/raid1/www/Hosts/bankrupt/TCRLA_Public/200210.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, February 10, 2020, Vol. 21, No. 29
Headlines
A N T I G U A A N D B A R B U D A
ANTIGUA & BARBUDA: Facing Lawsuit Brought by St. Kitts-Nevis Bank
A R G E N T I N A
CUOTAS CENCOSUD VIII: Moody's Hikes Class C Debt Rating to 'Caa1'
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Took US$5.4 Billion in Loans in 2019
E C U A D O R
ECUADOR: Moody's Lowers Foreign Currency Unsec. Rating to Caa1
J A M A I C A
UC RUSAL: E N Plus Increases Shares in Firm
M E X I C O
CEMENTOS DE CHIHUAHUA: Fitch Affirms BB+ LongTerm IDRs
G.D.S. EXPRESS: Committee Taps Levinson as Counsel
P U E R T O R I C O
PUERTO RICO: Bonds Trade Higher in Wake of Tentative Debt Deal
U R U G U A Y
URUGUAY: NCov Poses New Threat to All-Important Beef Industry
X X X X X X X X
[*] BOND PRICING: For the Week February 3 to February 7, 2020
- - - - -
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A N T I G U A A N D B A R B U D A
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ANTIGUA & BARBUDA: Facing Lawsuit Brought by St. Kitts-Nevis Bank
-----------------------------------------------------------------
RJR News reports that the Antigua and Barbuda government says it
will defend a multi-million dollar lawsuit brought against it by
the St. Kitts-Nevis National Bank.
Prime Minister Gaston Browne told legislators that the EC$60
million lawsuit stems from an agreement relating to the former
Antigua Barbuda Investment (ABI) Bank that ended operations in
2015, according to RJR News.
Mr. Browne told legislators that the St. Kitts-Nevis National Bank
had chosen to underwrite a loan of the former government, granted
by ABI Bank, which his administration is honoring, the report
notes.
He said that the claims by the bank for millions of dollars will
not be honored, the report adds.
=================
A R G E N T I N A
=================
CUOTAS CENCOSUD VIII: Moody's Hikes Class C Debt Rating to 'Caa1'
-----------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo has taken
rating action on the global scale and on the national scale of
Argentina of Fideicomiso Financiero Cuotas Cencosud Serie VIII.
These rating actions resulted in:
(i) the affirmation of the VDFA notes rated at B2 (sf)
(Global Scale) and at Aa3.ar (sf) (National Scale);
(ii) the upgrade of the VDFB notes to B3 (sf) from Caa3 (sf)
(Global Scale Rating) and to A3.ar (sf) from Caa2.ar (sf)
(National Scale Rating);
(iii) the upgrade of the VDFC notes to Caa1 (sf) from Ca (sf)
(Global Scale Rating) and to Baa3.ar (sf) from Ca.ar (sf)
(National Scale Rating) and;
(iv) the affirmation of the Certificates (CP) rated at C (sf)
(Global Scale) and at C.ar (sf) (National Scale).
The full rating action is as follow:
- Class A Floating Rate Debt Securities (VDFA) of Fideicomiso
Financiero Cuotas Cencosud Serie VIII: to affirm ratings at B2 (sf)
in the Global Scale and at Aa3.ar (sf) in the National Scale;
previously on September 6, 2019 downgraded to B2 (sf) from Ba3 (sf)
(Global Scale Rating) and to Aa3.ar from Aaa.ar (sf) (National
Scale Rating).
- Class B Floating Rate Debt Securities (VDFB) of Fideicomiso
Financiero Cuotas Cencosud Serie VIII: to upgrade to B3 (sf) from
Caa3 (sf) in the Global Scale and to A3.ar (sf) from Caa2.ar (sf)
in the National Scale; previously on June 18, 2019 assigned Caa3
(sf) (Global Scale Rating) and Caa2.ar (sf) (National Scale
Rating).
- Class C Floating Rate Debt Securities (VDFC) of Fideicomiso
Financiero Cuotas Cencosud Serie VIII: to upgrade to Caa1 (sf) from
Ca (sf) in the Global Scale and to Baa3.ar (sf) from Ca.ar (sf) in
the National Scale; previously on June 18, 2019 assigned Ca (sf)
(Global Scale Rating) and Ca.ar (sf) (National Scale Rating).
- Certificates (CP) of Fideicomiso Financiero Cuotas Cencosud
Serie VIII: to affirm ratings at C (sf) in the Global Scale and at
C.ar (sf) in the National Scale; previously on June 18, 2019
assigned C (sf) (Global Scale Rating) and C.ar (sf) (National Scale
Rating).
RATINGS RATIONALE
Moody's upgraded the VDFB and VDFC notes based on the strong
performance of the securitized pool and increase in credit
enhancement. As of December 2020, the pool had 180+ day
delinquencies of 0.3% of the original pool balance. The VDFB notes
had a credit enhancement of 54.7% while the VDFC had a credit
enhancement of 41.3%.
Moody's used a loss coverage ratio approach. The ratings were
positioned according to the ratio of the note credit enhancement to
the pool expected loss. In arriving at the ratings, Moody's also
considered the note's position in the capital structure and the
allocation of the collected cash flows from the securitized pool.
The rated securities are payable from the cash flow derived from
the trust assets, which includes a static and amortizing pool of
eligible purchases in credit card installments denominated in
Argentine pesos and originated by Cencosud (Argentina) S.A.
("Cencosud Argentina"), the local subsidiary of Cencosud S.A.
("Cencosud" Baa3, Negative). Cencosud is among Latin America's
largest retailers, with presence in Chile, Argentina, Peru,
Colombia and Brazil.
The assigned installments pertain to credit cards issued by
Cencosud Argentina. Cencosud credit cardholders can make purchases
in affiliated stores and split the payments in several monthly
installments bearing no interest. The monthly installments are
detailed in the cardholder's monthly credit card statements. Not
all installments due under a given credit card will be assigned to
the trust. Therefore, a given credit card account may also have
other installments that do not serve as collateral for this
transaction.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may lead to a downgrade of the ratings include a
downgrade in Argentina's local currency ceiling and an increase in
delinquency levels beyond the level Moody's assumed when rating
this transaction. Although Moody's analyzed the historical
performance data of previous transactions and similar receivables
originated by Cencosud, the actual performance of the securitized
pool may be affected, among others, by the economic activity and
the unemployment rate in Argentina.
Factors that may lead to an upgrade of the ratings include an
upgrade in Argentina's local currency ceiling and the building of
credit enhancement over time due to the turbo sequential payment
structure.
The principal methodology used in these ratings was Procedures
Manual for the Rating of Financial Trusts published in January
2017.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Took US$5.4 Billion in Loans in 2019
--------------------------------------------------------
Dominican Today reports that the Dominican Republic took US$5.4
billion in loans during 2019, or 40.4% of the public debt, in
relation to the country's GDP.
Finance Minister Donald Guerrero said that by adding the US$10.0
billion of the Central Bank debt to that of the non-financial
public system, the country owes 52% of GDP, according to Dominican
Today.
Guerrero said the Dominican foreign debt is US$23.4 billion:
US$10.1 billion internal and US$2.5 billion intra-governmental,
adding credit commitments for US$35.9 billion, the report notes.
Guerrero stressed that the funds the country borrowed last year
"were obtained at the best market conditions," 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).
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E C U A D O R
=============
ECUADOR: Moody's Lowers Foreign Currency Unsec. Rating to Caa1
--------------------------------------------------------------
Moody's Investors Service downgraded the long-term foreign-currency
issuer and senior unsecured rating of the Government of Ecuador to
Caa1 from B3 and changed the outlook to stable from negative.
The downgrade of Ecuador's rating reflects the following key rating
drivers:
(1) Market access for the sovereign is likely to remain constrained
ahead of a challenging debt amortization schedule beginning in
2022.
(2) The authorities are facing considerable resistance to the
adoption of urgent reforms, which has led to policy uncertainty and
hindered economic growth, in addition to adding further challenges
to debt sustainability and market access.
The stable outlook on the Caa1 rating captures the authorities'
intentions to maintain their efforts aimed at achieving further,
gradual, fiscal consolidation and that risks to debt repayment
remain contained in 2020-21 given an absence of large amounts of
maturing market debt.
At the same time, Moody's has affirmed the long-term
foreign-currency senior unsecured rating for unrestructured debt at
C, pertaining to the approximately $52 million (including accrued
interest) of the 2030 global bonds that have been in default since
2008.
Ecuador's long-term foreign-currency bond ceiling was changed to B3
from B2 and the foreign-currency bank deposit ceiling changed to
Caa2 from Caa1. The short-term foreign-currency bond ceiling and
the short-term foreign-currency bank deposit ceilings remain
unchanged at Not Prime (NP).
RATINGS RATIONALE
RATIONALE FOR THE DOWNGRADE TO Caa1
FIRST DRIVER: MARKET ACCESS FOR THE SOVEREIGN IS LIKELY TO REMAIN
CONSTRAINED AHEAD OF A CHALLENGING DEBT AMORTIZATION SCHEDULE
BEGINNING IN 2022
A persistently high cost of funding and the need to access markets
to rollover maturing debt highlight risks to repayment capacity in
2022 given already low debt affordability metrics. High yields on
the sovereign's debt issuances and a reliance on unconventional
sources of finance as alternatives to the high market rates have
been partly responsible for the sovereign's tight liquidity
position prior to engaging the International Monetary Fund (IMF)
and signing on to an Extended Fund Facility (EFF) program in early
2019. Although the program initially resulted in a more favorable
liquidity situation, the sovereign's high cost of funding has not
been fully addressed owing to delays in adopting reforms under the
program. Moody's estimates that the central government's interest
payment-to-revenue deteriorated to 17.3% in 2019 from 14.7% in
2018, higher than the median for 'B'-rated sovereigns at 10% and
for 'Caa'-rated sovereigns at 11.2%, and will remain above peer
medians through 2024.
The authorities were able to adopt tax reform in December 2019 that
they expect will yield a net increase in revenues of 0.5% of GDP in
2020 and 0.5% of GDP in 2021, lower than the 0.7% in 2020 and 0.6%
in 2021 under a prior proposal that was more in line with the
initial IMF program targets. Additionally, no measures were enacted
for 2019 to mitigate some of the loss in revenues from the ailing
economy. Moody's estimates real GDP contracted 0.5% in in 2019. As
a result, the loss of tax revenues in 2019 was larger than what the
authorities and the IMF had forecast by 0.3% of GDP. Other
expenditure restraint targets for 2019 were broadly met, but owing
to the revenue loss, Moody's estimates that the central government
fiscal deficit widened marginally to 3.8% of GDP from 3.6% in
2018.
IMF funding in 2020-21 and other efforts will provide support for
meeting the sovereign's financing needs, but Ecuador faces
considerable uncertainty beyond 2021 owing to the large amounts of
market debt coming due beginning in 2022. Market sentiment has been
prone to abrupt shifts as illustrated by the spike to over 1,300
basis points on Ecuador's EMBI spread in November, when the
National Assembly voted to reject an urgent reform package.
Although spread levels declined through the end of the year, they
once again have risen to nearly 1,000 basis points. This highlights
the fragility of the sovereign's access to markets despite a
continued reliance on market funding in order to fulfill its
financing needs, which Moody's estimates will remain between 7% and
8% of GDP for the central government through 2023, despite
continued gradual fiscal consolidation efforts.
SECOND DRIVER: THE AUTHORITIES ARE FACING CONSIDERABLE RESISTANCE
TO THE ADOPTION OF URGENT REFORMS, WHICH HAS LED TO POLICY
UNCERTAINTY AND HINDERED ECONOMIC GROWTH, IN ADDITION TO ADDING
FURTHER CHALLENGES TO DEBT SUSTAINABILITY AND MARKET ACCESS
The authorities have shown a willingness to adopt forceful
adjustment measures, but the sociopolitical environment has been
unsupportive for the adjustment that the government intended. The
government announced a set of reform measures on October 1, 2019
expected to yield 2.1% of GDP in fiscal adjustment at the
non-financial public sector level through 2021, including a removal
of fuel subsidies which would be the key measure underpinning the
fiscal adjustment, but the authorities were forced to backtrack due
to strong opposition from the population. Compensatory measures,
along with a set of other urgent reforms to meet IMF performance
criteria, were rejected in a vote by the National Assembly.
Although the tax reform was later approved by the National
Assembly, the ensuing policy uncertainty along with the protests
have adversely impacted economic activity, resulting in a
contraction of real output in 2019. Moody's forecasts that economic
growth will remain subdued at 0.2% in 2020, reflecting the negative
impact of the recent political instability and policy uncertainty
on investment in 2020, which will be unsupportive of domestic
demand growth.
Sluggish economic activity will further hinder efforts by the
authorities to narrow the central government deficit and reduce
financing needs. The upcoming February 2021 presidential and
legislative elections cast some uncertainty as to policy direction,
as does the conclusion of the IMF program in December 2021, ahead
of the challenging debt service schedule in 2022 and beyond.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook on the rating reflects Moody's view that upside
and downside risks to the current assessment of Ecuador's credit
profile remain balanced in the near term. Moody's believes that the
authorities intend to maintain their efforts aimed at achieving
further, gradual, fiscal consolidation and that risks to debt
repayment remain contained in 2020-21 given an absence of large
amounts of maturing market debt.
ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS
Environmental considerations are not material to Ecuador's credit
profile, and the country has not been identified as being one of
the sovereigns materially exposed to physical climate change risks.
However, Ecuador's economy, particularly primary sector activity,
has been subject to droughts and floods from the El Nino weather
shock at irregular intervals (10 or more years).
Social considerations have played a role in increasing political
risk in the country. As illustrated recently in October 2019,
violent protests broke out against government measures to eliminate
fuel subsidies, forcing the government to backtrack on the subsidy
removal and to devise complimentary measures in support of fiscal
consolidation under an IMF program. The risk of social unrest
constrains the sovereign's ability to adopt policies that address
long-standing distortions that inhibit economic growth in the
country.
Governance considerations form an integral part of its credit
analysis for Ecuador and are material to the credit profile.
Long-standing concerns about public financial and fiscal
management, willingness to repay (which in the past had a hand in
defaults), and the overall lack of clarity and predictability of
policymaking have constrained Ecuador's credit profile.
WHAT COULD CHANGE THE RATING UP
Evidence of a sustained improvement in economic management leading
to a material reduction in both fiscal and external imbalances
would contribute to improving creditworthiness. Additionally,
substantial progress on consolidating the central government
deficit to reduce financing needs and improve access to market
funding at rates that support the sustainability of public finances
could lead to a positive rating action.
WHAT COULD CHANGE THE RATING DOWN
Further tightening of liquidity conditions, due to the lack of
credible fiscal policies or other factors outside the authorities'
control, would likely lead to a downgrade by jeopardizing the
sovereign's ability to access market funding at affordable rates
ahead of the challenging debt maturity profile beginning in 2022.
GDP per capita (PPP basis, US$): 11,760 (2018 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 1.3% (2018 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 0.3% (2018 Actual)
Gen. Gov. Financial Balance/GDP: -3.6% (2018 Actual) (also known as
Fiscal Balance)
Current Account Balance/GDP: -1.4% (2018 Actual) (also known as
External Balance)
External debt/GDP: 40.9% (2018 Actual)
Economic resiliency: ba3
Default history: At least one default event (on bonds and/or loans)
has been recorded since 1983.
On January 31, 2020, a rating committee was called to discuss the
rating of the Ecuador, Government of. The main points raised during
the discussion were: The issuer's economic fundamentals, including
its economic strength, have not materially changed. The issuer's
institutions and governance strength, have not materially changed.
The issuer's fiscal or financial strength, including its debt
profile, has not materially changed. The issuer has become
increasingly susceptible to event risks.
The principal methodology used in these ratings was Sovereign
Ratings Methodology published in November 2019.
=============
J A M A I C A
=============
UC RUSAL: E N Plus Increases Shares in Firm
-------------------------------------------
RJR News reports that a Russian company has increased its
shareholding in Windalco's parent entity, aluminium firm UC Rusal.
Nasdaq's website disclosed that E N Plus Group has raised its stake
in Rusal to 56.8% after completing an asset swap with Glencore,
according to RJR News.
This is part of a deal that has helped companies controlled by
Russian tycoon Oleg Deripaska to ward off U.S. sanctions, the
report notes.
E N Plus Group and Glencore agreed in 2017 that Glencore would swap
its 8.75% stake in Rusal for shares in E N Plus Group, an aluminium
and hydropower group controlled by Mr. Deripaska, following E N
Plus's initial public offering, the report relays.
However, the deal was suspended in 2018 when the United States
announced sanctions on Mr. Deripaska, Rusal, E N Plus and other
companies in which he owns stakes, citing malign activities by
Russia, the report adds.
As reported in the Troubled Company Reporter-Latin America on Jan.
24, 2020, Fitch Ratings revised United Company RUSAL Plc's Outlook
to Negative from Stable and affirmed the metal group's Long-Term
Issuer Default Rating at 'BB-'. Fitch has also affirmed Rusal
Capital D.A.C.'s senior unsecured rating at 'BB-'/'RR4'.
===========
M E X I C O
===========
CEMENTOS DE CHIHUAHUA: Fitch Affirms BB+ LongTerm IDRs
------------------------------------------------------
Fitch Ratings affirmed Grupo Cementos de Chihuahua, S.A.B. de
C.V.'s Long-Term Local and Foreign Currency Issuer Default Ratings
at 'BB+'. The Rating Outlook is Stable.
GCC's ratings reflect the company's solid business position in the
cement, ready mix and aggregates segments in the regions where it
has a presence, diversified operations in Mexico and the U.S. in
the non-residential and residential sectors, as well as positive
free cash flow generation through the recent industry cycle. The
ratings also reflect GCC's position as a top supplier of oil well
cement in the U.S.. The ratings are limited by the company's scale
relative to industry peers and the cyclicality of the cement
market.
KEY RATING DRIVERS
Leading Market Shares: GCC's contiguous presence from Chihuahua in
northern Mexico to North Dakota, and its efficient distribution and
logistics system allow it to serve markets in 16 states across the
U.S. Midwest, Southwest and Rocky Mountain regions and in the
Canadian province of Alberta. The company is the dominant cement
producer in the state of Chihuahua and has strong market positions
in Colorado, North Dakota, South Dakota, Wyoming, New Mexico and
western Texas. GCC faces a lower threat from seaborne imports,
which can significantly pressure prices, due to its contiguous
presence away from the coasts, the Great Lakes or the Mississippi
River.
Solid Oil Well Cement Demand: The backbone of the company's cash
flow is the region from the state of Chihuahua, through western
Texas and New Mexico. The company heavily services the oil industry
in this market and benefits from the growth in output in the
Permian Basin. Oil production in the Permian region increased to
4.7 million barrels of crude oil per day at the end of 2019 from
2.1 million barrels per day at the end of 2016. In this sub-region,
GCC exports cement from its plants in Mexico to complement
production from its plant in Odessa. Exports from Mexico doubled to
0.8 million metric tons (MT) in 2018 from 0.4MT in 2016.
Competitive Industry: GCC derives about 73% of its EBITDA from the
U.S. market, where it often competes with larger global and
regional players with more financial resources. This competitive
threat has been mitigated by GCC's wide distribution reach relative
to its scale. The company continued to generate positive FCF
through the most recent industry downturn and maintained high
profitability. Fierce price competition following periods of waning
demand is a key risk for cement producers, particularly in more
competitive markets such as the U.S..
Sound Operating Performance: Operating EBITDA is expected to remain
solid in 2020 and 2021 in the USD270million to USD300 million range
compared to USD256 million on a LTM basis as of third quarter in
2019. This is primarily the result of cement demand growth and
higher cement prices in the U.S.. Limited capacity expansions in
this market should support rising prices. Price increases in
Chihuahua are expected to remain moderate. After climbing double
digits in 2016-2018, prices rose mid-single digits in the first
nine months of 2019. Cement demand in Chihuahua should continue to
outperform Mexico's overall cement demand, supported by mining and
manufacturing investment as well as favorable economic conditions
in Texas.
Leverage Expected to Trend Down: Fitch projects GCC's net
debt/EBITDA will reach 0.7x in 2020 due to strong FCF of about
USD100 million. This compares with 1.1x forecast for 2019, 1.6x in
2018 and 1.9x in 2017. The company will continue to pursue
acquisitions that further enhance its position within key markets.
Given projected leverage, GCC should have sufficient rating
headroom to pursue midsize acquisitions while maintaining net
debt/EBITDA below 3.0x. Fitch projects GCC's gross EBITDA leverage
at 2.3x in 2020, absent acquisitions.
DERIVATION SUMMARY
GCC derives 73% of its EBITDA from the U.S. market. The remainder
of the group's EBITDA is generated in the state of Chihuahua in
Mexico.
This dual Mexican and U.S. presence is shared by Elementia, S.A.B.
de C.V. (BB+/Rating Watch Negative), but in different regions
within both countries. Elementia's product and geographic
diversification as a building products and building materials
hybrid with operations in North America, Central America and South
America compares favorably with GCC's. However, GCC benefits from
higher growth expectations in its markets and a desire to have
lower leverage. Fitch expects GCC to maintain net leverage below
3.0x over the intermediate term, while Elementia's net leverage
should be around 3.5x
Cementos Pacasmayo S.A.A. (BBB-/Negative), a dominant cement
producer in northern Peru, has a capital structure that deviated
from levels consistent with an investment-grade credit profile, and
therefore has a Negative Outlook. Peru's infrastructure spending
supports Pacasmayo's long-term growth prospects, which should
benefit the country's northern region. While Fitch expects the U.S.
market to continue recovering, its more developed infrastructure
network makes it a mature market that, combined with more
competitive industry dynamics, is likely to be more volatile, with
potentially much slower cement demand growth.
Fitch projects GCC's financial profile will be stronger than those
maintained by investment-grade cement companies, such as CRH,
LafargeHolcim and HeidelbergCement AG (BBB-/Stable) during the next
two to three years. GCC's lack of geographic diversification
compared with these companies, its much smaller scale and the
competitive nature in the U.S. result in a business profile more
consistent with issuers rated in the 'BB' category.
CEMEX, S.A.B. de C.V. (BB/Stable) and Intercement Participacoes
(B-/Stable) have lower ratings than GCC because their
credit-protection measures are projected to be materially worse
than GCC's during the next two years. These companies have strong
businesses in several markets. Votorantim Cimentos S.A.
(BBB-/Stable), which is a much larger cement producer with a
dominant position in Brazil and operations throughout the world, is
not a direct peer, as its rating is tied to Votorantim S.A.'s,
which includes mining, pulp and financial services subsidiaries.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Revenues grow low-single digits;
-- EBITDA of USD280 million-USD300 million over the next several
years;
-- Net debt to EBITDA remains below 3x;
-- Debt amortizes according to schedule;
-- Capex is financed mostly through internal cash flow
generation;
-- Dividends remain below USD20 million per year in the
intermediate term.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-- Expectations of gross debt/EBITDA below 2.5x and net
debt/EBITDA below 2x through growth cycles combined with a larger
scale would be positive.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
--Weak operational results reflecting increased price
competition, market share loss or a material slowdown in cement
demand on GCC's key markets of Chihuahua, Western Texas, Colorado,
South Dakota and New Mexico;
--Expectations of net debt/EBTIDA leverage above 3.0x, gross
debt/EBITDA above 3.5x, FFO adjusted net leverage above 3.5x, FFO
adjusted leverage above 4.0x;
--Sustained negative FCF generation.
LIQUIDITY AND DEBT STRUCTURE
Sound Liquidity: GCC's liquidity is sound. The company's cash
position at 3Q19 was USD277 million, and Fitch expects FCF to be
around USD100 million in 2020. This compares with debt maturities
of USD25 million in 2020 and USD92 million in 2021. Fitch bases FCF
expectations on robust yearly cash flow from operations of around
USD200 million, capex of approximately USD70 million and dividends
of less than USD20 million.
GCC's total debt as of Sept. 30, 2019 was USD659 million and
consisted mostly of USD260 million of notes due 2024 and amortizing
bank debt. Fitch projects GCC's net debt/EBITDA to reach 1.1x in
2019, compared with 1.6x in 2018 and 1.9x in 2017. The company
maintains good access to bank lending and capital markets, as
evidenced by debt refinancings during 2015, 2016, 2017 and 2018.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. ESG issues are credit neutral
or have only a minimal credit impact on the entity, either due to
their nature or the way in which they are being managed by the
entity.
G.D.S. EXPRESS: Committee Taps Levinson as Counsel
--------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 cases of G.D.S. Express and its debtor-affiliates seeks
permission from the Bankruptcy Court for the Northern District of
Ohio to retain Levinson LLP as its counsel.
As counsel, Levinson LLP will:
(a) consult with the Committee concerning the administration of
the Debtors' cases;
(b) consult with, aid, and advise the Committee with respect to
the investigation of the acts, conduct, assets,
liabilities, and financial condition of the Debtors, the
operation of the Debtors' businesses, and any other matter
relevant to the cases or the formulation of a plan or plans
of reorganization;
(c) advise the Committee of its fiduciary duties and
responsibilities to the unsecured creditors and to direct
necessary communication with its constituents;
(d) take actions necessary to aid the Committee in preserving
and protecting the assets of the Debtors' estates, to
prepare on behalf of the Committee all necessary
pleadings, reports, applications, answers, orders, and
other legal documents, including the review and, as
necessary, the negotiation, drafting, and filing of a
plan or plans of reorganization, disclosure
statement(s), and other related documents;
(e) evaluate and potentially pursue claims against
appropriate parties;
(f) ensure that all possible funds are recovered for the
benefit of the estates from any and all avoidance
actions;
(g) represent the Committee's interest in any hearings
before the Court;
(h) review all applications, motions, pleadings, orders,
or other matters filed in the Debtors' bankruptcy
cases;
(i) perform other necessary legal services for the
Committee;
(j) monitor actions taken, or proposed to be taken, by the
Debtors in connection with the disposition and/or sale
of property of the estate, the assumption and/or
rejection of executory contracts, unexpired leases,
and/or lease restructurings; and
(k) take all steps necessary to ensure that the Committee
is aware of all bar dates or key issues that might affect
the interests of the Committee and its constituents.
Levinson will charge the Debtors' estate for legal services
rendered at $350 per hour, subject to periodic adjustment, in
accordance with the firm's ordinary and customary hourly rates.
Jeffrey M. Levinson, a partner at the firm, attests that his firm
is a disinterested person as defined in section 101(14) of the
Bankruptcy Code.
The firm may be reached through:
Jeffrey M. Levinson, Partner
Levinson LLP
55 Public Square, Suite 1750
Cleveland, OH 44113
About G.D.S. Express
G.D.S. Express, Inc. -- http://www.gdsexpress.com/-- is a
family-owned trucking company that provides services in 48 states,
with general freight and garment-on-hangers service in both the
U.S. and Mexico. It operates with 75 owner operators and 60
company trucks. Headquartered in Akron, Ohio, GDS Express was
founded in 1990 by Jack Delaney, a former Roadway Express
executive.
G.D.S. Express and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Ohio Lead Case No. 19-53034)
on Dec. 27, 2019. At the time of the filing, G.D.S. Express had
estimated assets of less than $50,000 and liabilities of between $1
million and $10 million.
Judge Alan M. Koschik oversees the cases. Brouse McDowell, LPA is
the Debtors' legal counsel.
=====================
P U E R T O R I C O
=====================
PUERTO RICO: Bonds Trade Higher in Wake of Tentative Debt Deal
--------------------------------------------------------------
Valentin Ortiz at Reuters reports that Puerto Rico general
obligation bonds traded higher in the wake of a report of a
tentative deal involving debt that the U.S. commonwealth's
federally created financial oversight board has been trying to
void.
More than $6 billion of bonds Puerto Rico issued in 2012 and 2014
had been targeted by the board for allegedly being issued in
violation of a debt limit in the Caribbean island's constitution,
according to Reuters. As a result, owners of those bonds were
assigned low recoveries in a debt restructuring plan the board
submitted in September to a U.S. District Court hearing Puerto
Rico's bankruptcy case, the report notes.
The Wall Street Journal reported that competing groups of
bondholders and the board reached an initial compromise that would
settle a dispute over the 2012 and 2014 bonds, the report relays.
A tentative deal would increase recoveries for the bonds and remove
the need to litigate their validity, according to a person familiar
with the matter, the report relates. Representatives for the board
and for various bondholders declined to comment.
Bonds issued in 2014 that had been trading at 69 cents on the
dollar in late January sold at 72.63 cents on Feb. 6, the report
relays. Other bonds issued in 2012 with a 2041 maturity traded at
76 cents, up from the 72-cent range, according to Municipal Market
Data (MMD), the report notes.
Daniel Berger, MMD's senior market strategist, said the perception
that bondholders would get higher recoveries was driving prices
higher, the report relays.
Puerto Rico commenced a form of municipal bankruptcy in 2017 to
restructure about $120 billion of debt and pension obligations, the
report notes. The board's so-called plan of adjustment for the
government's core debt offered recoveries of 45% for the 2012 bonds
and 35% for the 2014 bonds with hold-out bondholders facing the
risk of receiving nothing if the bonds were ultimately invalidated
in federal court, the report adds.
The recovery for non-disputed GO bonds issued before 2012 was
pegged at 64%, the report relates.
At a federal court hearing last week, the board's attorney hinted
that movement in mediation with creditors could be announced this
month, 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.
=============
U R U G U A Y
=============
URUGUAY: NCov Poses New Threat to All-Important Beef Industry
-------------------------------------------------------------
The Latin American Herald reports that 3 1/2 to one is the ratio of
cattle to people in Uruguay, a South American country that relies
on exports of its prized beef to drive its economy and counts
heavily on one overseas market in particular: China.
China has become an ideal customer for Uruguayan cold-storage
plants and currently ranks as the No. 1 destination for the South
American country's highly acclaimed beef, but the spread of the new
Wuhan coronavirus has prompted fears of a sharp slowdown in that
crucial market, according to The Latin American Herald.
With Uruguay's population totaling just 3.5 million, the domestic
market is far too small for its formidable beef industry, which
exports around 75 percent of its production to more than 60
countries, said the marketing manager of the National Meat
Institute (INAC), Lautaro Perez, the report notes.
The report discloses that China replaced Russia as the biggest
importer of Uruguayan beef six years ago and its demand for that
meat grew even more in 2019 after an epidemic of African Swine
Fever took a devastating toll on the Asian nation's pig herd and
pork production.
China's size, its low tariffs on Uruguayan beef and consumer demand
for a wide range of cuts make that nation an ideal importer, Mr.
Perez said, the report relays.
Uruguayan beef exports to the Asian giant were valued at more than
$1 billion in 2019, according to figures from Uruguay XXI, that
country's investment and export promotion agency and country brand,
while the European Union and the United States came in a distant
second and third at $300 million and $200 million, respectively,
the report notes.
But the trade relationship with China became more complicated late
last year, the report relays.
The sales manager of cold-storage plant operator Sirsil, Gabriel
Slinger, told EFE that Chinese buyers started demanding a 30
percent discount on the price of Uruguayan beef and threatened to
leave containers at the port or in the water if they didn't get
their way.
He said part of the reason was the release of contingency stocks
onto the market by the Chinese government, while also pointing to a
grey-market trade in bovine meat products that enter China via Hong
Kong and Vietnam and are cheaper because they don't pass through
official import channels, the report relates.
But now the main focal point of concerns for Uruguayan exporters is
the novel coronavirus (2019-nCoV), whose epicenter is the central
Chinese city of Wuhan, the report notes.
With dozens of cities on lockdown and China gripped by a growing
collective hysteria, Slinger said all signs point to a drop in meat
consumption and that his company is waiting to see how market
conditions develop in February, the report discloses.
Separately, 20 Uruguayan cold storage plants recently obtained
halal certification -- a document that guarantees that products and
services aimed at the Muslim population meet the requirements of
Islamic law -- with a view to exporting beef and ovine meat to
Saudi Arabia, the report says.
Although that market opening is seen as positive, Slinger said
Uruguay will face stiff competition in Saudi Arabia from
lower-priced Brazilian beef, the report notes.
He also added that Saudi demand for beef is not as big as for sheep
meat and that more work needs to be done to grow that business
there, the report relays.
Another market opening will occur soon in Vietnam, where Uruguay
will be licensed to export beef in the first half of this year,
said the director of the Uruguayan Livestock, Agriculture and
Fisheries Ministry's international affairs unit, Rodolfo
Camarosano, the report relays.
Meanwhile, Uruguay's beef industry was displeased with the terms of
the Mercosur-EU trade agreement, which was reached last year but is
still pending ratification, the report notes.
Camarosano said the annual quota on Uruguayan beef exports to the
EU will fall to 19,000 tons, noting that in the past the country
has exported "a great deal more" to that market, the report adds.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week February 3 to February 7, 2020
-------------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
SACI Falabella 2.3 50.6 7/15/2020 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Banco Security SA 3.0 27.4 6/1/2021 CL CLP
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Empresa Provincial de 12.5 0.0 1/29/2020 AR USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Plaza SA 3.5 38.3 8/15/2020 CL CLP
Banco Security SA 3.0 5.6 7/1/2019 CL CLP
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Esval SA 3.5 49.9 2/15/2026 CL CLP
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 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 * * *