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/raid1/www/Hosts/bankrupt/TCRLA_Public/200110.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, January 10, 2020, Vol. 21, No. 8 Headlines B R A Z I L BRAZIL: 'Guedes Doctrine' Puts out 'For Sale' Signs for Country BRAZIL: Rio de Janeiro's Oil Royalty Transparency Portal Gets OK GLOBO COMUNICACAO: Moody's Rates Proposed $300MM Unsec. Notes Ba1 C H I L E GEOPARK LIMITED: Fitch Rates New $350MM Notes Due 2027 'B+' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Agro Chief Blames Poultry Flu On Farmers DOMINICAN REPUBLIC: Producers Worry as DR-Cafta Deadlines Loom J A M A I C A JAMAICA: More Focus to be Placed on Exporting Local Goods JAMAICA: Seeking Help to Reduce Country's Food Import Bill P E R U HUNT OIL: Moody's Lowers CFR to Ba2; Reviews Rating for Downgrade P U E R T O R I C O PUERTO RICO: Slowly Recovering Electrical Service T R I N I D A D A N D T O B A G O CARIBBEAN AIRLINES: Guyana Says No to Flag Carrier Status V E N E Z U E L A VENEZUELA: Chavistas Unite Around New Assembly Chief - - - - - =========== B R A Z I L =========== BRAZIL: 'Guedes Doctrine' Puts out 'For Sale' Signs for Country --------------------------------------------------------------- Richard Mann at Rio Times Online reports that the Brazilian government wants to sell everything. This is not a journalistic exaggeration or an attempt to capture the readers' attention: it is the literal words of Jair Bolsonaro's economic 'wunderkind', the ultra-liberal Economy Minister Paulo Guedes, and of Salim Mattar, the secretary-general of privatizations, a figure whose mere existence is a statement of intent. Beyond the rhetoric, they have already set to work, demonstrating that they are giving it their all in a privatization plan that began at the time of Michel Temer, but that gained momentum with Bolsonaro coming to power, says the report. This is the largest privatization of companies and public investments in the history of Brazil, the report adds. 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. BRAZIL: Rio de Janeiro's Oil Royalty Transparency Portal Gets OK ---------------------------------------------------------------- Xiu Ying at Rio Times Online reports that on December 18, the Legislative Assembly of the State of Rio de Janeiro (ALERJ) passed Bill 536/19, sponsored by Deputy Carlo Caiado, which proposes that Rio de Janeiro provides a transparency portal to disclose the expenses incurred with the revenue from royalties and share in oil production, transferred by the federal government. The history of the past ten years should be disclosed on the website, including revenues, amounts collected and the expected future collection, according to Rio Times Online. In addition, the expenses incurred with these proceeds must be disclosed, notes the report. 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. GLOBO COMUNICACAO: Moody's Rates Proposed $300MM Unsec. Notes Ba1 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to the proposed $300 million senior unsecured notes due 2030 to be issued by Globo Comunicacao e Participacoes S.A. Globo's existing Ba1 senior unsecured ratings and its Ba1 CFR remain unchanged. The ratings outlook is stable. Globo will use the proceeds from the proposed new issuance, together with available cash as necessary, to purchase up to $300 million of the existing 4.875% senior that will be tendered in a concurrent tender offer, and otherwise for general corporate purposes. Moody's does not expect that the proposed new issuance will increase Globo's leverage metrics because the company's objective with this transaction is to extend its debt maturity profile and lower interest expenses by replacing existing indebtedness. The rating of the proposed notes assumes that the issuance will be successfully completed and that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and assume that these agreements are legally valid, binding and enforceable. Rating assigned: Issuer: Globo Comunicacao e Participacoes S.A. $300 million senior unsecured notes due 2030: Ba1 The company's existing ratings are unchanged: Issuer: Globo Comunicacao e Participacoes S.A. Corporate Family Rating: Ba1 $325 million senior unsecured notes due 2025: Ba1 $300 million senior Unsecured notes due 2022: Ba1 Stable Outlook RATINGS RATIONALE Globo's Ba1 ratings are mainly supported by its resilient credit metrics and liquidity, and its leading market position in the Brazilian TV broadcasting market, with a 37% share of the overall national audience and 41% during prime time as of September 2019. The rating also reflects Globo's diversification away from advertising revenue toward the higher-margin content and programming segment, which accounted for 36% of revenue as of September 2019. The company's high-quality content, with most of its prime-time programing produced in-house, is an additional credit positive. The main factors constraining Globo's ratings are its dependence on Brazil's economic growth, revenue concentration in the cyclical Brazilian TV advertising market, with a degree of foreign-exchange exposure, high-fixed-cost base stemming from its high-quality programming strategy, margin compression, especially during economic downturns and amid a soft economic environment, and strong competition from digital media advertising. Globo is currently going through a restructuring process as part of its digital transformation strategy centralizing the production of content and digital businesses in a single business unit. The strategy aims to leverage its streaming platform Globoplay, reacting to the increasing competition of other streaming platforms and the tougher digital advertising competition. Moody's expects some margin expansion for 2020 supported by the continuing recovery of the Brazilian economy and the summer Olympic games in Tokyo that will boost advertising revenues. Still, it is unlikely that the company will succeed in significantly recovering profitability before the conclusion of the restructuring process probably by the end of 2020. Despite the 15% decline in revenue observed since 2014 along with a compression in operating margins, Globo's overall credit metrics remain strong. The company's total adjusted debt/EBITDA was 2.6x as of September 2019, while coverage (measured by EBIT/interest expense) remained strong at 5.0x. Globo has a solid liquidity position, supported by total cash of BRL10.3 billion as of September 2019. The company's increased liquidity covers total adjusted debt of around BRL3.3 billion by around 3.0x. Globo has a very comfortable debt maturity profile, with no major maturities until 2025 (pro-forma for the proposed issuance). Around 95% of Globo's debt is denominated in US dollars, exposing the company to foreign-currency fluctuations. Accordingly, the company hedges at least its next 24-month foreign-currency exposure, and its main debt maturities are due from 2022 onward, which mitigates cash impacts. In a stress scenario, considering an exchange rate of BRL/$ of 5.0 — around 20% devaluation from Q3'19 — Globo's leverage would increase to a still adequate 3.1x from 2.6x. The stable outlook reflects its expectation that Globo will maintain its exceptionally strong liquidity and low debt profile to comfortably navigate moments of softness in the local economy and foreign-exchange volatility. An upgrade on Globo's rating, would depend on an increasing profitability trend and on the maintenance of strong credit metrics, liquidity and market positioning. An upgrade in Globo's ratings would also depend on an upgrade of Brazil's government bond rating. A gap of more than one notch with Brazil's government bond rating is unlikely. Conversely, negative pressure could arise if Globo is unable to recover its profitability as a result of stiffer competition in the advertising market that translates in a greater-than-expected decline in Globo's credit metrics, liquidity and market positioning. The principal methodology used in this rating was Media Industry published in June 2017. Headquartered in Rio de Janeiro and owned by the Marinho family, Globo is Brazil's largest media group and leading broadcast TV network, with net revenue of BRL13.8 billion (equivalent to $3.3 billion) as of September 2019. Globo engages in other business activities, including pay-TV production and programing, sound recording, magazine publishing and internet businesses, through its subsidiaries. ========= C H I L E ========= GEOPARK LIMITED: Fitch Rates New $350MM Notes Due 2027 'B+' ----------------------------------------------------------- Fitch Ratings assigned a 'B+'/'RR4' rating to GeoPark Limited's proposed up to USD350 million notes due 2027. GeoPark plans to use the proceeds from the issuance to finance its recently announced acquisition of Amerisur Resources and general corporate purposes. Fitch currently rates GeoPark Limited's Long-Term Foreign and Local Currency Issuer Default Ratings IDRs 'B+'/ Outlook Stable, and USD425 million senior notes due 2024 'B+'/'RR4'. GeoPark's ratings reflect the company's track record of increasing production and improving reserve life, and ability to implement an effective cost-reduction plan. Fitch's base case scenario expects that GeoPark will reach production of nearly 50,000 barrels of oil equivalent per day (boed) by 2020-2021, and will have an average pro-forma total adjusted debt/operating EBITDAR of below 2.0x over the rate horizon. Despite strong operating metrics, the ratings remain constrained by the company's relatively small size and the low diversification of its oil fields. Increasing production levels while maintaining its reserve life and capital structure at existing levels bodes well for GeoPark's credit quality. The rating also reflects Fitch's expectations that GeoPark will continue to strengthen its capital structure following a deleveraging process that could result in net leverage below 1.0x on average. KEY RATING DRIVERS Small Production Profile: GeoPark's ratings remain constrained by its relative small size of operations and the low diversification of its oilfields, despite its growing production profile. Fitch expects GeoPark's daily production to increase yoy, reaching close to 50,000 boed by 2020-2021. During 2018, the company reported an increase of 31% in Oil and Gas production reaching an average of 36,027 boed; Fitch expects it to surpass 40,000 boed by the end of 2019. Fitch estimates the acquisition of Amerisur Resources will add nearly 7,000 boed of production, growing its production profile on a pro-forma basis to approximately 50,000 boed in 2020. Adequate Reserve Life: GeoPark maintains an adequate reserve life, and Fitch does not currently consider it a constraining factor for the company's ratings. As of Dec. 31, 2018, GeoPark had proved, developed and producing (PDP) oil and gas reserves of 44.2 million barrels of equivalent (mmboe), while its proved reserves (1P) totaled 114 mmboe; this translates into a 1P reserve life of 7.8 years when applying 2019 average production. Fitch estimates the company's reserve pro-forma reserve life will decrease modestly to 7.6 years when incorporating Amerisur's reported 15 million of 1P reserves in 2018, which does not consider any exploration success in 2019. Strong Capital Structure: Fitch estimates GeoPark will end 2019 at 1.2x total debt to EBITDA with interest coverage of 12.9x. On a pro-form basis assuming the conclusion of the UD350 million senior notes issuance due 2027, Fitch estimates 2020 total debt to EBITDA will be 1.7x and remain below 2.0x through the rating horizon, assuming the company continues to fund investment with internal cash flow. A more aggressive development strategy could result in additional debt; however, the company has significant headroom at its current levels relative to its rating category. As of third quarter 2019, GeoPark's only maturity is its USD425 million bond in 3Q 2024. Fitch estimates GeoPark has total debt to 1P in reserves of USD3.8boe, and a pro forma total debt to 1P incorporating Amerisur and the proposed issuance of USD5.98boe. Effective Cost Producer: Fitch expects that the company will continue to maintain its cost efficient production profile in the low oil price environment. GeoPark's competitive advantages are derived from its operations in onshore and growing oilfields, which results in lower exploration costs, partially driven by its low transportation costs by selling at the wellhead, than big players in the region. In 2019, Fitch estimates GeoPark reduced its half cycle cost by nearly 30% yoy to $10.1/boe and full-cycle costs by 3% to USD17.5/boe. Since 2015, the company has focused on lower risk projects and concentrated production in Colombia, specifically in the Tigana and Jacana oil fields in the Llanos 34 block. In 2018, the company continued its focus on preserving a solid cash position by reducing capex, drilling costs and operating expenses. Diversifying Away from Main Asset: Fitch believes GeoPark is diversifying away from its principal asset (Llanos 34), which represented 85% of total production with the acquisition of Amerisur Resources, its recent acquisition of blocks in Llanos and expansion into Ecuador, Peru and Argentina. In March 2019, the company announced its entry into Ecuador through the acquisition of the Espejo and Perico blocks 50/50 with Frontera Energy (B+/Negative). The Oriente basin is one of the most prolific petroleum systems in Latin America, currently producing more than 500,000 boepd. In Peru, the company drilled two wells presenting a combined production rate of up to 7,500 boepd of light oil and booked reserves of 18.5 mmbbl in its Morona block in the Maranon basin. Lastly, in 2018 GeoPark acquired Aguada Baguales, El Porvenir and Puesto Touquet Blocks in Argentina, which are located in the Neuquen Basin for USD52 million. DERIVATION SUMMARY GeoPark's 'B+' rating reflects the company's track record of increasing production to an average of 36,027 boepd in 2018, amid the past downturn in the oil and gas industry, and its proven ability to maintain an effective cost reduction plan in growing oilfields. The ratings also reflect Fitch's expectation that the company will be able to maintain and grow its production size further diversifying its asset base away from Colombia and maintain and potentially further reduce production costs in the medium and long term. GeoPark's production size compares favorably to other 'B' rated oil and gas E&P producers, which continues to constrain its rating to the 'B' category. These peers include Frontera Energy (B+/Negative), Gran Tierra Energy (B/Positive) and Compania General de Combustibles (CGC, CCC). Over the rated horizon, Fitch expects that GeoPark will reach nearly 50,000 boed by 2020-21 higher than Gran Tierra and CGC, both expected to be nearly 40,000 boed, but less than Frontera Energy 70,000 boed. Further, GeoPark reported 114 million boe 1P reserves at the end of 2018, equal to a reserve life of 7.8 years and higher than Frontera Energy's 4.5 years, Gran Tierra's 5.7 years and CGC's 5.0 years. GeoPark has a strong reserve base, and Fitch estimates the company will be able to maintain its reserve life of greater than seven years as it continues to increase production size. GeoPark's has a strong capital structure. Fitch expects gross leverage to decline to approximately 1.2x in 2019 as a result of increased production and improved prices. GeoPark's leverage is strong and compares favorably to CGC at 2.1x and Gran Tierra at 1.7x, but is slightly higher than Frontera at 0.5x. The company's total debt to 1P of reserves is USD3.82boe, slightly higher than Frontera's at USD3.00boe, Gran Tierra at USD10.31boe and CGC at UD7.50boe. On a pro forma basis, after the acquisition and proposed issuance, Fitch estimates GeoPark's total debt to 1P of reserves to be USD5.98boe, remaining lower than its peer, with the exception of Frontera Energy. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer 123456789012345678901234567890123456789012345678901234567890123456 -- Fitch's price deck per barrel of Brent oil of USD63.44 in 2019, USD62.50 in 2020, USD60.00 in 2021 and USD57.50 thereafter; -- Production of approximately 40,000 boed in 2019; -- Amerisur Resource acquisition will add ~7,000 bbld of production and 15 million of barrels in 1P reserves -- Annual production increasing at a steady pace for the next four years reaching nearly 50,000 boed in 2020-21; -- Half cycle costs averaging USD13boe with an average EBITDA per boe of USD22; -- Average annual capex of USD150 million from 2019-2021; -- Annual dividends payments of USD10 million from 2020-2022. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action -- Net production rising consistently to 75,000 boed on a sustained basis while maintaining a total debt to 1P reserves of $8bbl or below; and -- Reserve life is unaffected as a result of production increase at approximately 10 years. -- Company's ability to maintain a conservative financial profile with gross leverage of 2.5x or below; -- Cash flow generated from take-or-pay contracts from high quality off-takers covering interest expense by 1.0x; -- Diversification of operations and improvements in realized oil and gas differentials. Developments that May, Individually or Collectively, Lead to Negative Rating Action -- Sustainable production size decreased to below 30,000 boed; -- Reserve life decreased to below seven years on a sustained basis; -- A significant deterioration of credit metrics to total debt/EBITDA of 3.0x or more; -- A persistently weak oil and gas pricing environment that impairs the longer-term value of its reserve base or a reduction in reserves due to a change in the Peruvian concession. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of Sept. 30, 2019, GeoPark had cash on hand of USD82 million, which covers its interest expense nearly through the end of 2021. The company does not have any major maturities until its USD425 million bond comes due in 2024. Fitch estimates the company will finance capex through operating cash flow over the rating horizon. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3.0. 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. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Agro Chief Blames Poultry Flu On Farmers ------------------------------------------------------------ Dominican Today reports that Agriculture minister, Osmar Benitez, blamed a flu outbreak in central Cibao valley on the "lack of follow-up" to the poultry vaccination program by producers. He said what emerged in Espaillat province was Newcastle disease. "It is not because of Avian Influenza but because of Newcastle, a disease that has been in the country since 1960 that is affecting production in some areas of the Cibao," according to Dominican Today. Benitez said both diseases are flu that affect the chickens during their development, which causes loss of appetite and in very extreme cases death of the bird; but that the cases detected are due to Newcastle, not bird flu as reported, the report notes. "These diseases are endemic, and in the case of Avian Influenza it was detected at the end of 2007 in the country, and at the beginning of 2008 the outbreak was declared; then the Dominican Republic was declared free of the disease, until new cases have been detected over the years, none of which could reduce production," the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). DOMINICAN REPUBLIC: Producers Worry as DR-Cafta Deadlines Loom -------------------------------------------------------------- Dominican Today reports that the free trade agreement between Guatemala, Nicaragua, Costa Rica, Honduras, El Salvador, the United States and the Dominican Republic (DR-Cafta) has Dominican producers worried about pork, poultry, beans, garlic, onions, rice and milk, among others, labeling as unfair competition placing those items to compete with those imported with subsidies from their respective governments. While times have changed, the world is better linked with more open markets, but it is up to each country to gather the necessary tools to be more competitive with their peers and know how to negotiate free trade agreements so that they don't become threats to local producers, according to Dominican Today. Diario Libre reports that there are agro products whose 15-year period already expires this 2020 as is the case of pork and beans. "And by 2025, products such as rice, chicken thighs and some dairy products will enter the Dominican market free of tariffs," the report relays. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported on April 4, 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). ============= J A M A I C A ============= JAMAICA: More Focus to be Placed on Exporting Local Goods --------------------------------------------------------- RJR News reports that Jamaica Minister of State for Industry and Commerce, Floyd Green, has said there will be increased focus this year on the export of Jamaican-made goods. The ministry will be working with the private sector to update export regulations and customs practices and fast track the process of accessing potential consumers overseas, according to RJR News. Mr. Green said this will create jobs in the manufacturing and Micro, Small and Medium Enterprise (MSME) sectors, the report notes. He said the ministry has already steered exporters in areas of capacity building and promotion support, the report adds. 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. JAMAICA: Seeking Help to Reduce Country's Food Import Bill ---------------------------------------------------------- RJR News reports that the government is seeking assistance in its quest to reduce Jamaica's food import bill which soared to US$902 million in 2018. Agriculture Minister Audley Shaw is now calling for countries with successful strategies to share the formula with Jamaica, according to RJR News. For Tourism Minister Edmund Bartlett, the fundamental flaw is that Jamaica does not produce all the consumption needs of visitors, the report relays. 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. ======= P E R U ======= HUNT OIL: Moody's Lowers CFR to Ba2; Reviews Rating for Downgrade ----------------------------------------------------------------- Moody's Investors Service downgraded Hunt Oil Co. of Peru L.L.C., Suc. Del Peru's (corporate family rating to Ba2 from Ba1). Moody's also placed the ratings under review for downgrade. The rating actions were prompted by the downgrade on January 7, 2020 of Hunt Oil Company's issuer rating to B2 from B1 since it is Hunt Peru's ultimate parent company. Hunt's ratings are under review for further downgrade. The actions on the ratings of Hunt were based on the high likelihood that the company's unsecured creditors will be subordinated to secured debt in the capital structure, as part of the company's pending renewal or replacement of its unsecured revolver. In turn, the review of Hunt's rating for potential further downgrade reflects the uncertainty regarding the timing for concluding the refinancing process and the final form it will take. Hunt is in the midst of a refinancing process to replace its senior unsecured revolving credit facility that matures in July 2020. As part of this effort, Hunt has been engaged in discussions with its noteholders to obtain necessary amendments to allow for a senior secured borrowing base revolving credit facility, with the necessary pledging of US proved reserves to back the facility. The negotiations have been prolonged and the company has identified alternative approaches to secure the necessary financing Downgrades: Issuer: Hunt Oil Co. of Peru L.L.C., Suc. Del Peru Corporate Family Rating, Downgraded to Ba2 from Ba1; Placed Under Review for Downgrade Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from Ba1; Placed Under Review for Downgrade Outlook Actions: Issuer: Hunt Oil Co. of Peru L.L.C., Suc. Del Peru Outlook, Changed To Rating Under Review From Stable RATINGS RATIONALE The Ba2 corporate family rating on Hunt Peru and its senior unsecured notes are restrained by Hunt's capital control of the Peruvian company and Hunt's dependence on cash flow from its subsidiary to service its own large debt obligations. In addition, Hunt Peru's ratings are based on the company's large proved gas reserves, equivalent to 19 years of life; solid asset base in the world-class, prolific Camisea gas fields; low volume risk given solid demand both in the local and international markets; the company's solid credit metrics for its rating category, the strategic importance of the Camisea fields to Peru (A3 stable); and the company's experienced management team. On the other hand, the ratings also consider Hunt Peru's small production size; asset concentration in only two gas blocks; operating dependence on only two pipelines, owned by Transportadora de Gas del Peru (TGP, Baa1 stable); no operating control over the gas blocks; vulnerability to commodities prices; Moody's view of weak natural gas and natural gas liquids prices; and high dividend payout rate. Moody's considers the debt agreement's provisions in the company's unsecured notes that help ring-fence Hunt Peru from its parent to be beneficial to Hunt Peru's credit profile since the notes represent 100% of the company's debt. Hunt Peru has good liquidity. Cash in the amount of about $57 million in September 2019 plus around $200 million in cash from operations will fund $55 million in capital spending plus $150 million in shareholders distributions in the next 12 months. The company also counts on a $30 million three-year committed revolving credit facility that matures in 2021. Hunt Peru will start to amortize its senior unsecured notes in late 2021. Moody's review will focus on the final form of Hunt's refinancing and capital structure, and the resulting effect on its ratings. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. Hunt Peru is a wholly-owned, indirect subsidiary of Hunt, one of the largest privately-owned hydrocarbon companies in the United States. Hunt Peru is one of the leading exploration and production companies in Peru with a focus on the exploitation of hydrocarbons and related activities, such as the purchase, sale, processing and fractionation of hydrocarbons. ===================== P U E R T O R I C O ===================== PUERTO RICO: Slowly Recovering Electrical Service ------------------------------------------------- The Latin American Herald reports that Puerto Rico was slowly recovering its electrical service after the magnitude-6.4 earthquake that rocked the island, while aid to the towns in the southwest, where the damage is concentrated and about 2,000 people are homeless, is increasing. The state-run Electric Energy Authority (AEE) reported that, according to the latest available figures, 700,000 customers have had their power restored, an important achievement, although it warned that the situation will not be completely stabilized until the weekend, according to The Latin American Herald. AEE CEO Jose Ortiz emphasized that the recovery is moving more quickly in the San Juan metro area while in the south it is progressing more slowly, the report relays. The public firm expects to be able to bring new electrical plants online in the coming weeks and that should help to create a more robust power grid that will provide a solution to the obsolete infrastructure that the quake -- which struck right where the island's main electrical plants are located -- left considerably weakened, the report says. The quake, considered to be the most powerful in Puerto Rico's recent history, resulted in significant damage to the EcoElectrica and Costa Sur plants, causing the entire power system to go offline, the report notes. The temblor also damaged many homes, several hundred of them in the southwestern portion of the island, although the government has not yet released an official tally, the report says. The majority of those structures partially collapsed when the slender columns supporting them gave way, a common structural feature of homes in Puerto Rico's lower income areas, the report notes. The report discloses that the quake followed an earlier temblor measuring 5.8 on the Richter scale that had already weakened a number of buildings. There is no data on the number of people injured in the incident. The damage was aggravated by the fact that in Puerto Rico there are approximately 200,000 homes that have been built without construction permits -- and thus which are possibly not up to code -- and another 150,000 that are built on slender columns, the report notes. The aim of the island's government, headed by Wanda Vazquez, now is to increase the aid to people who suffered property damage, and she asked US authorities to declare an emergency on the island, the report relays. President Donald Trump approved the emergency declaration and ordered the dispatch of assistance to complement the local aid in response to the quake, the report says. The president's action authorizes the Department of Homeland Security and the Federal Emergency Management Agency to coordinate their efforts to alleviate the suffering caused by the quake and provide appropriate assistance, a US government statement said, the report discloses. The population of the US commonwealth, especially in the island's southwest, is experiencing great anxiety in the wake of the quake, however, and many people spent the night out on the streets out of fear that their homes might collapse on them, the report adds. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. Bondholders' Attorneys Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet, Rivera & Sifre, P.S.C. and serve as counsel to the Mutual Fund Group, comprised of mutual funds managed by Oppenheimer Funds, Inc., and the First Puerto Rico Family of Funds, which collectively hold over $4.4 billion of GO Bonds, COFINA Bonds, and other bonds issued by Puerto Rico and other instrumentalities. White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS Family of Funds and the Puerto Rico Family of Funds, which hold $613.3 million in COFINA bonds. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam & Lausell are co-counsel to the ad hoc group of General Obligation Bondholders, comprised of Aurelius Capital Management, LP, Autonomy Capital (Jersey) LP, FCO Advisors LP, and Monarch Alternative Capital LP. Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are co-counsel to the ad hoc coalition of holders of senior bonds issued by COFINA, comprised of at least 30 institutional holders, including Canyon Capital Advisors LLC and Varde Investment Partners, L.P. Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson Kempner Capital Management LP, OZ Management, LP, and OZ Management II LP (the QTCB Noteholder Group). Committees The U.S. Trustee formed an official committee of retirees and an official committee of unsecured creditors of the Commonwealth. The Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia & Milian, C.S.P., as its attorneys. The Creditors Committee tapped Paul Hastings LLP and O'Neill & Gilmore LLC as counsel. ===================================== T R I N I D A D A N D T O B A G O ===================================== CARIBBEAN AIRLINES: Guyana Says No to Flag Carrier Status --------------------------------------------------------- RJR News reports that the Guyanese government said it is not contemplating granting flag carrier status to Caribbean Airlines even though the entity has been servicing the route for several years. Public Infrastructure Minister David Patterson told a news conference that the issue is a complicated matter for Guyana, according to RJR News. Under the previous government, Caribbean Airlines was granted flag carrier status on the Georgetown-Toronto route and while direct flights were offered initially, those were eventually replaced by flights that made a stopover in Trinidad, the report notes. Mr. Patterson told reporters that on the issue of Guyana owning its own national airline again, the possibility exists, the report says. However, he says there will be the need for that to be done in conjunction with the private sector, the report adds. Caribbean Airlines Limited - http://www.caribbean-airlines.com/- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. As reported in the Troubled Company Reporter-Latin America on November 2, 2015, RJR News said that Michael DiLollo, Chief Executive Officer of Caribbean Airlines Limited, quit after just 17 months on the job. The 48-year-old Canadian national, citing personal reasons, resigned with immediate effect. His resignation was accepted by the airline's board of directors. Mr. DiLollo was appointed Caribbean Airlines CEO in May 2014, following the sudden resignation of Robert Corbie in September 2013. In early February 2015, Larry Howai, then Finance Minister, told Parliament that unaudited accounts for 2014 showed the airline made a loss of US$60 million, inclusive of its Air Jamaica operations, and the airline planned to break even by 2017. Mr. Howai told the Parliament that a five-year strategic plan had been completed and was in the process of being approved for implementation. In an interview with the Trinidad & Tobago Guardian in early November 2015, Mr. DiLollo said CAL did not need a bailout just yet. Mr. DiLollo said the airline had benefited from extremely patient shareholders for years and he believed the airline was strategically positioned to break even in three years. ================= V E N E Z U E L A ================= VENEZUELA: Chavistas Unite Around New Assembly Chief ---------------------------------------------------- EFE News reports that Chavista legislators closed ranks around Luis Parra, an opposition figure whom they elected to head the National Assembly without the support of the opposition majority, at the same time that anti-Chavista leaders called people into the streets to protest "for peace." Despite the fact that the leadership board headed by Parra has the support of Chavistas and other supporters of the Nicolas Maduro government, the lawmaker from the opposition coalition warned that he will not "subordinate" himself to the Constituent National Assembly (ANC), the legislative body comprised only of government militants that has taken over the functions of the legitimate parliament since 2017, according to EFE News. "We're not going to subordinate ourselves to anyone," Parra declared, the report notes. In an interview with EFE, upon being asked about the doubts surrounding who the lawmakers were who voted for him during tense legislative session, Parra said that he will request the videos of the session to prove who was present and thus that a proper quorum was achieved before the vote that elevated him to the president of the assembly, the report notes. The report relays that the lawmaker, who in December was expelled from the ranks of the Primero Justicia (PJ) party due to his links to an alleged corruption case, the video evidence from the session "is enough" to verify who supported his controversial election. Mr. Parra said he had been elected president of parliament with the backing of the Maduro-supporting legislators in a tense session from which the president of the National Assembly, Juan Guaido, and several dozen of his legislative supporters were barred by Venezuela's militarized police, the Bolivarian National Guard, who had been deployed around the legislative seat, the report discloses. Despite that, Guaido was later reelected head of the National Assembly by a vote of 100 of the chamber's 167 members in a parallel session held at the main office of El Nacional newspaper in Caracas, the report notes. Mr. Parra said that the "best way" to get Maduro out of power "is at the ballot box" and later added that he will undertake efforts to "eradicate the confrontation" between Chavista and anti-Chavista forces, the report says. Regarding the armed forces (FANB), the leaders of which have declared themselves to be "deeply Chavista," Parra called upon them to "fulfill what the Constitution establishes," adding that institution "cannot be at the service . . . (of) political partisanship," the report notes. He reminded the FANB, which he said he respects and recognizes, that the legislature "is a civil Parliament" and that it is ready to move forward with initiatives to "return" to the Constitution, the report says. "It's clear that we recognize the new authorities of the (National Assembly), absolutely," the president of the Maduro-backing ANC, Diosdado Cabello, said at a press conference, the report notes. He said that Parra was "elected under the (Constitution's) established rules" and the internal regulations of the body, the report relays. "I don't know him, I've never seen him in my life, not even from a distance," Cabello said when asked about Parra, the report notes. Just as Maduro has said, Cabello claimed that the confrontation between Parra and Guaido over who actually heads the National Assembly was due to "differences" between opposition "groups," the report discloses. The institutional crisis sparked by the vote revived calls for protests by both the government and the opposition headed by Guaido, who is recognized as Venezuela's legitimate interim leader by almost 60 countries, including the United States, most Latin American countries and most of the European Union, the report says. The opposition called on the public to take to the streets and to stage a massive march to accompany the opposition majority lawmakers to the Federal Legislative Palace on that day, when they hope to enter the legislative building without any confrontation with security forces, the report adds. About Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and a large number of small islands and islets in the Caribbean sea. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum. Nicolas Maduro was elected president in 2013 after the death of Chavez. Maduro won a second term at the May 2018 Venezuela elections, but this result has been challenged by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the United States who deemed it fraudulent and moved to recognize Juan Guaido as president. The presidencies of Chavez and Maduro have challenged Venezuela with a socioeconomic and political crisis. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country. Standard and Poor's long- and short-term foreign currency Sovereign credit ratings for Venezuela stands at 'SD/D' (November 2017). S&P's local currency sovereign credit ratings on the other hand Are 'CCC-/C'. The May 2018 outlook on the long-term local currency sovereign credit rating is negative, reflecting S&P's view that the sovereign could miss a payment on its outstanding local currency debt obligations or advance a distressed debt exchange operation, equivalent to default. Moody's credit rating (long term foreign and domestic issuer ratings) for Venezuela was last set at C with stable outlook (March 2018). Fitch's long term issuer default rating for Venezuela was last set at RD (2017) and country ceiling was CC. Fitch, on June 27, 2019, affirmed then withdrew the ratings due to the imposition of U.S. sanctions on Venezuela. ********* 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 2020. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *