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/raid1/www/Hosts/bankrupt/TCRLA_Public/200520.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, May 20, 2020, Vol. 21, No. 101 Headlines A R G E N T I N A ARGENTINA: Extends $65 Billion Offer After Bondholders Balk B R A Z I L AZUL SA: Net Debt Doubles as Coronavirus Hits Economy AZUL SA: S&P Lowers ICR to 'CCC+' on Ailing Capital Structure BADESC: Fitch Alters Outlook on BB- LongTerm IDR to Negative BANCO BMG: Moody's Alters Outlook on B1 Deposit Rating to Stable BRADESCO SEGUROS: Fitch Alters Outlook on 'BB' IFS Rating to Neg. BRDE: Fitch Alters Outlook on BB- LongTerm IDR to Negative GOL LINHAS: S&P Keeps 'B-' ICR on Watch Neg. on Liquidity Pressures USINA CORURIPE: S&P Lowers ICR to 'CCC', Outlook Negative D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Big Firms Reiterates Call to Extend Quarantine DOMINICAN REPUBLIC: Over 20 Basic Goods Post Higher Prices J A M A I C A JAMAICA: Date for Reopening Tourism Industry to be Announced Soon M E X I C O MEXARREND SAPI: S&P Lowers ICR to 'B', Outlook Stable P U E R T O R I C O CINKO CORP: Seeks to Hire Juan C. Bigas-Valedon as Counsel FERRELLGAS PARTNERS: Bryan Wright Quits as Chief Operating Officer JC PENNEY: Files Ch. 11 to Implement Financial Restructuring Plan T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Businesses Worry Over Long Closure TRINIDAD & TOBAGO: Investors Withdraw $2.6BB From Mutual Funds X X X X X X X X LATAM: ILO Says Over a Million Jobs to be Lost Across the Caribbean - - - - - ================= A R G E N T I N A ================= ARGENTINA: Extends $65 Billion Offer After Bondholders Balk ----------------------------------------------------------- Jorgelina Do Rosario and Scott Squires at Bloomberg News report that Argentina extended the deadline for bondholders to consider a $65 billion restructuring offer, buying time for more talks after the government failed to win enough support to reach a deal. The government is open to accepting offers that both allow the country to reach its debt sustainability goals and enhance creditor recoveries, according to a statement, Bloomberg News relays. Hours earlier, Argentina extended the deadline on its debt offer to May 22 from May 8 in a resolution published in the Official Gazette, Bloomberg News notes. Neither statement disclosed what percentage of investors accepted the original proposal. Argentina's dollar bonds climbed the most in three weeks after the government announced the extension, although the securities still trade near record lows as creditors brace for steep losses, Bloomberg News relays. "While many of our bondholders supported Argentina's invitation, other significant groups of creditors did not," the Economy Ministry said in the statement obtained by Bloomberg News. The new deadline aligns with the due date for $500 million of delayed interest payments, Bloomberg News notes. Failure to reach an agreement or pay the cash by that date would result in a default, Argentina's ninth in 200 years, Bloomberg News relays. To close the deal, the South American nation needs the support from creditors owning at least two-thirds of some of the outstanding bonds. Bonds edged higher on optimism the country can still avoid a hard default, Bloomberg News says. The government's debt team plans to speak with individual bondholders and creditor groups over the course of the week through video conferences, according to a person with direct knowledge of the matter who asked not to be named because the discussions are private, Bloomberg News notes. The deadline extension was first reported by Bloomberg. In its statement, the country said it would consider in good faith any proposal that meets its debt guidelines, including combinations of interest rates, capital reduction, grace periods and extension of maturities different from those that have been proposed, Bloomberg News says. The extension "will give the government time to revise its proposal on the basis of the feedback it has received," said Richard Segal, a senior analyst at Manulife Investment Management in London, which has $409 billion of assets, including Argentine debt, Bloomberg News notes. "Investors recognize that Argentina can't afford to pay much near- to medium-term." The bonds trade at deeply distressed levels near 30 cents on the dollar, Bloomberg News notes. Argentina's $4.5 billion in dollar notes due next year rose 2.2 cents to 33 cents on the dollar at market close in New York. Before the original deadline, the country's three largest creditor groups had already rejected the terms of the offer, which asked bondholders to take significant losses on interest and set a three-year grace period before any payments are made, Bloomberg News relays. Argentina had won the backing of the International Monetary Fund and academics including Joseph Stiglitz and Jeffrey Sachs, and insisted that even before the coronavirus pandemic began wrecking its economy, it was unable to pay what is owed, Bloomberg News notes. The South American country, which resolved its previous default just four years ago, lured billions of dollars of investment in 2016 after the inauguration of President Mauricio Macri, who had vowed to bring back economic growth, Bloomberg News discloses. Instead, the country saw a sharp plunge in the value of its currency, accelerating inflation and a severe economic contraction, Bloomberg News relays. He was voted out of office last year, replaced by the left-wing Fernandez, Bloomberg News notes. The agriculture-driven economy is poised to contract for a third-consecutive year in 2020, Bloomberg News relates. Officials are battling a widening gap between Argentina's official and unofficial exchange rates due to capital controls and annual inflation that's still hovering above 48%, Bloomberg News notes. "The government insists publicly that it wants to avoid a default but the current crisis offers the perfect excuse for President Alberto Fernandez to play hardball with Argentina's creditors," analysts at consulting firm Teneo wrote in a note, Bloomberg News discloses. The Province of Buenos Aires, which has followed the national government in submitting a proposal to rework $7 billion of its foreign debt, has given creditors to accept its initial offer, Bloomberg News says. The province's creditor group has panned the proposal, saying the deal represents a 60% loss to bondholders, Bloomberg News adds. About Argentina Argentina is a country located mostly in the southern half of South America. It's capital is Buenos Aires. Alberto Angel Fernandez is the 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 14, 2020, Fitch Ratings upgraded Argentina's Long-Term Foreign Currency Issuer Default Rating to 'CC' from 'RD' and Short-Term Foreign Currency IDR to 'C' from 'RD'. The TCR-LA reported on April 13, 2020, that 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 =========== AZUL SA: Net Debt Doubles as Coronavirus Hits Economy ----------------------------------------------------- Marcelo Rochabrun at Reuters reports that Brazil's No. 3 airline, Azul SA, saw its net debt jump by 94% in reais in the first quarter compared to a year ago, as the country's currency was battered even before the coronavirus crisis hit in full force. Azul's net debt rose to BRL17.9 billion (US$3.01 billion) compared to BRL11.8 billion a year ago, the company said, according to Reuters. Like many airlines, Azul has dollar-denominated liabilities, the report notes. Net debt measures a company's overall debt but subtracts whatever cash they have on hand at the moment, the report notes. The increased debt levels show that Azul's finances were already suffering in the leadup to the coronavirus crisis, even before travel was affected, the report relays. Brazil' real depreciated almost 30% in the first three months of 2020, initially at a time when the novel coronavirus was mostly set to affect China's economy, the report discloses. Such currency fluctuations disproportionately affect airlines, which receive their revenue in local currency but then pay for expenses, such as aircraft leases and fuel, in dollars, the report says. The currency fluctuations also led Azul to post a BRL6.14 billion loss in the quarter, compared to a profit of BRL125.3 million a year earlier, the report adds. As reported in the Troubled Company Reporter-Latin America on March 19, 2020, S&P Global Ratings placed its 'B+' global and 'brAA' national scale ratings on Azul S.A. on CreditWatch with negative implications, including the issuer credit and debt ratings. AZUL SA: S&P Lowers ICR to 'CCC+' on Ailing Capital Structure ------------------------------------------------------------- S&P Global Ratings, on May 18, 2020, lowered its global scale issuer credit and issue-level ratings on Azul S.A. to 'CCC+' from 'B', and the national scale issuer credit rating to 'brBB-' from 'brA-'. The recovery rating on the rated debt remains at '4' (40%). S&P said, "Azul's negotiations with BNDES, the Brazilian development bank, seem to be in advanced stages, but we don't have enough information about final terms and conditions of the proposed credit line. While on one hand the cash inflows should provide liquidity relief in the next 12 months, the BNDES loan also depends on the participation of other institutional investors and should include equity convertibility features, which depending on market interest and conversion ratios, could be deal breakers. "According to our base-case scenario, Azul's capital structure could become unsustainable in the medium term amid the lower demand for air travel, which could increase the likelihood of the company proposing a distressed debt exchange that we could view as a tantamount to a default. Azul's capital structure is overwhelmingly made up of operating leases, with about R$16 billion in lease liabilities in March 2020, including a short-term lease obligation of R$2.4 billion. On top of that, it has R$1 billion in short-term financial debt (excluding the OPIC debt). S&P said, "Despite Azul's sustainable business model, we understand that the company has a somewhat limited flexibility in its fleet structure in the next 12 months. In light of a demand contraction of about 50% in 2020 and slower-than-expected rebound in 2021, lessors will have to be even more supportive. Our base-case scenario assumes that 40% of Azul's fleet will remain grounded by the year-end." Environmental, social, and governance (ESG) factors relevant to the rating action: -- Health and safety BADESC: Fitch Alters Outlook on BB- LongTerm IDR to Negative ------------------------------------------------------------ Fitch Ratings has affirmed Agencia de Fomento do Estado de Santa Catarina S.A. - Badesc's Long- and Short-Term Local- and Foreign-Currency Issuer Default Ratings, long- and short-term national ratings, and Support Rating. Fitch has also revised the Rating Outlook on Badesc's international and national ratings to Negative from Stable. The rating action mirrors the recent action on Badesc's parent, the State of Santa Cantaria (Santa Catarina; Long-Term Foreign-Currency and Local-Currency IDRs at BB-/Negative). KEY RATING DRIVERS IDRS, NATIONAL RATINGS, SUPPORT RATINGS Badesc's IDRs and national ratings are driven by Fitch's expected support from its parent (Santa Cantarina State) and are equalized to the parent's ratings. Fitch considers Badesc as a core subsidiary in terms of financial services to the state, where Badesc focuses its operations. Fitch does not assign a Viability Rating to the institution, since according to Fitch's methodology, VRs are not usually assigned to development banks or to other FIs whose operations are largely determined by their policy roles. Badesc's SR is highly influenced by its role, along with the state, in Fitch's opinion. The institution is a development arm of the state's government, being an important entity in boosting the state's economic growth through lending to micro and small enterprises, as well as providing resources for municipalities under the administration of Santa Catarina State. The regulator is very active and imposes some limitations on the actions of the developing agencies in Brazil. In addition, the regulator imposes any state to be the majority shareholder in development agencies in Brazil. Therefore, Fitch believes it is also likely to favor support of a subsidiary by the parent in case of need. Therefore, group regulation is also a significant factor for Badesc's rating in Fitch's opinion. In its assessment, Fitch also considers the small size of the institution relative to the financial capacity of Santa Catarina; the fact that a potential sale of Badesc is very low; the high reputational risk that Badesc represents to the state; the high level of operational integration between both parent and subsidiary and the fact that it is a state-controlled institution. The SR of '3' takes into account the moderate likelihood, as defined in the criteria, that the parent will provide support if needed. This is because Santa Catarina's ratings are constrained by the Brazilian sovereign ratings, which in turn, constrain the state's capacity to provide support, even though its willingness to support would be high. The state has consistent revenue generation, with higher operating margins than its national peers. Since Badesc's ratings are driven by support, the issuer's intrinsic credit metrics have a limited impact on its ratings. Due to the global scenario of quick economic deterioration due to the coronavirus, the potential financial profile impact on Badesc will depend on the length and severity of measures to reduce the spread of the pandemic. Badesc has a dividend policy of full earnings distribution; however, part of this amount is returned to Badesc itself to provide subsidy for programs. Badesc's asset quality was adequate compared to the risks it takes. As of December 2019, the agency's D-H loans/gross loans ratio was 9.4% (8.0% in 2018 and 13.3% in 2017). Badesc's profitability has been at satisfactory levels since 2017. In 2019, the operating profits/RWA ratio stood at 4.0%, compared with 3.4% in 2018 and 5.8% in 2017. As a development agency, Badesc has limitations to diversify its funding base. The loan portfolio has been financed mainly by equity or on lending from official entities, such as BNDES (National Bank for Economic and Social Development) and FINEP (Financier of Studies and Projects). The company is highly capitalized and, given the limitations on raising funds from third parties, it has low leverage. Badesc's liquidity position is good. The agency has a significant amount invested in financial instruments with immediate liquidity to meet its obligations. As a development agency, Badesc must create and permanently maintain a liquidity fund equivalent to at least 10% of the value of its obligations to be fully invested in federal government securities. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: IDRS, NATIONAL RATINGS -- The ratings would be affected by further changes in Santa Catarina's ratings. -- The ratings could be affected by reduction of propensity from the Santa Catarina to support, which is not currently under Fitch's expectations. SUPPORT RATING -- If Santa Catarina's rating is downgraded to the single-B category, the SR would be downgraded to '4' from '3'. Factors that could, individually or collectively, lead to negative rating action/downgrade: IDRS, NATIONAL RATINGS -- Over the medium term, the ratings could benefit from a Rating Outlook revision to Stable or upgrade of Santa Catarina's ratings. SUPPORT RATING -- Improvements in SR are dependent on the upgrade of the parent. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions 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. 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. Agencia de Fomento do Estado de Santa Catarina S.A. - Badesc - LT IDR BB-; Affirmed - ST IDR B; Affirmed - LC LT IDR BB-; Affirmed - LC ST IDR B; Affirmed - Natl LT AA(bra); Affirmed - Natl ST F1+(bra); Affirmed - Support 3; Affirmed BANCO BMG: Moody's Alters Outlook on B1 Deposit Rating to Stable ---------------------------------------------------------------- Moody's Investors Service has affirmed Banco BMG S.A.'s B1/Not Prime, respectively long-and short-term global local and foreign currency deposit ratings, following the affirmation of its b1 baseline credit assessment. Moody's also affirmed BMG's Ba3/ Not Prime, respectively long and short-term global local and foreign currency counterparty risk ratings. At the same time, Moody's affirmed the bank's Baa1.br/BR-2 long- and short-term Brazilian national scale deposit ratings, as well as A1.br/BR-1 long and short-term national scale counterparty risk ratings. The outlook on BMG's ratings was changed to stable, from positive, reflecting Moody's assessment that the Brazilian economy will contract in 2020 as a result of the coronavirus outbreak, which will likely have a direct negative impact on BMG's and other Brazilian banks' asset quality and profitability. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The following ratings and assessments assigned to Banco BMG S.A. were affirmed: Long-term global local currency bank deposit rating affirmed at B1, outlook changed to stable, from positive Short-term global local currency bank deposit rating affirmed at Not Prime Long-term global foreign currency bank deposit rating affirmed at B1, outlook changed to stable, from positive Short-term global foreign currency bank deposit rating affirmed at Not Prime Foreign currency subordinate debt rating affirmed at B2 Long term local currency counterparty risk rating affirmed at Ba3 Short-term local currency counterparty risk rating affirmed at Not Prime Long term foreign currency counterparty risk rating affirmed at Ba3 Short term foreign currency counterparty risk rating affirmed at Not Prime Long-term counterparty risk assessment affirmed at Ba3(cr) Short-term counterparty risk assessment affirmed at Not Prime(cr) Long-term Brazilian local currency national scale deposit rating affirmed at Baa1.br Short-term Brazilian local currency national scale deposit rating affirmed at BR-2 Long term Brazilian local currency national scale counterparty risk rating affirmed at A1.br Short-term Brazilian local currency national scale counterparty risk rating affirmed at BR-1 Baseline credit assessment affirmed at b1 Adjusted baseline credit assessment affirmed at b1 Outlook Actions: Outlook changed to stable, from positive RATINGS RATIONALE The affirmation of BMG's ratings and assessments reflects the bank's leading market position in the payroll-linked credit card business, and its enhanced capital position following a recent public offering, which provides additional cushion against credit losses. At the same time, the bank's ratings also reflect the challenges BMG will face to consolidate its strategy and sustain earnings generation with record-low interest rates, higher funding costs and higher pressure on asset risk. BMG's payroll lending business also exposes the bank to regulatory changes that could affect the profitability of its business. In changing the outlook to stable, from positive, Moody's noted the deteriorating operating conditions for banks derived from disruptions to the economic activity caused by the coronavirus outbreak, and which will weaken asset quality and earnings generation, including BMG's. Sustained pullback in local consumption and extended closure of business will cause layoffs and weight on market sentiment. This challenging economic environment is creating strains for mid-sized banks, because of their less diversified loan book and revenue stream. The degree of the negative impact will depend on the length of the disruption and how it will affect unemployment and consumption, both still uncertain at this point. BMG's focus on low-risk payroll-related products helps mitigate credit risk, but about 25% of the bank's loans are unsecured personal loans and other commercial loans, which are more vulnerable to economic downturns such as the sharp contraction expected in 2020. The regulated nature of payroll related products also weights on the bank's profitability, as suggested by the recent reduction in payroll-lending rates introduced by the authorities as part of their credit support measures, which will hurt margins. Profitability metrics will likely come under further pressure, as low interest rates persist, lending and fee-related business volume decline, loan loss provisions and funding costs rise, given current high market volatility. BMG's current capital buffer, measured as Moody's tangible common equity to risk weighted assets (TCE/RWA) at 17.3%, provides adequate loss-absorption capacity as the bank's asset risk increases and profitability declines. BMG's problem loans increased to 3.99% in Q12020, from 3.75% in Q42019, already reflecting continued expansion into riskier unsecured consumer loans, which accounted for 7.3% of total loans, from 6.8% in December 2019 and 5.4% one year before. While about 70% of the loan book is composed on low risk payroll loans, Moody's views the unsecured personal loans as a high- risk asset class, as evidenced by delinquency rates that were as high as 27.6% in Q12020. Loans to corporates, even if collateralized, could also add pressure on the bank's asset risk considering current market conditions. BMG's profitability benefited from higher income from loans, lower credit and funding costs that offset higher personal expenses. Recurring bottom line increased by 31% when compared to Q42019, for a net income to tangible banking assets of 1.57% in Q12020. BMG's predominantly deposit based funding profile and positive tenor gap reinforces the bank's funding position. However, deposits are predominantly sourced from brokers, therefore exposing BMG to volatility. The bank has been focusing on expanding its proprietary digital distribution platform and on diversifying its funding base to reduce this vulnerability, as well as to enhance the term structure of its balance sheet to support its long-term loan portfolio. Under current conditions, BMG would have access to about BRL5 billion in liquidity facilities in the form of guaranteed bank notes from the central bank and guaranteed time deposits from large institutional investors and financial institutions. Its rating action reflects the potential deterioration in BMG's credit quality and profitability in the context of uncertain credit conditions, including the breadth and severity of the coronavirus pandemic, which limit the prospects for positive developments. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on BMG's BCA could result from material and sustainable generation of recurring earnings and further improvements in asset quality as the bank grows into riskier loans. BMG's ratings could be downgraded if its profitability and asset quality deteriorate, and if liquidity position were to deteriorate materially. Changes in the regulatory framework for its core business or rapid growth to address competitive pressures could result in adverse selection and a sharp deterioration in its financial metrics, thereby straining the ratings. METHODOLOGY USED The principal methodology used in these ratings was Banks Methodology published in November 2019. BMG is headquartered in São Paulo, Brazil, with assets of BRL 20.3 Billion and shareholders' equity of BRL 4.0 Billion as of March 31, 2020. BRADESCO SEGUROS: Fitch Alters Outlook on 'BB' IFS Rating to Neg. ----------------------------------------------------------------- Fitch Ratings has affirmed Bradesco Seguros S.A.'s Insurer Financial Strength at 'BB' and has revised the Rating Outlook to Negative from Stable. The National IFS rating of Bradesco Seguros has also been affirmed at 'AAA(bra)' and the Rating Outlook for this rating remains Stable, since Fitch believes that the company is less likely to be affected by potential changing local comparisons of creditworthiness within Brazil. KEY RATING DRIVERS The rating action follows Fitch's recent revision of Brazilian financial institutions' LT IDR Rating Outlooks to Negative from Stable. Bradesco Seguros' ratings are aligned with those of its parent, Banco Bradesco S.A. (LT IDR BB/Negative). The Rating Outlook revision for Bradesco Seguros' IFS rating mirrors that of its parent's LT IDR Rating Outlook revision to Negative, which in turn, remains one notch above Brazil's sovereign rating (LT LC IDR of BB-/Negative). Fitch revised Banco Bradesco's LT IDR Outlook to Negative from Stable, considering the direct influence and high importance of the operating environment on the bank's ratings. However, Fitch still believes that Banco Bradesco's credit profile meets the criteria to be rated above the sovereign ratings, given their diverse and stable funding, strong capitalization, diverse business mix, strong and well-matched funding, strong loan loss reserves and robust capital. In addition, Fitch recognizes their solid franchise, efficient management and strategy, and conservative risk appetite along economic cycles. Nevertheless, few banks in Latin America remain rated above its respective sovereign. Due to the global scenario of fast economic deterioration, the potential rating impact on these entities will depend on the length and severity of measures to reduce the spread of the pandemic on their credit metrics. Fitch views Bradesco Seguros as a core subsidiary of Banco Bradesco, and therefore, its ratings are equalized with those of its parent. This is based on the strategic importance of its insurance operations, which are a key and integral part of the group's business, share common branding and provide a high contribution to group profits (average 30% from 2013 through 2018). The ratings also reflect the company's leading position in the Brazilian insurance market, consistent performance through the cycles, diversified revenue base, strong distribution capacity underpinned by Banco Bradesco's wide agency network, and comfortable liquidity and capitalization ratios. In applying Fitch's insurance criteria regarding the impact of ownership on Bradesco Seguros' ratings, Fitch considered how the ratings would theoretically be affected under Fitch's bank support criteria. Fitch's insurance criteria are principles-based regarding ownership, and the referenced bank criteria were used to help inform Fitch's judgment in applying those principles. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Bradesco Seguros' ratings are linked to that of Banco Bradesco. Therefore, any negative change in the bank's ratings would affect the insurer's ratings, as would a change in its willingness to provide support, which Fitch considers highly unlikely. -- In addition, Banco Bradesco's Negative Rating Outlook reflects the downgrade potential for its LT IDRs in case Brazil's sovereign ratings are downgraded and the Country Ceiling is lowered. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Bradesco Seguros' IFS rating has limited upside potential, as it is equalized to those of Banco Bradesco, whose ratings capture constraints from its operating environment. Given the current Negative Rating Outlook on Banco Bradesco's International ratings and the high influence of the operating environment factor in its ratings, there are limited chances for possible upgrades for Bradesco Seguros' IFS. Over the medium term, the ratings could benefit from stabilization and eventual improvement of Fitch's assessment of the operating environment for Brazilian banks. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions 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. 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. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS Bradesco Seguros' rating is directly linked to Banco Bradesco's ratings. BRDE: Fitch Alters Outlook on BB- LongTerm IDR to Negative ---------------------------------------------------------- Fitch Ratings has affirmed Banco Regional de Desenvolvimento do Extremo Sul's (BRDE) Long-Term and Short-Term Local and Foreign Currency Issuer Default Ratings, Long- and Short-Term National Ratings and the bank's Support Rating. The agency revised the Outlook on both national and international long-term ratings to Negative from Stable. The Rating action mirrors the recent action on BRDE's parents, the State of Parana (Parana, Long-Term Foreign Currency and Local Currency IDRs BB-/Negative Outlook) and the State of Santa Cantaria (Santa Catarina, Long-Term Foreign Currency and Local Currency IDRs BB-/Negative Outlook). KEY RATING DRIVERS IDRS, NATIONAL RATINGS, SUPPORT RATINGS BRDE's IDRs and National Ratings are driven by the support of its shareholders, the states of Parana, Santa Catarina and Rio Grande do Sul. The IDRs are equalized to those of the first two, which account for two-thirds of its capital. Fitch assigns public ratings for Parana and Santa Catarina, while the analysis of Rio Grande do Sul state is internal. The creditworthiness, mainly of the first two states, strongly influences BRDE's ratings. In Fitch's view, the relatively small size compared to each shareholder (state) is a high influence factor in the support. Fitch recognizes that it would be relatively easy for parents to provide support if needed considering the financial flexibility of these states. BRDE's ratings are also highly influenced by its strategic role and importance as a development bank in the South of Brazil. The Support Rating of '3' reflects its shareholders' moderate probability of support, especially from Parana and Santa Catarina. In addition, in Fitch's opinion, since BRDE does not distribute dividends and obligatorily reinvests all its profits, a capital withdrawal is very unlikely, what mitigates the currently weak financial profile of Rio Grande do Sul. BRDE mainly provides financing to private SME and cooperatives and also operates, to a lesser extent, with municipalities, always with a development bias. The bank has a stable business model and focuses its operations on its controlling and bordering states. The institution is highly integrated and operates in line with the economic policies of its controllers. Fitch believes that, as with other public banks, strategies and goals could be influenced by the political guidelines of its shareholders. On the other hand, strategic decisions must be unanimously approved by the three states, which reduces the possibility of conflicts among controllers. Since BRDE's ratings are driven by support, the issuer's intrinsic credit metrics have a limited impact. Due to the quickly deteriorated global economic scenario, the potential financial profile impact on BRDE will depend on the length and severity of measures to reduce the spread of the pandemic on credit metrics. BRDE's asset quality continued controlled and presenting better ratios when compared to peers. As of December 2019, the agency's D-H Loans/Gross Loans ratio was 3.8% (4.5% in 2018 and 5.5% in 2017). BRDE's profitability was satisfactory. In 2019, the operating profits/risk-weighted assets ratio stood at 2.6%, compared with 2.3% in 2018 and 1.5% in 2017. The bank has also maintained adequate capitalization levels (Common Equity Tier 1 Capital was 18.2% in 2019). The bank's main source of funding is funds from Banco Nacional de Desenvolvimento e Social (BNDES/FINAME), which has been reducing its funding (approximately 60% of funding in 2019). The bank has been looking for alternatives to increase its funding through new sources of complementary national resources and international development entities, which Fitch considers positive for the expansion of its financing capacity, mainly because of the reduction of BNDES' limits. In terms of liquidity, BRDE's liquidity does not have major pressures by short-term obligations. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: IDRS, NATIONAL RATINGS -- As BRDE's ratings are driven by support, they can be downgraded if one or more of its shareholders are also downgraded and/or if Fitch observes changes in the bank control and in the dividend distribution policies; -- There may also be a downgrade if there are changes in the propensity of the controlling states (especially Parana and Santa Catarina) to support BRDE. SUPPORT RATINGS -- If Santa Catarina and/or Parana's ratings are downgraded to the Single-B category, the Support Rating would be downgraded to '4' from '3'; Factors that could, individually or collectively, lead to positive rating action/upgrade: IDRS, NATIONAL RATINGS -- Over the medium term, the ratings could benefit from revision the Outlook to Stable or upgrade of parents (especially Parana and Santa Catarina' Ratings; SUPPORT RATING -- Improvements in Support Rating are dependent on the upgrade of the parents. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions 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. 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. Banco Regional de Desenvolvimento do Extremo Sul (BRDE) - LT IDR BB-; Affirmed - ST IDR B; Affirmed - LC LT IDR BB-; Affirmed - LC ST IDR B; Affirmed - Natl LT AA(bra); Affirmed - Natl ST F1+(bra); Affirmed - Support 3; Affirmed GOL LINHAS: S&P Keeps 'B-' ICR on Watch Neg. on Liquidity Pressures ------------------------------------------------------------------- S&P Global Ratings, on May 18, 2020, kept its 'B-' global scale issuer credit and issue-level ratings and its 'brBBB-' national scale issuer credit ratings on Gol on CreditWatch with negative implications. The recovery rating remain '4' (30%). Gol's liquidity is pressured by its short-term debt maturities of about R$3.2 billion, mainly composed by the term loan due in August of about R$1.5 billion. The company has cash to pay down this specific debt and has been vocal about its willingness do to so, but its cash position would suffer significantly after August, despite cash preserving measures. S&P understands that the company is in advanced discussions for liability management alternatives, including a BNDES stimulus package, but the timing and final terms and conditions are uncertain, and delays in relieving liquidity pressure could hurt the ratings. In 2020, Gol has 18 aircraft leasing contracts expiring, reducing its gross debt position, which combined with the recent agreement with Boeing where it received cash inflows from the 737 Max delays, gives some flexibility to its fleet management and capex expenditure (capex) program. S&P said, "We expect a 50% demand decline this year compared to 2019, and for 2021 forecast demand about 25% lower than in 2019. In this context, we forecast that Gol will reduce its fleet to below 119 aircraft, and keep about 20%-30% grounded by the end of this year. Additionally, we have low visibility about the timing of the market rebound or if there will be changes in consumer habits that could affect load factors, which could further pressure fleet structure, liquidity, and ratings." Environmental, social, and governance (ESG) factors relevant to the rating action: -- Health and safety. USINA CORURIPE: S&P Lowers ICR to 'CCC', Outlook Negative --------------------------------------------------------- S&P Global Ratings lowered its global scale issuer credit rating to 'CCC' from 'B-', as well as its national scale credit ratings to 'brB-/brB' from 'brBBB-/brA-3' on S/A Usina Coruripe Acucar e Alcool (Coruripe). The company is one of the least exposed to our base-case scenario for the COVID-19 outbreak because it could raise its output of sugar to close to 65% of total production. It has also hedged almost 100% of sugar volumes for fiscal 2021 (which started on April 1, 2020) at about R$1,470, translating into a minor EBITDA drop compared to fiscal 2020. However, the company's capital structure, with high short-term debt concentration and exposure to foreign exchange (FX) variation, presents looming sustainability risks given the currently adverse economic conditions. The company is currently negotiating to extend maturities for about half of its consolidated debt with a syndicate of banks. However, even if Coruripe concludes the negotiation, the current restrictive credit environment, its high working capital needs to carry over ethanol inventories, and the depreciation of the real will continue to pose very high refinancing risks. S&P currently estimate in its base-case scenario that the company would have to refinance about R$600 million to maintain a minimum cash position of R$250 million by the end of the current fiscal year. Environmental, social, and governance (ESG) factors relevant to the rating action: -- Health and safety. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Big Firms Reiterates Call to Extend Quarantine ------------------------------------------------------------------ Dominican Today reports that National Business Council (Conep) president, Pedro Brache, reiterated its call for Congress in the Dominican Republic to approve the extension for the requested period of the state of emergency. Mr. Brache considered it an "essential element for the guarantee of public health facing the COVID-19 pandemic," according to Dominican Today. The state of emergency went into effect on March 19 and has received two extensions, the last of which expires on May 17, the report notes. "In the absence of a vaccine to deal with COVID-19, a necessary condition for the success of the economic reopening is to avoid the collapse of the country's health system, and this can be achieved by protecting the population considered vulnerable from the virus," 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 negative outlook (April 2020). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). DOMINICAN REPUBLIC: Over 20 Basic Goods Post Higher Prices ---------------------------------------------------------- Dominican Today reports that more than 20 basic consumer goods have posted price increases in recent weeks, according to the National Council of Merchants and Entrepreneurs of the Dominican Republic (Conacerd). According to Antonio Cruz Rojas, vice president of Conacerd, that organization has received complaints from its more than 9,560 members at the national level, in the pandemic period, the report notes. He said several companies have increased by up to 8% on average mass consumption products, according to Dominican Today. Products such as liquid seasonings, liquid and powdered milk, juices of various brands, rice, pasta, tomato paste, red and green sardines with coconut, sweet corn among others have increased, the report relates. 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 negative outlook (April 2020). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). ============= J A M A I C A ============= JAMAICA: Date for Reopening Tourism Industry to be Announced Soon ----------------------------------------------------------------- RJR News reports that Tourism Minister Ed Bartlett has said a date will be announced soon for the reopening of Jamaica's tourism industry. Mr. Bartlett said key stakeholders are working on a plan to get the industry back on track, according to RJR News. Jamaica's tourism industry suffered a massive hit from the COVID-19 pandemic with most hotels closed and more than 100,000 persons laid off, the report notes. As reported in the Troubled Company Reporter-Latin America on April 23, 2020, S&P Global Ratings said that on April 16, 2020, it revised its outlook on Jamaica to negative from stable. At the same time, S&P Global Ratings affirmed its 'B+' long-term foreign and local currency sovereign credit ratings, its 'B' short-term foreign and local currency sovereign credit ratings on the country, and its 'BB-' transfer and convertibility assessment. On April 17, 2020, the TCR-LA reported that Fitch Ratings has revised Jamaica's Outlook to Stable from Positive. The Long-Term Foreign-Currency Issuer Default Rating is affirmed at B+. The Outlook change reflects the shock to Jamaica from the coronavirus pandemic, which is expected to lead to a sharp contraction in its main sources of foreign currency revenues: tourism, remittances and alumina exports. =========== M E X I C O =========== MEXARREND SAPI: S&P Lowers ICR to 'B', Outlook Stable ----------------------------------------------------- S&P Global Ratings lowered its long-term global scale issuer credit rating on Mexarrend S.A.P.I. de C.V. to 'B' from 'B+'. S&P also lowered its national scale rating to 'mxBB+/mxB' from 'mxBBB-/mxA-3'. At the same time, S&P lowered its issue-level rating on the company's $300 million senior unsecured notes to 'B' from 'B+'. Finally, S&P removed the ratings from CreditWatch with negative implications, where it had placed them on March 27. The outlook is stable. S&P also revised Mexarrend's stand-alone credit profile (SACP) to 'b' from 'b+'. S&P said, "Mexarrend's capitalization levels took a hit from higher risk weights in our risk-adjusted capital framework (RACF) after we lowered our sovereign rating on Mexico and because of the higher economic risk for the Mexican financial system. The latter reflects a worsening of the sovereign's credit quality and its spillover to the domestic financial industry in the form of weaker economic resilience. Additionally, we expect a sharp economic downturn in 2020 and a moderate recovery in 2021. This will damage Mexarrend's asset quality and increase provisioning requirements, depressing its internal capital generation, and consequently, limiting its capitalization levels. These factors have prompted us to reduce our projected RAC ratio consistently below 10% for the next 12-24 months. Therefore, we're lowering our capital and earnings assessment to adequate from strong, triggering a downgrade of Mexarrend." The ratings on Mexarrend continue to reflect its status as one of the main independent leasing companies in the Mexican market with a stronger management structure since 2019. Despite its asset quality metrics' steady level last year, Mexarrend's non-performing assets (NPAs) remained slightly weaker than those of the peer average. Likewise, the company's relatively high customer concentrations--which could erode its asset quality metrics quickly--limit its risk position. The ratings also incorporate our view that Mexarrend has significant single-issuance concentrations that could cause refinancing risks, although its main debt maturity won't occur until 2024. In addition, it has adequate liquidity due to the 2019 issuance of the $300 million notes with a five-year tenor. ===================== P U E R T O R I C O ===================== CINKO CORP: Seeks to Hire Juan C. Bigas-Valedon as Counsel ---------------------------------------------------------- Cinko, Corp., seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Juan C. Bigas-Valedon, as counsel to the Debtor. Cinko, Corp. requires Juan C. Bigas-Valedon to represent and provide legal services to the Debtor in the Chapter 11 bankruptcy proceedings. Juan C. Bigas-Valedon will be paid at the hourly rate of $250. Juan C. Bigas-Valedon will be paid a retainer in the amount of $5,000. Juan C. Bigas-Valedon will also be reimbursed for reasonable out-of-pocket expenses incurred. Juan C. Bigas-Valedon assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Juan C. Bigas-Valedon can be reached at: Juan C. Bigas-Valedon, Esq. 4ta Ext. El Monte Ponce, P.R. 00730 Tel: (787) 259-1000 E-mail: jcbigas@gmail.com About Cinko, Corp. Cinko Corp., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 20-01099) on Feb. 28, 2020, disclosing under $1 million in both assets and liabilities. The Debtor is represented by Juan C. Bigas-Valedon, Esq. FERRELLGAS PARTNERS: Bryan Wright Quits as Chief Operating Officer ------------------------------------------------------------------ Bryan J. Wright resigned as senior vice president and chief operating officer and voluntarily terminated his employment with Ferrellgas, Inc., the general partner of Ferrellgas Partners, L.P. and a general partner of Ferrellgas, L.P., to pursue other opportunities. Effective as of May 11, 2020, Mr. Wright ceased to serve in all capacities previously held with (i) the General Partner, (ii) Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, each a general partner of Ferrellgas, L.P., and (iii) the Company and its subsidiaries, including Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. About Ferrellgas Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., and subsidiaries, serves propane customers in all 50 states, the District of Columbia, and Puerto Rico. Ferrellgas reported net loss of $64.54 million for the year ended July 31, 2019, a net loss of $256.82 million for the year ended July 31, 2018, and a net loss of $54.50 million for the year ended July 31, 2017. As of Jan. 31, 2020, the Company had $1.47 billion in total assets, $754.88 million in total current liabilities, $1.73 billion in long-term debt, $84.55 million in operating lease liabilities, $45.26 million in other liabilities, and a total partners' deficit of $1.14 billion. * * * Moody's Investors Service, in March 2020, downgraded Ferrellgas Partners L.P.'s Corporate Family Rating to Caa3 from Caa2. "Ferrellgas's downgrade is driven by the company's continued high financial leverage and the very high likelihood that the partnership will complete a full debt recapitalization in the near-term," said Arvinder Saluja, Moody's vice president. S&P Global Ratings, in October 2019, lowered its issuer credit rating on Ferrellgas Partners L.P. to 'CCC-' from 'CCC'. The downgrade was based on S&P's assessment that Ferrellgas' capital structure is unsustainable given the upcoming maturity of its $357 million notes due June 2020. JC PENNEY: Files Ch. 11 to Implement Financial Restructuring Plan ----------------------------------------------------------------- J. C. Penney Company, Inc. on May 15 disclosed that it has entered into a restructuring support agreement (the "RSA") with lenders holding approximately 70% of JCPenney's first lien debt to reduce the Company's outstanding indebtedness and strengthen its financial position. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan (the "Plan") that is expected to reduce several billion dollars of indebtedness, provide increased financial flexibility to help navigate through the Coronavirus (COVID-19) pandemic, and better position JCPenney for the long-term. To implement the Plan, the Company on May 15 filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX (the "Court"). During this process, JCPenney will continue to be one of the nation's largest apparel and home retailers with an expansive footprint of hundreds of stores across the U.S. and Puerto Rico and a powerful eCommerce site, jcp.com. JCPenney is welcoming customers back to select stores and continuing to offer its Contact-free curbside pickup service at all open stores. At the same time, JCPenney's eCommerce distribution centers continue to fulfill online orders and customer care centers are answering inquiries as usual. The health and safety of associates, customers, and communities remains a top priority, and the Company is gradually reopening stores and offices in a phased approach while following guidance from local and state orders. "The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company. Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy -- and our efforts had already begun to pay off. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt," said Jill Soltau, chief executive officer of JCPenney. Ms. Soltau continued, "Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come. We believe the RSA and the widespread support we have received from our asset-based lenders and first lien lenders will allow us to pursue a financial restructuring on an expedited timeframe. We are also encouraged by the level of support we have received from our vendor partners, landlords, and other stakeholders, whose confidence in our business and our people is expected to contribute to a successful reorganization." "We have a newly refreshed, highly experienced team of retail executives who remain focused on rebuilding our business and restoring financial strength to JCPenney. This team has continued to innovate even during these challenging times, implementing substantial improvements to our flagship eCommerce platform to increase efficiency and ensure our loyal customers continue to have access to the products they need through elevated shopping experiences. I would also like to thank all of our outstanding associates for their continued dedication to our company and their passion for meeting and exceeding our customers' expectations. We are continuing to serve our customers as we move through this process with a commitment to working seamlessly with our vendor partners and landlords. We look forward to emerging from both Chapter 11 and this pandemic as a stronger retailer, continuing to implement our Plan for Renewal, and building capabilities focused on satisfying customers' wants and needs," Ms. Soltau concluded. JCPenney's Transformation Strategy JCPenney has been successfully implementing its Plan for Renewal transformation strategy to improve gross margin, reduce inventory, eliminate inefficient spending, and design an engaging, inspiring shopping experience. Specifically, JCPenney has made foundational improvements to: -- Offer Compelling Merchandise -- Drive Traffic -- Deliver an Engaging Experience -- Fuel Growth -- Build a Results-Minded Culture While the challenging market conditions have impacted the Company's ability to meet its current operational and financial objectives, the Company remains focused on returning JCPenney to sustainable, profitable growth by reestablishing the fundamentals of retail, re-envisioning its merchandise offerings, and rolling out new innovations. The Company will continue to gather customer feedback and make improvements that enhance the shopping experience throughout this difficult time and over the long-term. Prior to the unprecedented Coronavirus (COVID-19) pandemic, the Company had made meaningful progress on its Plan for Renewal and successfully met or exceeded guidance on all five financial objectives for 2019 and saw comparable store sales improvement in six of eight merchandise divisions in the second half of 2019 over the first half. Financing and Ongoing Operations JCPenney has approximately $500 million in cash on hand as of the Chapter 11 filing date. JCPenney has received commitments for $900 million in debtor-in-possession ("DIP") financing from its existing first lien lenders, which includes $450 million of new money. Following Court approval, this financing, combined with cash flow generated by the Company's ongoing operations, is expected to be sufficient to meet JCPenney's operational and restructuring needs. As part of the DIP commitment from its existing lenders, JCPenney will explore additional opportunities to maximize value, including a third-party sale process. JCPenney will file a number of customary first day motions with the U.S. Bankruptcy Court seeking authorization to support its operations during the financial restructuring process, including authority to pay non-furloughed associate wages, provide certain benefits to all associates, and to pay vendor partners in the ordinary course for all goods and services provided on or after the Chapter 11 filing date. Store Optimization Implementing the financial restructuring will allow JCPenney to accelerate its store optimization strategy. As part of its ongoing transformation, JCPenney will reduce its store footprint to better align its business with the current operating environment. Stores will close in phases throughout the Chapter 11 process -- and the first phase of closures, including specific store details and timing, will be disclosed in the coming weeks. About J.C. Penney J.C. Penney Corporation, Inc., is an American retail company, founded in 1902 by James Cash Penney and today engaged in marketing apparel, home furnishings, jewelry, cosmetics, and cookware. The company was called J.C. Penney Stores Company from 1913 to 1924, when it was reincorporated as J.C. Penney Co. On May 15, 2020, JCPenney announced that it has entered into a restructuring support agreement with lenders holding 70% of JCPenney's first lien debt. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of indebtedness. To implement the Plan, the Company and its affiliates on May 15, 2020, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182). Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the Company. Prime Clerk is the claims agent, maintaining the page http://cases.primeclerk.com/JCPenney ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Businesses Worry Over Long Closure ----------------------------------------------------- Kim Boodram at Trinidad Express reports that some small and medium businesses in Trinidad & Tobago have already sent home staff with no guarantee of re-employment and may permanently close down, due to loss of revenue during the ongoing "lockdown" against the Covid-19 pandemic. The Greater Chaguanas Chamber of Commerce, headed by Vishnu Charran, and the Greater San Fernando Chamber of Commerce, of which Kiran Singh is president, were concerned that by the time some SMEs are allowed by Government to open, they would have suffered financial blows from which they can't recover, according to Trinidad Express. While both chambers welcomed Government's decision at the weekend to allow the opening, of the food service industry, there was a view that a handful of services mostly found among SMEs should have been included, the report discloses. Garages and other components of the auto industry, furniture and appliance stores, bookstores, stationery and art and craft suppliers should have been included in a "subset" of essential services allowed to open as the Government cautiously entered the first phase of the end of its anti-pandemic lockdown, they said, the report relays. Prime Minister Dr Keith Rowley disclosed that, though "nervous", Government would begin phase one of a six-phase exit out of lockdown— with each phase dependent on the success of the last—and guided by medical experts with a view to the virus' global patterns of retreat and re-emergence so far, the report notes. Food vendors including itinerant vendors are allowed to open from 8 a.m. and are to close by 8 p.m., hardwares and electrical suppliers from 8 a.m. to 4 p.m., groceries until 6 p.m. and pharmacies until 8 p.m., the report relates. Dining in, clustering and the consumption of food on itinerant sites are not permitted, as anti-virus protocol including physical distancing, proper hygiene and the wearing of face masks remain in place, the report notes. Singh said the Government had moved in the right direction with the reopening of the food service industry but stressed that a huge sector of the business community was currently without income, the report notes. Noting that each sector supports others, he said there was little to no revenue coming to SMEs and some had already let go of their staff, the report discloses. Singh said the Chamber was further "disappointed and had been hopeful that, based on presentations made to Government's Covid-19 Recovery Team", Government would have seen some smaller, sub-sectors reopened in the first phase," the report notes. The report relates that the chamber would have identified the auto service industry "from the garage around the corner to large dealerships", vendors of computers and related technology and accessories and vendors of security and other closed camera systems and related equipment. Singh said furniture and appliance stores also attract less foot traffic and could have worked by appointment, online service and delivery or the staggering of customers inside stores, the report says. School is also out until September, he said, and children learning and playing at home could benefit from the opening of book and stationery stores, as well as art and craft supplies, the report notes. "This would have allowed employment level to increase over the period," Singh said, adding that, based on revenue, some of the above may even have absorbed a small percentage of persons now disenfranchised from other sectors, the report relays. Chaguanas Chamber president, Vishnu Charran, said while that entity also welcomed partial opening of the gate, many members have complained at not being included, the report notes. He also noted services sectors that involved little human traffic, where no contact was required, and stated that "people need to get back to work," the report discloses. Noting references to the Covid-19 curve and expressing appreciation for the efforts of the Ministry of Health and health stakeholders so far, Charran said it was still necessary for Government to be clearer as to "what rationale it is using," the report relays. "They are not saying why it was 'food first', when several others services generate much less traffic and congestion of persons but are essential services," the report notes. Charran said accessing vehicle repair services, for example, was now a problem, the report relates. "The longer this is prolonged, the worse it becomes for the business community especially the SME sector," Charran said, the report discloses. "They stand to lose and many might collapse, permanently," he added. He said the sector was still looking forward to support and incentives including interest free loans and reduced rates, as well tax breaks, the report notes. "We are not hearing anything of incentives at all," he said, adding that moratoriums on loans still means "compounded interest," he added. Charran said Government must further base the progress of its lockdown ease on the reality of the Covid-19 presence but that would have been hard to determine, given a limited range of community testing, the report notes. TRINIDAD & TOBAGO: Investors Withdraw $2.6BB From Mutual Funds -------------------------------------------------------------- Trinidad Express reports that when the Covid-19 pandemic reached Trinidad & Tobago in March 2020, the T&T Securities and Exchange Commission (TTSEC) observed "significant redemptions" in mutual funds. Investors, the SEC noted, withdrew approximately $2.3 billion within the month of March 2020, according to Trinidad Express. Assets Under Management (AUM) which represents the total assets managed by a mutual fund, were reduced by four per cent from February 2020 to March 2020, the report notes. "The major mutual fund type that was impacted included equity funds, which predominantly invest in local and foreign equities i.e. shares of companies listed on a stock exchange," the SEC noted, the report relays. "The TTSEC has been monitoring the level of subscriptions and redemptions in the local mutual fund market; and accordingly observed significant redemptions in the month of March 2020 compared to the previous month. Overall, investors withdrew approximately $2.3 billion within the month of March 2020," it said, the report notes. According to the TTSEC's analysis, which was first published in the institution's April 29 column in the Express Business, total assets under management of T&T's mutual fund industry in February 2020 was $56.28 billion, the report says. That slipped to $53.98 billion in March 2020, the report notes. The report discloses that former minister in the Ministry of Finance Mariano Browne said if investors were looking at the international stock markets and saw huge declines, it would be logical to withdraw some of their investments here before there would be similar declines in the local market. "Withdrawals before any market decline would be a precautionary move to protect an investor from capital loss. That is, if I withdraw before the market crashes, I save value. If the market declines, the value of the units would decline. It would be better to withdraw and hold cash and preserve value," he added. The TTSEC's analysis indicated that the assets under management in equity funds fell by 10.34 per cent to $6.68 billion in March 2020 from $7.45 billion in February, 2020, the report notes. Assets under management in T&T's fixed income funds declined by 2.31 per cent to $35.29 billion in March 2020, from $36.13 billion in February 2020, the report relays. And total investments in balanced funds fell by 5.71 per cent to $11.53 billion in March from $12.23 billion in February 2020, the report notes. Economist Vaalmikki Arjoon observed that the substantial erosion in the equity portfolios of T&T mutual funds was because of the sharp downturn in global equity prices in March, together with some investors withdrawing from those funds owing to negative market and global economic sentiment brought on by Covid-19, the report discloses. Internationally, he pointed out that the S&P 500 fell by 24 per cent from February to March, while the Dow plummeted by 27 per cent, thereby causing the value of the equity-based mutual funds to fall, the report relays. "With these sharp price declines, several panicked investors would have sought to protect their portfolios, withdrawing some of their monies from these types of funds. This type of investor behaviour is normal under market turbulence, and would have exacerbated the drop in the AUM, the report notes. "Other investors, particularly institutional investors, may have also pulled out, not only from the equity side, but also from the fixed income and the money market sides, in order to get much needed liquidity. This is because they recognized that in the coming months, there would be a sharp fall in their revenues due to the Covid economic fallout and they would therefore need this liquidity to assist in the running of their organizations, the report relays. "Some individual investors may have also withdrawn monies as this pandemic has created a huge demand for cash. In total, over $2.3 billion was withdrawn, likely fueled by the negative market sentiment and the need for liquidity." Arjoon noted that those investors who would have left their monies in the equity-focused mutual funds would now be benefitting given recent positive turnarounds in the global equity markets—since the end of March, the Dow Jones and the S&P 500 both increased by approximately 30 per cent, thereby pushing up the portfolio values for those who chose to remain in the market," he told the Express Business. He noted that although fixed income securities' prices increased, this increase did not offset the redemptions from the fixed income side of the fund, causing the AUM to decline by 2 per cent, the report notes. "This may also suggest an apparent need for liquidity by institutional investors. Indeed, prices of US treasuries would have increased given the fall in US treasuries yields -- the ten-year yield fell from 1.54 per cent to 0.7 per cent between early February to late March, while the 20-year fell from 1.84 per cent to 1.15 per cent," he said, the report relays. Conversely, he pointed out that investors increased subscriptions to approximately $1.9 billion in March 2020 from $1.53 billion in February, the report discloses. "Apart from standing orders where investors put monies in the fund periodically as a form of savings, this may also be a reflection of a possible "flight to safety", where they invested in the less risky components of the fund, the report says. For instance, some may have subscribed to the money market, which carries the least risk as money market securities are short term and are therefore associated with less volatility and price risk, the report relays. "Going forward, it's possible that we may see increased redemptions and lower subscriptions, if the economic fallout from Covid takes a further toll and businesses requiring more cash choose to make further withdrawals from the fund. Persons with monthly standing orders to the fund as a form of savings may lessen the amounts invested or stop altogether, as they may also choose to hold cash, given the economic uncertainty in the short term," he said, the report notes. Redemptions in March amounted to $2.64 billion, which was more than double the redemptions of $1.31 billion in February, the report discloses. The TTSEC's analysis also noted that fixed Net Asset Value (NAV) funds were almost stable at $32 billion in March, but floating NAV funds dipped by about 8.7 per cent in March to $21.86 billion from $23.94 billion in February, the report adds. =============== X X X X X X X X =============== LATAM: ILO Says Over a Million Jobs to be Lost Across the Caribbean ------------------------------------------------------------------- RJR News reports that the International Labour Organisation (ILO) says more than one million full time jobs will be lost across the Caribbean during the second quarter of this year due to the impact of the COVID-19 pandemic. According to the ILO, the figure could reach 1.5 million, according to RJR News. The ILO said the estimates include only Jamaica, the Bahamas, Barbados, Cuba, Dominican Republic, Haiti, Puerto Rico, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago as well as the United States Virgin Islands, the report notes. The ILO said the new research focuses on the decline in hours worked, the report relays. It added that the figures show that the impact on workers is vast, and calls for attention to both those who lost their jobs and income and those who are asked by employers to reduce working hours and therefore earn less, the report discloses. The ILO said governments need to make sure social protection measures reach these categories of workers, the report adds. ********* 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 * * *