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/raid1/www/Hosts/bankrupt/TCRLA_Public/180220.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 20, 2018, Vol. 19, No. 36 Headlines A R G E N T I N A AES ARGENTINA: Fitch Affirms B Long-Term FC IDR, Outlook Positive BANCO HIPOTECARIO: Moody's Assigns B2 Global FC Rating to XL Notes B R A Z I L JBS USA: Moody's Rates $900MM Senior Unsecured Notes B3 D O M I N I C A N R E P U B L I C AES ANDRES: Fitch Corrects September 20 Rating Release DOMINICAN REPUBLIC: Ships 61.02% of Its Exports By Sea DOMINICAN REPUBLIC: Sustainable Mining Requires Transparency J A M A I C A DIGICEL INT'L: Fitch Puts B+ Sr. Sec. LT Rating on Watch Negative M E X I C O MEXICO: Parties Officially Nominate Presidential Candidates MEXICO: Powerful Earthquake Slams South and Central Areas P E R U INTERCORP PERU: Moody's Affirms Ba2 Sr. Unsec. FC Bond Rating P U E R T O R I C O KONA GRILL: RBC Global Ceases as Shareholder as of Dec. 31 KONA GRILL: Granahan No Longer a Shareholder as of Dec. 31 T R I N I D A D & T O B A G O CARIBBEAN AIRLINES: Adds Flights as Sea-bridge Chaos Continues - - - - - ================= A R G E N T I N A ================= AES ARGENTINA: Fitch Affirms B Long-Term FC IDR, Outlook Positive ----------------------------------------------------------------- Fitch Ratings has affirmed AES Argentina Generacion S.A.'s (AES Argentina or AAG) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B' and 'BB-', respectively. The Rating Outlook for the Foreign Currency Ratings is Positive, and the Rating Outlook for the Local Currency Ratings is Stable. Fitch has also affirmed AES Argentina's 'B+'/'RR3' ratings for the company's USD300 million 2024 senior unsecured bond. AES Argentina's ratings reflect the Argentine electricity industry's regulatory risk, which is improving but remains high. Fitch also considers the company's counterparty risk with CAMMESA and other market participants as the main off-takers, and its improving metrics supported by relatively stable and predictable cash flow generation. Finally, the ratings are constrained by the macro-economic environment, including high inflation and steep currency devaluation. AES Argentina's 'B' Long-Term Foreign Currency IDR is constrained by the Republic of Argentina's 'B' country ceiling, which limits the foreign currency rating of most Argentine corporates. Fitch's Country Ceilings are designed to reflect the risks associated with sovereigns placing restrictions upon private sector corporates, which may prevent them from converting local currency to any foreign currency under a stress scenario, and/or may not allow the transfer of foreign currency abroad to service foreign currency debt obligations. Since elected in December 2015, the Mauricio Macri administration removed FX controls introduced in 2011 and increased the flexibility of the Argentine peso, which should contribute towards improving the capacity of the economy to absorb external shocks and relieve pressure on international reserves. The Positive Rating Outlook reflects an improving backdrop for government policies that could support a stronger and more stable macroeconomic outlook, after a decade of weak and volatile performance. Recent midterm elections have improved confidence in the durability of the ongoing policy shift, which augurs well for investment and the sovereign's ability to maintain favorable financing access. The build-up in international reserves and a more flexible exchange rate confer greater policy flexibility to manage shocks. The 'B+'/'RR3' on the USD300 million senior unsecured notes due 2024 are one notch above AES Argentina's Foreign Currency IDR and reflect expected above average recovery for creditors given a default. Although a bespoke recovery analysis yields a higher than 70% recovery given a default, Fitch's Country-Specific Treatment of Recovery Ratings criteria allows for one notch uplift for recovery whenever there is a two notch rating differential between a company's foreign and local currency ratings. In instances when the difference between the Foreign and the Local Currency rating is one notch or less, Argentine corporates would be capped at an average recovery rating of 'RR4', which is in the range of 31% to 50%. KEY RATING DRIVERS Improving Regulatory Risk: Fitch believes the recent resolutions implemented by the new government reflect a trend of less government interference and discretion in the power generation sector. AES Argentina operates in a highly strategic sector in which the government has historically had a role as the price/tariff regulator and had full control over the subsidies for industry players. Since 2013, the Secretariat of Energy introduced material changes to the structure and operation of the wholesale electricity market (WEM). Since 2013, the tariffs have almost doubled. Additionally, the Ministry of Mining and Energy, under Resolution 22/2016 adjusted the spot price tariffs for energy sales under the Energia Base framework. Counterparty Exposure: The company depends on payments from CAMMESA, which acts as an agent on behalf of wholesale market participants (Mercado Mayorista Electrico or MEM), an association representing agents of electricity generators, transmission, distribution and large consumers. Payments from CAMMESA can be volatile, given that the agency depends partially on the national government for funds to make payments. Electric companies in Argentina are exposed to potential delays in payment from CAMMESA and also to risks in fuel supply, as the government's agency centralizes the country's fuel imports. During the past couple of years, CAMMESA has at times delayed payments to market participants due to deficits in the electricity market. The new resolutions have started reducing CAMMESA's deficit, and in 2017, CAMMESA has been able to comply with its commercial agreements of providing payments within 42 days. This normalization of payments is expected to continue as the Macri administration remains committed to developing a long-term sustainable regulatory environment, moving towards a more unregulated market and reducing the deficit. Strong Competitive Position: AAG owns a portfolio of diversified generation assets in terms of operational technologies and geographical presence, which lowers business risk. The company has a portfolio mix of 44% hydro and 56% thermal. This combined with a large generation capacity of close to 2.76 gigawatts and an 8% of installed capacity in Argentina and 6.8% of gross generation in the SADI. AAG is a competitive participant in the Argentine market. Strong Credit Metrics: As of September 2017, the company's financial metrics were strong, with low leverage and strong interest coverage. AAG's leverage, as measured by total debt to last twelve months EBITDA, including debt with Compania Administradora del Mercado Mayorista Electrico S.A. (CAMMESA), stood at 3.4x, while EBITDA/interest expense was 5.1x. Debt with CAMMESA is mostly related to loans provided by the government agency for maintenance and/or improvements of generation assets. AES Argentina also has a strong capital structure with its first debt maturity scheduled in 2024 and a manageable interest expense, which Fitch estimates EBITDA/Interest Expense for 2018 to be 5.7x. AES Argentina's ratings also reflect the receivables coming from its FONINVEMEM investments of USD74 million in 2018, and when coupled with an estimated 2018 EBITDA of USD150 million results in a pro forma EBITDA of USD224 million, and a 2018 gross leverage to pro forma EBITDA of 1.3x and pro forma EBITDA/Interest Expense of 8.6x. DERIVATION SUMMARY AES Argentina's Foreign Currency rating is constrained by the country ceiling of Argentina, similar to peers: Pampa Energia (B/Positive), Albanesi (B/Positive), Genneia (B/Positive) and Capex (B/Positive). Nonetheless, the company's metrics and capital structure are strong and consistent with the 'BB' rating category, as reflected in its 'BB-' Local Currency rating. Fitch estimates that AES Argentina's gross leverage as of September 2017 LTM, to be 3.4x compared to Pampa Energia at 2.5x, which incorporates the recent sale of its oil and refining assets, and compared to Genneia at 5.3x and Albanesi at 6.0x. Fitch estimates that AES Argentina's 2018 gross leverage to be 2.3x, slightly below its Argentine peers median of 3.0x. AES Argentina's 2018 credit metrics compare favorable to its Argentine peer Rio Energy/UGEN/UENSA (MSU Energy) and its Local Currency IDR is one notch above that of MSU Energy's Local Currency rating of 'B+' as a result of its lower leverage, which Fitch estimates to be 5.8x in 2018. AES Argentina's regional peers include Peruvian generators, Orazul Energy Egenor S. en C. por A. (BB/Stable) and Kallpa Generacion (BBB-/Stable). Unlike its Argentine peers, Peruvian utilities are not constrained by a country ceiling, and the operating environment in Peru has historically been more stable and open, in which generation companies are on average exposed to higher credit quality off-takers, and benefit from greater diversification in their counterparty risk. Orazul shows a weaker capital structure than AES Argentina, with leverage estimated to be above 5.0x through the rating horizon. Its high leverage is mitigated by its asset diversification. Additionally, Orazul's natural gas production business makes it uniquely vertically integrated among Peruvian generation companies. Kallpa is Peru's largest thermal generator and the country's largest privately owned hydro generator, with total installed capacity of 1,600MW. KEY ASSUMPTIONS Fitch's Key Assumptions Within Fitch Rating Case for the AES Argentina -- Installed capacity of 2,760MW through 2021; -- Gross Generation average of 10,607GWh in 2017 - 2021; -- Average tariffs averaging 23.67 per MWh from 2018 - 2021; -- Availability and load factors in line with historical; -- Maximum dividend pay-out to guarantee minimum cash balance of USD15 to USD20 million per year, with a higher cash balance maintained over the next few years reserved for strategic opportunities; -- EBITDA margins of 35% to 40%; -- USD denominated flows related to FONINVEMEM of approximately USD 64 million per year, mainly associated to Guillermo Brown, and USD11 million per year related to Belgrano and San Martin. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- An upgrade to the ratings of Argentina could result in a positive rating action. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A significant deterioration of credit metrics and/or significant payment delays from CAMMESA; -- A downgrade of Argentina's ratings would result in a downgrade of the issuer's ratings, given that the ratings are constrained by the sovereign's credit quality. LIQUIDITY As of September 2017, AES Argentina reported available cash of USD130 million covering approximately six years of interest expense, assuming no additional debt is raised. AES Argentina's has a strong capital structure with its first debt maturity scheduled in 2024, and the company does not face any significant financing needs over the foreseeable future. Fitch expects the company will maintain this strong cash position, as it looks to pursue opportunities in the Argentina, with a focus on renewable projects. FULL LIST OF RATING ACTIONS Fitch has affirmed the following: AES Argentina Generacion S.A. -- Foreign Currency Long-Term IDR at 'B'; Outlook Positive; -- Local Currency Long-Term IDR at 'BB-'; Outlook Stable; -- Long-term senior unsecured notes due 2024 at 'B+'/'RR3'. BANCO HIPOTECARIO: Moody's Assigns B2 Global FC Rating to XL Notes ------------------------------------------------------------------ Moody's Investors Service has changed the ratings on peso-linked debt issuances of Banco Hipotecario S.A. (Hipotecario), Banco Supervielle S.A. (Supervielle) and Tarjeta Naranja S.A. (Naranja) to foreign currency from local currency. This rating action does not imply a change in Moody's assessment of the credit risk of any of the debt instruments affected, all of which continue to be rated B2 with stable outlook. The following rating actions were taken on Hipotecario's $400 million pesos equivalent Class XL notes: Withdraw global local currency debt rating, previously rated B2 with stable outlook Assign global foreign currency debt rating of B2 with stable outlook The following rating actions were taken on Supervielle's $300 million Class A pesos equivalent notes: Withdraw global local currency debt rating, previously rated B2 with stable outlook Assign global foreign currency debt rating of B2 with stable outlook The following rating actions were taken on Naranja's $250 million Class XXXVII pesos equivalent notes: Withdraw global local currency debt rating, previously rated B2 with stable outlook Assign global foreign currency debt rating of B2 with stable outlook RATINGS RATIONALE This assignment of foreign currency ratings to the affected issuances reflects Moody's revised analytic view that these issuances remain subject to foreign exchange convertibility risk as the bonds are all payable in dollars and as such a foreign currency rating is more appropriate for this type of debt instrument, instead of the previously assigned local currency ratings. While the issuers do not bear foreign exchange rate risk, as the amount of dollars they must repay will depend on the exchange rate at the time of repayment, they are responsible for accessing the foreign exchange market in order to make principal and interest payments in U.S. Dollars under the bonds' terms and conditions. Moody's assesses convertibility risk faced by all issuers within a country through its foreign currency debt ceiling, which can sometimes act as a constraint on ratings assigned to foreign currency debt issuances. However, Argentina's ceiling is currently B1, one notch above the B2 ratings assigned to the affected issuances. Consequently, the conversion of the ratings to foreign currency from local currency does not affect Moody's view on the credit risk inherent to Hipotecario's, Supervielle's and Naranja's issuances. Although the specific language used to describe the bonds in their respective offering documents differs slightly -- for instance, Hipotecario and Supervielle's bonds are described as being denominated in pesos, while those of Tarjeta Naranja are denominated in dollars -- in practice, the key terms and conditions relating to the bonds' currency are effectively the same. In each of the three cases, the issuer raised an amount of Argentine pesos determined by applying the then current exchange rate to a specified dollar amount paid by investors for the bonds. However, the issuers are not obligated to repay the same amount of dollars that were initially paid, but rather the dollar equivalent of the amount of pesos the issuers received based upon the exchange rate as of the date of repayment. As such, investors, not the issuers, are exposed to foreign exchange rate risk - as would ordinarily be expected if a foreign investor were purchasing a local currency instrument. The stable outlook on the affected ratings is in line with the stable outlook on Argentina's B2 sovereign bond rating. Moody's has decided to withdraw the ratings for its own business reasons. WHAT COULD CHANGE THE RATING -- UP OR DOWN As the affected ratings are all constrained by Argentina's sovereign rating, upward ratings pressure will depend upon an improvement in Argentina's government bond rating. Similarly, the ratings would face downwards ratings pressure if the sovereign rating were lowered. The ratings could also be negatively affected if the issuers suffer a substantial deterioration in asset quality, earnings, and/or capitalization. The principal methodology used in rating Banco Hipotecario S.A. and Banco Supervielle S.A. was Banks published in September 2017. The principal methodology used in rating Tarjeta Naranja S.A. was Finance Companies published in December 2016. =========== B R A Z I L =========== JBS USA: Moody's Rates $900MM Senior Unsecured Notes B3 -------------------------------------------------------- Moody's Investors Service has assigned a B3 rating to $900 million 6.75% 10-year notes ("new notes") co-issued by JBS USA Lux S.A. ("JBS USA") and JBS USA Finance, Inc. ("JBS USA Finance"). Both of these co-borrowers are indirect wholly-owned subsidiaries of Brazil based JBS S.A. (B3 negative, "the parent"). The new notes are not guaranteed by the parent. No other ratings of JBS USA are affected. Net proceeds from the new notes will be used to redeem all of the outstanding $700 million 8.250% parent-guaranteed senior unsecured notes due 2020 that also were issued by JBS USA and JBS USA Finance. The remaining proceeds will be used to repay borrowings under the company's ABL revolving credit facility and to supplement cash balances. RATING RATIONALE The B3 rating assigned to the new notes reflects the absence of credit enhancement on the notes as compared to the other higher- rated debt instrument in the capital structure. The company currently has $3.5 billion of unsecured notes rated B2, all of which are guaranteed by JBS S.A. This amount includes the $700 million notes due 2020 that will be redeemed. In addition, the company has $3.6 billion of senior secured bank facilities, including a $900 million ABL revolver (unrated) and a $2.7 billion term loan (rated B1), which are also guaranteed by JBS S.A. Moody's observed that the terms of the new notes include a provision that JBS S.A. will guarantee the new notes under certain conditions, including a rating assignment by Moody's at B3 or lower. Therefore, Moody's expects that the new notes will become guaranteed debt instruments shortly after this rating action, at which time, the rating agency will likely upgrade the new notes to B2. Moody's believes that JBS S. A. continues to control JBS USA in all material respects. Thus, JBS USA's instrument ratings are largely driven by the credit profile of JBS S.A. Moody's expects that any future changes to the Corporate Family Rating of JBS S.A. will result in a corresponding change to the debt instrument ratings of JBS USA. Moody's has taken the following actions on JBS USA Lux, S.A.: Rating assigned: $900 million senior unsecured notes due February 2028 at B3. Ratings to be withdrawn: $700 million 8.250% parent-guaranteed senior unsecured notes due 2020. The rating outlook is negative. The new notes are rated one notch below the existing senior unsecured guaranteed notes reflecting the absence of support provided by the guarantee of parent company JBS S.A. On a normalized basis, adjusting for swings in protein cycles, the parent company's Brazil operations generate approximately 40% of combined EBITDA and 55% of combined debt (not including unrestricted subsidiaries). The new notes are rated two notches below the senior secured debt instruments, reflecting the support of the parent guarantee and the JBS USA asset pledge provided to the secured debt instruments. JBS USA operates the US beef and pork segments and the Australian beef and lamb operations of Brazil-based JBS S.A., the largest protein processor in the world. JBS USA also owns a controlling indirect 76.7% equity interest in US-based Pilgrim's Pride Corporation (Ba3 stable). Reported net sales for JBS S.A. and JBS USA for the twelve months ended September 2017 were approximately BRL 162.1 billion (USD50.3 billion) and $35.0 billion, respectively. The principal methodology used in this rating was Global Protein and Agriculture Industry published in June 2017. =================================== D O M I N I C A N R E P U B L I C =================================== AES ANDRES: Fitch Corrects September 20 Rating Release ------------------------------------------------------ Fitch Ratings has issued a correction to the ratings release on AES Andres B.V. published on Sept. 20, 2017. It includes Fitch's "National Scale Ratings Criteria", which was omitted from the original release. The revised release is as follows: Fitch Ratings has affirmed AES Andres B.V.'s (Andres) Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. This rating affects USD270 million of notes due 2026. Fitch has also affirmed the company's National Scale Long- Term Rating at 'AA(dom)' with a Stable Outlook. Andres's ratings reflect the high dependency of the Dominican Republic's electricity sector on transfers from the central government to service their financial obligations, a condition that links the credit quality of the distribution companies and generation companies to that of the sovereign. Low collections from end-users, high electricity losses and subsidies have undermined distribution companies' cash generation capacity, exacerbating generation companies' dependence on public funds to cover the gap produced by insufficient payments received from distribution companies. The ratings also consider the companies' solid asset portfolio, strong balance sheet, and well-structured purchase power agreements (PPAs). The notes' rating considers the combined operating assets of Andres and Dominican Power Partners (DPP), which joint obligors of AES Andres's USD270 million notes due 2026. These notes are attached to Empresa Generadora de Electricidad Itabo's USD100 million notes, also rated 'BB-'. The notes were primarily intended to repay a bridge taken to call similarly structured bonds last year. Additional funds will be used for small capex projects and to provide a working capital liquidity cushion. DPP currently contributes only about 10% of combined Andres/DPP EBITDA. In 2H17, DPP completed a significant capacity expansion in the form of conversion to a combined-cycle plant, substantially increasing its proportional revenue and EBITDA contribution to the combined results of the Andres/DPP. KEY RATING DRIVERS Sector's Dependence on Government Transfers High energy distribution losses (above 30% in last five years), low level of collections and important subsidies for end-users have created a strong dependence on government transfers. This dependence has been exacerbated by the country's exposure to fluctuations in fossil-fuel prices and energy demand growth (3.4% CAGR in 2009-2015). The regular delays in government transfers pressure working capital needs of generators and add volatility to their cash flows. This situation increases the risk of the sector, especially at a time of rising fiscal vulnerabilities affecting the Central Government's finances. High-Quality Asset Base AES Andres has the Dominican Republic's most efficient power plant, and ranks among the lowest-cost electricity generators in the country. Andres' combined-cycle plant burns natural gas and is expected to be fully dispatched as a base-load unit as long as the liquefied natural gas (LNG) price is not more than 15% higher than the price of imported fuel oil No. 6. Moreover, AES Andres operates the country's sole LNG port, offering regasification, storage, and transportation infrastructure. In the medium term, the company is also looking to expand its transportation network and processing capacity for its LNG operations. As of July 2017, the aggregate capacity of AES Dominicana increased by approximately 122MW as result of the development of a combined cycle facility in DPP's power plant. Strong Credit Metrics The combined credit metrics for Andres and DPP are strong for the rating category. EBITDA of USD149 million reflected major maintenance in the first half of 2016 and lower gas prices. As of YE16, companies' total gross leverage was 3.4x, while total net debt-to-EBITDA stood at 2.9x, significantly higher than historical levels but well within the thresholds for the rating category. The deterioration in leverage reflected the full drawdown on DPP's USD260 million credit facility and a USD100 million net debt increase from Andres's issuance in 2Q16. DPP's combined cycle plant was brought online in 3Q17. As a result, there should be a positive impact on EBITDA in 2017 and 2018, which will reduce leverage to around 2.5x in the medium term. Cash Flow Volatility Persists LTM Cash Flow from Operations (CFFO) for AES Dominicana was USD12 million at 4Q16, compared to USD218 million at year-end 2015. Average accounts receivable days increased to 98 days versus 49 days at YE2015. This is in line with Fitch's previously stated expectations, with receivable days returning to the 100-day level, barring another factoring agreement similar to the one the company executed in 3Q15 DERIVATION SUMMARY AES Andres B.V.'s ratings are linked to and constrained by the ratings of the government of the Dominican Republic, from whom it indirectly receives its revenues. As a result, Andres's capital structure is strong relative to similarly rated, unconstrained peers. Orazul Energy Egenor S. en C. por A.('BB/Stable') (whose ratings reflects combined results that include its sister company, Aguaytia Energy del Peru S.R.L.) has similar installed capacity and is expected to generate around USD100 million in EBITDA annually, with estimated leverage of approximately 5.0x. Egenor benefits from the stability conferred by its asset diversification and the flexibility allowed by its vertical integration. By comparison, the combined Andres/DPP operations are expected to generated above USD200 million, with leverage around 2.5x in the medium term. Other regional peers include Albanesi S.A. (B/Stable) and Fenix Power Peru S.A. (BBB-/Stable). As an Argentine corporate, Albanesi is similarly constrained by its operating environment, but it shows a comparable deleveraging trajectory, from around 4.0x to 2.5x in the medium term. Its strong capital structure is reflected in its Long Term Local Currency rating of 'BB-/Stable'. Fenix shows high leverage, similar to Egenor, but benefits from its strategic linkage to its parent company, Colbun S.A. (BBB/Stable), as well as a steady deleveraging trajectory in the medium term as its international bond amortizes. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: -- Demand growth in line with GDP growth; -- DPP's open cycle is operation in 2H17; -- 100% of previous year's net income to be distributed as dividends; -- Receivable days continue to climb to around 100; -- NG prices follow Fitch Price deck. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action could follow if the Dominican Republic's sovereign ratings are upgraded or if the electricity sector achieves financial sustainability through proper policy implementation. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A negative rating action to AES Andres would follow if the Dominican Republic's sovereign ratings are downgraded, if there is sustained deterioration in the reliability of government transfers, and financial performance deteriorates to the point of increasing the combined Andres/DPP ratio of debt-to-EBITDA to 4.5x for a sustained period. LIQUIDITY Andres and DPP have historically reported very strong combined credit metrics for the rating category. Both companies have financial profiles characterized by low to moderate leverage and strong liquidity. Combined EBITDA as of 4Q16 totalled USD149 million (vs. USD141 million at year-end 2015), with gross leverage of 3.4x and gross interest coverage of 10.4x. The companies' strong liquidity position is further supported by the 2026 bond, which extended most of their maturities by eight years. Currently, the company has a credit facility of 260m, of which approximately USD209 million had been drawn upon as of 4Q16. This loan is scheduled to begin amortizing in 4Q17 over nine equal quarterly payments. However, Fitch also expects this loan to be replaced by long-dated notes to be place in 4Q17. FULL LIST OF RATING ACTIONS AES Andres B.V. Fitch has affirmed the following ratings: -- Foreign Currency Long-term IDR at 'BB-'; -- National Scale Long-Term Rating at 'AA(dom)'; -- Senior unsecured notes due 2026 at 'BB-'. The Rating Outlooks are Stable. DOMINICAN REPUBLIC: Ships 61.02% of Its Exports By Sea ------------------------------------------------------ Dominican Today reports that 61.02% of Dominican exports during the first three quarters of 2017 were shipped by sea, 31.03% by air and 7.95% by road. The National Statistics Office (ONE) said Dominican exports from January to September last year totaled US$6.6 billion, of which US$4.0 billion were transported by sea, US$2.1 million by air, and US$527.0 million by land, according to Dominican Today. ONE director Alexandra Izquierdo said port dispatch figures show that 50.66% of the exports were from Haina Oriental; 22.04% from Caucedo Multimodal; 11.58% from Puerto Plata and 8.36% from Santo Domingo, the report notes. "By air it can be observed that 94.50% was exported through Las Americas International Airport and 3.51% from Cibao (Santiago) International Airport; whereas by road 38.34% was exported through Jiman° and 35.95% by Dajabon (west)," the official said in a statement, 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. DOMINICAN REPUBLIC: Sustainable Mining Requires Transparency ------------------------------------------------------------ Dominican Today reports that the head of an influential NGO's Transparency and Government says in the environmental study to determine the feasibility of mining in the Central Mountain Range, only the organizations not linked to the project should participate and warned that the results must be respected. Citizen Participation (PC) executive Carlos Pimentel said that the country has had various environmental impact studies that recommend nonintervention in a territory, but end up intervened, according to Dominican Today. "So we have to insist that the study be done, that its entire process be public and with the participation of the Academy [of Sciences of the Dominican Republic . . . and professionals in the area," he said, the report notes. Mr. Pimentel said the project must provide transparent all information, the report discloses. "A study cannot be done with the involvement of politicians with interests in the exploitation. Neither can it be done with the direct participation of companies that have an interest in exploitation," he adds, notes the report. The member of the Green March movement also stressed that citizens need govt. agencies which comply with the law. He railed against the "intentions of favoring economic and multinational groups," the report relays. Sustainable Mining? Pimentel said if the government wants to talk about 'sustainable mining it must create a comprehensive mine planning system, covering the Bonao and Cotui (central) deposits, the report notes. "There is no use for "sustainable" practices in San Juan, while in the center of the island, in Cotui and Bonao, we have actions that are not sustainable and that are open-pit," he said, the report relays. He stressed that the priority should be to protect ecosystems, especially water, 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. ============= J A M A I C A ============= DIGICEL INT'L: Fitch Puts B+ Sr. Sec. LT Rating on Watch Negative ----------------------------------------------------------------- Fitch Ratings has placed the issuance ratings of various speculative grade Latin American corporates on Rating Watch. KEY RATING DRIVERS The rating actions reflect the publication of Fitch's "Exposure Draft: Country-Specific Treatment of Recovery Ratings" on Feb. 14. (For additional info, see "Fitch Publishes Exposure Draft for Country-Specific Treatment of Recovery Ratings" at www.fitchratings.com.) RATING SENSITIVITIES Fitch expects to resolve the Rating Watches within the next six months upon completion of the exposure draft period. If the final criteria are substantially similar to the Exposure Draft, then the ratings are likely to be impacted after the final criteria report is published. FULL LIST OF RATING ACTIONS Fitch has taken the following rating actions: Digicel International Finance Limited -- Senior secured long-term rating of 'B+/RR3' placed on Rating Watch Negative. Enjoy S.A. -- Senior unsecured long-term rating of 'B/RR4' placed on Rating Watch Positive. Frontera Energy Corporation -- Senior secured long-term rating of 'BB-/RR3' placed on Rating Watch Negative. Grupo IDESA, S.A. de C.V, -- Senior unsecured long-term rating of 'B/RR3' placed on Rating Watch Negative. Grupo Posadas, S.A.B. De C.V. -- Senior unsecured long-term rating of 'B+/RR3' placed on Rating Watch Negative. Servicios Corporativos Javer, S.A.B. de C.V. -- Senior unsecured long-term rating of 'BB-/RR3' placed on Rating Watch Negative. U.S.J. - Acucar e Alcool S.A. -- Senior secured long-term rating affirmed at 'CCC+/RR3'; removed from Rating Watch Positive; -- Senior unsecured long-term rating affirmed at 'CCC+/RR3'; removed from Rating Watch Positive. =========== M E X I C O =========== MEXICO: Parties Officially Nominate Presidential Candidates ----------------------------------------------------------- EFE News reports that Mexico's political parties officially nominated their presidential candidates, who will face off in the July 1 election to succeed President Enrique Pena Nieto. Before some 18,000 delegates gathered at Mexico City's Foro Sol, Jose Antonio Meade was officially declared to be the presidential candidate of the Institutional Revolutionary Party (PRI), which heads the "Todos por Mexico" (Everyone for Mexico) coalition with the PVEM Green party and the New Alliance, according to EFE News. The report notes that Mr. Meade is a respected former finance minister, although the PRI's popularity among voters is currently so low that it resorted to nominating a non-party member to head its presidential ticket. Ricardo Anaya was proclaimed the presidential contender for the "Por Mexico al Frente" coalition comprised by the National Action Party (PAN) and the leftist Democratic Revolution (PRD) and Citizens Movement (MC) parties, the report relays. Anaya is a young former lawmaker who has been tainted by corruption allegations and accused of forcing his way forward to obtain his party's nomination, the report notes. Andres Manuel Lopez Obrador was confirmed as the presidential candidate of the coalition comprised of the National Renewal Movement (Morena) and the Labor (PT) and Social Encounter (PES) parties in a Mexico City hotel, the report relays. Lopez Obrador has fruitlessly run for president twice before and promised thorough changes for Mexico in accepting the Morena party's nomination, vowing to revamp public health and education, end the privatization of state resources and improve quality of life for the poor, the report says. The official nomination of the presidential candidates came a week after the pre-campaign period ended, during which the parties focused on their internal procedures and primaries to select their standard-bearers, the report relays. The presidential campaign will officially start on March 30. Some 88 million Mexicans are eligible to vote for president and for 3,200 other elected posts in 30 of the country's 32 states, the report adds. MEXICO: Powerful Earthquake Slams South and Central Areas --------------------------------------------------------- Associated Press reports that a powerful magnitude-7.2 earthquake shook south and central Mexico on Feb. 16, causing people to flee swaying buildings and office towers in the country's capital, where residents were still jittery after a deadly quake five months ago. Crowds of people gathered on Mexico City's central Reforma Avenue in Mexico City as well as on streets in Oaxaca state's capital, nearer the quake's epicenter, according to Associated Press. "It was awful," said Mercedes Rojas Huerta, 57 years old, who was sitting on a bench outside her home in Mexico City's trendy Condesa district, too frightened to go back inside, the report notes. "It started to shake; the cars were going here and there. What do I do?" she added, says AP. She said she was still scared thinking of the Sept. 19 earthquake that left 228 people dead in the capital and 369 across the region. Many buildings in Mexico City are still damaged from that quake, the report relays. The U.S. Geological Survey originally put the magnitude of Friday's quake at 7.5 but later lowered it to 7.2, the report discloses. It said the epicenter was 33 miles northeast of Pinotepa in southern Oaxaca state. It had a depth of 15 miles. Mexican Civil Protection chief Luis Felipe Puente tweeted that there were no immediate reports of damages from the quake. The Oaxaca state government said via Twitter that only material damages were reported near Pinotepa and Santiago Jamiltepec, and shelters were opened for those fleeing damaged homes. About an hour after the quake, a magnitude-5.8 aftershock also centered in Oaxaca caused tall buildings in Mexico City to briefly sway again. USGS seismologist Paul Earle said earthquake appeared to be a separate temblor, rather than an aftershock of a Sept. 8 earthquake also centered in Oaxaca, which registered a magnitude of 8.2. The Sept. 19 earthquake struck closer to Mexico City. The Sept. 8 quake killed nearly 100 people in Oaxaca and neighboring Chiapas but was centered about 273 miles southwest of Friday's earthquake, Mr. Earle said. In Mexico's capital, frightened residents flooded into the streets in Condesa, including one woman wrapped in just a towel, but there were no immediate signs of damage. "I'm scared," said Rojas Huerta, recalling five months ago when buildings fell as she ran barefoot into the street. "The house is old," notes the report. ======= P E R U ======= INTERCORP PERU: Moody's Affirms Ba2 Sr. Unsec. FC Bond Rating ------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 senior unsecured debt rating of Intercorp Peru Ltd.'s (Intercorp). The outlook remains positive. The action follows the change in the outlook of InRetail Consumer, a subsidiary of Intercorp, to negative on February 5 (see press release "Moody's changes InRetail Consumer's outlook to negative; affirms Ba1 ratings"). The following rating of Intercorp was affirmed: -- Senior Unsecured Foreign Currency Regular Bond/Debenture, Affirmed Ba2, Positive RATINGS RATIONALE The affirmation of Intercorp's Ba2 rating with a positive outlook - despite the change in InRetail Consumer's outlook to negative- considers the relatively limited relevance of InRetail Consumer to the holding company's consolidated net earnings, dividend receipts, and total assets. In addition, the positive outlook considers the positive outlook on the ratings of the holding group's main contributor of dividends and earnings, Banco Internacional del Per£-Interbank (Baa2/Baa2 positive, baa3). The recent change in InRetail Consumer's (Ba1) outlook to negative followed the announcement that its drugstore subsidiary Inkafarma (unrated) was acquiring Quicorp S.A. (unrated). The acquisition was funded through a combination of (i) a portion of a new USD1 billion 1-year bridge loan the proceeds of which will be used do partially fund Quicorp's acquisition and to perform liability management at InRetail and Quicorp, and (ii) a USD150 million equity contribution from group of private investors led by Nexus Group, which will provide them a 13% ownership stake of the consolidated pharma operations. The acquisition will increase InRetail's share of Peru's modern drugstore chain market to 80% and boost its international expansion strategy and it will likely increase the dividend contribution from the retail business in the long term, helping to improve Intercorp's revenue and dividend diversification. However, the financing of the deal will also considerably increase InRetail's leverage and Moody's anticipates that the deleveraging process will be gradual. While Intercorp's double leverage ratio, which equaled an estimated 114% as of December 2017, will not be affected by the transaction because the debt is being raised at the level of a subsidiary, Moody's nevertheless views the reliance on debt and minority investors to finance the transaction as credit negative for the holding company. However, InRetail's PEN44 million in dividend payments to Intercorp in 2017 constituted just 11% of the holding company's total dividend receipts; this was the first time that it had made dividend contributions to its parent. Even if dividends from InRetail fall back to zero in 2018 following the acquisition, dividends from Intercorp's other subsidiaries in 2017 would be sufficient to cover its interest payments by 3.7 times. While the acquisition will increase InRetail's assets by 40% and its net revenues by 61%, without considering synergies, Moody's estimates that InRetail will account for just 16% of Intercorp's total assets and 17% of its net revenues on a pro-forma basis following the acquisition, up from 10% and 14% respectively in 2017. In contrast, Interbank contributed 61% of Intercorp's total dividend receipts in 2017. Peru's fourth largest bank, Interbank has a strong focus on retail lending. Even after the merger, Interbank will account for 69.4% of Intercorp's total assets and 55% of its net revenues. Intercorp's remaining dividends primarily derive from Inteligo, a private banking and wealth management operation and Interseguro, an important player in life insurance and annuities, which contributed 22% and 6.5% of the holding company's dividends respectively in 2017. Despite moderate double leverage, Intercorp's rating is positioned two notches below the baa3 baseline credit assessment of Interbank to capture potential risks related to the holding company's aggressive acquisitive expansion strategy. In addition to Quicorp S.A., last year Intercorp purchased Seguros Sura S.A. and Hipotecaria Sura Empresa Administradora Hipotecaria S.A., through its subsidiary Intercorp Financial Services Inc. to strengthen the holding group's position in the annuities and individual life insurance market, financing the acquisition with a $270 million senior debt. The rating also considers the potential that the holding company could be called upon to provide financial support to some of its non-banking subsidiaries at some point in the future, as well as the structural subordination of Intercorp to the bank and its other operating subsidiaries. Interbank's baseline credit assessment reflects the bank's continued very strong earning generation, its good capital base, strong asset quality, ample access to granular low-cost deposit funding, and substantial liquid assets. These credit strengths offset capital levels that remain moderate despite recent improvements. Its positive reflects outlook Moody's view that the bank's financial performance is likely to remain strong despite indications of rising asset risks that may pressure profitability going forward, and that the improvements in the bank's capital will be sustained even as loan growth, and hence capital consumption, resumes. As a holding company, Intercorp's rating does not incorporate any government support, unlike Interbank's Baa2 deposit rating, which benefits from one notch of ratings uplift to reflect the moderate likelihood that the government will provide financial support to the bank in an event of stress. Moody's does not believe that any support provided to the bank will extend to the holding company. Intercorp has assets of $19.5 billion, net income of $145.7 million, and equity of $2.9 billion as of September 2017 on a consolidated basis. WHAT COULD CHANGE THE RATING UP/DOWN As indicated by the positive outlook, Intercorp's ratings could be upgraded if and when Interbank's rating is upgraded. The rating could also face upward pressure if its dividend streams become substantially more diversified such that the company is no longer so dependent on dividend payments from the bank, provided any new or larger sources of dividends are high quality and expected to be stable, which would indicate that the risk the company would need to provide meaningful financial support to its non-bank subsidiaries had diminished. While Intercorp's rating does not face downward pressure at the current time, the rating could be affirmed and the outlook returned to stable if Interbank is not upgraded and its outlook returns to stable. The same could happen even if the bank is upgraded if the company announces another leveraged acquisition or if it becomes apparent that the risks deriving from the Quicorp acquisition are greater than currently anticipated. The principal methodology used in this rating was Banks published in September 2017. ====================== P U E R T O R I C O ====================== KONA GRILL: RBC Global Ceases as Shareholder as of Dec. 31 ---------------------------------------------------------- In a Schedule 13G/A filed with the Securities and Exchange Commission, RBC Global Asset Management (U.S.) Inc. disclosed that as of Dec. 31, 2017, it no longer beneficially owns shares of common stock of Kona Grill, Inc. A full-text copy of the regulatory filing is available at https://is.gd/FcNx1I About Kona Grill Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill, Inc. -- http://www.konagrill.com/-- currently owns and operates 45 upscale casual restaurants in 23 states and Puerto Rico. The Company's restaurants offer freshly prepared food, attentive service, and an upscale contemporary ambiance. The Company's high-volume upscale casual restaurants feature a global menu of contemporary American favorites, sushi and specialty cocktails. Its menu items are prepared from scratch at each restaurant location and incorporate over 40 signature sauces and dressings, creating memorable flavor profiles that appeal to a diverse group of customers. Its diverse menu is complemented by a full service bar offering a broad assortment of wines, specialty cocktails, and beers. Kona Grill reported a net loss of $21.62 million for the year ended Dec. 31, 2016, following a net loss of $4.49 million for the year ended Dec. 31, 2015. As of Sept. 30, 2017, Kona Grill had $103.59 million in total assets, $85.61 million in total liabilities and $17.97 million in total stockholders' equity. "The Company has incurred losses resulting in an accumulated deficit of $67.3 million, has a net working capital deficit of $6.9 million and outstanding debt of $38.0 million as of September 30, 2017. These conditions together with recent debt covenant violations and subsequent debt covenant waivers and debt amendments, raise substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations, improving liquidity and reducing costs to meet its obligations and repay its liabilities arising from normal business operations when they become due. While the Company believes that its existing cash and cash equivalents as of September 30, 2017, coupled with its anticipated cash flow generated from operations, will be sufficient to meet its anticipated cash requirements, there can be no assurance that the Company will be successful in its plans to increase profitability or to obtain alternative financing on acceptable terms, when required or if at all," the Company stated in its quarterly report for the period ended Sept. 30, 2017. KONA GRILL: Granahan No Longer a Shareholder as of Dec. 31 ---------------------------------------------------------- Granahan Investment Management, Inc., disclosed in a Schedule 13G/A filed with the Securities and Exchange Commission that as of Dec. 31, 2017, it ceases to beneficially own shares of common stock of Kona Grill, Inc. A full-text copy of the regulatory filing is available for free at https://is.gd/7vRzhH About Kona Grill Kona Grill, Inc., headquartered in Scottsdale, Arizona, Kona Grill, Inc. -- http://www.konagrill.com/-- currently owns and operates 45 upscale casual restaurants in 23 states and Puerto Rico. The Company's restaurants offer freshly prepared food, attentive service, and an upscale contemporary ambiance. The Company's high-volume upscale casual restaurants feature a global menu of contemporary American favorites, sushi and specialty cocktails. Its menu items are prepared from scratch at each restaurant location and incorporate over 40 signature sauces and dressings, creating memorable flavor profiles that appeal to a diverse group of customers. Its diverse menu is complemented by a full service bar offering a broad assortment of wines, specialty cocktails, and beers. Kona Grill reported a net loss of $21.62 million for the year ended Dec. 31, 2016, following a net loss of $4.49 million for the year ended Dec. 31, 2015. As of Sept. 30, 2017, Kona Grill had $103.59 million in total assets, $85.61 million in total liabilities and $17.97 million in total stockholders' equity. "The Company has incurred losses resulting in an accumulated deficit of $67.3 million, has a net working capital deficit of $6.9 million and outstanding debt of $38.0 million as of September 30, 2017. These conditions together with recent debt covenant violations and subsequent debt covenant waivers and debt amendments, raise substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations, improving liquidity and reducing costs to meet its obligations and repay its liabilities arising from normal business operations when they become due. While the Company believes that its existing cash and cash equivalents as of September 30, 2017, coupled with its anticipated cash flow generated from operations, will be sufficient to meet its anticipated cash requirements, there can be no assurance that the Company will be successful in its plans to increase profitability or to obtain alternative financing on acceptable terms, when required or if at all," the Company stated in its quarterly report for the period ended Sept. 30, 2017. ================================ T R I N I D A D & T O B A G O ================================ CARIBBEAN AIRLINES: Adds Flights as Sea-bridge Chaos Continues -------------------------------------------------------------- Leah Sorias at Trinidad Express reports that Caribbean Airlines Limited expects to add more flights to the domestic air-bridge as it continues to accommodate passengers displaced by the withdrawal of the T&T Express from the seabridge. The airline advised that for the period February 14th to 16th, in addition to its core schedule of 128 flights and 8,876 seats, it proposed to increase capacity on the air bridge by 28 flights, providing a further 2,764 seats, according to Trinidad Express. CAL reiterated that it was working closely with the Port Authority of Trinidad and Tobago (PATT) and priority will be given to passengers disrupted by the ferry cancellations, the report relays. "Customers are reminded that there is a process in place to accommodate passengers holding confirmed ferry tickets. Travellers are asked to note that Caribbean Airlines' operations reserves the right to adjust the schedule based on demand," CAL advised, the report notes. The T&T Express, the lone passenger ferry servicing the sea- bridge, was removed from service last Wednesday after its license to operate expired, the report says. The PATT's Allison Lewis told the Express that the PATT had already applied for an extension of the license, but repairs first had to be done before this is granted, 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. *********** 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 * * *