/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/200522.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 Friday, May 22, 2020, Vol. 21, No. 103 Headlines A R G E N T I N A ARGENTINA: Creditors to Shoulder Blame if it Defaults B A H A M A S XTRA-GOLD RESOURCES: Historical Losses Cast Going Concern Doubt B R A Z I L BRAZIL: 2020 GDP Expected to Fall Six Percent [*] S&P Takes Various Actions on Brazilian Car Rental Companies C O S T A R I C A BAC SAN JOSE 2014-2: Fitch Cuts Ratings on DPR Program to 'BB+' DPR-CR LIMITED 2017-1: Fitch Cuts Ratings on DPR Program to 'BB+' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Chicken Farms Have Tons Sitting in Freezers DOMINICAN REPUBLIC: Issues US$727.3 Million of Debt DOMINICAN REPUBLIC: National Palace Mulls Economic Revival M E X I C O BRASKEM IDESA: S&P Lowers ICR to 'B+', Outlook Negative P U E R T O R I C O HOTEL CUPIDO: Wants to Move Exclusivity Filing Period to May 31 T R I N I D A D A N D T O B A G O CARIBBEAN AIRLINES: Does First Cargo Only Charter Flight CARIBBEAN AIRLINES: Secures US$65 Million Loan TRINIDAD & TOBAGO: Credit Unions Sign On to Emergency Loan Program - - - - - ================= A R G E N T I N A ================= ARGENTINA: Creditors to Shoulder Blame if it Defaults ----------------------------------------------------- Scott Squires at Bloomberg News reports that Argentina's bondholders need to present a reasonable counteroffer to avoid another debt default by the South American nation, according to Nobel laureate economist Joseph Stiglitz. The Columbia University professor, who has mentored Argentina's Economy Minister Martin Guzman, praised the government of President Alberto Fernandez for coming up with a plan that would put the country's debt on a sustainable path, according to Bloomberg News. He also warned that creditors may undermine trust in international debt markets by "playing hardball" amid a global pandemic, Bloomberg News notes. "If creditors don't put forward a sustainable offer, Argentina has no choice; it's creditors who are really driving the default here," Stiglitz said in an interview, adding that the country has made it clear it doesn't want to stop paying its debts, Bloomberg News relays. "If it occurs, it will be the decision of the creditors," he added. Bloomberg News notes that Argentina, which even before the Covid-19 crisis said its debt was unsustainable, is seeking to restructure $65 billion in overseas bonds, and they extended its initial exchange offer until May 22, when $500 million of delayed interest payments come due. Failure to reach an agreement or come up with the money by that date will result in a default, the ninth since the country's independence in 1816, Bloomberg News says. The government has asked bondholders for a three-year moratorium on payments and a steep cut to interest rates, but has said it is open to counteroffers as long as they restore debt sustainability. Creditors have called the deal "unacceptable," but have yet to propose an alternative, Bloomberg News notes. Earlier this month, Stiglitz and other top economists including Carmen Reinhart, Thomas Piketty, Kenneth Rogoff and Ricardo Hausmann, signed an open letter urging creditors to reach an agreement with Argentina, Bloomberg News notes. Sensible Role Stiglitz, who has been critical of the International Monetary Fund in the past, said this time, the Fund is playing a "sensible role" in Argentina's efforts to restructure its debt, Bloomberg News relays. "Usually, the debtor country doesn't have a conception of where it's going, they get bullied by creditors and usually the IMF, which has often acted as a collection agency of the creditors," he said, Bloomberg News discloses. "This time, the IMF has played a very constructive role here. My reading is the creditors aren't used to that," he added. Stiglitz added that a default in Argentina would reverberate globally among other debtor nations already looking ahead to potential restructurings, as the virus forces countries to shutter their economies, Bloomberg News says. It could make countries reluctant to engage with foreign creditors in the future, he warned. "Nobody will want to deal with these guys," he added. 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 A H A M A S ============= XTRA-GOLD RESOURCES: Historical Losses Cast Going Concern Doubt --------------------------------------------------------------- Xtra-Gold Resources Corp. filed its Form 6-K, disclosing a net income (attributable to Xtra-Gold Resources Corp.) of $357,744 on $0 of revenue for the three months ended March 31, 2020, compared to a net income (attributable to Xtra-Gold Resources Corp.) of $380,332 on $0 of revenue for the same period in 2019. At March 31, 2020, the Company had total assets of $7,565,222, total liabilities of $400,391, and $7,164,831 in total equity. The Company said, "At March 31, 2020, accounts payable and accrued liabilities increased to $229,134 (December 31, 2019 - $172,871) due to gold revenue related costs associated with the late Q1 2020 gold shipment. Our cash and cash equivalents as at March 31, 2020 were sufficient to pay these liabilities. We believe that our company has sufficient working capital to achieve our 2020 operating plan. However, our historical losses raise substantial doubt about our ability to continue as a going concern. Our auditors have issued an explanatory paragraph in their audit opinion for the year end December 31, 2019." A copy of the Form 6-K is available at: https://is.gd/MS4vpE Xtra-Gold Resources Corp. engages in the exploration and development of gold properties in Ghana, West Africa. The company was formerly known as RetinaPharma International, Inc. and changed its name to Xtra-Gold Resources Corp. in December 2003. Xtra-Gold Resources Corp. was incorporated in 1998 and is based in Nassau, Bahamas. =========== B R A Z I L =========== BRAZIL: 2020 GDP Expected to Fall Six Percent --------------------------------------------- Richard Mann at Rio Times Online reports that Undersecretary Vladimir Kuhl Teles, the undersecretary for Macroeconomic Policy for the Ministry of Economy in Brazil, said that if social isolation is maintained until the end of June, this year's Gross Domestic Product (GDP) will drop by over six percent. Mr. Teles said that for every two weeks of isolation, the GDP drops 0.70 percentage points, considering the direct loss of R$20 billion for each week, Rio Times relays. The government projects a 4.7 percent drop this year, but it could be higher, according to Mr. Teles, the report notes. As reported in the Troubled Company Reporter-Latin America on May 8, 2020, Fitch Ratings has affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-' and has revised the Rating Outlook to Negative. The Outlook revision to Negative reflects the deterioration of Brazil's economic and fiscal outlook, and downside risks to both given renewed political uncertainty, including tensions between the executive and congress, and uncertainty over the duration and intensity of the coronavirus pandemic. On April 10, 2020, the TCR-LA reported that S&P Global Ratings revised on April 6, 2020, its outlook on its long-term ratings on Brazil to stable from positive. At the same time, S&P affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings. S&P also affirmed its 'brAAA' national scale rating and its transfer and convertibility assessment of 'BB+'. The outlook on the national scale rating remains stable. [*] S&P Takes Various Actions on Brazilian Car Rental Companies --------------------------------------------------------------- S&P Global Ratings, on May 19, 2020, affirmed the ratings on Localiza Rent a Car S.A., JSL S.A., Movida Participacoes S.A., Companhia de Locacao das Americas S.A. (Unidas S.A.), and LM Transportes Interestaduais Servicos e Comercio S.A. S&P also assigned negative outlooks on JSL S.A., Movida Participacoes S.A., Companhia de Locacao das Americas S.A. (Unidas S.A.), and LM Transportes Interestaduais Servicos e Comercio S.A. The outlook on Localiza is now stable. Finally, S&P lowered its national scale issuer credit and issue-level ratings on Vix Logistica S.A. to 'brA+' from 'brAA-', with a negative outlook. S&P removed all these ratings from the CreditWatch listing with negative implications. Rating Action Rationale Market conditions for rent-a-car services in Brazil are challenging, but operations proved to be more resilient than global peers. Brazilian rent-a-car (RaC) companies saw utilization rates fall from their normal 75%-80% levels to 55%-60% in April with a marginal improvement in the first weeks of May, mainly because of mobility restrictions and the overall decline in economic activity. In addition, average tariffs are currently about 25% lower than pre-COVID-19 levels due to changes in the mix of clients and discounts applied to retained customers. S&P assumes a gradual recovery in utilization rates mainly in the fourth quarter, which should result in an average of 65%-70% for the year. This will lead to weaker operating cash flows in 2020. Still, compared with global peers, the impact on Brazilian companies will likely be much lower given the higher proportion of fleet management in their businesses, lower revenue dependency on airline passenger traffic (about 10%-20% for each RaC business), and a higher proportion of individual and corporate monthly clients. Cash flows from corporate leasing contracts have been stable in the past few weeks since the government imposed mobility restrictions. Nevertheless, S&P believes the companies could face difficulties renewing contracts or delinquency increases going forward, depending on the recession's impact on each sector. S&P said, "The extent of the recession and the path to recovery will drive our ratings. In our base-case scenario, we forecast EBITDA declines between 10% and 20% in 2020, depending on each company's exposure to the RaC segment and other business divisions, with slow but recovering levels in 2021 as the economy recovers and transport demand returns to levels similar to those in the past few years. Still, we see downside risks to our forecasts, and if we were to expect rent-a-car utilization rates to remain at 55%-60% for the rest of the year under current tariff prices, we would observe steeper EBITDA declines of 20%-30%, which could lead to downgrades. "We see higher downside risks on the operational side and increases in leverage, rather than on liquidity. Used car sales had slow but increasing activity in April and the first few weeks of May, with low price discounts performed by some players. We expect companies to use cash inflows from vehicle sales, combined with significant reductions of investments, to preserve their liquidity. We will monitor how the used car market behaves in the context of weaker consumer purchasing power in the coming quarters. Along with the capital spending flexibility, most of the Brazilian entities in the sector accessed credit markets in the first few weeks of the pandemic, increasing their cash position. In our view, such access, along with a smooth amortization profile for the year for most of the companies, should provide an adequate liquidity cushion for them to handle 2020's turbulence." Environmental, social, and governance (ESG) credit factors for the rating changes: -- Health and safety The rating actions for each company in the sector are detailed below. Localiza Rent a Car S.A (Localiza) S&P said, "We affirmed the 'BB+' global scale and 'brAAA' national scale ratings on Localiza with a stable outlook, reflecting our view of adequate cushion on the company's leverage metrics for the rating level, even amid the demand shock this year. This is because the final rating is currently one notch lower than company's 'bbb-' stand-alone credit profile (SACP) because we cap the rating two notches above the sovereign rating on Brazil (BB-/Stable/B). We see higher risk of us revising downward the SACP by one notch in the short term if cash flows from the RaC segment are weaker than what we currently forecast, due to the impact of mobility restrictions, social distancing measures, and the economic downturn. Considering the impact of COVID-19 in the last two months, we expect revenues and EBITDA declines of about 10%-15% and 15%-20%, respectively, in 2020. We also incorporate Localiza's capacity to reduce its current fleet in 2020 by 5% to 10% compared to 2019, generating additional cash flows from car sales. We expect EBIT interest coverage of 2.3x-2.6x in 2020, recovering in 2021 to 2.7x-3.0x as mobility restrictions ease. "In our base-case scenario, the long-term nature of fleet management contracts tend to mitigate the expected impact of depressed rental demand on Localiza's overall cash flow generation. Nevertheless, if due to the economic contraction we were to expect a reduction of these contracts, or potential breaches and increased delinquency, it could harm the company's operational performance and credit quality. Although cash position continues to be robust, we have revised our liquidity assessment to adequate from strong. This reflects the challenges Localiza could face in maintaining its cash reserves if economic and refinancing conditions worsen at a steeper-than-expected pace." Outlook S&P said, "The stable outlook reflects our view that Localiza's competitive advantages in the sector and comfortable credit metrics will help it overcome the expected weaker operating cash flows caused by the mobility restrictions and economic downturn in Brazil. We incorporate lower levels of used cars sales this year compared to pre-pandemic levels. Despite that, we expect Localiza to drastically reduce car acquisitions in 2020 and marginally increase them in 2021, following stronger economic activity. We expect EBIT interest coverage of 2.3x‐2.6x and funds from operations (FFO) to debt at 15%‐20% in 2020, recovering respectively to 2.7x‐3.0x and above 20% in 2021." Downside scenario S&P said, "We could downgrade Localiza if higher mobility restrictions significantly reduce the already depressed utilization rates and the company is unable to sell used cars. In this scenario, we would expect EBIT interest coverage below 1.3x and FFO to debt below 12% in 2020 and 2021. We could revise downward the company's SACP to 'bb+' if the impact to its rental car utilization rates is higher than we currently predict, fleet management contracts are not renewed, and Localiza faces greater difficulties in selling its used fleet. That scenario could occur if mobility restrictions in Brazil increase or if we see deeper effects of the recession on customers' purchasing power. In that scenario, we would see cash flow reduction pointing to EBIT interest coverage below 1.7x." Upside scenario A positive rating action would depend on an upgrade of Brazil, which has a stable outlook, given that the rating on Localiza is already at the maximum two‐notch differential above the sovereign. JSL S.A. S&P said, "We affirmed our 'BB-' global scale and 'brAA+' national scale ratings on JSL. The negative outlook on both ratings reflects our view that despite the significant impact on some of its subsidiaries' cash flow generation in 2020, JSL has some business resiliency that should contribute to recovery in 2021. The long-term contracts on its fleet management services and truck and heavy equipment rentals should partially offset the expected reduction in JSL's cash flows. We see its exposure to rental cars (about 30%‐35% of JSL's consolidated EBITDA) as a factor that would pressure credit metrics if mobility restrictions are exacerbated in the next few months, or lower economic activity lasts for longer than expected. In 2020, we project a drop in consolidated revenues and EBITDA of about 10% and 10%-15%, respectively, compared with 2019. "Considering COVID‐19's impact on the company's 2020 cash inflows and its capacity to reduce the size of its fleet in order to adapt to market conditions, we expect JSL's debt to EBITDA to increase to about 4.0x-4.5x and FFO to debt to be slightly lower than 12%. Despite the reduced cash flow generation, we expect EBIT interest coverage at 1.4x-1.7x in 2020. Because we forecast Brazil's economy to rebound in 2021, JSL's leverage metrics should follow the recovery, with EBIT interest coverage at 1.6x-1.8x, debt to EBITDA at 3.5x-4.0x, and FFO to debt above 12% next year." Outlook The negative outlook reflects S&P's view that JSL's cash flow generation, and consequently its leverage metrics, could be more pressured in the medium term if mobility restrictions are exacerbated in Brazil in the next few months or if the economic contraction lasts for longer than predicted. Downside scenario S&P said, "We could downgrade JSL in the next 6-12 months if we perceive that Brazil's recession will be more severe and the impacts will be more lasting for JSL's business, leading to weaker cash flow generation in its different segments, with EBITDA falling more than 30% compared to 2019. In that scenario, we would expect EBIT interest coverage below 1.1x, debt to EBITDA above 5.0x, and FFO to debt below 12% in 2020 and 2021." Upside scenario S&P could revise the outlook to stable in the next 12 months if the impacts of the pandemic are shorter than expected, rental car use rates recover at a rapid pace in the next few months, and we have more clarity on 2021 Brazilian economic activity. In this scenario, EBIT interest coverage would remain about 1.7x , debt to EBITDA below 4.0x, and FFO‐to‐debt ratio consistently above 12%. Movida Participacoes S.A. S&P said, "We affirmed our 'brAA' national scale ratings on Movida with a negative outlook. The outlook reflects the risks of weaker economic activity leading to RaC utilization rates at lower levels for a longer period, and reduced fleet management business and used car sales. Our current scenario points to a deterioration in credit metrics in 2020, with EBIT interest coverage at about 2.0x compared with 2.3x in 2019. This scenario incorporates our forecast of a 70% utilization rate for its RaC business in 2020, higher car depreciation rates, somewhat stable cash flows from its fleet management business, and a 5%-10% decline in used car sales compared to 2019. "We expect Movida to maintain an adequate liquidity position even amid weaker cash flow generation. Its latest cash position of R$1.3 billion, including issuances in April and May,, more than covers its short-term debt of R$581 million in March 31, 2020. Movida's ability to maintain used car sales while temporarily suspending vehicle acquisitions in the initial stages of the pandemic -- adapting its fleet size to the current market conditions -- also support its liquidity position. We also observe that its negotiations with carmakers and banks for suppliers' financing, which would reduce working capital consumption this year, would provide further liquidity cushion. In our base case, we expect Movida to comply with acceleration-type financial covenants for its debentures and promissory notes in 2020, but with a limited cushion of about 13%." Outlook The negative outlook reflects the possibility of a downgrade should utilization rates for Movida's RaC business not improve in the coming months because of an extended impact of the pandemic while fleet management and used car sales activity worsen, hurting the company's cash generation and credit metrics. Downside scenario S&P could lower the ratings in the next 6-12 months if RaC utilization rates were to remain close to 55%-60% and/or if it was to expect weaker cash flows from fleet management and used car sales, resulting in an overall EBITDA reduction of about 25% this year. In this scenario, S&P would see EBIT interest coverage below 1.7x and FFO to debt below 12% in 2020 and 2021. Upside scenario S&P could revise the outlook to stable if the impacts of the pandemic are shorter than expected, RaC utilization rates recover rapidly in the next few months, and it gains more clarity about Brazil's economic activity in 2021. In this scenario, EBIT interest coverage would remain above 2.0x and FFO to debt consistently above 12%. At the same time, Movida would keep an adequate liquidity position, with sources over uses of cash consistently above 1.2x. Companhia de Locacao da Americas S.A. (Unidas S.A.) S&P said, "We affirmed our 'brAAA' national scale rating on Unidas with a negative outlook. Even though Unidas is less exposed to the rental car segment compared to other players, the negative outlook on the company also reflects our expectation of weaker cash flow generation from its RaC business and downside risks to its fleet management and used car sales businesses. We forecast about 10% decline in EBITDA stemming from the RaC impact and higher car depreciation rates (20% increase year-over-year), which should result in EBIT interest coverage ratio of 2.0x-2.3x and FFO to debt close to 17%-20% by the end of 2020. We currently forecast somewhat improved RaC, fleet management, and used cars industry conditions in 2021, which would allow the company to post credit metrics similar to pre-pandemic levels, with an EBIT interest coverage ratio of 2.5x-3.0x and FFO-to-debt ratio close to 25%-30%." Unidas' equity follow-on in late 2019 allowed the company to enter the pandemic with a strong cash position. The company used part of the proceeds to pay down suppliers, while its latest cash position of about R$1.5 billion, including issuances in April , comfortably covers short-term debt of R$120 million and could even allow for some increase in fleet size, should market conditions improve. Outlook The negative outlook reflects the possibility of a downgrade should rental car utilization rates for Unidas not improve in the coming months because of an extended impact of the pandemic while fleet management and used car sales activity worsen, hampering the company's cash generation and credit metrics. Downside scenario S&P could lower the rating in the next 12 months if the rent-a-car, fleet management, and used car market don't recover as expected after the impacts of the pandemic diminish, resulting in Unidas' EBIT interest coverage staying below 1.7x and its FFO-to debt-ratio remaining below 12% on a sustained basis. Upside scenario S&P could revise the outlook to stable if the impacts of the pandemic are shorter than expected, RaC utilizationrates recover quickly in the next few months, and it has more visibility about Brazil's forecasted economic recovery in 2021. In this scenario, EBIT interest coverage would remain above 3.0x and FFO-to-debt ratio consistently above 20%. Vix Logistica S.A. S&P said, "The downgrade of Vix to 'brA+' from 'brAA-' and the negative outlook reflect that we expect much weaker EBITDA and cash flow generation for Vix's parent company, Águia Branca Participacoes (GAB; not rated), due to mobility restrictions and lower economic activity. We expect a severe demand contraction of about 50% in GAB's bus passenger transport division and about 30% in its auto and truck dealer division in 2020 compared with 2019. However, we believe the group will burn cash in the bus passenger transport division only in the second quarter, because it's reducing its operations and selling assets. Still, because of much weaker operations in these two segments, combined with a decline in Vix's EBITDA of about 5% in 2020, we expect GAB's gross debt to EBITDA to peak near 6.0x in 2020, compared with 4.2x in 2019. "Even amid the reduction of some contracts due to lower economic activity, we expect a lower impact on Vix's cash flows compared with the overall group, given its exposure to more resilient businesses, such as its dedicated logistic and fleet management businesses. The company has shown active risk management, lowering investments while selling assets. Nevertheless, the negative outlook on the rating reflects the potential downward pressure on Vix's and the group's cash generation amid lower demand for transport because of depressed economic activity this year and an uncertain path for recovery. We expect Vix to post gross debt to EBITDA of close to 5.0x in 2020 compared with 4.6x in 2019. "We don't see significant liquidity pressures in the next 12 months. As of March 31, 2020, GAB and Vix each had a cash position of R$900 million and R$400 million, respectively, compared with R$431 million and R$368 million of short-term debt, and both have accessed credit markets to reinforce cash position in the past few weeks. We also expect Vix to comply with its acceleration-type covenant of net debt to EBITDA below 4x with a cushion of about 20% in 2020." Outlook The negative outlook reflects S&P's expectation of higher leverage in 2020 because of the depressed economy and mobility restrictions hurting the company and group's businesses, resulting in gross debt to EBITDA close to 5.0x for Vix and about 6.0x for the group in 2020. Downside scenario S&P could lower the ratings on Vix in the next 6-12 months if the company's cash flow generation and liquidity position worsen because of the prolonged effect of the pandemic, resulting in gross debt to EBITDA above 5x for both Vix and the group throughout 2020 and 2021. Upside scenario S&P said, "We could revise the outlook to stable if we have a clearer view of the path of economic recovery in 2021 and the company is able to improve its operating performance such that we would expect leverage below 4.5x consistently for both Vix and the group. LM Transportes Interestaduais Servicos e Comercio S.A. (LM) S&P affirmed its 'brA' rating on LM with a negative outlook. S&P said, "The outlook reflects our view of downside risks to the company's cash flow generation due to uncertainties about the impact that the economic recession will have on different sectors of the economy over the next few quarters, and the unclear recovery path. Still, the affirmation reflects the somewhat stable cash flows forecast from its fleet management business, which has some concentration in the more resilient food and utilities sectors. We expect EBIT interest coverage ratio to remain close to 2.0x and FFO to debt to be 10%-15% in 2020. "The company has a less than adequate liquidity position, with sources of cash covering short-term needs by about 1.15x over the next 12 months as of March 2020. Additionally, we expect a tight cushion of less than 10% on LM's financial covenant that requires debt to EBITDA below 3.0x. On the other hand, we believe that LM has some ability to adjust its debt position to comply with covenants due to high liquid nature of part of its assets, mainly the light vehicles." Outlook The negative outlook reflects the possibility of a downgrade should an extended impact from the pandemic translate into weaker cash flow generation for LM because of deterioration drop in its fleet management and used car sales activity. Downside scenario S&P said, "We could lower the ratings on LM in the next 6-12 months if we were to expect weaker cash flow generation resulting in FFO to debt below 12% and EBIT interest coverage close to 1.3x. In addition, we could lower the ratings if LM's liquidity profile worsened due to such conditions and it faced restrictions to refinance, potentially breaching its covenants." Upside scenario S&P said, "We could revise the outlook to stable if we have a clearer view of the path of economic recovery in 2021 and the company's operating performance improves such that EBIT interest coverage would remain above 2.0x and FFO to debt above 15% in a consistent manner. In this scenario, we would also see a higher cushion on LM's financial covenants." Ratings List Ratings Affirmed; Outlook/CreditWatch Action To From Localiza Rent a Car S.A. Issuer Credit Rating BB+/Stable/-- BB+/Watch Neg/-- Brazil National Scale brAAA/Stable/-- brAAA/Stable/-- Senior Unsecured Brazil National Scale brAAA brAAA Recovery Rating 3(65%) 3(65%) To From JSL S.A. Issuer Credit Rating BB-/Negative/-- BB-/Watch Neg/-- Brazil National Scale brAA+/Negative/-- brAA+/Watch Neg/-- Senior Unsecured Brazil National Scale brAA+ brAA+/Watch Neg Recovery Rating 3(60%) 3(60%) To From JSL Europe Senior Unsecured BB- BB-/Watch Neg Recovery Rating 3(60%) 3(60%) To From Movida Participacoes S.A. Issuer Credit Rating Brazil National Scale brAA/Negative/-- brAA/Watch Neg/-- Senior Unsecured Brazil National Scale brAA brAA/Watch Neg Recovery Rating 3(65%) 3(65%) To From LM Transportes Interestaduais Servicos e Comercio S.A. Issuer Credit Rating Brazil National Scale brA/Negative/-- brA/Watch Neg/-- To From Companhia de Locacao das Americas S.A. Issuer Credit Rating Brazil National Scale brAAA/Negative/-- brAAA/Watch Neg/-- Senior Unsecured Brazil National Scale brAAA brAAA/Watch Neg Recovery Rating 3(65%) 3(65%) To From Unidas S/A Issuer Credit Rating Brazil National Scale brAAA/Negative/-- brAAA/Watch Neg/-- Senior Unsecured Brazil National Scale brAAA brAAA/Watch Neg Recovery Rating 3(65%) 3(65%) Downgraded; Outlook/CreditWatch Action To From Vix Logistica S.A. Issuer Credit Rating Brazil National Scale brA+/Negative/-- brAA-/Watch Neg/-- Senior Unsecured Brazil National Scale brA+ brAA-/Watch Neg Recovery Rating 3(60%) 3(60%) =================== C O S T A R I C A =================== BAC SAN JOSE 2014-2: Fitch Cuts Ratings on DPR Program to 'BB+' --------------------------------------------------------------- Fitch Ratings has downgraded the ratings assigned to the outstanding series issued by BAC San Jose DPR Funding Ltd to 'BB+' from 'BBB-'. The transaction Outlook has been revised to Stable from Negative. The rating action on the DPR transaction follows the downgrade of Banco BAC San Jose, S.A. and the sovereign, Costa Rica. The 'BB+' rating translates to a two-notch uplift from the Local-Currency (LC) Issuer Default Rating of the originator, BAC SJ (LC IDR: BB-/Negative). BAC San Jose DPR Funding Ltd - 2014-2 (144A) 05633WAB9; LT BB+ Downgrade - 2014-2 (Reg S) USG0701RAB18; LT BB+ Downgrade - 2014-2 05633WAD5; LT BB+ Downgrade TRANSACTION SUMMARY The series issued by BAC SJ DPR are backed by existing and future USD-denominated diversified payment rights originated by BAC SJ which is part of the BAC/Credomatic group. The majority of DPRs are processed by designated depositary banks that have signed acknowledgement agreements. Fitch's ratings address timely payment of interest and principal on a quarterly basis. KEY RATING DRIVERS Credit Quality of BAC SJ: On May 14, 2020, Fitch downgraded BAC SJ's LC IDR to 'BB-' from 'BB' with a Negative Outlook, following the rating action on the sovereign. The LC IDR is consistent with the maximum uplift of two notches above the sovereign rating allowed by Fitch's criteria. Fitch also downgraded BAC SJ's Viability Rating to 'b' from 'b+'. The VR maintains the ratings at the same level of the sovereign rating, reflecting the high influence of the sovereign and the local operating environment over the financial sector and the credit profile of the bank. Going Concern Assessment Score: Fitch uses a Going Concern Assessment score to gauge the likelihood that the originator of a future flow transaction will stay in operation throughout the transaction's life. Fitch assigns a GCA score of 'GC2' to BAC SJ, based on the bank's strategic importance to its parent as well as its position as the largest private bank in Costa Rica, representing approximately 14% of system assets. The score allows for a maximum of four notches above the LC IDR of the originator, however, additional factors limit the maximum uplift. Notching Uplift from IDR: The GCA score of 'GC2' allows for a maximum uplift of four notches from the originator's IDR; however, uplift is tempered to two to three notches as the originating bank is one category from investment grade and further tempered to two notches, in this instance, as BAC SJ's IDR is support-driven. The bank's VR is 'b'. Coronavirus Impact and Containment Measures Pressure Transaction Flows: BAC SJ has continued to process a steady volume of DPR flows during the first four months of 2020. While these flows are slightly lower when compared to 2019 flows during the same period, Fitch expects that global events such as the expected sharp economic contractions given the coronavirus pandemic and different containment measures will translate into a continued decrease in transaction cash flows, which can add pressure to the assigned ratings. Therefore, the potential volatility of the DPR flows limits the notching differential of the transaction. Coverage Levels Commensurate with Assigned Rating: Global events including the coronavirus crisis are expected to negatively impact DPR flows. These situations have already translated into a slight decrease in flows as of April 30, 2020. The projected quarterly debt service coverage ratios are expected to be more than sufficient to meet debt service obligations for the remainder of the transaction. The DPR transaction can withstand a significant drop in flows and still cover a maximum quarterly principal and interest payment. Fitch will continue to monitor the performance of the flows, as potential pressures could negatively impact the assigned ratings. Strong Program Performance: Fitch has observed average quarterly DSCRs of 77.50x for the program since 2015. This is above Fitch's expectation of average quarterly DSCRs of 55.41x for the life of the program as the transaction has started to de-lever and the 2014-1 series was paid in full in November 2019. This calculation considers average quarterly rolling DPR flows and the maximum quarterly debt service. BAC SJ's growing DPR business line is supported by the bank's historical market share of the country's DPR market, its longstanding relationships with key corporate clients and Costa Rica's dynamic export sector. The DSCR is in line with coverage levels observed in other DPR programs. Moderate Program Size: The outstanding DPR program represents approximately 0.91% of BAC SJ's total liabilities and 8.97% of its nondeposit funding as of the bank's March 2020 financials. Fitch considers these ratios small enough to differentiate the credit quality of the financial future flow transaction from the originator's LC IDR. Sovereign Ratings: On May 8, 2020, Fitch downgraded Costa Rica's Long-Term Foreign-Currency IDR to 'B' from 'B+'. The Rating Outlook is Negative. Costa Rica's 'B' rating reflects the increased risks of near-term financing stress due to widening fiscal deficits, a steep amortization schedule and borrowing constraints against a background of economic contraction caused by the effects of the coronavirus pandemic. The ongoing health crisis comes at a time when Costa Rica's fiscal space is limited and rapidly narrowing, raising risks to post-crisis debt sustainability. The interest bill is climbing rapidly, and the debt burden is on a relatively steep upward trajectory. The Negative Outlook reflects further downside risks to debt sustainability amid uncertain prospects for post-crisis fiscal consolidation, economic growth and borrowing costs. Sovereign/Diversion Risks Reduced: The structure mitigates certain sovereign risks by keeping cash flows offshore until scheduled debt service is paid to investors, allowing the transaction to be rated above Costa Rica's country ceiling. Fitch believes payment diversion risk is partially mitigated by the AAs signed by the four correspondent banks processing the vast majority of USD DPR flows. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: Fitch does not anticipate developments with a high likelihood of triggering an upgrade. However, the main constraint to the program rating is the originator's rating and bank's operating environment. If upgraded, Fitch will consider whether the same uplift could be maintained or if it should be further tempered in accordance with criteria. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: The transaction ratings are sensitive to changes in the credit quality of the originating bank. A deterioration of the credit quality of the sovereign and/or originating bank by more than one notch is likely to pose a constraint to the rating of the transaction from its current level. The transaction ratings are sensitive to the ability of the DPR business line to continue operating, as reflected by the GCA score. Additionally, the transaction rating is sensitive to the performance of the securitized business line. The quarterly DSCRs are expected to be more than sufficient to cover debt service obligations and should therefore be able to withstand a significant decline in cash flows in the absence of other issues. However, significant further declines in flows could lead to a negative rating action. Any changes in these variables will be analyzed in a rating committee to assess the possible impact on the transaction ratings. No company is immune to the economic and political conditions of its home country. Political risks and the potential for sovereign interference may increase as a sovereign's rating is downgraded. However, the underlying structure and transaction enhancements mitigate these risks to a level consistent with the assigned rating. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven 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 seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. DPR-CR LIMITED 2017-1: Fitch Cuts Ratings on DPR Program to 'BB+' ----------------------------------------------------------------- Fitch Ratings has downgraded the ratings assigned to the outstanding series issued by DPR-CR Limited to 'BB+' from 'BBB-'. The Rating Outlook has been revised to Stable from Negative. The rating action on the DPR transaction follows the downgrade of the Banco Davivienda Costa Rica (D-CR) and the sovereign, Costa Rica. The 'BB+' rating translates to a two-notch uplift from the Local Currency Issuer Default Rating of the originator, D-CR (LC IDR BB-/Negative). RATING ACTIONS DPR-CR Limited - 2017-1 G2616*AA3; LT BB+; Downgrade - 2017-2 G2616*AB1; LT BB+; Downgrade TRANSACTION SUMMARY The future flow program is backed by U.S. dollar-denominated existing and future diversified payment rights originated by Banco Davivienda Costa Rica, S.A. The majority of DPRs are processed by designated depository banks that have executed acknowledgement agreements, irrevocably obligating them to make payments to an account controlled by the transaction trustee. Fitch's ratings address timely payment of interest and principal on a quarterly basis. KEY RATING DRIVERS Credit Quality of Banco Davivienda Costa Rica (D-CR): The rating of the transaction is tied to the credit quality of Davivienda Costa Rica. On May 14, 2020, Fitch downgraded Banco Davivienda Costa Rica's LC IDR to 'BB-' from 'BB' with a Negative Outlook, reflecting the downgrade and Negative Outlook on the sovereign rating. The LC IDR is consistent with the maximum uplift of two notches above the sovereign rating allowed by Fitch's criteria. Fitch also downgraded Banco Davivienda Costa Rica's Viability Rating to 'b' from 'b+'. The VR maintains the ratings at the same level of the sovereign rating, reflecting the high influence of the sovereign and the local operating environment over the financial sector and the credit profile of the bank. The ratings assigned to D-CR are driven by the support the bank would receive from its Colombian parent, Banco Davivienda (Davivienda; BBB-/Negative), if necessary. Going Concern Assessment Score: Fitch uses a GCA score to gauge the likelihood that the originator of a future flow transaction will stay in operation throughout the transaction's life. Fitch rates a going concern assessment score of 'GC2' to D-CR, based on the bank's strategic importance to its parent as well as its moderate importance within the Costa Rican financial system. The score allows for a maximum of four notches above the LC IDR of the originator; however, additional factors limit the maximum uplift. Notching Uplift from IDR: The GCA score of 'GC2' allows for a maximum uplift of four notches from the originator's IDR; however, uplift is tempered to two to three notches as the originating bank is one category from investment grade and further tempered to two notches, in this instance, as D-CR's IDR is support-driven (The bank's VR is b). Coronavirus Impact and Containment Measures Pressure Transaction Flows: Banco Davivienda Costa Rica has continued to process a steady volume of DPR flows during the first three months of 2020, but has seen a decrease in volume in April 2020 as expected due to the coronavirus containment measures in place. While these flows are slightly lower when compared to 2019 flows during the same period (first four months of the year), Fitch expects that global events such as the expected sharp economic contractions given the coronavirus pandemic and different containment measures will translate into a continued decrease in transaction cash flows, which can add pressure to the assigned ratings. Therefore, the potential volatility of the DPR flows limits the notching differential of the transaction. Coverage Levels Commensurate with Assigned Rating: Global events including the coronavirus crisis are expected to negatively impact DPR flows. These situations have already translated into a slight decrease in flows as of April 30, 2020. The projected quarterly debt service coverage ratios are expected to be greater than 33x for the transaction, and the DPR transaction can withstand a significant drop in flows and still cover a maximum quarterly principal and interest payment. Nevertheless, Fitch will continue to monitor the performance of the flows, as potential pressures could negatively impact the assigned ratings. Adequate Debt Service Coverage: Fitch expects quarterly debt service coverage ratios to be approximately 44.1x the maximum quarterly debt service for remaining life of the program. D-CR's growing DPR business line is supported by the bank's well-regarded franchise, its longstanding relationships with key corporate clients, and Costa Rica's dynamic export sector. This calculation considers average quarterly rolling DPR flows since 2017and the maximum quarterly debt service stressed according to Fitch's 'BB+' level interest rate stress. Reductions in coverage levels would be a constraint on the future flow ratings. Moderate Program Size: The future flow transaction represents approximately 3.51% of the bank's total funding and 10.26% of non-deposit funding as of March 31, 2020. While Fitch considers these ratios small enough to differentiate the credit quality of the financial future flow transaction from the originator's LC IDR, an increase in future flow debt size would constrain the transaction ratings. Sovereign Ratings: On May 8, 2020, Fitch downgraded Costa Rica's Long-Term Foreign Currency IDR to 'B' from 'B+'. The Rating Outlook is Negative. Costa Rica's 'B' rating reflects the increased risks of near-term financing stress due to widening fiscal deficits, a steep amortization schedule and borrowing constraints, against a background of economic contraction caused by the effects of the coronavirus pandemic. The ongoing health crisis comes at a time when Costa Rica's fiscal space is limited and rapidly narrowing, raising risks to post-crisis debt sustainability. The interest bill is climbing rapidly, and the debt burden is on a relatively steep upward trajectory. The Negative Outlook reflects further downside risks to debt sustainability amid uncertain prospects for post-crisis fiscal consolidation, economic growth and borrowing costs. Sovereign/Diversion Risks Reduced: The structure mitigates certain sovereign risks by keeping cash flows offshore until scheduled debt service is paid to investors, allowing the transaction to be rated above Costa Rica's country ceiling. Fitch believes payment diversion risk is partially mitigated by the AAs signed by the five correspondent banks processing the vast majority of DPR flows. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch does not anticipate developments with a high likelihood of triggering an upgrade. However, the main constraint to the program rating is the originator's rating and bank's operating environment. If upgraded, Fitch will consider whether the same uplift could be maintained or if it should be further tempered in accordance with criteria. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The transaction ratings are sensitive to changes in the credit quality of the originating bank. A deterioration of the credit quality of the sovereign and/or originating bank by more than one notch is likely to pose a constraint to the rating of the transaction from its current level. -- The transaction ratings are sensitive to the ability of the DPR business line to continue operating, as reflected by the GCA score. Additionally, the transaction rating is sensitive to the performance of the securitized business line. The quarterly DSCRs are expected to be sufficient to cover debt service obligations and should therefore be able to withstand a significant decline in cash flows in the absence of other issues. However, significant further declines in flows or an increase in the level of future flow debt as a percentage of the bank's liabilities could lead to a negative rating action. Any changes in these variables will be analyzed in a rating committee to assess the possible impact on the transaction ratings. -- No company is immune to the economic and political conditions of its home country. Political risks and the potential for sovereign interference may increase as a sovereign's rating is downgraded. However, the underlying structure and transaction enhancements mitigate these risks to a level consistent with the assigned rating. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven 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 seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. 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 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). =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Chicken Farms Have Tons Sitting in Freezers --------------------------------------------------------------- Dominican Today reports that Dominican Republic's normal demand for chicken is 17.5 million birds per month but the pandemic has slashed it by 35% and is currently around 65%. The closed hotels, restaurants, fast food businesses and the shortened hours in the markets have led the poultry sector to have more than 10 million pounds accumulated, plus the chickens on farms ready to slaughter. "Tourism has a consumption of three to four million pounds a month, today it is part of what we have saved. We have saved 12 million pounds frozen, apart from the live chickens that we have left on the farm," said Dominican Poultry Association (ADA) president Pavel Concepcion. 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. Danilo Medina Sanchez is the current president of the nation, since 2012. 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: Issues US$727.3 Million of Debt --------------------------------------------------- Dominican Today reports that the Dominican Republic Finance Ministry disclosed a special issue of internal debt of RD$40 billion (US$727.3 million) to deal with the pandemic. The bonds were purchased by four pension fund managers, Finance said in a statement, according to Dominican Today. The securities, called COVID-19 economic stimulus emergency bonds, were purchased in equal parts by AFP Crecer, Popular, Reservas and Siembra, the report notes. The investment in the bonds, made in coordination with Dominican Republic's Central Bank, will be used for economic reactivation, the development of infrastructure projects and social programs, the report relays. 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. Danilo Medina Sanchez is the current president of the nation, since 2012. 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: National Palace Mulls Economic Revival ---------------------------------------------------------- Dominican Today reports that President Danilo Medina met with Dominican business and union sector leaders who, according to a statement from the National Palace, went to propose ideas for the country's economic revival due to the pandemic. The statement sent by the Presidency emphasizes that the proposals would be in the sense of "a gradual and orderly reactivation," according to Dominican Today The meeting comes after Public Health Minister, Rafael Sanchez Cardenas, announced that the National District will be intervened in three consecutive days as part of a plan to prevent the spread of the coronavirus, the report notes. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Danilo Medina Sanchez is the current president of the nation, since 2012. 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). =========== M E X I C O =========== BRASKEM IDESA: S&P Lowers ICR to 'B+', Outlook Negative ------------------------------------------------------- S&P Global Ratings, on May 19, 2020, lowered its issuer credit and issue-level ratings on Braskem Idesa, S.A.P.I., Mexico-based polyethylene producer, to 'B+' from 'BB-'. The recovery rating on rated debt remains at '3'. Braskem Idesa started operating its "Fast-Track" strategy in February 2020 for ethane imports (its main raw material) to make up for shortfalls in deliveries from Petroleos Mexicanos and support the plant's expansion through higher production volumes. This strategy mainly involves importing ethane from the U.S. using vessels, delivering it in tanks to terminals, and finally transporting the ethane by truck to Braskem Idesa's facilities. S&P said, "We expect the 'Fast-Track' to enable the company to increase its polyethylene production, and consequently, boost its revenue for 2020. However, the current global economic downturn and a dramatic declines in oil prices could slow the recovery in polyethylene prices. This would keep the company's sales prices under pressure longer than previously expected, preventing its EBITDA from rising. As a result, the company's deleveraging will take longer than estimated. Braskem Idesa posted debt to EBITDA of 6.2x by the end of 2019, and we expect it to be around 6.4x by year-end. However, we expect the metric to drop below 5.0x by the end of 2021 as the company continues to increase its production volumes amid rising polyethylene sales prices." Braskem Idesa's performance has been strengthening through rising revenue and EBITDA margins that are above those of other industry players due to competitive raw material costs, vertical integration, increasing sales volume, and geographic diversification. The company's EBITDA margins are currently 40%-45%. Due to the COVID-19 pandemic, S&P believes that Braskem Idesa will continue to enhance its operating performance through higher volume sales. This is because demand for the high and low density polyethylene will continue to grow given that most of its applications are oriented to more resilient industries such as the packaging, hygiene, cleaning, pharmaceuticals, food and beverage, among others. Products from these industries are of basic necessity, and consumption of which during the pandemic have skyrocketed. Around 65% of Braskem Idesa's sales are oriented to the packaging industries. The company also sells its product to other industries such as construction and automotive manufacturing, which generate 14% and 1% of total revenue, respectively. Both sectors are currently suffering a slowdown; however, S&P expects the company to balance its sales to other sectors. Additionally, Braskem Idesa's diversified customer base continues to support consistent cash flows. Despite our expectations of greater sales volumes, the polyethylene price will remain weak and its recovery could be slower than expected. This would reduce the company's EBITDA with an EBITDA margin dropping to around 40% by the end of 2020 from 47% at the end of 2019. The company's debt structure mainly consists of a project finance loan and a recent issuance of $900 million in secured notes due 2029. S&P said, "We expect Braskem Idesa to slightly reduce its debt in 2020 as it continues to amortize its project finance loan under its current maturity schedule. Therefore, given a lower EBITDA in 2020 and stable debt level, we believe the deleveraging process could take longer than originally expected, given our expectations of debt to EBITDA at around 6.4x in 2020 and 4.6x in 2021." S&P said, "We believe Braskem Idesa's solid business operations still support the rating. This is because the nature of its product is more resilient to macroeconomic downturns given the flexibility of its applications and the wide range the final industries that demand polyethylene. Additionally, the company's liquidity is a rating strength given that Braskem Idesa doesn't have substantial short-term obligations and we expect its financial metrics to improve in the upcoming years due to the expected deleveraging." ===================== P U E R T O R I C O ===================== HOTEL CUPIDO: Wants to Move Exclusivity Filing Period to May 31 --------------------------------------------------------------- Hotel Cupido Inc., Wilmer Tacoronte Ortiz, Remliw Inc., and Monte Idilio Inc. asked the U.S. Bankruptcy Court for the District of Puerto Rico for an extension of the exclusivity period to file a joint disclosure statement and a joint plan of reorganization to May 31. The Debtors further asked for an extension of the period to secure votes to confirm a joint Plan to be sixty days from the date when the Court approves the Debtors' joint Disclosure Statement. The Governor of Puerto Rico issued an Executive Order declaring a state of emergency due to COVID-19, ordering a mandatory quarantine, and the closure of all non-essential businesses from March 15 through March 30, which has been subsequently extended until May 3. The Debtors' businesses are classified in the Executive Order as a non-essential business or commercial activity subject to the lockdown and curfew. Thus, the Debtors needed additional time to re-evaluate the financial consequences caused by the unprecedented lockdown and the impact in their cash flow and the projections that form an integral part of the projections to be included in the joint disclosure statement. Damaris Quinones Vargas, Esq., the Debtors' counsel, told the Court that "the Debtors are currently trying to weather the financial storm caused by COVID 19, although we must recognize that we are navigating the unchartered waters of a rough sea of financial uncertainty; but notwithstanding, we have the responsibility to present to the Court, the creditors and other parties in interest with numbers in tune with what the news call the new normal." About Hotel Cupido Hotel Cupido Inc. is a privately held company that owns and operates hotels and motels. Hotel Cupido sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 19-03799) on June 30, 2019. At the time of the filing, the Debtor disclosed $488,176 in assets and $3,213,031 in liabilities. The case is assigned to Judge Edward A. Godoy. The Debtor is represented by Bufete Quinones Vargas & Asoc. ===================================== T R I N I D A D A N D T O B A G O ===================================== CARIBBEAN AIRLINES: Does First Cargo Only Charter Flight -------------------------------------------------------- RJR News reports that Caribbean Airlines Limited has carried out its first cargo only charter service. The flight, was part of the airline's recently launched charter service, and was used to move essential supplies from Guyana to Cuba, according to RJR News. Caribbean Airlines said the new service was introduced to serve islands experiencing reduced cargo capacity due the closure of borders to commercial passenger flights due to COVID-19, th report notes. About Caribbean Airlines Caribbean Airlines Limited - http://www.caribbean-airlines.com/- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. CARIBBEAN AIRLINES: Secures US$65 Million Loan ---------------------------------------------- Asha Javeed at Trinidad Express reports that the Trinidad and Tobago has agreed to guarantee a US$65 million (US$442 million) loan to majority State-owned Caribbean Airlines (CAL). Finance Minister Colm Imbert made the announcement at the virtual press conference hosted by Ministry of Communications, according to Trinidad Express. In April, the Express had exclusively reported that CAL had approached the Government to guarantee a US$65 million loan to help keep it afloat in the coming months, the report notes. Chief executive Garvin Medera had told the company's staff that while CAL was able to fund April's salaries it would need external funding for the coming months, the report relays. Imbert said: "Caribbean Airlines is earning no money at this point in time" so the Government agreed to guarantee the loan, the report relates. Since Covid-19 hit the Caribbean in March 2020, the airline's flights dwindled as borders were closed to contain the spread of the virus, the report discloses. According to the Auditor General's 2019 Report, the Ministry of Finance already services a US$75 million loan for CAL, taken under the People's Partnership administration, at First Citizens, the report relays. That balance, according to the report which was laid in Parliament last Friday is $478,594,222.56, the report says. CAL's fleet, which comprises Boeing 737-800s and ATR72-600 aircraft, has remained, for the most part, grounded, the report notes. T&T's borders closed on March 23 and have remained closed except for cargo flights and flights authorized by the Minister of National Security, the report relays. On April 29, CAL disclosed that the aircraft will be used as part of its cargo charter service within the Caribbean and on May 8, it utilized one of its Boeing 737-800 passenger aircraft for its first cargo-only charter service from Guyana to Cuba, the report notes. According to CAL, the new service was introduced to serve islands experiencing reduced cargo capacity due the closure of borders to commercial passenger flights due to Covid-19. CAL Cargo aims to service Barbados, Grenada, Guyana, Jamaica, St Lucia, St Vincent and Suriname, the report relays. It's all-cargo B-737 freighter service operates weekly out of its Miami hub to the Caribbean, the report relays. "Using their interline partners, CAL can provide connections globally out of the Miami gateway. The airline is currently offering special prices on barrel and e-container shipments to help customers ship care packages to families and friends during this unprecedented time," the company said in a press statement at the time, the report notes. Antigua and Barbuda's Tourism Minister Charles Fernandez said the country will welcome its first international flight on June 4 from American Airlines which will be followed by Caribbean Airlines in mid-June and British Airways in July, the report relays. CAL declined to comment. National Security Minister Stuart Young said the Government has enlisted CAL to undertake the mission to bring university students from Jamaica and Barbados back to T&T, the report relays. The airline, which is 13 years old, has had a turbulent few years and was on its way to financial recovery before the coronavirus, the report discloses. On March 12, when T&T recorded its first Covid-19 case, CAL was set to host a re-branding function which was cancelled, the report says. Last year, the company released its unaudited 2018 financial results which said that the airline has made a profit of $42 million, the report relays. The statement showed that while the airline recorded $158 million in earnings before interest and tax on international routes, it made negative $47 million on the airbridge, the report says. The company's net income from international flights and other operations was $109 million, while domestic airbridge operations made a net loss of $67 million with total revenues increased by 11 per cent to $292 million, the report relays. The last time CAL, which is majority-owned by the Government, presented annual financial statements to the public was in 2015, for its 2014 performance, when it recorded a US$60 million loss, the report adds. About Caribbean Airlines Caribbean Airlines Limited - http://www.caribbean-airlines.com/- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. TRINIDAD & TOBAGO: Credit Unions Sign On to Emergency Loan Program ------------------------------------------------------------------ Trinidad Express reports that six credit unions have signed their liquidity support loan agreements with the Dominican Republic Ministry of Finance and will start providing loans to members whose incomes have been eroded or depleted as a result of the Covid-19 pandemic. The program, which is financed by the Dominican Republic Government, is intended to provide funds to members so that they can continue to pay their bills and feed families until their circumstances can be improved or when they can turn around their situations, according to Trinidad Express. Loans will be granted at an annual rate of six per cent with a maximum principal amount of $15,000, the report notes. Participating credit unions include Community Care Credit Union, PSCU Credit Union, Pentecostal Credit Union, Venture Credit Union, Runnemede Credit Union and Mason Hall Credit Union, ther eport relays. All the participating credit unions will receive backroom technical support from the Central Finance Facility (CFF), the financial and developmental institution of the local cooperative movement, the report discloses. This follows the signing of the agreement with the Government on April 27, 2020, for the establishment of a Government-financed liquidity support loan facility which will back the coronavirus relief loan, the report relays. This loan facility was specially established to enable credit unions to provide the necessary support to their members who have been negatively affected by the Covid-19 pandemic, the report discloses. Present at the signing were Minister of Finance, Colm Imbert, Vice President of the Central Finance Facility (CFF), Lyndon Byer and President of the Cooperative Credit Union League of Trinidad & Tobago, Joseph Remy, the report notes. In a statement issued, the Central Finance Facility said individuals can access the facility by contacting their respective credit unions or contacting the Central Finance Facility (CFF) at 739 4496 or via e-mail: c19support@centralfinancefacility.com. "As the country continues to battle the effects of the Covid-19 pandemic, the Central Finance Facility (CFF) continues to press for the survival and security of its members and their membership," said the CFF, the report relays. In a statement issued on March 18, outlining the measures it had taken to support the population, the Ministry of Finance said: "The Government will institute a liquidity support loan program through the credit union movement to its members. The objective of the program would be to provide liquidity support to individuals and those small businesses who qualify for credit union loans. "Individuals and businesses who access the programme will be expected to repay the loans advanced to them within 12 months after the end of the affected period. These loans will attract a reduced interest rate of 50 per cent of the existing credit union interest rate, ie from 12 per cent to six per cent, and will be supported with funding from the Government," the report relays. The Government and the Co-operative Credit Union League (CCUL) signed a memorandum of understanding (MOU) for the roll out of the $100 million emergency income loan facility on April 27, 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 * * *