/raid1/www/Hosts/bankrupt/TCRLA_Public/200528.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
Thursday, May 28, 2020, Vol. 21, No. 107
Headlines
A R G E N T I N A
ARGENTINA: Fitch Cuts LT IDR to RD on Interest Payment Failure
ARGENTINA: S&P Cuts Ratings on Four of Country's USD Bonds to 'D'
ARGENTINA: Tries to Escape Default as it Misses Bond Payment
B O L I V I A
BOLIVIA: IDB Facilitates Ventilators Buyout as Part of Financing
B R A Z I L
GLOBO: Loses 350,000 Subscribers; Losses Could Exceed R$40Million
OI SA: Fitch Cuts Foreign Curr IDR to CCC+ on Weak Operating Trends
C H I L E
LATAM AIRLINES: Fitch Cuts LT IDR to D on Debt Reorganization
LATAM AIRLINES: Moody's Cuts CFR to Ca on Chapter 11 Filing
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Around 6,000 Homes Won't Be Built in 2020
DOMINICAN REPUBLIC: Dominican Internet Recovers Lost Speed
E C U A D O R
ECUADOR: Egan-Jones Lowers Senior Unsecured Ratings to CCC-
J A M A I C A
JAMAICA: MSMEs Urged to Adopt Business Continuity Plan
P A N A M A
MULTIBANK INC: S&P Lowers ICRs to 'BB+/B', Outlook Stable
P A R A G U A Y
PARAGUAY: IDB Approves $210 Million Loan to Address COVID-19
P U E R T O R I C O
MCIG INC: Changes Corporate Name to "Bots, Inc."
V E N E Z U E L A
DIRECTV: Venezuelan Court Orders Regime to Seize, Reactivate Firm
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A R G E N T I N A
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ARGENTINA: Fitch Cuts LT IDR to RD on Interest Payment Failure
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Fitch Ratings has downgraded Argentina's Long-Term Foreign-Currency
Issuer Default Rating to Restricted Default from 'C'.
The issue ratings on the three senior unsecured foreign-currency
bonds were downgraded to 'D' from 'C' and withdrawn for the
following reason: bankruptcy of the rated entity, debt
restructuring or issue/tranche default.
KEY RATING DRIVERS
The downgrade of Argentina's rating to 'RD' follows the failure of
the authorities to pay interest due on three sovereign bonds within
the stipulated 30-day grace period that expired on May 22. This
marks an event of default under Fitch's criteria with respect to
the sovereign's Issuer Default Rating as well as the individual
issue ratings of the affected securities (Global 2021, 2026 and
2046 bonds).
The sovereign continues to negotiate with creditors for a
comprehensive restructuring of its external bonds. Bondholders
rejected the initial debt exchange offer made by the authorities on
April 16, and have since submitted counter-offers. The government
has extended its deadline for completion of negotiations to June 2
from May 22. The parties involved have indicated recent progress
toward a comprehensive restructuring, although uncertainty remains
around the prospects for reaching a deal with acceptance from
bondholders sufficient to meet the different thresholds set in
"collective action clauses" in the securities.
Should a deal be reached and result in a bond restructuring, this
would constitute a "distressed debt exchange" under Fitch's
criteria. Should this operation normalize relations with the
international financial community, in Fitch's view, it would result
in the upgrade of the sovereign's ratings out of 'RD' to a level
consistent with its credit fundamentals on a forward-looking
basis.
Argentina's Local Currency IDRs remain 'RD', given that the
authorities have continued the strategy of swapping
peso-denominated debt instruments on terms that Fitch has deemed
distressed.
ESG - Governance: Argentina has an ESG Relevance Score of 5 for
both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption, as
is the case for all sovereigns. Theses scores reflect the high
weight that the World Bank Governance Indicators have in Fitch's
proprietary Sovereign Rating Model. Argentina has a medium WBGI
ranking at the 52nd percentile, reflecting a recent track record of
political transitions that have been peaceful, but been accompanied
by high policy uncertainty; moderate control of corruption,
government effectiveness and regulatory quality and rule of law;
and above-average voice and accountability.
ESG - Creditor Rights: Argentina has an ESG Relevance Score of 5
for Creditor Rights as willingness to service and repay debt is
highly relevant to the rating and is a key rating driver with a
high weight. Argentina has recently defaulted on its debt and has
done so many times in the past, for extended periods in some cases.
The current 'RD' rating indicates another default has occurred.
SOVEREIGN RATING MODEL AND QUALITATIVE OVERLAY
In accordance with its rating criteria, for ratings of 'CCC' and
below, Fitch's sovereign rating committee has not utilized the SRM
and QO to explain the ratings, which are guided instead by its
ratings definitions.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centered
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Completion of a commercial debt restructuring that Fitch judges
to have normalized relations with the international financial
community, after which point Fitch will assign ratings based on a
forward-looking analysis of the sovereign's willingness and
capacity to honor its prevailing foreign currency debt
obligations.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Due to the rating being in Restricted Default, negative actions are
not applicable.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Public Finance issuers have a
best-case rating upgrade scenario (defined as the 99th percentile
of rating transitions, measured in a positive direction) of three
notches over a three-year rating horizon; and a worst-case rating
downgrade scenario (defined as the 99th percentile of rating
transitions, measured in a negative direction) of three notches
over three years. The complete span of best- and worst-case
scenario credit ratings for all rating categories ranges from 'AAA'
to 'D'. Best- and worst-case scenario credit ratings are based on
historical performance.
KEY ASSUMPTIONS
Fitch expects growth of the global economy, and that of key trading
partner Brazil, in line with the projections outlined in the latest
Global Economic Outlook update in May.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Argentina has an ESG Relevance Score of 5 for Political Stability
and Rights as World Bank Governance Indicators have the highest
weight in Fitch's SRM and are highly relevant to the rating and a
key rating driver with a high weight.
Argentina has an ESG Relevance Score of 5 for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight.
Argentina has an ESG Relevance Score of 5 for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver, as for all sovereigns. Argentina has recently
defaulted on its debt and has done so many times in the past, for
extended periods in some cases. The current 'RD' rating indicates
another default has occurred.
Argentina has an ESG Relevance Score of 4 for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or to the way in which they
are being managed by the entity(ies).
Argentina
- LT IDR RD; Downgrade
- ST IDR C; Affirmed
- LC LT IDR RD; Affirmed
- LC ST IDR RD; Affirmed
- Country Ceiling CCC; Affirmed
- Senior unsecured; LT D; Downgrade
- Senior unsecured; LT WD; Withdrawn
ARGENTINA: S&P Cuts Ratings on Four of Country's USD Bonds to 'D'
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S&P Global Ratings lowered its issue ratings on four of Argentina's
U.S. dollar-denominated bonds to 'D' from 'CC'.
S&P said, "We lowered the issue ratings on three New York-law U.S.
dollar-denominated international bonds -- BIRAD 2021, BIRAD 2026,
and BIRAD 2046 -- to 'D' from 'CC' because the government missed
US$500 million in coupon payments. These payments were originally
due April 22, and the grace period expired May 22. These bonds will
remain at 'D' pending conclusion of the debt renegotiations that
are currently underway.
"We also lowered the issue rating on an Argentine-law U.S.
dollar-denominated bond, the BONAR 2024, to 'D' from 'CC'. The bond
had US$1.6 billion in coupon and principal payments due May 7.
These payments were not made, since the bond was captured by
government decree 346/2020, dated April 6, that postponed payment
of all U.S. dollar-denominated principal and interest on local-law
debt to at least 2021, or when deemed feasible by the government.
"This decree led to S&P Global Ratings lowering its foreign
currency issuer credit rating on Argentina to 'SD' on April 7,
2020. We viewed this unilateral extension as tantamount to default
under our criteria. The government has also signaled that,
following the conclusion of the ongoing restructuring negotiations
of foreign-law debt, it would apply equitable treatment to
local-law foreign currency debt. As a result, once we lower any
such bond issue rating to 'D', we will keep it there until that
process has concluded."
ARGENTINA: Tries to Escape Default as it Misses Bond Payment
------------------------------------------------------------
Daniel Politi at The New York Times reports that Argentina missed a
bond payment on May 22 and inched closer to another crushing
default, which would plunge it into a new period of economic
isolation and deepen a recession that has been exacerbated by the
coronavirus pandemic.
The missed deadline means Argentina has technically entered default
for the ninth time in its history, according to The New York Times.
But the government signaled that it was making progress toward a
deal with creditors to restructure $66 billion in foreign debt and
announced that negotiations would continue until June 2, the report
notes.
President Alberto Fernandez downplayed the missed payment and said
the government would not accept a deal that deepens the economic
pain for Argentines who have seen their earning power decimated by
the pandemic, the report relays.
"I want the world to see us as an honorable country that fulfills
its commitments," he said in a speech, the report discloses.
Argentina's last defaulted on its debt in 2014, and its long
history of spending beyond its means and defaulting on loans has
given it a reputation as a deadbeat, the report relays. But its
current efforts to negotiate an advantageous restructuring of its
debt have drawn broad support by prominent figures including Pope
Francis and Senator Elizabeth Warren of Massachusetts, a lawyer and
recognized expert on bankruptcy and commercial law, the report
notes.
"With Covid-19 worsening an already weak economy, this is no time
for Wall Street creditors to exploit any country struggling to deal
with debt burdens," Ms. Warren wrote on Twitter recently. "A fair
deal will help save more lives," the report discloses.
A group of 138 economists, including the Nobel laureates Joseph
Stiglitz and Edmund Phelps, signed an open letter urging
Argentina's creditors to come to an agreement with the
cash-strapped country, the report says. The International Monetary
Fund has also expressed optimism about the negotiations to
restructure Argentina's debt, which it has characterized as
"unsustainable," the report relates.
Argentina's economy minister, Martin Guzman, who is leading the
negotiations, expressed optimism that the country would avoid a
prolonged default, the report notes.
"Argentina is holding constructive negotiations with its
creditors," he said in an email, the report relates. "The positive
thing about all this is that there is a willingness from all sides
to seal a deal, now the agreement needs to be an agreement that is
sustainable," the report adds.
Hans Humes, the C.E.O. of Greylock Capital Management, who is
involved in the negotiations, said during a panel discussion hosted
by the Wilson Center that the consequences of Argentina technically
slipping into default would be minimal in the short term, the
report notes.
"There should be enough flexibility to get to a deal that's
acceptable," he said, sounding upbeat about the ongoing
negotiations, the report discloses.
The government's initial offer to creditors, which was roundly
rejected, called for a three-year grace period on future payments,
a 5.4 percent reduction in the loan balance and a 62 percent cut in
interest payments, the report says.
Argentina had initially offered to pay about 40 cents on the
dollar, while creditors demanded 60 cents, the report relays.
Analysts say the two sides appear closer to accepting a midpoint
between 50 and 55 cents, the report discloses.
Argentina's economy, which has been in a recession for more than
two years, took a major hit after the government imposed a strict
lockdown in mid-March to curb the spread of the coronavirus, the
report notes.
Analysts said there would be no significant consequences to
Argentina missing the deadline, the report relates.
"A soft default doesn't look like such a negative scenario compared
to what we're dealing with today," said Todd Martinez, an expert on
Argentina at Fitch Sovereign Ratings Group. "In practice, not a lot
changes, although it may have some psychological impact," the
report says.
But if talks break down in coming days, Argentina will face a new,
lengthy period of economic isolation and contraction, the report
notes.
"If it extends for a prolonged period of time, that is when you
will start seeing difficulty to access credit for companies and
people, as well as complications in the exchange market and
inflationary pressure," said Daniel Marx, a former finance
secretary who heads Quantum Finanzas, a consultancy, the report
discloses.
Although polls show that Argentines would rather not fall into
default, the issue has not dominated the news in recent days, the
report relays.
"I'm really not following it," Victoria Ferreira, a 37-year-old
venue manager, said. "I'd rather worry about things I can solve."
Living in Argentina, she added, means there is always "a context of
uncertainty," the report 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.
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B O L I V I A
=============
BOLIVIA: IDB Facilitates Ventilators Buyout as Part of Financing
----------------------------------------------------------------
Bolivia's Ministry of Health, based on an analysis of immediate and
necessary actions to address the coronavirus crisis, purchased 170
Spanish-made ventilators of the RESPIRA brand. The devices were
considered appropriate to help meet the increase in demand for
mechanical ventilation for COVID-19 patients in municipalities
where intensive-care services are lacking, and to complement the
resources available in tertiary hospitals.
Following a request by the Bolivian Government, the Inter-American
Development Bank facilitated the purchase of these devices as part
of $82 million in financing that had been reassigned to support the
country's response to the public-health emergency. The contracting
of goods and services financed by the IDB is performed by executing
agencies that work with the government entity in charge of the
project. The agencies solicit, receive and evaluate offers and
award contracts.
For its part, the IDB examines the bidding procedures and contract
to verify that the process is carried out in accordance with agreed
practices. In coordination with executing agencies, the Bank
performs subsequent project reviews and verifications, tracking
results and assimilating the experience gained.
In this circumstance, the Bank followed the aforementioned steps,
analyzing the executing agency's solicitation of bids, the contract
between the parties, and the legal details and technical arguments
made by the agency, after which no objection was given to the
process. The result of this initiative to date is the availability
of the 170 ventilators in a very short period, given the complexity
of the process and the extremely high global demand for medical
equipment today.
The IDB will continue to collaborate on efforts to mitigate the
impact of the pandemic in Bolivia and the region.
As reported in the Troubled Company Reporter-Latin America on March
23, 2020, Moody's Investors Service downgraded the Government of
Bolivia's local and foreign currency issuer and senior unsecured
debt ratings to B1 from Ba3, and changed the outlook to negative,
concluding the review for downgrade that was initiated on December
5, 2019.
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B R A Z I L
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GLOBO: Loses 350,000 Subscribers; Losses Could Exceed R$40Million
-----------------------------------------------------------------
Dorah Feliciano at Rio Times Online reports that Premiere, Globo's
pay-per-view service focused on sports content, has lost over
350,000 subscribers after the suspension of national soccer
championships due to the novel coronavirus pandemic.
The subscriber base has dropped by around 20 percent since March
15, according to Rio Times Online. In total, the platform had 1.8
million subscribers before the pandemic, the report notes.
The termination of subscriptions represents a loss that could range
from R$28 (US$5,06) to R$41 million, the report says.
In a note, Globo Group sports executives stated that the number is
within the expected loss margin, the report relays.
"Once soccer returns, a significant recovery of Premiere is
expected" according to a Globo spokesperson, the report adds.
OI SA: Fitch Cuts Foreign Curr IDR to CCC+ on Weak Operating Trends
-------------------------------------------------------------------
Fitch Ratings has downgraded Oi S.A's ratings, including the
Long-Term Foreign Currency Issuer Default Rating to 'CCC+' from
'B-', the LT Local Currency IDR to 'CCC+' from 'B-', the National
LT Rating to 'B(bra)'/Stable' from 'BB-(bra')/Stable, and the 2025
notes to 'CCC+'/'RR4' from 'B-'/'RR4'. The Rating Outlook on the
international ratings has been removed.
The downgrade reflects the company's weak operating trends and the
deterioration in the Brazilian operating environment, which will
hinder Oi's return to growth. While the company has adequate
liquidity in 2020, the company's business model and financial
performance is unsustainable relative to capex requirements and
debt service in 2022 and beyond.
KEY RATING DRIVERS
Slower than Expected Recovery: Oi's turnaround prospects remain
weak heading into the coronavirus downturn. Revenues shrank by 9%
in 2019 (vs. a forecasted decline of 5%-6%), with EBITDA margins
falling to 22% (vs. 25% forecast). Subscriber trends are negative
as fixed-voice and overall broadband subscribers are falling as the
company focuses on its fiber-to-the-home offering. Post-paid is
showing very strong growth, but the company's mobile base is more
heavily weighted than its competitors' toward lower-revenue
pre-paid subs. While Fitch previously expected revenues to
stabilize in 2021, the return to growth has been delayed to 2022 or
beyond.
Adequate Liquidity, Low Financial Flexibility: Fitch expects Oi to
have enough liquidity to meet its opex, capex, and debt service
requirements in 2020, although refinancing risk is increasing.
Beginning in January 2022, the company faces significant debt
payments, including the PIK debentures (issued at BRL2.5 billion),
which carry significant FX risk, as the principal is
USD-denominated. The PIK amortization is followed by the resumption
of interest and principal payments on the restructured debt in
2022, and 2023 respectively. Faced with high cash burn, the company
may have difficulty refinancing debt or raising additional equity.
The significant depreciation of the Brazilian real is a negative
for the company, and it has less room to reduce capex than regional
peers.
Weakening Financial Profile: Oi's credit metrics continue to
deteriorate as revenue declines, margin compression, and high
investments cause high cash burn. Net leverage metrics, which
declined following the debt restructuring, are on the rise. Fitch's
adjusted net debt / EBITDA leverage ratio is higher than 8.0x in
2020 and beyond (up from 6.2x in 2019). While standard credit
metrics don't fully capture the nuance of Oi's financial structure
given the company's long-dated amortization profile, the sustained
rise in leverage suggests the company's financial profile is
unsustainable. Fitch adjusts Oi's reported debt and EBITDA to back
out the fair-value adjustment of restructured debt and IFRS16
add-backs.
Asset Sales to Continue: Oi has headroom to raise BRL2.0 billion in
vendor credit; however, given the gap between operating cash flow
and investment requirements, the company is reliant on asset sales
to fund its capital expenditures. In 1Q2020, the company completed
the sale of its African operations for USD1.0 billion (BRL4.8
billion). Without the sale, which Fitch had expected before YE2019,
the company's ratings would have been pressured due to liquidity
concerns. Fitch forecasts that the company will continue to sell
non-core assets of around BRL2.0 billion, in line with the
strategic plan, in 2020 and 2021.
Mobile Sale Would Be a Positive: Fitch does not include the
divestment of the company's mobile arm in its base case, due to the
significant uncertainties surrounding the sale process. Oi has
begun negotiations with potential acquirers and creditors regarding
the valuation and use of proceeds. Fitch expects that a sale could
take place in 2020, to be followed by a regulatory review, and
close by YE2021. To the extent that the sale would enable Oi to
reduce its leverage and access additional financing, a sale would
likely result in an upgrade of Oi's rating.
Coronavirus Impact on Telecoms: Fitch does not expect the same
level of disruption to telecom as other sectors from the
coronavirus. Increased screen time, across both fixed and mobile
platforms, will likely be offset by declining disposable incomes,
pressuring cash flow generation. Carriers in Brazil do not face the
same non-suspension measures as regional peers, but Fitch forecasts
deteriorating working capital as customers lengthen / default on
bills. While Fitch generally expects telecom operators to reduce
capex in the 15%-25% range, Oi's investment needs as part of its
turnaround are high. Combined with Brazilian real depreciation, the
company has limited room to reduce capex.
Declining Market Position: Oi's competitors made substantial
advances while the company's operating performance deteriorated,
before and during its judicial reorganization. Over the last two
years, Oi has spent BRL13.7 on cash capex (32.5% of revenues).
Ultimately, Oi's turnaround prospects hinge on its ability to
convert these network investments into subscribers, now that their
debt overhang has been eliminated. The descent of the Brazilian
economy into another recession is a negative for the higher-end
telecom services (e.g. smartphones, postpaid, fiber) more
generally.
DERIVATION SUMMARY
Oi's ratings reflect its restructured financial profile and the
still-uncertain outlook for its turnaround strategy. Compared to
Latin American carriers in the low speculative grade / distressed
territory, such as Digicel Group Limited, Oi has better
diversification and liquidity. Digicel benefits from its business
position in a series of duopoly markets, which support EBITDA
margins above 40%. Digicel is in the process of restructuring its
debt for the second time in as many years; like Oi, the first debt
restructuring did not involve a principal haircut but rather the
extension of maturities.
Compared to American carriers that have restructured or declared
bankruptcy, such as Windstream and Frontier, Oi has a better
business position as the third largest telecom operator in Brazil,
as well as better diversification.
The ratings are not constrained by Brazil's operating environment
or country ceiling, but the company is wholly exposed to
fluctuations in the Brazilian macroeconomic environment
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
-- Revenues declining by approximately 7% in 2020 and 1% in 2021
before stabilizing and returning to growth in 2022, as strong fiber
broadband and postpaid growth is insufficient to fully mitigate
declines in copper, voice, and prepaid;
-- Fitch-adjusted EBITDA margins around 22%;
-- Capital intensity of 30%-35% of revenues in 2020, down from
37% (BRL7.4 billion) in 2019;
-- Continued non-core asset sales of approximately BRL2.0 over
the next two years;
-- Minimal tax payments;
-- Fitch's base case does not assume a sale of the mobile arm.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A sale of the mobile unit would be a positive, if it were
accompanied by a reduction in debt and additional financial
access.
-- Revenue stabilization and growth, driven by sustained
increases in subscribers as the company regains market share and
monetizes its investments in mobile data and fiber broadband
networks.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Continued deterioration in operating performance, driven by
subscriber losses in mobile and broadband, which results in
continued revenue decline.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity, Low Flexibility: As of YE2019, Oi had cash and
securities of BRL2.3 billion down against short-term debt of BRL326
million. Oi reports long-term debt of BRL17.9 billion, to which
Fitch adds back the fair value adjustment of BRL13.4 billion, which
results in long-term debt of BRL31.3 billion. Per Fitch
methodology, credit metrics ratios are calculated based on the par
value rather than the fair value or market value of debt. Standard
credit metrics are less meaningful for Oi, given its extended
amortization schedule.
Following the completion of the company's debt restructuring in
2018, the vast majority of debt is payable in 2025 and beyond, per
the Judicial Reorganization Plan. Oi does not have meaningful
access to external debt funding, and Fitch does not include
additional equity capital in its base case. The company is reliant
on asset sales to continue funding its ambitious capex program. The
company is exposed to FX risk, through the 2022 PIK debentures and
the 2025 PIK Toggle notes, as well as its restructured debt.
Furthermore, Fitch estimates that over 60% of Latin American
telecom capex is dollar denominated, which is particularly a
concern for Oi, given its investment requirements.
The JRP allowed for an additional BRL2.5 billion of debt financing,
which the company secured through a private placement in December
2019 in US-denominated secured PIK instrument. The debentures,
issued in January of 2020, mature in January 2022 (unless certain
conditions are met). The debentures accrue PIK interest of 12.7%
and 13.6% in year one and two, respectively. In 1Q2020, the company
completed the sale of its African operations for USD1.0billion,
along with real estate sales of BRL121 million. Pro-forma for the
divestments and the new notes, Fitch expects that the company will
have sufficient liquidity (when combined with approximately BRL4.2
billion in EBITDA in 2020) to maintain operations and investments
in 2020 and 2021.
SUMMARY OF FINANCIAL ADJUSTMENTS
- Financial statements adjusted for operating leases, consistent
with Fitch criteria;
- Reversed out fair-value adjustment to debt.
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
Oi has an ESG Score of 4 on Financial Transparency, owing to the
complexity of its restructured balance sheet.
Except for the matters discussed, 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).
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C H I L E
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LATAM AIRLINES: Fitch Cuts LT IDR to D on Debt Reorganization
-------------------------------------------------------------
Fitch Ratings has downgraded LATAM Airlines Group S.A.'s Long-Term
Foreign Currency Issuer Default Rating to 'D' from 'CC' and its
National scale Long-term rating to 'D(cl)' from 'CC(cl). LATAM
Finance's unsecured notes were affirmed at 'C' and the recovery
rating for the notes was revised to 'RR6' from 'RR5'. LATAM's
national scale unsecured notes were affirmed at 'C(cl)'. The
National Equity Rating has been affirmed at 'Segunda Clase Nivel 5
(cl)'.
The downgrades to 'D' follow LATAM's announcement that it, together
with its affiliates in Chile, Peru, Colombia, Ecuador and the
United States, initiated a reorganization and restructuring of
their debt under Chapter 11 protection in the United States. This
process will result in material changes in the terms and conditions
of its debt. Once the airline exits the administration proceedings,
Fitch will assess its new strategy and restructured financial
profile and re-rate LATAM accordingly.
The revision of the recovery rating of the bonds to 'RR6' from
'RR5' reflects the additional subordination of this debt and lower
expected recoveries following the announcement that LATAM's main
shareholders intend to provide USD900 million of senior secured
debtor-in-possession financing.
KEY RATING DRIVERS
Voluntary Reorganization Proceedings: LATAM announced on May 25,
2020 that it had filed for bankruptcy protection from its creditors
in light of the effects of the coronavirus on the worldwide
aviation industry. The group has secured the financial support of
its main shareholders, including the Cueto and Amaro families and
Qatar Airways, to provide up to USD900 million in DIP financing.
LATAM's affiliates in Argentina, Brazil and Paraguay are not
included in the Chapter 11 filing. LATAM's affiliate in Brazil is
still in discussions with the Brazilian government about financial
support for its domestic operations.
Coronavirus Assumptions: LATAM has responded to the challenging
environment by reducing capacity by 95% during April and May. The
recovery of capacity utilization levels remains uncertain as the
virus spreads and more restrictive measures are imposed that stifle
demand. Since mid-March, LATAM has announced lease payment
deferrals, renegotiations with suppliers and a significant
reduction in personnel expenses.
Large Exposure to International Market: Around 51% of LATAM 2019's
revenues were originated from long haul international routes. The
recovery of this market remains highly uncertain, as certain
countries or regions are expected to continue to restrict travel in
the face of continued outbreaks. LATAM has a strong business
position in the region as the leader or secondary leader in most
markets/countries. Besides the aforementioned international routes,
LATAM's revenues were distributed within Brazilian domestic market
(30%) and Spanish-speaking countries' domestic markets (19%).
DERIVATION SUMMARY
The rating has been downgraded to 'D' as the company has entered
voluntary administration.
KEY ASSUMPTIONS
Key assumptions in Fitch's rating case include a steep drop in
demand through 2020, with full recovery only occurring by 2022.
During 2020, Fitch's base case includes revenues down roughly 90%
through the second quarter of the year, down as much as 70% in the
third quarter, and down 40% in the fourth quarter for domestic
focused carriers and closer to 50% for carriers with more
international exposure. Fitch incorporates the company's efforts to
reduce variable costs, including salary and wages, marketing
expenses and services operations, as well as capex reduction and
deferral of aircraft deliveries, as already announced.
Fitch's recovery analysis assumes that LATAM would be reorganized
as a going concern in bankruptcy rather than liquidated. Fitch has
assumed a 16% administrative claim that consists of the USD900
million of DIP financing. Fitch's GC EBITDA estimate reflects
Fitch's view of a sustainable, post-reorganization EBITDA level
upon which Fitch bases the enterprise valuation. Fitch's GC EBITDA
is marginally above 2020 forecast levels, incorporating the current
pandemic crisis, but still below 2021. An enterprise value multiple
of 5.0x EBITDA is applied to the GC EBITDA to calculate a
post-reorganization EV. Historical bankruptcy case studies exit
multiples for peer companies ranged from 3.1x to 6.8x.
Fitch applies a waterfall analysis to the post-default EV based on
the relative claims of the debt in the capital structure. The
agency's debt waterfall assumptions take into account the company's
total debt at Dec. 31, 2019. Fitch assumed the proposed USD900
million DIP financing in its recovery considerations. These
assumptions result in a poor recovery rate for the unsecured bonds
consistent with the 'RR6' range.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch will rate LATAM following its exit from the
administration proceedings based on its new strategy and financial
profile.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The company is rated 'D', and therefore, there can be no
negative rating action on the IDR.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
LATAM held cash of USD1.5 billion as of Dec. 31, 2019, compared
with short-term debt of USD1.9 billion and total debt of USD10.4
billion. Of this short-term debt, USD1.5 billion is related to
financial debt and USD0.4 billion is related to leasing
obligations. Around 49% of LATAM's debt was secured, 29% unsecured,
and 30% related to leasing obligations. LATAM had in place a senior
secured revolving credit facility of USD600 million, which had a
combination of aircraft, spare engines and spare parts as
collateral. Considering the current scenario of tight liquidity and
seeking to boost its cash position, LATAM fully withdrew this RCF.
LATAM's cash position as of May 25, 2020 was USD1.3 billion.
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 listed below.
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).
LATAM AIRLINES: Moody's Cuts CFR to Ca on Chapter 11 Filing
-----------------------------------------------------------
Moody's Investors Service has downgraded LATAM Airlines Group
S.A.'s corporate family rating to Ca from B1. The outlook is
negative. This concludes the review initiated on March 17, 2020.
The Baa2 rating on LATAM Pass Through Trust 2015-1A and Ba1 rating
on LATAM Pass Through Trust 2015-1B are unchanged and remain on
review for downgrade. Subsequent to its actions, LATAM's CFR will
be withdrawn shortly following the filing for Chapter 11.
Downgrades:
Issuer: LATAM Airlines Group S.A (LATAM)
Corporate Family Rating, Downgraded to Ca from B1
Ratings unchanged:
Issuer: LATAM Pass Through Trust 2015-1A
Senior Secured Enhanced Equipment Trust, Baa2 on review for
downgrade
Issuer: LATAM Pass Through Trust 2015-1B
Senior Secured Enhanced Equipment Trust, Ba1 on review for
downgrade
Outlook Actions:
Issuer: LATAM Airlines Group S.A (LATAM)
Outlook, Changed to Negative from Ratings Under Review
Outlooks unchanged:
Issuer: LATAM Pass Through Trust 2015-1A
Outlook, unchanged Ratings Under Review
Issuer: LATAM Pass Through Trust 2015-1B
Outlook, unchanged Ratings Under Review
RATINGS RATIONALE
The downgrade to Ca reflects LATAM's announcement that the company
and its affiliates in Chile, Peru, Colombia, Ecuador and the United
States have filed for voluntary protection under the U.S. Chapter
11 financial reorganization process and its view that losses to
existing unsecured creditors could be higher than 70%. LATAM's
affiliates in Argentina, Brazil and Paraguay are not included in
the filing. The rating action concludes the review initiated on
March 17, 2020.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The passenger
airline sector has been one of the sectors most significantly
affected by the shock given its exposure to travel restrictions and
sensitivity to consumer demand and sentiment. More specifically,
the weaknesses in LATAM's credit profile have left it vulnerable to
shifts in market sentiment in these unprecedented operating
conditions and LATAM remains vulnerable to the outbreak continuing
to spread. Its action reflects the impact on LATAM of the breadth
and severity of the shock, and the broad deterioration in credit
quality it has triggered. Moody's regards the coronavirus outbreak
as a social risk under its ESG framework, given the substantial
implications for public health and safety.
The Chapter 11 filing is a result of a sharper decline in passenger
traffic than initially anticipated and a slower recovery that will
prevent passenger demand from reaching 2019 levels before 2023. The
International Air Travel Association's (IATA) latest scenario
analysis forecasts a decline in global passenger numbers of around
24% for the full year 2020 while 2019 levels will not be exceeded
until 2023. Since the outbreak of coronavirus LATAM has been
experiencing a significant cash burn, leading to a weakening
liquidity profile and a significantly higher leverage.
With the Chapter 11 financial reorganization LATAM expects to
resize its operations and reorganize its capital structure to the
new demand environment, remaining operational as conditions permit
throughout the process.
Moody's base case assumptions are that the coronavirus pandemic
will lead to a period of severe cuts in passenger traffic for 2020
with partial or full flight cancellations and aircraft groundings,
with all regions affected globally. The base case assumes a gradual
recovery in passenger volumes starting in the third quarter.
However, there are high risks of more challenging downside
scenarios and the severity and duration of the pandemic and travel
restrictions is uncertain. Moody's analysis assumes a reduction of
around 60 % in LATAM's passenger traffic for the full year 2020 and
a 40% reduction for 2021, with volumes recovering to 2019 levels
only by 2023.
Moreover, the economic slowdown in Latin American economies coupled
with increased risk aversion globally is driving the sharp
devaluation in local currencies in the region. Accordingly, LATAM
is particularly exposed to the depreciation of both the Brazilian
Real and the Chilean Peso, which together comprise about 40% of the
company's revenues. This effect is only partially mitigated by the
important reduction in fuel prices.
Moody's anticipates that the airline industry will require
continued and further support from regulators, national governments
and labor representatives to alleviate pressures on slot
allocations, provide indirect or direct financial support and
manage airlines' cost bases. Although there is nothing concrete
yet, the Brazilian government announced that it is considering
measures to support the airlines operating in Brazil including, but
not limited to long term credit lines and working capital lines to
be provided by state owned banks as well as allowing the companies
to defer tax payments.
LIQUIDITY
LATAM's liquidity is weak in light of the challenges ahead. LATAM
had around U$1.3 billion in cash at the date of the Chapter 11
filing. The company has secured the financial support of
shareholders, including the Cueto and Amaro families, which have
lasting ties to LATAM, and Qatar Airways, to provide up to U$900
million in debtor-in-possession financing. Moody's expects that
losses for existing unsecured creditors could be higher than 70%.
The negative outlook reflects Moody's view of a more prolonged
recovery to the airline industry and LATAM's limited financial
flexibility. Subsequent to its actions, LATAM's CFR will be
withdrawn shortly following the filing for Chapter 11.
Changes in the EETC ratings can result from any combination of
changes in the underlying credit quality or ratings of the company,
Moody's opinion of the importance of the aircraft collateral to the
operations and/or its estimates of current and projected aircraft
market values, which will affect estimates of loan-to-value.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Passenger Airline
Industry published in April 2018.
COMPANY PROFILE
LATAM Airlines Group S.A is a Chile-based airline holding company
formed by the business combination of LAN Airlines S.A. of Chile
and TAM S.A. of Brazil in June 2012. LATAM is the largest airline
group in South America, with a local presence for domestic
passenger services in six countries (Brazil, Chile, Peru, Ecuador,
Argentina and Colombia). The company also provides intraregional
and international passenger services and has a cargo operation that
is carried out using belly space on passenger flights and dedicated
freighter service. In 2019, LATAM generated $10 billion in net
revenue and carried more than 74 million passengers and 904,000
tons of cargo.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Around 6,000 Homes Won't Be Built in 2020
-------------------------------------------------------------
Dominican Today reports that the construction sector builds some
6,000 homes each year but for 2020, it's estimated that close to
that number were paralyzed by the emergency period caused by
COVID-19 in the Dominican Republic.
Dominican Home Builders and Developers Association (Acoprovi) first
vice president Jorge Montalvo said the halted housing construction
occurred in different stages: some would be in the completion
phase, others would be in a middle phase and others just starting,
according to Dominican Today.
"We estimate that 6,000 homes are built annually, that is, that we
could estimate that close to this number are the homes that could
be paralyzed in these two months," he said, the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for the Dominican Republic stands
at BB- with negative outlook (April 2020). Moody's credit rating
for the Dominican Republic was last set at Ba3 with stable outlook
(July 2017). Fitch's credit rating for the Dominican Republic was
last reported at BB- with negative outlook (May 8, 2020).
DOMINICAN REPUBLIC: Dominican Internet Recovers Lost Speed
----------------------------------------------------------
Dominican Today reports that the rise of more than 40% of Internet
consumption in Dominican homes caused by the closure imposed to
contain the Covid-19, caused in the first days of quarantine a drop
of up to 35% in download speed by the mobile network, and 5% in the
fixed one; however, the numbers and the service have managed to
achieve stability.
According to the Global Index that the company Ookla created to
measure the impact of the coronavirus on Internet behavior
worldwide, Internet speed on the Dominican Republic's fixed network
dropped only -7% as of May 19, while the mobile presented a
decrease of -2%, after having reached 23.40mbps, the report notes.
However, those numbers were not like that at the beginning of the
running of the bulls, according to Dominican Today.
On the most critical day, March 23, the speed on both networks
reached 23.27 Mbps and 15.24 Mbps, respectively, the report
relays.
"This shows that people have already stopped using the mobile
Internet and are preferring the fixed one," technological
entrepreneur Arturo Lopez explained to EL DIA, who highlighted the
strength shown by local telephone companies, which have been able
to maintain a stable service, despite 40% increase in video
consumption, the report discloses.
He alerted the population to make reasonable use of the service,
avoid video calls and streaming, whenever possible, to maintain the
quality of the service, the report says.
Inconvenient
Claro network users suffered a breakdown in the voice and data
service that was solved in a short time by the company, the report
relays. Low speed does not necessarily affect quality, Arturo
Lopez said, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for the Dominican Republic stands
at BB- with negative outlook (April 2020). Moody's credit rating
for the Dominican Republic was last set at Ba3 with stable outlook
(July 2017). Fitch's credit rating for the Dominican Republic was
last reported at BB- with negative outlook (May 8, 2020).
=============
E C U A D O R
=============
ECUADOR: Egan-Jones Lowers Senior Unsecured Ratings to CCC-
-----------------------------------------------------------
Egan-Jones Ratings Company, on May 18, 2020, downgraded the foreign
currency and local currency senior unsecured ratings on debt issued
by the Republic of Ecuador to CCC- from CCC+. EJR also downgraded
the rating on commercial paper issued by the Company to D from C.
=============
J A M A I C A
=============
JAMAICA: MSMEs Urged to Adopt Business Continuity Plan
------------------------------------------------------
RJR News reports that micro, small and medium-sized enterprises
(MSMEs) in Jamaica are being encouraged to adopt the Ministry of
Industry and Commerce's Business Continuity Plan aimed at
mitigating against risks and failures.
Portfolio Minister, Audley Shaw, said he is concerned about how
prepared businesses are to utilize the digital mode of operation,
according to RJR News.
Mr. Shaw said with COVID-19 putting a wrench in the operation of
many local businesses, more resources need to be devoted to a
technology infused continuity plan that would allow for their
continued profitability and longevity, the report relays.
He was delivering remarks at a webinar hosted by the American
Chamber of Commerce of Jamaica, at the Ministry's St. Lucia Avenue
offices, the report adds.
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings revised on April 16, 2020 its outlook on Jamaica to
negative from stable. At the same time, S&P 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.
The TCR-LA also reported that Fitch Ratings, in April 2020, 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.
===========
P A N A M A
===========
MULTIBANK INC: S&P Lowers ICRs to 'BB+/B', Outlook Stable
---------------------------------------------------------
S&P Global Ratings lowered its long-term global scale issuer credit
rating on Multibank to 'BB+' from 'BBB' and its short-term global
scale issuer credit rating to 'B' from 'A-2'. At the same time, S&P
lowered its issue-level rating on the company's $300 million senior
unsecured notes to 'BB+' from 'BBB'. Finally, S&P removed the
ratings from CreditWatch with negative implications, where it had
placed them on Nov. 1, 2019. The outlook is stable.
S&P said, "We removed our ratings on Multibank from CreditWatch
negative and downgraded the bank, reflecting the announcement on
May 22, 2020, of its acquisition by Banco de Bogota (BB+/Stable/B)
after all regulatory requirements were finalized. We now consider
Multibank as a core subsidiary to its new parent, Banco de Bogota.
Therefore, we cap the ratings on Multibank at the level of its new
parent. In our view, in a hypothetical financial stress of Banco de
Bogota, the group could negatively affect the creditworthiness of
Multibank." This could be in the form of a potential transfer of
assets from one group entity to the other, or, if the group is in a
stress situation, it could trigger business or financial
difficulties for members of the group.
S&P said, "Multibank's core group status reflects our opinion of
its strategic importance for its parent, and our expectation that
Banco de Bogota will support Multibank with capital or liquidity if
needed. With this acquisition, Banco de Bogota will become the
second largest financial group in the Panamanian banking industry,
which is the market with the largest growth prospects in Central
America. We anticipate that Multibank's brand recognition, product
expertise, and its know-how in the commercial and private banking
business segments will create a strong synergy with BAC
International Bank, Inc. and will accelerate Banco de Bogota's
expansion strategy in the region. In addition, we expect Multibank
will continue to be a relevant market participant, maintaining its
current risk appetite and operating in the same business lines as
its parent.
"Our assessment of Multibank's stand-alone credit profile (SACP)
remains unchanged at 'bbb'. We consider that although we expect
lower profitability levels and worsening asset quality indicators
this year due to the ongoing pandemic, we believe the bank's SACP
will remain the same." Well-diversified business operations,
historically solid corporate governance, and conservative
underwriting practices will support the latter. Moreover,
Multibank's risk-adjusted capital ratio will stay at solid
levels--projected at 11% for the next 24 months--which in
conjunction with its broad deposit base and prudent liquidity
management will provide enough cushion to absorb potential
deviations from our current projections.
===============
P A R A G U A Y
===============
PARAGUAY: IDB Approves $210 Million Loan to Address COVID-19
------------------------------------------------------------
The Inter-American Development Bank (IDB) approved a loan for
Paraguay to strengthen the efficiency and effectiveness of its
public policy and fiscal management to address the public health
and economic crises triggered by COVID-19. The project calls for a
total of $210 million in lending, of which $160 million will be
financed by the IDB and $50 million by the Korea Infrastructure
Development Co-Financing Facility for Latin America and the
Caribbean, or KIF, which is administered by the IDB.
Among other policy measures, the project will support temporary
transfer programs that will benefit more than 300,000 low-income
families, allowing them to buy food, medicine and basic goods, and
a 40 percent increase in the country's health care budget so as to
take on the public health emergency caused by COVID-19.
The implementation of the project will also include measures to
safeguard the incomes of informal workers, through subsidies and
other tools to support micro, small and medium-sized enterprises
(MiPyMES). In addition, it will provide liquidity to companies
affected by the economic consequences of the pandemic.
The project also aims to help the State in economic and fiscal
terms in the post-pandemic period by supporting reforms designed to
boost the efficiency of the public sector in areas such as public
health, education, social protection, fiscal matters and government
institutions.
The operation will also encourage knowledge exchange between the
governments of Paraguay and South Korea based on the latter's
valuable experience in tackling the pandemic.
The $160 million loan financed by the IDB is over 20 years, with a
grace period of five and a half years and an interest rate based on
LIBOR. The KIF co-financing of up to $50 million will be over 25
years, with a grace period of seven years and an interest rate of
2.5 percent.
As reported in the Troubled Company Reporter-Latin America on May
7, 2020, S&P Global Ratings affirmed its 'BB/B' long- and
short-term sovereign credit ratings on Paraguay. The outlook
remains stable. At the same time, S&P affirmed its 'BB+' transfer
and convertibility assessment.
=====================
P U E R T O R I C O
=====================
MCIG INC: Changes Corporate Name to "Bots, Inc."
------------------------------------------------
The Board of Directors of mCig, Inc. has elected to change the name
of the corporation to Bots, Inc. On May 15, 2020, the name change
was recorded with the Department of State of Puerto Rico.
About mCig
Headquartered in Jacksonville, Florida, MCIG, Inc. (now known as
BOTS, Inc.) -- http://www.mciggroup.com/-- is a diversified
company servicing the legal cannabis, hemp and CBD markets via its
lifestyle brands. The Company is committed to drive the
innovations needed to shape the future of robotic automation
management through digital technology and decentralized blockchain
solutions.
mCig reported a net loss attributable to controlling interest of
$3.06 million for the year ended April 30, 2019, compared to a net
loss attributable to controlling interest of $1.08 million for the
year ended April 30, 2018.
Weinstein International CPA, in Tel Aviv, Israel, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated Nov. 19, 2019 citing that as of April 30, 2019, the
Company has negative cash flow and there are no assurances the
Company will generate a profit or obtain positive cash flow, in
addition the Company has a nominal working capital deficit. These
and other factors raise substantial doubt about the Company's
ability to continue as a going concern.
=================
V E N E Z U E L A
=================
DIRECTV: Venezuelan Court Orders Regime to Seize, Reactivate Firm
-----------------------------------------------------------------
The Latin American Herald reports that Venezuela's Supreme Court
ordered the regime to take control of the installations of DirecTV
in the Andean nation and restore the signal two days after US-based
parent company AT&T shut down the service in compliance with
Washington's sanctions against the regime in Caracas.
The court said that Conatel, the telecommunications regulatory
agency, must "take immediate possession of all movable and
immovable assets, commercial offices, administrative headquarters,
operation and transmission centers, antennas and any other
equipment or installation," according to The Latin American
Herald.
DirecTV was serving roughly 2 million Venezuelan households when
AT&T terminated the operation, the report notes.
Once in control of DirecTV, Conatel will "immediately" restore the
satellite signal to subscribers and the agency will be able to
count on support from the Venezuelan armed forces in carrying out
the task, the Supreme Court said, the report relays.
Conatel was instructed to appoint an acting board of directors for
DirecTV with agency director Jorge Marquez Monsalve as chairman,
the report discloses.
The report relays that the new board will determine whether
subscribers are entitled to rebates for the period when the signal
was down.
Cable and satellite providers in Venezuela are required by law to
allocate a minimum 8% of total programming to national broadcast
channels, including Globovision and state-run PDVSA TV, the report
notes.
But U.S. sanctions aimed at toppling the regime of leftist
incumbent Nicolas Maduro bar firms and individuals in the United
States from doing business with state entities in Venezuela, such
as PDVSA TV, the report says.
And while Globovision is a privately owned outlet opposed to
Maduro, the network was sanctioned by the US Treasury Department in
January 2019 for ostensibly "illicit foreign exchange operations,"
the report relays.
Caught between the US prohibition on dealings with PDVSA TV and
Globovision and Venezuela's insistence that the two networks be
carried, AT&T decided to pull the plug on DirecTV in the oil-rich
country, the report says.
"Because it is impossible for AT&T's DirecTV unit to comply with
the legal requirements of both countries, AT&T was forced to close
its pay TV operations in Venezuela," the US telecoms giant said in
a statement earlier, the report discloses.
AT&T said that management at DirecTV Venezuela were not told in
advance of the decision to shut down, 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
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Information contained herein is obtained from sources believed to
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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.
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