/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/190716.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, July 16, 2019, Vol. 20, No. 141 Headlines A N T I G U A A N D B A R B U D A LIAT: Antigua Prime Minister 'Not Aware' Talks Stalled LIAT: Shares Divesting Negotiation Continue A R G E N T I N A ARGENTINA: IMF Approves US$5.4 Billion Disbursement ARGENTINA: Moody's Affirms B2 Issuer Ratings, Alters Outlook to Neg B R A Z I L BRF S.A.: S&P Affirms 'BB-' Issuer Credit Rating, Off Watch Pos. OURO VERDE: Fitch Raises IDRs to B, Outlook Positive C O S T A R I C A INSTITUTO COSTARRICENSE: Fitch Affirms B+ IDRs, Outlook Negative J A M A I C A DIGICEL GROUP: Moody's Downgrades CFR to Caa2, Outlook Negative M E X I C O BAJA CALIFORNIA: Moody's Lowers Issuer Rating to B2, Outlook Neg. UNIFIN FINANCIERA: Fitch Rates USD450MM Sr. Unsec. Notes Final 'BB' P U E R T O R I C O ADVANCE PAIN: Case Summary & Unsecured Creditors EL PATIO BBQ: Seeks Court Approval to Hire Accountant EL PATIO BBQ: Seeks to Hire Hatillo Law Office as Counsel J.C. PENNEY: Egan-Jones Withdraws CCC- Sr. Unsec. Debt Ratings PUERTO RICO: Lawmakers Advance Bill to Boost Medicaid Funding V E N E Z U E L A PETROLEOS DE VENEZUELA: Trading Chief Leaves as Exports Fall - - - - - ===================================== A N T I G U A A N D B A R B U D A ===================================== LIAT: Antigua Prime Minister 'Not Aware' Talks Stalled ------------------------------------------------------ Winn reports that the Antigua and Barbuda government said it is not aware that negotiations with Barbados regarding the sale of the shares of the cash-strapped regional airline, LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, owned by Bridgetown are in limbo. Media reports in Barbados had suggested that the talks, which began, had broken down after only "a few hours," according to Winn. But in a WhatsApp message sent to the Caribbean Media Corporation (CMC), Prime Minister Gaston Browne said that he is "not aware that it has stalled", adding, "not to my knowledge," the report notes. Mr. Browne said that "a counter offer was made by Antigua" telling CMC he would not be disclosing the counter offer "at this time, the report relays. "I am not at liberty to discuss the details," Mr. Browne added. Barbados's negotiating team is led by Attorney General Dale Marshall and includes the Minister for Tourism Kerrie Symmonds and Director of Finance and Economic Affairs Ian Carrington, the report relays. The Barbados media reports had indicated that Bridgetown was not impressed with St John's initial proposals, the report notes. Antigua and Barbuda is seeking to become the largest shareholder government of the airline and is in negotiations with Barbados to acquire most of that country's shareholding in the Antigua-based airline, the report says. The other shareholders are Dominica, St Vincent and the Grenadines and Grenada, the report relays. Antigua and Barbuda currently holds 34 per cent of the shares and if it succeeds in convincing Bridgetown to part with its LIAT shares, would have 81 per cent of the airline that employs over 600 people and operates 491 flights weekly across 15 destinations, the report notes. St John's said it would seek to acquire the LIAT shares owned by Barbados through a take-over of the liability of Barbados to the Caribbean Development Bank (CDB), the report adds. About LIAT LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, is an airline headquartered on the grounds of V. C. Bird International Airport in Antigua. It operates high-frequency inter-island scheduled services serving 15 destinations in the Caribbean. The airline's main base is VC Bird International Airport, Antigua and Barbuda, with bases at Grantley Adams International Airport, Barbados and Piarco International Airport, Trinidad and Tobago. The airline is owned by seven Caribbean governments, with three being the major shareholders: Barbados, Antigua & Barbuda and St. Vincent and the Grenadines along with Dominica(94.7 %); other Caribbean governments, private shareholders and employees (5.3%). In the last few years, LIAT has been challenged with financial difficulties, often needing additional funding as the airline dealt with the high cost of operations. In November 2016, the Barbados government defended LIAT's operations, even as opposition legislators called for a cessation of the business. In early 2015, LIAT offered early retirement packages to employees in efforts to downsize. In 2014, LIAT knew it had to deal with unprofitable routes to make operations viable. In the third quarter of 2013, the airline's top management was shaken, with news Chief Executive Officer Captain Ian Brunton's sudden resignation. LIAT's current chief executive officer is Julie Reifer-Jones, chairman is Jean Holder, and chief financial officer is Rojer Inglis. Dr. Ralph Gonsalves, prime minister of St. Vincent & the Grenadines, serves as chairman of LIAT shareholders. LIAT: Shares Divesting Negotiation Continue ------------------------------------------- Winn reports that Antigua and Barbuda Prime Minister Gaston Browne is disputing claims that negotiations between his country and Barbados to purchase Bridgetown's LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, shares have broken down. A Barbados Today report indicated that the Barbados Government wants Antigua and Barbuda to pay US$44 million dollars, almost EC$100 million dollars for the shares, according to Winn. That sum is linked to Barbados' debt to the Caribbean Development Bank for the purchase of three airplanes for LIAT, the report notes. However, Prime Minister Browne says the sum put forward by the Barbados negotiating team is exorbitant, and he has been in touch with Prime Minister Mia Mottley making that case, the report discloses. Mr. Browne explained, "My understanding is that the planes are worth between US$10 and US$12 million dollars apiece. Let's say it's even US$12 million apiece that's US$36 million dollars, Barbados owns about let's say 50 percent, not quite 50 but just for simple mathematics let's say 50 percent, it means therefore that the debt associated with the planes and I'm looking at it based on the value of the planes will be US$18 million. So if we decided that we want to buy 50 percent of the Barbados shares then the 50 percent would be US$9 million. We are aware that Barbados would have put in additional funds over the years to support LIAT but as far as we're concerned those are sunk costs, Barbados would have already gotten the benefits of those investments. Antigua had to treat all of its prior investment as a sunk cost, so there is a precedent for that already and what we are saying now is that any additional investment that Barbados would have given to LIAT those are sunk costs so we are not concerned about those." Prime Minister Browne appeared to signal his disappointment with the Antigua and Barbuda negotiating team. About LIAT LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, is an airline headquartered on the grounds of V. C. Bird International Airport in Antigua. It operates high-frequency inter-island scheduled services serving 15 destinations in the Caribbean. The airline's main base is VC Bird International Airport, Antigua and Barbuda, with bases at Grantley Adams International Airport, Barbados and Piarco International Airport, Trinidad and Tobago. The airline is owned by seven Caribbean governments, with three being the major shareholders: Barbados, Antigua & Barbuda and St. Vincent and the Grenadines along with Dominica(94.7 %); other Caribbean governments, private shareholders and employees (5.3%). In the last few years, LIAT has been challenged with financial difficulties, often needing additional funding as the airline dealt with the high cost of operations. In November 2016, the Barbados government defended LIAT's operations, even as opposition legislators called for a cessation of the business. In early 2015, LIAT offered early retirement packages to employees in efforts to downsize. In 2014, LIAT knew it had to deal with unprofitable routes to make operations viable. In the third quarter of 2013, the airline's top management was shaken, with news Chief Executive Officer Captain Ian Brunton's sudden resignation. LIAT's current chief executive officer is Julie Reifer-Jones, chairman is Jean Holder, and chief financial officer is Rojer Inglis. Dr. Ralph Gonsalves, prime minister of St. Vincent & the Grenadines, serves as chairman of LIAT shareholders. ================= A R G E N T I N A ================= ARGENTINA: IMF Approves US$5.4 Billion Disbursement --------------------------------------------------- The Executive Board of the International Monetary Fund (IMF) completed the fourth review of Argentina's economic performance under the 36-month Stand-By Arrangement (SBA) that was approved on June 20, 2018. The completion of the review allows the authorities to draw SDR 3.9 billion (about US$5.4 billion), bringing total disbursements since June 2018 to SDR 31.91371 (about US$44.1 billion). Following the Executive Board discussion of Argentina's economic plan, Mr. David Lipton, the IMF's Acting Managing Director and Chair, stated: "The Argentine authorities continue to show a strong commitment to their economic policy program, meeting all the applicable targets under the Fund-supported program. While it has taken time, these policy efforts are starting to bear fruit. Financial markets have stabilized, the fiscal and external positions are improving, and the economy is beginning a gradual recovery from last year's recession. The Fund is strongly supportive of these important policy efforts. "Although inflation is still high, it is now on a downward path that is expected to continue in the coming months. The BCRA's prudent management of monetary policy remains an essential anchor for both the exchange rate and the disinflation process. "The Argentine government has consistently demonstrated its commitment to fiscal discipline and has well-exceeded its fiscal targets for March and June. The authorities have asked the IMF to support raising the end-September primary balance target as a signal of their priority of ensuring that Argentina's debt-to-GDP ratio is placed decisively on a downward path. "The government was able to meet its fiscal targets while also protecting social programs and using fiscal tools to shield the most vulnerable from the effects of the recession. The authorities have also requested the IMF to support an expansion of the social spending floor to incorporate assistance programs targeted at adults without children and low-income working mothers. These commendable efforts will both expand coverage of the social safety net and help improve gender equity. "The authorities' efforts to increase rollover rates on public debt and to lengthen the maturity of new debt issuance should help mitigate financing risks in the period ahead. Ongoing efforts to improve the functioning of local sovereign debt markets will help improve market liquidity and lower financing costs. "Steadfast implementation of the policies underlying the IMF-supported program will be critical for continued progress. As macroeconomic stability becomes more entrenched, policy efforts will need to focus more on reinvigorating plans for structural reforms. The recent MERCOSUR-EU trade agreement is an important step in that direction. Further efforts are needed to redesign the tax system; increase competition in domestic product markets; and deepen efforts to strengthen governance and confront corruption. Such reforms have significant potential to raise Argentina's growth potential, create jobs, reduce poverty, and improve the standard of living for all Argentineans." About Argentina Argentina is a country located mostly in the southern half of South America. It's capital is Buenos Aires. Mauricio Macri is the incumbent president of Argentina. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019 according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and--in the recent decades--increasing poverty. Standard & Poor's credit rating for Argentina stands at B with stable outlook (November 2018). Moody's credit rating for Argentina was last set at B2 with stable outlook (November 2017). Fitch's credit rating for Argentina was last reported at B with negative outlook (November 2018). DBRS's credit rating for Argentina is B with stable outlook. ARGENTINA: Moody's Affirms B2 Issuer Ratings, Alters Outlook to Neg ------------------------------------------------------------------- Moody's Investors Service changed the outlook for the Government of Argentina to negative from stable. Concurrently, Moody's has affirmed the B2 foreign-currency and local-currency long-term issuer and senior unsecured ratings. The senior unsecured ratings for shelf registrations were also affirmed at (P)B2. At the same time Argentina's short-term rating was affirmed at Not Prime (NP). The senior unsecured ratings for unrestructured debt were affirmed at Ca and the unrestructured senior unsecured shelf affirmed at (P)Ca. Moody's decision to change the outlook to negative for Argentina's B2 ratings reflects: 1. Increased uncertainty regarding the continued implementation of policies that, by addressing Argentina's fundamental imbalances, restore reliable access to international capital markets and contain the risk of further damaging currency shocks. 2. And, relatedly, the rising risk that policy uncertainty itself leads to a material, sustained shift in sentiment that increases financing pressures and erodes buffers. The B2 rating affirmation reflects Moody's central expectation that Argentina's core credit metrics will not worsen materially still further over the coming period. The rating level balances a rising debt burden and a history of economic volatility with comparatively high economic development and support from the International Monetary Fund (IMF). Argentina's long-term foreign-currency bond ceiling remains unchanged at B1 and the foreign-currency deposit ceiling unchanged at B3. The local-currency country ceilings for bonds and bank deposits remain unchanged at Ba2. The short-term foreign-currency bank deposit ceiling and the short-term foreign-currency bond ceiling remain unchanged at Not Prime (NP). RATINGS RATIONALE RATIONALE FOR CHANGING THE OUTLOOK TO NEGATIVE FROM STABLE INCREASED UNCERTAINTY REGARDING CONTINUED IMPLEMENTATION OF POLICIES THAT WILL RESTORE RELIABLE ACCESS TO INTERNATIONAL CAPITAL MARKETS AND REDUCE THE RISK OF FURTHER CURRENCY SHOCKS The structural reform program initiated by President Macri's government, and the accelerated fiscal consolidation efforts that sit at its core, have played a crucial role in restoring a modicum of credit stability after last year's severe currency shocks. They have done so both by reassuring investors as to the government's medium-term objectives; and by allowing the government to reach a three year, $57 billion Stand By Arrangement (SBA) with the IMF, which has been a key liquidity support. The government aims to end 2020 with a 1% of GDP primary surplus, which it expects will support a return to the international capital markets in 2020 or 2021. In the meantime, IMF lending will provide over 60% of Argentina's medium and long-term funding in 2019. And even though the importance of IMF funding will fall in 2020 and 2021, strong relations with the IMF will remain vital if financial and exchange rate stability is to be sustained over the next few years. However, the government's ability to continue to implement its desired policies and to sustain its commitment to reform over the medium term is increasingly uncertain. Rising domestic discontent at the near-term impact of government policies on growth and living standards is raising the prospect of a different, and potentially credit negative, policy path in the period following the national elections in October. Argentina has a long history of policy changes following changes in government. The main opposition candidates have raised questions about commitments made as part of the IMF program. They have not ruled out seeking to renegotiate some or all of the SBA conditions and pursuing alternative fiscal strategies and monetary policies that could complicate the country's relationship with the IMF. But whatever the result of the upcoming elections, shifts in the domestic political environment suggest that the future path of policy is increasingly uncertain. The risk is rising of changes or potentially reversals to a fiscal consolidation program that Moody's currently estimates will reduce the government's primary balance to a 0.5% of GDP deficit in 2019 from a 4.2% of GDP deficit in 2016. A significant reversal of these targets could threaten the continuation of the SBA program and close the door on international market funding. That funding will be needed to meet the government's financing requirements from 2021 onwards. The absence of it would put significant pressure on the liquidity position of the government and increase the possibility of a debt restructuring in the next two or three years. RISING RISK THAT POLICY UNCERTAINTY ITSELF LEADS TO A SUSTAINED SHIFT IN SENTIMENT THAT INCREASES FINANCING PRESSURES AND ERODES BUFFERS Recent months have illustrated Argentina's vulnerability to vicious cycles of worsening investor sentiment, exchange rate depreciation, rising inflation expectations, rising interest rates, falling growth, rising debt and falling debt affordability. Since April of last year Argentina has gone through several exchange rate shocks, which have left most credit metrics significantly weaker than when the country's rating was upgraded to B2 in 2017. Government debt will reach 76% of GDP this year, up from 50% in 2017. Over the same time period interest payments have jumped to 17% of revenues from 11%. Both debt and interest payments are now higher than the median for B2 and B3-rated sovereigns. The exchange rate shocks have also pushed inflation close to 60% over the last twelve months and will result in two consecutive years of falling economic output. Moody's decision to affirm the B2 rating reflects its central expectation that core metrics will not materially worsen still further. However, the negative outlook reflects balance of risk to the downside and the country's vulnerability to unpredictable shifts in sentiment. In the last two months, exchange rate pressures have eased and sovereign spreads have fallen. But volatility remains high, and much rests on the administration's policy credibility after many years of highly idiosyncratic policymaking. Concerns on the part of investors and consumers, before or after the elections, about the likely emergence and consequences of a credit negative policy shift could lead to a fresh vicious cycle triggered by a new round of currency devaluations which would further worsen already weak credit metrics. Another sudden and sharp devaluation would push inflation still higher, ending the nascent economic recovery and delaying still further the recovery from recession, and rapidly worsen the debt burden and debt affordability. RATIONALE FOR AFFIRMING THE RATINGS AT B2 The affirmation of the B2 rating reflects Moody's central expectation that Argentina's core metrics will not materially worsen still further and that support from the IMF will sustain the issuer until it is able to regain affordable access to international capital markets. Notwithstanding the rise in the government's debt and interest burdens, the sovereign benefits from its strong commitment to consolidation under its IMF program to date. This should, provided policy continuity persists, see domestic and external imbalances continue to adjust, with IMF financing shielding the government from external refinancing risks through 2019. As confidence returns, so should growth, allowing Argentina to build on fundamental strengths including a large, highly developed and comparatively wealthy economy. WHAT COULD CHANGE THE RATING UP Although a rating upgrade is unlikely in the near future, a return to a stable outlook could result if it becomes clear that fiscal consolidation, central bank independence, and continued support from the IMF will be sustained in the coming years. WHAT COULD CHANGE THE RATING DOWN The rating would likely be downgraded were Moody's to observe a further material worsening in Argentina's fiscal strength and a heightened exposure to domestic or external financing shocks, or were it to conclude that the risk of such an outcome had materially risen. Such a conclusion would likely be driven by revised assumptions around the future path of government economic and fiscal policy, particularly if supported by a worsening in relations with the IMF and by a further erosion in financial buffers. GDP per capita (PPP basis, US$): 20,537 (2018 Actual) (also known as Per Capita Income) Real GDP growth (% change): -2.5% (2018 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 47.6% (2018 Actual) Gen. Gov. Financial Balance/GDP: -5.2% (2018 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -5.4% (2018 Actual) (also known as External Balance) External debt/GDP: 53.5% (2018 Actual) Level of economic development: Low level of economic resilience Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On July 09, 2019, a rating committee was called to discuss the rating of the Argentina, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have materially decreased. The issuer's institutional strength/framework, have materially decreased. The issuer's fiscal or financial strength, including its debt profile, has materially decreased. The systemic risk in which the issuer operates has materially increased. The issuer has become increasingly susceptible to event risks. The principal methodology used in these ratings was Sovereign Bond Ratings published in November 2018. =========== B R A Z I L =========== BRF S.A.: S&P Affirms 'BB-' Issuer Credit Rating, Off Watch Pos. ---------------------------------------------------------------- On July 12, 2019, S&P Global Ratings removed all the ratings on BRF S.A. and Marfrig Global Foods S.A. from CreditWatch with positive implications. S&P said, "We're also affirming our global scale 'BB-' issuer credit and issue-level ratings and our national scale the 'brAA+' issuer ratings on BRF and Marfrig. We also assigned a stable outlook on both companies. "We have placed the ratings on BRF and Marfrig on CreditWatch positive on May 31, 2019, due to the potential merger of their operations, which could have had a positive impact on the combined entity's credit quality in our view." After a period of less than 45 days of discussions, the companies announced yesterday the end of the negotiations due to disagreements on the terms and conditions on the governance of the combined entity. As a result, S&P's removing the ratings on both entities from the CreditWatch listing. S&P expects BRF and Marfrig to return their focus on improving their operating performances, while benefiting from the more favorable fundamentals for the South American protein export players. OURO VERDE: Fitch Raises IDRs to B, Outlook Positive ---------------------------------------------------- Fitch Ratings upgraded Ouro Verde Locacao e Servico S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings to 'B', from 'RD'. Fitch has also upgraded the company's national scale rating and its 7th debenture issuance to 'BBB(bra)' from 'RD(bra)'. The Rating Outlook for the corporate ratings is Positive. The upgrade reflects Ouro Verde's improved financial profile following Brookfield's acquisition of 100% of the issuer's shares and it BRL500 million capital injection, as well as the completion of the company's debt restructuring, which led to lengthening of the company's debt maturities through 2034, and lower interest rate. The Positive Outlook reflects Fitch's perception that Ouro Verde's recovery should occur within the next 12 to 24 months due to Brookfield's ownership of the company and its improved liquidity position. On July 8, 2019, Cedar Fundo de Investimento em Participacoes Multiestrategia (Cedar), a Brookfield investment vehicle in Brazil, acquired 100% of Ouro Verde's shares and voting rights. On the same date, the company received a BRL500 million cash injection and concluded the debt restructure of its 5th, 6th, 7th and 8th debenture issuance. The cash injection was comprised of a BRL365 million capital increase and a BRL135 million receivable pay down from the previous main shareholder. KEY RATING DRIVERS New-Ownership Strengthens Business Profile: Ouro Verde's business profile should improve on the medium term. The financial strength of its new controlling shareholder should help the company to face competition from larger participants, with stronger financial profiles, and to grow in the fragmented, incipient and capital intensive Brazilian market of heavy vehicles and machinery rentals. Fitch views Brookfield, which has numerous investments in Brazil, as a strategic owner due to its ability to support an increase in Ouro Verde's scale and operating competitiveness. Improved Capital Structure: Fitch expects the recently concluded debt restructure and the BRL500 million cash injection to improve Ouro Verde's capital structure, helping the company to manage its growth while keeping leverage at moderate levels in the medium term -- depending on the company's strategy in terms of capex. On a pro forma basis, adding BRL300 million into Ouro Verde's cash position, assuming BRL200 million of the cash injection would support capex, the adjusted net debt-to-EBITDA ratio should be at 3.8x, based on BRL274 million annualized EBITDA and BRL1.4 billion of pro-forma total debt. DERIVATION SUMMARY Ouro Verde's ratings reflect the company's better position to recover its operating performance and improved financial profile after the BRL500 million cash injection, but still weaker competitive position compared to its bigger domestic peers such as Localiza Rent a Car S.A. (Foreign Currency IDR BB, Local Currency IDR BBB-/Stable), JSL S.A. (Foreign Currency and Local Currency IDRs BB/Negative) and Companhia de Locacao das Americas - Locamerica (National Scale Rating AA[bra]/Positive). Those comparable peers also present a better financial profile. After its debt restructuring, Ouro Verde has slightly lower leverage and higher rental margins than those of JSL. However, the company's access to new funding has yet to be tested. Additionally, compared with Localiza, JSL and Locamerica, Ouro Verde has smaller scale and lower bargain power within the industry, which are key variables in an industry that demands high capital investing and an established network for asset disposal. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Cash inflow of BRL500 million; - Lengthened debt maturity profile. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Improvement in Ouro Verde's business position and client base without jeopardizing its financial profile. Developments That May, Individually or Collectively, Lead to Negative Rating Action The Positive Outlook may be removed in case of a dificulty in achieving the triggers for the upgrade. The ratings may be downgraded in case of: - Further deterioration of the company's business position; - Deterioration of the liquidity profile, leading to refinancing risks; - Declining EBITDA and profitability levels. LIQUIDITY Improved Liquidity: The expected BRL500 million cash injection should support capex and strengthen the company's cash position, significantly improving the financial flexibility of Ouro Verde, which has a track record of weak liquidity. Additionally, expected lower funding cost and a better spread debt amortization schedule should improve Ouro Verde's financial profile. To better predict liquidity and cash flow levels, Fitch has yet to have a clear view on the management growth strategy. After the debt restructure, total and short-term debt reached BRL1.4 billion and BRL150 million, respectively, with expected cash/short-term debt around 2.5x. FULL LIST OF RATING ACTIONS Fitch has upgraded the following ratings: Ouro Verde Locacao e Servico S.A -- Long-Term Foreign and Local Currency IDRs to 'B' from 'RD'; -- Long-Term National Scale Rating to 'BBB(bra)' from 'RD(bra)'; -- 2021 senior unsecured 7th debenture issuance to 'BBB(bra)' from 'RD(bra)'. The Rating Outlook is Positive. =================== C O S T A R I C A =================== INSTITUTO COSTARRICENSE: Fitch Affirms B+ IDRs, Outlook Negative ---------------------------------------------------------------- Fitch Ratings has affirmed Instituto Costarricense de Electricidad y Subsidiarias' Foreign- and Local-Currency Issuer Default Ratings (FC/LC IDRs) at 'B+'. In addition, Fitch has also revised its assessment of ICE's consolidated Standalone Credit Profile to 'b+' from 'bb-'. The Rating Outlook remains Negative. Simultaneously, Fitch affirmed ICE's national scale long-term rating at 'AAA(cri)' with a Stable Rating Outlook. The Negative Outlook reflects its strong linkage to the sovereign of Costa Rica (B+/Negative), given its strategic importance to the country and the potentially significant negative socio-political and financial implications of any financial distress at the company level. The ratings are supported by government ownership and the implicit and explicit expectation of government support. Additionally, the ratings incorporate the company's diversified asset portfolio, moderate capex program and its strong market share position in the telecommunications business. KEY RATING DRIVERS Weak Corporate Governance and Financial Transparency: ICE's Standalone Credit Profile (SCP) was revised to 'b+' from 'bb-' due to uncertain management strategy coupled with defective financial transparency reporting and a high leverage profile, consistent with a weak single 'b' rating. Per Fitch's Government Related Entity Criteria (GRE Criteria), ICE's ratings are now at the same level of Costa Rica's sovereign rating due to the agency's assessment of the company's strong linkage with the government and the strong to very strong incentive of government support. Hence, the primary driver of the GRE's IDR will be that of the supporting government, limiting ICE's IDR to 'B+'. Diquis Project Cancellation: Diquis was a 650MW hydro-power plant project designed under the previous Expansion Generation Plan (PEG 2014-2018), which previously estimated electricity demand by 2026 of 14.000GWh/Year (30% increase from 2017); nonetheless, PEG 2018-2040 determined that the plant was no longer part of the optimum minimum cost plan. As a result, CRC88,556 million of pre-investing costs were transferred to other expenses. After adjusting this for non-recurring/non-cash item, EBITDAR generation was CRC488,365 million in 2018 (2017: CRC524,360 million), and EBITDAR margin was 34.9% (2017: 38.6%). Adjusted leverage was 6.2x and adjusted coverage ratio of 2.2x. LTM as of March 2019 showed EBITDAR of CRC486,520 million and adjusted leverage of 6.7x. For FY 2019, Fitch expects adjusted leverage of 6.9x and adjusted coverage ratio of 1.6x, improving to 5.1x and 2.4x toward 2022, under favorable tariffs adjustments and results on cost contingency plan. High Exposure to Regulatory and Political Interference: ICE is exposed to regulatory interference risk given the lack of clear and transparent electricity tariff schedules. The company proposes electricity tariffs for end-users to the regulator annually; in previous years, regulatory and political interference affected the tariff adjustment process. Electricity tariffs are set using two mechanisms: through the quarterly adjustment of variable costs of fuel (CVC) in place since 2013, and the ordinary tariff review that considers the operating costs. Tariff for consumption of less than 200kwh for residential users is capped at CRC85.46/kwh. Diversified Asset Portfolio: ICE is a vertically integrated monopoly in the electricity industry and the incumbent player in the telecommunications industry in Costa Rica. ICE's mobile market share in terms of subscribers was approximately 50% as of December 2017. The ratings reflect the company's low business risk resulting from its business diversification and positive characteristics as a utility service provider. The company had an installed capacity of 2,524 MW as of March 2019, including the generation plants of its subsidiary, Compania Nacional de Fuerza y Luz, S.A. (CNFL). ICE is the exclusive owner of the national transmission grid. The National Electric System (SEN) is composed of ICE, two municipal companies, and four rural electrification cooperatives. There are also private generators that sell energy to ICE. The SEN installed capacity is 3,516MW as of March 2019, a 2.8% decrease compared with December 2018. DERIVATION SUMMARY ICE's linkage to the sovereign is similar to its peers such as Comision Federal de Electricidad (CFE) (BBB/Stable) and Centrais Eletricas Brasileiras S.A. (Eletrobras) (BB-/Stable). These companies all have strong linkages to their respective sovereigns given their strategic importance to each country and the potentially significant negative socio-political and financial implications of any financial distress at these companies. ICE's ratings are supported by its linkage to Costa Rica's sovereign rating, which stems from the company's government ownership and the implicit and explicit expectation of government support. The ratings reflect the company's diversified asset portfolio, moderate capex program and its strong market share position in the telecommunications business. ICE has a lower scale of operations compared with its peers; ICE's adjusted leverage of 6.2x is higher than CFE's 4.2x but lower than Eletrobras' 9.9x as of December 2018. Regarding adjusted coverage ratio, ICE's 2.2x compares negatively with its peers' average of 4.0x. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - ICE remains important to the government as a strategic asset for the country; - Electricity demand organic growth around 1%; - Adjusted leverage close to 6.9x 2019, before improving toward 5.7x in 2021; - Tariffs adjustments for 2019-2020 reflect appropriate operating expenses and higher prices payed to private generators; - ICE's Telco market share remains strong; - The recovery analysis assumes that ICE would be a going concern in bankruptcy, and Fitch has assumed a 10% administrative claim, with a going-concern EBITDA close to CRC378,000 million and an EV multiple of 5.0x; - The Recovery Rating is limited, however, to 'B+'/'RR4' as Costa Rica is categorized as Group D, per Fitch's Country-Specific Treatment of Recovery Ratings Criteria, which caps the Recovery Ratings at 'RR4.' RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Upgrade on the sovereign's ratings. Developments That May, Individually or Collectively, Lead to Negative Rating Action - A sovereign downgrade; - Sustained and consistently adjusted leverage over 6.0x; - Regulatory intervention that negatively affects the company. LIQUIDITY Adequate Liquidity: ICE has historically financed capex with owned resources and new debt. The cancelation of the Diquis project should ease capex expense through the rating horizon, generating expected positive FCF through 2020-2022. Debt related to electricity projects represents approximately 90% of total debt, and the remaining debt is capex spent on the telecommunications sector projects. ICE's cash balance as of March 2019 was CRC444,520 million, where CRC216,144 million is part of a liquidity reserve account that is used exclusively for debt payments. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings of Instituto Costarricense de Electricidad y Subsidiarias: - Long-Term Foreign Currency IDR at 'B+'; Outlook Negative; - Long-Term Local Currency IDR at 'B+'; Outlook Negative; - Senior unsecured debt at 'B+'/'RR4'; - Long-Term National Scale rating affirmed at 'AAA(cri)'; Outlook Stable; - Senior unsecured debt National Scale rating affirmed at 'AAA(cri)'. ============= J A M A I C A ============= DIGICEL GROUP: Moody's Downgrades CFR to Caa2, Outlook Negative --------------------------------------------------------------- Moody's Investors Service downgraded Digicel Group Limited's corporate family rating to Caa2 from Caa1 and its probability of default rating to Caa2-PD from Caa1-PD. At the same time, Moody's downgraded the senior unsecured rating of Digicel Limited to Caa2 from B3, the senior secured rating of Digicel International Finance Limited to B3 from B1, the senior secured rating of Digicel Group One Limited to Caa2 from Caa1 and the senior unsecured ratings of both Digicel Group Two Limited and Digicel to Ca from Caa3. The outlook is negative. Downgrades: Issuer: Digicel Group Limited Corporate Family Rating, Downgraded to Caa2 from Caa1 Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD Senior Unsecured Regular Bond/Debenture, Downgraded to Ca from Caa3 Issuer: Digicel Group Two Limited Senior Unsecured Regular Bond/Debenture, Downgraded to Ca from Caa3 Issuer: Digicel Group One Limited Senior Secured Regular Bond/Debenture, Downgraded to Caa2 from Caa1 Issuer: Digicel Limited Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 from B3 Issuer: Digicel International Finance Limited Senior Secured Bank Credit Facility, Downgraded to B3 from B1 Senior Secured Regular Bond/Debenture, Downgraded to B3 from B1 Outlook Actions: Issuer: Digicel Group Limited Outlook, Changed to Negative from Stable Issuer: Digicel Group Two Limited Outlook, Changed to Negative from Stable Issuer: Digicel Group One Limited Outlook, Changed to Negative from Stable Issuer: Digicel Limited Outlook, Changed to Negative from Stable Issuer: Digicel International Finance Limited Outlook, Changed to Negative from Stable RATINGS RATIONALE The downgrade of Digicel's CFR to Caa2 and the change of its outlook to negative reflect Moody's view that the risk of Digicel making another distressed exchange or debt restructuring within the next 12-18 months has increased, considering the still weak operating results and liquidity of the group. In fiscal year ending March 31, 2019 (FY19), Digicel has continued to report declining earnings, negative free cash flow and increasing leverage (gross debt/EBITDA, including Moody's adjustments) which was in excess of 7x at the end of March 2019. A return to sustained revenue and earnings growth has not materialized and any improvement to the company's financial profile will only be very gradual, resulting in Digicel still facing high refinancing risk. The downgrade of DL's senior unsecured rating to Caa2 from B3 as well as the downgrade of the senior secured rating of DIFL to B3 from B1 reflects Moody's view of materially increased refinancing risk to the group. Digicel's next large debt maturity is the USD1.3 billion senior unsecured notes at DL due April 2021. DL's senior unsecured notes rating is aligned with that of the DGL1 senior secured notes, also rated Caa2. Both entities had a similar leverage level of around 5.4x (as reported by Digicel) at the end of FY19. While DL bondholders would have access to the residual value of the Caribbean operations before the DGL1 bondholders in the case of a bankruptcy, the notes at DGL1 benefit from collateral which includes the capital stock of Digicel Pacific Limited, a material contributor to the group's cash flow (around 20% of Digicel's consolidated EBITDA), and DGL1's receivable under the Digicel (Central America) Group Limited credit facility. Digicel's liquidity remains overall weak. Digicel improved its cash balance and debt maturity profile when it issued, in March 2019, USD600 million of senior secured notes at DIFL, with related proceeds used to repay DIFL's existing term loan A of USD300 million, repay the drawings under the DIFL revolving credit facility (RCF), and increase the group cash balance. However, as long as free cash flow remains negative, liquidity will weaken again. As of March 2019, Digicel had USD279 million in cash and its USD100 million RCF was again available. The increase in leverage has nevertheless resulted in tight leeway under financial covenants: while these are only tested if the RCF is drawn, it could challenge Digicel drawing under its RCF in case of need. Digicel's ratings could be upgraded if the company's liquidity improves and its leverage declines, driven by a clear improvement in its operating performance and a return to positive free cash flow generation, enabling the company to refinance its upcoming large debt maturities. A further downgrade could happen in case of a debt restructuring that results in higher than expected losses to creditors. The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017. Incorporated in Hamilton, Bermuda, Digicel is the largest provider of wireless telecommunication services in the Caribbean. The company operates in 31 markets in the Caribbean and South Pacific regions. In addition, the company provides a comprehensive range of business solutions, cable TV and broadband and other related products and services. The company also operates a wireless network in Panama through its 45% ownership interest in affiliate, Digicel Holdings (Central America) Limited. Digicel generated revenue of $2.3 billion in FY19. =========== M E X I C O =========== BAJA CALIFORNIA: Moody's Lowers Issuer Rating to B2, Outlook Neg. ----------------------------------------------------------------- Moody's de Mexico downgraded the State of Baja California ratings to B2/Ba1.mx (Global Scale issuer rating/Mexican National Scale rating) from B1/Baa2.mx. At the same time the Baseline Credit Assessment (BCA) was also downgraded to b2 from b1. The outlook on the ratings remains negative. RATINGS RATIONALE RATIONALE FOR THE RATINGS DOWNGRADE The downgrade of Baja California's BCA to b2 and issuer ratings to B2/Ba1.mx reflects structural pressures stemming from expenditures, mainly related to education and pension contributions, that have led to recurrent financial deficits and to very weak liquidity levels. Baja California has posted, on average, financial deficits equivalent to 5.3% of total revenues during the 2014-2017 period. Despite measures implemented by the state to decrease the growth of current expenditures, mainly related to personnel services, and that revenue continue to increase, the state registered a deficit equivalent to 1.8% of total revenues in 2018. Moody's expects that the state will continue registering deficits around 4% of total revenues during 2019 and 2020 as a result of pressures mainly related to expenditures in education and transfers to the state's pension system (ISSSTECALI). Total transfers to ISSSTECALI were equivalent to roughly 6% of total revenues during 2018. Moody's estimates that in 2019 and 2020 Baja California will continue dedicating similar levels of support to ISSSTECALI given its high level of unfunded pension liabilities (196% of total revenues compared to the Mexican states median of 100% as of 2018) and its low reserve levels. According to the actuarial study, pension contributions will grow 9% per year, exerting additional pressure if no measures are taken. In order to finance its cash needs, Baja California contracted both long and short-term debt during 2018. Debt to total revenues increased to 27.1% in 2018 from 25.7% in 2017. Despite this increase, the debt burden is still considered manageable although Moody's notes that the debt structure represents a material credit challenge for the state. Short-term debt represented 21.3% of gross debt as of December 2018, compared to 14.8% in 2014. While Moody's expects the state to adhere to the Fiscal Discipline Law which requires Baja California to fully pay its short-term debt by July 31 (three months prior to the change of administration), Moody's notes that this will require the state to increase other current liabilities as funds are diverted to debt repayment. This will result in a deterioration in the state's liquidity metrics. Moody's also expects that Baja California will recur to the use of short-term debt during the last two months of 2019 in order to finance the deficit. As a result, Moody's expects the state's liquidity metrics will deteriorate further in 2019 and 2020. As of December 2018, liquidity measured as cash to current liabilities was equivalent to 0.1x, one of the lowest levels compared to national peers. As of March 2019, Baja California registered a negative cash position and Moody's expects liquidity to be nearly depleted as of December 2019. RATIONALE FOR THE NEGATIVE OUTLOOK The negative outlook reflects Moody's expectation that absent the implementation of structural measures to reduce operating expenditures and stem cash financing needs, the state will increase its short-term debt exposure. This will lead to a weaker debt profile than currently recorded, with additional risk stemming from a continued weak liquidity position. WHAT COULD CHANGE THE RATING UP/DOWN Given the negative outlook, a rating upgrade is unlikely. However, the state's ratings could be stabilized if Baja California registers a sustainable improvement of cash financing results leading to a debt stabilization and stronger liquidity metrics. Conversely, if the state does not implement clear measures to decrease cash financing needs in the near future, maintaining high levels of short-term debt alongside weak liquidity, the ratings could face further downward pressure. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. UNIFIN FINANCIERA: Fitch Rates USD450MM Sr. Unsec. Notes Final 'BB' ------------------------------------------------------------------- Fitch Ratings has assigned a final rating of 'BB' to Unifin Financiera, S.A.B. de C.V.'s (BB/Stable) US dollar senior unsecured notes of up to USD450 million Reg S/144A due 2028. The final rating is in line with the expected rating assigned on July 8, 2019. The notes have a maturity of eight years at a fixed rate with semi-annual interest payments. The principal will be paid at maturity, may be redeemed at the option of the issuer and is fully and unconditionally guaranteed by two operating subsidiaries of Unifin. The net proceeds from the offering will be used for general corporate purposes and to continue matching the asset-liability tenor profile. KEY RATING DRIVERS The rating assigned to these senior notes is at the same level as Unifin's Long-Term Issuer Default Ratings (IDRs) of 'BB' as the likelihood of default on the notes is the same as Unifin's. There will not be increased exposure to market risk as a result of this transaction, as the company will hedge both FX rate risk and interest rate risk with cross-currency swaps for both the principal and interest payments. Unifin's ratings are highly influenced by its national leadership in the independent leasing sector in Mexico (non-related to financial holding company) and its ample expertise in its core market focused on SME typically unattended by the banking sector. The ratings are also significantly influenced by its relatively tight capitalization metrics. The ratings also consider Unifin's good earnings, controlled asset quality, and well-managed liquidity and funding. The adoption of IFRS accounting standards in 1Q19 gives better clarity on Unifin's asset quality, which has led to stronger reserve coverage. However, this put further pressure on the company's already tight capitalization and leverage position under Fitch's core metric. As of March 2019 and following the adoption of IFRS, Unifin's leverage ratios (measured as total debt to tangible common equity) exceeded Fitch's sensitivity according to its ratings level, as it reached 8.5x. This ratio was mainly impacted by around 190 bps, after IFRs application by an immediate and sizeable effect on retained earnings, but Fitch expects a leverage recovery in the following 18 to 24 months through internally generated capital, to levels around 7x. The company projections consider leverage gradually improving to nearly 7.1x as of YE 2020, a ratio that Fitch believes is still relatively tight but consistent with the current rating level. If the company does not show a consistent improvement of leverage metrics toward the 7x threshold, negative rating actions could occur in the near future. Fitch does not expect a greater deterioration of leverage metrics after the issuance of the new senior notes as they will refinance some existing liabilities, some others will mature and the new notes will continue to effective match the asset-liability tenor profile. Unifin's profitability remains at good levels but lower than historical records. As of March 2019, Unifin's pre-tax income to average assets ratio was 2.7% from historic average levels of 4.0%, still a credit strength to the current rating level. Under IFRS there is more visibility on non-performing loans (NPLs) and more prudential loan loss allowance approach. As of March 2019, Unifin's NPL ratio stood at 3.6%, which was lower than its closest peers, while its loan loss allowance coverage of NPLs increased to 57.0%, which continues to be relatively limited, in Fitch's opinion. Unifin continues with a more diversified and unsecured funding structure than local peers. However, the entity is heavily reliant on wholesale financing through local debt issuances via securitizations and international senior bonds. Nevertheless, this funding structure has proven effective for Unifin because it helps to properly match the asset-liability tenor profile. As of March 2019, the unsecured debt to total debt stood at 56%, a sound level than compares better than peers. Unencumbered loans to total loans were around 62% as of March 2019. ===================== P U E R T O R I C O ===================== ADVANCE PAIN: Case Summary & Unsecured Creditors ------------------------------------------------ Two affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Advance Pain Management and Rehabilitation 19-03941 E22 Calle Santa Cruz Bayamon, PR 00961 JG & RM Realty Inc. 19-03942 E22 Calle Santa Cruz Bayamon, PR 00961 Business Description: Advance Pain Management and Rehabilitation owns and operates ambulatory health care facilities. Ambulatory surgery centers (or outpatient surgery centers) are health care facilities where surgical procedures not requiring an overnight hospital stay are performed. Chapter 11 Petition Date: July 11, 2019 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Hon. Enrique S. Lamoutte Inclan Debtors' Counsel: Isabel M. Fullana, Esq. GARCIA-ARREGUI & FULLANA PSC 252 Ponce De Leon Avenue Suite 1101 San Juan, PR 00918 Tel: 787 766-2530 Fax: 787 756-7800 E-mail: isabelfullana@gmail.com Advance Pain's Total Assets: $69,818 Advance Pain's Total Liabilities: $122,108 JG & RM's Total Assets: $1,291,294 JG & RM's Total Liabilities: $1,749,258 The petitions were signed by Dr. Renier Mendez, president. A full-text copy of Advance Pain's petition containing, among other items, a list of the Debtor's four unsecured creditors is available for free at: http://bankrupt.com/misc/prb19-03941.pdf A full-text copy of JG & RM's petition containing, among other items, a list of the Debtor's five unsecured creditors is available for free at: http://bankrupt.com/misc/prb19-03942.pdf EL PATIO BBQ: Seeks Court Approval to Hire Accountant ----------------------------------------------------- El Patio BBQ & Grill Inc. seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to hire an accountant. In an application filed in court, the Debtor proposes to employ Ingrid Hassan, an accountant based in Guaynabo, to prepare and review its monthly operating reports and other accounting reports, tax returns, and financial projections required for the proposal and confirmation of a Chapter 11 plan. Hassan will also supervise the Debtor's accounting affairs and operations. The Debtor will pay $75 per hour for the services of the accountant and $25 per hour for the supporting staff. Hassan is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, according to court filings. Hassan maintains an office at: Marginal Buchanan Flamingo Apartments 9404 Bayamon, PR 00959 Tel: 787-398-0166 Email: ingridhassanoffice@gmail.com About El Patio BBQ & Grill Inc Based in Vega Baja, P.R., El Patio BBQ & Grill Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 19-03639) on June 26, 2019, listing under $1 million in both assets and liabilities. Jaime Rodriguez Perez, Esq., at Hatillo Law Office, represents the Debtor as counsel. EL PATIO BBQ: Seeks to Hire Hatillo Law Office as Counsel --------------------------------------------------------- El Patio BBQ & Grill Inc. seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Hatillo Law Office, PSC as its legal counsel. The firm will advise the Debtor of its powers and duties in the continued operation of its business and management of its property; prepare applications, reports and other legal papers; and provide other legal services in connection with the Debtor's Chapter 11 case. Hatillo's standard hourly rates are: Jaime Rodriguez-Perez, Attorney $250 Paralegal $50 Law Clerks $50 Hatillo is disinterested and has no connection with the creditors and other parties in interest or their respective attorneys, according to court filings. The firm can be reached through: Jaime Rodriguez-Perez Hatillo Law Office, PSC URB Rexville BB 21 Calle 38 Bayamon, PR 00957 Phone: 787 797-4174 Fax: 787-730-5454 Email: Email: jrpcourtdocuments@gmail.com About El Patio BBQ & Grill Inc Based in Vega Baja, P.R., El Patio BBQ & Grill Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 19-03639) on June 26, 2019, listing under $1 million in both assets and liabilities. Jaime Rodriguez Perez, Esq., at Hatillo Law Office, represents the Debtor as counsel. J.C. PENNEY: Egan-Jones Withdraws CCC- Sr. Unsec. Debt Ratings -------------------------------------------------------------- Egan-Jones Ratings Company, on July 5, 2019, withdrew its 'CCC-' foreign currency and local currency senior unsecured ratings on debt issued by J. C. Penney Company, Incorporated. J. C. Penney Company, Inc. is an American department store chain with 864 locations in 49 U.S. states and Puerto Rico. PUERTO RICO: Lawmakers Advance Bill to Boost Medicaid Funding ------------------------------------------------------------- Karen Pierog at Reuters reports that a bill that would give Puerto Rico a substantial boost in federal Medicaid funding advanced out of a U.S. House subcommittee after lawmakers agreed to work on stricter safeguards for the money in the wake of a government corruption scandal in the island territory. The Health Subcommittee sent the legislation, which would give the bankrupt U.S. commonwealth an additional $12 billion over four years, to the full House Committee on Energy and Commerce, according to Reuters. On July 10, U.S. law enforcement officials disclosed a 32-count indictment and arrests of six people, including two former high-ranking Puerto Rico government officials, who were charged with conspiracy and other crimes in connection with millions of dollars in federal Medicaid and education funds. Angela Avila-Marrero, former executive director of Puerto Rico's Health Insurance Administration, was indicted for her role in a scheme to steal federal Medicaid dollars through a corrupt bidding process with private contractors, the report notes. Her lawyer, Jason Gonzalez, said she pleaded not guilty to the charges, the report relays. He declined to comment further. U.S. Representative Frank Pallone, a New Jersey Democrat who chairs the Energy and Commerce Committee, said while the indictments were "very troubling," there was no time to address the allegations in the bill, the report notes. "We can't lose sight of the fact that unless we act there will be a massive shortfall of federal funds for the Puerto Rico Medicaid program that would be devastating to the people that live there," he said, adding he hoped lawmakers will work together to add "rigorous" oversight to the bill, the report discloses. U.S. Representative Greg Walden, an Oregon Republican, said he was committed to ensuring measures are in the bill "to stop these types of fraudulent activities that are alleged from happening," the report notes. Federal funding to the five U.S. territories to support the healthcare program for low-income residents is capped, often leading to shortfalls during economic downturns or natural disasters like the devastating hurricanes that hit Puerto Rico in 2017 just months after it filed a form of bankruptcy in U.S. District Court, the report relays. Meanwhile, Puerto Rico Governor Ricardo Rossello, who is under fire for not preventing corruption in his administration, scheduled a news conference, the report discloses. U.S. Representative Raul Grijalva, an Arizona Democrat who chairs the House Natural Resources Committee, which oversees U.S. territories, is calling for Rossello to step down as governor, Grijalva's spokesman said, the report relays. Rossello was not implicated in the indictments, the report adds. 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. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Trading Chief Leaves as Exports Fall ------------------------------------------------------------ Luc Cohen at Reuters reports that the top trade and supply official at Venezuelan state oil company Petroleos de Venezuela, S.A. (PDVSA) has left the post, according to a recent copy of the government's official gazette, as the OPEC nation's crude exports fall after U.S. sanctions and gasoline supplies dry up. Jose Rojas Reyes, who was named vice president of trade and supply last October, is no longer on PDVSA's board of directors, according to a decree in the gazette dated June 12. Marcos Rojas, who remains vice president of international affairs, has assumed the role on an interim basis, according to Reuters. The report relays that Rojas Reyes' departure comes as PDVSA, which was already reeling from corruption, mismanagement and underinvestment, was hit this year by Washington-imposed sanctions preventing U.S. companies from importing Venezuelan oil, part of the Trump administration's effort to oust socialist President Nicolas Maduro. The company's exports of crude and refined products fell 17% in May from the previous month to 874,500 barrels per day, the report relays. A plunge in gasoline imports due to the sanctions, coupled with severe refinery outages, have forced motorists to wait hours or even days to fill their tanks, the report notes. Manuel Quevedo, a National Guard general who also serves as Venezuela's oil minister, remains as chairman of PDVSA, according to the decree, the report relays. Critics say PDVSA has done little to stem the fall in production since Quevedo's 2017 appointment ushered in a new era of military rule at the firm, the report discloses. Rojas is also a National Guard general and previously held jobs at the Defense Ministry and the Housing Ministry, which Quevedo led before his surprise appointment to lead PDVSA, the report says. About PDVSA Petroleos de Venezuela, S.A. is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil as well as exploration and production of natural gas. As reported in Troubled Company Reporter-Latin America on June 3, 2019, Moody's Investors Service withdrew all the ratings of Petroleos de Venezuela, S.A. including the senior unsecured and senior secured ratings due to insufficient information. At the time of withdrawal, the ratings were C and the outlook was stable. ********* 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 2019. 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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