/raid1/www/Hosts/bankrupt/TCRLA_Public/180920.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, September 20, 2018, Vol. 19, No. 187
Headlines
A R G E N T I N A
ALGODON WINES: Adjourns Annual Meeting to Sept. 28
ALGODON WINES: Raises $1.3 Million in Private Placement Financing
ARGENTINA: Fernandez Rebuts Corruption Accusations
B A R B A D O S
BARBADOS: Plans to Transform Island's Sugar Cane Industry
B R A Z I L
B3 S.A.: S&P Affirms 'BB-/B' Issuer Credit Rating, Outlook Stable
BRAZIL: DBRS Confirms BB (low) LT Issuer Ratings, Trend Stable
C A Y M A N I S L A N D S
ALLEGRO CLO II-S: Moody's Assigns B3 Class E Notes Rating
M E X I C O
UNIFIN FINANCIERA: S&P Affirms Global Scale BB ICR, Outlook Stable
P U E R T O R I C O
PUERTO RICO: Sales Tax Bond Deal Heads to Court by October 15
T R I N I D A D & T O B A G O
PETROLEUM CO: Closure Doesn't Make Sense, Union Says
TRINIDAD & TOBAGO: Losing Out on Regional LNG Market
- - - - -
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A R G E N T I N A
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ALGODON WINES: Adjourns Annual Meeting to Sept. 28
--------------------------------------------------
Algodon Wines & Luxury Development Group, Inc. has decided to
reconvene at its 2018 Annual Stockholder Meeting at 11:00 a.m.
Eastern Time on Friday, on Sept. 28, 2018, at 135 Fifth Avenue,
10th Floor, New York, NY 10010.
Algodon Wines convened its 2018 Annual Meeting on Sept. 12, 2018,
at the Company's offices: 135 Fifth Avenue, 10th Floor, New York,
NY, 10010. A quorum was present for the Annual Meeting. However,
the Company adjourned the Annual Meeting because it had not
received a sufficient number of votes in order to pass Proposal
Number 3. Although the votes received to date were overwhelmingly
in favor of the proposal to approve a reverse stock split, the
proposal requires significantly more votes than any other proposal
as it requires a majority of the outstanding common stock (on an
as converted basis) of the Company. The Company would like to
give stockholders additional time to review the material sent on
Aug. 31, 2018 regarding the increased range for the stock split
and then to vote their stock accordingly.
The record date for the Annual Meeting has not changed, and only
stockholders of record at the close of business on July 27, 2018,
are entitled to vote at the reconvened meeting. The polls will
remain open for voting during the adjournment period.
About Algodon Wines
Through its wholly-owned subsidiaries, Algodon Wines & Luxury
Development Group, Inc. -- http://www.algodongroup.com/-- invests
in, develops and operates real estate projects in Argentina.
Based in New York, AWLD operates a hotel, golf and tennis resort,
vineyard and producing winery in addition to developing
residential lots located near the resort. The activities in
Argentina are conducted through its operating entities:
InvestProperty Group, LLC, Algodon Global Properties, LLC, The
Algodon - Recoleta S.R.L, Algodon Properties II S.R.L., and
Algodon Wine Estates S.R.L. AWLD distributes its wines in Europe
through its United Kingdom entity, Algodon Europe, LTD.
Algodon Wines reported a net loss attributable to common
stockholders of $8.25 million for the year ended Dec. 31, 2017,
compared to a net loss attributable to common stockholders of
$10.04 million for the year ended Dec. 31, 2016. As of June 30,
2018, the Company had $5.39 million in total assets, $4.67 million
in total liabilities, $9.02 million in series B convertible
preferred stock, and a total stockholders' deficiency of $8.30
million.
Marcum LLP, in New York, the Company's auditor since 2013, issued
a "going concern" opinion in its report on the consolidated
financial statements for the year ended Dec. 31, 2017, citing that
the Company has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
ALGODON WINES: Raises $1.3 Million in Private Placement Financing
-----------------------------------------------------------------
Between June 30, 2018 and Sept. 11, 2018, Algodon Wines & Luxury
Development Group, Inc., sold 1,890,993 shares of common stock to
accredited investors for gross proceeds of $1,323,695 pursuant to
a private placement. No general solicitation was used, no
commissions were paid, and the Company relied on the exemption
from registration available under Section 4(a)(2) and Rule 506(b)
of Regulation D of the Securities Act of 1933, as amended, in
connection with the sales. A Form D was filed with the Securities
and Exchange Commission on July 17, 2018, an amended Form D was
filed with the SEC on Aug. 1, 2018, and a second amended Form D
was filed with the SEC on Sept. 17, 2018.
In addition, between July 11, 2018 and Aug. 29, 2018, the
Company's wholly-owned subsidiary, Gaucho Group, Inc., sold
convertible promissory notes in the amount of $255,500 to
accredited investors. The maturity date of the notes is Dec. 31,
2018, and at the option of the holder, the principal amount of the
note plus accrued interest can be converted into Gaucho Group
common stock at a 20% discount to the share price in a future
offering of common stock by Gaucho Group. No general solicitation
was used, no commissions were paid, and Gaucho Group relied on the
exemption from registration available under Section 4(a)(2) and
Rule 506(b) of Regulation D of the Securities Act of 1933, as
amended, in connection with the sales. A Form D was filed with
the SEC on Sept. 18, 2018.
About Algodon Wines
Through its wholly-owned subsidiaries, Algodon Wines & Luxury
Development Group, Inc. -- http://www.algodongroup.com/-- invests
in, develops and operates real estate projects in Argentina.
Based in New York, AWLD operates a hotel, golf and tennis resort,
vineyard and producing winery in addition to developing
residential lots located near the resort. The activities in
Argentina are conducted through its operating entities:
InvestProperty Group, LLC, Algodon Global Properties, LLC, The
Algodon - Recoleta S.R.L, Algodon Properties II S.R.L., and
Algodon Wine Estates S.R.L. AWLD distributes its wines in Europe
through its United Kingdom entity, Algodon Europe, LTD.
Algodon Wines reported a net loss attributable to common
stockholders of $8.25 million for the year ended Dec. 31, 2017,
compared to a net loss attributable to common stockholders of
$10.04 million for the year ended Dec. 31, 2016. As of June 30,
2018, the Company had $5.39 million in total assets, $4.67 million
in total liabilities, $9.02 million in series B convertible
preferred stock, and a total stockholders' deficiency of $8.30
million.
Marcum LLP, in New York, the Company's auditor since 2013, issued
a "going concern" opinion in its report on the consolidated
financial statements for the year ended Dec. 31, 2017, citing that
the Company has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
ARGENTINA: Fernandez Rebuts Corruption Accusations
--------------------------------------------------
Lao Ferta reports that Argentine former President Cristina
Fernandez asserted in a legal brief responding to corruption
charges that she has had no part in illegal activity.
"Let them continue monitoring my movements and those of my family,
clandestinely listening to my telephone conversations and dig up
all of Argentine Patagonia, or wherever they want, and they're
never going to find anything to involve me because I will never
take possession of any illicit money," the report quoted President
Fernandez as saying.
President Fernandez, who has already faced legal procedures in six
cases, was summoned and came to the federal courthouse in Buenos
Aires to give a statement before Judge Sebastian Casanello
regarding allegations of money laundering, the report relays.
The report notes that the accusation is that between 2010-2013, at
least $60 million was laundered through an elaborate network of
foreign bank accounts and shell companies.
"Not only do I know absolutely nothing about this alleged
maneuver, but there exists no proof that I am linked to it,"
President Fernandez said in her lengthy written response, the
report discloses.
The investigation centers on businessman Lazaro Baez -- a close
collaborator of Fernandez's late husband and predecessor, Nestor
Kirchner -- who has been in preventive custody since 2016, the
report relays.
The report notes that Mr. Kirchner awarded a number of public
works contracts to Baez-owned companies during his time as
governor of the southern province of Santa Cruz.
President Fernandez, who in the brief once again accused the
administration of her successor, Mauricio Macri, of pulling
strings regarding her legal situation, claimed that she "never"
had any undeclared bank accounts, the report relays.
"All the assets of our family are and will continue to be in the
Argentine Republic and they were always incorporated into our
sworn tax declarations," she said, the report notes.
President Fernandez noted that while neither she nor any of her
family are mentioned in the Panama Papers, a report by
investigative journalists on offshore financial machinations, the
names of Macri and other members of his administration do appear
in the document, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Sept. 4, 2018, S&P Global Ratings placed on Aug. 31, 2018, its
'B+' long-term and 'B' short-term sovereign credit ratings on
Argentina on CreditWatch with negative implications. At the same
time, S&P placed its 'raAA' national scale rating on CreditWatch
negative and affirmed its 'BB-' transfer and convertibility
assessment. The CreditWatch negative reflects the risk of
worsening creditworthiness due to potentially weakened
implementation of the government's strategy to stabilize the
economy. Exchange rate volatility, as shown by recent pressure on
the Argentine currency, could jeopardize the effective
implementation of economic adjustment measures, absent further
steps to boost investor confidence. Consequently, S&P Global
Ratings corrected its short-term ratings on Argentina
by removing them from CreditWatch with negative implications.
Fitch Ratings affirmed on May 8, 2018, Argentina's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B' and revised
the Outlook to Stable from Positive.
On December 4, 2017, Moody's Investors Service 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.
As previously reported by the TCR-LA, Argentina defaulted on some
of its debt late July 30, 2014, after expiration of a 30- grace
period on a US$539 million interest payment. Earlier that ,
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 A R B A D O S
===============
BARBADOS: Plans to Transform Island's Sugar Cane Industry
---------------------------------------------------------
Caribbean360.com reports that Barbados is considering merging or
partnering the state-owned Barbados Agricultural Management
Company Limited (BAMC) with the Barbados Sugar Industry Limited
(BSIL), as it seeks to fully privatize the sugar cane industry.
Additionally, Barbadians will have an opportunity to own shares in
the newly formed entity which should come on stream within another
five years, according to Caribbean360.com.
Minister of Agriculture and Food Security Indar Weir said
Government could no longer subsidize the BAMC to the tune of
BDS$12 million (US$6 million) under the current International
Monetary Fund arrangement, so the company would have to find a way
to bridge that financial gap, the report notes. He said he had
already instructed the Chairman of the BAMC that the board would
have to look at how quickly the transition into the new entity
could happen, the report relays.
The Agriculture Minister said Government's stake in the entity
would be limited, the report notes.
"We are embarking on a system of retooling and empowering,
retraining and enfranchising. And, if we are going to do this
successfully, then it means that we as a Government must pave the
way for all of this to take place. There is no space for any
government in this modern time and place where the private sector
can perform those duties and do them better. I feel that greater
efficiencies can come if we can get the sugar industry completely
managed and operated through the private sector," the report
quoted Mr. Weir as saying.
Mr. Weir said Barbados now had a sugar industry that is capable of
delivering what was needed "in terms of build out of an industry"
to contribute to Barbados' economy going forward, the report
relays.
Mr. Weir cited additional opportunities that would be created
through the rebirth of the sugar cane industry, such as
entrepreneurs becoming involved in the "direct packaging and
consumption of sugar" and rum distilleries producing more rum
using local inputs, the report notes. He also praised the high-
quality products being made at the St. Nicholas Abbey, as well as
their business model, which combines the manufacturing of
agricultural products with tourism, the report discloses.
He added that there was a high demand for locally produced rum,
adding that it was being sold "for a premium" in markets such as
the United Kingdom, the report says.
As reported in the Troubled Company Reporter-Latin America on
Aug. 10, 2018, S&P Global Ratings lowered its issue-level
ratings on Barbados' global bonds due 2019 and 2022 to 'D'
(default) from 'CC'. At the same time, S&P Global Ratings lowered
its long- and short-term local currency sovereign issuer credit
ratings to 'SD' from 'CC' and 'C', respectively.
===========
B R A Z I L
===========
B3 S.A.: S&P Affirms 'BB-/B' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
On Sept. 18, 2018, S&P Global Ratings affirmed its 'BB-/B' long-
and short-term issuer credit ratings on B3 S.A - Brasil, Bolsa,
Balcao (B3). The outlook is stable. S&P also affirmed its 'BB-'
ratings on the company's $612 million senior unsecured notes due
2020, which are at the same level as the issuer credit rating.
S&P said, "B3's 'bbb+' stand-alone credit profile (SACP) includes
our view of the company's strong business risk profile; given its
dominant market position in Brazil, scale, and diversified revenue
mix in business lines. Its merger with CETIP has resulted in
larger scale (with revenue growth of about 50%) and broader
product diversification in complementary lines that allows B3 to
consistently generate cash during different economic cycles. The
most important services that CETIP provides are registration, a
central securities depository, trading and settlement services for
assets and securities, and electronic solutions for delivering
information required for registering contracts (i.e. auto loans)
and financial liens by transit bodies. However, these factors are
somewhat tempered by the company's still limited geographic
diversification, because operations continue to be focused in
Brazil. In addition, B3 could potentially start facing competition
in cash equities and in CETIP's bank securities registration,
while it already has competition in CETIP's loan registration
business. However, this factor is still incipient and we'll
monitor it going forward."
BRAZIL: DBRS Confirms BB (low) LT Issuer Ratings, Trend Stable
--------------------------------------------------------------
DBRS, Inc. confirmed Brazil's Long-Term Foreign and Local
Currency -- Issuer Ratings at BB (low) and its Short-Term Foreign
and Local Currency -- Issuer Ratings at R-4. The trend on all
ratings remains Stable.
KEY RATING CONSIDERATIONS
Prospects for policy action to address the fiscal imbalance and
increase potential growth are unclear ahead of general elections
next month. The most pressing issue facing Brazil's credit profile
is the large budget deficit and rising public debt burden. The
constitutional spending cap creates strong incentives to follow
through with fiscal consolidation. However, it is unclear whether
the next administration will have the willingness and ability to
build a congressional coalition large enough to pass the necessary
structural reforms. Without corrective policy action, concerns
about public debt sustainability will intensify. General elections
are scheduled for October 7th. If no presidential candidate
receives 50% of the vote, which seems highly likely in this
election, a second round of voting among the top two finishers
will take place on October 28th.
The Stable trend indicates that upside and downside risks to the
ratings are balanced. Recent positive developments, such as
improved monetary policy credibility, reformed credit markets and
stronger household balance sheets, put the economy in a better
position to grow. Nonetheless, prospects for a sustained recovery
depend on the implementation of a credible deficit-reduction plan
by the next administration.
RATING DRIVERS
The ratings could experience upward pressure if the next
government implements a fiscal consolidation plan, underpinned by
a reform that stems the growth of pension spending. The structural
nature of such an adjustment would lend credibility to the plan,
which could strengthen confidence, lower real interest rates and
accelerate the recovery. Economic reforms that improve the
investment outlook and facilitate deeper integration into global
markets would also be credit positive.
On the other hand, the ratings could experience downward pressure
if the next administration does not pass reforms to curb the
spending trajectory and address Brazil's structural fiscal
imbalance. External shocks that exacerbate Brazil's growth
challenges could make the necessary fiscal adjustment even more
difficult to achieve.
RATING RATIONALE
Prospects For Policy Action Are Uncertain In The Post-Election
Environment
Brazil's electoral outlook remains highly uncertain. With less
than four weeks remaining until the first-round vote, there are
still five viable presidential candidates in the race. Former
president Luiz Ignacio Lula da Silva of the Workers' Party (PT),
who is barred from running, aims to transfer his popularity to the
PT candidate, Fernando Haddad. The PSDB candidate, Geraldo
Alckmin, is trying to capitalize on his institutional advantages,
such as greater television time and nationwide party machinery. On
the other hand, widespread dissatisfaction with the political
elite creates space for smaller-party candidates, such as Marina
Silva, or anti-establishment candidates, such as Jair Bolsonaro,
to win a place in the second round.
Most of the candidates recognize the need for spending reform.
However, even if the next president wants to pursue budget
consolidation, it is unclear whether the next administration will
be able to build a congressional coalition large enough to pass
key legislation, particularly pension reform which requires
amending the constitution. The challenge could be even greater if
the next president's party has limited representation in congress.
On an institutional level, the Car Wash investigations have
revealed widespread corruption but also highlighted some of
Brazil's strengths. According to the World Bank Governance
Indicators, Brazil compares poorly too many other emerging
economies in the area of corruption control. However, Brazil's
institutional response to corruption in recent years is
encouraging. The investigations themselves are the product of a
strong and independent judiciary, which has been supported by an
active civil society and vibrant media. One legacy of the Car Wash
probe could be better corporate governance.
Fiscal Dynamics Are Unsustainable Without Corrective Action
The most pressing issue facing Brazil's credit profile is the
fiscal deficit. The consolidated primary balance deteriorated from
a surplus of 2.9% of GDP in 2011 to a deficit of 2.5% in 2016. The
Temer administration responded by implementing an expenditure-
based fiscal consolidation plan, which is underpinned by a
constitutional amendment that limits the growth of primary
spending to the rate of inflation. Compliance with this spending
cap was achieved in 2017, and the primary deficit narrowed to 1.7%
of GDP. Spending will likely come in below the cap in 2018 as
well, driven by large cuts in discretionary expenditure. However,
the improving headline figure masks an unfavorable structural
outlook. Given the high share of spending that is constitutionally
protected or indexed to the minimum wage, pressures on mandatory
expenditure continue to build. In particular, the scale and growth
of pension spending makes reform essential.
In the absence of reform, mandatory expenditure will likely exceed
the spending cap starting in 2020. This leaves the next
administration with a short period of time to act. If the spending
cap is breached, automatic austerity measures will be triggered,
forcing a fiscal adjustment that would be both economically
inefficient and politically challenging.
Public debt dynamics are not expected to stabilize in the near
term. Assuming future governments comply with the spending cap,
DBRS estimates that the primary balance would shift to a surplus
in 2022 and then rise to 2.2% of GDP in 2026. In such a scenario,
gross non-financial public sector debt (based on IMF definition)
would peak in 2024 at around 96% of GDP and then gradually
decline. Stronger growth on the back of corrective policy action
and economic reforms could also materially improve debt
sustainability. On the other hand, if spending reforms are not
passed, public debt ratios would continue to rise, thereby
jeopardizing the sustainability of public finances and,
potentially, macroeconomic stability.
Medium-Term Growth Prospects Are Weak
The cyclical recovery continues to advance but Brazil's medium-
term growth prospects are weak. The IMF projects that Brazil will
expand on average 2.2% per year from 2020-2023, below most
emerging market peers. The poor outlook partly reflects
demographics, but interlinking structural constraints of low
investment, high business costs and weak competitive forces also
play a role. Low investment is especially evident in Brazil's
underdeveloped infrastructure, which holds back productivity. In
addition, high tariff barriers, elevated compliance costs, and
inward-looking policy impede Brazil from more fully benefiting
from global trade.
The Temer administration has taken some measures to improve the
investment climate. In July 2017, congress passed labor reform,
which should make the jobs market more flexible and encourage
greater formalization. In September 2017, congress passed a law
that gradually aligns directed lending rates with market rates.
This should improve credit allocation and enhance budget
transparency. In addition, the government eased restrictions in
the oil and gas sector and scaled back local content rules, making
the sector more attractive to foreign capital. Nevertheless, the
implementation of a broader structural reform agenda that
strengthens Brazil's medium-term growth outlook will depend on the
next government.
Inflation Expectations Are Anchored, The Banking System Is
Healthy, And External Accounts Are Sound
Prudent monetary policy has consolidated inflation at low levels
and anchored inflation expectations around the target. Although
the truckers' strike in May 2018 resulted in a temporary price
shock, the inflation outlook remains relatively benign with risks
both to the upside and downside. In July 2018, year-over-year
inflation was 4.5%, which is in line with the target for the year.
The central bank is implementing expansionary monetary policy, in
the context of a large negative output gap, in order to support
the economic recovery. Enhanced central bank credibility combined
with the tapering of directed lending should strengthen the
effectiveness of monetary policy over time.
The banking system has weathered the recession well. Banks remain
profitable and well-capitalized, even considering the Basel III
requirements. Asset quality is benefiting from the recovery. The
delinquency rate (loans 90 days past due) for household and
corporate loans declined from 4.0% in May 2017 to 3.0% in July
2018. Moreover, in the event of macroeconomic shocks, the banking
system appears sufficiently capitalized to digest additional
credit losses or manage unexpected financial market volatility,
including large swings in the exchange rate, without major
disruption.
Brazil's external accounts do not exhibit any significant
imbalances. Gross external liabilities are moderate, the current
account deficit is modest, and inflows of net foreign direct
investment provide a stable source of external financing.
Moreover, exchange rate flexibility facilitates Brazil's
adjustment to global conditions. In the event of an external
shock, the central bank has a large stock of reserves to provide
foreign exchange liquidity if necessary.
RATING COMMITTEE SUMMARY
The DBRS Sovereign Scorecard generates a result in the BB (high) -
- BB (low) range. The main points discussed during the Rating
Committee include the electoral outlook, prospects for advancing
the reform agenda, and the economy's performance in 2018.
KEY INDICATORS
Fiscal Balance (% GDP): -7.9 (2017); -8.5 (2018F); -7.8 (2019F)
Gross Debt (% GDP): 84.0 (2017); 88.2 (2018F); 90.4 (2019F)
Nominal GDP (USD billions): 2,055 (2017); 2,088 (2018F); 2,198
(2019F)
GDP per capita (USD thousands): 9.9 (2017); 10.0 (2018F); 10.4
(2019F)
Real GDP growth (%): 1.0 (2017); 1.8 (2018F); 2.5 (2019F)
Consumer Price Inflation (%, eop): 2.9 (2017); 3.5 (2018F); 4.1
(2019F)
Domestic Credit (% GDP): 47.1 (2017); 46.8 (June-2018)
Current Account (% GDP): -0.5 (2017); -1.6 (2018F); -1.8 (2019F)
International Investment Position (% GDP): -32.5 (2017); -25.1
(June-2018)
Gross External Debt (% GDP): 32.5 (2017); 32.5 (June-2018)
Foreign Exchange Reserves (% short-term external debt + current
account deficit): 274.9 (2017); 283.6 (June-2018)
Governance Indicator (percentile rank): 53.7 (2016)
Human Development Index: 0.75 (2015)
Notes: All figures are in U.S. dollars unless otherwise noted.
Fiscal Balance and Gross Debt figures are reported for the non-
financial public sector (NFPS) and based on the IMF definition.
NFPS debt includes central, state, and local governments, and
social security funds; it excludes the central bank, state-owned
enterprises, Petrobras, and Electrobras. Domestic Credit refers to
domestic bank credit. Gross External Debt includes inter-company
loans and fixed income securities traded in the domestic market
held by non-residents. Short-Term External Debt is measured on a
residual maturity basis. Governance indicator represents an
average percentile rank (0-100) from Rule of Law, Voice and
Accountability and Government Effectiveness indicators (all World
Bank). Human Development Index (UNDP) ranges from 0-1, with 1
representing a very high level of human development.
==========================
C A Y M A N I S L A N D S
==========================
ALLEGRO CLO II-S: Moody's Assigns B3 Class E Notes Rating
---------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to notes issued by Allegro CLO II-S,
Ltd.:
US$1,600,000 Class X Senior Secured Floating Rate Notes due 2028,
Assigned Aaa (sf)
US$256,000,000 Class A-1 Senior Secured Floating Rate Notes due
2028, Assigned Aaa (sf)
US$44,400,000 Class A-2 Senior Secured Floating Rate Notes due
2028, Assigned Aa2 (sf)
US$19,600,000 Class B Mezzanine Secured Deferrable Floating Rate
Notes due 2028, Assigned A2 (sf)
US$26,000,000 Class C Mezzanine Secured Deferrable Floating Rate
Notes due 2028, Assigned Baa3 (sf)
US$22,000,000 Class D Mezzanine Secured Deferrable Floating Rate
Notes due 2028, Assigned Ba3 (sf)
US$5,500,000 Class E Junior Secured Deferrable Floating Rate Notes
due 2028, Assigned B3 (sf)
RATINGS RATIONALE
Moody's definitive ratings of the rated notes reflect the risks
due to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's is
of the opinion that the collateral manager, AXA Investment
Managers, Inc., has sufficient experience and operational capacity
and is capable of managing this CLO.
Allegro CLO II-S, Ltd. is a managed cash flow CLO. The issued
notes will be collateralized primarily by broadly syndicated
senior secured corporate loans. At least 90% of the portfolio must
consist of first lien senior secured loans and eligible
investments, and up to 10% of the portfolio may consist of second
lien loans and unsecured loans. The portfolio is approximately 95%
ramped as of the closing date.
The Manager will direct the selection, acquisition and disposition
of the assets on behalf of the Issuer and may engage in trading
activity, including discretionary trading, during the
transaction's two year reinvestment period. Thereafter, the
Manager may reinvest unscheduled principal payments and proceeds
from sales of credit risk assets, subject to certain restrictions.
In addition to the seven classes of notes rated by Moody's, the
Issuer issued US$37,800,000 of subordinated notes which will not
be rated.
The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to pay
down the notes in order of seniority.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in August 2017.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. AXA Investment Managers, Inc. investment
decisions and management of the transaction will also affect the
notes' performance.
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in August 2017.
Moody's used the following base-case modeling assumptions:
Par amount: US$400,000,000
Diversity Score: 63
Weighted Average Rating Factor (WARF): 3,100
Weighted Average Spread (WAS): 3.40%
Weighted Average Recovery Rate (WARR): 48.5%
Weighted Average Life (WAL): 7.1 years
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M E X I C O
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UNIFIN FINANCIERA: S&P Affirms Global Scale BB ICR, Outlook Stable
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S&P Global Ratings said it affirmed its global scale 'BB' issuer
credit and issue-level ratings on Unifin Financiera, S.A.B. de
C.V. SOFOM, E.N.R. (Unifin). S&P also affirmed its 'mxA/mxA-1'
national scale issuer credit rating. The outlook remains stable.
S&P said, "Our view that the firm's priority (secured) debt will
represent less than 15% of adjusted assets for the next 12 months,
which supports our 'BB' rating on its senior unsecured notes.
Unifin's unencumbered assets will also cover 2.0x of its rated
unsecured debt.
"Ratings on Unifin reflect its stable and growing business
operations that are highly oriented to pure leasing activities--
primarily in the small- to midsize enterprise sector. Moreover,
the ratings incorporate our forecasted RAC ratio of about 9.9% for
the next 12 months and a risk position that reflects a subpar
reserve coverage with asset quality metrics in line with those of
Unifin's main competitors. Finally, our funding and liquidity
assessment is based on the firm's diversified funding range
compared with the Mexican nonbank financial institution (NBFI)
industry, and its sufficient liquidity levels to support daily
operations and its financial obligations. Unifin's stand-alone
credit profile (SACP) is 'bb'.
"Our stable outlook on Unifin for the next 12 months reflects our
forecasted RAC ratio of 9.9%, which continues to be supported by
steady internal capital generation despite strong loan growth. In
addition, we expect aggressive loan growth to continue while NPAs
remain below 5% of total loans with reserves coverage hovering
between 15%-20% for the same timeframe.
"We could downgrade Unifin in the next 12 months if asset quality
deteriorates more than our expectations, hampering the firm's
bottom-line results.
"If Unifin's projected RAC ratio in the next 12 months
consistently surpasses the 10% threshold, we could raise our
capital, leverage and earnings assessment, which would in turn
lead us to upgrade Unifin."
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P U E R T O R I C O
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PUERTO RICO: Sales Tax Bond Deal Heads to Court by October 15
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Reuters reports that a final agreement to restructure Puerto
Rico's sales tax-backed bonds will be filed by Oct. 15 in federal
court, where a judge overseeing the U.S. commonwealth's bankruptcy
case will decide its fate, parties to the deal said.
A plan support agreement between Puerto Rico, its Sales Tax
Financing Corporation (COFINA), the island's federally created
oversight board, bondholders and bond insurance companies that was
announced, would be the first debt adjustment plan to seek court
approval, according to Reuters.
The report notes that Puerto Rico has been in bankruptcy court
since May 2017 trying to restructure about $120 billion of debt
and pension obligations. A deal with COFINA creditors surfaced
earlier this summer.
"The deal provides for more than a 32 percent reduction in COFINA
debt, gives Puerto Rico approximately $17.5 billion in debt
service savings and enables local retail bondholders in Puerto
Rico to receive a significant recovery," said Natalie Jaresko, the
oversight board's executive director, in a statement obtained by
the news agency.
She added that it paves the way for "achieving a consensual
restructuring of COFINA debt by the end of 2018," the report
relays.
A coalition of senior COFINA bondholders hailed the deal, which
includes investors in senior and junior bonds as well as island
residents who bought the debt, as "a significant milestone for
Puerto Rico on its road to economic revitalization," the report
discloses.
The report says that the agreement could still face a headwind. In
June, a key group of Puerto Rico bondholders who own general
obligation debt opposed the proposed COFINA deal. GO and COFINA
bondholders have long debated the ownership of Puerto Rico's
future sales tax revenue, the report notes.
Puerto Rico's unsecured creditor committee (UCC), moreover, warned
in a court filing that the terms of the COFINA deal would result
in a $28 billion deficit under the commonwealth's most recent
fiscal plan, the report relays.
In a court motion filed on Aug. 13, the UCC, which represented the
commonwealth in negotiating the COFINA settlement framework,
states that these issues must be solved before the committee
supports any plan of adjustment for COFINA, the report discloses.
The report says that Puerto Rico's fiscal board, meanwhile,
expects to again revise the commonwealth's fiscal plan, which was
last certified on June 29. It is unknown whether this revision
will address the issues raised by the UCC.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70
billion, a 68% debt-to-GDP ratio and negative economic growth in
nine of the last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III
of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that
may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets
Inc. is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet,
Rivera & Sifre, P.S.C. and serve as counsel to the Mutual Fund
Group, comprised of mutual funds managed by Oppenheimer Funds,
Inc., and the First Puerto Rico Family of Funds, which
collectively hold over $4.4 billion of GO Bonds, COFINA Bonds, and
other bonds issued by Puerto Rico and other instrumentalities.
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP,
Autonomy Capital (Jersey) LP, FCO Advisors LP, and Monarch
Alternative Capital LP.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ
Management II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed an official committee of retirees and an
official committee of unsecured creditors of the Commonwealth.
The Retiree Committee tapped Jenner & Block LLP and Bennazar,
Garcia & Milian, C.S.P., as its attorneys. The Creditors
Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as
counsel.
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T R I N I D A D & T O B A G O
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PETROLEUM CO: Closure Doesn't Make Sense, Union Says
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Trinidad Express reports that a representative of one of the
Oilfields Workers Trade Union's international affiliates says the
closure of the Petrotrin refinery makes no economic sense and
would decimate south Trinidad.
Former Director of Energy Industries at Industrial in Geneva, Jim
Catterson, said there would be a downward spiral into poverty as
tens of thousands of people would be impacted by the closure,
according to Trinidad Express.
As reported in the Troubled Company Reporter-Latin America on
May 3, 2018, S&P Global Ratings revised its outlook on Petroleum
Co. of Trinidad & Tobago Ltd (Petrotrin) to negative from stable.
S&P said, "We also affirmed our 'BB' long-term corporate credit
and senior unsecured debt ratings on the company. Additionally,
we're keeping its SACP unchanged at 'b-'."
TRINIDAD & TOBAGO: Losing Out on Regional LNG Market
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David Renwick at Trinidad Express reports that Caricom member,
Jamaica, is converting to natural gas for power generation at a
brisk pace but, alas, none of it seems to be coming from the only
indigenous gas producer in the region, Trinidad and Tobago.
It's all being supplied by United States-based companies and,
what's more, they all plan to do what Trinidad and Tobago should
long have been doing -- sending gas on to the rest of the region,
to feed into those power generation plants converting to natural
gas, the report discloses.
***********
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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
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USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
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