/raid1/www/Hosts/bankrupt/TCRLA_Public/190722.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
Monday, July 22, 2019, Vol. 20, No. 145
Headlines
A R G E N T I N A
BALANZ CAPITAL: Moody's Withdraws Caa1 Issuer Rating
BANCO DE LA CIUDAD: Moody's Rates Sr. Unsec. Debt B2, Outlook Neg.
BUENOS AIRES: Moody's Rates Province's Medium Term Notes B2
YPF ENERGIA: Moody's Assigns B2 Rating to $500MM Notes Issuance
YPF ENERGIA: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
B R A Z I L
AZUL SA: Fitch Publishes BB- LT IDRs, Outlook Stable
C A Y M A N I S L A N D S
GUANAY FINANCE: Fitch Hikes Series 2013-1 Notes Rating to BB
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Leads Region in Making Trade Easier
DOMINICAN REPUBLIC: Political Tension Affects Economy
H O N D U R A S
HONDURAS: Seeks US$311 IMF Loan for Stability and Growth
M E X I C O
ENGENCAP HOLDING: Fitch Assigns BB- LT IDR, Outlook Stable
P U E R T O R I C O
INVERSIONES CARIBE: Condado 2 Objects to Disclosure Statement
PUERTO RICO: Governor Faces Calls For Impeachment Over Chats
V E N E Z U E L A
PETROLEOS DE VENEZUELA: Guaido Seeks Protection for Appointed Board
PETROLEOS DE VENEZUELA: Partly Restarts Amuay Refinery
X X X X X X X X
LATAM: World Bank Mobilizes US$14 billion for Region
[*] BOND PRICING: For the Week July 15 to July 19, 2019
- - - - -
=================
A R G E N T I N A
=================
BALANZ CAPITAL: Moody's Withdraws Caa1 Issuer Rating
----------------------------------------------------
Moody's Latin America A.C.R. S.A. announced that it has withdrawn
all of its ratings for Balanz Capital Valores S.A.U. for business
reasons.
The following ratings of Balanz Capital Valores S.A.U. were
withdrawn:
Long-term global local currency issuer rating, previously rated
Caa1
Argentinean long-term national scale local currency issuer rating,
previously rated Ba1.ar
Long-term global local currency Senior unsecured MTN rating,
previously rated (P)Caa1
Argentinean long-term national scale local currency senior
unsecured MTN rating, previously rated Ba1.ar
Long-term global foreign currency Senior unsecured MTN rating,
previously rated (P)Caa1
Argentinean long-term national scale foreign currency senior
unsecured MTN rating, previously rated Ba1.ar
Outlook, previously Stable
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
BANCO DE LA CIUDAD: Moody's Rates Sr. Unsec. Debt B2, Outlook Neg.
------------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo assigned a
B2 global local currency senior unsecured debt rating and a A1.ar
in Argentinean national scale senior debt rating to Banco de la
Ciudad de Buenos Aires' XXI Peso-denominated, floating rate senior
unsecured notes. The notes will be due July 2021 and will be issued
under Ciudad's existing multi-currency senior unsecured program of
USD1,500 million. The notes will be issued for ARS3,000 million,
extendable up to ARS5,000 million, and the proceeds will be used
for lending to small and medium sized companies in Argentina. The
outlook on the global scale debt rating is negative; the outlook is
stable on the national scale debt rating.
The following ratings were assigned to Banco de la Ciudad de Buenos
Aires' Class XXI notes:
Global local currency senior unsecured debt rating of B2; negative
outlook
Argentinean national scale local currency senior debt rating of
A1.ar; stable outlook
RATINGS RATIONALE
Ciudad's ratings, which are equal to the highest ratings assigned
to any domestically-owned Argentine bank, reflect its good
capitalization levels and adequate asset risk and liquidity
metrics. However, these credit strengths are offset by risks
associated with Argentina's ongoing economic weakness and which may
pressure Ciudad's financial performance in the coming quarters.
Ciudad's role as financial agent of the city of Buenos Aires (B2
negative) provides it access to stable, low-cost funding,
supporting its well-established deposit franchise, and allows the
bank to offer financial services to a large base of civil servants,
ensuring recurring earnings generation and lower credit risk, which
help mitigate the effects of a downturn . Nevertheless, while asset
quality remains stronger-than peers, with problem loan ratio at
2.9% as of March 2019 and below the 4.1% industry average, Ciudad's
delinquencies have increased by 137% in the past 12 months to
March, leading to a 76.4% rise in loan loss provisions, well above
inflation rates.
The loan loss reserve coverage at 78.8% in March 2019, reflects the
fact that nearly one-quarter of Cuidad's loan book is made of
secured mortgage loans. Together with its adequate capitalization
ratio (8.6% tangible common equity to risk-weighted assets), it
would help absorb potential increases in loan losses resulting from
the weak economic scenario.
Ciudad's profitability remained strong, resulting from trading
gains and higher-than-peers lending activity, with net income to
tangible assets increasing to 3.51% in March 2019, up from 2.55% in
2018, but distorted by Argentina's very higher inflation rate.
Despite uncertainty on growth prospects and= economic recovery in
the second half of 2019, Ciudad continues to gradually reprice new
loans at higher rates, which will continue to boost net interest
margins, benefited by the bank's low-cost funding.
Ciudad's A1.ar NSR is at the high end of the three NSR categories
in Argentina that correspond to Moody's B2 global debt ratings,
supported by its entrenched market presence in retail banking, that
ensures a steady core funding position and recurring earnings
generation through the cycles.
WHAT COULD CHANGE THE RATING UP/DOWN
Ciudad's ratings are currently at the same level as those of its
shareholder, the City of Buenos Aires, and Argentina's government
bond ratings. Upward pressure on Cuidad's ratings is limited at
this point as the rating outlook on the sovereign is negative. A
downgrade of Argentina's sovereign rating could put downward
pressure on the bank's global scale rating.
Both the GSR and NSR could be downgraded if Ciudad experiences a
significant deterioration in its financial fundamentals without a
corresponding deterioration in the government of Argentina's
creditworthiness.
The principal methodology used in these ratings was Procedures
Manual for Rating of Deposits, Debt Instruments and Shares of
Financial Institutions published in January 2017.
BUENOS AIRES: Moody's Rates Province's Medium Term Notes B2
-----------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has assigned
a B2 Global Scale local currency debt rating and an A3.ar National
Scale in local currency to the Medium Term Notes of the Province of
Buenos Aires. The ratings are in line with the province's long term
foreign currency issuer ratings, which carry a negative outlook.
RATINGS RATIONALE
The Medium Term Notes have been authorized by the province's 2019
law Nº15.077 and by Decree Nº210/19. The notes to be issued under
this program will be secured by the Province, affecting resources
coming from the federal tax-sharing regime.
The assigned debt ratings reflect Moody's view that the willingness
and capacity of the Province of Buenos Aires to honor these notes
are in line with the provincial's long-term credit quality as
reflected in the B2/A3.ar issuer ratings in local currency.
The Province of Buenos Aires intends to issue the notes in two
different series, with full amortization once they mature in
February and April 2020, respectively. The maximum issuance amount
authorized is ARS10,000 million, which represents 1.1% of the total
revenues budgeted for 2019. The final terms of the issuance will
depend on the results of the auction process.
The assigned B2/A3.ar ratings to the Medium Term Notes are based on
preliminary documentation received by Moody's as of the rating
assignment date. Moody's does not expect changes to the
documentation reviewed over this period, nor does it anticipate
changes in the main conditions that the Notes will carry. Should
issuance conditions and/or final documentation of the program
deviate from the original ones submitted and reviewed by the rating
agency, Moody's will assess the impact that these differences may
have on the ratings and act accordingly.
WHAT COULD CHANGE THE RATING UP/DOWN
Given the negative outlook and the difficult operating environment,
an upgrade of the ratings is unlikely. However, an upgrade of
Argentina's sovereign rating or a systemic improvement, or both,
along with lower idiosyncratic risks arising from this province
(that is, for instance, a sustained record of operating surpluses),
could exert upward pressure on the province's ratings.
A downgrade of Argentina's bond rating or a deterioration in the
province's liquidity, hindering its ability to service its
short-term debt service payments in foreign currency, or both,
could strain the ratings. In addition, if the province records a
deterioration in its operating and financial results, leading to
higher-than-expected debt levels, its ratings could be downgraded.
The principal methodology used in these ratings was Procedures
Manual for Risk Rating of Sub-Sovereign Governments published in
January 2017.
YPF ENERGIA: Moody's Assigns B2 Rating to $500MM Notes Issuance
---------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to YPF Energia
Electrica S.A. planned note issuance of up to $500 million under
its medium term note program. The outlook is negative.
The notes will have a 7-year maturity and YPFEE will use the
proceeds to partially fund its investment program, repay
outstanding debt and working capital needs.
Moody's has reviewed the preliminary draft legal documentation
related to the debt issuance. The assigned rating assumes that
there will be no material variation from the drafts reviewed and
that all agreements will be legally valid, binding and
enforceable.
RATINGS RATIONALE
YPFEE B2 rating and negative outlook reflect the stable and
predictable nature of the company's business model, derived from
long term contracted revenues under long term power purchase
agreements (PPAs) and fixed price capacity payments entered with
Cammesa (Compania Administradora del Mercado Electrico Argentino,
the Government of Argentina's -B2 negative - agency overseeing the
wholesale electricity market in Argentina). The PPA's are long term
(10-20 years) and provide the issuer with fixed payments based on
availability. The PPAs are denominated in US dollars which
materially reduces currency mismatches. The assigned ratings also
incorporate some benefits from the still incipient diversification
provided by YPFEE's long term contracts with private
counterparties, notably with YPFEE's main shareholder YPF S.A. (B2,
negative). Moody's understands that future contracts with private
counterparties will be limited to tier 1 Argentine corporations.
The rating also assumes that the company will pursue its growth
strategy prudently. Moody's expectation is that leverage will
temporarily surpass debt to EBITDA levels of five times at the peak
of the company's investment plan but will decline to debt to EBITDA
levels of two times by 2022. Moody's also expects that YPFEE will
manage its organic growth and development of new projects relying
on well-known technology under fixed price, full Engineering and
Procurement contracts (EPC) and long term service agreements
entered with well-known equipment or service providers. Moody's
understands that YPFEE's capital expenditures program will amount
to more than 20% of the company's total property, plant and
equipment (PP&E) for the next 2 years. While large, the investment
program is relatively simple and carries moderate execution risks.
Liquidity Profile
YPFEE has adequate liquidity. At the end of fiscal the first
quarter of 2019 the company had cash and equivalents over $200
million, or an excess of $50 million over its short-term debt
maturities.
YPFEE has adequate access to external financing, as demonstrated by
the various financings the company obtained in the last two years
to fund its projects. The issuance of the notes will contribute to
enhance its liquidity profile given the seven-year term of the
debt.
What Could Change the rating up/down
A further downgrade of the sovereign or evidence of a significant
negative shift in policies or regulations will likely result in
negative rating actions for this issuer. Liquidity deterioration in
a more challenging operating environment could also create negative
pressure on ratings.
Additional negative pressure on the ratings could result if YPFEE
financial policy became more aggressive. Specifically, Moody's
would become concerned should the debt to EBITDA ratio persist
above 5 times beyond 2020 when several of its projects should be
operational. At that point a ratio of CFO pre-working capital to
debt below 20% would also create negative pressure on the ratings.
Given the negative outlook, a rating upgrade is unlikely at this
time. However, a rating upgrade or outlook stabilization would
require the stabilization of the sovereign rating outlook. Improved
cash generation in relation to debt and lower leverage would also
be important to consider an upgrade or outlook stabilization.
Quantitatively, Moody's would expect YPFEE's debt to Ebitda ratio
in the range of two times, cash from operations to debt
consistently over 25% and positive levels of free cash flows.
Corporate profile
YPFEE is an Argentine power generation company with 1,819 MW of
installed capacity in thermal and renewable plants. Since 2017, the
company has acquired and developed assets for an installed capacity
of 723MW with an 634MW of power capacity under development that is
expected to enter operations by 2020. YPFEE was established in
August 2013 as a spin off from YPF, the company's main shareholder.
YPF S.A.(B2, negative) is Argentina's largest energy company, fully
integrated in oil and gas, majority owned by the government of
Argentina and listed on the Buenos Aires and the New York Stock
Exchange. As part of the company's growth strategy, in March 2018,
GE EFS Power Investments B.V., an affiliate of General Electric,
subscribed 24.9% of the company's stock.
The principal methodology used in this rating was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
YPF ENERGIA: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issuer credit rating
to Argentina-based energy generation company YPF Energia Electrica
S.A. (YPF Luz). At the same time, S&P assigned a 'B' rating to the
proposed senior unsecured notes.
The 'b+' stand-alone credit profile on the company reflects its
small scale at the 1,819 MW capacity and geographic concentration
with operations in one country, but with strong EBITDA margins of
about 65%.
The stable outlook on YPF Luz mirrors the one on the sovereign,
which caps the ratings on the company. S&P said, "The outlook also
reflects our view that YPF Luz will post above $200 million in
EBITDA in 2019 and $300 million in 2020, backed by 1,224 MW in
long-term, dollar-denominated contracts. As a result, we expect YPF
Luz to post average gross debt to EBITDA below 4.0x in the next 2
years."
The 'B' issuer credit and issue-level ratings on YPF Luz mirror the
rating on the sovereign and reflect S&P's view that the company
operates under a still weak, although improving, regulatory
framework.
The 'b+' SACP on YPF Luz incorporates its small scale and lack of
geographic diversification, with operations only in Argentina, as
well as high current and expected debt. The latter is necessary to
finance a considerable investment plan that consists of increasing
the installed capacity to up to about 2,453 MW by 2020 from the
current 1,819 MW. On the other hand, the company's profitability is
a credit strength, with sustained EBITDA margins above 65% in the
past three years, and operations under domestic regulations and
long-term contracts with dollar-denominated tariffs, which provide
certain stability and predictability to the cash flow generation.
Finally, the company has a satisfactory track record in terms of
service reliability and plant availability, with an average rate
above 80% in the past two years. The electricity tariffs and
long-term power purchase agreements (PPAs) provide stability to YPF
Luz's cash flow generation and mitigate currency mismatch for the
company's dollar-denominated debt. Nevertheless, in S&P's view, the
regulatory framework for Argentina's electricity industry remains
weaker than those of regional peers, given that the government
reorganized the sector less than five years ago.
===========
B R A Z I L
===========
AZUL SA: Fitch Publishes BB- LT IDRs, Outlook Stable
----------------------------------------------------
Fitch Ratings has published Azul S.A.'s 'BB-' Long-Term Foreign and
Local Currency Issuer Default Ratings and 'A+(bra)' Long-Term
National Scale rating. Fitch has also published a 'BB-'/'RR4'
rating to Azul's USD400 million senior unsecured notes due 2024,
that was issued by Azul Investments LLP and guaranteed by Azul and
Azul Linhas Aereas Brasileiras S.A. The Rating Outlook is Stable.
Azul's ratings are supported by its strong regional market position
in the Brazilian domestic airlines industry and solid operating
margins, constrained by its limited geographic diversification and
FX exposure. The ratings reflect the expectation of improvements in
Azul's credit risk profile during 2019-2020, supported by better
industry fundamentals for the airline industry in Brazil, higher
operating cash flow generation, deleveraging trend, and commitment
to maintain high liquidity ratios to reduce refinancing risk. The
ratings further incorporate the vulnerability of the company's cash
flow generation to fuel price variations and the inherent risks of
the airline industry, as well as the carrier's capacity to maintain
operational margins based on its leadership position in the markets
where it operates.
The Stable Outlook reflects Fitch's expectation that Azul will
continue to manage its growing business in a conservative manner
that will continue to support a decline in leverage. Fitch's base
case scenario forecasts the company's total and net adjusted
leverage/EBITDAR ratios at around 4.5x and 4.0x, respectively,
during 2019-2020 compared to 5.4x and 4.6x in 2018.
KEY RATING DRIVERS
Regional Market Position: Azul's credit profile benefits from its
unique regional airline market position in Brazil, with a strong
presence in underserved markets and limited route overlap with
competitors (around 31% with GOL and 20% with LATAM). This
positioning tends to give Azul a better pricing advantage. Azul is
the third largest airline company in Brazil with a market share of
around 19% as measured by revenues/passenger/kilometer in 2018. As
this is the company's key market, Azul's operating results are
highly correlated to the Brazilian economy. Due to this limited
geographic diversification compared to global peers, the company's
FX exposure is high. Azul generates approximately 79% of its
revenues in Brazilian reals, while around 55% of its total costs
and 76% of its total debt are denominated in USD.
Better Industry Scenario for 2019: Avianca Brasil's financial
distress and subsequent downsizing has been contributing to a
healthier yield environment as it was the most aggressive domestic
player in recent years. The combination of market share gains and
improvements in yields should help the airlines to mitigate soft
economic conditions in Brazil, higher fuel prices and FX
volatility. The expectation of a relatively better macroeconomic
environment in 2020, notwithstanding any reverse due to political
turbulence, should benefit traffic levels and operating cash flow
generation. Fitch forecasts Brazil's GDP growth to be 2.2% in 2020.
This compares with an average of 1.2% during 2017-2018 and negative
0.3% during 2012-2016.
Cost Structure to Improve: Azul has been working to expand
operating margins through its fleet renewal plan with the addition
of next generation aircraft such as A320Neo and Embraer E2, which
should result in lower CASK-ex fuel, improved fuel efficiency and
increased revenues due to passenger capacity expansion. Fitch
expects Azul to sustain its EBIT margin in the 11%-12% range during
2019 (not considering IFRS impacts), driven by cost reduction,
moderate higher passenger yields and expectations of moderate
demand recovery as the Brazilian macroeconomic environment
improves. These factors could be partially offset by fuel cost
increases, depreciation of the Brazilian real versus the U.S.
dollar and/or increasing capacity from competitors. Fitch
anticipates Azul will maintain reasonable capacity management given
the current competitive environment in the domestic market.
Capex to Remain Pressuring FCF: The improving operating cash flow
generation should reduce Azul's negative FCF during 2019, with the
company exhibiting FCF generation of negative BRL361 million in
2018. Going forward, the fleet expansion program could pressure
FCF, but Fitch views Azul as having the capacity to adjust its
capex plan in an economic distress scenario as occurred in
2016-2017. FCF levels are projected to be negative BRL50 million in
2019 and moving to positive territory during 2020 (BRL50 million).
Fitch does not expect dividends to be a cash drain for Azul in the
short to medium term.
Deleverage Trend: Fitch's base case scenario indicates a decline in
leverage with Azul's total and net adjusted leverage moving toward
4.6x and 4.0x, respectively, over the next two years. This
represents an improvement from 5.4x and 4.6x, respectively, in 2018
and average of 6.1x and 5.5x during 2016-2017. Fitch's calculation
for these leverage forecasts does not incorporate the
implementation of IFRS16 as of January 2019.
DERIVATION SUMMARY
Azul's 'BB-' rating is at the same level than LATAM Airlines Group
S.A, (LATAM) and one notch higher than the ratings of GOL Linhas
Aereas Inteligentes S.A. (B+/Stable). The other main regional
player in Latin America, Avianca Holdings S.A. (B-/Rating Watch
Negative) faces higher refinancing risks. Among the four companies
Azul has exhibited the highest operating margins during 2017-2019.
Azul has a weaker position in the 'BB' rating category relative to
global peers given its limited geographic diversification and
relatively high leverage; nonetheless its important regional market
position in the Brazilian market, high operating margins and strong
liquidity ratios supports its ratings. These positive factors are
tempered by the company's ongoing business growth and operational
volatility related to its key market, Brazil. FX risk exposure is
viewed as a negative credit factor for Azul considering its limited
geographic diversification; however, the company has implemented a
currency hedge position which limits its exposure in
USD-denominated debt to 35%.
Azul has consistently maintained a stronger liquidity position,
measured as cash over LTM revenues, when compared to regional
peers. Fitch anticipates Azul maintaining a liquidity position
around 18%-20% of its expected annual revenue levels during
2019-2020. This liquidity position is higher than those levels
expected by LATAM and GOL.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Capacity growth of 15%-20% during 2019-2020;
-- Low single-digit yield growth and load factor in the 81%-83%
range;
-- 2018-2019 EBIT margin around 12%;
-- Negative FCF margin in 2019 and slightly positive in 2020, as
capex remains high;
-- 2019-2020 liquidity, measured as readily available cash over
LTM net revenues, in the 18%-20% range.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that Azul would be considered a going
concern in bankruptcy and that the company would be reorganized
rather than liquidated. Fitch has assumed a 10% administrative
claim.
Going-Concern Approach: Azul's going-concern EBITDA is based on an
average of 2014-2018 EBITDA that reflects a scenario of intense
volatility in the airline industry in Latin America and Brazil,
plus a discount of 20%. The going-concern EBITDA estimate reflects
Fitch's view of a sustainable, post-reorganization EBITDA level,
upon which Fitch's bases the valuation of the company. The
EV/EBITDA multiple applied is 5.5x, reflecting Azul's good market
position in Brazil.
Fitch applies a waterfall analysis to the post-default enterprise
value (EV) based on the relative claims of the debt in the capital
structure. The agency's debt waterfall assumptions take into
account the company's total debt at Dec. 31, 2018. These
assumptions result in a recovery rate for the unsecured bonds
within the 'RR4' range, which per Fitch's criteria leads to
equalization of the rating to the IDR.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-- Liquidity, measured as cash/LTM revenues, consistently above
25%;
-- Total adjusted debt/EBITDAR consistently below 4.0x;
-- Sustainable positive FCF generation;
-- FFO fixed-charge coverage sustained around 3x;
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-- Total adjusted debt/EBITDAR sustained above 5.0x and/or net
adjusted debt/EBITDAR above 4.5x;
-- EBITDAR margin consistently below 25%;
-- Liquidity, cash/ LTM revenues, consistently below 17%;
-- Sustained negative FCF at levels resulting in a FCF margin
consistently below negative 5%.
LIQUIDITY
Fitch views the company's liquidity position as a key factor for
its 'BB-' rating and expects Azul to remain proactive in its
liability management strategy in order to avoid refinancing risks.
Azul held adjusted cash of BRL1.8 billion as of March 31, 2019, per
Fitch's calculation, which considers only 40% of its marketable
securities relating to the high yields bonds of TAP. Azul's
short-term debt was BRL156 million, excluding the BRL1.3 billion of
leasing obligations. Azul's liquidity was 19% of its LTM revenues
as of March 31, 2019. The company has a comfortable debt schedule
amortization, with debt amortizations of BRL526 million during 2019
and 2020 and BRL445 million in 2021.
FULL LIST OF RATING ACTIONS
Fitch has published the following ratings:
Azul S.A.(Azul)
-- Long-Term Foreign Currency IDR 'BB-'; Outlook Stable;
-- Long-Term Local Currency IDR 'BB-'; Outlook Stable;
-- Long Term National Scale Rating 'A+(bra)', Outlook Stable .
Azul Investments LLP
-- USD400 million senior unsecured debt issuance 'BB-'/'RR4'.
===========================
C A Y M A N I S L A N D S
===========================
GUANAY FINANCE: Fitch Hikes Series 2013-1 Notes Rating to BB
------------------------------------------------------------
Fitch Ratings has upgraded Guanay Finance Limited's 2013-1 notes to
'BB' from 'BB-'. The Rating Outlook has been revised to Stable from
Positive.
The transaction is backed by existing and future U.S. and Canadian
dollar-denominated ticket receivables originated by LATAM Airlines
Group S.A. (LATAM). Receivables result from passenger and cargo
sales booked under IATA code 045 and purchased with a qualified
credit, debit or charge card in the U.S. and Canada. Fitch's rating
addresses timely payment of interest and principal on a quarterly
basis.
The rating action on the notes reflects the upgrade of LATAM's
Long-Term Foreign Currency Issuer Default Rating (FC IDR) to 'BB-'
from 'B+'. The Corporate Rating Outlook was revised to Stable from
Positive.
Guanay Finance Limited
Current Rating Prior Rating
Series 2013-1 40066NAA4; LT BB Upgrade; previously BB-
Series 2013-1 Reg S USG4182JAA19; LT BB Upgrade; previously BB-
KEY RATING DRIVERS
Originator's Credit Quality: Fitch rates LATAM's Long-Term FC
Issuer Default Rating (IDR) 'BB-'/Stable. LATAM's rating is
supported by its diversified business model, significant regional
market position, adequate liquidity, improved margins in key
markets and slightly better than the 2017 level gross adjusted
leverage when compared to 2018.
Going Concern Assessment: Fitch assesses LATAM a going concern
assessment (GCA) score of 'GC3'. The maximum rating uplift allowed
by the GCA score is two notches. However, other risks outlined
result in a one-notch rating uplift from LATAM's IDR.
Adequate Performance: Considering maximum quarterly debt service
for the life of the transaction, last twelve month average DSCR is
4.9x. Flows benefit from a strategically important and strong
securitized business line.
Future Flow Debt: As of 4Q18, outstanding future flow debt
represented approximately 2% of LATAM's consolidated debt and 3.2%
relative to unsecured debt. These percentages are low relative to
LATAM's balance sheet and have been improving since closing.
Moderate Diversion Risk: The transaction is exposed to potential
diversion risk despite structural protections. Cash flows could be
diverted from the transaction by rerouting sales through a
different IATA code or processing card payments in a different
jurisdiction. Moderate diversion risk limits uplift of the future
flow rating from the originator's IDR.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Leads Region in Making Trade Easier
-------------------------------------------------------
Dominican Today reports that Dominican Republic is one of the Latin
America and the Caribbean countries that has shown strong
willingness to enact the World Trade Organization's (WTO) Trade
Facilitation Agreement (CFA), which took effect on February 22,
2017.
While other countries have shown around a 50% willingness, as high
as 76% of Dominican authorities have indicated that they'll take
measures to comply with this agreement, according to Dominican
Today.
WTO representative, Helen Chang congratulated the country's
leadership in the regional benchmark. "Dominicana has indicated
that it is already applying the agreement at 76%; that the 24% that
remains is what we have to work on," the report relays.
Chang spoke about the CFA's challenges and benefits during a
breakfast-panel organized by the American Chamber of Commerce
(AmchamDR), the report notes.
According to the WTO, the AFC contains provisions to expedite the
movement, release and clearance of goods, including goods in
transit, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported on April 4,
2019 that the Dominican Today related that Juan Del Rosario of the
UASD Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with stable outlook (2015). Moody's credit rating for Dominican
Republic was last set at Ba3 with stable outlook (2017). Fitch's
credit rating for Dominican Republic was last reported at BB- with
stable outlook (2016).
DOMINICAN REPUBLIC: Political Tension Affects Economy
-----------------------------------------------------
Dominican Today reports that the main representatives of the
country's economic sector said that the political uncertainty that
the Dominican Republic is going through affects the economy.
The businessmen spoke in those terms at the end of the breakfast of
the Association of Industries of the Dominican Republic (AIRD),
according to Dominican Today.
For Celso Juan Marranzini, president of that entity, the country
lives in a climate of concern, the report relays. "It is a moment
of prudence and to see how we all work to build trust and reverse
that situation," he said, the report notes.
Dominican Today discloses that the director of the Center for
Export and Investment of the Dominican Republic (CEI-RD), Marius de
Leon, said that despite the political situation in the country,
this has not significantly affected the growth of trade.
"We have more than 500 million dollars in projects and you have
seen the last projects inaugurated in the tourism area, which are
approximately 300 million dollars, that are for direct foreign
investment," said the official, the report says.
Regarding exports, De Leon explained that so far this year have 5.6
billion dollars with a projection of closing the year with 12
billion dollars and an estimated growth of 8.3%, the report notes.
Dominican Today relays that the competition in international
markets which is the cause of the country's growth is not the same
as the previous year, causing the Dominican market to adjust the
methodology to new times and markets.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported on April 4,
2019 that the Dominican Today related that Juan Del Rosario of the
UASD Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with stable outlook (2015). Moody's credit rating for Dominican
Republic was last set at Ba3 with stable outlook (2017). Fitch's
credit rating for Dominican Republic was last reported at BB- with
stable outlook (2016).
===============
H O N D U R A S
===============
HONDURAS: Seeks US$311 IMF Loan for Stability and Growth
--------------------------------------------------------
The International Monetary Fund said Honduras has made significant
progress in restoring economic stability and laying the groundwork
for sustainable growth since completing its IMF-supported economic
program in December 2017. But poverty remains high, and a large
informal labor market, strong dependence on agriculture, and
violence continue to challenge economic growth, the IMF said in its
latest economic review.
To tackle these structural challenges and to build on previous
achievements, Honduras has requested US$311 million in IMF support
to foster their reform agenda and promote inclusive growth. The
authorities are planning to treat the financing as precautionary,
that is, they are not planning to draw on it.
In the following interview, Esteban Vesperoni, the IMF's mission
chief for Honduras, discusses the details of the economic plan.
Honduras has made very good progress under the previous program.
Why does the country need new assistance from the IMF?
Indeed, Honduras has made great strides reducing macroeconomic
imbalances (high imbalances in a country can be a sign of economic
and financial stress) and strengthening its policy framework
supported by the IMF program during 2014-17. Nevertheless,
challenges remain. The authorities have maintained prudent policies
-- with a low fiscal deficit that over-performed the targets in the
Fiscal Responsibility Law over the last years -- but the
deteriorating financial situation of the public electricity company
has strained public finances.
This takes places in a context in which poverty is still high and
significant social and infrastructure spending is needed. In
addition, an overarching challenge to achieve sustainable inclusive
growth is associated with the need to improve governance, which
calls for wide-ranging institutional reforms.
What does the new economic plan seek to achieve?
The policy mix and structural reforms under the program aim at
making the economy strong and stable, protecting the most
vulnerable, and supporting jobs and growth that benefit all. This
new economic plan is ambitious and comprehensive, and has the key
elements:
securing the fiscal position by putting the public electricity
company on a sustainable path through reforms in the electricity
sector and through measures to maintain spending room in the budget
for investment and social spending;
strengthening the monetary policy framework to buffer shocks and
maintain stability; and implementing reforms to improve the
business environment and governance, including by stepping up
efforts in the fight against corruption.
You have mentioned a number of reforms to maintain economic
stability, boost growth, and address many structural issues. How
will the government protect social spending under the plan?
This is at the core of the authorities' program. Bold reforms to
place the finances of the public electricity company on a
sustainable path and efforts to uphold previous revenue
mobilization achievements will help maintain space for social
spending. The fiscal program also defines priority spending that
will be protected going forward and comprises a set of high-impact
interventions aimed at alleviating poverty, fostering investment in
human capital, and supporting women entrepreneurship and
participation in labor markets -- such as Criando con Amor, Mejores
Familias, and Ciudad Mujer -- which are critical for long-term
inclusive growth.
At 46 percent of the total working population, the participation of
women in the formal labor market is low compared to Latin American
peers. How does the new economic plan aim to support more women in
the workforce?
The new economic plan combines new programs with an expansion of
ongoing initiatives to promote women entrepreneurship and improve
opportunities for women to access education and enter labor markets
by:
(i) supporting childcare services;
(ii) facilitating credit for women; and
(iii) supporting women with young children.
Does the plan also include reforms that support strengthening
governance and tackling corruption?
The authorities are also working on strengthening governance,
including by stepping up efforts in their fight against corruption.
The planned reforms aim at improving governance and transparency in
public finance management, the monetary policy operational
framework, and the electricity sector. The authorities are also
working with the staff and other development partners to implement
reforms aimed at enhancing the rule of law, with the objective of
preventing the misuse of public funds and improving the business
climate -- notably by simplifying procedures in public
administration with the objective to reduce red tape and
discretion, which can give place to corruption.
===========
M E X I C O
===========
ENGENCAP HOLDING: Fitch Assigns BB- LT IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings has assigned final Long- and Short-Term Issuer
Default Ratings to Engencap Holding, S. de R.L. de C.V. of 'BB-'
and 'B', respectively. The actions follow receipt of changed and
final conditions for Engencap Holding's acquisition of a 51%
controlling stake in TIP de Mexico, S.A.P.I. de C.V (TIP).
To complete the acquisition, Engencap Holding raised a five-year
secured debt loan (syndicated loan) of USD116 million. The 51%
controlling stake represents 100% of the voting power in TIP and
will allow Engencap Holding to receive 100% of the dividend
distributions from TIP. The transaction included a call option that
provides Engencap Holding with the right, but not the obligation,
to acquire the remaining 49% of TIP in the coming 5.5 years.
Fitch previously published an expected rating based on Engencap's
initial plan to acquire a 100% stake financed by a public placement
of subordinated perpetual notes for up to USD225 million. Fitch has
now withdrawn the 'B(EXP)' rating on the notes since Fitch no
longer expects to convert it to a final rating within the
previously envisaged timeline.
KEY RATING DRIVERS
IDRs
Engencap Holding's final ratings reflect that the new terms and
conditions of the TIP acquisition did not change Fitch's assessment
of the consolidated company profile. Fitch expects several aspects
of the combined entity's business to be strengthened by an improved
franchise, asset diversification and a larger business scale. The
combined financial profile will also benefit from increased profit
generation (although still lagging behind its sector peers) and
from a more diversified funding structure. The acquisition funding
vehicle was recently changed from subordinated perpetual notes with
an expected 50% equity value to a secured loan for about 50% of the
initial transaction. Fitch does not expect this change to result in
significantly different leverage levels. However, leverage is
pressured compared with Engencap Holding's pre-acquisition
individual leverage level, which was 5.1x as of YE18.
The combined operation will allow Engecap Holdings and TIP to
improve their business scales and increase their target customer
base. Additionally, both entities could benefit from cross-selling
opportunities. The acquisition has positioned the Engencap-Tip
entity as one of the largest participants in the Mexican leasing
market. Nevertheless, its company profile continues to be of a
niche nature and a moderate size for the Mexican financial sector.
Final conditions for the TIP acquisition resulted in an estimated
metric of debt to tangible equity of 6.8x in 2018 and a forecasted
pro forma metric of 7.0x in 2019. Tangible leverage is mainly
affected by goodwill originated from the transaction and the
increasing intangibles due to the recognition of customer
relationships and trademarks. Considering the cushion provided by
restricted cash to service debt obligations, the company's net debt
to tangible equity ratio (net only of restricted cash) declined to
6.2x and 6.4x in 2018 and 2019. The entity is not planning to
disburse dividends until the call option is executed in full.
Engecap Holding registered standalone operational net losses in
2016, 2017 and 2018 as a result of the process of setting up
independent operations. Pre-tax income to assets for 2018 and to
average assets for 2019 of the combined entity would result in a
hypothetic and pro forma 1.7% and 2.4%, respectively. Those metrics
consider an increasing net interest margin and controlled
operational expenses and provisions for credit losses. TIP's proven
track record of earnings generation will immediately benefit
Engencap Holding's profitability. Although operational synergies
are not the main objective of this transaction, the entity expects
to reflect savings in its funding costs and incremental origination
from acquisition. Fitch expects currency risk to remain relevant
but decrease as the company services its USD securitization
transaction with restricted cash and portfolio amortization.
In Fitch's view, the combined profile will present a reasonable
impaired loan metric. As of December 2018, this ratio would have
been 3.2%, although the agency's asset quality evaluation would be
pressured by a low reserve coverage ratio of 51%, according to
initially calculated figures. While impairments compare unfavorably
to Engencap Holding's 2.2% standalone metric due to TIP's higher
delinquencies and higher historical impairment volatility, this
ratio is relatively in line with the majority of its peers. Both
Engencap Holding and TIP have low historical write-offs, which is
also common in the leasing sector.
After the TIP acquisition the combined entity will increase its
funding diversification, given the greater amount of funding lines
from TIP, while its unsecured funding will remain at a relatively
low level of around 8% of total funding, behind most of its peers.
The combined funding sources include secured credit lines from
commercial banks, loan securitizations, leasing and unsecured
credit lines from development banks. Fitch views the credit
facilities that TIP will provide as a positive.
Fitch will continue to monitor execution risks from the
transaction. Fitch expects both companies to continue as
independent operations. Even though the entity does not anticipate
any other changes in top management apart from the recent
announcement that TIP's CEO will be the combined entity CEO, Fitch
believes some other managerial or governance changes could result
from the acquisition.
RATING SENSITIVITIES
IDRs
The ratings could be downgraded if the combined company is not able
to consistently sustain a pre-tax income to average assets ratio
above 1% and if its debt to tangible equity ratio is sustained
consistently above 7x. A material increase in non-performing loans
or in concentrations per debtor, coupled with a relevant increase
in tangible leverage could also negatively affect ratings. Evidence
of weaknesses in corporate governance or internal controls, or the
materialization of higher than expected costs arising from the
integration process could also pressure ratings downward.
Upside potential in the short term is limited. The ratings could be
upgraded in the medium term if the company materially strengthens
its franchise and competitive position under its new strategy as an
independent leasing company. At the same time, Fitch expects the
company to achieve and maintain a pre-tax income to average assets
ratio consistently above 3%, reduce concentrations per debtor, and
sustain a tangible leverage ratio below 6x, while it maintains
asset quality metrics around current levels. In addition, an
improvement in the flexibility of its funding mix driven by a
materially larger contribution of unsecured facilities or a
significantly larger portion of unencumbered assets would also
benefit creditworthiness.
Fitch has assigned the following ratings:
Engencap Holding, S. de R.L. de C.V.:
-- Long-Term Local and Foreign Currency IDRs 'BB-'; Outlook
Stable;
-- Short-Term Local and Foreign Currency IDRs 'B'.
Fitch has withdrawn the following rating:
-- Subordinated perpetual notes for up to USD225 million
'B(EXP)'.
=====================
P U E R T O R I C O
=====================
INVERSIONES CARIBE: Condado 2 Objects to Disclosure Statement
-------------------------------------------------------------
Secured creditor Condado 2, LLC, objects to the disclosure
statement explaining the Chapter 11 plan of Inversiones Caribe
Delta.
Condado points out that the Disclosure Statement in this case does
not provide sufficient adequate information that would creditors to
make an informed judgment as to the reasonableness of the Plan of
Reorganization.
Condado further points out that the Disclosure Statement does not
inform or take into account the potential scenario where the
Objection to Claim is denied and the Debtor has to pay the total
amount in Proof of Claim No. 7, which is the main claim in the
instant case.
Attorneys for Condado:
Sonia E. Colon, Esq.
Gustavo A. Chico-Barris, Esq.
Camille N. Somoza, Esq.
PO Box 195168
San Juan, PR 00919-5168
Telephone: (787) 766-7000
Facsimile: (787) 766-7001
Email: scolon@ferraiuoli.com
gchico@ferraiuoli.com
csomoza@ferraiuoli.com
About Inversiones Caribe
Inversiones Caribe owns a parcel of land in Dorado, Puerto Rico,
which is valued at $6 million, and a commercial property in Ponce,
Puerto Rico, which is valued at $1.4 million.
Inversiones Caribe Delta filed a Chapter 11 petition (Bankr. D.P.R.
Case No. 19-00388) on Jan. 29, 2019. In the petition signed by
Carlos F. Muratti, president, the Debtor disclosed $7,415,061 in
assets and $3,619,549 in liabilities. The case has been assigned
to Judge Brian K. Tester. Carmen D. Conde Torres, Esq., at C.
Conde & Assoc., is the Debtor's counsel.
The case is jointly administered with the Chapter 11 case of
Preserba Compania de Desarrollos, Inc. (Case No. 19-00387).
PUERTO RICO: Governor Faces Calls For Impeachment Over Chats
------------------------------------------------------------
Reuters reports that Puerto Rico's embattled governor came under
growing pressure to resign or be impeached after the leak of
hundreds of vulgar and offensive chat messages, as the Caribbean
island's trade unions staged another protest march in San Juan.
Governor Ricardo Rossello has faced violent street protests
demanding he step down over the messages about political
adversaries, according to Reuters.
The chats on a private Telegram group were published July 13,
adding to Rossello's woes the same week two of his former officials
were arrested by the FBI as part of a federal corruption probe in
the bankrupt U.S. territory, the report relays.
The 889 pages of messages revealed by Puerto Rico's Center for
Investigative Journalism showed how Rossello and advisers exchanged
memes and comments that were derogatory, misogynistic and
homophobic, as well as privileged information, the report notes.
The governor agreed to convene an emergency meeting with members of
his political party after a string of U.S. Democratic presidential
candidates and lawmakers called for his ouster, the report notes.
In a report, Puerto Rico's influential bar association cited clear
grounds to impeach the 40-year-old former scientist, based on the
"depravity" of the messages. The group's president, Edgardo Roman,
recommended the island's legislature begin the process, Reuters
says.
"According to the analysis we've done on the contents of the chats
made public, we understand that it is appropriate to start said
impeachment process," the report said, Reuters relays.
Reuters notes that Puerto Rico has never carried out a political
impeachment, according to legal experts, and while opposition
legislators back the process it has yet to gain critical support
from lawmakers in Rossello's governing PNP party.
The political turmoil comes at a critical stage in the U.S.
territory's bankruptcy, Reuters relays. It has also raised
concerns with U.S. lawmakers who are weighing the island's requests
for billions of federal dollars for healthcare and for recovery
efforts following devastating hurricanes in 2017, Reuters notes.
Rossello has apologized for the messages, saying they were
"inappropriate" but not "illegal," and sent tweets showing him
carrying out business as usual, Reuters discloses.
Puerto Rico House Speaker Carlos Mendez disclosed the creation of
an independent committee to determine whether Rossello engaged in
illegal activity in the chats, 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 & Youngis
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.
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 & Youngis
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: Guaido Seeks Protection for Appointed Board
-------------------------------------------------------------------
Jef Feeley at Bloomberg News reports that Venezuela's opposition
leader is asking a court in Delaware to protect his board
appointments to the government-owned company that runs one of the
biggest U.S. refiners, Citgo Petroleum Corp.
Houston-based Citgo is the biggest asset of Petroleos de Venezuela
SA, and the company has become a target of a bitter and chaotic
leadership dispute in the South American country, according to
Bloomberg News. Juan Guaido was tapped to be president by
Venezuela's National Assembly but he has failed to wrest power from
Nicolas Maduro, Bloomberg News relays.
Guaido, who appointed new directors to PDVSA, asked Delaware
Chancery Judge to reject a bid by Maduro to replace them with his
own candidates, Bloomberg News relays. The nation's oil industry
was one of the world's largest before the economy collapsed and
thousands began fleeing the country, Bloomberg News notes.
Since U.S. President Donald Trump declared Guaido as Venezuela's
legitimate president for purposes of U.S. law, that vested him with
the power to appoint the directors and Maduro has no legal grounds
for challenging them, Ken Nachbar, one of Guaido's lawyers, told
McCormick, Bloomberg News discloses. The judge said she'd rule
later on the issue, Bloomberg News notes.
Maduro's attorneys are trying to "throw up enough dust" to obscure
the clarity of U.S. Supreme Court cases certifying Trump's
authority to recognize foreign governments, Nachbar said, Bloomberg
News says. McCormick should defer to the executive branch on the
issue, he said, Bloomberg News notes.
Venezuela is mired in its worst recession, following years of
Maduro's economic policies coupled with a collapse in the country's
all-important oil industry, Bloomberg News relays. Venezuelan
officials are scrambling to keep their hands on Citgo to help
alleviate the country's economic ills, Bloomberg News notes.
Bloomberg News discloses that PDVSA counts on Citgo's U.S.
refineries to handle Venezuelan crude that translates into
desperately needed hard currency. Creditors have sued around the
world seeking to seize control of the the refiner to satisfy their
debts, Bloomberg News says.
U.S. sanctions against Maduro's authoritarian regime have largely
isolated Venezuela from the global financial system and hampered
financing, Bloomberg News relates. In response, the Venezuelan
government has stepped up sales of gold to firms in places such as
the United Arab Emirates and Turkey, Bloomberg News notes.
Settlement Talks
Guaido, head of the country's National Assembly, and Maduro, who
has the support of the Venezuelan Army, have held talks in Oslo,
Norway, seeking to resolve the crisis. The latest round of
negotiations were scheduled to take place earlier this month in the
Caribbean country of Barbados.
Maduro's lawyers argued he is still the de facto ruler of
Venezuela, so he has the power to name directors to the state-owned
oil company, Bloomberg News notes. Maduro has turned to Russia and
Iran for support in the face of American sanctions, Bloomberg News
says.
"This isn't a political-question case" that should tie a judge's
hands, Quinn Smith, one of Maduro's attorneys, told McCormick,
Bloomberg News relays. Guaido's legal team is giving an "overly
broad" reading to court decisions ratifying Trump's power to
recognize foreign governments, Smith said in court filings,
Bloomberg News discloses.
In their suit challenging Guaido's board candidates, Maduro's
lawyers argued even though the National Assembly issued a
resolution authorizing Guaido to clean house among PDVSA's board,
Venezuela's Constitutional Court struck down the statute as
unconstitutional, Bloomberg News says.
"Under Venezuelan law, the decision is binding, final, and
unappealable," Maduro's board designees said in the chancery court
suit, filed in June, Bloomberg News notes.
More than 50 other countries have recognized Guaido as Venezuela's
rightful leader and a handful of U.S. courts have recognized
Guaido's sole authority to represent Venezuela in American
litigation, Bloomberg News relays. None have ruled on whether
Guaido's slate of directors legitimately controls PDVSA's U.S.
subsidiaries, Bloomberg News notes. In May, the Guaido directors
approved a $71 million payment on PDVSA's 2020 bonds, which are
backed by Citgo shares, Bloomberg News adds.
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.
PETROLEOS DE VENEZUELA: Partly Restarts Amuay Refinery
------------------------------------------------------
Mircely Guanipa at Reuters reports that Venezuelan state oil
company PDVSA (Petroleos de Venezuela, S.A.) partly restarted
activity at its 645,000 barrel-per-day (bpd) Amuay refinery where a
blackout halted operations in early July, four sources with
knowledge of the matter said, though it remained well below
capacity.
The refinery's catalytic cracker restarted and was processing
68,000 bpd, one of the sources said. Three other sources said two
distilling units were processing a total of 135,000 bpd. The
neighboring 310,000 bpd Cardon refinery remains offline, the
sources said, according to Reuters.
Outages are frequent at the twin facilities that together form the
955,000 bpd Paraguana Refining Center, which has been operating
well below capacity for years because of chronic operational
problems aggravated by OPEC member Venezuela's economic crisis, the
report notes.
Low output from the refineries, together with sanctions on PDVSA by
the United States as part of its effort to oust socialist President
Nicolas Maduro, have contributed to fuel shortages throughout
Venezuela in recent months, the report adds.
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.
===============
X X X X X X X X
===============
LATAM: World Bank Mobilizes US$14 billion for Region
----------------------------------------------------
Trinidad Express reports that the World Bank Group said it has
mobilized more than US$14.4 billion in lending and guarantees to
support sustainable development and poverty reduction in Latin
American and the Caribbean during the 2019 fiscal year that ended
last month.
The Washington-based financial institution said this included a
combined US$6.4 billion from the International Bank for
Reconstruction and Development (IBRD) and the International
Development Association (IDA) typically referred to as the World
Bank, a record US$6.2 billion from the International Finance
Corporation (IFC) to promote private sector led sustainable
development, and almost US$1.8 billion in guarantees by the
Multilateral Investment Guarantee Agency (MIGA), according to
Trinidad Express.
[*] BOND PRICING: For the Week July 15 to July 19, 2019
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Empresa Provincial de 12.5 0.0 1/29/2020 AR USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Plaza SA 3.5 38.3 8/15/2020 CL CLP
Banco Security SA 3.0 5.6 7/1/2019 CL CLP
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
SACI Falabella 2.3 50.6 7/15/2020 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Banco Security SA 3.0 27.4 6/1/2021 CL CLP
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Esval SA 3.5 49.9 2/15/2026 CL CLP
*********
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. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
* * * End of Transmission * * *