/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/200219.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 Wednesday, February 19, 2020, Vol. 21, No. 36 Headlines A R G E N T I N A STONEWAY CAPITAL: Moody's Lowers Sr. Sec. Rating to Caa3 B R A Z I L BRAZIL: Casual Employment in Brazil Exceeds 50% in 11 States BRAZIL: Dollar Escalation Concerns Sectors Dependent on Imports VIRACOPOS: Creditors Approve Debt Restructuring C O L O M B I A TELECOMUNICACIONES DE BOGOTA: Fitch Affirms BB+ LongTerm IDRs D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Electricity Distributors Lost US$58.5MM in 2019 DOMINICAN REPUBLIC: Industries Face-to-Face With Presidentiables H A I T I HAITI: Wants Stronger Customs Ties With Dominican Republic J A M A I C A TRANSJAMAICA HIGHWAY: Fitch Assigns BB- Rating to Sr. Sec. Notes TRANSJAMAICAN HIGHWAY: S&P Rates $225MM Senior Secured Notes 'B+' P A N A M A LA HIPOTECARIA 14TH NOTES TRUST: Fitch Affirms Class C Notes at Bsf P U E R T O R I C O GONZALEZ & COLON: March 26 Hearing on Disclosure Statement SAN JUAN ICE: Court Confirms Amended Plan - - - - - ================= A R G E N T I N A ================= STONEWAY CAPITAL: Moody's Lowers Sr. Sec. Rating to Caa3 -------------------------------------------------------- Moody's Investors Service downgraded Stoneway Capital Corporation senior secured rating to Caa3 from Caa2. The rating remains under review for further downgrade. The outlook remains unchanged at ratings under review. The downgrade follows the company's announcement to request bondholders' consent to postpone until September 1st of this year, a $27 million amortization payment due on March 1st, 2020. If the deal is completed as proposed prior to March 1st, Moody's would likely classify this transaction as a distressed exchange. RATINGS RATIONALE The rating downgrade to Caa3 from Caa2 reflects the liquidity pressures the company is facing due to the off-taker's (CAMMESA) payments delay under its power purchase agreements (PPAs) that has resulted in insufficient cash flow generation leading to the company's inability to meet its debt service obligations. These liquidity pressures triggered the deferral payment proposal, which will be likely followed by a comprehensive debt restructuring. The rating action also considers its expectation of continued weak financial performance and its assessment that a successful debt payment extension will only bring temporary relief to the company. Fundamentally affecting Stoneway´s credit profile is the perspective of continuous payment delays from CAMMESA. In the absence of any external liquidity in the form of funded debt service reserve account, there is minimal cushion to absorb additional disruptions in the timing of receivables from CAMMESA. The rating also recognizes that the project still has supportive cash generation potential. Its four plants are currently in operations and have existing long term power purchase agreements with a fixed price for availability. Typically these PPA´s would pay on a monthly basis and mature in 2027. If the consent solicitation is completed as proposed prior to March 1st, Moody's would likely classify this transaction as a distressed exchange. A distressed exchange is defined as an offer by an issuer to creditors of a new or restructured debt, or a new package of securities, cash or assets, that amount to a diminished value relative to the original obligation with the effect of the transaction being the avoidance of a likely eventual payment default on the debt. A distressed exchange is a default under Moody's definition of default. The rating remains under review for downgrade. During the review period, Moody´s will focus on CAMMESA and its ability to stay current on its obligations. Moody´s views CAMMESA as a government related entity closely linked to the credit quality of the Government of Argentina (Caa2 RUR-). The review will also evaluate the outcome of the consent solicitation process. If Stoneway completes the payment deferral and exchange as proposed, Moody's will reassess the existing ratings and outlook to reflect the sustainability of the company's capital structure post-restructuring as well as any further comprehensive debt restructuring. The ratings following the completion of the restructuring will represent the company's creditworthiness under the new capital structure. Moody's also notes that failure to obtain consent from bondholders will likely result in a payment default and trigger a debt acceleration, which could lead to a further downgrade. The principal methodology used in this rating was Power Generation Projects published in June 2018. =========== B R A Z I L =========== BRAZIL: Casual Employment in Brazil Exceeds 50% in 11 States ------------------------------------------------------------ Dorah Feliciano at Rio Times Online reports that casual labor is the main occupation of the population in 11 Brazilian states, reported on February 14, the Brazilian Institute of Geography and Statistics (IBGE). The drop in unemployment in 2019 was driven by the increase in casual work, which reached 41.1 percent, its highest rate since 2016, and broke records in 19 states and the Federal District, according to Rio Times Online. 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. BRAZIL: Dollar Escalation Concerns Sectors Dependent on Imports --------------------------------------------------------------- Richard Mann at Rio Times Online reports that domestically, a number of factors weigh on the exchange rate hikes, such as the country's dollar outflow and the trade balance deficit in January Brazilian importers are concerned about the slowdown of the international economy and, in Brazil, the recent decline in the retail and trade balance are weighing on their pricing, according to Rio Times Online. 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. VIRACOPOS: Creditors Approve Debt Restructuring ----------------------------------------------- Tatiana Bautzer at Reuters reports that creditors of the operator of Brazilian airport Viracopos approved the company's debt restructuring, according to a statement by air traffic regulator ANAC. Aeroporto de Viracopos, the company that operates the airport, agreed to give back the license to operate the airport in the city of Campinas, in Sao Paulo state, according to Reuters. The Brazilian federal government will reimburse the company for the investments in the airport, the report notes. The government will deduct from the reimbursement fees that have not been paid by the operator, the report adds. =============== C O L O M B I A =============== TELECOMUNICACIONES DE BOGOTA: Fitch Affirms BB+ LongTerm IDRs ------------------------------------------------------------- Fitch Ratings affirmed Empresa de Telecomunicaciones de Bogota S.A. E.S.P.'s Long-Term Foreign and Local Currency Issuer Default Ratings at 'BB+'. Fitch has also affirmed ETB's National Scale Rating at 'AA+(col)' and its COP530 billion senior notes due 2023 at 'BB+'. The Rating Outlook is Stable. ETB's credit profile reflects a strong asset based fixed operation concentrated in the city of Bogota, with a revenue structure concentrated mainly in its home business (46%) and B2B (48%), with the remaining 6% coming from its relatively weak mobile operation. The affirmation reflects ETB's continued network deployment in 2019 that has resulted in 1,001,000 homes passed in FTTH and 486,000 in FTTC. Fitch expects future growth potential to come from these businesses as the company now focuses on increasing fiber network penetration. ETB's ratings are constrained by its limited geographic diversification in its home business and a 26% up take on its FTTH network penetration that could limit the company's ability to achieve meaningful revenue and EBITDA growth in the short to medium term; specially as its copper legacy service revenue continues to contract following shifting consumer preferences for data consumption, connectivity and convergence. KEY RATING DRIVERS Conservative Capital Structure and Low Leverage: Fitch expects ETB's total adjusted gross and net EBITDAR leverage to be 1.6x and 0.7x respectively, as of Dec. 30, 2019. Adjusted gross leverage has come down over the year as ETB successfully tendered COP176,106 million worth of its international notes. Fitch expects unadjusted gross leverage, as measured by debt/EBITDA to be 0.8x in 2019. EBITDA improvement, along with relatively low capex execution, reduced financing needs and allowed the company to bring net leverage down. Fitch's calculated adjusted EBITDAR leverage metric is expected to remain around 1.6x during 2020-2022, below the company's negative leverage rating trigger of 2.0x for its 'BB+' rating. Fitch's adjusted net leverage is expected to remain around 0.8x. Positive to Neutral FCF Based on Reduced Capex: Its base case projects average cash flow from operations (CFFO) of COP410 billion/year in 2019-2022, in relation to average capex of COP320 billion during the same period, resulting in an average FCF margin around 2% without pressuring the company's liquidity. The company redefined its subscriber growth strategy based on lower projected average capex intensity of 22% of projected revenue in 2019-2022. The new capex strategy focuses on promoting double-play bundles over triple-play bundles both on its fiber to the cabinet and FTTH deployments. This strategy will slow the pace at which ETB diversifies its revenue structure away from traditional copper services to higher ARPU fiber services, while simultaneously reducing the projected capex outlay in support of higher cash preservation for general corporate purposes. Continued Revenue Diversification: ETB's commercial strategy seeks to reduce the percentage of revenues coming from its copper network (53% in 2016, down to 49% in 2017, 46% in 2018 and 43% as of September 2019) and increase revenues coming from non-traditional services to support operational profitability as its FTTH and FTTC networks are deployed and penetrated. This restructuring of the company's revenue structure is key for ETB and will help improve EBITDA margin and obtain payback on its major network investments. Fitch estimates nearly 48% of total revenues comes from more stable B2B services, while 46% comes from the Home business. Intense Competition: Fitch expects the company's competitive position to remain under pressure as local integrated telecom operators push their commercial strategies to retain and/or grow their subscriber base while ETB continues to implement its strategy of replacing legacy copper subscribers with FTTC and FTTH clients. Claro Americas S.A. surpassed ETB as the leading fixed voice and internet provider in Bogota in 2018. ETB's market share of lines in service (LIS) and internet declined by 2.4% 1.3%, respectively, while Claro strengthened its leadership position. Cost Efficiencies Benefit EBITDA: Fitch expects EBITDA margins to stabilize at close to 30% over the rating horizon. EBITDA was supported by a decline in operational expenses during LTM Sept. 30, 2019 , combined with a marginal revenue increase and credit-loss provision adjustments, which led to margin expansion to 32%. Although the company's recent profitability improvement is positive, it was driven primarily by the realization of cost efficiencies. In Fitch's opinion, this will be difficult to sustain, especially as the company resumes commercial capex execution and associated operating expenditure to support revenue growth. DERIVATION SUMMARY ETB is rated one notch lower than Colombia Telecomunicaciones S.A. E.S.P. (CoTel; BBB-/Stable), a more diversified telecom, with a growing fixed operation and a strong mobile foot print in Colombia. CoTel exhibits a more levered capital structure at 2.6x than ETB at 1.6x. ETB is rated at the same level as Comcel Trust (BB+/Stable), a mobile operator focused on Guatemala (BB/Stable), which exhibits a strong competitive position and low leverage of 1.2x. ETB is rated two notches above TalkTalk Telecom Group PLC (BB-/Negative), a UK-based broadband service provider with a less profitable business model with 15% EBITDA margin. TalkTalk has a weaker technology portfolio, which led to deterioration in the company's leverage structure. ETB is rated on a standalone basis, as any recurring support from the District of Bogota (BBB/Stable), the controlling shareholder, is unlikely. ETB is rated on a standalone basis, as any recurring support from the District of Bogota (BBB/Stable), its controlling shareholder, is unlikely. Fitch views the district's 2017 decision to restructure ETB's dividend liability into a 10-year obligation with a two-year grace period as an extraordinary support of the company's cash position, which is not likely to reoccur in the future. No Country Ceiling and/or operating environment constraint were in effect for these ratings. KEY ASSUMPTIONS -- Total and operating revenues grow at 0.5% and 0.9% per year in 20121-2022; -- Adjusted gross and net debt is forecast around 1.6x and 0.8x, respectively, during the projection period. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- A positive rating action is unlikely, given the difficulty faced by the company to achieve meaningful revenue growth in the short to medium term, which will continue to constrain CFFO performance. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Muted revenue growth, due to slower than expected subscriber growth in nontraditional services, amid continued material revenue erosion in copper-based services; -- EBITDA margin deterioration without a material improvement in market position; -- Negative FCF generation with a low cash balance on a basis; -- Adjusted leverage increasing to 2.0x on a sustained basis. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity Position: ETB's liquidity profile improved in 2019 as available cash balances increased to COP635 billion as of September 2019 from COP468 billion at YE 2018, with no short-term debt. This excess cash was used in the last quarter of 2019 to prepay COP176 billion of the total 2023 bond maturity of COP530 billion. This operation further strengthened the maturity profile, taking into account the extraordinary dividend payments rescheduled from 2015 that will be paid in a 10-year period starting from 2020. SUMMARY OF FINANCIAL ADJUSTMENTS -- Capitalized operating lease expenses by 5x since the company is in Colombia; -- Reclassified certain operating income/expense items as non-operating. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Electricity Distributors Lost US$58.5MM in 2019 ------------------------------------------------------------------- Dominican Today reports that the three State companies that distribute and charge for electricity in the Dominican Republic continue posting major losses. The electricity distribution company of the South (EDESur), the North (EDENorte) and the East (EDEEste) accumulated debt last year of RD$3.1 billion (US$58.5 million), according to the State Electric Utility (CDEEE), Dominican Today relays. Last year, EDEeste billed RD$87.7 million but collected RD$84.6 million, a deficit of RD$3.1 million, the report notes. EDESur lost RD$1.9 billion, billing RD$35.5 million, collecting RD$33.7 million, or 5.09%, the report relates. EDENorte billed RD$27.3 million but collected RD$26.6 million, with which it recorded loss of RD$709.7 million, or 2.59%, 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 in April 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: Industries Face-to-Face With Presidentiables ---------------------------------------------------------------- Dominican Today reports that the Dominican Republic Industries Association (AIRD) will host a luncheon with the presidential candidates entitled: "Industrial Policies: Candidate Proposals." The presidential candidates who have more than 15% in voter preference, validated by three nationally recognized surveys, will participate simultaneously, according to Dominican Today. The event is an opportunity to learn about various aspects of the productive policies proposed by the main presidential candidates, the report notes. "For entrepreneurs it is a reference that contributes to form or strengthen their opinions on the most relevant topics for the sector," local media report, the report relates. "It's the most important scenario for industrial sector members to learn about the plans and programs for an upcoming government on national industrial development and other economic topics of extraordinary importance for the sustainable development of the country in the next four years," the AIRD said, 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 in April 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). ========= H A I T I ========= HAITI: Wants Stronger Customs Ties With Dominican Republic ---------------------------------------------------------- Dominican Today reports that the Government of Haiti intends to strengthen customs collaboration with the Dominican Republic to fight smuggling and increase tax collection, Economy and Finance Minister Joseph Jouthe announced. Speaking to newspaper Le Nouvelliste, the official said that both countries have "reactivated" an agreement signed in 2017 to increase collaboration between Haitian and Dominican customs, according to Dominican Today. "We continue the pressure to control the border, whether land, air or sea. We are going to put order in order to collect the fees that we have never collected to, at least, provide services to the population," Jouthe said, the report notes. ============= J A M A I C A ============= TRANSJAMAICA HIGHWAY: Fitch Assigns BB- Rating to Sr. Sec. Notes ---------------------------------------------------------------- Fitch Ratings assigned a final 'BB-' rating to TransJamaica Highway Limited's senior secured notes with a Stable Outlook. Final pricing for the USD225 million notes was a coupon of 5.75%, lower than what Fitch assumed in its cases. Financial metrics in Fitch's rating case show some improvement due to the lower interest rate. The notes are payable on a quarterly basis, commencing April 2020. Principal on the notes will also be payable quarterly on the same dates as interest, but beginning April 2021. The final rating is the same as the expected rating assigned to the notes on January 31, 2020. RATING RATIONALE The rating reflects the stability and resiliency of a commuting asset strategically located in the outskirts of Kingston, Jamaica's capital city. The rating is also supported by a satisfactory rate-setting mechanism, which allows tariffs to be adjusted annually by U.S. inflation and the variations in foreign-currency (FX) rate between the Jamaican dollar (JMD) and the U.S. dollar (USD). Debt is senior secured, with typical project finance features that include limitations on additional indebtedness. Rating case minimum and average debt service coverage ratio (DSCR) are at 1.7x and 2.1x, respectively, which are viewed as strong for the rating category according to applicable criteria. The transaction presents robust break-even values for its most important variables and no dependency on traffic growth in order to repay the rated debt. Furthermore, it withstands domestic economic shocks beyond those observed between 2008-2014 when the Jamaican economy deeply deteriorated, supporting a rating above that of the Jamaican sovereign (B+/Positive), but constrained by Jamaica's Country Ceiling of 'BB-'. The rating incorporates the expectation that the current concessionaire, the National Road Operating Constructing Company Limited (NROCC), which is a limited liability public company directly owned by the government of Jamaica, will make an IPO for up to 80% of TJH's shares shortly after the note issuance. According to the transaction documents, if the IPO is not successful and the collateral is not properly pledged in favor of the noteholders, an unwinding of the notes will be triggered. This is why the transaction was not rated under the Government-Related Entities Rating Criteria. Fitch expects the IPO to be executed after the notes are issued, therefore the project's ultimate shareholders will not be known until that time. However, Fitch believes noteholder exposure to a potentially weak controlling shareholder is mitigated by: 1) the limited liability nature of the company, with all assets pledged to the trust. This should protect against potential consolidation in a sponsor insolvency scenario; 2) the transaction's debt structure, which limits future indebtedness and distributions, preventing a potentially weak sponsor from negatively affecting project operations or financial performance for its own benefit; and 3) the project's O&M contract signed with an experienced operator, which should ensure its satisfactory operation with costs at historical levels KEY RATING DRIVERS Strategically Located Essential Asset [Revenue Risk - Volume: Midrange]: The toll road is the main link between the capital city of Jamaica, Kingston, and other populated urban and industrial centers including the cities of Portmore and May Pen. The asset is currently the only high-speed roadway serving the western part of Kingston's metropolitan area, with an estimated population of 1.4 million people along the corridor. The project has fully recovered from the 2009 crisis and the austerity program implemented by the International Monetary Fund (IMF) in the country, and has shown a traffic CAGR of 3.8% in 2013-2019. An important section of the road was slightly negatively affected by improvements in a competing route, but growth prospects in the long term are underpinned by its position as a strategic asset for the country, along with the fact that motorization rates in Jamaica are still low and expected to increase by 3.5% per annum until 2028. Adequate Rate Adjustment Mechanism [Revenue Risk - Price: Midrange]: Toll rates are adjusted annually using an escalation formula based on the U.S. CPI and the FX rate (USD/JMD) evolution, plus an additional 1% until the foreign debt is repaid in full, in accordance with the maximum capped toll level of that period, with additional increases if USD/JMD exchange rate depreciates by more than 10% intra-period. TJH is allowed to annually increase toll rates, but any change needs to be authorized by the roll regulator. If the toll regulator does not authorize such toll rates, the concessionaire would need to be compensated for the lost revenue. Fitch believes it is unlikely that the regulator would choose to cut prices given the toll rates' updated track record since 2009. Fully Operational Asset [Infrastructure Development & renewal: Midrange]: The toll road has been fully operational, with its four toll plazas, since 2012. It benefits from oversight from an independent engineer who provides financial annual reviews of the budget and the O&M plan and a commentary of the six succeeding semesters. The structure holds a three-month operations and maintenance reserve account, as well as a major maintenance reserve account funded with 100% of the costs to be carried out in the next 12 months, 50% in the next 13 to 24 months and 25% in the next 25 to 36 months. The assessment on this attribute is somewhat limited by the hand back requirements as included in the concession, which oblige the concessionaire to return the project to the grantor in a good and operable condition. TJH has executed an amendment to the concession agreement in which the tenor could be renewed, at any time during 2034, at TJH's request for an additional 35 years. With this updated agreement, the hand back requirements will fall after the maturity of the notes. Nonetheless, Fitch's financial projections assume such expenses will be made in 2035-2036, given the concession currently ends in 2036. Typical Debt Structure [Debt Structure: Midrange]: The notes are senior, fully amortizing, fixed-rate and with typical project finance covenants. There is a six-month debt service reserve account and a lock-up trigger at a 1.25x backward- and forward-looking DSCR. No FX risk is anticipated given the formula for toll rates increase captures movements in the JMD/USD exchange rate. Financial Profile Under Fitch's Rating Case, the project yields a minimum and average DSCR of 1.7x and 2.1x, respectively, which is strong for the rating category under the indicative ranges of the applicable Fitch criteria, but ultimately constrained by Jamaica's Country Ceiling. PEER GROUP Comparable projects in the region include Autopistas del Sol, S.A. (AdS; B+/Negative) in Costa Rica, and Autopistas del Nordeste (Cayman) Limited (AdN; BB-/Stable) in The Dominican Republic. AdS and TJH are similar, as both are strong commuting assets within their respective country's capital cities. They also share all attributes at the Midrange level, but the difference in ratings comes from AdS's lower metrics (average DSCR of 1.2x versus 2.1x under Fitch's rating case). AdN has a Weaker assessment on Volume Risk given it has mostly leisure traffic that has historically underperformed, but Stronger Debt Structure as targeted principal amortization on the notes is deferrable and stockholders have contributed with additional liquidity to support operations. Debt service payments are dependent upon a minimum revenue guarantee (MRG) provided by the Minister of Public Works and Communications. DSCR averages 1.3x, but the rating is constrained by Fitch's assessment of the credit quality of the MRG grantor obligation, which is commensurate with that of the sovereign. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Negative Rating Action: - negative rating action on Jamaica's Country Ceiling; - nil or negative traffic growth rate for a sustained period; - an IPO outcome that is not supportive of Fitch's expectation with respect to the transaction's insulation from the risk presented by a financially weak or unexperienced sponsor. Developments that May, Individually or Collectively, Lead to Positive Rating Action: - Positive rating action on Jamaica's Country Ceiling. TRANSACTION SUMMARY TJH issued senior secured debt for USD225 million through a fully amortizing bond maturing in 2036 with a fixed 5.75% coupon rate. In addition, the issuance contemplates a 1.25x backward and forward looking distribution test, along with a six-month debt service reserve account. There are limitations for the project incurring on additional debt. The proceeds will be used to pay existing debt, pay transaction fees and for general corporate purposes. The toll road is the largest infrastructure project in Jamaica. Between 2006-2007, TJH experienced an increase in traffic levels due to the opening of the Portmore toll plaza in July 2006. Traffic levels declined from 2008 to 2010 due to the Jamaican recession, and the removal of a subsidy on toll rates in the Portmore toll plaza. Current toll rates for all toll plazas represent, on average, 85% of the annual capped toll rate. In 2018, TJH experienced higher levels of traffic flow of (i.e. +8.3%) due to a partial shutdown of the Nelson Mandela Highway (a toll-free competing road) caused by the construction works related to its expansion from a two lane to a three lane road. However, when the construction works were finalized in 2019, traffic grew at a lower rate (i.e. +1.2%). FINANCIAL ANALYSIS Fitch Cases The base case reflects Fitch's view of long-term sustainable performance. The base case includes a CAGR for traffic between 2020 and 2036 of 2.4%. The cost profile assumed is in line with the sponsor's original assumptions with a 5% increase. Macroeconomic assumptions are in line with Fitch's expectations. Under this scenario, the minimum and average DSCR are 1.9x and 2.4x, respectively. Fitch's rating case reflects a reasonable likely scenario of stress that could occur in this project. Assumptions in relation to traffic are reduced to a CAGR of 1.4%. Operating, general and administrative, and maintenance expenses are increased by 7.5% throughout the tenor of the debt. Rating case metrics are slightly weaker than that of the base case, with minimum and average DSCR of 1.7x and 2.1x, respectively. Fitch tested debt-structure resiliency by assessing the financial impact on individual stress factors. The breakeven scenarios include base case assumptions for the rest of the variables not being tested. Results demonstrate that the project can withstand a -1.0% traffic decrease every year. In addition, it tolerates toll rates as low as 49% of the capped toll level instead of the current weighted average of 85%. The project also remains able to service its debt with coverages above 1.0x when the agency replicates the same traffic growth rates as the ones experienced between 2009 and 2014. SECURITY The collateral includes, among other things: (i) certain reserve accounts; (ii) rights under certain project documents; (iii) tangible movable property; (iv) leasehold rights; and (v) an agreement to assign TJH's interest in the concession agreement. Asset Description TJH stretches for 49.9km, connecting Kingston with May Pen, and is divided in two corridors: T1 and T2. The T1 corridor stretches between Kingston and May Pen (with a connection through to Spanish Town), and has three toll plazas located at Spanish Town, Vineyards and May Pen. The T2 corridor, also called the Portmore Causeway, begins on Marcus Garvey Drive in Kingston and ends on Dyke Road in Portmore. TJH acts as a major connector between business and key customers in the Island's southern parishes. 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 to the way in which they are being managed by the entity. TRANSJAMAICAN HIGHWAY: S&P Rates $225MM Senior Secured Notes 'B+' ----------------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term rating to Transjamaican Highway Limited's (TJH or the project) $225 million notes due 2036 at 5.75% after the receipt and satisfactory review of all final transaction documentation. The interest rate on the new notes is slightly below its previous assessment but still in line with its expectations. S&P's 'B+' rating is mostly influenced by the sovereign rating that reflects Jamaica's high debt and interest burden, which restrict its fiscal flexibility. Despite a recent pick-up, GDP growth remains low, constrained by structural impediments. Nevertheless, the government's commitment to fiscal prudence fosters macroeconomic stability--including low inflation--and supports the country's creditworthiness. S&P said, "We tested the project to assess if it could withstand a hypothetical sovereign stress and concluded that there is an appreciable likelihood that the project would default if the sovereign were to default. The test mainly includes severe macroeconomic stresses such as a 100% depreciation of the Jamaican dollar, a 10% contraction in GDP that results in a plummeting traffic level, and a doubling of inflation rate. In such a scenario, the project's cash flows would significantly deteriorate. Despite a six-month cash-funded reserve account located offshore, we don't believe cash flows would be enough to fully pay debt payments in 2022 (defined as the year of the stress). Therefore, we don't rate TJH above the rating on Jamaica." S&P said, "We expect steady traffic increases during the notes' term thanks to the project's strategic location in a highly populated area and very low exposure to market risk. "Total traffic grew at a compounded annual growth rate (CAGR) of about 3.8% between 2013 and 2019. Despite periods of lower traffic, such as in 2013 and 2014 that we attribute to the weak economy and the implementation of the International Monetary Fund's austerity program, traffic rebounded starting in 2015, lifting the project's revenue. In line with the independent consultant, Steer, we expect a high correlation between GDP and traffic growth for the upcoming years. We expect Jamaica's economy to expand by about 2% between 2021 tand 2036, and that traffic will continue averaging about 2.3%. Class I vehicles (light) will continue to represent, in our view, the highest share of traffic and revenue. We view this as a credit strength, given that we consider these vehicles less sensitive to GDP growth fluctuations, and they take a lower toll on the road's pavement, preventing its frequent heavy maintenance." Cash flow available for debt service will remain relatively steady, in S&P's view. This is due to the mature nature of the asset that has been operating for more than 17 years and the forecasted low capital expenditures (capex), given that all mandatory investments under the concession contract were already completed. S&P said, "The stable outlook follows that on the sovereign. It also incorporates our expectation that the traffic volumes will continue to increase in the next 12 months at a steady rate of about 2.3%, allowing the project to maintain a minimum and average DSCR of about 2.1x and 2.6x, respectively. Furthermore, we expect TJH to continue efficiently managing its operations, with limited exposure to major maintenance risks, particularly in the next few years. "We are unlikely to raise the rating in the next 12 months, because we expect it to move in tandem with that on Jamaica. However, an upgrade of the sovereign could result in the same rating action on the project. "We could raise our stand-alone credit profile (SACP) on TJH if traffic increases beyond our expectations, or if the amount it issues is lower, leading to a minimum DSCR of at least 3x, while improving the project's resilience in the downside scenario. "We could lower the rating on the project if we downgrade Jamaica to 'B', which we do not expect in the short term, given the stable outlook. However, poor economic growth or an unexpected weather-related shock that leads to a reversal in the improving trajectory of Jamaica's external position could result in higher external financing needs or a significant decline in usable foreign exchange reserves. This could lead to a downgrade of the sovereign--and consequently--the project. "We could revise downward the project's 'bbb+' SACP if its financial performance deviates substantially from our estimates, leading to a minimum DSCR of 1.65x or below and a less resilient performance to a downside-case scenario. A SACP that we lower to below the existing rating on Jamaica is highly unlikely in the current scenario, and would require a severe deterioration of the minimum DSCR to less than 1.1x. This could occur if traffic is significantly below our expectations or there are higher-than-expected maintenance works." =========== P A N A M A =========== LA HIPOTECARIA 14TH NOTES TRUST: Fitch Affirms Class C Notes at Bsf ------------------------------------------------------------------- Fitch Ratings affirmed the ratings of the La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A Notes, La Hipotecaria Tenth Mortgage Trust Series A Notes & IO Notes, La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A Notes and revised the Outlooks to Negative from Stable following Fitch's revision of Panama's Outlook to Negative from Stable on Feb. 6, 2020. Fitch Ratings affirmed the ratings of the La Hipotecaria Panamanian Mortgage Trust 2007-1 Certificates, La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2 Certificates and La Hipotecaria Trust 2019-2 Certificates and revised the Outlooks to Negative from Stable as they are sensitive to the credit quality of the underlying notes. Fitch Ratings affirmed the ratings and the Outlook Stable of La Hipotecaria Fourteenth Mortgage-Backed Notes Trust B and C Notes along with the La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1 Certificates. RATING ACTIONS La Hipotecaria Trust 2019-2 Series 2019-2 Certs; LT BBBsf Affirmed; previously at BBBsf La Hipotecaria Tenth Mortgage Trust Series A Notes Interest Only; LT Asf Affirmed; previously at Asf Series A; LT Asf Affirmed; previously at Asf La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A; LT Asf Affirmed; previously at Asf La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Class A; LT BBBsf Affirmed; previously at BBBsf Class B; LT B+sf Affirmed; previously at B+sf Class C; LT Bsf Affirmed; previously at Bsf La Hipotecaria Panamanian Mortgage Trust 2007-1 2007-1 2007-1 Certificates 50346AAA3; LT Asf Affirmed; previously at Asf 2007-1 Certificates 50346AAA3; ULT Asf Affirmed; previously at Asf La Hipotecaria Panamanian Mortgage Trust 2014-1 Class A-1 50346EAA5; LT AAAsf Affirmed; previously at AAAsf Class A-2 50346EAB3; LT BBBsf Affirmed; previously at BBBsf La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A PAL3006961A4; LT BBBsf Affirmed; previously at BBBsf KEY RATING DRIVERS Sovereign LC IDR: As of Feb. 6, 2020, Panama's Issuer Default Ratings were affirmed at 'BBB', the Outlook was revised to Negative from Stable and the Country Ceiling is 'A'. According to Fitch's 'Structured Finance and Covered Bonds Country Risk Rating Criteria' the ratings of Structured Finance notes cannot exceed the CC of the country of the assets, unless the transfer and convertibility (T&C) risk is mitigated. For the La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A Notes, La Hipotecaria Tenth Mortgage Trust Series A Notes & IO Notes, the transactions have sufficient credit enhancement to be rated above the country's IDR, the T&C risk is not mitigated, so the ratings remain constrained by the country ceiling and ultimately linked to the ratings of Panama. For the La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B & C Notes, the transactions are constrained by the country's IDR due to the underlying portfolios of mortgages having a high dependence on the public sector and in the case of the Twelfth, exposure to subsidies granted by the government of Panama. Asset Analysis: La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A Notes As of Jan. 31, 2020 The portfolio is composed of 1,789 mortgage loans. The average OLTV for the portfolio is 92.7% while the average CLTV is 59.2%. Delinquencies are maintained at low levels due to the fact that 54.5% of the current portfolio benefits from direct deduction on the borrower pay checks. As of Jan. 31, 2020, of the 85 loans that have reached a delinquency level of 180+ days, cumulative +180-day delinquency level has only reached 2.07% of the original pool balance, lower than expected by Fitch. Prepayments have been in line with Fitch expectation averaging 4.8% over the life of the transaction and 3.3% over the past 12 months. La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B and C Notes The current portfolio is composed of 2,059 mortgage loans. The average OLTV for the portfolio is 83.5% while the average CLTV is 69.1%. Delinquencies are maintained at low levels due to the fact that 76.8% of the current portfolio benefits from direct deduction on the borrower pay checks. Cumulative +180-day delinquency level has only reached 0.03% of the original pool balance, lower than the .4% initially assumed by Fitch for the base case for the same period of time. As of Jan. 31, 2020, only 1 loan has reached a delinquency level of 180+ days. Prepayments have been in line with Fitch expectation averaging 4.5% over the life of the transaction. La Hipotecaria Tenth Mortgage Trust Series A Notes & Interest Only Notes The portfolio is composed of 2,188 mortgage loans. The average OLTV for the portfolio is 94.1% while the average CLTV is 63.6%. Delinquencies are maintained at low levels due to the fact that 58.5% of the current portfolio benefits from direct deduction on the borrower pay checks. Cumulative +180-day delinquency level has only reached 1.27% of the original pool balance, lower than expected by Fitch. As of Jan. 31, 2020, 62 loans that have reached a delinquency level of 180+ days. Prepayments have been in line with Fitch expectation averaging 4.9% over the life of the transaction and 5.0% over the past 12 months. La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes The portfolio is composed of 2,056 mortgage loans. The average OLTV for the portfolio is 91.1% while the average CLTV is 68.3%. Delinquencies are maintained at low levels due to the fact that 68.3% of the current portfolio benefits from direct deduction on the borrower pay checks. Cumulative +180-day delinquency level has only reached 1.26% of the original pool balance, lower than the 3.5% initially assumed by Fitch for the base case for the same period of time. As of Jan. 31, 2020, 38 loans that have reached a delinquency level of 180+ days. Prepayments have been in line with Fitch expectation averaging 4.6% over the life of the transaction and 5.2% over the past 12 months. Cash Flow Analysis: La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A Notes Credit Enhancement has increased due to the sequential nature of the structure. As of Jan. 31, 2020, CE has increased to 52.4% up from 47.0% observed during the same month of last year. Stability in the excess spread along with good asset performance has also helped to improve this metric. La Hipotecaria Tenth Mortgage Trust Series A Notes & Interest Only Notes Credit Enhancement has increased during the last year due to the sequential nature of the structure. As of Jan. 31, 2020, CE has increased to 43.7% up from 36.8% observed during the same month of last year. Stability in the excess spread along with good asset performance has also helped to improve this metric. La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes Credit Enhancement has increased during the last year due to the sequential nature of the structure. As of Jan. 31, 2020, CE has increased to 19.0% up from 15.6% observed during the same month of last year. Credit enhancement continues to increase as expected considering the frequency of the fiscal credit payments. Fitch expects the credit enhancement level will continue to increase as fiscal credits are received and applied to the outstanding principal balance. La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B & C Notes Credit Enhancement has increased during the last year due to the sequential nature of the structure. As of Jan. 31, 2020, CE for the class A notes has increased to 8.9% up from 8.0% observed at closing in February. The CE levels for the class B notes has increased to 2.3% up from 2.0% and class C notes have increased to .1% from 0.0%. Operational Risk: Pursuant to the servicer agreement, Grupo ASSA, S.A. (the primary servicer) which is rated 'BBB-'/Stable by Fitch has hired Banco La Hipotecaria, S.A. (the sub-servicer) to be the servicer for the mortgages. Fitch has reviewed Banco La Hipotecaria's systems and procedures and is satisfied with its servicing capabilities. These capabilities are also demonstrated through historical asset performance. Also, Banco General S.A. which is rated 'BBB+'/Stable by Fitch has been designated as back-up servicer in order to mitigate the exposure to operational risk, and will replace the defaulting servicer within five days of a servicer disruption event. Credit Quality: La Hipotecaria Panamanian Mortgage Trust 2007-1 Certificates The rating assigned to the 2007-1 unenhanced certificates is commensurate with the credit quality of the Series A Notes of La Hipotecaria's Eight Mortgage-Backed Notes Trust. La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1 Certificates The rating assigned to the 2014-1 A-1 certificates is commensurate with the credit quality of the guarantee provider. The credit quality of the U.S. Development Finance Corporation (DFC) is directly linked to the U.S. sovereign rating (AAA/F1+/Stable), as guarantees issued by, and obligations of, DFC are backed by the full faith and credit of the U.S. government, pursuant to the Foreign Assistance Act of 1969. La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2 Certificates The rating assigned to the 2014-1 A-2 certificates the timely payment of interest and ultimate payment of principal relies on the Series A Notes of La Hipotecaria's Twelfth Mortgage-Backed Notes Trust. La Hipotecaria Trust 2019-2 Certificates The 2019-2 certificates are a repackaging of the La Hipotecaria Fourteenth Mortgage-Backed Notes Trust series A notes, therefore the rating assigned to the 2019-2 certificates is commensurate with the credit rating of the La Hipotecaria Fourteenth Mortgage-Backed Notes Trust series A notes, which carry a rating of 'BBBsf'/Outlook Negative. The interest received from the underlying notes is expected to be sufficient to cover the expenses and coupon payments due for the certificates. Counterparty Risks: Issuer Account Bank is Banco General (LT IDR BBB+). Replacement language is included on the transaction documents as well as a rating threshold for this counterparty of BBB and replacement timing of 60 days. RATING SENSITIVITIES The ratings of the La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A Notes, La Hipotecaria Tenth Mortgage Trust Series A Notes & IO Notes, La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B and C Notes are sensitive to changes in the credit quality of Panama (especially its country ceiling [CC]). An upgrade or downgrade of Panama's ratings, specifically its CC, could lead to an upgrade or downgrade on the notes. In addition, severe increases in foreclosure frequency as well as reductions in recovery rates could lead to a downgrade of the notes. The ratings of the La Hipotecaria Panamanian Mortgage Trust 2007-1 - 2007-1 Certificates, La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1 and A-2 Certificates and La Hipotecaria Trust 2019-2 - 2019-2 Certificates are sensitive to changes in the credit quality of the Series A Notes. ===================== P U E R T O R I C O ===================== GONZALEZ & COLON: March 26 Hearing on Disclosure Statement ---------------------------------------------------------- Judge Edward A. Godoy has scheduled a hearing on the approval of disclosure statement filed by Gonzalez & Colon Investment Group Inc. for March 26, 2020 at 9:30 a.m. at the United States Bankruptcy Court, Southwestern Divisional Office, MCS Building, Second Floor, 880 Tito Castro Avenue, Ponce, Puerto Rico. Objections to the form and content of the disclosure statement must be in filed and served not less than 14 days prior to the hearing. As reported in the Troubled Company Reporter, Gonzalez & Colon Investment Group Inc. filed a plan of reorganization. The source of payments under the proposed plan shall come from the operation of Debtor's business. There are no general unsecured claims. A full-text copy of the Disclosure Statement dated Jan. 31, 2020, is available at https://tinyurl.com/v85qtnk from PacerMonitor.com at no charge. Counsel for the Debtor: Miriam A. Murphy-Lightbourn PO Box 372519 Cayey, Puerto Rico 00737 Tel: 787-263-2377 Email: mamurphyli82@gmail.com About Gonzalez & Colon Investment Group Gonzalez & Colon Investment Group Inc., is authorized by Puerto Rico Department of State to operate as a privately owned corporation. It Debtor classifies as single asset property, constituting a single property with 4 commercial units, that generates substantially all of the gross income of the debtor. Gonzalez & Colon Investment Group sought Chapter 11 protection (Bankr. D.P.R. Case No. 19-05905) on Oct. 11, 2019. Miriam A. Murphy-Lightbourn, Esq., at MIRIAM A. MURPHY & ASSOCIATES PSC, is the Debtor's counsel. SAN JUAN ICE: Court Confirms Amended Plan ----------------------------------------- Judge Mildred Caban Flores has confirmed and approved the Amended Plan of Reorganization and Disclosure Statement proposed by San Juan Ice Inc. The Amended Plan was filed on Sept. 9, 2019. Payments and distributions under the Plan will be funded by income generated from the sales from the ice plant performed by debtor. Under the Plan, Class 1 secured claim to CRIM will be paid within five years of the filing of the petition, and secured creditor Symetric Engineering will be paid in full as an impaired claim commencing 5 years of the filing date in monthly payments within 5 years thereafter via payment schedule, to be modified and stipulated via settlement with secured creditor. Class 2 Priority claims to the Puerto Rico Treasury Department in the amount of $86,673 to the Puerto Rico Department of Labor, 6,039 and $16,126 will be paid with five years. Class 3 unsecured claims filed by creditor will be paid after the payment of all secured and priority claims. General Unsecured claims shall be paid 21% of their value of the claim. A copy of the Disclosure Statement dated Sept. 9, 2019, is available at https://tinyurl.com/yxm45rdu A copy of the January 2020 Order Confirming the Plan is available at https://tinyurl.com/t4nr2n2 from PacerMonitor at no charge. About San Juan Ice Inc. San Juan Ice Inc., based in San Juan, PR, sought Chapter 11 protection (Bankr. D.P.R. Case No. 18-01784) on April 3, 2018. In the petition signed by Ramiro Rodriguez Pena, president, the Debtor disclosed $580,495 in assets and $1.17 million in liabilities. The Hon. Mildred Caban Flores oversees the case. Robert Millan, Esq., at Millan Law Offices, serves as bankruptcy counsel to the Debtor. ********* 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. 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