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       T R O U B L E D   C O M P A N Y   R E P O R T E R

                 L A T I N   A M E R I C A

          Friday, November 22, 2019, Vol. 20, No. 234

                           Headlines



A R G E N T I N A

ARGENTINA: Bonds Sink to 36 Cents as President-Elect Stays Mum


B R A Z I L

BRAZIL: To Ask Rich Countries to Help Pay for Amazon Protection
JBS SA: BNDES to Sell $1.9 Billion in Firm Shares, Says Chairman
JBS SA: Posts $86 Million Profit for Third Quarter, Shares Rise
PETROBRAS: Signs Contract to Sell Liquigas Unit for BRL3.7BB


D O M I N I C A N   R E P U B L I C

CORPORACION DOMINICA: Punta Catalina Power Plant Will Soon Be Sold


H A I T I

HAITI: Delta Airlines to End Service to Haitian Capital


J A M A I C A

DIGICEL GROUP: Fitch Downgrades LT IDR to 'CC'
JAMAICA: PM Urges Corporate to Invest in its Workers


M E X I C O

MEXICO: Bank of Mexico Cuts Rates, as Expected
MEXICO: Faces $2.4 Billion Lawsuit From Tech Startup

                           - - - - -


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A R G E N T I N A
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ARGENTINA: Bonds Sink to 36 Cents as President-Elect Stays Mum
--------------------------------------------------------------
Sydney Maki and Andres Guerra Luz at Bloomberg News reports that
investors are souring on how much they can recoup from a potential
Argentine default as President-elect Alberto Fernandez
procrastinates on plans to save his nation from financial ruin.

Argentine dollar bonds due in 2028 now fetch as little as to 36
cents on the dollar--a drop of about 20 cents since the immediate
aftermath of the leftist's surprise primary victory in August. A
mountain of debt, staggeringly high inflation and little sign of
who Fernandez will pick for his cabinet--and which policies they
will implement--have bondholders begging for clarity, according to
Bloomberg News.

"It doesn't inspire confidence for effective crisis management,"
according to Siobhan Morden, who runs Amherst Pierpoint Securities'
Latin America fixed-income strategy from New York, Bloomberg News
notes. "If there is no obvious growth model and no commitment for
fiscal reform, then the burden may shift to bondholders for debt
relief," he added.

Bloomberg News says that the information void surrounding
Fernandez's economic policies or specific restructuring plans means
some analysts are hesitant to be specific on how much bondholders
will ultimately get if Argentina reneges on payments.

Morden puts the figure at between 35 and 40 cents, implying a 50%
principal haircut, payment in kind and a five-year maturity
extension, in a recent note, Bloomberg News says.  Juan Manuel
Pazos, chief economist at Buenos Aires brokerage TPCG Valores, pegs
it at 40 cents.  For Ezequiel Zambaglione, head of strategy at
Balanz Capital Valores in Buenos Aires, a "hard default" would push
bond prices below 30 cents, while a "friendly negotiation" could
mean investors get more than 50 cents, Bloomberg News relates.

Bloomberg News discloses that the expectations represent an
enormous gap from the closest Fernandez has gotten to addressing
investor concerns: In the run-up to the election, he repeatedly
referred to Uruguay's 2003 default, which left creditors with a
loss of just 20%. In the meantime, while bondholders have begun to
prepare for a renegotiation, little can be done without details on
how the incoming leader will behave.

Investors understand the "poison chalice" that Fernandez inherited,
said Edwin Gutierrez, a London-based head of emerging-market
sovereign debt at Aberdeen Asset Management, Bloomberg News relays.
"We never believed the 20% haircut, nor does the market. Bonds
wouldn't be here if that were the case," he added.

That said, if Fernandez can steer policy without the heavy hand of
his running mate, former President Cristina Fernandez, it may be
enough to reassure money managers and invite a honeymoon at the
beginning of his term, said Ray Zucaro, chief investment officer at
RVX Asset Management in Miami, Bloomberg News relays.  Should
Fernandez clarify his plans and express a desire to work with
creditors, "It could turn quickly," said Shamaila Khan, the New
York-based director of emerging-market debt at AllianceBernstein,
Bloomberg News notes.

For now, though, Argentina's closely watched century bond is
trading at just about 37 cents--half its value before the August
market meltdown, Bloomberg News relates.  It's among notes governed
by foreign laws, including those due in 2021, 2028 and 2048, that
fell to all-time lows on Nov. 13.

Credit-default swaps already imply a 98% probability that Argentina
will stop making debt payments within the next five years, compared
with 75% right after the primary and 49% just before the vote,
Bloomberg News discloses.  Fernandez, who has a dwindling stock of
net reserves, is widely expected to renegotiate Argentina's $56
billion line of credit with the International Monetary Fund,
Bloomberg News notes.

                         All But Certain

Likelihood that Argentina defaults climbs after Fernandez wins
primary Bad news is still piling up. In a U.K. lawsuit, three hedge
funds -- Palladian Partners LP, HBK Master Fund LP and Hirsh Group
LLC -- say Argentina restated economic figures to avoid paying out
on securities tied to its growth, Bloomberg News relates.  The
funds want the nation to fork over EUR384 million ($423 million) in
compensation, Bloomberg News notes.  And Fernandez threw his first
barbs at U.S. President Donald Trump, expressing an opposing view
over political upheaval in Bolivia, Bloomberg News says.

"He has been sounding more radical than expected, and investors
started to increase the probability of a hard default," said
Balanz's Zambaglione, Bloomberg News adds.

                          About Argentina

Argentina is a country located mostly in the southern half of South
America.  It's capital is Buenos Aires. Alberto Angel Fernandez is
the President-elect of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.

Argentina has the third largest economy in Latin America.  The
country's economy is an upper middle-income economy for fiscal year
2019 according to the World Bank.  Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and -- in the recent decades -- increasing poverty.

Standard & Poor's foreign and local currency sovereign credit
ratings for Argentina stands at CCC- with negative outlook. S&P
said, "The negative outlook reflects the prominent downside risks
to payment of debt on time and in full per our criteria over the
coming months amid very complex political, economic, and financial
market dynamics."  Moody's credit rating for Argentina was last set
at Caa2 from B2 with under review outlook. Fitch's credit rating
for Argentina was last reported at CC with n/a outlook. DBRS's
credit rating for Argentina is CC with under review outlook.  S&P,
Moody's and DBRS ratings were issued on Aug. 30, 2019; Fitch rating
on Sept. 3, 2019.

Bids are due Nov. 27 at 11:00 a.m. Eastern Time.
Back in July 2014, Argentina defaulted on some of its debt, after
expiration of a 30-day grace period on a US$539 million interest
payment.  The country hasn't been able to access international
credit markets since its US$95 billion default 13 years ago.  On
March 30, 2016, Argentina's Congress passed a bill that will
allow the government to repay holders of debt that the South
American  country defaulted on in 2001, including a group of
litigating hedge  funds that won judgments in a New York court.
The bill passed by a vote of 54-16.



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B R A Z I L
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BRAZIL: To Ask Rich Countries to Help Pay for Amazon Protection
---------------------------------------------------------------
Paulo Trevisani at The Wall Street Journal reports that Brazil's
government, under fire from Western governments over deforestation
in the Amazon, will ask developed countries to help finance efforts
to preserve rainforest and promote sustainable economic activities
during a climate-change conference in December.

Environment Minister Ricardo Salles said his country will call on
rich nations during the two-day United Nations conference, known as
COP25, to provide $100 billion a year to help Brazil and other
developing countries preserve their natural resources, as promised
under the 2016 Paris Agreement, according to The Wall Street
Journal.

Mr. Salles's call came two days after Brazil's space agency said
the pace of deforestation in the country's Amazon accelerated
during the past year, the report notes.  Nearly all of the new
deforestation took place after President Jair Bolsonaro, a
pro-business politician who promotes ranching and farming in the
Amazon, was inaugurated in January, the report discloses.

Mr. Salles, who was expected to lay out the government's plans to
tackle forest loss, didn't release any details but said the
government was working to reduce deforestation next year and reach
zero in the future, the report says.

"It's necessary that funds compatible with the challenge of
preserving the Amazon start to flow towards developing countries,"
Mr. Salles told reporters, the report relates.  "The people who
take care of the forest must be compensated," he added.

The minister said the administration was working to unlock funds
from the cash-strapped national budget to beef up agencies in
charge of fighting illegal logging, while working with Amazon state
governors to promote sustainable economic activities in the region,
the report relays.

Critics say that promoting business in the rainforest is the wrong
way to deal with the Amazon, a jungle scientists say is vital to
keep the world from overheating, and that the Brazilian government
is ill-suited to get financial help, the report points out.

"It's clear this government has no solid plan to protect the
Amazon," Greenpeace's public policy coordinator in Brazil Marcio
Astrini said after the presser, the report notes.  "With no plan,
it has no moral authority to get any funds from developed
countries."

Brazil's space agency said an area about the size of Rhode Island
and Delaware together lost tree cover in the 12 months through
July, the report says.  That was an increase of 30% over the same
period ended in July 2018 and the highest level of deforestation
since 2008, the report relates.

Mr. Bolsonaro's administration has said that instead of punishing
farmers, ranchers and miners for breaking Brazil's environmental
laws it should offer ways for Amazonian residents to prosper
without cutting down trees, the report relays.

"Deforestation is increasing because the Amazon is rich in natural
resources but it has very bad social indicators," including low
income and poor infrastructure, Mr. Salles said. "It won't change
until Amazon residents are included" in efforts to protect the
forest, the report points out.

Mr. Salles said Brazil is speeding up efforts to legalize land
ownership in the Amazon so environmental protection agents can more
efficiently prosecute people who are involved in illegal logging,
the report notes.

As reported in the Troubled Company Reporter-Latin America on Nov.
18, 2019, Fitch Ratings affirmed Brazil's Long-Term Foreign
Currency Issuer Default Rating at 'BB-'. The Rating Outlook is
Stable.

JBS SA: BNDES to Sell $1.9 Billion in Firm Shares, Says Chairman
----------------------------------------------------------------
Rodrigo Viga Gaier at Reuters reports that Brazilian development
bank BNDES intends to sell roughly 8 billion reais ($1.91 billion)
in shares of meatpacker JBS SA through a secondary share offering,
its chairman said.

Chairman Carlos Thadeu the Freitas said the bank plans to conclude
the share offering by December, according to Reuters.  The amount
of shares to be sold equals nearly half of JBS's total stake in the
company, the report notes.

As reported in the Troubled Company Reporter-Latin America on Nov.
1, 2019, S&P Global Ratings raised its long-term issuer credit
ratings on Brazil-based protein processor JBS S.A. (JBS) and JBS
USA Lux S.A. to 'BB' from 'BB-'.

JBS SA: Posts $86 Million Profit for Third Quarter, Shares Rise
---------------------------------------------------------------
Ana Mano at Reuters reports that JBS SA reported a quarterly net
profit of $86 million as higher meat prices across its markets
bolstered results amid an outbreak of African swine fever in Asia.

The disease, which killed nearly half of China's pig herd, created
a global supply imbalance that has benefited Brazilian food
producers, according to Reuters.

The company, which has a diversified production and export base,
said it will continue to generate strong results as incomes are
rising in Asia and people move to cities from the countryside, the
report notes.

In remarks after posting results on Nov. 14, JBS managers told
analysts the prospects are bright for operations in the United
States, where cattle availability is projected to increase by 2%
next year, the report discloses.

While neutral for Brazil, the company said a decision by China to
allow U.S. poultry imports will benefit its U.S.-based Pilgrims
Pride Corp operation, the report says.

In Brazil, where it is headquartered, JBS said it will be necessary
to boost chicken production volumes as internal and export demand
pickup, the report relates.

JBS' net revenues stood at BRL52.1 billion ($12.4 billion) in the
third quarter, a 5.6% rise thanks in part to strong sales in the
Brazilian market through its Seara processed foods and beef
divisions, according to an earnings statement, the report relays.

Net sales at Seara increased 7.4% to 5.4 billion reais, with a 10%
rise in prices helping offset a 2.3% reduction in volumes sold, the
company said, the report points out.

JBS also highlighted a 19% rise in pork exports at the Seara
division. The unit's chicken and pork sales to China registered a
46% rise in value in dollar terms, JBS said, alluding to demand
spurred by China's need to step up food imports, the report notes.

In the U.S. unit, which includes Australia and Canada, net revenue
was $5.6 billion, 3.8% higher from a year ago, reflecting mainly a
3.2% price increase while volumes sold remained virtually flat, the
report discloses.

JBS also said operating income came in at BRL5.92 billion in the
third quarter, above an average estimate of BRL5.42 billion, the
report says.

Managers reiterated plans to make new acquisitions, including
"transformational" deals in markets where JBS already operates, the
report relates.

Asked by analysts whether JBS would consider making acquisitions in
China, company Chief Executive Gilberto Tomazoni said the priority
is investing to secure a reliable distribution platform there, the
report relays.

Still, he said, the company would consider any "undeniable"
acquisition opportunities in the Asian country, the report points
out.

As reported in the Troubled Company Reporter-Latin America on Nov.
1, 2019, S&P Global Ratings raised its long-term issuer credit
ratings on Brazil-based protein processor JBS S.A. (JBS) and JBS
USA Lux S.A. to 'BB' from 'BB-'.

PETROBRAS: Signs Contract to Sell Liquigas Unit for BRL3.7BB
------------------------------------------------------------
Iolanda Fonseca at Rio Times Online reports that Petrobras
disclosed on November 19th, the signing of the sales agreement with
private companies Copagaz and Nacional Gas Butano, covering all its
equity in Liquigas Distribuidora.

The sale value is BRL3.7 billion (US$925 million), according to Rio
Times Online.  As part of the operation's structure, Itausa will
invest a minority share of equity in Copagaz, the report relays.

Liquigas operates in the bottling, distribution, and marketing of
liquefied petroleum gas (LPG) in Brazil.

                        About Petrobras

Petroleo Brasileiro S.A. or Petrobras (in English, Brazilian
Petroleum Corporation - Petrobras) is a semi-public Brazilian
multinational corporation in the petroleum industry headquartered
in Rio de Janeiro, Brazil.  Petrobras control significant oil and
energy assets in 16 countries in Africa, the Americas, Europe and
Asia.  But, Brazil represents majority of its production.

The Brazilian government directly owns 54% of Petrobras' common
shares with voting rights, while the Brazilian Development Bank
and
Brazil's Sovereign Wealth Fund (Fundo Soberano) each control 5%,
bringing the State's direct and indirect ownership to 64%.

A corruption scandal was uncovered in 2014 that involved
Petrobras.
The scandal related to money laundering that involved Petrobras
executives.  The executives were alleged to get received kickbacks
from overpriced contracts, to the tune of about $3 billion in
total.

As reported in the Troubled Company Reporter-Latin America on Feb.
25, 2019, S&P Global Ratings raised the stand-alone credit profile
(SACP) on Petrobras to 'bb' from 'bb-'. S&P also affirmed its
global scale ratings on the company at 'BB-' and its Brazilian
national scale rating at 'brAAA'.



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D O M I N I C A N   R E P U B L I C
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CORPORACION DOMINICA: Punta Catalina Power Plant Will Soon Be Sold
------------------------------------------------------------------
Dominican Today reports that Finance Ministry advances the creation
of the company Punta Catalina power plant, leading to its sale,
according to Lstin Diario sources.

"As a result of the progress of these efforts to institute this
form of society, the Corporacion Dominicana de Empresas Electricas
Estatales (CDEEE)(electric utility) and the Fonper have agreed to
hold an extraordinary general assembly in each electricity
distribution company to, among other actions, authorize the total
or partial transfer of rights, works, benefits and/or obligations
contained in the 'Contract of Engineering, Procurement and
Construction-Contract of EPC No.101 /14'"/, the outlet reports,
according to Dominican Today.

It reports that the reference contract was signed on April 14, 2014
between the CDEEE, on behalf of Edenorte, Edesur and Edeeste, and
the Odebrecht-Tecnimont-Estrella Consortium, the report notes.



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H A I T I
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HAITI: Delta Airlines to End Service to Haitian Capital
-------------------------------------------------------
RJR News reports that Delta Air Lines will end a decade of service
to Haiti citing weak demand.

The carrier will operate its last flight between Atlanta and
Port-au-Prince on January 9, 2020, according to RJR News.

The airline has served Port-au-Prince since 2009 when it began
flights between the Haitian capital and New York, the report notes.



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J A M A I C A
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DIGICEL GROUP: Fitch Downgrades LT IDR to 'CC'
----------------------------------------------
Fitch Ratings downgraded the Long-Term Foreign Currency Issuer
Default Ratings of all of the rated entities in the Digicel
corporate structure, including: Digicel Group Limited, to 'CC' from
'CCC-'; Digicel Group Two Limited to 'CC' from 'CCC-'; Digicel
Group One Limited to 'CCC' from 'B-'; Digicel Limited to 'CCC' from
'B-'; and Digicel International Finance Limited to 'B-' from 'B'.
The Rating Outlooks on DGL1 and DL have been removed, while the
Outlook on DIFL has been revised to Negative from Stable.

Fitch has also downgraded DGL3's unsecured notes to 'C'/'RR5' from
'CC'/'RR5', DGL2's unsecured notes to 'C'/'RR5' from 'CC'/'RR5';
DL's unsecured notes to 'CCC'/'RR4' from 'B-'/'RR4', DGL1's
unsecured notes to 'CCC'/'RR4' from 'B-'/'RR4', and DIFL's secured
notes and credit facilities to 'B-'/'RR4' from 'B'/'RR4'.

Fitch expects that Digicel will have to restructure debt at
multiple levels in the next 12-18 months, due to the group's
unsustainable capital structure and imminent refinancing risk.

KEY RATING DRIVERS

Unsustainable Capital Structure: Digicel's leverage, as measured by
consolidated net debt to EBITDA, continues to increase, standing at
approximately 7.5x as of June 30, 2019, up from 6.6x at YE2018. The
distressed debt exchange that DGL concluded in January 2019
involved an extension of maturities rather than principal haircuts
or debt/equity swaps. Fitch expects increasing interest expense to
consume most of the company's declining operating income, which
contributes to a cycle of cash burn.

Imminent Refinancing Risk: Fitch views Digicel as having imminent
refinancing risk, given its amortization schedule and low financial
flexibility. The most immediate concern is DL's USD1.3 billion
notes maturing in April 2021, which Fitch believes that the company
will struggle to refinance amid stagnant operating performance.
Digicel has headroom to issue secured debt at the DIFL level;
however, significant additional debt incurred at DIFL would strain
its leverage metrics.

Stagnant Operating Performance: The group's performance has
deteriorated in recent years as double-digit revenue declines in
traditional voice products outweigh growth elsewhere. These issues
have been exacerbated by local currency depreciation against the
U.S. dollar, which Fitch expects to continue. The company is
diversifying away from its core mobile focus via double-digit
growth in the business solutions and home entertainment segments;
however, these segments only account for approximately 20% of
revenues.

Weak to Moderate Group Linkages: Fitch assesses the legal,
operational and strategic ties among the issuers and considers
legal ties to be to the most important linkage. While strong
operational and strategic ties bind the group, the debt
restructuring has caused Fitch to de-emphasize their importance
relative to the lack of strong legal ties between DIFL and the
other holding companies in the corporate structure. The DL notes
have a subordinated guarantee from DIFL, which is structurally
junior to the DIFL obligations. Combined with the elevated DL's
increasing leverage and refinancing risk, this supports a
multi-notch rating differential.

DERIVATION SUMMARY

Digicel Group Limited's solid business profile, with leading mobile
market shares in its well-diversified operational geographies
supported by network competitiveness, is stronger than speculative
grade peer Oi S.A.'s (B-/Stable), which has also struggled before
and after its debt restructuring. However, Oi has lower refinancing
risk and stronger liquidity, owing to the extension of principal
and interest payments on its restructured debts. Digicel's
competitive position is stronger than Telecom Argentina's (CCC),
which suffers from its exposure to the macroeconomic turmoil of
Argentina and is capped by the country ceiling. However, Telecom
Argentina's strong capital structure enables its notes to be rated
'B-'. Digicel's financial profile is materially weaker than its
regional diversified telecom in the speculative-grade categories,
including Millicom International Cellular S.A. (BB+/Stable), and
Cable & Wireless Communications Limited (BB-/Stable).

Digicel's ratings are constrained by its operating environments in
the Caribbean and South Pacific; however, no Country Ceiling was in
effect for these ratings. Under its Country-Specific Treatment of
Recovery Ratings Criteria, Fitch caps Digicel's debt instruments at
'RR4'; therefore, the instruments' ratings are capped at the
issuers' IDRs.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  -- Muted overall revenue growth, as solid Home and Entertainment
(includes fixed line telephony, TV, and broadband) and Business
Solutions growth are offset by weak growth prospects for the mobile
segment;

  -- Continued appreciation of the U.S. dollar against local
currencies in most of Digicel's markets;

  -- No dividend payments to controlling shareholders.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  -- The company's limited financial flexibility, due to its
stagnant operating performance and amortization schedule, limits
the potential for a positive rating action at this time, absent a
debt restructuring, asset sales, and/or additional equity.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -- Shareholder actions that impair creditors would result in
additional negative rating actions for the group;

  -- If Digicel pursues another debt restructuring, Fitch will take
such actions are appropriate at that time.

LIQUIDITY

Weak Liquidity: Digicel has weak liquidity, due to its persistently
negative FCF, high cash interest burden, and the limited financial
flexibility. Cash on hand at DGL stood at USD214 million, of which
USD156 million was at DL, against current debt of USD177 million at
DGL, of which USD103 million was at DL. DIFL has an undrawn credit
facility, but the covenants may not allow the company to draw on
it. The company faces an amortization wall, with significant
maturities beginning in April 2021.

FULL LIST OF RATING ACTIONS

Digicel Group Limited

  -- LT FC IDR downgraded to 'CC' from 'CCC-';

  -- Unsecured notes downgraded to 'C'/'RR5' from 'CC'/'RR5'.

Digicel Group Two Limited

  -- LT FC IDR downgraded to 'CC' from 'CCC-';

  -- Unsecured notes downgraded to 'C'/'RR5' from 'CC'/'RR5'.

Digicel Group One Limited

  -- LT FC IDR downgraded to 'CCC' from 'B-'; Outlook Removed;

  -- Unsecured notes downgraded to 'CCC'/'RR4' from 'B-'/'RR4'.

Digicel Limited

  -- LT FC IDR downgraded to 'CCC' from 'B-'; Outlook Removed;

  -- Unsecured notes downgraded to 'CCC'/'RR4' from 'B-'/'RR4'.

Digicel International Finance Limited

  -- LT FC IDR downgraded to 'B-' from 'B'; Outlook revised to
     Negative from Stable;

  -- Secured notes and credit facilities downgraded to 'B-' /'RR4'
     from 'B'/'RR4'.


JAMAICA: PM Urges Corporate to Invest in its Workers
----------------------------------------------------
RJR News reports that Prime Minister Andrew Holness has urged
corporate Jamaica to treat their workers well and invest in their
development.

He said such investment is one sure way to increase business
productivity and spur the country's economic growth, according to
RJR News.

Mr. Holness, while noting that he is a firm believer in business,
said workers should be treated as an investment and not as an
expense, the report notes.

                          About Jamaica

As reported in the Troubled Company Reporter-Latin America on Oct.
1, 2019,  S&P Global Ratings, on Sept. 27, 2019, raised its
long-term foreign and local currency sovereign credit ratings on
Jamaica to 'B+' from 'B'. The outlook is stable. At the same time,
S&P Global Ratings affirmed its 'B' short-term foreign and local
currency sovereign credit ratings on the country. S&P Global
Ratings also raised its transfer and convertibility assessment to
'BB-' from 'B+'.

RJR News reported in June 2019 that Steven Gooden, Chief Executive
Officer of NCB Capital Markets, warned 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.




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M E X I C O
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MEXICO: Bank of Mexico Cuts Rates, as Expected
----------------------------------------------
Juan Montes at The Wall Street Journal reports that the Bank of
Mexico cut interest rates by a quarter percentage-point on Nov. 14,
as expected, continuing an easing cycle that started in August when
inflation eased towards the bank's target.

In its third consecutive cut, the Mexican central bank reduced the
overnight interest-rate target to 7.5%, its lowest level since June
of last year, according to The Wall Street Journal.  The decision
wasn't unanimous, with two of the five board members voting for a
more aggressive half percentage-point cut, the report notes.

The cuts mirror recent moves by the U.S. Federal Reserve, the
report relays.  The monetary easing in the U.S. has given Mexico's
central bank maneuvering room to lower borrowing costs without
reducing the attractiveness of the peso and other peso-denominated
assets, the report notes.

The bank cited tame inflation and the lack of economic growth, as
well as a more stable peso, in cutting rates, the report discloses.
Economic growth for this year and 2020 will likely be below the
bank's current estimates of 0.5% and 2%, the bank said in its
policy statement obtained by the news agency.

The fact that two members voted for a bigger rate cut indicates the
easing cycle would likely continue, at least at the next policy
meeting in December, analysts said, the report relays.

Gerardo Esquivel and Jonathan Heath, both appointed by President
Andres Manuel Lopez Obrador, a leftist, had voted for a
half-percentage point cut at the September meeting and are seen as
the most dovish board members, the report says.  The identities of
the voters are disclosed two weeks later in the post-meeting
minutes, the report notes.

Mexico's economy has narrowly avoided slipping into recession so
far this year, the report discloses.  Gross domestic product was
flat in the first nine months, following a 0.3% contraction in the
first quarter, hit by declines in private and public investment,
and a slowdown in manufacturing and domestic demand, the report
says.

The slack in the economy "has widened more than anticipated," the
bank said, the report notes.

The central bank stressed the Mexican economy is going through a
period of "significant uncertainty," both external and domestic,
the report relays.  The new trade deal with the U.S. and Canada,
which is set to replace the North American Free Trade Agreement,
has yet to be passed by the U.S. Congress, the report notes.

The bank also sent a message to the Lopez Obrador administration,
saying the government needs to strengthen the credit rating outlook
for the country and state-oil firm Petroleos Mexicanos, and to
achieve its 2019 fiscal targets and 2020 budget goals, the report
discloses.

Fitch Ratings downgraded Pemex's bonds to speculative status in
June, while Moody's Investors Service has the company at its lowest
investment grade with a negative outlook.  Pemex reduced its debt
to $99.6 billion at the end of September from $104.4 billion in
June thanks to a capital injection from the government, but remains
the world's most indebted oil company, the report relays.

The central bank seemed pleased by the recent performance of
consumer prices, as annual inflation is in line with its target at
3.02% in October, the report notes.  The slowing inflation has to
do with lower energy prices and a stagnant economy crimping demand
for goods and services, the report discloses.

The central bank warned of several risks that could still impact
inflation, including a deterioration of public finances and the
threat of trade tariffs by the U.S., although the bank said the
risk of tariffs has declined, the report adds.

MEXICO: Faces $2.4 Billion Lawsuit From Tech Startup
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Robbie Whelan at The Wall Street Journal reports that a lawsuit
concerning a tech startup is pitting Mexican billionaire Ricardo
Salinas Pliego, a key private-sector ally of President Andres
Manuel Lopez Obrador, against the Mexican leader's government.

The startup, which according to U.S. court records is partly owned
by the businessman, sued Mexico's federal government for $2.4
billion this year after Mexico City canceled a contract it won at
auction to develop a ride-hailing smartphone app for the city's
140,000 licensed taxis, according to The Wall Street Journal.

The claim represents one of Mexico's largest potential legal
liabilities, the report notes.  If the Delaware-based plaintiff,
Espiritu Santo Technologies LLC, were to win a judgment or reach a
settlement, Mr. Salinas Pliego could receive a major payout, the
report discloses.  Mr. Salinas Pliego's connection to the plaintiff
hasn't been reported, the report says.

Mr. Lopez Obrador, a leftist leader, and Mr. Salinas Pliego, the
second-richest person in Mexico after telecom mogul Carlos Slim,
have been friends for two decades and have worked closely together
since the president's rise to power last year, the report relates.

Mr. Lopez Obrador appointed Mr. Salinas Pliego--who controls
industrial, retail, banking and TV businesses worth more than $14
billion--to the president's private-sector advisory council late
last year, the report relays.  Mr. Salinas Pliego's bank, Banco
Azteca, was then awarded an exclusive contract in January to
produce ATM cards to distribute funds to the poor under one of Mr.
Lopez Obrador's signature social programs, the report points out.

In September, the president publicly defended Mr. Salinas Pliego
after The Wall Street Journal reported that the billionaire had
ties to a fertilizer company that was sold to state oil company
Pemex at what government auditors had determined to be an inflated
price.  Mr. Salinas Pliego denied he had any stake in the
fertilizer company, the report notes.

Despite their relationship, the two men have sometimes clashed. In
a 2010 book, Mr. Lopez Obrador named Mr. Salinas Pliego as one of
16 Mexican business leaders who formed a "power mafia" that
controlled the country's politics, the report discloses.  Mr.
Salinas Pliego has publicly opposed Mr. Lopez Obrador's move to
cancel construction of a new airport, the report says.

Mr. Lopez Obrador declined to comment on the litigation through a
spokeswoman. Andres Lajous, Mexico City's secretary of
transportation, declined to comment on the suit, the report
relates.

Luciano Pascoe, a spokesman for Mr. Salinas Pliego's holding
company, Grupo Salinas, said the businessman has nothing to do with
any company associated with the taxi ride-hailing app. "Certain
people are seeking to involve Mr. Salinas Pliego in affairs that
are alien to him," he said, the report relays.

The lawsuit concerns the smartphone taxi app, called L1bre, which
was developed by Santiago Leon and Eduardo Zayas, two Mexican
entrepreneurs with investments in mining and restaurants, the
report points out.  The men said that in 2017 they sold a one-half
stake in Espiritu Santo, the app's parent company, to an investment
vehicle owned jointly by Mr. Salinas Pliego and Fabio Covarrubias,
an Italian-Mexican businessman, the report notes.

Court documents filed in New York related to a separate dispute
between the taxi app's Mexican owners support their assertion. U.S.
District Judge Colleen McMahon, chief judge for New York's Southern
District, wrote in a May court order that an investment vehicle
that owns half the L1bre business "is indirectly owned and
controlled by two Mexican businessmen, Ricardo Salinas Pliego. . .
. and Fabio Covarrubias," the report discloses.

An internal company document viewed by The Journal also lists Mr.
Salinas Pliego as a director of Espiritu Santo and describes the
billionaire's investment vehicle as one-half owner of it, the
report says.  In November 2018, Mr. Salinas Pliego called a meeting
of the company's principal shareholders at his office in Mexico
City to discuss setbacks with the Mexico City government, according
to a text message viewed by The Journal, the report relates.

Mr. Salinas Pliego's bank, Banco Azteca, has lent Espiritu Santo
$20 million, according to Grupo Salinas, and Mr. Covarrubias was
named chief executive of the L1bre business, according to court
records and the internal company documents, the report relays.

Through his spokesman, Mr. Salinas Pliego declined several requests
for interviews, the report points out.  His spokesman declined to
respond directly to the information contained in the judge's
written order or the text messages, the report notes.  The
spokesman pointed out that Mr. Salinas Pliego's signature wasn't on
the internal document. Mr. Covarrubias' lawyer said he wasn't
available for an interview, the report discloses.

The lawsuit stemmed from Mexico City's cancellation of a 2017
contract with Espiritu Santo to develop L1bre, the report says.
The contract, viewed by The Journal, also called for the company to
install tablets with digital taximeters, panic buttons and payment
modules in every cab in the city so that drivers could better
compete with ride-hailing apps, such as Uber Technologies Inc.,
China's Didi Chuxing Technology Co. and Spain's Cabify, the report
relates.

For decades, Mexico City's taxi cab fleet, which is about 10 times
the size of New York City's, has struggled with a reputation for
insecurity and inconvenience after a wave of robberies and
kidnappings in the 1990s, the report relays.  Even today, the
city's taxis don't accept credit card payments and rely on analog
ride meters that can be easily altered to inflate fares, the report
points out.

But L1bre's business model raised hackles among taxi drivers
because the contract would have required them to pay 12 pesos
(about $0.60) per ride to the company, the report notes.  L1bre
also planned to sell advertising and bill payment services on the
tablets, the report discloses.

Mexico City Mayor Claudia Scheinbaum, elected last year as a member
of Mr. Lopez Obrador's Morena party, has refused to honor the terms
of the concession that was awarded by her predecessor, saying that
it was unfair to force cabbies to pay the cost, that the bidding
process was corrupt and that the company lacked experience, the
report says.

Espiritu Santo says that it won the contract legally in a
competitive process and hired software and logistics experts to
design the system, the report relates.  The company's founders say
they and their partners have invested about $105 million in the
company and were raising more when their concession was canceled,
the report relays.

Late last year, according to a fundraising document viewed by The
Journal, Goldman Sachs Group Inc. bankers calculated L1bre's
potential enterprise value at $2.4 billion, the report points out.
That was before the company started operations or earned revenue,
the report notes.

Using this valuation, Espiritu Santo gave notice to Mexico's
federal government in May that it would sue it under chapter 11 of
the North American Free Trade Agreement, which protects investors
from having assets seized by the government, the report discloses.
The company is also arguing in the same case that an app launched
by Mexico City in September, called MiTaxi, constituted a theft of
L1bre's business model and intellectual property, the report says.
The app allows riders to use a panic button to call police if they
encounter trouble, the report relates.

"This was a Venezuela-style expropriation," said Mr. Leon, one of
the co-founders, the report relays.

Mr. Lajous, the Mexico City transportation secretary, said the
MiTaxi app is different from L1bre and doesn't conflict with it
because MiTaxi doesn't include credit card payments or a
ride-hailing component, the report points out.  But he has said
publicly that both are coming in later phases, the report notes.

Mr. Lajous described the 12-pesos fees as a tax levied on cabbies
by a private company, the report discloses.  And he said L1bre's
model was unenforceable because it depended on the government to
chase drivers down and seek payments, the report says.  Espiritu
Santo had said it had planned to subsidize the fees during the
app's initial rollout, the report relates.

"Taxi drivers didn't want to use it," Mr. Lajous said, the report
adds.


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