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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, March 9, 2020, Vol. 21, No. 49
Headlines
B R A Z I L
BRAZIL: Coronavirus May Disrupt Car Production, Says ANFAVEA
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Mines Roll Back Operations as Market Dwindles
G U Y A N A
GUYANA: Opposition Urges Calm From Supporters
J A M A I C A
JAMAICA: Local Mining Sector to Feel Impact of COVID-19
P A N A M A
BAC INT'L: Moody's Cuts LT Deposit Ratings to Ba1, Outlook Stable
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Manufacturers Brace For 'Corona' Lash
V E N E Z U E L A
VENEZUELA: Plans to Sell Shares in CAF Dev't Bank to Pay Debt
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B R A Z I L
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BRAZIL: Coronavirus May Disrupt Car Production, Says ANFAVEA
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Richard Mann at Rio Times Online reports that the National
Association of Motor Vehicle Manufacturers (ANFAVEA) said that the
production of vehicles may be stopped due to a shortage of parts.
The coronavirus epidemic, which began in China, has led to a
reduction in shipments to Brazil, 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.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Mines Roll Back Operations as Market Dwindles
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Dominican Today reports that some companies in the local mining
sector have suspended part of their operations on a dwindling
market to sell ferronickel, due to mobility and transport
restrictions in China to prevent the expansion of coronavirus.
"These suspensions have been until there is greater certainty in
the international market," said Dominican Republic Industries
Association (AIRD) executive vice president Circe Almanzar at a
business breakfast, according to Dominican Today.
In that regard, AIRD president Celso Juan Marranzini warned that
the effect of this virus on the world economy will negatively
impact the national economy, which is why he expects the Central
Bank will enact monetary measures as it has done in similar
situations, the report notes.
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).
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G U Y A N A
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GUYANA: Opposition Urges Calm From Supporters
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RJR News reports that Guyana's main opposition People's Progressive
Party (PPP) urged supporters to remain calm and act in a peaceful
manner after they staged a fiery protest in Berbice and along the
East Coast as the country awaits the final results of regional and
general elections.
The supporters blocked the road with burning tyres demanding the
resignation of President David Granger, according to RJR News.
Media reports said in one instance, a school bus was attacked and
four children injured, the report notes.
In a video statement, PPP General Secretary Bharrat Jagdeo said,
while he could understand the sense of frustration among citizens,
they should remain calm and stay at home while the party works to
ensure their is no discrepancy with the election results, the
report relays.
Cathy Hughes, a member of the executive of the ruling Alliance for
Change, also expressed concern about the outbreak of violence. She
said she was disappointed by the level of violence that has been
"transmitted live all across the world" and urged "peace and calm,"
the report discloses.
Other Countries Concerned
Meanwhile, the U.S. and other countries say they are concerned
about credible allegations of fraud in Guyana's election, the
report notes.
US Western Hemisphere affairs official Michael Kozak said no
candidate should declare victory or be sworn in while serious
questions remain, the report discloses.
President Granger defended a narrow parliamentary majority against
the PPP, the report says.
Mr. Granger declared victory, but observers said official results
for a key region were not credible, the report adds.
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J A M A I C A
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JAMAICA: Local Mining Sector to Feel Impact of COVID-19
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RJR News reports that the ripple effects of the coronavirus
outbreak in China have now reached Jamaica's mining sector.
As China's reels from the virus which has disrupted economic
activity the Jamaican Government says there will be implications
for the resumption of operations at the JISCO/Alpart alumina
refinery in Nain, St. Elizabeth, according to RJR News.
The report notes that Mining Minister Robert Montague last night
revealed that preparations for the company to restart operations
are being delayed because of the coronavirus outbreak.
The Mining Minister, who was responding to questions posed by
Member of Parliament Phillip Paulwell during the meeting of
Parliament's Standing Finance Committee also outlined details of
the negative implications for the reopening of JISCO/Alpart, the
report relays.
Late last year, news came that operations at JISCO/Alpart would be
suspended for up to two years to facilitate the plant's
modernization and expansion, the report discloses.
IMF
Meanwhile, the International Monetary Fund (IMF), has announced
US$50 billion in funding for countries hit by the coronavirus, the
report says.
The organization also warned that the outbreak had already pushed
this year's global economic growth below last year's levels, the
report notes.
The emergency measure came after the virus spread rapidly outside
China to more than 70 countries, the report says.
The report discloses that the IMF said it is making the money
available to help poor and middle-income countries with weak health
systems respond to the epidemic.
At the same time, the fund said the spread of the coronavirus has
erased expectations of stronger economic growth this year, and
will push 2020 global output gains to their slowest rate since the
financial crisis in 2008, the report relays.
Earlier, the World Bank committed $12 billion in aid for developing
countries grappling with the spread of the coronavirus, the report
notes.
The emergency package included low-cost loans, grants and technical
assistance, the report adds.
About Jamaica
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings in September 2019 raised its long-term foreign and
local currency sovereign credit ratings on Jamaica to 'B+' from
'B'. The outlook is stable. At the same time, S&P Global Ratings
affirmed its 'B' short-term foreign and local
currency sovereign credit ratings on the country. S&P Global
Ratings also raised its transfer and convertibility assessment to
'BB-' from 'B+'.
RJR News reported in June 2019 that Steven Gooden, Chief Executive
Officer of NCB Capital Markets, warned that the increasing
liquidity in the Jamaican economy might result in heightened risk
to the financial market if left unchecked. This, he said, is
against the background of the local administration seeking to
reduce the debt to GDP to 60% by the end of the 2025/26 fiscal
year, which will see Government repaying more than J$600 billion
which will get back into the system, according to RJR News.
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P A N A M A
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BAC INT'L: Moody's Cuts LT Deposit Ratings to Ba1, Outlook Stable
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Moody's Investors Service has downgraded the long-term local and
foreign currency deposit ratings of Panama-domiciled BAC
International Bank, Inc (BAC) to Ba1 from Baa3, and changed the
outlook on the ratings to stable from negative. Moody's also
downgraded the bank's standalone baseline credit assessment (BCA)
and adjusted BCA to ba1 and baa3.
The following ratings and assessments were downgraded:
Issuer: BAC International Bank, Inc
Baseline credit assessment and adjusted baseline credit
assessment, to ba1 from baa3
Long term local and foreign currency deposit ratings, to Ba1
from Baa3, outlook changed to stable from negative
Short term local and foreign currency deposit ratings, to Not
Prime from Prime-3
Long-term foreign currency counterparty risk rating, to Baa3
from Baa2
Short-term foreign currency counterparty risk rating, to
Prime-3 from Prime-2
Long-term counterparty risk assessment, to Baa3(cr) from
Baa2(cr)
Short-term counterparty risk assessment, to Prime-3(cr)
from Prime-2(cr)
Outlook, Changed to stable from negative
RATINGS RATIONALE
The downgrade of BAC's ratings reflects the relatively weak
operating conditions in the countries where it operates, which lead
to the bank's ratings to be more appropriately positioned at the
Ba1 level, despite its still strong financial fundamentals. The
main challenges have arisen in BAC's operations in Costa Rica (B2
stable), its largest subsidiary with 28% of the loan book, and
Nicaragua (B3 stable), which nevertheless represent just 5% of the
bank's loan exposure. The sovereign ratings on these two countries
were recently downgraded by Moody's, due to the weakening fiscal
position in Costa Rica and due to weaker economic strength and
reduced access to funding in the case of Nicaragua, coupled with
still subdued economic growth, all of which leads to its assessment
of weaker operating conditions for BAC.
After this rating action, BAC continues to be rated significantly
above most of the sovereign ratings of the countries where it
operates, because nearly 56% of the bank's loan portfolio is
located at B-rated countries (Costa Rica, Honduras, El Salvador and
Nicaragua). BAC's sizeable exposure to Panama (Baa1 stable, 24% of
the loan portfolio) and to a lesser extent Guatemala (Ba1 stable,
20%), the benefits from its geographical and business
diversification, and its continued strong financial performance
despite recent deterioration continues to support the bank's
ratings.
BAC's consolidated non-performing loan (NPLs) ratio rose to a still
low 1.5% as of December 2019, from 1.3% as of year-end 2018 and
1.2% in 2017. At the same time, the NPL ratio at BAC's Costa Rican
subsidiary increased to 2.3%%, from 1.5% in 2018 and 1.3% in 2017.
Consolidated loan restructurings also spiked to 2.7% of gross loans
in December 2019 from 2.4% in 2018 and 1.4% in 2017, indicating
still seasoning asset risks. This is partly mitigated by a strong
consolidated coverage of NPLs with reserves, at 2.0 times.
Higher credit costs driven by the deterioration in asset risk have
affected BAC's profitability, but it has continued to report robust
earnings, with a return on tangible assets of 1.7% as of December
2019, slightly lower than the 1.8% of 2018. Moody's expects ample
net interest margins and robust fee income to continue to support
the bank's profitability.
BAC is funded by a broad base of customer deposits, consistent with
its well-established banking franchise in the region, which
significantly reduces refinancing and repricing risks. As a result,
market funding needs remain contained at around 14% of total
assets. This, combined with adequate liquidity buffers at a quarter
of the balance sheet as of December 2019, further supports BAC's
financial flexibility.
Moody's assumes a very high probability of affiliate support to BAC
from Banco de Bogotá S.A. in the case of need. This assumption is
based on BAC's relevance in Banco de Bogotá S.A.'s regional
footprint and earnings generation, illustrated by the bank's
significant contribution to the parent's profitability. However,
BAC derives no rating uplift from affiliate support because Banco
de Bogota S.A.'s ba1 adjusted BCA is already at the level of BAC's
BCA.
Moody's does not have any particular concerns with BAC's
governance, and therefore does not apply any corporate behavior
adjustment to the bank's ratings. The company shows an appropriate
risk management framework commensurate with its risk appetite.
WHAT COULD CAUSE THE RATINGS TO MOVE UP OR DOWN
The rating could be upgraded if there were a material and sustained
improvement in the operating conditions of BAC's main countries of
operation, provided that the bank sustains its solid financial
performance.
The ratings could be downgraded if there were a deterioration in
the bank's operating environment, especially in Costa Rica, leading
the bank's asset quality to sustained deterioration and if its
profitability and capitalization declined significantly.
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
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T R I N I D A D A N D T O B A G O
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TRINIDAD & TOBAGO: Manufacturers Brace For 'Corona' Lash
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Trinidad Express reports that the Trinidad and Tobago Manufacturers
Association (TTMA) is bracing for the impact of the coronavirus on
trade which is expected to be felt within the next four to six
weeks when supplies of raw materials from China will either be
halted or slowed.
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V E N E Z U E L A
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VENEZUELA: Plans to Sell Shares in CAF Dev't Bank to Pay Debt
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Globalinsolvency.com, citing Reuters, reports that Venezuela is
planning to sell some of its shares in the CAF Latin American
development bank to pay down its debt with the lender,
representatives of the South American country's opposition said.
The sale was expected to be discussed at a meeting of the CAF's
board, said two opposition lawmakers and a member of a committee
named by the opposition to restructure the country's debt, who
warned that the move would jeopardize the crisis-stricken nation's
economic recovery, according to Globalinsolvency.com.
"We have learned that the CAF wants to buy shares from Venezuela
equivalent to our country's debt, to clean its balance sheet and
wipe out the debt," Julio Borges, a lawmaker living in exile and
serving as opposition leader Juan Guaido's chief overseas
representative, wrote on Twitter, the report notes.
In December, Venezuela failed to pay the CAF some $400 million in
outstanding debt, prompting rating agencies to downgrade the
lender, the report adds.
Venezuela
Venezuela, officially the Bolivarian Republic of Venezuela, is a
country on the northern coast of South America, consisting of a
continental landmass and a large number of small islands and
islets in the Caribbean sea. The capital is the city of Caracas.
Hugo Chavez was president to Venezuela from 1999 to 2013. The
Chavez presidency was plagued with challenges, which included a
2002 coup d'etat, a 2002 national strike and a 2004 recall
referendum. Nicolas Maduro was elected president in 2013 after
the death of Chavez. Maduro won a second term at the May 2018
Venezuela elections, but this result has been challenged by
countries including Argentina, Chile, Colombia, Brazil, Canada,
Germany, France and the United States who deemed it fraudulent and
moved to recognize Juan Guaido as president.
The presidencies of Chavez and Maduro have challenged Venezuela
with a socioeconomic and political crisis. It is marked by
hyperinflation, climbing hunger, poverty, disease, crime and death
rates, social unrest, corruption and emigration from the country.
Standard and Poor's long- and short-term foreign currency
Sovereign credit ratings for Venezuela stands at 'SD/D' (November
2017).
S&P's local currency sovereign credit ratings on the other hand
Are 'CCC-/C'. The May 2018 outlook on the long-term local currency
sovereign credit rating is negative, reflecting S&P's view that
the sovereign could miss a payment on its outstanding local
currency debt obligations or advance a distressed debt exchange
operation, equivalent to default.
Moody's credit rating (long term foreign and domestic issuer
ratings) for Venezuela was last set at C with stable outlook
(March 2018).
Fitch's long term issuer default rating for Venezuela was last set
at RD (2017) and country ceiling was CC. Fitch, on June 27, 2019,
affirmed then withdrew the ratings due to the imposition of U.S.
sanctions on Venezuela.
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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
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Information contained herein is obtained from sources believed to
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contact Peter A. Chapman at 215-945-7000.
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