/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/180928.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 Friday, September 28, 2018, Vol. 19, No. 193 Headlines A R G E N T I N A ARGENTINA: IMF Boosts Bailout for Crisis-Hit Country BBVA BANCO: Fitch Affirms B+ Long-Term IDR, Outlook Stable COMPANIA GENERAL: Fitch Affirms B LT IDRs; Outlook Now Stable B E R M U D A DIGICEL LIMITED: Extends Refinancing Deadline as Talks Continues B R A Z I L BANCO LA HIPOTECARIA: Fitch Publishes BB+ LT IDR, Outlook Stable D O M I N I C A N R E P U B L I C AES ANDRES: Scrambles as Biggest Power Plant Out Till Feb. DOMINICAN REPUBLIC: Oil Prices Force Gov. to Cut From Budget E C U A D O R CHEVRON CORP: Ecuador Found Liable for Violating Int'l. Law CHEVRON CORP: Ecuadorians Call on Gov't to Reject Hague Ruling M E X I C O CFG HOLDINGS: S&P Affirms 'B' Issuer Credit Rating, Outlook Stable P U E R T O R I C O COLONIAL MEDICAL: Plan and Disclosures Hearing Set for Oct. 18 LA TRINIDAD ELDERLY: Case Summary & 18 Unsecured Creditors T R I N I D A D & T O B A G O PETROLEUM CO: Moody's Reviews B1 CFR, Debt Rating for Downgrade TRINIDAD & TOBAGO: Slowly Recovering From a Deep Recession U R U G U A Y ADMINISTRACION NACIONAL: S&P Affirms 'BB+' ICR, Outlook Stable - - - - - ================= A R G E N T I N A ================= ARGENTINA: IMF Boosts Bailout for Crisis-Hit Country ----------------------------------------------------- BBC News reports that the International Monetary Fund (IMF) has agreed to provide a bigger, faster bailout to Argentina than initially planned in an effort to restore market confidence in the country. The IMF plans to boost its 36-month financing package to $57.1 billion (GBP43 billion) from $50 billion announced previously, according to BBC News. It will make about $50 billion in credit available though 2019 -- $19 billion more than previously anticipated, the report notes. The report relays that the move comes as Argentina faces a budget deficit and economic crisis. Its economy has contracted as the value of the Argentine peso has plunged and a drought has hurt agricultural exports, the report discloses. Alarmed investors have pulled money from the country, leaving the government and companies that hold debt in dollars in turmoil, the report relays. Last month, President Mauricio Macri asked the IMF to accelerate its emergency package, which makes credit available to Argentina, the report notes. The report says that officials plan to use the financing to support the budget. Protests and Strikes As part of its agreement with the IMF, the government has said it will be cut back spending, committing to a balanced budget by 2019 -- a year earlier than planned, the report relays. Christine Lagarde, managing director of the IMF, said she was confident the package -- one of the biggest in IMF history -- would help to restore market confidence in Argentina, while still providing for the "most vulnerable," the report discloses. But the budget plans have prompted protests and strikes in Argentina, stirring memories of the austerity imposed after earlier IMF bailouts, the report notes. Ms. Lagarde said it was "essential" that Argentina's Congress approve the 2019 budget, the report relays. The bailout plan also needs approval from the IMF's executive board, the report discloses. Speaking at a press conference in New York, Ms. Lagarde said: "A great deal of work remains to be done if Argentina is to respond effectively to the current challenging circumstances. That effort is just beginning. The IMF is committed to continue supporting the Argentine authorities in their efforts." 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. BBVA BANCO: Fitch Affirms B+ Long-Term IDR, Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed BBVA Banco Frances S.A.'s (BBVA Frances) local currency (LC) long-term Issuer Default Rating (IDR) at 'B+' and assigned a foreign currency (FC) long-term IDR of 'B' in order to publish the full set of ratings for the bank. The Rating Outlook is Stable. KEY RATING DRIVERS IDRS, SUPPORT RATING AND VIABILITY RATING BBVA Frances' IDRs and Support rating reflect the likelihood of parent support. Fitch views BBVA Frances as a strategically important entity for Spain's Banco Bilbao Vizcaya Argentaria, S.A. (BBVA, A-/Stable). In addition, BBVA Frances' IDR and VR are driven and constrained by Argentina's low sovereign ratings and its volatile economic and operating environments. Fitch expects progress in correcting macroeconomic imbalances, easing of inflation, lower financing constraints and a return to sustained growth will take time to materialize. Despite BBVA's strong financial profile, BBVA Frances's rating uplift from support is limited to one notch above Argentina's Local Currency Long-Term IDR given downside risks of high economic stress, the country's tentative policy reforms and still normalizing relations with creditors. While BBVA Frances' LC IDR is one notch above the sovereign rating, its FC IDR is constrained by the country ceiling of 'B'. While the operating environment highly influences BBVA Frances' VR, Fitch takes into account the benefits from its growing franchise as the fourth largest private sector bank in the country by loans and deposits, with market shares of 8% and 6%, respectively, as of June 30, 2018, and the ample experience of its main shareholder. Fitch also considers the bank's risk appetite and other financial metrics, which are in line with its current VR, even when taking into account inflation. The bank's funding and liquidity profile underpin its VR of 'b'. BBVA Frances has a long track record of a stable base of customer deposits which represented nearly 93% of total funding at June 2018. BBVA Frances also has access to wholesale funding, primarily market debt issuances and lines from local and international banks. BBVA Frances' liquidity is strong for its rating category, with a Liquidity Coverage Ratio (LCR) of 270% at June 2018. Fitch Core Capital to Risk Weighted Assets(FCC) was satisfactory at 14% at end-June 2018. Given BBVA France's lower risk appetite, Fitch expects the bank's capital cushion to remain at comfortable levels over the medium term. Notwithstanding its large retail and middle market corporate portfolios, BBVA Frances has maintained strong asset quality indicators relative to its peers, though inflation blurs international comparisons. At June 2018, it reported an impaired loan ratio of 0.9% which compares favorably to local peers. Reserve coverage as of June 2018 of nearly 215% is also consistently high (not below 200% since 2012) according to its internal policy of exceeding regulatory requirements. The bank's nominal profitability at mid-year 2018 remained satisfactory when compared to peer averages. The bank reported an operating profits/to risk-weighted assets ratio of 4.4% at June 30, 2018, a material improvement from the 2.6% reported at year- end 2017. Nevertheless, this ratio has declined since 2014 due to higher credit and operating costs. However, administrative expenses may moderate in response to the bank's efficiency strategy, which could sustain recent improvements in profitability. RATING SENSITIVITIES IDRS, SUPPORT and VR The bank's IDRs and SR are sensitive to a change in Fitch's views on BBVA's ability and propensity to provide support. The bank's IDRs and VR would also likely move in line with a change in Argentina's sovereign rating. In addition, the bank's IDRs and SR could be negatively affected by changes in the political scene that result in a return to unorthodox policies resulting in political and regulatory intervention in the banking system. These ratings could benefit from a medium term consolidation of a more market friendly political framework. Absent a change in the sovereign rating, the bank's VR could also be negatively affected by an unlikely deterioration in its credit metrics that negatively affects its liquidity position or loss absorption capacity. Specifically, a sustained deterioration in the bank's FCC ratio below 8.5% could be negative for creditworthiness. Fitch considers it unlikely that Argentine banks' VRs could be rated above the sovereign. Fitch has assigned the following ratings to BBVA Frances: -- Foreign Currency Long-Term IDR 'B'; Outlook Stable; -- Foreign and Local Currency Short-Term IDR 'B'. Fitch has affirmed the following ratings of BBVA Frances: -- Local Currency Long-Term IDR at 'B+'; Outlook Stable; -- Viability rating at 'b'; -- Support Rating at '4'. COMPANIA GENERAL: Fitch Affirms B LT IDRs; Outlook Now Stable ------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of Compania General de Combustibles S.A. (CGC) at 'B'. The Rating Outlook has been revised to Stable from Negative. The rating action affects USD300 million of senior unsecured notes due 2021, which are rated 'B'/'RR4' The Stable Outlook reflects the company's improved cash flow generation from operations due to growing production, higher percentage of oil exports and positive impact from the Argentine peso depreciation. CGC's production during the 2Q18 was 36% higher than the average reported for 2017. Furthermore, the company benefited from having approximately 50% of its gas production qualify under the country's plan gas incentives program and from greater client diversification in its oil sales, where nearly 70% was exported. CGC reported an EBITDA for the LTM ended June 2018 of USD192 million, an increase of 137% versus year-end (YE) 2017 and higher than Fitch previous forecast of USD80 million for YE 2017. Fitch recognizes the company continues with its capex plan aimed at increasing production and improving its reserve profile. CGC's leverage profile has improved with total debt to LTM 2Q18 EBITD of 2.5x, down from 4.9x in YE 2017. The company's liquidity position has improved with its reported cash position in 2Q18 covering its short-term debt obligations. CGC's 'B' ratings reflect the company's small production size, its asset concentration, increased exposure to the Argentine government and a required capex plan to improved reserve profile to support its increase in production. CGC somewhat benefits indirectly from its majority owner, Corporacion America, a large Argentine infrastructure holding company, as the controlling shareholder with a 70% stake and the company's ratings consider the possibility of support. The company has alternative liquidity sources to help fund capex that could result from the monetization of its mid-stream assets. On April 17, 2017, CGC announced its intention to search for potential purchasers for its stake in natural gas transportation assets in Argentina. If CGC decides not to monetize its assets, the expected dividend proceeds received from the company's midstream assets (TGN & Gas Andes) can help support its liquidity. Due to Fitch's "Country-Specific Treatment of Recovery Ratings" criteria, a Recovery Rating of 'RR4' is assigned to the company's senior unsecured notes. Per the criteria, Argentina is categorized within Group D as having a soft cap at 'RR4'. This assumes a recovery in the range of 31% to 50%, although a bespoke recovery analysis for the company yields a higher than 70% recovery given a default. KEY RATING DRIVERS Small Production Profile: Despite its growing production profile, CGC's ratings remain constrained in part due to its small size and the low diversification of its blocks. The company has exploration and production interest in 40 concessions in Argentina, its asset base is concentrated, as approximately 96% of the company's proved (1P) reserves, and approximately 95% of the production is in the Austral Basin. This limited diversification exposes the company to operational macroeconomic risks associated with small-scale oil and gas production. Low Hydrocarbon Reserves: Fitch believes CGC's relatively low reserve life of 6.2 years limits its flexibility to reduce capex investments. As of YE 2017, CGC reported 1P reserves of 51.0 million boe, with 79% related to natural gas. The company extended its concessions in the Santa Cruz I and Santa Cruz II areas to 2027, which is expected to improve the company's reserve life to be in-line with the median for Fitch-rated speculative-grade peers. Fitch estimates that the company will drill 55 wells by 2021 at an average cost per well of USD7.0 million to replenish reserves, which Fitch estimates in order to maintain its current reserve life considering Fitch's expected production expansion, CGC will need to drill approximately 70 wells from 2H18 through YE 2020. Negative FCF Despite Better EBITDA: Fitch expects FCF to remain negative through 2020 as the company continues to invest in increasing production while replacing reserves. Fitch estimates funds flow from operations (FFO) will on average be USD145 million from 2018 through 2021 covering nearly 90% of expected capex, not including dividends received from its midstream assets. Fitch estimates CGC will be able to fund its capex plan as it raised USD100 million from a local bond issuance in December 2017, covering 20% of total Fitch estimated capex, with the remainder being financed through FFO and cash on hand. Improved Leverage Profile: CGC's rating outlook stabilization primarily reflects the company's improved capital structure resulting from higher than expected cash flow generation from operations. CGC's leverage, as measured by total debt to EBITDA, improved to 2.5x as of the LTM ended June 2018 from 4.9x as of YE 2017. Fitch estimates total debt to EBITDA will be 1.8x at the end of 2018 and remain at this level through 2021, assuming CGC does not refinance its short-term debt through 2021. The improved leverage profile is driven by a 240% increase in LTM EBITDA compared to YE 2017, explained by 50% of the company's gas production receiving preferential pricing under plan gas (USD7.50 MMBTU in 2018), nearly 70% of oil gas sales sold abroad to high quality off-takers (Vitol, ENAP and Trafigura) and 50% increase in gas production reaching 26,719 boe/d in 1H18. Lastly, the company has benefited from the depreciation of the Argentine Peso, as nearly 100% of the company's petroleum sales and 80% of gas sales are paid in U.S. dollars. Increase in Production: CGC's daily production increased in the 1H18 by 36% to an average of 32,101 boed compared to 2017 average of 23,600 boed. Fitch expects CGC will gradually increase total production to 35,700 boed by 2021, keeping petroleum production flat at around 4,000 boed, but increase gas production from 25,000 boed to nearly 31,000 boed by 2021, growth coming from unconventional production. Exposure to the Government: Fitch estimates that between 15%-20% of CGC's 2018-2019 revenues are associated to Plan Gas subsidies, paid by the Argentine government (B/Stable), who does not have a strong track record of paying this subsidy. For example, the Argentine government has yet to officially announce an agreement to pay the USD1.5 billion of plan gas subsidies for 2017 production, and in November 2017, the government amended the subsidy program to apply to all new and incremental unconventional, or shale and tight, gas production in the Neuquina and Austral basins. Recently, the government has announced that it will no longer approve new projects under the plan gas subsidies in order to cut government expenditures, to comply with IMF conditions. As of the publication of the RAC, Fitch's understanding is that the government has been making plan gas payments for production in 2018, which is evident in CGC's 1H18 figures. DERIVATION SUMMARY CGC's small production size compares favorably to other 'B' rated oil and gas E&P producers, but continues to constrain its rating to the 'B' category. These peers include Frontera Energy (B+/Stable), Gran Tierra Energy (B/Stable) and Geopark (B+/Stable). Over the rating horizon, Fitch expects that CGC will average 35,000 boed through 2021 compared to 40,000 boed for both Gran Tierra Energy and Geopark for the same time period, and less than Frontera Energy at 75,000 boed. Further, CGC reported 51.0 million boe 1P reserves at the end of 2017 equating to a reserve life of 6.2 years, lower than GeoPark's at 9.5 years but higher than Gran Tierra's at 5.9 years and Frontera's at 4.5 years. Fitch expects the company will be able to maintain its reserve life as it continues to increase production size. CGC's capital structure has improved since YE 2017. As of LTM 2Q18, the company's gross leverage measured by total debt to LTM EBITDA is 2.5x, down from 4.9x in YE 2017. Fitch estimates its 2019 gross leverage to be 1.8x in line from Geopark (1.8x) and Gran Tierra (1.7x), but higher than Frontera Energy (0.9x). CGC operates in a lower operating environment, a constraining factor for its ratings. Fitch categorizes Argentina as being an economic environment conducive with the 'B' rating category, compared to Colombia, 'BBB', where Geopark, Gran Tierra and Frontera source a majority if not all of its production. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Oil & gas production to remain between 29,000-35,000 boe/d over the next five years; - Oil prices straight-lining over next five years to Fitch Price Deck assumption of long-term price of USD57.50/bbl; - 50% of gas production receiving plan gas preferential pricing of USD7.50 MMBTU in 2018 decreasing by USD0.50 MMBTU each year until reaching USD6.00 MMBTU in 2021; - Leverage levels remaining flat assuming short-term debt is refinanced; - High capex spending averaging 35% of annual revenues through 2021; - Recovery analysis assuming that CGC would be considered a going-concern in bankruptcy and that the company would be reorganized rather than liquidated. - CGC's going-concern EBITDA estimate would be based on 2017 capex and interest expense and reflects Fitch's view of a sustainable, post-reorganization EBITDA level. - Applying an EV multiple of 5.0x, which is the 10-year historical take-out multiple applied to energy companies in the region. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Although an upgrade is unlikely given the company's revenues are concentrated in Argentina and collects plan gas subsidies from the government, a net production rising consistently to 35,000 boed or more on a sustained basis, coupled with increasing reserve life to or greater than seven years, while maintaining a total debt/EBITDA of 3.0x or less could bode well for the rating. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A downgrade to the ratings of Argentina could result in a negative rating action; -- Given the issuer's high dependence on the subsidies from plan gas, any changes to or cancellation of plan gas that negatively impact the company's collection/cash flows will result in a negative rating action; -- A significant deterioration of credit metrics to total debt/EBITDA of 5.5x or more. Sustained declines in hydrocarbon reserves/production levels to less than 20,000 boe/d. LIQUIDITY Adequate Liquidity: Total cash and equivalents amounted to approximately USD65.2 million as of June 30, 2018, covering USD46.2 million of short-term debt maturing in 2018. Fitch FFO will be between USD125 million-USD150 million from 2018 through 2021. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings: Compania General de Combustibles: -- LT Foreign Currency IDR at 'B'; Outlook revised to Stable from Negative; -- LT Local Currency IDR at 'B'; Outlook revised to Stable from Negative; -- International senior unsecured debt rating at 'B'/'RR4'. ============= B E R M U D A ============= DIGICEL LIMITED: Extends Refinancing Deadline as Talks Continues -------------------------------------------------------------- Lillian Rizzo at The Wall Street Journal reports that Digicel Group Ltd., the dominant mobile provider in the Caribbean, has hit a snag in its effort to gain more time to repay about $3 billion in debt. A group of bondholders has pushed back on the terms of Digicel's refinancing offer. In response, the company extended the deadline for creditors to sign on to the deal to Oct. 19 from Sept. 28, according to The Wall Street Journal. The report notes that Digicel wants to extend the maturities on $2 billion in 8.25% bonds due in 2020 to 2022, and $1 billion in 7.125% bonds due in 2022 to 2024. The Bermuda-based company is part of the telecom empire of Irish businessman Denis O'Brien, who in 1991 founded Esat Telecom Group to compete with Eircom PLC, Ireland's former state-owned telephone company, the report relays. The report notes that holders of more than 60% of Digicel's 2020 and 2022 bonds have entered into a so-called lockup agreement, which states the holders won't tender their Digicel notes in response to the company's proposal, according to a law firm representing the group of bondholders. The law firm, Akin Gump Strauss Hauer & Feld LLP, said it has advised the committee of bondholders since early September, when a number of Digicel's largest bondholders reached out to the firm in an effort to organize a wider group, the report says. Akin Gump said multiple financial institutions that hold about $2.8 billion of Digicel bonds have indicated they considered the proposal unacceptable, the report discloses. "Digicel continues constructive discussions with an ad hoc group of noteholders regarding the exchange offers and consent solicitations," the company said in the news release, the report relays. In addition to Akin, the bondholders committee has hired Moelis & Co. as its financial adviser, the report relays. The hiring of Akin Gump and Moelis was earlier reported by LCD News, the report notes. In late August, Moody's Investors Service Inc. said it viewed Digicel's proposed exchange offer as "distressed," and downgraded the company further into junk territory due to its debt load as well as its belief that more such distressed exchange offers would take place, the report discloses. The report relays that the ratings firm said Digicel's liquidity has weakened in recent quarters as its cash position declines and its debt continues to pile up. The company has been selling assets to generate cash. Digicel is expected to receive $145 million in proceeds from a recently announced tower sale and leasebacks, Moody's said, the report notes. Digicel has operations in 31 markets in the Caribbean, Central America and the Asia Pacific region. In 2015, the company pulled a planned $2.3 billion initial public offering, blaming conditions in emerging markets, The Wall Street Journal reported at the time. The company generated $2.4 billion in revenue in the year ended in March, according to Moody's. As reported in the Troubled Company Reporter-Latin America on July 5, 2018, Moody's Investors Service has changed to negative from stable the outlook on the ratings of Digicel Group Limited ("Digicel", "DGL" or the "company") and Digicel Limited ("DL") and assigned a negative outlook to Digicel International Finance Limited ("DIFL"). At the same time, Moody's has affirmed DGL's B2 corporate family rating (CFR) and B2-PD probability of default rating (PDR), as well as the B1 rating on the unsecured notes of DL and the Ba2 rating on the secured bank credit facilities of DIFL. =========== B R A Z I L =========== BANCO LA HIPOTECARIA: Fitch Publishes BB+ LT IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has published a Long-Term Issuer Default Rating (IDR) of 'BB+' and a Viability Rating (VR) of 'b+' for Banco La Hipotecaria, S.A. Fitch has also assigned La Hipotecaria a Short- Term IDR of 'B' and a Support Rating of '3'. The Rating Outlook for the Long-Term IDR is Stable. KEY RATING DRIVERS IDRS La Hipotecaria's IDRs, National Ratings and senior debt reflect the probability of support from its ultimate shareholder, Grupo ASSA, S.A. (Grupo ASSA), if required. Grupo ASSA is a regional financial conglomerate that mainly operates in the insurance and banking services while maintaining some non-controlling interest in other industries with a presence in Panama, Nicaragua, Costa Rica, El Salvador, Honduras, Guatemala and Colombia. Grupo ASSA currently has a 'BBB-' IDR with a Stable Outlook, which reflects its ability to support La Hipotecaria. In Fitch's opinion, Grupo Assa's propensity to support La Hipotecaria if needed reflects the bank's significant strategic importance to the group's operations. La Hipotecaria shares strong synergies with its main shareholder given its role in complementary market segments for many of its subsidiaries. This allows cross sales among products and services such as the signing of insurance policies that accompany the mortgage credit. Fitch believes there is notable reputational risk for Grupo ASSA and that a default by one of its subsidiaries could have a significant impact on its business. In addition, La Hipotecaria counts on guarantees of its funding instruments from Grupo ASSA, which further demonstrates the group's commitment to its subsidiaries' performance. However, La Hipotecaria has significant independence from its ultimate shareholder, and there is a relatively low level of integration in terms of management and the bank's strategic decisions. Nonetheless, Grupo ASSA does have a presence at the bank and actively participates in its committees and Board of Directors. VR Banco La Hipotecaria specializes in the underwriting, administration and securitization of mortgage loans. Its VR is highly influenced by its niche approach, which solely focuses on the mortgage market and so causes the bank's franchise to be limited. This puts La Hipotecaria at a disadvantage compared to other banks in Panama with higher diversification and larger market shares. In spite of its small size, the bank's business model proves to be efficient enough to compete against larger commercial banks and display adequate financial ratios that compare favorably with the rest of the banking system. The bank is characterized by its low NPL ratios that consistently display levels around 1%, well below the industry's average. La Hipotecaria's profitability ratios are modest but stable, reflecting its relatively risk averse approach business model. The bank's main income stream comes mainly from the origination of mortgage loans but also generates recurring income from its loan portfolio administration fees. Its net interest margin is modest but stable, while its operating efficiency is relatively high and compares unfavorably with many of its peers. La Hipotecaria's funding structure is adequate and well diversified. The bank's funding is balanced between deposits, debt issuances and credit lines. Funding has been ample enough to sustain the company's growth rate and expansions. The predictability of its debt obligations deadlines allows the bank to mitigate any refinancing risk through a precise schedule of its payment obligations. As for the issues of fixed income securities, the classifications of the unsecured tranches and series issued by La Hipotecaria are equal to its national ratings. SUPPORT RATING The bank's Support Rating is based on Fitch's view of Grupo ASSA's ability and propensity to provide support to La Hipotecaria if required. According to Fitch's criteria, La Hipotecaria's 'BB+' IDR results in a support rating of '3'. RATING SENSITIVITIES IDRS Changes in Banco La Hipotecaria's IDRs would reflect modifications in its shareholder's risk profile or changes in the assessment of its ability, or willingness, to provide support to its subsidiary. VR Banco La Hipotecaria's VR could increase given a significant improvement its competitive position and expansion of its market share. Conversely, its VR could be negatively affected by a noticeable reduction of its profitability metrics as well as deterioration of its funding stability or capitalization metrics. The rating actions are as follows: Fitch has published the following ratings for Banco La Hipotecaria, S.A: -- Long-Term Issuer Default Rating (IDR) 'BB+', Outlook Stable; -- Viability Rating 'b+'. Fitch has assigned the following ratings to Banco La Hipotecaria, S.A: -- Short-Term IDR 'B'; -- Support Rating '3'. =================================== D O M I N I C A N R E P U B L I C =================================== AES ANDRES: Scrambles as Biggest Power Plant Out Till Feb. ---------------------------------------------------------- Dominican Today reports that AES Andres power plant executives said they added 110 megawatts to the national grid and another 120 will enter in 30 days, which they affirm will mitigate the current crisis by normalizing the electricity supply to the distributors, after the recent outage of some generators. AES Corp. CEO Andres Gluski made the announcement during a meeting in New York with president Danilo Medina, who attends the annual UN General Assembly, according to Dominican Today. The report relays that Mr. Gluski also said they plan to restore AES' 300 megawatt capacity into the national grid by next February. AES Andres is the country's biggest power plant. "In this way we believe that we maintain the system stabilized to provide the energy that is necessary in the Dominican Republic," said AES executive vice president, Bernerd da Santos, who also participated in the meeting, the report adds. DOMINICAN REPUBLIC: Oil Prices Force Gov. to Cut From Budget ------------------------------------------------------------- Dominican Today reports that budget director Luis Reyes said the Government aims to cut RD$12.0 billion (US$240.0 million) from this year's Budget, which will affect the entire government apparatus. The official said the reduction and other administrative cuts being made don't need congressional approval because they are within the same lines, for the Government to finance the US$300.0 million electricity sector deficit that resulted from the rise in oil prices this year, according to Dominican Today. Interviewed on Hoy Mismo, ColorVision, Reyes said due to the impact of rising oil prices in public finances, the Finance Ministry had to advance the date to prepare the Budget Complementary, which traditionally in the current administration was done for December, "after the design and presentation of the corresponding for the following year, the report relays. Now it was necessary to work simultaneously with the 2019 budget bill and with the 2018 supplementary," the report adds. As reported in the Troubled Company Reporter-Latin America on Sept. 24, 2018, Fitch Ratings has affirmed Dominican Republic's Long-Term, Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. ============= E C U A D O R ============= CHEVRON CORP: Ecuador Found Liable for Violating Int'l. Law ----------------------------------------------------------- An international tribunal administered by the Permanent Court of Arbitration in The Hague has issued an award in favor of Chevron and its indirect subsidiary, Texaco Petroleum Company (TexPet), finding that the Republic of Ecuador violated its obligations under international treaties, investment agreements and international law. The tribunal unanimously held that a $9.5 billion judgment rendered against Chevron in Lago Agrio, Ecuador, in 2011 was procured through fraud, bribery and corruption and was based on claims that had been already settled and released by the Republic of Ecuador years earlier. The tribunal concluded that the fraudulent Ecuadorian judgment "violates international public policy" and "should not be recognised or enforced by the courts of other States." As a matter of international law, this award confirms Chevron is not obliged to comply with the Ecuadorian judgment. The tribunal held that Ecuador breached its obligations under a 1995 settlement agreement releasing TexPet and its affiliates from public environmental claims -- the same claims on which the $9.5 billion Ecuadorian judgment is exclusively based. The tribunal found "TexPet spent approximately $40 million in environmental remediation and community development under the 1995 Settlement Agreement" carried out by a "well-known engineering firm specializing in environmental remediation" and that Ecuador in 1998 executed a final release agreement "certifying that TexPet had performed all of its obligations under the 1995 Settlement Agreement." The tribunal found "no cogent evidence" supporting Ecuador's claim that TexPet failed to comply with the terms of the remediation plan approved by Ecuador. To the contrary, the award recites the sworn testimony of Ecuadorian officials that TexPet's "technical work and environmental work was done well," while Ecuador's national oil company "during more than three decades, had done absolutely nothing" to address its own environmental remediation obligations in the area, even though Ecuador and its national oil company received 97.3% of the oil production revenues from the project. The award further recounts in detail the testimony of numerous former members of the plaintiffs' environmental team and scientific experts who admitted under oath that they found no evidence to support the plaintiffs' environmental claims against Chevron and TexPet. "An esteemed international tribunal, including an arbitrator appointed by Ecuador, has unanimously confirmed that, following completion of an agreed environmental remediation program, Chevron was released by the Republic of Ecuador from the environmental claims that the fraudulent Ecuadorian judgment purports to address," said R. Hewitt Pate, Chevron vice president and general counsel. "Following years of litigation, including visits to the former area of operations by the tribunal, the tribunal found that Ecuador violated the final release agreement that had certified the successful completion of TexPet's remediation." The tribunal also reached the same conclusion as U.S. courts regarding the issue of judicial fraud. "The tribunal found extensive evidence of fraud and corruption by members of the Ecuadorian judiciary acting in collusion with American and Ecuadorian lawyers. This award is consistent with rulings by courts in the United States, Argentina, Brazil, Canada and Gibraltar confirming that the Ecuadorian judgment is unenforceable in any country that respects the rule of law," said Pate. "Indeed, the tribunal explicitly found that it would be contrary to international law for the courts of any other State to recognize or enforce the fraudulent Ecuadorian judgment." In more than 500 pages, the tribunal's award details the evidence of the Lago Agrio plaintiffs' legal team's fraud and corruption in Ecuador, finding the evidence to be "overwhelming." The tribunal concluded: "Short of a signed confession by the miscreants . . . the evidence establishing 'ghostwriting' in this arbitration 'must be the most thorough documentary, video, and testimonial proof of fraud ever put before an arbitral tribunal.'" The tribunal found that Nicolas Zambrano, the Ecuadorian judge purported to have drafted the Lago Agrio judgment, did not in fact draft the judgment but rather, "in return for his promised reward, allowed certain of the Lago Agrio Plaintiffs' representatives [including attorneys Fajardo and Donziger], corruptly, to 'ghostwrite' at least material parts of the Lago Agrio Judgment." The tribunal described the conduct as "grossly improper by any moral, professional and legal standards." Finding that "judicial bribery must rank as one of the more serious cases of corruption, striking directly at the rule of law, access to justice and public confidence in the legal system; and also, as regards the foreign enforcement of a corrupt judgment, at the law of nations," the tribunal held Ecuador responsible for denying justice to Chevron. The tribunal also found that the plaintiffs' legal team had inappropriate secret meetings with several judges who presided over the litigation, blackmailed one of the presiding judges, bribed the supposedly independent court-appointed environmental expert Richard Stalin Cabrera, ghostwrote the Cabrera report on which the judgment relies for environmental findings, orchestrated collusive criminal proceedings against TexPet's lawyers, paid bribes to former judge Alberto Guerra to draft orders for Zambrano, and devised and implemented a "covert" and "nefarious" plan to ghostwrite the judgment which then Judge Zambrano issued under his name in exchange for a promised $500,000 bribe payable from enforcement proceeds. Comprised of three preeminent international arbitrators, the tribunal issued its award unanimously. The tribunal's award aims to "wipe out all the consequences" of Ecuador's internationally wrongful actions, and it grants Chevron several forms of relief. The tribunal orders Ecuador to take immediate steps to remedy its internationally wrongful conduct, including rendering the $9.5 billion judgment unenforceable, precluding the Plaintiffs or any interested party from enforcing the judgment, and ensuring that Chevron has no liability or responsibility for the judgment. It also orders Ecuador to abstain from receiving any proceeds from the fraudulent judgment, and to promptly return any such proceeds that come into its possession. The award holds Ecuador liable for any cost or damage to Chevron should the judgment ever be enforced anywhere in the world. Finally, the tribunal orders Ecuador to compensate Chevron for any damages arising from the fraudulent Judgment. The tribunal will address the extent of damages for which Ecuador must compensate Chevron in the next and final phase of the arbitration. Pate concluded: "Ecuador's executive and judicial branch officials are now different from those involved in the events at issue in this award. Chevron takes no pleasure in any dispute with a sovereign nation. The company invites the government of Ecuador to repudiate the fraudulent scheme and make constructive efforts to meet its own long unfulfilled environmental obligations." Background information As found by the tribunal, Chevron has never operated or had assets in Ecuador. Texaco Petroleum (TexPet), which became an indirect subsidiary of Chevron following Chevron's acquisition of Texaco Inc. in 2001, was a minority partner in an oil production consortium in Ecuador along with the state-owned oil company, Petroecuador, from 1964 to 1992. Petroecuador took over TexPet's share of the oil operations in 1992. Pursuant to a 1995 agreement with Ecuador, TexPet agreed to remediate certain environmental impacts in the former concession area while Petroecuador assumed responsibility for performing any remaining environmental cleanup. To perform the remediation work, TexPet engaged a well-known engineering firm specializing in environmental remediation. The government of Ecuador oversaw and certified the successful completion of TexPet's remediation and fully released TexPet from further environmental liability. Petroecuador failed to conduct the cleanup it promised and has continued to operate and expand its oil operations for more than 25 years. Chevron filed an international arbitration claim against the Republic of Ecuador in 2009 pursuant to the U.S.-Ecuador Bilateral Investment Treaty seeking to hold Ecuador accountable for breaching the settlement agreement with TexPet and to enforce the releases. Chevron then amended the claim in 2012 to include the denial of justice that occurred through the Ecuadorian court's fraud and corruption during litigation and the resulting fraudulent $9.5 billion judgment. The tribunal, administered by the Permanent Court of Arbitration in The Hague, said the Republic of Ecuador violated its international law and treaty obligations by issuing, affirming, and enforcing a fraudulent judgment against Chevron, because the Lago Agrio litigation was marred by fraud, bribery, and coercion perpetrated by the Plaintiffs' attorneys in collusion with Ecuador's courts. The award was issued unanimously by all three members of the tribunal, including Ecuador's appointed arbitrator. In 2014, a U.S. federal court found that the Ecuadorian judgment was the product of fraud and racketeering activity, including extortion, money laundering, wire fraud, witness tampering, Foreign Corrupt Practices Act violations and obstruction of justice. The court also prohibited enforcement of the Ecuadorian judgment in the United States. That decision is now final after having been unanimously affirmed by the court of appeal and denied review by the Supreme Court. Other attempts to enforce the judgment in jurisdictions around the globe have also failed: In January 2017, a Canadian court rejected an attempt to enforce the Ecuadorian judgment against Chevron's Canadian subsidiary. An appeals court upheld this decision in May 2018. In November 2017, Brazil's Superior Court of Justice unanimously rejected an attempt to enforce the Ecuadorian judgment in Brazil. Brazil's Deputy Prosecutor General stated the judgment was "issued in an irregular manner, especially under deplorable acts of corruption." In October 2017, a court in Argentina denied recognition of the Ecuadorian judgment. An appeals court upheld the decision in July 2018. In December 2015, the Supreme Court of Gibraltar issued a judgment against Amazonia Recovery Ltd., a Gibraltar-based company set up by the plaintiffs' attorneys to receive and distribute funds resulting from the Ecuadorian judgment, awarding Chevron $28 million in damages, and issued a permanent injunction against Amazonia to prevent the company from assisting or supporting the case against Chevron in any way. The court issued a similar ruling in May 2018 against directors of Amazonia, Frente de Defensa de la Amazonia, Ecuadorian attorney Pablo Fajardo, and Servicios Fromboliere for their role in attempting to enforce the ruling, this time awarding $38 million in damages to Chevron. Chevron Corporation is one of the world's integrated energy companies, with subsidiaries that conduct business worldwide. The company is involved in virtually every facet of the energy industry. Chevron Corporation's subsidiaries explore for, produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and lubricants; manufacture and sell petrochemical products; generate power and produces geothermal energy; provide energy efficiency solutions; and develop the energy resources of the future, including biofuels. Chevron Corporation is based in San Ramon, California. CHEVRON CORP: Ecuadorians Call on Gov't to Reject Hague Ruling -------------------------------------------------------------- EFE News reports that around 50 Indians from Ecuador's Amazon region gathered outside the federal Attorney General's Office in this capital to demand the government reject an arbitration ruling in The Hague in favor of American oil supermajor Chevron Corp. "The Ecuadorian Amazon demands respect," "Chevron Guilty" and "The Amazon is Dying and Justice is Dying" were some of the signs held up by those taking part in the demonstration, according to EFE News. Chevron Corporation -- http://www.chevron.com/-- through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. =========== M E X I C O =========== CFG HOLDINGS: S&P Affirms 'B' Issuer Credit Rating, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings affirmed its long-term 'B' issuer credit rating on CFG Holdings, Ltd. (CFGLTD). The outlook is stable. The rating on CFGLTD reflects its status as a non-operating holding company. Therefore, the rating on the company is one notch below its consolidated entities' creditworthiness. S&P said, "The stable outlook reflects our belief that for the next 12 months, CFGLP's funding profile will remain similar while it maintains a solid capital base. It also reflects our expectations that the company will maintain its origination standards and modest growth levels, supporting slightly better asset quality metrics." ====================== P U E R T O R I C O ====================== COLONIAL MEDICAL: Plan and Disclosures Hearing Set for Oct. 18 -------------------------------------------------------------- Bankruptcy Judge Brian K. Tester conditionally approved Colonial Medical Management Corp.'s disclosure statement, filed on Sept. 17, 2018, referring to a chapter 11 plan. Acceptances or rejections of the Plan may be filed in writing on/or before 10 days prior to the date of the hearing on confirmation of the Plan. Any objection to the final approval of the Disclosure Statement and/or the confirmation of the Plan must be filed on/or before 10 days prior to the date of the hearing on confirmation of the Plan. A hearing for the consideration of the final approval of the Disclosure Statement and the confirmation of the Plan will be held on Oct. 18, 2018 at 11:00 AM, with shortened notice, at the U.S. Bankruptcy Court, U.S. Post Office and Courthouse Building, 300 Recinto Sur, Courtroom No. 1, Second Floor, San Juan, Puerto Rico. Class 3 - General Unsecured Claims are impaired and will receive 20% payable in equal monthly payments starting the 13th month as of the date of the confirmation of the plan. Municipio de Anasco's claim no. 12 is disputed. If the claim is not disallowed as requested by the Debtor, the Debtor proposes: (A) continuing the payment of the rent as per the contract and until the expiration date in 2020; (B) a lump sum payment of $60,000 payable on or before six months of the effective day of the plan; and (C) $2,000 monthly depending upon the amount settled starting after 30 days of payment of the lump sum; or (D) a lump sum payment of $60,000 payable on or before six months of the effective of the plan, the consignment and/or the assignment of moneys received from the commercial spaces located in the property operated by the Debtor after thirty (30) days of the payment of the lump sum; and (E) $2,000 monthly depending upon the amount settled starting after 30 days of payment of the lump sum; and (F) an adjustment in the monthly rent to the amount of $2,500. Payments and distributions under the Plan will be funded by the income after deducting operational expenses of the services provided by the business. A copy of the Disclosure Statement from PacerMonitor.com is available at https://tinyurl.com/ycau3o2q at no charge. About Colonial Medical Colonial Medical Management Corp. is an ambulatory health care clinic located in Anasco, Puerto Rico. Its practice location is listed as Carretera 402 Km 1.8 Bo. Marias Anasco, Puerto Rico. The Debtor previously sought bankruptcy protection (Bankr. D.P.R. Case No. 14-01922) on March 13, 2014. Colonial Medical sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 17-06925) on Nov. 21, 2017. In the petition signed by Luis Jorge Lugo Velez, its president, the Debtor estimated assets of less than $50,000 and liabilities of $1 million to $10 million. Judge Brian K. Tester presides over the case. Ada Conde, Esq., at 1611 Law and Justice for All, Inc., is the Debtor's bankruptcy counsel. The U.S. Trustee appoints Edna Diaz De Jesus, the Puerto Rico State Patient Care Ombudsman, as the Patient Care Ombudsman. LA TRINIDAD ELDERLY: Case Summary & 18 Unsecured Creditors ---------------------------------------------------------- Debtor: La Trinidad Elderly, LP, SE PO Box 12032 San Juan, PR 00914 Business Description: La Trinidad Elderly LP SE is a privately held company in San Juan, Puerto Rico engaged in activities related to real estate. Chapter 11 Petition Date: September 25, 2018 Case No.: 18-05549 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Hon. Brian K. Tester Debtor's Counsel: Wigberto Lugo Mender, Esq. LUGO MENDER GROUP, LLC Centro Internacional De Mercadeo 100 Carr 165 Suite 501 Guaynabo, PR 00968 Tel: 787 707-0404 Email: wlugo@lugomender.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $10 million to $50 million The petition was signed by Jorge A. Rios Pulperio, president-managing partner. A full-text copy of the petition containing, among other items, a list of the Debtor's 18 unsecured creditors is available for free at: http://bankrupt.com/misc/prb18-05549.pdf ================================ T R I N I D A D & T O B A G O ================================ PETROLEUM CO: Moody's Reviews B1 CFR, Debt Rating for Downgrade --------------------------------------------------------------- Moody's Investors Service placed Petroleum Co. of Trinidad & Tobago's B1 corporate family rating and senior unsecured debt ratings on review for downgrade. This rating action was based on the lack of clarity regarding Petrotrin's new business profile and strategy as well as increasing liquidity risk related to the approaching maturity of the 2019 bonds. Ratings placed under review: Issuer: Petroleum Co. of Trinidad & Tobago (Petrotrin) Corporate Family Rating, Placed Under Review for Downgrade, currently B1 Senior Unsecured Regular Bond/Debenture, Placed Under Review for Downgrade, currently B1 Underlying Senior Unsecured Regular Bond/Debenture, Placed Under Review for Downgrade, currently B1 Outlook Actions: Issuer: Petroleum Co. of Trinidad & Tobago (Petrotrin) Outlook, Changed To Rating Under Review From Stable RATINGS RATIONALE Petrotrin has a weak financial condition, reflected in its high adjusted debt leverage of 6.2 times and low adjusted interest coverage of 2 times in March 2018. In addition, the government recently announced that it will close Petrotrin's refinery and the company will focus on its upstream exploration and production business. Petrotrin's new business profile and strategy is still unclear, which put to question its medium-term financial prospects. In 2017, the company's oil and gas production was 49,084 boe, which is considered small in the universe of exploration and production companies. Petrotrin also faces increased liquidity risk related to $850 million in global bonds that mature in August 2019. Petrotrin's total adjusted debt in March 2018 amounted to close to $2 billion, out of which about $600 million was short term debt. Although Moody's believes that the level of implicit government support to the state-owned company has not changed and continues to be very high, Petrotrin's weak financial condition and liquidity, combined with uncertainties regarding the viability of its business transformation, raise questions about its intrinsic credit profile. During the ratings review, Moody's will focus on Petrotrin's business plan and strategy regarding oil and gas exploration and production activities, including operating efficiency and earnings prospects, technology capability, and the size and sources of capital needed to sustain or increase reserves and production. The analysis will also review Petrotrin's plans around sale of fuel in the country as well as the company's financial management plans and alternative sources of liquidity. Based in Pointe-a-Pierre, Trinidad & Tobago, Petrotrin is an integrated petroleum company 100% owned by the government. The company has an effective monopoly position in oil refining and wholesale marketing operations and some exploration and production activity. Petrotrin owns the country's sole refinery, which has a crude distillation capacity of 175,000 bpd, with a full conversion capacity of 168,000 bpd and a Nelson complexity rating of 8.6. The methodologies used in these ratings were Refining and Marketing Industry published in November 2016, and Government- Related Issuers published in June 2018. TRINIDAD & TOBAGO: Slowly Recovering From a Deep Recession ----------------------------------------------------------- On August 31, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Trinidad and Tobago and considered and endorsed the staff appraisal without a meeting. Executive Board Assessment Trinidad and Tobago is slowly recovering from a deep recession. The economy continued to contract but at a slower pace, underpinned by the strong recovery in gas production, while weak activity in construction, financial services, and trade, continued foreign exchange (FX) shortages, and slow pace of public investment dampened non-energy sector growth. Positive growth should return from 2018 as the recovery takes hold in both sectors. Good progress has been made in fiscal consolidation through spending cuts, but public debt continued to rise, approaching the government's soft target of 65 percent of GDP. The external position is weaker than the level consistent with medium- term fundamentals and desirable policies, but gross international reserves provide significant financial buffers, along with the Heritage and Stabilization Fund (HSF), although reserves are projected to fall gradually given the current FX regime. The financial sector remains stable, with profitable, well-capitalized banks, while the recent decline in asset quality, rising household debt, large domestic and regional sovereign exposures, and an interconnected financial system create pockets of vulnerability. Economic prospects are expected to improve over the medium term, but remain heavily dependent on the energy sector. The medium-term growth, fiscal and external outlook is vulnerable to negative surprises in energy prices and output, a sizeable primary deficit, and elevated levels of public debt. Possible delays in completing the ongoing fiscal adjustment and reforms, persistence of FX shortages, tightening of financial conditions, and ongoing regional financial sector challenges also tilt the risks to the downside. A multi-pronged strategy is needed to ensure a sustained recovery, and safeguard fiscal and external sustainability. Such a strategy should aim at improving the economy's resilience to future shocks, focusing on: (i) completing the fiscal adjustment to put the public debt on a downward trajectory to safeguard sustainability, while reducing the economy's over-reliance on the energy sector; (ii) safeguarding financial stability; and (iii) creating an enabling environment for the non-energy sector as an engine of growth, by removing the obstacles to its development, while increasing transparency of the operating environment for the energy sector. The authorities should take advantage of the impact higher energy prices had on the fiscal position and complete the ongoing adjustment, given the inherent volatility in energy prices. Efforts should focus on speedy implementation of the delayed revenue reforms, finalizing the energy taxation reform, and reducing reliance on noncore revenues, including through increased tax compliance. Improved efficiency and containment of public spending should continue. Further cost savings from increased utility tariffs and reduced transfers and subsidies should be redirected to the most vulnerable segments of society and public investment targeted at closing skills and infrastructure gaps to reduce adverse impacts of adjustment. Paced over the medium term, an adjustment equivalent to 4.4 percent of GDP should create fiscal space to confront future shocks, alleviate market concerns about the adequacy of adjustment, and put the public debt on a downward trajectory to safeguard sustainability. An appropriate Medium-Term Fiscal Framework (MTFF) could provide a systematic tool for countercyclical fiscal policy and help insulate the economy from energy price swings. Adopting an appropriate formal fiscal target within a clearly-communicated MTFF to guide fiscal policy could provide a tool to anchor fiscal adjustments. The HSF should be fully integrated with the MTFF, by linking transfers to/from it to the fiscal target. Such a mechanism can shield the government from pressure to deviate from the adjustment path, and allow the HSF to build reserves during revenue booms to use during downturns. Managing public debt and the HSF in an integrated framework may limit situations where the government must borrow to save into the HSF. Establishing a medium-term debt strategy may clarify the desired debt composition and limit adverse implications of borrowing strategies. The government should settle the overdraft balance with the Central Bank of Trinidad and Tobago (CBTT), and rely on market-based financing. The continued state of FX market imbalance must be addressed on an urgent and sustained basis. Notwithstanding the reduced tightness in the market, owing to increased FX inflows from energy companies, continued FX shortages affect market confidence, raise the cost of doing business, hampers non-energy sector activity, and could result in responses that further feed shortages. The authorities could take advantage of the current relatively stable period with low inflation and progress in fiscal consolidation to address the shortages, while minimizing distortions. Going forward, the exchange rate could play a more active role in an economy exposed to frequent terms-of-trade shocks and help manage the transition to a more balanced FX market. Allowing gradually some market forces in determining the exchange rate (e.g., within a widening band) could facilitate adjustment to external shocks, help restore competitiveness, and safeguard foreign reserves. Permitting two-way exchange-rate variation could help reduce incentives for FX-hoarding and one-way currency bets, while allowing the exchange rate to anchor inflation expectations with some scope for flexible monetary policy. Such a move requires careful design and implementation to avoid adverse balance-sheet problems or second-round effects and needs to be supported by a prudent fiscal, monetary, financial, and structural policy mix, adequate safety nets, and well-designed intervention and communication strategies. Preserving financial stability calls for careful monitoring of the sources of systemic risk and swift implementation of the ongoing reforms. Staff welcomes the authorities' cautious and proactive approach, given a highly-indebted household sector, bank-sovereign linkages domestically and regionally, and rising interest rates in a complex, interconnected financial system. Efforts must focus on risk-based, consolidated, cross-border supervision with appropriate prudential regulations, and completing the ongoing regulatory reforms, including Basel II, the Insurance Law, and nonbank supervisory frameworks. Trends in Correspondent Banking Relationships (CBRs) should be systematically monitored, given the ongoing weaknesses in AML/CFT and tax transparency regimes. Ensuring compliance with international standards, risk-based supervision, and complete legislative processes should accompany banks' ongoing due-diligence, relationship-maintenance, and risk- management efforts. A structural reform agenda should create an enabling environment for the non-energy sector, and boost its potential to support sustainable growth and resilience. Institutional reforms should focus on improved tax collection and contract enforcement and strengthening existing legal frameworks that hinder legislative- passage of ongoing reforms. Reduced cost of doing business, addressing crime (with prevention and response efforts), reducing skills gaps (with ongoing training programs), and sustained government support in removing obstacles to diversification within and outside the energy sector should help reduce heavy reliance on the energy sector, enhance FX-earning potential, and attract foreign investment. The quality and timeliness of data continue to present a significant challenge to surveillance and policymaking. Staff welcomes the progress made, and calls for further efforts to complete data improvements needed for surveillance, prioritize operationalization of the independent statistical authority, and enhance interagency cooperation. It is recommended to hold the next Article IV consultation on the standard 12-month cycle. ============= U R U G U A Y ============= ADMINISTRACION NACIONAL: S&P Affirms 'BB+' ICR, Outlook Stable -------------------------------------------------------------- S&P Global affirmed its 'BB+' issuer credit rating on Administracion Nacional de Combustibles, Alcohol y Portland (ANCAP). S&P also revised the company's stand-alone credit profile (SACP) upwards to 'b+' from 'b'. The outlook remains stable. S&P said, "Our 'BB+' credit rating on ANCAP continues reflects our view that there's a very high likelihood that the Republic of Uruguay (BBB/Stable/A-2) would provide timely and sufficient extraordinary support to the company in the event of financial distress. Our assessment incorporates our view of ANCAP's very important role as the sole petroleum importer, refiner, and supplier of refined products to Uruguay's distributors, and its very strong link with the government, particularly regarding the budget approval process, debt authorization, and tax payments." The SACP revision reflects the continued improvement of the company's operating and financial performance amid higher fuel prices. This is because the government has imposed greater discipline on public-sector enterprises, including ANCAP, in order to lead to a surplus and reduce fiscal deficit. In addition, after the maintenance stoppage that ANCAP performed in 2017, the refinery's efficiency has improved, as seen in record levels of 8.2 million of barrels processed during the first half of 2018. S&P said, "Therefore, we now expect ANCAP's EBITDA to range between $220 million and $250 million, debt to EBITDA at 2.5x- 3.0x, and free operating cash flow to debt of approximately 10%. Although it has improved, we still believe that ANCAP's cash flow generation is very volatile, because it ultimately depends on discretionary fuel price increases, which the government must approve. In addition, volatility to our analysis stems from ANCAP's debt that's mostly denominated in dollars while its cash flow generation is in domestic currency, although linked to the dollar." *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2018. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. 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