/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/200414.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 Tuesday, April 14, 2020, Vol. 21, No. 75 Headlines A R G E N T I N A ARGENTINA: Fernandez Extends Coronavirus Lockdown for Big Cities ARGENTINA: Fitch Upgrades LT IDR to 'CC' ARGENTINA: Puts Off Payments on $10 Billion In Local-Law Debt B R A Z I L ROTA DAS: Moody's Withdraws Ba3/A1.br CFR for Business Reasons SUNCOKE ENERGY: Moody's Affirms B1 CFR, Alters Outlook to Neg. TUPY SA: Fitch Affirms LT IDR at 'BB', Outlook Stable [*] S&P Revises Outlook on 29 Brazilian Corporations to Stable D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Construction Sector Demands Aid for Workers J A M A I C A JAMAICA: BOJ Reports Increase in NIR P U E R T O R I C O RENT-A-CENTER INC: Egan-Jones Cuts Sr. Unsec. Debt Ratings to B+ V E N E Z U E L A PETROLEOS DE VENEZUELA: Bond Transactions Blocked Until July 22 PETROLEOS DE VENEZUELA: Increases Oil Storage Capacity With CNPC X X X X X X X X LATIN AMERICA: Mobilizing to Deal With Hunger Amid Pandemic - - - - - ================= A R G E N T I N A ================= ARGENTINA: Fernandez Extends Coronavirus Lockdown for Big Cities ---------------------------------------------------------------- Argentina will extend the lockdown it has imposed as a measure to control the spread of the coronavirus for the country's major cities, President Alberto Fernandez said in a televised address. He did not specify when the lockdown, which was first mandated on March 20, would be lifted. He said the requirement that Argentines stay at home has helped control the rate of new infections. About Argentina Argentina is a country located mostly in the southern half of South America. It's capital is Buenos Aires. Alberto Angel Fernandez is the current president of Argentina after winning the October 2019 general election. He succeeded Mauricio Macri in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019 according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. As reported by the Troubled Company Reporter - Latin America on April 13, 2020, Fitch Ratings has downgraded Argentina's Long-Term Foreign-Currency Issuer Default Rating to 'RD' from 'CC' and its Short-Term Foreign-Currency IDR to 'RD' from 'C'. S&P Global Ratings also lowered its long- and short-term foreign currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC-/C'. S&P also affirmed the local currency sovereign credit ratings at 'SD/SD'. There is no outlook on 'SD' ratings. On April 9, the TCR-LA reported that Moody's Investors Service downgraded the Government of Argentina's foreign-currency and local-currency long-term issuer and senior unsecured ratings to Ca from Caa2. ARGENTINA: Fitch Upgrades LT IDR to 'CC' ----------------------------------------- Fitch Ratings has upgraded Argentina's Long-Term Foreign Currency Issuer Default Rating to 'CC' from 'RD' and Short-Term Foreign Currency IDR to 'C' from 'RD'. Argentina - LT IDR CC; Upgrade - ST IDR C; Upgrade - LC LT IDR RD; Affirmed - LC ST IDR RD; Affirmed - Country Ceiling CCC; Affirmed - Senior unsecured LT CC; Affirmed KEY RATING DRIVERS The upgrade of Argentina's foreign currency ratings follows the unilateral re-profiling via executive decree of locally issued foreign currency debt instruments, which Fitch deems to constitute the execution and completion of a distressed debt exchange (DDE). The 'CC' Long-Term Foreign Currency rating indicates a high probability of another default of some kind, either execution of a DDE with external bondholders or a missed payment. On April 5, Argentina's government issued a decree postponing payment on USD-denominated debt instruments issued under local law, including long-term BONARs and short-term LETES. These payments were pushed to Dec. 31, 2020, although the decree indicates that these could be paid at an earlier date should the executive determine that progress on broader efforts to ensure debt sustainability has been made. Fitch deemed this operation to constitute a DDE, in line with its published Sovereign Rating Criteria and downgraded the sovereign's Foreign Currency IDRs to 'RD' on April 6. Given the DDE was conducted unilaterally via executive decree rather than negotiations with creditors, Fitch deems the DDE to have effectively concluded. The 'CC' rating indicates probable default of some kind, either a DDE with holders of external bonds or a missed payment on these obligations, if negotiations are protracted. The authorities have indicated substantial relief from commercial creditors is needed to achieve sovereign debt sustainability, but have yet to submit a formal exchange offer. It remains highly uncertain how much of a loss creditor would be willing to accept, specifically the supermajorities of creditors needed to trigger collective action clauses. This poses risks of protracted negotiations and outright payment default, given the authorities have expressed narrowing appetite to keep servicing debt with international reserves. Argentina's Local Currency IDRs remain 'RD', given that the authorities have continued the strategy of swapping peso-denominated debt instruments on terms that Fitch has deemed distressed. ESG - Governance: Argentina has an ESG Relevance Score (RS) of 5 for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, as is the case for all sovereigns. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model. Argentina has a medium WBGI ranking at 52nd percentile, reflecting a recent track record of political transitions that have been peaceful but been accompanied by high policy uncertainty and macroeconomic instability; moderate control of corruption, government effectiveness and regulatory quality and rule of law; and above-average voice and accountability. ESG - Creditor Rights: Argentina has an ESG Relevance Score of 5 for Creditor Rights as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. The current rating action taken on Argentina reflects a 'distressed debt exchange' that constitute a default event, and Argentina has defaulted on its debt repeatedly in the past, for extended periods in some cases. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) In accordance with its rating criteria, Fitch's sovereign rating committee has not utilized the SRM and QO to explain the ratings, which are instead guided by the ratings definitions. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign Currency IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within Fitch's criteria that are not fully quantifiable and/or not fully reflected in the SRM. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Developments that alleviate financing constraints and enable the government to meet its debt service obligations on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Missed debt payment or signs of imminent default on commercial debt obligations. For example, a formal launch of a debt exchange proposal involving a material reduction in terms and taken to avoid a traditional payment default. BEST/WORST CASE RATING SCENARIO Ratings of Public Finance issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. KEY ASSUMPTIONS Fitch expects growth of the global economy, and that of key trading partner Brazil, in line with the projections outlined in the latest Global Economic Outlook (GEO). REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS Argentina has an ESG Relevance Score of 5 for Political Stability and Rights as World Bank Governance Indicators have the highest weight in Fitch's SRM and are highly relevant to the rating and a key rating driver with a high weight. Argentina has an ESG Relevance Score of 5 for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. Argentina has an ESG Relevance Score (RS) of 5 for Creditor Rights as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. The recent rating actions taken on Argentina reflect a 'distressed debt exchange' that constitutes a default event, and Argentina has defaulted on its debt repeatedly in the past, for extended periods in some cases. Argentina has an ESG Relevance Score of 4 for Human Rights and Political Freedoms as the Voice and Accountability pillar of the World Bank Governance Indicators are relevant to the rating and a rating driver. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). ARGENTINA: Puts Off Payments on $10 Billion In Local-Law Debt ------------------------------------------------------------- The Financial Times reports that Argentina unilaterally postponed until next year the payment on $10 billion of dollar-denominated debt governed by local law in what some analysts have called a technical default. The move has raised new concerns about Argentina's approach to debt restructuring as it negotiates the fate of $83bn in debt issued under foreign law, according to The Financial Times. Private sector investors holding that debt expect an offer to be made by the centre-left government of President Alberto Fernandez as soon as possible, the report relates. While some hope the decision to postpone payments on the local-law debt could provide Argentina with more room to deal with its foreign-law debt, which is vulnerable to unpredictable international lawsuits, others fear it could signal a more broadly aggressive stance that could result in a messy default, the report notes. About Argentina Argentina is a country located mostly in the southern half of South America. It's capital is Buenos Aires. Alberto Angel Fernandez is the current president of Argentina after winning the October 2019 general election. He succeeded Mauricio Macri in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019 according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. As reported by the Troubled Company Reporter - Latin America on April 13, 2020, Fitch Ratings has downgraded Argentina's Long-Term Foreign-Currency Issuer Default Rating to 'RD' from 'CC' and its Short-Term Foreign-Currency IDR to 'RD' from 'C'. S&P Global Ratings also lowered its long- and short-term foreign currency sovereign credit ratings on Argentina to 'SD/SD' from 'CCC-/C'. S&P also affirmed the local currency sovereign credit ratings at 'SD/SD'. There is no outlook on 'SD' ratings. On April 9, the TCR-LA reported that Moody's Investors Service downgraded the Government of Argentina's foreign-currency and local-currency long-term issuer and senior unsecured ratings to Ca from Caa2. =========== B R A Z I L =========== ROTA DAS: Moody's Withdraws Ba3/A1.br CFR for Business Reasons -------------------------------------------------------------- Moody's America Latina has withdrawn the Ba3/A1.br corporate family ratings of Rota das Bandeiras S.A. Prior to the withdrawal, the outlook on the rating was positive. The following ratings were withdrawn: Issuer: Rota das Bandeiras S.A. Corporate Family Ratings: Ba3 (Global Scale Rating), A1.br (National Scale Rating) RATINGS RATIONALE Moody's has decided to withdraw the ratings for its own business reasons. The last rating action on Rota das Bandeiras was taken on June 2019, when Moody's confirmed the Ba3 global scale rating and upgraded the national scale rating to A1.br from A3.br. The outlook was changed to positive from under review. Rota das Bandeiras S.A. is a privately managed toll road under concession, which include five roads throughout the Dom Pedro I corridor in the State of São Paulo for a total extension of 297 kilometers. The concession was awarded in 2009 for a period of 30 years. The company's main shareholders are Farallon Capital Management LLC and Mubadala Investment Company, Abu Dhabi, UAE that through a private equity fund control 85% of the company. The remaining 15% is owned by Odebrecht Rodovias S.A. SUNCOKE ENERGY: Moody's Affirms B1 CFR, Alters Outlook to Neg. -------------------------------------------------------------- Moody's Investors Service changed the rating outlook for SunCoke Energy Inc. to negative. At the same time, Moody's affirmed SunCoke's corporate family rating of B1, the probability of default rating of B1-PD and the B2 rating of senior unsecured notes of SunCoke Energy Partners, L.P. which are guaranteed by SunCoke. The Speculative Grade Liquidity Rating remains SGL-2. "The change in the outlook to negative reflects a significant deterioration in the North American steel industry conditions and the uncertainty around the company's cokemaking take-or-pay contracts expiring in 2020 and 2021," said Botir Sharipov, Vice President and lead analyst for SunCoke Energy Inc. Outlook Actions: Issuer: SunCoke Energy Partners, L.P. Outlook, Changed to Negative from Stable Issuer: SunCoke Energy, Inc. Outlook, Changed to Negative from Stable Affirmations: Issuer: SunCoke Energy Partners, L.P. Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD5) from (LGD4) Issuer: SunCoke Energy, Inc. Probability of Default Rating, Affirmed B1-PD Corporate Family Rating, Affirmed B1 RATINGS RATIONALE SunCoke's B1 corporate family rating reflects its still moderate leverage and relative earnings stability offered by its long-term take-or-pay contracts with pass-through provisions, offset by potential event risk related to high customer concentration, expiration of some of the contracts in 2020-2021 and challenging coal and steel industry conditions. The ratings acknowledge that despite the headwinds faced by the steel industry in the past few years, its customers continued to either take the contracted deliveries or make make-whole payments to the company. The company contracts allow for pass-through, with some variation in contract structure, of most costs, including metallurgical coal, the principal raw material input and largest cost component in the coke-making process. The ratings also acknowledge that the company's portfolio of efficient and technologically advanced coke batteries gives it a distinct competitive advantage over other aging cokemaking facilities in North America that are likely to continue to close due to environmental challenges and rising costs. Soft demand and the resulting downward pressure on steel prices in 2019 negatively impacted the profitability of SunCoke's customers, the three largest integrated steel producers in North America, with some, in response, cutting back production and announcing permanent closures such as AK Steel's Ashland Works facility. The steel industry conditions worsened further in 2020 prompting additional steelmaking capacity reductions as the rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines created a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The steel sector is a sector that will be affected by the shock given its sensitivity to end market demand, such as automotive, OCTG, general manufacturing and sentiment. More specifically, SunCoke's significant dependence on the steel industry, its customer concentration and exposure to the coal industry have left it more vulnerable to shifts in market sentiment in these unprecedented operating conditions. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Despite difficult steel industry conditions, Moody's assumes that SunCoke's customers will continue to honor their take-or-pay obligations under contracts as they have in the past. SunCoke generated $254 million in Moody's adjusted EBITDA and $53 million in free cash flow in 2019. Following the repayment of about $58m of debt, Debt/ EBITDA, as adjusted, stood at 3.2x at December 31, 2019. For 2020, Moody's expects the adjusted EBITDA in the range of $220-230 million as the incremental earnings from the Indiana Harbor over rebuild program will partially offset the EBITDA loss from the Murray Energy and Foresight Energy bankruptcies and overall lower logistics revenues. Moody's expects 2020 adjusted leverage in the range of 3.5-4x but track below 4x in 2021. Moody's also estimates that SunCoke will remain free cash flow positive in 2020. However, there is a significant uncertainty around the company's cokemaking business in the longer term given that 1) contracts representing 30% of its domestic cokemaking capacity expire in December 2020; 2) Haverhill 2 contract with AK Steel (550kt, 13% of capacity) expires in December 2021 and, Moody's believes, is unlikely to be renewed due to the permanent closure of Ashland Works and 3) North American EAFs continuing to take away market share from integrated steel producers. The negative outlook reflects a significant deterioration in the North American steel industry conditions, the uncertainty around the company's take-or-pay coke contracts expiring in 2020-2021 and the overall risk that the credit profile will deteriorate more meaningfully than currently expected. As a producer of coke and a supplier of key input ingredient for the steel industry, SunCoke is exposed to elevated environmental social and governance risks. SunCoke, like all producers of carbon-based products is subject to numerous regulations including environmental laws aimed at reducing greenhouse gas and air pollution emissions, among a number of other sustainability issues and will likely incur costs to meet increasingly stringent regulations. As of December 31, 2019, the company also had $55 million in obligations for coal workers' black lung benefits related to its legacy coal mining business. SunCoke's SGL-2 speculative grade liquidity rating reflects its good liquidity, supported by $97 million in cash as of December 31, 2019 and $245 million available under the $400 million revolving credit facility. Moody's expects SunCoke to be in compliance with the restrictive financial covenants under the credit agreement, which include maximum consolidated leverage ratio of 4.50x and a minimum consolidated interest coverage ratio of 2.50x. Substantially all assets that could be pledged are encumbered under the terms of the credit agreement and Moody's does not view asset sales as representing an additional source of liquidity. The B2 rating on SXCP's senior unsecured notes, which are guaranteed by SunCoke, reflect their relative position in the capital structure with respect to claim on collateral behind SunCoke's secured revolver. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade is unlikely in the near term but would be considered if the company's end markets show signs of improvement, coke contracts successfully renewed in 2020-2021 and Debt/ EBITDA, as adjusted by Moody's, were expected to be maintained below 2.5x. The ratings could be downgraded if liquidity were to deteriorate or if Debt/EBITDA, as adjusted, were expected to exceed and sustain above 4.0x. SunCoke Energy Inc. is the largest independent US based producer of coke, a key ingredient in the production of steel in blast furnace steel operations. The company owns and operates five metallurgical coke making facilities in the US, and also operates a cokemaking facility in Brazil on behalf of ArcelorMIttal (Baa3 Negative). The company's logistics business comprised of 4 terminals, provides handling and mixing services to steel, electricity utility, coke and coal producing and other manufacturing companies. The company generated $1.6 billion in revenues in 2019. The principal methodology used in these ratings was Steel Industry published in September 2017. TUPY SA: Fitch Affirms LT IDR at 'BB', Outlook Stable ----------------------------------------------------- Fitch Ratings has affirmed the ratings of Metalsa, S.A. de C.V., Nemak, S.A.B. de C.V. and Tupy S.A. The Rating Outlook was revised to Negative from Stable on the IDRs of Nemak to reflect Nemak's more limited rating headroom amid plummeting new vehicle auto part demand during 2020 and the uncertainty surrounding the velocity and extent of recovery in new vehicle sales once COVID-19 containment measures are lifted. The Rating Outlook of Metalsa and of Tupy is Stable as Fitch expects the company's financial profiles to remain within reasonable boundaries of their ratings. Tupy Overseas S.A. - Senior unsecured; LT BB; Affirmed Tupy S.A. - LT IDR BB; Affirmed - LC LT IDR BB; Affirmed - Natl LT AA(bra); Affirmed Metalsa, S.A. de C.V. - LT IDR BBB-; Affirmed - LC LT IDR BBB-; Affirmed - Senior unsecured; LT BBB-; Affirmed Nemak, S.A.B. de C.V. - LT IDR BBB-; Affirmed - LC LT IDR BBB-; Affirmed - Natl LT AA(mex); Affirmed - Senior unsecured; LT BBB-; Affirmed KEY RATING DRIVERS The duration of plant shutdowns will largely determine the extent to which suppliers' capital structure will weaken while the extent of the ripple effects of containment measures on employment and household wealth will fundamentally govern the speed with which suppliers can deleverage in the aftermath of the coronavirus pandemic. New vehicle sales are partly driven by replacement needs, which in the intermediate term supports increasing demand for new vehicles from depressed levels projected for 2020. A fundamental assumption of Fitch's rating case is that U.S. vehicle sales, which is the main driver of suppliers' cash flow, will embark on a recovering trajectory resulting in sales approaching Fitch's pre-shutdown expectations of approximately 16.6 million units by 2022 after declining by around 20% in 2020. That implies reaching a level of roughly around 13.5 million units in 2020. A second assumption is that supplier plant shutdowns will last for about six weeks on average. Fitch expects that efficient cost management will increase the companies' operating flexibility, which should allow them to adjust production to projected demand rapidly and generate positive FCF in 2021. The months following the manufacturing facilities' re-opening should allow Fitch greater visibility as to the magnitude of expected positive FCF generation and thus be able to determine appropriate rating action. A material extension in lockdown efforts would inevitably be leveraging and could result in negative rating actions. Nemak's Negative Outlook: The Negative Outlook on Nemak's ratings reflects the company's more limited rating headroom going into the plant shutdowns from a leverage standpoint. As of year-end 2019, Nemak's net debt/EBITDA, excluding IFRS16, stood at 1.9x. Fitch estimates that Nemak's EBITDA could decline by about 40% during 2020. This drop results in leverage expectations spiking to about 3.5x in 2020 before declining to around 2.5x in 2021 as new vehicle sales rebound from extremely depressed levels projected in 2020. Nemak's business position is strong as they are the sole supplier for about 90% of the products they sell. Their position should allow them to benefit from an ensuing uptick in sales once OEMs re-open facilities and economic activity improves. The company has strong liquidity, which should allow it to whether the downturn. In addition, Nemak is majority owned by Alfa, S.A.B. de C.V., one of Mexico's largest business groups, which enhances its financial flexibility to access funding. The Stable Outlook for Tupy's ratings reflects Fitch's view that the company will maintain under its base-case scenario its capital structure and liquidity commensurate with its rating boundaries. The agency estimates Tupy could generate negative FCF of BRL92 million (USD17 million) in 2020, and rebound to a positive BRL445 million (USD84 million) in 2021, once the company incorporates Teksid operations. Under this scenario, net EBITDA leverage would reach 2.7x in 2020, falling to 1.6x in 2021, from 0.9x in 2019. The company has implemented precautionary measures such as sending employees home in collective vacations. The acquisition of Teksid for EUR210 million from the Fiat Chrysler Association (FCA) is secured and will improve geographic and customer diversification, albeit increasing Tupy's dependence on FCA. Metalsa's Rating Outlook: The Stable Outlook on Metalsa's ratings reflects the strength of financial profile going into the plant shutdowns. They also reflect its position as an important supplier of chassis structures to pickup truck vehicle platforms, which Fitch expects will continue to remain as large contributors to the cash flow of Metalsa's customers. Metalsa's net debt/EBITDA is expected to spike to around 1.7x in 2020 from 0.9x in 2019 and to decline to around 1.3x in 2021. The company has strong liquidity and Fitch believes both Metalsa and Proeza, its shareholder, will be able to maintain their financial structures through the coronavirus pandemic crisis comparable with those of 'BBB' category rated credits, under said assumptions. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer - Supplier's operations are fully shut down for six weeks and gradually resume production over 2020; - U.S. light vehicle sales will decline approximately 20% during 2020 and trend up to around 16.5 million units by 2022. RATING SENSITIVITIES Metalsa Developments That May, Individually or Collectively, Lead to Negative Rating Action - A combination of increased leverage, lower EBITDA generation or negative FCF that pressures the company's credit profile; - Expectations of net debt/EBITDA above 1.5x or gross leverage above 2.0x on a sustained basis; - A material loss in market share. Developments That May, Individually or Collectively, Lead to Positive Rating Action - Fitch does not expect positive rating actions in the medium term, considering Metalsa's business and financial profile. However, an established business position as a global Tier 1 supplier and continued diversification away from its three main customers, in conjunction with low leverage levels, robust profitability and strong FCF could result in positive rating actions. Nemak Developments That May, Individually or Collectively, Lead to Negative Rating Action -- An extension in plant shutdowns which materially defers from deleveraging expectations of 2.4x by 2021 and 2x by 2022. -- An inability to progressively reduce gross and net debt in 2020 and into 2021 from an expected peak in 2Q20. -- Expectations of sustained net debt/EBITDA above 2.0x or gross leverage above 2.5x for a sustained period of time; -- A deterioration in the credit profile of Nemak's shareholder Alfa that would result in higher dividends and/or a weaker capital structure. -- A severe decline in demand for Nemak's products due to changes in technology or consumer preferences; Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Factors that could lead to a revision of the Outlook to Stable include: -- Expectations of a more moderate decline in U.S. vehicle sales than anticipated in 2020. -- Faster than anticipated deleveraging. Tupy Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Severe decline in American pick-up and truck production that leads to reduced demand for Tupy's products for a sustained period of time; -- FFO gross leverage above 3.5x for a prolonged period; -- EBITDA gross leverage above 4.0x sustainably; -- EBITDA net leverage above 3.0x on a recurring basis; -- Significant negative FCF, eroding the company's liquidity. Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Further expansion of Tupy's geographic footprint while improving FCF materially; -- FFO gross leverage below 2.5x; -- EBITDA gross leverage below 3.0x on a sustainable basis; -- EBITDA net leverage below 2.0x on a consistent basis; -- Maintenance of robust liquidity. BEST/WORST CASE RATING SCENARIO Best/Worst Case Rating Scenarios - Non-Financial Corporate: Ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Metalsa Sound Liquidity: Metalsa's liquidity is sound. The company has no significant debt maturities until 2023, when USD300 million of capital market debt is due. Short-term debt of USD92 million as of year-end 2019 was mostly composed of revolving credit lines and compares to USD92 million of cash. The company holds USD300 million of undrawn committed credit lines that will mature in 2021-2022 that provide additional liquidity support. Fitch does not anticipate Metalsa to post material FCF burn in 2020 and expects the company's net debt/EBITDA ratio to be within the rating sensitivities by 2021. This ratio stood comfortably at 0.9x as of year-end 2019. Nemak Sound Liquidity: Nemak company faces no significant debt maturities until 2024 when EUR500 million of notes are due. Cash was USD312 million and the company held USD404 million in undrawn committed credit lines maturing predominantly in 2022-2023 as of year-end 2019. Nemak maintains good access to bank lending and also benefits from enhanced financial flexibility as a subsidiary of Alfa, one of Mexico's largest business groups. Fitch does not anticipate Nemak to generate materially negative FCF in 2020. Nemak's leverage is projected to return to a level within sensitivities by 2022. Tupy Strong Liquidity Resisting the Pressure: Fitch believes Tupy's strong liquidity position could resist the pressure caused by the COVID-19-related restrictions under its base-case scenario. In December 2019, cash and marketable securities of BRL840 million covered 18.2x the short-term debt of BRL46 million. Fitch understands the company is taking measures to improve further its liquidity. Short-term debt is mostly related to trade finance, funding company's exports that are backed by receivables. Tupy's cash position is enough to cover total debt maturities until 2023. The company's main debt obligation is the USD350 million senior unsecured notes due July 2024, which represents 99% of its total debt. Tupy's acquisition of Teksid announced in late 2019, which is pending regulatory approval, is expected to be financed with a stand-by committed bridge loan. Upon the transaction's closing, Tupy will have 12 months to replace the loan with long-term funding. The agency expects the integration of Teksid to occur during the first-quarter of 2021. [*] S&P Revises Outlook on 29 Brazilian Corporations to Stable -------------------------------------------------------------- S&P Global revised its outlook to stable from positive on 29 Brazilian companies and one Peruvian company. S&P said, "On April 6, 2020, we revised our outlook on Brazil to stable from positive, which reflects diminishing prospects for an upgrade over the coming year due to the negative impact of the COVID-19 pandemic on the economy. We expect Brazil's GDP growth and fiscal performance to suffer in 2020 due to the pandemic and extraordinary government spending, before gradual economic recovery and fiscal consolidation resumes. We also assume slower-than-expected progress on the reform agenda to address structural fiscal vulnerabilities and to improve low medium-term GDP growth prospects. "The global scale 'BB-' rating on Brazil limits a large number of corporate and infrastructure ratings because of our belief that in an event of sovereign default, many of these entities would experience credit stress too." Issuers capped at the sovereign level (BB-) S&P said, "The sovereign rating limit adopts various forms for our rated portfolio of Brazilian corporations. We cap a large number of rated Brazilian entities at the 'BB-' long-term foreign currency sovereign rating. These issuers have intrinsic credit qualities (or stand-alone credit profiles [SACPs]) stronger than 'bb-', but the final ratings on them are, by virtue of the sovereign limit, 'BB-'. Thus, the outlook revision to stable on the sovereign led us to revise the respective outlooks on these entities back to stable too." This group includes all regulated utilities that S&P caps by the sovereign given their inherent exposure to the regulatory framework in the country. Also in this group are companies that don't pass our liquidity stress test in a hypothetical sovereign distress scenario: - Camil Alimentos S.A. - CESP-Companhia Energetica de Sao Paulo - Cosan S.A. - Cosan Ltd. - Cosan Lubrificantes e Especialidades S.A. - Cyrela Brazil Realty S.A. Empreendimentos e Participacoes - Rede D'Or Sao Luiz S.A. - MRS Logistica S.A. - EDP Espirito Santo Distribuicao de Energia S.A. - Neoenergia S.A. - Companhia de Eletricidade do Estado da Bahia - Companhia Energetica de Pernambuco (CELPE) - Companhia Energetica do Rio Grande do Norte - Energisa S.A. - Energisa Sergipe-Distribuidora de Energia S.A. - Energisa Paraiba-Distribuidora de Energia S.A. - Transmissora Alianca de Energia Eletrica S.A. Issuers with ratings limited to one to four notches above the sovereign These entities have a number of credit strengths that, in S&P's opinion, would somewhat insulate them from a potential sovereign stress. In this group, S&P has a wide array of entities, from companies with assets and clients mostly in Brazil but that have very low leverage (generally the weaker SACPs in this group), to companies with a global footprint or that are export-oriented with demand that doesn't correlate to Brazil's economy (the strongest SACPs in this group). S&P said, "We limit some ratings in this group--generally the highest--at one or two notches above Brazil's transfer and convertibility assessment (T&C, currently at 'bb+'), which is our assessment of the likelihood of the country imposing currency controls. Because the T&C assessment of a sovereign correlates with the sovereign rating, we assume that in a scenario of a sovereign upgrade, we would also upgrade the T&C assessment accordingly." The lower chance of a rating change at the sovereign level is therefore mirrored in these entities' stable outlooks: - Ache Laboratorios Farmaceuticos S.A - Ambev S.A. - Globo Comunicacao e Participacoes S.A. - Ultrapar Participacoes S.A. - Raizen Combustiveis S.A. and Raizen Energia S.A., jointly referred to as Raizen S.A. - Votorantim S.A. and its subsidiaries (Votorantim Cimentos S.A.; Nexa Resources S.A. and Nexa Resources Peru S.A.A.) The outlook change on Votorantim S.A. triggers the same action on Votorantim Cimentos S.A., Nexa Resources S.A., and its core Peruvian subsidiary, Nexa Resources Peru S.A.A., because of S&P's view of group support in a stress scenario. Government-owned entities Finally, S&P revised the outlooks to stable on two government-owned entities it rates in Brazil: - Eletrobras-Centrais Eletricas Brasileiras S.A. - Petroleo Brasileiro S.A. - Petrobras National scale ratings S&P said, "Finally, we have revised the outlook on the national scale rating on Ultrafertil S.A. to stable from positive. "We'll keep monitoring credit conditions and each sector's response to the coronavirus pandemic in the following weeks. Additionally, as information becomes available, we will test these entities' sensitivity to the updated economic conditions, which could potentially alter our conclusions on sovereign rating limits and the ratings." Ratings List Ratings Affirmed; Outlook Action To From Ache Laboratorios Farmaceuticos S.A. Issuer credit rating BB+/Stable/-- BB+/Positive/-- Ambev S.A. Issuer credit rating BBB/Stable/-- BBB/Positive/-- Camil Alimentos S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- CESP – Companhia Energetica de Sao Paulo Issuer credit rating BB-/Stable/-- BB-/Positive/-- Cosan Ltd. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Cosan Lubrificantes e Especialidades S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Cosan S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Cyrela Brazil Realty S.A. Empreendimentos e Participacoes Issuer credit rating BB-/Stable/-- BB-/Positive/-- EDP Espirito Santo Distribuicao de Energia S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Eletrobras – Centrais Eletricas Brasileiras S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Energisa S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Energisa Paraiba – Distribuicao de Energia S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Energisa Sergipe – Distribuicao de Energia S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Globo Comunicacao e Participacoes S.A. Issuer credit rating BB+/Stable/-- BB+/Positive/-- MRS Logistica S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Neoenergia S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Companhia de Eletricidade do Estado da Bahia Issuer credit rating BB-/Stable/-- BB-/Positive/-- Companhia Energetica de Pernambuco (CELPE) Issuer credit rating BB-/Stable/-- BB-/Positive/-- Companhia Energetica do Rio Grande do Norte Issuer credit rating BB-/Stable/-- BB-/Positive/-- Petroleo Brasileiro S.A. – Petrobras Issuer credit rating BB-/Stable/-- BB-/Positive/-- Raizen Energia S.A. Issuer credit rating BBB-/Stable/-- BB-/Positive/-- Raizen Combustiveis S.A. Issuer credit rating BBB-/Stable/-- BBB-/Positive/-- Rede D'Or Sao Luiz S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Transmissora Alianca de Energia Eletrica S.A. Issuer credit rating BB-/Stable/-- BB-/Positive/-- Ultrafertil S.A. Issuer credit rating National scale brAA/Stable/-- brAA/Positive/-- Ultrapar Participacoes S.A. Issuer credit rating BB+/Stable/-- BB+/Positive/-- Nexa Resources S.A. Issuer credit rating BB+/Stable/B BB+/Positive/B Nexa Resources Peru S.A.A. Issuer credit rating BB+/Stable/-- BB+/Positive/-- Votorantim Cimentos S.A. Issuer credit rating BBB-/Stable/-- BBB-/Positive/-- Votorantim S.A. Issuer credit rating BBB-/Stable/-- BBB-/Positive/-- =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Construction Sector Demands Aid for Workers ---------------------------------------------------------------- Dominican Today reports that the construction sector organized in the Dominican Chamber of Construction (Cadocon) and the Association of Home Builders and Promoters (Acoprovi) demanded that the Government include more than 300,000 workers in the sector in the state aid and subsidy programs adopted as part of measures to deal with the impact of the coronavirus on the country's workers. Both entities request to be received by the high-level commission on economy and employment in order to seek solutions for construction workers, who they say are not being considered in the measures indicated so far, according to Dominican Today. "We value the Government's effort for the aid delivery solutions and subsidies that it has arranged for a part of the population, in the face of the state of Emergency against the COVID-19 pandemic that our nation is experiencing. However, the proposed mechanisms do not include more than 300,000 mobile workers nationwide, who are being left out of the aid measures," they indicated in a statement obtained by the news agency. They explain that construction is the fastest growing product sector in the national economy, with 10.5% of gross domestic product (GDP), and contributed 19% of growth at the end of 2019, the report relates. The construction industry needs government support and recognition to be able to survive this crisis due to its essential impact on the economy and because it is a vital sector for the reactivation of economic dynamics once this is overcome, say the Caadocon and Acoprovi. "It is imperative that mechanisms be created that can be applied effectively," they indicate. They recall that, given the seriousness of the situation, the first thing they did was to call its members to suspend their operations before the government-mandated the cessation, notes the report. In addition, in order not to create propagation points, they have been recommended to stay in their homes and have disseminated and oriented their collaborators and members to adopt sanitary measures to protect health against COVID-19, reports the Dominican Today. However, they specify that if these measures are not accompanied by subsidies from the State, they will become unsustainable and they will not be able to continue the process of social distancing and isolation for a sector whose labor force live from work day by day in the different construction projects and whose work they have not been able to carry out in the current circumstances, the report adds. Measures The report relates that recently, the Government, through the Ministry of Finance, announced the expansion of social assistance programs by delivering food and non-carbonated beverages for a monthly value of RD $ 5,000 in two biweekly items of RD$2,500 each. In addition, the Employee Assistance Fund (FASE) was put into effect, through which it supports the worker with a monthly subsidy of RD$4,500 to RD$8,500 per month. Cadocon and Acoprovi indicated their willingness to help and to make the process as traumatic as possible. 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). The purchase and sale of the US dollar is at RD $ 54.00 (pesos) in the Dominican Republic ============= J A M A I C A ============= JAMAICA: BOJ Reports Increase in NIR ------------------------------------ RJR News reports that Jamaica had higher Net International Reserves (NIR) at the end of last month. The reserves amounted to US$3.2 billion, according to RJR News. According to data released by the Bank of Jamaica, that was a US$106 million increase over February, the report notes. The NIR was valued at 23 weeks of goods and services, 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. ===================== P U E R T O R I C O ===================== RENT-A-CENTER INC: Egan-Jones Cuts Sr. Unsec. Debt Ratings to B+ ---------------------------------------------------------------- Egan-Jones Ratings Company, on March 24, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Rent-A-Center Incorporated/TX to B+ from BB-. Rent-A-Center, Incorporated operates franchised and company-owned Rent-A-Center and ColorTyme rent-to-own merchandise stores. The Company's stores offer home electronics, appliances, furniture, and accessories under flexible rental purchase agreements. Rent-A-Center operates across the United States and Puerto Rico. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Bond Transactions Blocked Until July 22 --------------------------------------------------------------- UrduPoint News reports that the United States has blocked until July 22 any sale or transfer of debt held by US bondholders in Venezuela's state-owned oil company Petroleos de Venezuela, S.A. (PDVSA), to prevent the government of President Nicolas Maduro from seizing those bonds, according to a document posted online by the US Treasury Department. "Between October 24, 2019 and July 22, 2020 (the date the authorization in General License 5C becomes effective), there is no authorization in effect that licenses against subsection 1(a)(iii) of E.O. 13835 applicable to the holders of the PdVSA 2020 8.5 percent bond," the document said, according UrduPoint News. "As a result, during such period, transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8. 5 percent bond are prohibited, unless specifically authorized by OFAC, the report discloses. The US government issued an original order on October 24 to block through January 22 a creditor seizure of PdVSA's US subsidiary Citgo, whose shares were used as collateral for the bond issue, the report says. Venezuela opposition leader and self-proclaimed President Juan Guaido took control of Citgo in early 2019 after the US government recognized him as the country's legitimate leader, the report notes. After Guaido's takeover of Citgo, the bond went into default when a $913 million payment came due and he and his allies filed a US lawsuit requesting the bond be declared null, the report relates. The order issued effectively prevents creditors of PDVSA from seizing shares in the parent company of Citgo through July 22, the report adds. About PDVSA Founded in 1976, Petroleos de Venezuela, S.A. (PDVSA) is the Venezuelan state-owned oil and natural gas company, which engages in exploration, production, refining and exporting oil as well as exploration and production of natural gas. It employs around 70,000 people and reported $48 billion in revenues in 2016. As reported in Troubled Company Reporter-Latin America on June 3, 2019, Moody's Investors Service withdrew all the ratings of Petroleos de Venezuela, S.A. including the senior unsecured and senior secured ratings due to insufficient information. At the time of withdrawal, the ratings were C and the outlook was stable. Citgo Petroleum Corporation (CITGO) is Venezuela's main foreign asset. CITGO is majority-owned by PDVSA. CITGO is a United States-based refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. However, CITGO formally cut ties with PDVSA at about February 2019 after U.S. sanctions were imposed on PDVSA. The sanctions are designed to curb oil revenues to the administration of President Nicolas Maduro and support for the Juan Guaido-headed party. PETROLEOS DE VENEZUELA: Increases Oil Storage Capacity With CNPC ---------------------------------------------------------------- The Petrolera Sinovensa, SA, a joint venture in alliance with China National Petroleum Corporation (CNPC), attached to the Venezuelan Petroleum Corporation (CVP), successfully accomplished the installation and commissioning of two tanks (0002-TK-1003 y0002 -TK-1004) for handling degassed diluted wet crude oil for transfer, in order to increase autonomy and operational flexibility in the Orinoco Oil Belt (FPO) Hugo Chavez. The installation of the tanks adds 20,000 barrels to the storage and handling volumes of diluted wet crude oil from the deposits associated with the MPE-3 extraction area of the Carabobo Division in Morichal, Monagas state. The activity was carried out by Petrolera Sinovensa, SA with the support of the Morichal District and the company China Huanqiu Contracting & Engineering Corporation (HQC), and responds to the facilities restructuring plan, promoted by Petroleos de Venezuela, SA (PDVSA) to strengthen the effectiveness of production and operational expansion. About PDVSA Founded in 1976, Petroleos de Venezuela, S.A. (PDVSA) is the Venezuelan state-owned oil and natural gas company, which engages in exploration, production, refining and exporting oil as well as exploration and production of natural gas. It employs around 70,000 people and reported $48 billion in revenues in 2016. As reported in Troubled Company Reporter-Latin America on June 3, 2019, Moody's Investors Service withdrew all the ratings of Petroleos de Venezuela, S.A. including the senior unsecured and senior secured ratings due to insufficient information. At the time of withdrawal, the ratings were C and the outlook was stable. Citgo Petroleum Corporation (CITGO) is Venezuela's main foreign asset. CITGO is majority-owned by PDVSA. CITGO is a United States-based refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. However, CITGO formally cut ties with PDVSA at about February 2019 after U.S. sanctions were imposed on PDVSA. The sanctions are designed to curb oil revenues to the administration of President Nicolas Maduro and support for the Juan Guaido-headed party. =============== X X X X X X X X =============== LATIN AMERICA: Mobilizing to Deal With Hunger Amid Pandemic ----------------------------------------------------------- Javier Castro Bugarin, Carlos Meneses and Raul Martinez at EFE News report that the spread of the coronavirus in Latin America poses an additional challenge for the region that other parts of the world are not confronting: How to feed the 187 million people who don't have a guaranteed meal on the table? The quarantines governments throughout the region have decreed due to the pandemic, which are preventing many people from getting a square meal, have spurred social organizations, governments and anonymous citizens to contribute their efforts to guarantee that the most vulnerable sectors of society can get food to eat even as they are continuing to self-isolate with an eye toward limiting the spread of the virus, according to EFE News. ********* 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 * * *