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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

          Wednesday, January 15, 2020, Vol. 21, No. 11

                           Headlines



A R G E N T I N A

ARGENTINA: Fernandez Sets March 31 Deadline to Renegotiate Debt


B A R B A D O S

BARBADOS: S&P Hikes Foreign Curr. Sovereign Credit Ratings to B-/B


B R A Z I L

BRAZIL: 2019 Records Highest Dollar Outflow of $44BB in 30+ Yrs.


D O M I N I C A N   R E P U B L I C

DOMINICAN REPUBLIC: Agro Lists Measures to Confront Bird Flu
DOMINICAN REPUBLIC: Law Seeks to Reduce Taxes on Luxury Homeowners


P U E R T O   R I C O

IMR SECURITY: Plan & Disclosures Deadlines Extended to Mid-February
PUERTO RICO: U.S. Supreme Court Declines to Hear Bonds Dispute


V E N E Z U E L A

PETROLEOS DE VENEZUELA: Partners Act as Traders Amid Sanctions

                           - - - - -


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A R G E N T I N A
=================

ARGENTINA: Fernandez Sets March 31 Deadline to Renegotiate Debt
---------------------------------------------------------------
Joseph Warner at The Media Times reports that President Alberto
Fernandez said he has set a March 31 deadline to renegotiate
Argentina's rampant public debt and that a more "innovative"
International Monetary Fund endorses his government's direction.

Argentina is in talks with bondholders and other creditors to
restructure about $100 billion in debt, including the IMF owed
about $44 billion, according to The Media Times.

"I think from here until March 31, our trajectory will be very
clear," Fernandez said in an interview published by the El Cohete A
La Luna news website, the report notes.  "This is the ceiling we
set because it has considerable maturity," he added.

The report notes that Fernandez, a moderate left-wing Peronist, was
elected in October with a mandate to end the painful fiscal cuts
implemented by his predecessor, Mauricio Macri.

Fernandez's supporters expect more state spending to help families
struggling with low growth, rising poverty and inflation above 50%,
the report relays.

After assuming the presidency just over a month ago, his government
has announced plans to raise taxes on farm exports, as well as
efforts to monetize foreign assets and Argentine tourism dollars
spent abroad, the report says.

The measures have drawn criticism from the opposition but,
according to Fernandez, won IMF approval, the report notes.

"Everything that we have proposed so far has been seen as an
essential starting point for the direct deployment of the economy,"
Fernandez said of his government's initial talks with the global
financial institution, the report discloses.

Fernandez said the new IMF managing director, Kristalina Georgieva,
aimed at a more "innovative" approach than its predecessor,
Christine Lagarde, the report says.

"In the Lagarde era, they wouldn't have taken all this with love,
they would have seen it in a critical way," he said. "It's a good
start, but I think there is a lot to do," the report 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.

Moody's credit rating for Argentina was last set at Caa2 from B2
with under review outlook. Moody's rating was issued on Aug. 30,
2019.  S&P Global Ratings, in December 2019, raised its foreign
currency sovereign credit ratings on Argentina to 'CC/C' from
'SD/D'.  S&P's outlook on the long-term sovereign credit ratings is
negative. Fitch Ratings, in December 2019, upgraded Argentina's
Long-Term Foreign-Currency Issuer Default Rating to 'CC' from 'RD',
and its Short-Term Foreign-Currency IDR to 'C' from 'RD'.  DBRS,
Inc. meanwhile downgraded Argentina's Long-Term and Short-Term
Foreign Currency - Issuer Ratings to Selective Default (SD), from
CC and R-5, respectively, also in December 2019.




===============
B A R B A D O S
===============

BARBADOS: S&P Hikes Foreign Curr. Sovereign Credit Ratings to B-/B
------------------------------------------------------------------
S&P Global Ratings, on Dec. 11, 2019, raised its long- and
short-term foreign currency sovereign credit ratings on Barbados to
'B-/B' from 'SD/SD' (selective default). At the same time, S&P
Global Ratings assigned its 'B-' issue-level foreign currency
rating to Barbados' long-term foreign currency debt issued in its
debt exchange. S&P Global Ratings also affirmed its 'B-/B' long-
and short-term local currency sovereign credit ratings and 'B-'
issue-level rating on Barbados' long-term local currency debt.

Outlook

The stable outlook balances the administration's strong mandate to
implement broad fiscal and macroeconomic reforms with the political
and economic challenges of doing so. Multilateral lending
institutions, which S&P expects will continue to commit and
disburse financial and technical assistance to Barbados, will also
support the government's mandate. S&P expects over the next 12-18
months the government will continue to implement policies that
achieve fiscal consolidation and instil institutional safeguards,
while strengthening macroeconomic stability.

Failure to meet fiscal and debt targets over the next year could
weaken investor confidence and result in a loss of official capital
inflows. This outcome could place renewed pressure on the country's
foreign exchange reserves and reduce funding sources. Under this
scenario of diminished liquidity, S&P could lower the ratings.

S&P said, "We could raise the ratings over the next year should the
government adhere to its ambitious fiscal targets and reform
agenda, which could strengthen investor confidence and contribute
to improved GDP growth prospects. Higher economic growth would
facilitate a reduced debt burden, which, together with an
expectation of continued access to official funding, could lead us
to raise the rating."

Rationale

The raised foreign currency sovereign credit rating follows
Barbados' foreign currency debt exchange, which has addressed the
government's commercial U.S. dollar debt outstanding. The
government received creditor participation above the required 75%
voting thresholds for debt containing collective action clauses or
equivalent, and extraordinary resolutions passed by bondholders
such that all debt instruments covered by the government's
invitation have been exchanged. S&P said, "Given this outcome, we
believe that this exchange will be the final resolution of
Barbados' foreign currency default that began in June 2018. At the
same time, we believe that the near-term litigation risk to future
debt service posed by non-consenting creditors is limited. In
addition to some immediate debt cancelation, the new bonds extend
the previous debt maturities of between 2018 and 2022, to 2029, and
with a 6.5% interest rate, contribute to a reduced government
interest burden. This exchange follows the government's local
currency debt exchange in November 2018, which addressed all local
currency treasury bills, treasury notes, debentures, loans, certain
government arrears, and debt issued by state-owned enterprises and
other entities that receive transfers from the state budget. Before
these exchanges, we had lowered our foreign currency issuer credit
rating on the country to 'SD', following the administration's
announcement that it would suspend external debt service payments
after assuming office."

The 'B-' long-term issuer rating reflects the country's still-high
debt burden, despite an improved debt profile and fiscal outlook
following the local currency and foreign currency debt exchanges
and diminished refinancing risks, given the commitment of official
funding. At the same time, Barbados's economic growth has been low
since the 2008 global financial crisis, and we expect muted growth
over the next year as the government progresses in its ambitious
fiscal consolidation program. S&P said, "Although we expect foreign
exchange reserve levels will strengthen on the back of official and
private investment inflows, we believe that external liquidity will
remain a credit weakness, which limited market access will
exacerbate following the government's 2018 defaults. The
government's plans for increasing foreign exchange reserve levels,
end dependence on central bank financing of the central government,
and reforms to central bank regulation should improve confidence in
Barbados' exchange-rate regime. However, we expect it will take
time to strengthen the credibility and effectiveness of the
country's monetary policy."

Flexibility and performance profile: Budget surpluses and reduced
financing risks will support fiscal performance, though a
still-high debt burden and weak monetary policy will limit policy
flexibility.

-- S&P expects net general government debt will keep falling, and
the interest burden will remain at a much lower level than it was
before the debt exchanges, over the forecast horizon.

-- Nevertheless, the government's falling, but still-high, debt
burden will limit fiscal policy flexibility.

-- Barbados' pegged exchange rate regime and weakened monetary
policy effectiveness will limit the ability of monetary policy to
respond to imbalances.

The foreign currency and local currency debt exchanges, along with
fiscal consolidation, will lead to a decreasing debt and interest
burden over the forecast horizon. S&P expects net general
government debt, including debt held by the Central Bank, the
National Insurance Scheme (NIS), and government-supported entities
that had debt incorporated in the exchanges, will fall to 111% of
GDP in 2019, and below 100% by 2022, from 137% in 2017. At the same
time, S&P expects the general government interest burden will fall
to about 7% of general government revenues, on average, from
2019-2022, from nearly 16% in 2017.

While this debt level will remain high, S&P believes that official
financing inflows that will cover borrowing requirements over the
next several years somewhat offset the associated risks. IMF
resources under the US$290 million extended fund facility (EFF)
approved in October 2018 will provide balance of payment support,
with about US$97 million already disbursed under the program and an
additional US$48 million expected in December 2019. However, the
Inter-American Development Bank (IDB) and the Caribbean Development
Bank (CDB) have provided, and S&P expects will continue to provide,
budgetary support. The CDB and IDB approved policy-based loans in
2018 for US$75 million and US$100 million, respectively. The CDB
has also approved a US$40 million loan to upgrade infrastructure
and services at Barbados' international airport, and, in November
2019, the IDB approved an additional US$40 million loan to support
the modernization of the public sector in Barbados. This financing
has favorable repayment terms, which should further support the
country's fiscal consolidation plans.

S&P said, "We believe that contingent liabilities are limited,
considering our view of commercial bank risks. Although banks'
capital levels fell following the domestic restructuring in 2018,
with the capital adequacy ratio in the banking system falling to
13% from 17%, capital is still significantly above the prudential
threshold, and liquidity in the system remains high. We also
believe that the banks' ownership structure somewhat mitigates
contingent liabilities in Barbados, given that most banks operating
in the country are Canadian-owned."

Fiscal reforms, including new taxes, a broader tax base, and
restructuring of the state-owned enterprise sector, will contribute
to the government's fiscal consolidation. S&P said, "We forecast
that the general government fiscal balance will be in a surplus
position, at an average of 1.96% of GDP for 2019-2022. We expect
this will contribute to a yearly change in the net general
government debt to GDP, on average, of nearly negative 1% during
2019-2022." The government's long-term fiscal goal is to reduce
public debt-to-GDP to 60% by 2033-2034. Among its policies designed
to help with this goal, the government aims to produce an annual
primary fiscal surplus of 6% of GDP, before arrear repayment,
beginning in the 2019-2020 fiscal year, and continue thereafter.
Early indications suggest the government is on track to meet its
goal this fiscal year.

Despite the likely improved fiscal performance, S&P believes that
the government's policy flexibility will be extremely limited over
the next several years. As part of the domestic debt exchange in
2018, in addition to write-offs of debt held by the private sector
resulting in net present value (NPV) losses of about 30%, debt held
by the Central Bank of Barbados' (CBB) and NIS were also written
off, such that NPV losses for the CBB were about 76%, while NPV
losses for the NIS were about 41%. These two entities met a
significant part of the government's financing needs before the
exchange as the government increasingly lost access to affordable
market funding. According to available data, government securities
represented at least 75% of NIS' investment assets before the
exchange. Although the government plans to address challenges at
the NIS under the EFF program, no concrete policies have been
implemented. S&P believes these issues might limit the government's
medium-term fiscal policy flexibility. At the same time, given the
economy's concentration in tourism, any downturns in the tourism
sector could negatively affect the government's fiscal performance.
This is particularly relevant, given the government's increased
reliance on tourism revenues as part of its fiscal reform efforts.

In addition, given the CBB's weak financial position, with negative
capital levels of about 16% of GDP, following years of significant
monetary financing and central government debt write-off, the
government will develop plans to recapitalize the CBB by mid-2020.
Although the government, under the EFF program, plans to strengthen
the CBB's governance and autonomy, monetary policy credibility is
difficult to restore quickly. In our view, historical monetary
financing of the central government has been at odds with
sustaining Barbados' currency peg to the U.S. dollar and has
significantly curtailed the central bank's ability to act as a
lender of last resort to the financial system. That said, although
S&P expects inflation will continue to average below 5% over the
forecast horizon, S&P believes this largely reflects global
commodity prices rather than effective monetary policy execution,
given the fixed exchange-rate regime. Transmission mechanisms of
monetary policy will remain weak in the near term, in part due to
shortcomings of the domestic capital market.

Although S&P expects central bank foreign exchange reserves will
rise over the next several years on official and private investment
inflows, reversing the negative usable reserve position that the
central bank has maintained over the past several years will be
difficult in the short term. S&P said, "Usable international
reserves, which S&P considers in assessing external liquidity, have
been negative since 2013; S&P subtracts the monetary base from
international reserves because the base's reserve coverage
maintains confidence in the exchange rate regime. Furthermore, S&P
believes that Barbados will continue to have limited access to
external commercial debt, in part due to its debt exchanges.
Nevertheless, S&P expects rising foreign official and other
investment inflows will improve, in part, the country's narrow net
external debt position over the forecast horizon, which S&P expects
will average 54% of current account receipts (CAR) from 2019-2022."


S&P said, "Our external assessment also considers that net external
liabilities of a projected 208% of CAR during 2019-2022 are
substantially higher than narrow net external debt. In addition,
while we expect external liquidity needs to improve, we expect
gross external financing needs to average over 185% of CAR and
usable reserves over the forecast horizon. Data on Barbados'
international investment position have inconsistencies and are not
timely."

Institutional and economic profile: Government's strong mandate
will facilitate progress on fiscal reform, though economic growth
will continue to pose challenges

-- The Barbados Labor Party's (BLP) absolute parliamentary
majority will continue to facilitate institutional reform
progress.

-- Nevertheless, S&P believes that it will take time to see the
dividends of the government's reform efforts.

-- A contractionary fiscal stance will continue to subdue growth.

S&P said, "Despite the country's macroeconomic challenges, we
expect that Barbados will maintain its position as an upper-middle
income economy in the Caribbean over the outlook horizon. We
anticipate that GDP per capita will reach US$17,979 by year-end
2019. Nevertheless, historical growth has been below that of peers
with a similar level of economic development, and we believe that
the economy will contract further this year, and stay below 1% next
year, on the back of comprehensive fiscal consolidation. We expect
real GDP growth of negative 0.1% and positive 0.6% in 2019 and
2020, respectively. At the same time, while the country has
benefited from a traditionally strong tourism sector, and long-stay
tourist arrivals grew by 4% in the first nine months of 2019,
shorter visits and fewer cruise ship arrivals have limited growth.
In our view, the economy's concentration in tourism will remain a
credit weakness, because it exposes the country to greater economic
cyclicality."

Barbados has a stable, predictable, and mature political system,
which has traditionally benefited from consensus on major economic
and social issues. Governance has alternated between the Democratic
Labour Party and the BLP. After winning all the seats in parliament
in 2018, the BLP, led by Prime Minister Mottley, has a strong
mandate to implement fiscal and macroeconomic reform. After taking
office, the administration acted swiftly to restructure domestic
debt, agree with the IMF on an EFF, and present the initial stages
of its economic recovery and transformation plan. Nevertheless, S&P
believes that improving policymaking and political institutions
will be gradual. Before the most recent election, policymaking in
Barbados was slow to respond to fiscal and economic challenges.
Transparency and timeliness of data publication have also weighed
on its institutional profile assessment. While initial indications
suggest that the administration seeks to reverse these trends,
developing a strong track record will take time.

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.

  Ratings List

  New Rating  

  Barbados

   Senior Unsecured     B-
   Not Rated Action  
                        To        From
  Barbados

   Senior Unsecured NR        D

  Ratings Affirmed  
  
  Barbados

   Sovereign Credit Rating  
   Local Currency       B-/Stable/B

   Transfer & Convertibility Assessment
   Local Currency       B-

  Barbados

   Senior Unsecured B-
   Upgraded; CreditWatch/Outlook Action

                        To           From
  Barbados

   Sovereign Credit Rating  
   Foreign Currency     B-/Stable/B  SD/--/SD




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B R A Z I L
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BRAZIL: 2019 Records Highest Dollar Outflow of $44BB in 30+ Yrs.
----------------------------------------------------------------
Richard Mann at Rio Times Online reports that in a year marked by
strong exchange rate volatility, the outflow of dollars from the
Brazilian economy exceeded its inflow by US$44.77 (R$180) billion
in 2019, the Central Bank (BC) disclosed on Jan. 8.  This is the
largest net foreign exchange withdrawal since the start of the
historical series in 1982, according to the report.

The dollar outflow in 2019 is the highest recorded in 38 years. In
2019, the net trade flow was a positive US$17.47 billion, but the
net financial flow was negative US$62.24 billion, the report
cites.

The previous record for net withdrawals had been recorded in 1999
when foreign exchange flow -- the difference between dollar inflows
and outflows -- had turned negative at US$16.18 billion, the report
notes.

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




===================================
D O M I N I C A N   R E P U B L I C
===================================

DOMINICAN REPUBLIC: Agro Lists Measures to Confront Bird Flu
------------------------------------------------------------
Dominican Today reports that the World Organization for Animal
Health (OIE) has registered four cases of Newcastle disease and
another 12 cases of H5N2 bird flu of low pathogenicity, as notified
by the Dominican authorities in two different reports to the
international organization and in which it lists the measures to
attack the problem that has affected more than 180,400 broilers and
fighting roosters jus from the virus known in the country as
"distemper."

Due to the mildly pathogenic Avian Influenza H5N2, the Agriculture
Ministry's Livestock Directorate (Digega) registered in the OIE 12
cases reported in December 2019, whose summary indicates the death
of 13,848 laying hens, chicks and broilers from the virus,
according to Dominican Today.

The report by Digega Animal Health director Dr. Nimia Lissette
Gomez says that the Newcastle virus that has been affecting poultry
farming in the Dominican Republic is being controlled with several
measures that include quarantine, surveillance, destruction at the
source, vaccination, disinfection, among others, which also apply
in the case of influenza infection, Dominican Today 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: Law Seeks to Reduce Taxes on Luxury Homeowners
------------------------------------------------------------------
Dominican Today reports that last December, a law was passed by the
Senate of the Dominican Republic whose purpose is to apply a
"considerable decrease" in the Property Tax (IPI) paid by owners of
sumptuous homes and urban non-built buildings every year.

At present, a 1% tax is imposed on the total real estate assets of
natural persons and the new law proposes that it be reduced to
0.25%. This would represent a 0.75% reduction, according to
Dominican Today.

The new legislation, which modifies articles 1 and 3 of "Law No.
18-88, which establishes an annual tax called Tax on Sumptuary
Housing and Unbuilt Urban Plots," establishes in its fourth recital
that it is necessary to modify the IPI to generate greater dynamism
and stimulus to the taxpayer regarding the payment of this tax, the
report notes.

              What Are the Assets That Are Taxed?

According to Law 18-88 and its amendments by-laws 253-12 on
Strengthening the State's Collection Capacity for Fiscal
Sustainability and Sustainable Development and 288-04 on Fiscal
Reform, taxed housing is what its value in as a whole, including
that of the plot where they are built, exceeds six million five
hundred thousand pesos (RD $ 6, 500,000 or USD $122,641), the
report notes.

Also the urban plots are not taxed and those buildings not destined
for housing, including those destined to commercial, industrial and
professional activities, belonging to natural persons, whose total
value exceeds six million five hundred thousand pesos (RD $
6,500,000), the report relays.

The tax will also be paid when the total value of the lots and
housing as a whole exceeds the indicated amount, the report
discloses.

Law 18-88 points out in one of its recitals that the creation of a
tax that severely sumptuous housing will result in a greater
distribution of wealth and will serve to support housing programs
in favor of the neediest classes, 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).




=====================
P U E R T O   R I C O
=====================

IMR SECURITY: Plan & Disclosures Deadlines Extended to Mid-February
-------------------------------------------------------------------
Judge Enrique S. Lamoutte of the U.S. Bankruptcy Court for the
District of Puerto Rico granted the motion filed by Debtor IMR
Security & Investigation Services, LLC requesting an extension of
time to file Disclosure Statement and Chapter 11 Plan.

In seeking a 60-day extension of the Dec. 16, 2019 deadline to file
a Chapter 11 plan and disclosure statement, the Debtor said there
are certain circumstances related to Debtor's operation which still
need to be worked with prior to filing a disclosure statement.

Among those, there is a corporation which existed prior to IMR
Security from which the operation was acquired and there are some
debts from said corporation which we need to identify if should be
paid within the captioned voluntary petition.  The accountant from
the estate has been making said analysis.  In addition, the Debtor
is considering moving the operation to another property and said
decision has occupated Debtor's President's attention within the
last month.  Finally, the Debtor's President has been actively
searching for new contracts.

            About IMR Security & Investigation Services

IMR Security & Investigation Services, LLC, a privately held
company in Puerto Rico that offers security and investigation
services, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D.P.R. Case No. 19-04668) on Aug. 16, 2019.  At the time of
the filing, the Debtor had estimated assets of between $100,000 and
$500,000 and liabilities of between $1 million and $10 million.

The case is assigned to Judge Enrique S. Lamoutte Inclan.  Nilda M.
Gonzalez-Cordero, Esq., is the Debtor's counsel.


PUERTO RICO: U.S. Supreme Court Declines to Hear Bonds Dispute
--------------------------------------------------------------
Karen Pierog at Reuters reports that the U.S. Supreme Court
declined to take up a dispute that has roiled the $3.8 trillion
U.S. municipal bond market over payments on special revenue bonds
that grew out of Puerto Rico's ongoing bankruptcy.

The justices left in place lower court rulings dismissing lawsuits
by bond insurance companies Assured Guaranty Corporation and Ambac
Assurance Corporation that sued the federally created financial
oversight board that is trying to restructure about $120 billion of
Puerto Rico's debt, according to Reuters.  The companies had asked
the justices to reverse the lower court rulings, the report notes.

Reuters notes that the high court's action leaves a dark cloud over
special revenue bonds, which could increase borrowing costs for
local governments seeking to finance infrastructure projects.

In two cases involving Puerto Rico Highways and Transportation
Authority debt, the Boston-based 1st U.S. Circuit Court of Appeals
determined last year that payments on bonds secured by special
revenues are not required -- but optional -- while the issuer's
bankruptcy is ongoing, the report relays.

The financial oversight board commenced a form of municipal
bankruptcy for the U.S. Caribbean island territory to restructure
about $120 billion of debt and pension obligations, the report
discloses.

The two companies sued the board contending that payments on the
bonds from pledged toll and other revenue should not be halted
during the bankruptcy, the report notes.  The 1st Circuit upheld
the litigation's dismissal by a federal judge hearing Puerto Rico's
bankruptcy, issuing rulings that surprised the municipal bond
market used by states, cities, schools and other issuers to sell
debt, the report says.

The bond insurers argued that the lower court's decision conflicted
with the "settled understanding" of the municipal bankruptcy code
and protections for special revenue bonds and would impede the
ability of municipalities to finance critical infrastructure such
as sewers and roads, the report notes.

They also pointed to actions by credit rating agencies to place
several special revenue bond ratings under review that in some
cases has led to downgrades, including to water and sewer bonds
from Cleveland and Dallas, the report discloses.

In briefs to the Supreme Court, the Securities Industry and
Financial Markets Association said that if left in place the
rulings would increase borrowing costs for financially troubled
municipalities and could lead to higher fees and taxes, the report
says.

The board argued that requiring bond payments would undermine its
"exclusive right" to propose a restructuring plan that would lead
to Puerto Rico's bankruptcy exit, the report notes.

Revenue bonds accounted for 61% of the $406.5 billion of debt sold
in the municipal market last year, according to Refinitiv data, the
report relays.  Only certain revenue bonds qualify as being backed
by special revenues under the bankruptcy code, the report adds.

                        About Puerto Rico

Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.

The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.

The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').

The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017.  On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").

U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases.  The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.

Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.

The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.

Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.

McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.

Prime Clerk LLC is the claims and noticing agent.  Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico

Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.

O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.

The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.

                    Bondholders' Attorneys

Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet, Rivera
& Sifre, P.S.C. and serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc., and
the First Puerto Rico Family of Funds, which collectively hold over
$4.4 billion of GO Bonds, COFINA Bonds, and other bonds issued by
Puerto Rico and other instrumentalities.

White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.

Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP, Autonomy
Capital (Jersey) LP, FCO Advisors LP, and Monarch Alternative
Capital LP.

Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.

Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ Management
II LP (the QTCB Noteholder Group).

                          Committees

The U.S. Trustee formed an official committee of retirees and an
official committee of unsecured creditors of the Commonwealth.  The
Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia &
Milian, C.S.P., as its attorneys.  The Creditors Committee tapped
Paul Hastings LLP and O'Neill & Gilmore LLC as counsel.




=================
V E N E Z U E L A
=================

PETROLEOS DE VENEZUELA: Partners Act as Traders Amid Sanctions
--------------------------------------------------------------
Marianna Parraga, Mircely Guanipa, Deisy Buitrago at Reuters report
that Venezuela, its oil exports decimated by U.S. sanctions, is
testing a new method of getting its crude to market: allocating
cargoes to joint-venture partners including Chevron Corp, which in
turn market the oil to customers in Asia and Africa.

This would not violate sanctions as long as sale proceeds are used
for paying off a venture's debts, according to three sources from
joint ventures, according to Reuters.  They said this approach
could help Venezuela overcome obstacles to producing and exporting
oil, the report notes.

Venezuela's oil exports fell 32% last year as the U.S. government
blocked imports by American companies and transactions made in U.S.
dollars, the report relays.  PDVSA was forced to use intermediaries
for crude sales as Washington pressured Venezuela's Indian and
Chinese customers to halt direct purchases, the report notes.

The sanctions were designed to oust Venezuelan President Nicolas
Maduro after most Western nations branded his 2018 re-election a
sham, the report discloses.

By acting as an intermediary for PDVSA's oil sales, Russia's
Rosneft in 2019 became the largest receiver of Venezuelan crude,
using the sales to amortize billions of dollars in loans granted to
Venezuela in the last decade, the report relays.

Washington has mostly allowed mechanisms to pay off debt with oil
or to swap Venezuelan crude for imported fuel, but Venezuela's
opposition is lobbying the U.S. administration to punish
intermediaries, the report notes.

The latest tests of the policy come this month. A 1 million-barrel
cargo of Venezuelan upgraded crude consigned to Chevron is
scheduled to load at PDVSA's Jose port, according to internal
documents from the state-run firm seen by Reuters.

The report relays that Chevron has a stake in the Petropiar joint
venture with PDVSA to upgrade oil in the OPEC nation's Orinoco
belt, one of the world's largest oil reserves.  Chevron's license
to operate in Venezuela despite sanctions expires on Jan. 22 unless
the U.S. Treasury renews it, the report notes.

"Proceeds from these marketing activities are paid to our joint
venture accounts to cover the cost of maintenance operations, in
full compliance with all applicable laws and regulations," said
Chevron spokesperson Ray Fohr, the report says.

In the past, Chevron itself used to refine Venezuelan crude at its
U.S facilities, often bought from PDVSA's joint ventures, the
report notes.

Another cargo of 670,000 barrels of Tia Juana and Boscan crudes,
chartered by Venezuelan oil firm Suelopetrol, set sail at the
beginning of January, the documents showed, the report says.

Reuters relates that Suelopetrol, a minority stakeholder in joint
ventures with PDVSA, said it was recently allocated a Venezuelan
crude cargo under contracts signed prior to U.S. sanctions with
PDVSA and joint venture Petrocabimas to support investment and
development of oilfields.

"Those contracts include the designation of Suelopetrol as offtaker
of crude produced for compensating accounts receivable, due since
2015, for capital contributions, technical assistance, provision of
services and accumulated dividends," it said in response to
questions from Reuters.

By Venezuelan law, state-run PDVSA is required to market all
Venezuela's crude exports, except for upgraded oil, whose output
was suspended in 2019 due to accumulation of stocks, the report
notes.  Only Petropiar, one of four upgrading projects in the
Orinoco, has recently resumed operations, the report discloses.

To avoid violating Venezuelan law, the joint ventures that are not
allowed to market their output for exports first sell the oil to
PDVSA, which then allocates the cargoes to its joint venture
partners, according to two of sources and documents, the report
relays.

The private partners take possession of the cargoes at Venezuelan
ports and transport them in chartered vessels to refineries around
the world, according to the documents and tanker tracking data from
Refinitiv Eikon, the report notes.

Proceeds from these sales to ultimate buyers are being transferred
to the joint venture's trustees to fund operational expenses as
well as paying debt and dividends owed to partners, the report
says.

"It is a matter of life or death for joint ventures to achieve this
so operations can restart," said a top executive from one of the
joint ventures that accepted the mechanism, the report discloses.

According to the PDVSA documents and sources, Chevron took two
cargoes of Venezuelan Boscan and Merey crudes in the last quarter
of 2019, before lifting a cargo of Hamaca crude in January, the
report says.  Suelopetrol's cargo, on tanker Ace, set sail on Jan.
5.

                            Accumulated Debt

Several of PDVSA's more than 40 oil producing joint ventures owe
hundreds of millions of dollars to minority partners as PDVSA
demanded from 2013 to 2017 they extend funding to the projects, the
report relays.

Minority stakeholders put the money through credit lines and loans
backed by supply contracts so sale proceeds would go to trustees
for paying the projects' costs while amortizing the loans, the
report notes.

But U.S. sanctions deprived PDVSA and some joint ventures of the
supply contracts used to guarantee the loans, leaving the projects
without sources of cash and freezing the credit lines, the report
notes.

The new mechanism is intended to unfreeze cash flow to continue
production, the sources said, the report relays.  It could also
make it easier to trade Venezuelan oil by using joint-venture
partners as buyers or traders while sanctions are in place, the
report notes.

Very high freight tariffs for transporting Venezuelan oil, the
difficulty in finding willing buyers, and problems at oilfields and
shipping terminals remain obstacles to implementing the mechanism,
the sources added, the report discloses.

Lawyers consulted by some PDVSA partners interested in lifting
Venezuelan crude told them the sales are allowed under sanctions as
long as proceeds paying off debts remain out of Maduro's reach,
which is the main intention of the measures, one of the sources
said, the report adds.

                             About PDVSA

Founded in 1976, Petroleos de Venezuela, S.A. (PDVSA) is the
Venezuelan state-owned oil and natural gas company, which engages
in exploration, production, refining and exporting oil as well as
exploration and production of natural gas.  It employs around
70,000 people and reported $48 billion in revenues in 2016.

As reported in Troubled Company Reporter-Latin America on June 3,
2019, Moody's Investors Service withdrew all the ratings of
Petroleos de Venezuela, S.A. including the senior unsecured and
senior secured ratings due to insufficient information. At the
time
of withdrawal, the ratings were C and the outlook was stable.

Citgo Petroleum Corporation (CITGO) is Venezuela's main foreign
asset.  CITGO is majority-owned by PDVSA.  CITGO is a United
States-based refiner, transporter and marketer of transportation
fuels, lubricants, petrochemicals and other industrial products.

However, CITGO formally cut ties with PDVSA at about February 2019
after U.S. sanctions were imposed on PDVSA.  The sanctions are
designed to curb oil revenues to the administration of President
Nicolas Maduro and support for the Juan Guaido-headed party.



                           *********


S U B S C R I P T I O N   I N F O R M A T I O N

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