/raid1/www/Hosts/bankrupt/TCRLA_Public/200608.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
Monday, June 8, 2020, Vol. 21, No. 114
Headlines
A R G E N T I N A
AEROLINEAS ARGENTINAS: Seeks to Suspend Workers' Contracts
PROVINCE OF RIO NEGRO: S&P Lowers ICR to 'CC', Outlook Negative
B R A Z I L
BRAZIL: Bolsonaro Threatens WHO Exit as Coronavirus Toll Soars
CSN ISLANDS: Moody's Alters Outlook on B2 Unsec. Rating to Negative
C A Y M A N I S L A N D S
SEAGATE HDD CAYMAN: S&P Assigns 'BB+' Rating on 11-Year Notes
C H I L E
LATAM AIRLINES: Reports $2.12 Billion Q1 Loss Due to Pandemic
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Hydrocarbon Tax Collections Fall by 19%
DOMINICAN REPUBLIC: Lost US$700MM++ Due to COVID-19
E C U A D O R
ECUADOR: Starts Debt Talks as Economic Strains Mount
M E X I C O
LIBRE ABORDO: Files Bankruptcy, Termination of Swap With Venezuela
V E N E Z U E L A
CITGO PETROLEUM: Issues $1.125 Billion of New 5-Year Bonds
X X X X X X X X
[*] BOND PRICING: For the Week June 1 to June 5, 2020
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A R G E N T I N A
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AEROLINEAS ARGENTINAS: Seeks to Suspend Workers' Contracts
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Eliana Raszewski at Reuters reports that Aerolineas Argentinas will
begin negotiations with unions to suspend the contracts of
thousands of employees until August after the flag carrier's income
plunged about 97% due to the coronavirus outbreak, it said.
The airline, which is staying afloat largely through state support,
will pay workers' social security and make smaller, spot payments
during the proposed two-month suspension, it said in a statement
obtained in the news agency.
A source told Reuters the carrier aims to suspend some 8,000 of its
12,000 employees.
Savings from the suspension would be used to maintain the fleet,
make repairs and shore up its spare parts supply chain, the company
said, according to Reuters.
The flag carrier said it had postponed payments, renegotiated debts
with fuel suppliers and was in talks to reschedule payments to
Brazilian and Argentine banks, the report notes.
"We have to adopt all the necessary measures for Aerolineas
Argentinas to get out of this situation and have a chance of
growing and developing in the future," it added.
About Aerolineas Argentinas
Headquartered in the Torre Bouchard, located in San Nicolas,
Buenos Aires, Aerolineas Argentinas, formerly Aerolineas
Argentinas S.A., is Argentina's largest domestic and international
airline. It is the national airline and carries around 70% of
Argentina's domestic traffic and 40% of international flights from
Ministro Pistarini International Airport, which is located in
Ezeiza, Buenos Aires. Aerolineas Argentinas is currently owned in
its majority by the Argentine government, which seized the airline
from Spanish tourism company Grupo Marsans in 2009.
In June 2001, the airline filed for protection from creditors and
went into administration. In 2002, a Buenos Aires judge accepted
its debt restructuring agreement with creditors.
PROVINCE OF RIO NEGRO: S&P Lowers ICR to 'CC', Outlook Negative
---------------------------------------------------------------
S&P Global Ratings lowered its long-term ratings on the province of
Rio Negro to 'CC' from 'CCC'. The outlook is negative.
Outlook
The negative outlook reflects S&P's view that a default on the
province's debt is virtually inevitable, given the very stressful
conditions and the province's intention to restructure its debt.
The outlook also incorporates prospects for a missed payment on
upcoming due dates.
Downside scenario
S&P said, "We could lower the ratings on Rio Negro to selective
default (SD) in the next few months if it misses any debt service
payments or if it completes a distressed exchange. The global 2025
bond has upcoming interest payments on June 7, 2020, and the local
RN20 bond has principal and interest payments on July 6, 2020.
Given prospect of establishing a dialogue and arranging
negotiations with bondholders, we believe that the province could
make use of the 30-day grace period in the bond indentures. We
would lower the ratings on the province to 'SD' if it fails to
service any of the bonds by the end of their stated grace period."
Upside scenario
S&P could raise the ratings in the next six months if the province
regains financing sources and it sees a clear strategy for timely
payment of debt. At the same time, the stabilization of the
macroeconomic and financial conditions in Argentina would improve
the province's creditworthiness, given existing links on both level
of governments.
Rationale
The downgrade reflects S&P's view of virtual certainty of default,
either a missed payment or a distressed debt exchange in the next
few months. The erosion in provincial revenues following the
national lockdown imposed on March 20 is likely to be more severe
than initially expected. Tax collection in the first four months
has increased only 31%, below year-over-year inflation rate of 47%.
Moreover, local revenues registered a nominal fall of 5% in April
2020 versus the same month in 2019. In addition, provincial
finances took a hit from the fall in hydrocarbon royalties, which
represent around 10% of the provincial budget. Production in the
sector has plummeted over the past months amid declining prices and
the downturn in economic activity.
Despite ongoing efforts to curb expenses and reallocate
increasingly scarce resources, S&P estimates a deficit after capex
of 9% of total revenues in 2020. In addition, the province faces
amortization of ARP4 billion in 2020, half of which is related to
the 2020 local bond due July 6.
The province faces a $11.6 million interest payment on June 7, 2020
for its 2025 global bond. In S&P's view, the province reserved
enough funds to make this payment. However, amid increasingly
stressed financial conditions--including very limited access to
financing--the province has decided to prioritize operating and
capital spending and is seeking to restructure its debt service
burden. On May 29, 2020, the local legislature passed the Law 5441,
which allows the province to initiate a broad restructuring
process. S&P said, "The restructuring is at an incipient stage and
no details of it have been disclosed, but we believe it would be
considered as tantamount to default under our criteria. Market
conditions are extremely stressed, and we believe that the province
could seek to extend maturities or reduce coupon payments,
resulting in potential net present value losses for investors."
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
Downgraded
To From
Province of Rio Negro
Issuer Credit Rating CC/Negative/-- CCC/Negative/--
Senior Unsecured CC CCC
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B R A Z I L
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BRAZIL: Bolsonaro Threatens WHO Exit as Coronavirus Toll Soars
--------------------------------------------------------------
Aaljazeera News reports that Brazil's President Jair Bolsonaro has
threatened to pull his country out of the World Health Organization
(WHO) after the United Nations agency warned governments about the
risk of lifting lockdowns before slowing the spread of the new
coronavirus.
"I'm telling you right now, the United States left the WHO, and
we're studying that, in the future," Bolsonaro told journalists
outside the presidential palace, according to Aaljazeera News.
"Either the WHO works without ideological bias, or we leave, too,"
he added.
US President Donald Trump, an ideological ally of Bolsonaro, said
last month that Washington would end its own relationship with the
WHO, accusing the organization of becoming a puppet of China, where
the corona virus first emerged, the report notes.
Bolsonaro has followed a similar script to the US president in his
handling of the coronavirus pandemic, downplaying its severity,
criticizing state authorities' stay-at-home measures and touting
the purported effects of the drugs chloroquine and
hydroxychloroquine against COVID-19, the report relays.
His threat to leave the WHO came shortly before Brazil announced
that its death toll from the coronavirus had risen above 35,000,
the third-highest in the world behind the US and the United
Kingdom, the report notes.
In an editorial running the length of newspaper Folha de S Paulo's
front page, the Brazilian daily highlighted that just 100 days had
passed since Bolsonaro described the virus now "killing a Brazilian
per minute" as "a little flu," the report discloses.
Brazil's Health Ministry reported that confirmed cases in the
country had climbed past 600,000 and 1,437 deaths had been
registered within 24 hours, the third consecutive daily record, the
report notes. Authorities reported another 1,005, but Bolsonaro
continues to argue for quickly lifting state isolation orders,
arguing that the economic costs outweigh public health risks, the
report discloses.
In Geneva, when asked about efforts to loosen social-distancing
orders in Brazil despite rising daily death rates and diagnoses, a
WHO spokeswoman said a key criterion for lifting lockdowns was
slowing transmission, the report says.
"The epidemic, the outbreak, in Latin America is deeply, deeply
concerning," Margaret Harris told a news conference. Among six key
criteria for easing quarantines, she said, "one of them is ideally
having your transmission declining," the report adds.
Bolsonaro's dismissal of the coronavirus risks to public health and
efforts to lift state quarantines have drawn criticism from across
the political spectrum in Brazil, where some accuse him of using
the crisis to undermine democratic institutions, the report
relates.
But many of those critics are divided about the safety and
effectiveness of anti-government demonstrations in the middle of a
pandemic, especially after one small protest was met with an
overwhelming show of police force, the report notes.
In Latin America, the virus has now infected more than 1.1 million
people, the report discloses.
While Brazil and Mexico are seeing the highest rates of new
infections, the pandemic is also gathering pace in countries such
as Peru, Colombia, Chile and Bolivia, the report says.
Most Latin American leaders have taken the pandemic more seriously
than Bolsonaro, but some politicians who backed strict lockdowns in
March and April are pushing to open economies back up as hunger and
poverty grow, the report adds.
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.
The TCR-LA has also 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.
CSN ISLANDS: Moody's Alters Outlook on B2 Unsec. Rating to Negative
-------------------------------------------------------------------
Moody's Investors Service affirmed the B2 ratings assigned to the
senior unsecured notes of CSN Islands XI Corporation, CSN Islands
XII Corporation and CSN Resources S.A. that are guaranteed by
Companhia Siderurgica Nacional. At the same time, Moody's America
Latina affirmed CSN's global scale ratings at B2 and the National
Scale Ratings at Ba1.br. The outlook for the ratings changed to
negative from stable.
Ratings affirmed:
Issuer: CSN Islands XI Corporation
USD1 billion 6.75% BACKED Gtd Senior Unsecured Notes Due 2028:
B2
Issuer: CSN Islands XII Corporation
USD1 billion 7.0% BACKED Gtd Senior Unsecured Perpetual Notes:
B2
Issuer: CSN Resources S.A.
USD1.2 billion 6.5% BACKED Gtd Senior Unsecured Notes Due 2020:
B2
USD600 million 7.625% BACKED Gtd Senior Unsecured Notes Due
2026: B2
USD925 million 7.625% BACKED Gtd Senior Unsecured Notes Due
2023: B2
Outlook Actions:
Issuers: CSN Islands XI Corporation, CSN Islands XII Corporation, &
CSN Resources S.A.
Outlook, changed to negative from stable
RATINGS RATIONALE
The change in CSN's ratings outlook to negative reflects its
expectation that the company's refinancing risk will remain high in
the next 12-18 months despite the recent efforts to roll-over debt
maturing in 2020, and that credit metrics will remain weak
throughout 2020 as a consequence of the steep decline in steel
demand in Brazil.
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 steel sector
has been affected by the shock given its sensitivity to demand and
sentiment. Moody's regards the coronavirus outbreak as a social
risk under its ESG framework, given the substantial implications
for public health and safety.
The affirmation of CSN's B2/Ba1.br ratings reflect the company's
position as a leading manufacturer of flat-rolled steel in Brazil
(Ba2 stable), with a favorable product mix that is focused on
value-added products, and as a major producer of iron ore
(second-largest exporter in Brazil). Historically, the company has
reported a strong Moody's-adjusted EBITDA margin of 20%-30% (18.5%
in the LTM ended March 2020), supported by its solid domestic
market position, wide range of products across different segments
and globally competitive production costs for both steel and iron
ore. The ratings also incorporate the improvement in the company's
short-term liquidity because of several measures taken over the
past two years, and its expectations that the mining segment will
continue to support the company's cash generation in 2020.
However, the ratings remain constrained by the company's highly
leveraged capital structure and weakened credit metrics. Despite
the company's debt refinancing efforts that addressed short-term
maturities, gross debt remains high and the company still faces
significant debt maturities in 2021-22. Furthermore, Moody's
expects CSN's credit metrics to remain strained during 2020 and
deleveraging to slow as a result of the impact of the coronavirus
outbreak on the company's steel and cement operations, while its
iron ore business will continue to support cash flow because of
high prices and foreign-exchange rate levels. As such, CSN will
continue to rely on external liquidity events to be able to reduce
its debt levels and refinancing risk in a more structural and
meaningful manner.
Since the beginning of 2018, CSN has pursued several initiatives to
address its short-term debt and improve liquidity. More recently,
in January 2020, CSN concluded the issuance of $1 billion in new
notes due 2028, and proceeds will be used to fund a tender offer
for the totality of the outstanding notes due in July 2020 and to
pay down other existing debt maturing in the short term, thus
lengthening the company's debt amortization schedule. Later in May
2020, CSN announced the refinancing of BRL1.4 billion in bank debt
maturing in 2020 and 2021, which eased liquidity risks for 2020,
but did not resolved the refinancing needs for 2021-22.
Pro forma to the transaction, CSN's cash position of BRL4.9 billion
cover short-term debt maturities by around 1.3x, compared with a
0.9x coverage at the end of March 2020. But, despite the
improvement, CSN still has sizable debt maturities of BRL9.0
billion in 2021-22, and will need to pursue additional alternatives
to reduce liquidity pressures and leverage. Besides the notes
maturing in July 2020, CSN's debt maturities until 2022 comprises
mainly bank debt, which are easier to be rolled over based on CSN's
long-standing relationship with Brazil's local banks, namely Caixa,
Banco do Brasil and Bradesco. Still, in its view, the high
refinancing need at a time of strained steel operations, risk
aversion and more limited access to external sources of liquidity
raises liquidity risks for CSN.
For 2020, Moody's expects Brazil's steel demand to retreat by
around 20% as the coronavirus outbreak hinders employment and
business and consumer confidence. Brazilian automotive and capital
goods sales will decelerate with lower disposable income and
investments, and lockdown requirements will slow construction, all
of which will impact steel sales in the country. Weak demand will
also likely keep Brazil's domestic steel prices below the
import-parity level in 2020, rather than the typical 5%-10%
premium, even with the depreciation of the local currency.
Accordingly, CSN's operations in the steel segment will remain
strained in 2020, while the company's iron ore operations will
remain strong based on current high prices, relatively stable sales
volumes and a favorable exchange rate for exports. To respond to
the steep decline in steel demand in Brazil, CSN lowered its
capital spending and dividends for 2020, shutdown a blast furnace
and will focus on cost reduction, all of which will contribute to a
strong free cash flow generation. The amount of free cash flow
generation will not be sufficient to cover debt maturities in 2021,
though.
The strain Moody's expects on the company's steel business in
Brazil and the depreciation of the Brazilian real will slow CSN's
deleveraging process, keeping adjusted leverage in 2020 near its
high level of 5.5x (total adjusted debt/EBITDA) as of year-end 2019
(or 5.0x excluding costs related to the blast furnace revamp). In
the first quarter of 2020, CSN's adjusted leverage increased
sharply to 8.1x, reflecting the impact of the depreciation of the
Brazilian real in the company's US dollar denominated debt without
the corresponding benefit on its foreign currency EBITDA. Even
though Moody's expects some recovery in leverage during the
remaining of 2020, the ratio will only remain more sustainably at
levels of around 3.5x-4.0x if iron ore prices remain at the current
high levels while the company's steel operations recover, or if the
company is able to amortize a substantial amount of debt during the
year, none of which Moody's expects to happen.
The negative outlook reflects its expectation that the company's
refinancing risk will remain high in the next 12-18 months despite
its recent efforts to roll-over debt maturing in 2020, and that
credit metrics will remain weak throughout 2020 as a consequence of
the steep decline in steel demand in Brazil.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings would suffer negative pressure if the company is unable
to roll over debt maturing in 2021-22 on a timely manner, thus
increasing liquidity risks. The ratings could be downgraded if
performance over the next 12 to 18 months does not improve such
that leverage does not moderate to at least 5.0x and EBIT/interest
remains below 1.5x.
An upward rating movement would require additional improvements in
liquidity profile and recovery in operating performance. An upgrade
would also be dependent on further adjustments in CSN's capital
structure, with total leverage trending towards 4.0x total adjusted
debt to EBITDA and interest coverage ratios (measured by EBIT to
Interest expenses) above 2.5x on a sustainable basis.
With an annual capacity of 5.9 million tons of crude steel,
Companhia Siderurgica Nacional is a vertically integrated, low cost
producer of flat-rolled steel, including slabs, hot and cold rolled
steel, and a wide range of value-added steel products, such as
galvanized sheet and tinplate. In addition, the company has
downstream operations to produce customized products, pre-painted
steel and steel packaging. CSN sells its products to a broad array
of industries, including the automotive, capital goods, packaging,
construction and home appliance sectors. CSN owns and operates cold
rolling and galvanizing facilities in Portugal, along with long
steel assets in Germany through its subsidiary Stahlwerk Thuringen
GmbH. The company also has a long steel line (500,000 tons
capacity) in the Volta Redonda plant. CSN is a major producer of
iron ore (the second-largest exporter in Brazil) besides steel,
with a sales volume of 35.3 million tons in the twelve months ended
March 2020. The company has operations in other segments too, such
as cement, logistics, port terminals and power generation. CSN
reported revenues of BRL24.8 billion ($6.1 billion) in the twelve
months ended March 2020.
The principal methodology used in these ratings was Steel Industry
published in September 2017.
===========================
C A Y M A N I S L A N D S
===========================
SEAGATE HDD CAYMAN: S&P Assigns 'BB+' Rating on 11-Year Notes
-------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level and '3' recovery
ratings to Fremont, Calif.-based hard disk drive maker Seagate
Technology PLC's new 11-year unsecured notes, the same as what S&P
had rated its existing unsecured debt. Seagate's subsidiary Seagate
HDD Cayman -- the borrower of the existing debt -- will issue the
new 11-year notes, the proceeds of which will be used to redeem
portions of the existing notes due 2022 and 2023.
S&P said, "Our 'BB+' issuer credit rating on Seagate is unchanged.
With S&P Global Ratings-adjusted gross leverage of 2.3x, the
company has ample cushion to our downgrade threshold of 3x. We
expect leverage to remain in the low-2x area through fiscal year
2021, supported by stable revenues and profitability, due to
continued strong demand from hyperscale customers, despite
significant macroeconomic weakness."
Issue Ratings--Recovery Analysis
Key analytical factors
-- S&P's '3' recovery rating on Seagate's unsecured debt is
unchanged.
-- S&P values the company on a going-concern basis because it
believe reorganization rather than liquidation would yield more
value for creditors due to the company's proprietary disk
technologies.
-- S&P values Seagate using a 6x multiple of its projected
emergence EBITDA, which reflects its scale and intellectual
property.
-- S&P's simulated default scenario contemplates a default in 2025
due to significant declines in flash pricing that allows flash to
take a higher share of use cases from hard disks than its currently
expect.
Simulated default assumptions
-- Simulated year of default: 2025
-- Emergence EBITDA: $600 million
-- Multiple: 6x
-- The revolving credit facility is 85% drawn at default
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $3.4
billion
-- Senior unsecured debt claims: $5.5 billion
-- Recovery expectations: 50%-70% (rounded estimate: 60%)
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C H I L E
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LATAM AIRLINES: Reports $2.12 Billion Q1 Loss Due to Pandemic
-------------------------------------------------------------
Fabian Cambero at Reuters reports that LATAM Airlines had losses of
$2.12 billion in the first quarter after an accounting adjustment
of its assets amid the coronavirus pandemic, the company said in a
statement late.
LATAM said its operational quarterly result was 17% higher
year-on-year despite the fact that in March it reduced its offer of
flights due to the first effects of the health crisis, according to
Reuters.
The firm mainly attributed the loss to a goodwill impairment loss
of $1.73 billion as a result of the pandemic, the statement said,
the report notes.
"The accounting loss is a natural consequence of the impact that
COVID-19 has had over the entire industry, where inevitably the
assets of airlines are devalued due to the impossibility of
operating," CEO Roberto Alvo said in the statement obtained by the
news agency.
Revenue from ordinary activities fell 6.8% to $2.266 billion
between January and March, the report relays.
LATAM filed for U.S. bankruptcy protection, becoming the world's
largest carrier so far to seek an emergency reorganization due to
the pandemic, the report adds.
About LATAM Airlines
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise.
LATAM Airlines Group S.A. is the largest passenger airline in South
America. Before the onset of the COVID-19 pandemic, LATAM offered
passenger transport services to 145 different destinations in 26
countries, including domestic flights in Argentina, Brazil, Chile,
Colombia, Ecuador and Peru, and international services within Latin
America as well as to Europe, the United States, the Caribbean,
Oceania, Asia, and Africa.
LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25,
2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United
States are part of the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general
bankruptcy counsel, and FTI Consulting as restructuring advisor.
The Debtors also engaged Togut, Segal & Segal LLP as conflicts
counsel, and Claro & Cia in Chile as Chile counsel. Prime Clerk is
the claims agent.
As reported in the Troubled Company Reporter-Latin America on May
28, 2020, 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)'.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Hydrocarbon Tax Collections Fall by 19%
-----------------------------------------------------------
Dominican Today reports that the restrictions on mobility and
closure of the population due to the Covid-19 pandemic have been
particularly hard for fuel sellers, also for the Dominican
Republic, which had a drop of -16% -19% fuel tax collections.
The loss was almost RD$6 billion if you compare what the State had
planned to enter between January and April 2020, with what it
received for Ad Valoren and Specific taxes, according to statistics
from the General Directorate of Internal Taxes (DGII), according to
Dominican Today.
From the Specific tax, the entity had projected to obtain RD$14.8
billion in the four months, but only saw RD$10.7 billion;
meanwhile, from Ad value, they expected RD$7.4 billion, and just
RD$5.2 billion arrived, the report notes.
These collections are also below the amounts of 2019, the report
relays. Their fall is due to a reduction in economic activities
and a drop in the price of oil by 71.6% in April (compared to April
2019), the report discloses.
Social distancing measures led to a decrease in the taxed fuel of
72,280 gallons, when the taxed tax decreased from 511,868.6 gallons
between January and April 2019 to 439,488 in the same period this
year, the report notes.
Drop in Sales
The most significant decrease occurred in April when the majority
of the population was confined to their homes, and the fuel
dispensing stations barely sold 70 or 75% of the usual, the report
relays. For this reason, the DGII registered 65,975 gallons of
taxed hydrocarbons, 44% less than in April 2019, the report notes.
"Retailers' sales fell flat. They fell between 25% and 30%," said
Anulfo Rivas, former president of the National Association of
Gasoline Retailers (Anadegas), interviewed by EL DIA. For this
reason, it considered that the Government should increase the
profit margins of that sector, the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with 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: Lost US$700MM++ Due to COVID-19
---------------------------------------------------
Dominican Today reports that the businessman Frank Rainieri,
president of the Puntacana Group, said that between March, April,
and May, the Dominican Republic missed out on hosting 600,000
tourists.
Mr. Rainieri explained that if it is calculated at US$1,200 per
tourist as indicated by the Central Bank, the country missed out on
more than US$700 million to date due to COVID-19 closure of the
borders, according to Dominican Today.
"If you calculate that for Punta Cana International Airport . . . .
between March, April, and May, we missed out on hosting about
600,000 tourists and then calculate the average that the Central
Bank figures spending at US $ 1,200 per tourist, it means that the
Dominican economy in Punta Cana alone has lost out on more than US
$700 million so far from March to date," he explained, the report
relays.
Rainieri further explained that the reopening of the sector would
depend on the attitude that Dominicans have, starting with the
State on the industry, the report notes.
"Why am I saying this? Because if we are the last to get on the
train, the train may have left us," Rainieri said, noting that
other markets have already opened, and others already have a
reopening date, the report says.
The businessman Frank Rainieri, president of the Puntacana Group,
spoke in the VI Virtual Conversation of the Dominican Association
of Tourist Press (Adompretur): "Current situation and challenges of
Dominican tourism," the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with negative outlook (April 2020). Moody's credit rating for
Dominican Republic was last set at Ba3 with stable outlook (July
2017). Fitch's credit rating for Dominican Republic was last
reported at BB- with negative outlook (May 8, 2020).
=============
E C U A D O R
=============
ECUADOR: Starts Debt Talks as Economic Strains Mount
----------------------------------------------------
Ben Bartenstein at Bloomberg News report that Ecuador kicked off
the first round of creditor in the first week of June with the goal
of releasing an initial debt restructuring offer as early as late
June, according to people with direct knowledge of the matter.
President Lenin Moreno's administration is pressing to avoid a hard
default and to regain access to credit markets, according to
Bloomberg News. The South American nation convened a call with its
biggest bondholders, including a group led by BlackRock Inc. and
Ashmore Group Plc, as it looks to plug a multibillion dollar
financing gap for 2020, said the people, who requested anonymity
because the talks are private, Bloomberg News relates.
Ecuador is also working to secure a staff-level agreement from the
International Monetary Fund and to complete $2.4 billion in loans
from China, Bloomberg News discloses. Half of the Chinese
disbursement will come this month, the people said, Bloomberg News
relays.
'Friendly Restructuring'
Bloomberg News notes that despite the nation's track record of 10
external defaults, second-most in the world since 1800, the Moreno
government has won the approval of many on Wall Street. But it's
now grappling with a crash in crude oil prices and one of Latin
America's worst Covid-19 outbreaks. Ecuador was forced to suspend
payments on its debt in April, Bloomberg News says. The economic
crisis is adding to political pressure ahead of next February's
presidential vote, Bloomberg News notes.
On a conference call, Finance Minister Richard Martinez said
Ecuador wants a "more friendly restructuring" than Argentina,
Bloomberg News relays. He pointed to the overwhelming support from
bondholders to delay interest payments until mid-August as a reason
for optimism, Bloomberg News notes. Ecuador liquidated repurchase
agreements with Goldman Sachs Group Inc. and Credit Suisse Group AG
beforehand to avoid triggering a cross default, Bloomberg News
discloses. The government wants to avoid a situation like Argentina
in 2001, when it was cut out of credit markets, Bloomberg News
adds.
"It took Argentina 15 years to return to the market," Martinez
said, the report relays. "Ecuador cannot fall into something like
this. That would be very traumatic for the country," he added.
Political Risk
Bloomberg News notes that Moreno, who doesn't intend to seek
re-election in February, has seen his approval rating slump to
about 20%. Meantime, Martinez has four impeachment motions pending
against him, with a fifth in the works, Bloomberg News relays.
Political opponents have criticized the finance minister for
cutting education spending while paying the nation's maturing March
2020 bond and liquidating the repurchase agreements, Bloomberg News
notes.
Martinez has argued that the debt-restructuring process and new
financing deals couldn't be accomplished in an orderly fashion
without making those tough decisions, Bloomberg News relays. He
has met privately with at least two presidential candidates viewed
more favorably by markets, the businessman Guillermo Lasso and
former Guayaquil mayor Jaime Nebot, the people said, Bloomberg News
discloses.
Nebot, whose party is pushing for the finance minister's
impeachment, said in a text message that he hasn't met nor does he
plan to meet with Martinez. Lasso declined to comment.
The race is wide open. Some investors fear that public discontent
will sweep in an outsider and that risk will also weigh on
negotiations with the IMF and bondholders, Bloomberg News notes.
"The elections are inconvenient," said Siobhan Morden, head of
Latin American fixed income strategy at Amherst Pierpont Securities
in New York, Bloomberg News relays. "It will probably require a
higher exit yield post-restructuring to account for those
unresolved risks," he added.
About Ecuador
The Republic of Ecuador is a country in northwestern South America.
The sovereign state of Ecuador is a middle-income representative
democratic republic and a developing country that is highly
dependent on commodities, namely petroleum and agricultural
products. Lenin Boltaire Moreno Garces is the county's current
President, who has been in office since May 2017. As of May 12,
2020, Ecuador has defaulted on sovereign
debt in 2020.
On April 3, 2020, Moody's Investors Service downgraded the
long-term foreign-currency issuer and senior unsecured rating of
the Government of Ecuador to Caa3 from Caa1 and changed the
outlook
to negative from stable. Moody's decision to downgrade Ecuador's
rating reflects the increased and now very high probability of a
restructuring, distressed exchange or default on Ecuador's market
debt as a result of the economic and financial shock the country
is
experiencing due to the coronavirus outbreak that has led to
extremely tight financing conditions for Ecuador.
On April 13, 2020, S&P Global Ratings lowered its long- and
short-term sovereign credit ratings on Ecuador to 'SD/SD' from
'CCC-/C'. S&P removed the ratings from CreditWatch. S&P said
Ecuador's already large budgetary financing needs have been
exacerbated by the plunge in global oil prices and the negative
global economic impact of the COVID-19 pandemic. The country is
one
of the worst affected by the virus outbreak in the region.
Also, in mid April 2020, Fitch lowered Ecuador's longterm foreign
currency issuer default rating to C from CC. The 'C' rating
reflects Fitch's view that a sovereign default of some kind is
imminent following the "consent solicitation" made by the
Ecuadorian government to defer external bond payments while it
pursues a comprehensive restructuring. A deferment in payments,
if
agreed to by bondholders, would constitute a distressed debt
exchange in Fitch's view.
As reported in the Troubled Company Reporter-Latin America,
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.
===========
M E X I C O
===========
LIBRE ABORDO: Files Bankruptcy, Termination of Swap With Venezuela
------------------------------------------------------------------
Ana Isabel Martinez at Reuters reports that Mexico-based company
Libre Abordo said it was bankrupt and that Venezuelan President
Nicolas Maduro had terminated an oil-for-food agreement that had
allowed the firm to supply water trucks in exchange for millions of
barrels of Venezuelan crude.
Libre Abordo and its related firm Schlager Business Group threw a
lifeline to Maduro late last year by trading Venezuelan crude and
fuel under the oil-for-food pact, following the imposition of U.S.
sanctions on Venezuela's PDVSA in early 2019, according to
documents from the state-run oil firm, according to Reuters.
The Mexican companies said in a statement they were targets of an
international political campaign, driven by the U.S. government,
which had led to a loss of over $90 million and the suspension of
Venezuelan crude lifting, the report relays.
"In recent months, (we) have faced excessive challenges, from the
oil price fall . . . to pressure from the U.S. government aimed at
stopping our operations," they said, the report notes.
The U.S. State and Treasury Departments, helped by the FBI, have
been investigating the Mexican companies to find out if they
contravened sanctions imposed on PDVSA and the Venezuelan
government, sources have told Reuters, the report relays.
The two U.S. government departments did not immediately respond to
a request for comment on Sunday.
Maduro said that U.S. pressure had "knocked down" the oil-for-food
agreements with Mexican companies, without elaborating, the report
relays.
The firms have defended the agreement they signed with Venezuela's
Corporation of Foreign Trade (Corpovex) by saying Corpovex had not
been included in the U.S. list of sanctioned entities, the report
notes.
Lawyers hired by the firms also said the swap was permitted under
licenses allowing supply of food and other equipment to Venezuela
under humanitarian exceptions, the companies said, the report
adds.
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: Issues $1.125 Billion of New 5-Year Bonds
----------------------------------------------------------
The Latin American Herald reports that Venezuela's PDVSA (Petroleos
de Venezuela SA) refining company in the United States, Citgo
Petroleum, has tapped U.S. markets to issue $1.125 billion of
5-year bonds.
The offering was originally slated to be for just $750 million but
was upsized due to demand and the coupon and yield were reduced to
7%, according to The Latin American Herald.
The company originally announced that it intended to use the
proceeds from the sale "to repay all $614 million outstanding under
the Company's term loan B due 2021, pay all fees and expenses in
connection with the offering, and for working capital and general
corporate purposes," the report notes.
There was no additional information given as to what the specific
purpose was of the additional upsizing of $375 million even though
the issuance increased Citgo's debt by $510 million over the Term
Loan B that Citgo was paying off, the report discloses.
The report relates that although price talk on the bonds was
originally 7.25% to 7.00%, the yield was finalized at 7%. The bonds
were priced at par (100) with a 7% coupon and are non-callable by
Citgo for the first 2 years.
A unique feature of the Senior Secured bonds is that they are
collateralized by first priority liens on Citgo's three refineries
in the United States, as well as inventories, accounts receivables
and capital stock, the report notes.
The Citgo or PDVSA ad hoc boards, controlled by National Assembly
President Juan Guaido who is recognized by the U.S. and 58 other
countries as the Interim President of Venezuela, did not ask the
National Assembly for permission to issue the new debt which is
backed by all of Citgo's refineries, the report relays. Some
bondholders found that contradictory because the Guaido
Administration's PDVSA ad hoc Board is suing the bondholders of a
PDVSA 2020 bond collateralized by 50.1% of Citgo, arguing that the
PDVSA 2020 bond was illegally issued because it was not approved by
the National Assembly as a contract involving an asset that was in
the "national interest," the report notes.
About CITGO Petroleum
Citgo Petroleum Corporation is a United States-based refiner,
transporter and marketer of transportation fuels, lubricants,
petrochemicals and other industrial products. Based in Houston,
Texas, Citgo is majority-owned by PDVSA, a state-owned company of
the Venezuelan government (although due to U.S. sanctions, in 2019,
they no longer economically benefit from Citgo.)
As reported in the Troubled Company Reporter-Latin America on
Troubled Company Reporter-Latin America on June 5, 2020, S&P Global
Ratings assigned its 'B+' rating and '1' recovery rating
to Citgo Petroleum Corp.'s $750 million senior secured notes due in
2025. The '1' recovery rating indicates S&P's expectation for very
high (90%-100%; rounded estimate: 95%) recovery in the event of a
default.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week June 1 to June 5, 2020
-----------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Plaza SA 3.5 38.3 8/15/2020 CL CLP
Banco Security SA 3.0 5.6 7/1/2019 CL CLP
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Empresa Provincial de 12.5 0.0 1/29/2020 AR USD
Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD
SACI Falabella 2.3 50.6 7/15/2020 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Banco Security SA 3.0 27.4 6/1/2021 CL CLP
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Esval SA 3.5 49.9 2/15/2026 CL CLP
*********
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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