mining, steel, energy, cement and interests in railways and ports operations. The company has a medium cost competitive position in the iron ore segment, operating within the 2nd quartile of iron ore cost curve. Giving its integrated operations in the steel, CSN has a better position in the global slab cost curve (1st/2nd quartile). Largely Dependent on the Brazilian Market: CSN's operations are still concentrated in Brazil (around 60% of consolidated revenues, on historical basis). As a result, its operations have been significantly impacted by the recessionary environment in the country over the last few years. Flat steel domestic sales in Brazil are on a declining trend since 2014. CSN's 2016 flat steel volume sales have dropped 40% since 2013, while its steel EBITDA declined 23%. For 2017, local flat steel sales have started a recovery with a 4% increase during the first 10 months of 2017, mostly influenced by the increase in the auto production in Brazil. DERIVATION SUMMARY CSN's 'B-' ratings reflect its highly leveraged capital structure, elevated refinancing risks and corporate governance issues. CSN's more integrated business profile and diversified portfolio of assets compares well with Usinas Siderurgicas de Minas Gerais S.A.'s (Usiminas; B). Both issuers are highly exposed to the local steel industry in Brazil. CSN and Usiminas show much weaker business position compared to the other Brazilian steel producer Gerdau S.A (Gerdau; BBB-), that has a diversified footprint of operations with important operating cash flow generated from its assets abroad, mainly in US, and flexible business model (mini- mills) that allow it to better withstand economic and commodities cycles. From a financial risk perspective, Usiminas and CSN are far weaker than Gerdau, which has been able to maintain positive free cash flow generation, strong liquidity and no refinancing risks over the last few years. CSN's corporate governance issues are a concern and its faces elevated refinancing risks in the medium term. In contrast, after concluding its debt restructuring, Usiminas has a more manageable debt schedule amortization. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- 4% increase in steel volumes sold during 2017; expansion of 10% in 2018 ; -- 9% decrease in iron ore volumes sold during 2017 and 5% increase in 2018; -- Average iron ore price of USD70 per ton during 2017 and Fitch's price deck of USD55 per ton in 2018; -- EBITDA of BRL3.7 billion in 2016 and BRL3.2 billion in 2017; -- Successful refinancing of 2018's local banking debt; -- No dividends paid in 2017 and 2018. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that CSN would be considered a going concern in bankruptcy and that the company would be reorganised rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern Approach: CSN's going concern EBITDA is based on 2015 EBITDA. The going-concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganisation EBITDA level upon which Fitch's bases the valuation of the company. The going-concern EBITDA is based on 2015 EBITDA that reflects a scenario of intense volatilities in the steel industry, in terms of volume and prices, and on the iron price fundamentals. The EV/EBITDA multiple applied is 5.5x, reflecting CSN's strong market share in the flat steel market and it also reflects a mid-cycle multiple. Fitch applies a waterfall analysis to the post-default enterprise value (EV) based on the relative claims of the debt in the capital structure. Fitch debt waterfall assumptions take into account debt at Dec. 31, 2016. The waterfall results in a 36%/'RR4' Recovery Rating for senior unsecured debt. Therefore, the senior unsecured notes due 2019, 2020 and perpetual are 'B-'/'RR4'. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Negative Rating Action. -- CSN's inability to succeed with the refinance the local banking debt in the next two months and afterwards start the bonds refinancing before end of 2018 will lead to a downgrade of CSN's ratings; -- Further deterioration of the steel industry in Brazil, or inability to proceed with price increases would also pressure free cash flow generation and liquidity, and consequently the ratings. Developments that May, Individually or Collectively, Lead to Positive Rating Action. -- A Rating Outlook to Stable could occur if CSN is successful in refinancing both local and cross-border debt; -- Better than expected scenario for the local steel sales in Brazil and healthy iron ore fundamentals, which would lead improvement in FCF and net leverage to below 5.0x on sustainable basis, could lead a positive rating action. LIQUIDITY Under CSN's audited financial statement of Dec. 31 2016, it reported BRL5.6 billion of cash and marketable securities, BRL2.1 billion of short-term debt and BRL30.4 billion of total debt. CSN's debt schedule amortization shows high concentration in the short-to-medium term with amortization of BRL1.7 billion over 2017; BRL5.5 billion in 2018; and BRL15.1 billion between 2019 and 2020 (BRL6.6 billion of cross-border issuances). CSN's debt primarily consists of prepayment export financings (36%), local bank loans (24%), senior notes (19%) and perpetual bonds (11%). As of Sept. 30, 2017, CSN's not audited financial statement reported BR4.1 billion of cash and marketable securities, a very tight position compared to its short term debt of BRL3.9 billion and total debt of BRL29 billion, per Fitch's calculation. FULL LIST OF RATING ACTIONS Fitch has assigned the following expected rating: CSN Resources S.A -- Senior unsecured USD Note due 2025 'B-'/'RR4'; Rating Watch Negative. Fitch rates CSN with the following ratings: -- CSN Long-term Foreign and Local currency IDRs 'B-', Rating Watch Negative; -- CSN National Long-Term rating 'BB-(bra)'; Rating Watch Negative; -- CSN Islands XI Corp. senior unsecured notes due 2019 'B- '/'RR4'; Rating Watch Negative; -- CSN Islands XII Corp. senior unsecured perpetual notes ' B- '/'RR4'; Rating Watch Negative; -- CSN Resources S.A. senior unsecured due 2020 'B-'/'RR4'; Rating Watch Negative. SUZANO PAPEL: Forests Acquisition Credit Pos., Moody's Says ----------------------------------------------------------- Moody's Investors Service comments that Suzano Papel e Celulose S.A. (Suzano, Ba1 negative)'s acquisition of land and forests is credit positive. On February 5, 2018, Suzano announced that it has entered into an agreement with Duratex S.A. (unrated) to purchase forest assets and land in the state of Sao Paulo, Brazil, for a total transaction amount of BRL 1.1 billion (about USD325 million). The assets comprise 9.500 hectares of land and 1.200.000 cubic meters of forests for BRL 308 million as well as an option to purchase an additional 20.000 hectares of land and 5.600.000 cubic meters of forests for BRL 749 million. The option can be exercised through July 2, 2018, at the sole discretion of Suzano. The acquisition is credit positive because it supports Suzano's strategy of assuring forest assets for its operations and maintaining its cost competitiveness, without jeopardizing its credit metrics. Suzano can pay for the acquisition entirely with cash, without increasing its leverage metrics. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: 25% of Energy From Renewables by 2025 --------------------------------------------------------- Dominican Today reports that National Energy Commission (CNE) Director Juan Rodriguez said the country is on pace to reach 25% of its energy from renewables by 2025, to comply with Law 57-07. "I assure you that by 2025 we will have more than 25%, as proposed by COP 21, will be in renewable energy," he said, according to Dominican Today. "There are very good hopes that in this same year 2018 the country can close with around 800 megawatts of energy from natural gas," he added. "Nothing has been closed yet, but the auguries are very positive," the official said, the report relays. He said since 2012, natural gas has been sought to convert not only the eastern plants but also to build new plants, especially in the north region," the official said, the report notes. 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. DOMINICAN REPUBLIC: ADIE Hails Push to Fuel Natural Gas Plants -------------------------------------------------------------- Dominican Today reports that Dominican Republic's power companies grouped in ADIE hailed the government's push to continue expanding energy generation fueled by natural gas, as State Electric Utility (CDEEE) CEO Ruben Jimenez Bichara, announced. ADIE executive vice president Manuel Cabral said the private electricity industry supports efforts to add more clean energy sources to generate power, according to Dominican Today. He reiterated ADIE's willingness to provide all the facilities and support to spur the installation of new infrastructure and convert existing plants to natural gas, as Jimenez proposed at the Annual Caribbean Energy Conference held in the Bahamas, the report notes. In addition, the electricity industry also praised the announced long-term tenders to buy energy, as the Electricity Law stipulates, the report adds. As reported in the Troubled Company Reporter-Latin America on Nov. 20, 2017, Fitch Ratings has affirmed Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. =============== H O N D U R A S =============== INVERSIONES ATLANTIDA: Fitch Affirms 'B' IDR; Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Inversiones Atlantida, S.A. y Subsidiarias' (Invatlan) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B' with a Stable Outlook. Fitch also has affirmed the National Ratings of Banco Atlantida, S.A. (Atlantida), main subsidiary of Invatlan, at 'A+(hnd)' with a Stable Outlook. KEY RATING DRIVERS Invatlan's IDRs and Senior Debt Invatlan's IDRs reflect the financial profile of its main subsidiary, Atlantida in Honduras, rated 'A+(hnd)' on the national scale by Fitch, which has demonstrated good financial performance through the economic cycle. The ratings also consider Invatlan's high operational integration with its operating subsidiaries, as well as the light restrictions on subsidiaries upstreaming liquidity to Invatlan. Invatlan's ratings also reflect the expected moderate levels of double leverage. Invatlan's creditworthiness is aligned with its main operating subsidiary, Atlantida, since its status as a pure holding company with low ability to generate profits in an unconsolidated basis creates a natural dependence on the dividend flows from its subsidiaries to meet its financial commitments. This is particularly relevant because of Invatlan's expected moderate levels of double leverage. As of September 2017 this ratio was close to 94%. Fitch considers as positive that Honduran regulations establish very light restrictions to capital and liquidity fungibility. Hence, Invatlan's subsidiaries can pay dividends to their holding or inject liquidity efficiently. Dividend flows from its subsidiaries are expected to be ample and more than sufficient to service the entity's debt. Invatlan's senior debt rating reflects that these are senior obligations of Invatlan that rank pari passu with other senior indebtedness, and therefore this rating is aligned with the company's Long-Term Foreign and Local Currency IDRs of 'B'. The recovery rating of 'RR4' assigned to Invatlan's senior debt issuance reflects the average expected recovery in case of the company liquidation. Atlantida's National Ratings Atlantida's National Ratings are highly influenced by the Honduran operating environment and its company profile. In recent years the operating environment of the banking system has fluctuated significantly due to different stress cases, from political unrest to regulatory changes constraining the potential of the entity. Atlantida is a dominant bank in Honduras with a robust franchise on both loans and deposits, which benefits its performance and business model. However, like its peers, it has high concentrations, the top 20 debtors and depositors are close to 25% of total loan portfolio and total deposits, respectively. This increases their sensitivity to the possibility of significant changes in the economic environment, although this is not Fitch's base scenario. The bank's National Ratings also consider its improving asset quality. Atlantida presented a reasonable non-performing loan (NPL) ratio (2.7% as of 3Q17); but still comparing below system average (2%). This is improving with respect to that registered in previous years. However, the restructuring of its loan portfolio is high at 6% of total loan portfolio, although the administration points out that these readjustments anticipate the deterioration of the loan portfolio. In turn, the bank has adequate loan loss reserves and good coverage of collaterals, which partially mitigates this risk. Fitch expects that loan quality will remain at similar levels in the short to medium term. The bank's funding structure is based on low cost deposits. The good perception of Atlantida among its clients has allowed it to sustain its deposits in times of systemic stress. Atlantida's liquidity levels are stable and are considered sufficient to handle potential deposit volatility. The bank has a good loan to deposit ratio (83%) better than its local peers (90%) as of September 2017. Profitability is driven by the appropriate net interest margin (NIM) and moderate provision expense, although limited operating efficiency (cost to income) limits the bank's financial results and still compares unfavourably to that shown by its closest peers. The operating profit to Risk Weighted Assets (RWAs) ratio was 2%, in Fitch's view a good level in light of the business model still oriented to companies, (closest local peers 2.3%). Fitch expects a gradual improvement on Atlantida's operating efficiency as is increasing its presence in retail segments and some changes in the compensation of its employees. Capitalization levels of the bank are adequate but slightly declining from previous years due to the high growth of assets experienced in past years. However, they still compare reasonably with local and internationals peers. The Fitch Core Capital to RWAs was 12% as of September 2017 (December 2016: 11%). Given the expected asset growth and profitability in 2018, the capital levels should remained stable in the foreseeable future. Noteworthy, the total net revenue generated in 2017 will be capitalized in total which will contribute to sustain the capitalization. RATING SENSITIVITIES Invatlan's IDRs and Senior Debt Invatlan's creditworthiness will likely move in line with that of its main subsidiary, Atlantida. Also, Invatlan's IDRs could be downgraded by one notch if the company's double-leverage ratio is sustained above 120%. Given their senior nature, these notes will typically be aligned with the company's IDRs, and the rating of the notes will mirror any potential change to Invatlan's IDRs. Atlantida's National Ratings National ratings would increase with a sustained improvement in its asset quality metrics, including NPLs ratios, levels of restructurings and concentration ratios. In turn, although it is not Fitch's baseline scenario, the ratings could be downgraded in the event of material deterioration in the quality of the loan portfolio that negatively affects its operating profitability and lead to a marked weakening of the bank's capital position. Fitch has affirmed the following ratings: Invatlan -- Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B'; Outlook Stable; -- Long-Term Local Currency IDR at 'B'; Outlook Stable; -- Short-Term Foreign Currency IDR at 'B'; -- Short-Term Local Currency IDR at 'B'; -- USD150 million senior notes at 'B/RR4'. Atlantida -- Long-Term National Rating at 'A+(hnd)';Outlook Stable; -- Short-Term National Rating at 'F1(hnd)'. ====================== P U E R T O R I C O ====================== ROBERTO KUPERMAN: KC5 Buying San Juan Property for $325K -------------------------------------------------------- Roberto Lazoff Kuperman and Graciela Blank Zaitman ask the U.S. Bankruptcy Court for the District of Puerto Rico to authorize the sale of the real property located at Kings Court 52, Apt. 5-A, San Juan, Puerto Rico to KC5A, LLC for $325,000 The Property is a 3 bedrooms and two bathrooms apartment (2,055 square feet gross living area) and is the Debtors' residence at this time. It is Lot Number 15,863 registered at Page 159 of Volume 1190 of Santurce Norte, Registry of Property of Puerto Rico, San Juan, I. The title search and the Appraisal Report of the Property, dated Jan. 29, 2018 and Jan. ll, 2018, respectively, are attached with the Motion. The Property is encumbered by a lien in favor of Condado 3, LLC. Judgement for money collection and foreclosure of collateral was entered on Civil Case number K CD2013-31, Condado 3, LLC. vs. Le Natural, Inc. et als. , Court of First Recourse, Sala Superior de San Juan. As per Judgment entered in favor of Condado, the Debtors owed to this creditor approximately $607,000 for principal, interest and other charges. Debtors are guarantors for a commercial loan, and the property was used as collateral as per mortgage note dated September 29, 2009, and Mortgage Deed Number 478 executed in San Juan, Puerto Rico, before Public Notary Antonio Hernandez Almovar. The Debtors have received a cash offer to purchase the Property for the amount of $325,000 from the Purchaser as per offer dated Jan. 25, 2018. The Purchaser accepts the Property "as is," and it assumes any debt for property taxes and/or maintenances fees. The Purchaser has submitted evidence of the immediate availability of the funds. It is the only offer the Debtors have received for the Property since foreclosure proceedings commenced in Sept. 4, 2013. The sale will be made "as is" and "where is," without any warranty of any kind. The Purchaser assumes all environmental hazards, if any. All risk of loss will pass to the Purchaser upon adjudication of the sale by the debtors. A report of the sale proceeds will be filed before the Court within 30 days of the sale. The Purchaser will pay all notary fees and stamps related to the certified Deed of Sale, and its registration according 31 LPRA 38141, Article 13541 of PR Civil Code. A copy of the Contract attached to the Motion is available for free at http://bankrupt.com/misc/ROBERTO_KUPERMAN_9_Sales.pdf The proceeds from the sale will be used to pay Condado. Any outstanding amount owed to this creditor after sale proceeds are discounted, will receive distribution as general unsecured creditor under the Chapter 11 Reorganization Plan. The sale of the Property will be free and clear of liens. Application to Employ Notary will be filed before the Court. The payments to the Notary depend on filing of proper applications and Court's approval. In the event that any party objects to the sale, a hearing on said objection will be scheduled by the Honorable Court. Unless a party-in-interest files a written objection, within the term of 21 days from the date of the notice of sale, the Debtors Will complete the sale subject to the terms and conditions described without further order, notice or hearing. The Creditor: CONDADO 3, LLC. c/o Midwest Servicing 3144 Winton Rd. Rochester, NY 14623 Roberto Lazoff Kuperman and Graciela Blank Zaitman sought Chapter 11 protection (Bankr. D.P.R. Case No. 18-00291) on Jan. 24, 2018. The Debtors tapped Gloria Justiniano Irizarry, Esq., at Justiniano's Law Office, as counsel. ================= V E N E Z U E L A ================= VENEZUELA: Government & Opposition Resume Dialogue -------------------------------------------------- EFE News reports that the Venezuelan government and opposition resumed their dialogue amid contradicting statements about whether they had reached a definitive accord to put an end to their country's political crisis. Upon his arrival at the meeting, Venezuelan Communications Minister Jorge Rodriguez said that a "definitive" agreement with the opposition had been reached and would be signed, a claim that was denied minutes later by opposition spokesman Julio Borges, according to EFE News. 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. 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