/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/191003.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, October 3, 2019, Vol. 20, No. 198 Headlines A R G E N T I N A ARGENTINA: Crisis Adds to Neighboring Economies' Headwinds AUTOPISTAS DEL SOL: Fitch Affirms B+ Rating on International Notes BANCO DE BUENOS AIRES: Fitch Affirms 'CCC' LT Issuer Default Rating BANCO HIPOTECARIO: Fitch Affirms CC IDRs, Outlook Stable BANCO SUPERVIELLE: Fitch Affirms CC LT Issuer Default Ratings TARJETA NARANJA: Fitch Affirms CC LT Issuer Default Ratings B E R M U D A SIGNET JEWELERS: Fitch Assigns B+ LT IDR, Outlook Negative B R A Z I L ODEBRECHT SA: Dominican Republic Asks Brazil to Secure US$124MM OI SA: To Test 5G in Rio Music Festival Using Huawei's Gear C U B A THOMAS COOK: Bankruptcy Affects Some 2,000 Tourists in Cuba J A M A I C A THOMAS COOK: Officials Seek to Mitigate Fallout from Collapse P A R A G U A Y PARAGUAY: To Get 90MM-IDB Loan to Improve Efficiency of Fund Use P U E R T O R I C O JG & RM REALTY: Seeks to Hire Garcia-Arregui & Fullana as Counsel X X X X X X X X LATAM: Election Cycle Ending W/ Challenge of Meeting Expectations - - - - - ================= A R G E N T I N A ================= ARGENTINA: Crisis Adds to Neighboring Economies' Headwinds ---------------------------------------------------------- Fitch Ratings noted in an Oct. 1, 2019 report that Argentina's economic crisis will have negative effects on neighboring economies, adding to an already challenging external backdrop for the region. Reduced trade and financial exposures should help to limit broad-based regional effects from a prolonged Argentinian recession, but smaller economies with higher direct exposures to Argentina are likely to be affected more. Fitch forecasts the Argentinian economy to contract by 3% in 2019 and 1.7% in 2020. The scope for destabilizing regional contagion should be limited by a substantial reduction in trade linkages over the past two decades, limited direct financial exposures and low financial market contagion risk. Positively, direct goods trade exposures to Argentina for Brazil, Chile and Uruguay have fallen substantially since the 2001-2002 crisis, largely due to trade diversification into markets such as China. Exports to Argentina have risen for Paraguay and Bolivia, although the concentration in certain goods less directly exposed to Argentinian demand (soybeans) or based on pre-agreed contractual terms (natural gas) should mitigate the economic effects. Thus far, the region has also seen no substantive signal of market contagion risk to neighboring countries since the onset of heightened volatility in Argentina in August. Bond and CDS spreads for neighboring countries have remained roughly stable even as Argentinian spreads rose significantly. The confluence of challenges facing the country including low policy credibility, a substantially increased and highly dollarized government debt burden, high inflation, a sharp recession, acute financing constraints amid large financing needs and reduced international reserves, makes it an outlier. Additionally, the severe political shock and elevated policy uncertainty that have exacerbated these challenges in Argentina are not shared by other countries. Fitch said, "Although we believe that Argentina's crisis will unlikely have a severe or destabilizing effect for the rest of the region, it will pose headwinds of varying magnitude among individual countries. Smaller economies, including Uruguay, Paraguay and Bolivia, are likely to see the greatest economic growth effects owing to a range of exposures including trade, tourism, reduced competitiveness owing to real exchange rate appreciation and remittances." Fitch's outlook on Bolivia and Uruguay's ratings are already Negative. "For the latter, we specifically highlighted persistent growth underperformance and fiscal deterioration as contributing to the Negative Rating Outlook in our rating affirmation in May, which primarily reflect homegrown issues that will be amplified by headwinds from Argentina namely via the key tourism sector. Bolivia's Negative Rating Outlook also reflects rising macroeconomic vulnerability from the rapid decline in international reserves due to adverse developments in the gas sector and highly expansive policies. Further erosion in competitiveness vis-a-vis Argentina could exacerbate these trends," Fitch said. Paraguay will see a substantial growth slowdown with growth now forecast at zero this year, partly due to the Argentinian crisis. That said, Paraguay has a stronger fiscal position relative to Bolivia and Uruguay, with the lowest debt burden in Latin America at 17% of GDP in 2018, offering greater scope to cushion the impact with countercyclical fiscal policy, Fitch added. While less vulnerable, risks related to Argentina will still add to a challenging macroeconomic backdrop for larger neighbors such as Brazil and Chile, Fitch noted. The addition of the Argentina crisis to an already challenging set of external risks and domestic demand challenges confronting Brazil will further constrain recovery potential and add to difficulties in addressing rising general government debt and the large deficit. Chile stands out as being in a stronger fiscal position and likely with the least vulnerabilities directly linked to Argentina. AUTOPISTAS DEL SOL: Fitch Affirms B+ Rating on International Notes ------------------------------------------------------------------ Fitch Ratings affirmed the 'B+' rating on the international notes that Autopistas del Sol, S.A. has placed in the international markets. The Rating Outlook is Negative. The notes are supported by the cash flow generation of the Costa Rican toll road Ruta 27. Fitch has also affirmed the 'AA(cri)' rating with a Stable Outlook on the local notes. RATING RATIONALE The ratings reflect the asset's stable traffic and revenue profile, supported by an adequate toll adjustment mechanism. Mostly used by commuters, the project may face significant competition in the short-to-medium term if the main competing road is substantially improved and its tariff is significantly lower than that of the project. Toll rates are adjusted quarterly to exchange rates and annually to reflect changes in the U.S. Consumer Price Index (CPI). The ratings also reflect pari passu, fully amortizing senior debt with a fixed interest rate and a cash trap mechanism that mitigates an early termination of the concession before debt is fully repaid. Fitch's rating case average Debt Service Coverage Ratio (DSCR) of 1.2x is generally in line with its criteria guidance for the rating category but is currently limited by the sovereign risk. The presence of a minimum revenue guarantee (MRG) provides an additional layer of comfort to the ratings. The Negative Outlook continues to reflect Fitch's view on Costa Rica's sovereign risk, given the toll road's exposure to the country's economic conditions and links to the sovereign credit quality through the MRG. KEY RATING DRIVERS Mostly Commuter Traffic Base - Revenue Risk (Volume): Midrange Light vehicles account for approximately 93% of all users, which have proven to be the most stable and resilient traffic base. The road is used by commuters on workdays and by residents of the capital city, San Jose, travelling to the nearby beaches on the weekends. The road could face significant competition if major improvements to the existing and congested San Jose-San Ramon Route are made and the road is untolled or materially cheaper than the project. The concession agreement provides a MRG mechanism that compensates the issuer if revenue is below certain thresholds, alleviating this risk to a certain extent. Adequate Rate Adjustment Mechanism - Revenue Risk (Price): Midrange Toll rates are adjusted quarterly to reflect changes in the Costa Rican Colon (CRC) to USD exchange rate and also annually to reflect changes in the U.S. Consumer Price Index (CPI). Tolls may be adjusted prior to the next adjustment date if the U.S. CPI or the CRC/USD exchange rate varies by more than 5%. Historically, tariffs have been updated appropriately. Suitable Capital Improvement Program - Infrastructure Development & Renewal: Midrange Brownfield asset operated by an experienced global company with a higher-than-average expense profile due to the geographical attributes of the project. The majority of the investments required by the concession have been made. The concession requires lane expansions when congestion exceeds 70% of the ideal saturation flow, which triggers the need for of further investments. However, the project would only be required by the grantor to perform these investments to the extent they do not represent a breach of the debt coverage ratios assumed by the issuer in the financing documents. Structural Protections Against Shortened Concession - Debt Structure: Midrange Debt is senior secured, pari passu, fixed rate and fully amortizing. The debt is denominated in USD. Nonetheless, no significant exchange rate risk exists due to the tariff adjustment provisions set forth in the concession and because CRC-denominated toll revenues will be converted to USD on a daily basis. The structure includes a cash trap mechanism to prepay debt if revenue outperforms the base case revenue indicated in the issuer's financial model, which largely mitigates the risk of the concession maturing before the debt is fully repaid. Typical project finance features include six-month Debt Service Reserve Account (DSRA), three-month O&M Reserve Account (OMRA), six-month backward and forward looking 1.20x distribution trigger and limitations on investments and additional debt. Financial Profile Under Fitch's rating case, the project's yields a minimum and average DSCR of 0.9x and 1.2x, respectively. Considering this scenario, the concession will last until its final maturity date in July 2033 and will receive MRG payments from 2025 to 2032, which amounts in average 5.3% of annual revenues. Also, under this scenario, restricted payment conditions are not expected to be met for six consecutive periods, which would trigger mandatory prepayments. Debt repayment is not dependent on the MRG payment, as should it not be received, toll revenues and reserve funds would be sufficient to cover debt service. The metrics are in line with Fitch's applicable criteria for the rating category, although constrained by the sovereign risk. PEER GROUP There are no peers rated locally by Fitch that are comparable with the project. The closest peer is Mexico's Concesionaria Mexiquense, S.A. de C.V. (Conmex, BBB/Positive), as both assets provide access to the capital cities of their respective countries with a significant commuting traffic base, and have similar risk assessments at Midrange. Nevertheless, the rating difference is due to Autopistas del Sol's much lower coverage metrics (LLCR 1.2x vs. 2.5x). RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Negative Rating Action: - Negative rating action on Costa Rica's sovereign ratings could trigger a corresponding negative action on the rated notes; - Traffic volumes below Fitch's base case over a prolonged period; - Projected average DSCR profile below 1.1x under Fitch's rating case. Developments That May, Individually or Collectively, Lead to Positive Rating Action: - Positive rating action on Costa Rica's sovereign ratings could trigger a corresponding positive rating action on the rated notes, as long as project's fundamentals support this view. TRANSACTION SUMMARY The asset serves as a connection between the city of San Jose and its metropolitan area with Puerto Caldera, along the Pacific coast. The asset is operated by Globalvia, one of the world leaders in infrastructure concession management, which manages 28 concessions in seven countries. The company was established in 2007 by FCC Group and Bankia Group. In March 2016, Globalvia was acquired by pension funds OPSEU Pension Plan Trust Fund (40%), PGGM N.V. (40%) and Universities Superannuation Scheme Ltd (20%). CREDIT UPDATE During the first half of 2019, the weighted average annual daily traffic (WAADT) of Ruta 27 increased 0.1% from the same period of the prior year, compared to Fitch's expectations of 1.3% under its base and rating cases. In Fitch's view, the lower-than-expected performance is a reflection of that of the national economy. Revenue was USD38.2 million, compared with the USD38.5 million expected by Fitch in its cases, following the weaker traffic performance and the decrease of heavy vehicle participation in the total traffic mix. MRG was not executed, and there were no revenues shared with the government, as per Fitch's expectations. Major maintenance cost was higher than the budget given the works performed on the roads have advanced at a faster-than-anticipated pace. Thus, Fitch expects that year-end major maintenance costs will comply with the budget. Total expenses were lower than expected given lower operating costs. Reported DSCR in July 2019 was 1.33x, compared with Fitch base case DSCR expectations of 1.28x. This occurred because the lower expenses compensated for the lower revenue generation. Net Present Value was below that specified in the concession agreement. FINANCIAL ANALYSIS Fitch's Base Case assumes 2019 traffic level will be at the same level recorded in 2018 and will grow at a Compounded Annual Growth Rate (CAGR) of 1.8% from 2020 to 2033. This considers, among other factors, that the competing route will charge 50% of the tariff initially stablished when the concession was granted. U.S. CPI reflects Fitch's forecast of 2.2% for 2019, 2.3% for 2020, 2.5% for 2021 and 2.0% afterwards. O&M and major maintenance expenses were projected following the budget provided plus 5.0%. Fitch's base case resulted in a minimum and average DSCR of 1.2x and 1.3x, respectively. Fitch's base case expects no MRG collections and a single mandatory redemption payment to be made as restricted payment conditions will not be met for six consecutive periods. Under this case, the concession will end in July 2033, i.e. at concession's maturity, due to the project reaching the NPV specified in the concession agreement. Fitch's rating case also assumes 2019 traffic levels will be identical to those of 2018 and CAGR of 1.4% from 2020 to 2033, which considers, amongst others, that the competing route will be untolled. U.S. CPI rates as utilized in Fitch's base case. O&M and major maintenance expenses were projected following the budget provided plus 7.5%. Fitch's rating case resulted in a minimum and average DSCR of 0.9x and 1.2x, respectively. Under this scenario, MRG will be received from 2025 to 2032, representing 5.3% of annual revenues on average, and two mandatory redemption payments are expected to occur. Fitch's rating case expects the concession will end in July 2033, i.e. at concession's maturity. BANCO DE BUENOS AIRES: Fitch Affirms 'CCC' LT Issuer Default Rating ------------------------------------------------------------------- Fitch Ratings affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings of Banco de la Ciudad de Buenos Aires at 'CCC'. KEY RATING DRIVERS The IDRs of Banco Ciudad are driven by parent support. Fitch believes Banco Ciudad's parent, the City of Buenos Aires (CBA; LT IDR CCC) demonstrates adequate propensity to provide extraordinary support to the bank, should it be needed. However, CBA's speculative-grade rating limits the parent's capacity of support, resulting in a Support Rating of '5'. Argentina's country ceiling represents a constraint on the IDRs of Banco Ciudad's sole shareholder, CBA. Equalization of the bank's IDRs with those of its parent is supported by CBA's legal guarantee of the bank's operations (including deposits, debt securities and wholesale funding), its full ownership stake, and the bank's integral role in government operations such as tax collection and payment of city employee salaries. Banco Ciudad's Viability Rating is highly influenced by the volatile operating environment which have resulted in operational challenges for the banking system such as a partial USD deposit run, which in the case of Banco de la Ciudad de Buenos Aires represented 18.1% of the total deposits as of Sept. 25, 2019 (compared to 32.3% for the banking system) and some deterioration of the asset quality with impairments representing 4.2% and reserve coverage decreasing to 62.5%. While the rating also considers the bank's satisfactory capitalization metrics with a FCC of 15.3% as of June 2019, its stable and low cost funding base and adequate nominal profitability, however, the bank's financial performance is distorted by persistently high inflation. In Fitch's opinion, conditions underlying the agency's recent downgrade of the sovereign's Long-Term IDR on Aug. 30, 2019 to 'RD' (restricted default) following the government's unilateral extension of repayment on certain debt obligations and subsequent upgrade on Sept. 3, 2019 to 'CC' after the payment of short-term debt instruments under revised terms are likely to adversely impact this bank's financial performance through market volatility, further declining loan portfolios (in real terms), rising non-performing loans, higher funding costs and rising administrative expenses due to rising inflation. RATING SENSITIVITIES The IDRs and VR of Banco Ciudad are sensitive to any further changes in the ratings of CBA, which are capped by the country ceiling, or Argentina's sovereign ratings. A material deterioration in the local operating environment over the foreseeable future that leads to a material deterioration in its financial profile or liquidity could also pressure the VR. The bank's VR would likely move in line with any change to Argentina's sovereign rating while the IDRs are sensitive to a change in the country ceiling. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS Ratings of Banco de la Ciudad de Buenos Aires are driven by the support of the City of Buenos Aires. BANCO HIPOTECARIO: Fitch Affirms CC IDRs, Outlook Stable -------------------------------------------------------- Fitch Ratings has affirmed Banco Hipotecario S.A.'s Foreign and Local Currency Long-Term Issuer Default Ratings at 'CC' and its Viability Rating at 'cc'. The Rating Outlook is Stable. KEY RATING DRIVERS IDRS AND VR Hipotecario's VR and IDRs are highly influenced by the operating environment and constrained by the low sovereign rating of Argentina (LT IDR at CC). This resulted in operational challenges for the banking system such as a partial USD deposit run, which also affected Hipotecario in a significant deterioration of the bank's asset quality and profitability. The ratings also consider the bank's adequate capitalization metrics, as well as a more pressured funding and liquidity profile due to its higher than peers reliance on wholesale sources. Since 2018, the operating environment in Argentina has significantly deteriorated, and Fitch believes the recent decision of the Argentine government to extend the repayment on certain debt obligations will likely adversely impact banks' financial performance through market volatility, higher inflation, and further declining loan portfolios, rising non-performing loans, higher funding costs and administrative expenses. Historically, the bank presented a higher delinquency ratio than the banking industry, driven by its focus on consumer lending. The bank's NPL deteriorated significantly to 12.34% in March 2019, driven by the deterioration of some corporate loans, which affected several banks in the industry and the deterioration of the loan book of its former consumer finance subsidiary Tarshop. In June 2019 this ratio went up to 13.44% due to the reduction in the credit portfolio. In terms of consumer portfolio delinquency, the quarterly growth rate of the non-performing loans of the consumer portfolio was significantly lower than previous quarter, decreasing from 14.7% to 6.5% from the peak in December 2018. The loan loss coverage has been reducing and was at a low 52% in June 2019, which is below its historical average due to the deterioration of the credit portfolio. Asset quality deterioration posted a relevant pressure in operating profits as well as increasing operating expenses from layoffs. Operating profit to RWAs stood at a low 1.3% as of June 2019, below its three-year average of 3%. However, persistently high inflation levels distort profitability indicators and its international comparability. Fitch believes that, as with all the financial system, Hipotecario's profitability will continue to be highly pressured by inflation, slow growth and likely higher credit and operating costs. The bank's current capitalization levels are commensurate with its rating level with FCC/RWA of 14.2%, which is in line with its peers. The bank posts an excess capital relative to CB requirement of 58.5% over minimum required by CB, which is sufficient cushion to cover the additional provisioning needs. Currently, the bank's strategy places a higher priority on profitability through improvement of operational efficiency and maintaining comfortable liquidity position over growth, which Fitch views as positive for capitalization over the medium term. In spite of recent reduction in USD deposits due to current uncertainty, Fitch believes current liquidity has an adequate coverage ratio for deposits, the immediate liquidity ratio (cash and equivalents plus short term central banks securities divided by total deposits) stood at a comfortable 104.2% as of June 30, 2019. However, Fitch believes the current capital controls and risks of additional tightening could potentially limit the banking sector's ability to access foreign exchange, and Hipotecario currently does not have enough USD on its balance sheet to meet the coming international issuance due in November 2020 as its immediate USD liquidity covers around 46% of the USD bullet bond. Deposits represented 42% of total funding at June 2019, which have stabilized coming from a growing trend but still below the system average. Deposit concentration is higher than its peers due to the funding structure, with the top 10 depositors representing 16% of the total deposits. Local issuances represent a significant portion of funding, making up 50% of the total. As of June 2019, Banco Hipotecario reported a liquidity coverage ratio (LCR) of 262% reflecting the buildup of liquidity coming from 211% in December 2018 and 197% in 2017. SENIOR DEBT The 'CC'/'RR4' rating on Hipotecario's medium term notes reflects that the likelihood of default is the same as the bank's. The notes are denominated in ARS but settled in USD at the prevailing exchange rate. Fitch considers the bank's FC IDR as the appropriate anchor for this issue rating given the transfer and convertibility risk associated with settlement in foreign currency notwithstanding that the issuer will not incur material currency risk. The notes' Recovery Rating of 'RR4' reflects the average expected recovery in case of bank liquidation. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating of '5' and the Support Rating Floor of 'NF' reflect that, although possible, external support for Banco Hipotecario cannot be relied upon given the sovereign's track record. RATING SENSITIVITIES IDRS, VR AND SENIOR DEBT The IDRs and VR of Banco Hipotecario are sensitive to any further changes in Argentina's sovereign ratings, or material deterioration on the local operating environment over the foreseeable future that leads to further material deterioration in its liquidity, asset quality and profitability metrics. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3. ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch has affirmed Banco Hipotecario S.A.'s ratings as follows: -- Long-Term Foreign and Local Currency IDRs at 'CC'; -- Short-Term Foreign and Local Currency IDR at 'C'; -- Senior unsecured notes at 'CC/RR4'; -- Viability rating at 'cc'; -- Support Rating at '5'; -- Support Rating Floor at 'NF'. BANCO SUPERVIELLE: Fitch Affirms CC LT Issuer Default Ratings ------------------------------------------------------------- Fitch Ratings affirmed Banco Supervielle S.A.'s Foreign and Local Currency Long-Term Issuer Default Ratings at 'CC'. KEY RATING DRIVERS IDRS AND VIABILITY RATING Supervielle's Viability Rating and IDRs are highly influenced and constrained by the low sovereign ratings of Argentina and the volatile operating environment, which have resulted in operational challenges for the banking system such as a partial USD deposit run and some deterioration of the asset quality, which has also affected Supervielle. The ratings also consider the bank's moderate franchise and adequate capitalization and management of funding and liquidity. Profitability metrics have been under pressure in recent years and recently improved aided by increased holdings of Central Bank short-term issuances, however, the bank's financial performance is distorted by persistently high inflation. Since 2018, the operating environment in Argentina has significantly deteriorated and, in Fitch's opinion, the recent decision of the Argentine government to extend the repayment on certain debt obligations will likely adversely impact banks' financial performance through market volatility, higher inflation, further declining loan portfolios, rising non-performing loans, higher funding costs and administrative expenses. Despite increasing NPLs, Fitch considers that Supervielle's asset quality is still commensurate for the business model due to its stronger focus in SME and retail lending, and the portion of loans coming from its consumer finance subsidiary (Cordial Compania Financiera, CCF, roughly 9% of gross consolidated loans). In line with the deterioration of the operating environment, Supervielle's NPL ratio has risen to 5.0% of total loans at June 30, 2019 (3.48% as of June 30, 2018). The strategy during the current crisis has been to place special focus on controlling credit risks and managing delinquencies. In line with this, since mid-2018 both the bank and CCF have considerably tightened their loan admission criteria and have strengthened the loan monitoring and collection processes. However, Fitch expects further deterioration in asset quality indicators for all the financial system during 2H19. The securities portfolio has increased significantly (27.8% of total assets as of June 30, 2019 from 13.0% YoY) as the bank has followed the strategy to invest in the highly profitable short term Central Bank securities (Leliqs) to allocate its liquidity given the slump in loan growth due to lower demand and the bank's decision to restrict lending in the current difficult environment. Since 2017, the bank's profitability has been under pressure by higher loan loss provisions due to the worsening of the operating environment and by much lower loan growth since 2H18. Supervielle's profitability has recently been aided by the increased holdings of the highly profitable Central Bank securities and its ratio of Operating Profit/Risk Weighted Assets rose to 3.04% at June 30, 2019. However, persistently high inflation levels distort profitability indicators and its international comparability. Fitch believes that, as with all the financial system, Supervielle's profitability will continue to be highly pressured by inflation, slow growth and likely higher credit and operating costs. Supervielle's capitalization significantly improved following the issuing fresh capital done by the Supervielle Group though an IPO in the New York and Buenos Aires stock exchanges for a total of USD623 million in 2016 and 2017. At June 30, 2019, the bank's Fitch core capital to risk-weighted assets ratio was 12.28%, which is commensurate with its rating level. Although growth in the medium term will likely be low, the bank is committed to take the necessary measures to maintain its capitalization at adequate levels when needed. The primary source of funding is the bank's deposit base, which made up 77.5% of its funding as of June 30, 2019. The bank's loan to deposits ratio has rapidly decreased since 2018 to 80.26%, well below the 100%-110% range shown in recent years, given that deposits growth has been significantly stronger that of loans. Supervielle's foreign exchange deposits accounted for 32.4% of the total as of June 30, 2019. Liquidity levels are adequate, with a liquidity coverage ratio (LCR) that has remained above 100%; at June 30, 2019, the LCR was 146.9%. The immediate liquidity ratio (cash and equivalents plus short term Central Banks securities divided by total deposits) stood at a comfortable 51.3% as of June 30, 2019. In spite of recent reduction in USD deposits due to current uncertainty, Fitch believes the bank's liquidity adequately covers deposits and short-term debt maturities. Although, Fitch believes the current capital controls and risks of additional tightening could potentially limit the banking sector's ability to access foreign currency, Supervielle currently has enough USD on balance sheet to meet its coming international issuances due in 2020 which, although denominated in Argentine Pesos, it is payable in US Dollars. SENIOR UNSECURED DEBT The long-term rating of Supervielle's senior unsecured debt issuance is at the same level as the bank's Local Currency Long-Term IDR given that the likelihood of default is the same as that of the bank. The recovery rating of 'RR4' assigned to Supervielle's senior debt issuance reflects the average expected recovery in case of bank liquidation. SUPPORT RATING AND SUPPORT RATING FLOOR Supervielle's SR of '5' and SRFs of 'NF' reflect that, although possible, external support for this bank, as with most Argentine banks, cannot be relied upon given the ample economic imbalances. In turn, the sovereign ability to support banks is uncertain, as reflected by the low sovereign ratings. RATING SENSITIVITIES IDRS AND VIABILITY RATING Supervielle's IDR and VR are sensitive to any changes in Argentina's sovereign ratings, or material deterioration on the local operating environment over the foreseeable future that leads to a material deterioration in its liquidity and general financial profile. Supervielle's VR would likely move in line with any change to Argentina's sovereign rating. TARJETA NARANJA: Fitch Affirms CC LT Issuer Default Ratings ----------------------------------------------------------- Fitch Ratings affirmed Tarjeta Naranja, S.A.'s Foreign and Local Currency Long-term Issuer Default Ratings at 'CC'. KEY RATING DRIVERS IDRS AND SENIOR DEBT TN's IDRs are predominantly influenced and constrained by Argentina's volatile operating environment and low sovereign ratings (LT IDR CC). The ratings also consider TN's higher risk appetite relative to bank peers and its business concentration in credit cards targeting low- and middle-income segments which has resulted in relevant asset quality deterioration and additional profitability pressures. TN's ratings also factor in its robust niche franchise as the largest credit card issuer in Argentina and one of the top credit card issuers in the region. Since 2018, the operating environment in Argentina has significantly deteriorated, and Fitch believes the recent decision of the Argentine government to extend the repayment on certain debt obligations will likely adversely impact the financial system's performance through market volatility, higher inflation, further declining loan portfolios, rising non-performing loans, and higher funding costs and administrative expenses. TN's profitability has been driven by ample margins and fee income sourced from both customers and merchants, and it posted a recurring double-digit Pre-tax profit/average assets ratio until 2017. However, since 2018 the persistently high inflation in Argentina significantly affected the company's profitability since it was required to adjust its financial statements by inflation, in line with IAS29. In addition, net income was also affected by an increase in loan loss provisions from impairment ratio deterioration and operating expenses driven by the merger with Tarjetas Cuyanas. Excluding the inflation adjustment, TN's 2018 pre-tax profit would have been 25% lower than in 2017 mainly due to slower growth, higher credit costs and administrative expenses and the costs related to the merger. The inflation adjustment of TN's financial statements resulted in a distorted comparability with local banks as they were not required to do such adjustments and reported the statements in nominal terms. TN's loan quality indicators have deteriorated significantly since 2017 due to the tough operating environment, especially faced by lower income segments of the population due to the high inflation, and the very low loan growth since 2H18. Its loans past due more than 90 days rose to 9.9% as of March 31, 2019, well above the 2015-2018 average of 5.8%. Positively, TN's reserve coverage has remained above 100% of impaired loans. Fitch expects the company's asset quality indicators to continue to deteriorate throughout 2019 in line with the deterioration of the economic and operating environment, but that such deterioration should be contained somewhat by the strong tightening of the credit policies. TN's funding profile relies primarily on accounts payable and local issuances. No-cost accounts payable to merchants (for an average tenor of 45 days) represents 55.6% of liabilities, while a further 36.4% derive from local and international issues of unsecured debt. Only 2.7% of liabilities derive from bank financing, although Banco Galicia, as its ultimate parent, has been a reliable source of financing. Since the beginning of the current crisis, and given the restrictions to market debt issuances, TN has increased its liquidity levels and is constantly monitoring the market to issue in every market window that become available. In addition, its liquidity is strengthened by the predictable churn of its loan assets (with an average duration of approximately four months). TN's holdings of cash, bank deposits and investments in mutual funds covered around 16.1% of all short term liabilities at June 2019. Fitch believes the current capital controls and risks of additional tightening could potentially limit the financial sector's ability to access foreign currency, and TN currently does not have enough USD on its balance sheet to meet the coming international issuance capital payment due in April 2020 for ARS1.3 billion. Although TN's international issuance is denominated in Argentine pesos, it must be settled in U.S. dollars. TN's capitalization and leverage is adequate for its business model and risk appetite. Capital is mostly composed of tangible equity with limited intangible assets. The company's leverage (Debt/Tangible Equity) and tangible common equity to tangible assets ratios have remained relatively stable in the past few years at around 4x and 20% (3.9x and 19.5%, respectively, as of March 31 2019). TN's capital and leverage position has recently benefited from slower loan growth, internal capital generation and moderate dividend payments of around 20%. The rating of TN's senior unsecured debt is at the same level as the company's Long-Term local currency IDR as the likelihood of default of the notes is the same as the one of TN. The recovery rating of 'RR4' reflects the average expected recovery in case of liquidation. RATING SENSITIVITIES IDRS AND SENIOR DEBT TN's ratings would likely move in line with a change of Argentina's sovereign rating. TN's ratings could also be affected in the event of a material deterioration in liquidity, asset quality and/or earnings that drive a significant reduction of its loss absorption capacity. TN's senior debt ratings are sensitive to a change in its Local Currency IDR. ============= B E R M U D A ============= SIGNET JEWELERS: Fitch Assigns B+ LT IDR, Outlook Negative ---------------------------------------------------------- Fitch Ratings assigned 'BB+/RR1' ratings to Signet Jewelers Limited's new ABL revolver and FILO term loan, which is being issued by Signet's subsidiary Signet Group Limited. Fitch has also assigned a 'B+' Long-Term Issuer Default Rating to Signet Group Limited. In addition, Fitch has upgraded Signet Jewelers Limited's preferred equity ratings to 'BB-'/'RR3' from 'B'/'RR5', and has affirmed the rest of Signet's ratings, including the 'B+' IDR at Signet Jewelers Limited and the 'BB'/'RR2' rating for unsecured notes issued by subsidiary Signet UK Finance plc. The Rating Outlook is Negative. Signet's ratings reflect reduced confidence in Signet's ability to reverse operational declines, which have driven EBITDA toward a projected approximately $450 million in 2019 from peak levels of $1 billion in 2015/2016. Beyond the loss of credit card operations income following the sale of this business, execution issues have driven the significant decline in EBITDA as the company has struggled to offer the right merchandise assortment to customers while dealing with an increasingly crowded mid-tier jewelry space. Following EBITDA declines, Signet's adjusted debt/EBITDAR (capitalizing leases at 8x) was 5.5x in 2018 and could rise to around 5.7x in 2019. The Negative Outlook reflects reduced confidence regarding the company's ability to stabilize operating trends beginning 2020; Signet would need to show flattening sales around $6 billion and EBITDA improving toward $500 million to reduce adjusted debt/EBITDAR below 5.5x and stabilize its 'B+' rating. The rating continues to reflect Signet's leading position in the U.S. retail jewelry market and positive cash flow generation despite operational challenges. Signet is undertaking several capital structure actions. The company has issued a $1.5 billion ABL revolver and $100 million term loan due 2024, which together replace its existing $700 million unsecured revolver due 2021. Proceeds from the new facilities will be used to pay down Signet's approximately $275 million in unsecured term loans and approximately $250 million of its $400 million in unsecured notes. KEY RATING DRIVERS Top-Line Weakness: Signet's same-store sales turned negative in second-quarter 2016 with same-store sales at negative 1.9% in 2016 and weakened further to negative 5.3% in 2017. SSS did improve to flat in 2018; however, recent results have modestly deteriorated with full year 2019 SSS expected down around 2%. Fitch forecasts near-flat SSS beginning 2020, assuming Signet's recently enacted merchandising and marketing initiatives bear some fruit. Over the last few years, Signet has dealt with intensifying competition in the specialty jewelry space and an increasing number of companies competing for the self-gifting customer. Retailers such as department stores have shown renewed focus on categories that help differentiate and drive traffic in the face of an otherwise challenging mid-tier space. Several of these players have called out fine jewelry as a well-performing category in recent quarters, and Fitch expects these competitive dynamics to continue in the near to medium term and to pressure Signet's ability to stabilize its market share. Beyond sector dynamics, Fitch believes much of the sales weakness is due to company-specific factors. Signet's weak performance suggests the company's brands and merchandise assortment are not resonating with consumers, as the company has not effectively responded to changing shopping patterns and preferences and has lagged on investments in an omni-channel platform (including a robust customer-facing website) and innovative product design and marketing. Fitch believes that the ability to execute effectively on top-line strategies has been difficult in the face of several challenges the company has faced over the last few years. Signet faced negative press around allegations of both diamond swapping during routine product servicing and poor treatment of female employees, which may have affected consumer sentiment toward Signet's brands. Execution missteps associated with the company's credit operations transition have also recently affected customer experiences and sales conversion. Total top-line in 2019 is expected to be down in the 3% to 5% range, assuming SSS decline around 2%, and as Signet cycles a net 222 store closures in 2018 while closing another approximately 150 stores during 2019. Given Fitch's expectations of the jewelry category growing in the low-single digits, these results would indicate continued market share loss. Initiatives to Reverse Sales Declines: The company has implemented a number of initiatives to improve SSS, including increasing the pace of product innovation, developing product extensions to encourage repeat visits and investing in its omni-channel platform. While jewelry's online penetration is expected to remain low relative to other retail categories, Signet believes a robust website is a competitive advantage as a complement to the in-store shopping experience. The company paid $328 million in 2017 to buy JamesAllen.com, the leading online diamond engagement jeweler, partially to acquire the company's digital marketing and product-imaging expertise. Fitch estimates JamesAllen.com generates around $250 million of revenue and minimal EBITDA; Signet subsequently wrote down virtually its entire investment in the company given revised long-term projections. Fitch acknowledges that these initiatives may not meaningfully drive top-line over the near-to-medium term, and could drive flat to negative 1% comps annually over the next two to three years. Significant EBITDA Declines: With $6.2 billion of revenue in 2018 on a base of over 3,300 stores, Signet is a leader in the jewelry and watch category, with an approximately 7% share of the U.S. market and leading positions in Canada and the U.K.. Signet's well-known brands include Kay, Jared, Zales and Piercing Pagoda in the U.S.; Peoples in Canada; and H.Samuel and Ernest Jones in the U.K.. Prior to 2016, the company showed good growth, with average SSS of 5% between 2010 and 2015, which was commensurate with the recovery in jewelry sales post-recession. Signet acquired the Zale Corporation in May 2014. Pro forma for the Zale acquisition, Signet generated $6.1 billion in revenue and roughly $770 million in adjusted EBITDA in 2013, with Fitch's expectations that EBITDA would increase to approximately $1 billion in 2016, which Signet reached a year ahead of schedule. Following two years of EBITDA at $1 billion, EBITDA in 2017 declined to around $830 million on negative 5.3% SSS and the mid-year outsourcing of its credit operations and sale of its prime receivables. EBITDA fell further to $475 million in 2018 due to the continued impact of the credit operations transactions and lack of top-line improvement. Pro forma for a full year of sale of all credit card receivables, 2016 EBITDA would have been around $150 million lower at about $850 million due to removal of the credit card income. The significant $375 million decline in EBITDA from this pro forma level reflects material deterioration in Signet's underlying trends. Given the material EBITDA declines, the company announced a cost reduction program to protect margins and enable further growth investments in March 2018, targeting $200 million to $225 million of net cost savings to be achieved over the next three years. Major elements of the plan include sourcing savings and back-office efficiency efforts. The company has indicated it achieved $85 million of annualized net savings in 2018. Signet has also indicated a gross closure of around 150 stores in 2019 after net closing over 220 stores in 2018. The store closures are predicated around optimizing the mall versus off-mall mix of the real estate portfolio. However, should recent trends persist, Fitch forecasts EBITDA could be in the $450 million range in 2019 on $6 billion of revenue. Assuming some top-line and cost reduction efforts gain traction, revenue could stabilize around $5.9 billion with EBITDA improving toward $500 million range over the next two to three years. Signet would need to demonstrate this operational improvement to support its current 'B+' rating. Elevated Leverage: In 2017, concurrent with its receivables sale and use of proceeds for a mix of debt reduction ($600 million, or around 40% of proceeds) and share buybacks, the company updated its financial policy to target leverage at 3.0x-3.5x, capitalizing rent at 5.0x. At the end of 2017, given around $830 million of EBITDA, Signet's updated range equated to approximately 4.0x-4.5x Fitch-defined adjusted debt/EBITDAR. The Fitch-defined metric subsequently rose to 5.5x in 2018 on EBITDA declines (4.3x on a Signet-defined basis) and could rise further to around 5.7x in 2019 on continued EBITDA erosion. Assuming EBITDA improves toward $500 million over the next two years and given lower rent levels following store closures, adjusted debt/EBITDAR could decline below 5.5x. Fitch would expect Signet to be FCF positive despite significant EBITDA declines from peak and generate $50 million to $100 million of FCF annually, assuming neutral working capital. Near-term FCF generation could be at the lower end of the range due to cash restructuring charges associated with the company's cost reduction program. Refinancing: Signet completed a partial refinancing of its capital structure, which included a $700 million unsecured revolver, approximately $275 million of unsecured term loans and $400 million of unsecured notes. The company is using proceeds from a new $1.5 billion ABL revolver and $100 million FILO term loan (both due 2024 and which together replace Signet's existing revolver) to pay down its existing term loan. Concurrently, the company completed a tender offer for its $400 million of unsecured notes. The company successfully tendered $252 million of its unsecured notes and is using ABL proceeds to repay the tendered amount. The new revolver is governed by a borrowing base inclusive of Signet's inventory and receivables; the FILO term loan is secured by the same assets and both instruments have a first lien on Signet's remaining assets, including intellectual property. DERIVATION SUMMARY Signet's ratings reflect weak operating trends in recent years, with flat to negative SSS beginning 2016, exacerbated by the sale of the company's receivables business, driving EBITDA to $475 million in 2018 from peak levels of around $1 billion in 2015/2016. Adjusted debt/EBITDAR has consequently risen from around 4.0x as recently as 2017 to 5.5x in 2018 and an expected 5.7x in 2019. While the company's performance has been affected by some macro challenges and increased competition in the mid-tier jewelry space, Fitch believes that execution issues have driven much of the operating weakness. Signet has not responded effectively to changing consumer preferences around both shopping behavior and product assortment and has been losing market share despite a fragmented market, implying that the company's brands have not been resonating with consumers. The ratings continue to reflect Signet's leading position in the U.S. specialty jewelry market. The Negative Outlook reflects concerns over the company's ability to demonstrate stabilizing trends in top-line and EBITDA. To stabilize its Rating Outlook, Signet would need to show flattening SSS with EBITDA improving toward $500 million on cost reduction efforts. EBITDA improvement, in concert with reduced rent from store closures, would drive adjusted debt/EBITDAR below 5.5x. Fitch's U.S. jeweler coverage includes Tiffany & Co. (BBB+/Stable), whose Long-Term IDR reflects its strong position in the relatively fragmented global premium jewelry segment, its iconic brand status, industry-leading EBITDA margins, superior real estate portfolio, relatively limited competition from alternate channels such as ecommerce and discounters, and generally strong cash flow and credit metrics. Tiffany's leverage is expected to trend at or below 2.5x. Tapestry, Inc. and Capri Holdings Limited (both BBB-/Stable) are primarily exposed to the handbag and accessories industry, which is somewhat more prone to fashion and brand risk than the jewelry category. Fitch's rating case assumes adjusted debt/EBITDAR for both of these leading players returns below 3.0x following recent acquisitions (Kate Spade for Tapestry and Versace for Capri). GNC Holdings, Inc.'s 'B-' IDR/Negative Outlook reflect concerns about the company's ability to refinance a projected nearly $400 million of term loan debt due March 2021 given weaker than expected top-line and EBITDA trends, and elevated adjusted debt/EBITDAR (capitalizing rent at 8.0x) at 7.3x in 2018. The company had significant difficulty addressing its 2019 maturities, ultimately undertaking a distressed debt exchange (DDE), $300 million preferred equity investment and a partial refinancing of its $1.1 billion term loan due March 2019. Fitch Ratings expects GNC will have sufficient liquidity to repay debt in 2019/2020, including around $160 million in principal amount of convertible notes set to mature in August of 2020, but will need to refinance the remainder of its tranche B-2 term loan, projected at nearly $400 million, due March 2021. GNC would need to successfully address its 2021 maturities for Fitch to stabilize the company's Rating Outlook. Rite Aid Corporation's 'B' IDR incorporates its weak position in the relatively stable U.S. drug retail business and its high leverage. The company's drug retail business, representing two-thirds of total EBITDA following the sale of roughly 43% of stores to Walgreens Boots Alliance, Inc. (BBB/Negative), is expected to continue losing share, although the company's EnvisionRx PBM — representing Rite Aid's remaining EBITDA — should grow modestly over time. The Negative Outlook reflects concerns about the company's ability to stabilize topline results following a protracted transaction process with Walgreens and an ultimately cancelled merger process with Albertsons Companies, Inc. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Revenues in 2019 are expected to be down by approximately 3%, reflecting an estimated net 134 store closures this year, combined with modestly negative SSS; -- EBITDA is expected to decline to around $440 million in 2019 from $475 million in 2018 and $830 million in 2017 due to revenue deterioration, deleverage of fixed costs and the sale of Signet's receivables business. Assuming sales stabilize near $6.0 billion beginning 2020, EBITDA could improve toward $500 million over the next 18 to 24 months given Signet's cost reduction efforts; -- FCF is expected to be in the $60 million to $70 million range in 2019/2020 and improve to the low $100 million range in 2021 on EBITDA growth and lower cash restructuring charges. -- Fitch adjusted debt/EBITDAR (capitalizing leases at 8x), which was 5.5x in 2018, up from 4.1x in 2017, is projected to climb to 5.7x in 2019 on EBITDA declines but moderate to below 5.5x by 2021 assuming EBITDA improves toward $500 million. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Fitch could stabilize Signet's rating with improved confidence that the company can meet its rating case forecast, including sales stabilizing near $6.0 billion and EBITDA improving toward $500 million, which would yield adjusted debt/EBITDAR (capitalizing leases at 8x) below 5.5x; -- An upgrade would result from positive SSS trends and realization of cost reductions, which together could yield EBITDA trending near $600 million and adjusted debt/EBITDAR declining below 5.0x. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A downgrade would result from a continuation of current operating trends, which would yield EBITDA moderating to the low $400 million range and causing adjusted debt/operating EBITDAR to sustain in the high 5.0x range. LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity: As of Aug. 3, 2019, Signet had $271.5 million in cash & cash equivalents. As of that date, the company had approximately $686 million in availability on its $700 million revolving credit facility, which was undrawn at that date and had $14.5 million of standby LOCs, which reduce availability. Signet's capital structure as of August 3rd, 2019, included a $277 million term loan, and $400 million of senior unsecured notes. In 2016, the company received a $625 million convertible preferred investment by Leonard Green and Partners, with proceeds deployed toward share repurchases. Fitch gave 0% equity credit to the $625 million of convertible preferred securities. Permanence in the capital structure — in this case permanence of the convertible preferreds — is necessary for equity credit recognition. Fitch views these securities as debt in a permanent view of the capital structure, with the main purpose being to support the company's stock price. Fitch would expect the company to refinance the convertibles with debt upon 2024 maturity. Liquidity post Refinancing: On Sept. 5, 2019, Signet announced a refinancing in which the company would replace its $700 million unsecured revolver with an ABL revolver due 2024. The company is using the proceeds from its new $1.5 billion ABL revolver and $100 million FILO term loan (both due 2024) to repay its approximately $275 million of unsecured term loans. Concurrently with this announcement, the company also made a tender offer for its $400 million of unsecured notes - to be repaid with ABL proceeds - and subsequently received participation from approximately $252 million of these notes. Assuming a borrowing base of around $1.5 billion, inclusive of the FILO term loan, with approximately $275 million in proceeds from the ABL & FILO Term Loan used to pay down the unsecured term loans, and approximately $252 million in proceeds from the ABL drawn to pay for the notes tendered, Fitch assumes that Signet will have approximately $1 billion in availability on its new ABL facility. RECOVERY ANALYSIS In Fitch's recovery analysis, Signet's value is maximized as a going concern with approximately $2 billion of value. In a going-concern scenario, Fitch assumes a distressed EBITDA of around $400 million, which could be achieved if Signet was to accelerate its store closings and close around one-third of its store base. The company could close stores at its mall-based banners such as Kay and Zales as well as smaller regional banners that have been more challenged, resulting in a post-restructuring revenue base around $4 billion. Assuming a 10% EBITDA margin, at the lower end of specialty retailer EBITDA ranges, going-concern EBITDA would be $400 million. Fitch uses a 5.0x multiple, which is around the 5.4x median multiple for retail going concern reorganizations, the 12-year retail market multiples of 5x to 11x but lower than the 7x to 12x for retail transaction multiples. These assumptions yield a going-concern value of $2 billion. Fitch's liquidation analysis results in value of approximately $1.76 billion, modestly below its going-concern value. Signet's liquidation value primarily comes from its inventory, which has recently trended in the $2.3 billion- $2.5 billion range; Fitch assumes a 70% advance rate on the cost value of the inventory. The resulting inventory value of $1.6 billion, plus some fixed assets, yields Signet's total $1.76 billion liquidation value. Under the new capital structure, the $1.5 billion ABL revolver, which is governed by a borrowing base including inventory and receivables, and the $100 million FILO Term Loan, which is secured by inventory and receivables, are fully recovered and are thus rated 'BB+'/'RR1'. The remaining $148 million in senior unsecured notes, which are pari passu to operating lease claims, have superior recovery prospects and are thus rated 'BB'/'RR2'. Given a reduced outstanding balance of unsecured notes, the preferred equity now has good recovery prospects and are thus upgraded to 'BB-'/'RR3'. SUMMARY OF FINANCIAL ADJUSTMENTS -- Historical and projected EBITDA is adjusted to add back non-cash stock based compensation and a one-time adjustment in 2018 for the resolution of a regulatory matter. In 2018, Fitch added back $16.5 million in stock based compensation and excluded $11 million for the one-time charge for the resolution of a regulatory matter. -- Fitch has adjusted the historical and projected debt by adding 8x annual gross rent expense. =========== B R A Z I L =========== ODEBRECHT SA: Dominican Republic Asks Brazil to Secure US$124MM --------------------------------------------------------------- Dominican Today reports that the Attorney General's Office (PGR) said it filed a formal complaint with Brazilian justice to ensure the collection of US$124 million that the company Odebrecht has pending with the Dominican Republic, after the agreement it assumed with the country after admitting US$92 million in bribes to officials to obtain works contracts. A press release from the Attorney General's Office said that the formal claim before Brazilian justice comes after Odebrecht filed for bankruptcy in Brazil, according to Dominican Today. The company promised to pay the Dominican Republic 184 million dollars, or double the bribes, an agreement validated by the Supreme Court in February 2018, the report notes. About Odebrecht SA Odebrecht S.A. -- www.odebrecht.com -- is a Brazilian conglomerate consisting of diversified businesses in the fields of engineering, construction, chemicals and petrochemicals. Odebrecht S.A. is a holding company for Construtora Norberto Odebrecht S.A., the biggest engineering and contracting company in Latin America, and Braskem S.A., the largest petrochemicals producer in Latin America and one of Brazil's five largest private-sector manufacturing companies. Odebrecht controls Braskem, which by revenue is the fourth largest petrochemical company in the Americas. On June 17, 2019, Odebrecht filed for bankruptcy protection, aiming to restructure BRL51 billion (US$13 billion) of debt. The bankruptcy filing comes after years of struggles for Odebrecht, the biggest of the Brazilian engineering groups caught in a sweeping political corruption investigation that has rippled across Latin America, Reuters relayed, as reported by The Troubled Company Reporter - Latin America. On August 28, 2019, the Troubled Company Reporter - Latin America, citing The Wall Street Journal, reported that Odebrecht and its affiliates filed for chapter 15 bankruptcy, seeking U.S. recognition of the largest-ever bankruptcy in Latin America. Odebrecht SA and several of its affiliates has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York on Aug. 26. The case is assigned to Hon. Stuart M. Bernstein. OI SA: To Test 5G in Rio Music Festival Using Huawei's Gear ----------------------------------------------------------- Gabriela Mello at Reuters reports that Brazil's telecoms carrier Oi SA is preparing to test fifth-generation wireless network (5G) during the Rock in Rio music festival, using equipment provided by China's Huawei Technology Co Ltd, to conduct one of the largest trials of the technology in Brazil. According to Oi, 5G will be used by the entire event's staff in live coverage of the attractions, while the public will be able to test the technology on handsets that will be made available during the event, the report notes. The "City of Rock," as the venue of the event is known, is expected to lure around 100,000 people per day featuring local and international bands including Foo Fighters, Bon Jovi and The Black Eyed Peas, the company added, according to Reuters. "We've suggested to Rock in Rio the deployment of 5G to transform the event in the first city connected by the technology," Oi's operational director, Jose Claudio Moreira Gonçalves, said in a statemen obtained by the news agency. The company, Brazil's largest fixed-line carrier, began 5G tests in March, when it also partnered up with Huawei to try out the technology in Buzios, a city in Rio de Janeiro state, the report discloses. Since it filed for bankruptcy protection in June 2016 to restructure BRL65 billion in debt, Oi has been focusing on reviving its mobile operations, whose customer base has shrunk over 20% to 35 million, according to the most recent earnings, the report relays. The United States has alleged Huawei's equipment could be used by Beijing for spying, which the Chinese firm has repeatedly denied. U.S. firms are barred from using some of the firm's equipment and Washington is putting pressure on other countries to follow suit, the report adds. As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings, on Sept. 12, 2019, affirmed its global scale 'B' issuer credit and issue-level ratings and revised the outlook to negative from stable. At the same time, S&P lowered its national scale rating to 'brA-' from 'brA' and assigned a negative outlook. ======= C U B A ======= THOMAS COOK: Bankruptcy Affects Some 2,000 Tourists in Cuba ----------------------------------------------------------- OnCubeNews reports that the British Thomas Cook tour operator's bankruptcy has affected some 2,000 tourists who are in Cuba, sources from the Embassy of the United Kingdom in Havana reported, and has led to the rescheduling of 10 flights from three airports on the island. Those affected are in three Cuban destinations: the eastern province of Holguin, Cayo Coco, off the northern coast, and the popular tourist resort of Varadero, about 150 kilometers west of Havana, an official of the British diplomatic mission said to the EFE news agency, according to OnCubeNews. The report notes that Thomas Cook's customers were planning to return to the United Kingdom in the next few weeks on a total of 10 flights, the first of them from Holguín to London's Gatwick Airport, which has been rescheduled. The remaining nine flights from the three destinations, which were planned between Wednesday, September 25 and next October 6, are still pending rescheduling, according to the United Kingdom Civil Aviation Authority (CAA), the report relays. Those affected have their stay guaranteed in Cuban hotels until they are transferred back to the United Kingdom, explained the source from the Embassy, which has sent assistance personnel to the three destinations to tend to Thomas Cook's customers, the report notes. For his part, the British ambassador to Cuba, Antony Stokes, explained via Twitter that he is working closely with the country's authorities and Thomas Cook staff to help ensure customers can continue to enjoy their holidays and return safely to the UK, the report discloses. The report says that the approximately 2,000 tourists who traveled to Cuba through Thomas Cook are part of the more than 600,000 worldwide -- 150,000 of them from the United Kingdom -- affected by the bankruptcy of this tour operator, which took place in the early morning hours after 178 years of history. The fall of the group -- which operates in 16 countries, has 105 aircraft and 200 hotels and hotel complexes with its brand -- also affects those who have already paid for reservations in advance, totaling millions of pounds, the report says. In addition, it is an indirect blow to Cuban tourism, which loses an important client and one of the principal bridges or the principal one for those who visited the island from the United Kingdom, the report notes. Thomas Cook went into suspension of payments when it did not obtain the additional funds of GBP200 million (EUR227 million) required by banks―such as RBS and Lloyds―to face the winter months, the report adds. ============= J A M A I C A ============= THOMAS COOK: Officials Seek to Mitigate Fallout from Collapse ------------------------------------------------------------- Caribbean360.com reports that Jamaica Tourism Minister Edmund Bartlett said he's confident that Jamaica will be able to mitigate any potential fallout from the collapse of the 178-year-old United Kingdom (UK)-based mega tour operator, Thomas Cook. He acknowledged that the immediate impact of the company's folding will see Jamaica losing up to half of the 1,800 passengers who were booked to arrive on rotation flights from Manchester, England, between September 23 and October 31, according to Caribbean360.com. Additionally, he said the overall impact could potentially see Jamaica lose just over US$10 million in earnings from the fallout in flight bookings of between 10,000 and 11,000 passengers, the report notes. Speaking at a media briefing on Tuesday before leaving for London for the Jamaica Travel Market from September 24 to 26, Bartlett said the Government, through the Ministry, is moving to cauterize any potential repercussions to another 20 flights out of Europe's Nordic region, which incorporates countries such as Denmark, Finland, Iceland, Norway and Sweden, the report relays. He advised that Tourism Director Donovan White has been in touch with overseas tour operators and airlines with which Jamaica has forged strong relationships, to explore the most effective solutions, the report discloses. "As a matter of fact, he is in London now . . . . making contact with other partners such as TUI. . . . and to make sure that Condor [Airlines] is going to fly and that they are not going to [experience a] fallout, even though they are connected with Thomas Cook," the report quoted Mr. Bartlett as saying. The Minister said based on the interventions being pursued, "we believe we will be fairly well protected for the other rotations that would have come through [Thomas Cook]," he said. "The good news for us, really, is that we have that resilience in terms of the outreach of our marketing activities. We think we will be able to recover, perhaps, half of those 1,800 passengers . . . . based on re-bookings and other airlines coming in to pick up the slack . . . and to work with some of our other partners [to protect the other rotations]," he added. Bartlett said when tourism officials return from London, they will be able to give a fuller report "of the extent to which we have been able to cover ourselves and protect our market for the winter and beyond," the report notes. As reported in the Troubled Company Reporter-Latin America on June 27, 2019, RJR News said that Steven Gooden, Chief Executive Officer of NCB Capital Markets, is warning that the increasing liquidity in the Jamaican economy might result in heightened risk to the financial market if left unchecked. This, he said, is against the background of the local administration seeking to reduce the debt to GDP to 60% by the end of the 2025/26 fiscal year, which will see Government repaying more than J$600 billion which will get back into the system, according to RJR News. =============== P A R A G U A Y =============== PARAGUAY: To Get 90MM-IDB Loan to Improve Efficiency of Fund Use ---------------------------------------------------------------- Paraguay will carry out a program designed to improve the efficiency and transparency of the use of public funds, with the support of a $90 million loan approved by the Inter-American Development Bank (IDB). Paraguay's National Development Plan 2030 features among its goals of promoting efficient and transparent public administration. In line with this objective, the IDB-backed program will enhance everyday citizens' and economic actors' access to government information and policies. The measures backed by the program include the adoption of the Fourth Open Government Action Plan, regulations on access to public information for processing applications and an accountability manual for executive branch agencies. The plan will also serve to enhance the efficiency of public finance management with an emphasis on public investment projects and transparency in procurement and contracts for goods and services. It will include a system for electronic bidding for government purchases and the adoption of a system of transparency and accountability. This will allow for the publishing of the government budget in formats and language that is easily accessible for everyday people. The program will also feature measures to boost the efficiency of financial oversight and cut transaction costs. The measures being proposed are in line with recommendations made by the Financial Action Task Force and include the drafting of a bill to update the System for Prevention and Mitigation of Risks – designed to combat money-laundering – and a legal regime to identify and register end beneficiaries. Paraguay is working to adopt and institute a legislative and institutional framework of transparency and integrity in line with major international standards and best practices. The end beneficiaries of the program will be citizens, civil society organizations, government employees, oversight agencies and economic agents that deal with the public sector. The IDB loan for $90 million has a reimbursement period of 20 years, a five-year grace period and an interest rate pegged to the LIBOR. As reported in the Troubled Company Reporter-Latin America on Feb. 8, 2019, Fitch Ratings has assigned a 'BB+' rating to Paraguay's USD500 million bond, with final maturity in 2050. The bond has a coupon of 5.4%. ===================== P U E R T O R I C O ===================== JG & RM REALTY: Seeks to Hire Garcia-Arregui & Fullana as Counsel ----------------------------------------------------------------- JG & RM Realty Inc. seeks authority from the United States Bankruptcy Court for the District of Puerto Rico (Old San Juan) to hire Garcia-Arregui & Fullana, PSC, as its legal counsel. Advance Pain requires the attorney to: a) advise debtor with respect to its duties, powers and responsibilities in this case as debtor in Possession, its business, or is involved in litigation; b) assist the debtor with respect to negotiations with claimants' complaints and debtor's counterclaim if any; c) prepare on behalf of the debtor the necessary complains answer, order, reports memoranda of law under. or any other legal document, including Disclosure Statement, Plan of Reorganization; d) appear before the bankruptcy court, or any other court in which the debtor asserts a claim interest or defense directly or indirectly related to this bankruptcy case; e) perform such other legal services for debtor as may be required in these proceedings or in connection with the operation of/ and involvement with the debtor's business, including but not limited to notary services. The firm's hourly rates are: Senior Partners $250.00 Associate lawyers $150.00 Paralegals $90.00 The Law firm will charge actual and necessary expenses incurred in the prosecution of these matters. A retainer fee of $15,000.00 plus $1,717.00 (which included the filing fee) for expenses has already been paid prior to the filing. Isabel M Fullana of Garcia-Arregui & Fullana, PSC assures the court that she is a disinterested person within the meaning of 11 USC Sec. 101(14). The firm can be reached at: 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 About Advance Pain Management JG & RM Realty Inc. 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. JG & RM Realty Inc. filed a petition under Chapter 11 of Title 11, United States Code (Bankr. D. P.R. 19-03942) on July 11, 2019. In the petitions signed by Dr. Renier Mendez, president, the Debtor estimated $1,291,294 in assets and $1,749,258 in liabilities. Isabel M. Fullana, Esq. at Garcia-Arregui & Fullana PSC represents the Debtor as counsel. =============== X X X X X X X X =============== LATAM: Election Cycle Ending W/ Challenge of Meeting Expectations ----------------------------------------------------------------- EFE News reports that a long cycle of presidential elections is wrapping up this year with balloting in Bolivia, Uruguay and Argentina, with candidates facing the challenge of responding to citizens' demands and dissatisfaction, regional experts gathered here for the 2019 Global Forum Latin America and the Caribbean said. The second day of the event, which has brought together around 40 experts on international politics and the economy, began with a panel discussion of the so-called "election super-cycle," a series of elections in 12 Latin American countries that began in 2017 and will conclude in October of this year, according to EFE News. ********* 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. 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