/raid1/www/Hosts/bankrupt/TCRLA_Public/200706.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, July 6, 2020, Vol. 21, No. 134
Headlines
A R G E N T I N A
ARGENTINA: Economy to Shrink 12% in 2020 as Pandemic Lingers
ARGENTINA: Government Expected to Drop New Offer on Sunday
ARGENTINA: Readies Final Debt Restructuring Offer to Creditors
ARGENTINA: Two Creditor Groups Lambast Delays in Debt Talks
YPF SA: Fitch Rates New $1BB Unsec. Notes Due 2021 'CCC'
YPF SA: S&P Affirms 'CCC+' ICR on Debt Exchange Proposal
[*] S&P Lowers Ratings on 7 Argentine Foreign-Currency Bonds to 'D'
B R A Z I L
AZUL SA: Confirms Agreement with TAP Airline
BRASKEM SA: Fitch Lowers LongTerm IDR to BB+, Outlook Stable
SANTA CATARINA: S&P Lowers LT Credit Rating to 'B+', Outlook Neg.
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Hotels, Restaurants and Bars May Reopen
M E X I C O
GRUPO AEROMEXICO: Moody's Withdraws Ca CFR on Chapter 11 Filing
GRUPO FAMSA: S&P Puts CCC- Rating on 2024 Notes on Watch Negative
P A N A M A
PANAMA CANAL RAILWAY: S&P Places 'BB-' ICR on CreditWatch Negative
S U R I N A M E
SURINAME: Fitch Lowers LT Issuer Default Rating to 'C'
X X X X X X X X
BOND PRICING: For the Week June 29 to July 3, 2020
LATAM: Seen Heading for Deepest Slump Since at Least 1901
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Economy to Shrink 12% in 2020 as Pandemic Lingers
------------------------------------------------------------
Maximilian Heath at Reuters reports that Argentina's economy is
expected to contract by 12% in 2020, a monthly central bank poll of
analysts showed, worse than the previous estimate of a 9.4%
decline, as output is ravaged by measures to tame the coronavirus
outbreak.
The central bank poll of 41 analysts projected that inflation will
be 40.7% this year, according to Reuters. Prices are expected to
have risen 2% in June, according to the poll, the report notes.
The poll did find a silver lining, noting that "the expectation of
growth for the remaining quarters of 2020 suggest that the effect
of the coronavirus pandemic is perceived as transitory," the report
discloses.
The grim economic picture comes as Argentina tries to restructure
about $65 billion in debt after defaulting on its sovereign bonds
earlier this year, the report relays. The South American nation is
readying a final debt restructuring offer to creditors that could
be formally sent to U.S. regulators within days, a government
source told Reuters.
Analysts forecast the average nominal exchange rate will reach 88
pesos per dollar in December 2020 and 122.5 pesos per dollar in
December 2021, 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.
ARGENTINA: Government Expected to Drop New Offer on Sunday
----------------------------------------------------------
Jorgelina do Rosario and Michael O'Boyle of Bloomberg News reports
that Argentina's President Alberto Fernandez said the government
would make public a new offer to creditors on Sunday after talks
with some top bondholders broke down.
According to Bloomberg News, Fernandez said the new offer would be
open throught the end of August. "We have made a huge effort to
keep our word. This is the maximum effort that we can make,"
Fernandez said in an interview with local radio, Bloomberg relays.
Argentina, which entered its ninth default in May has repeatedly
extended the deadline to reach a deal and until Sunday, had set
July 24 as the next key date, Bloomberg News cites. The country
needs to restructure some $65 million in debt.
In late June, a group of bondholders called the Argentina Creditor
Committee presented a proposal to the government. But two other
groups of creditors are discussing an agreement to reject a new
government offer based on that proposal, people familiar with the
discussions told Bloomberg News.
Those two groups include major firms such as BlackRock Inc.,
Ashmore Group Plc. and Monarch Alternative Capital LP. The groups
said they hadn't had meaningful discussions with the government
since June 17, Bloomberg News relays.
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.
ARGENTINA: Readies Final Debt Restructuring Offer to Creditors
--------------------------------------------------------------
Reuters reports that Argentina's government is reading a final debt
restructuring offer to creditors which could be formally sent to
United States regulators within days, a government source told
Reuters News Agency, even as increasingly splintered bondholders
tabled another proposal of their own.
Argentina will present its new offer to the U.S. Securities and
Exchange Commission in the coming days, according to a government
source. A day earlier, a source close to the negotiations said the
government was "crafting the definitive and final offer" to
creditors, the report relays.
Meanwhile, a new counteroffer by bondholders, which Reuters
reported had been tabled, will provide the government with $39
billion of cashflow relief over the next eight years, the Argentina
Creditor Committee (ACC) said, the report discloses. It includes a
requirement that two-thirds of bonds participate in any deal, the
report notes.
Debt specialists see the participation threshold as important, the
report relays. If the government did not accept it, they say it
could signal an intention to adopt a so-called "Pac-Man' strategy"
whereby the government tries to get investors to deal with it one
at a time, the report adds.
"The ACC continues to believe that the best way forward is a
consensual resolution," the group said in a statement obtained by
the news agency.
Sources on July 2 said that the new ACC offer valued bonds at about
54.5 cents on the dollar, the report discloses. That would be a
modest drop from its previous offer of approximately 55-56 cents
but would still be above the government's last proposal of 50 cents
plus sweeteners, the report says.
The report discloses that the ACC added that its offer would leave
creditors with a weighted average coupon of 3.95 percent on their
bonds with a 5 percent maximum. Eligible bonds would also maintain
their original indentures -- the contract associated with the bond
-- meaning they would not have inferior legal guarantees , the
report notes.
The move came at a crucial stage in the $65 billion debt
renegotiations with the Argentine government, the report relates.
Talks have been extended a number of times in an effort to reach a
deal, though the two biggest creditor groups, the "Ad Hoc" and
"Exchange" groups, which hold a combined $21 billion of the $65
billion, have complained of lack of engagement from the government,
the report discloses.
Sources familiar with the thinking of those two groups have told
Reuters that they still want a better deal than the ACC proposal.
They also said if Argentina's next offer is not up to scratch, they
will have a so-called "lock up", which would prevent any of the
individual firms in the groups peeling off and accepting a deal if
the government did try the Pac-Man approach, 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.
ARGENTINA: Two Creditor Groups Lambast Delays in Debt Talks
-----------------------------------------------------------
Adam Jourdan, Eliana Raszewski, Rodrigo Campos at Reuters report
that two major Argentine creditor groups said there had been "no
meaningful engagement" with the country's government since
mid-June, flagging concerns about a deal after talks to restructure
$65 billion in debts stalled this month.
The two groups include BlackRock, Fidelity, and AllianceBernstein,
and hold around $21 billion of Argentinian bonds in the aggregate,
Reuters cites.
Argentina, which defaulted on foreign bond payments in May, is
racing to restructure its debts to avoid a messy and protracted
legal standoff with creditors, the news source relays. The
country's debts have become unsustainable after two straight years
of recession, the report notes.
After months of talks, the two sides had come close in terms of
valuation of a deal before hitting roadblocks with some distance
still between proposals and focus turning to disagreements over the
legal terms of an agreement, the report relays.
The Ad Hoc and Exchange creditor groups said in a joint statement
that the "lack of serious engagement" from Argentine authorities
was concerning, but said they were ready to work "constructively to
reach a consensual agreement," the report says.
"Time is of the essence and all parties should be focused on
avoiding the devastating legal and economic costs of a prolonged
default," said the two major creditor groups, Reuters quotes. The
strongly worded statement underscores tensions as the two sides
work toward an extended July 24 deadline for a deal, the report
says.
"I think it is fair to say that there is some disarray in each of
the bondholder groups and within the Argentine government," Reuters
quotes a source from one of the creditor committees said, asking
not to be named as the talks are private. "Chalk it down to a
combination of fatigue, impatience and some uniquely Argentina ways
of doing things," the source added.
A government source with knowledge of the talks said there was
ongoing dialogue with creditors over a sustainable offer, but some
of the demands, including over legal clauses, were "unacceptable"
to Argentina, Reuters notes. The person, who asked not to be
named, said the two groups had unilaterally declined an invitation
to sign non-disclosure agreements to continue discussions over
coupon payments linked to exports, according to the report.
Others, the government source said, had been more receptive, the
report relates.
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.
YPF SA: Fitch Rates New $1BB Unsec. Notes Due 2021 'CCC'
--------------------------------------------------------
Fitch Ratings has assigned a rating of 'CCC'/'RR4' to the proposed
exchange of notes due 2025 for YPF's $1.0 billion unsecured notes
due 2021. The rating reflects Fitch's view that the transaction
does not constitute a material reduction in the original terms of
the transaction. The exchange comprises of a 10% cash pay-out and
95% of the original principal to be refinanced during the early
participation date period expiring on July 16, 2020. Thereafter,
the cash payout will be 5%, with the remaining 95% to be
refinanced, expiring on July 30, 2020. Further, YPF is offering the
same coupon of 8.5%, and the new bonds will rank pari-passu in
priority of payment with all of its present and future
unsubordinated and unsecured obligations with the covenants being
unchanged.
YPF's ratings continue to be rated in line with Fitch's Government
Related Entities (GRE) criteria. Nonetheless, the Argentine
sovereign rating is 'RD' following 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, 2020. The sovereign
continues to negotiate with creditors for a comprehensive
restructuring of its external bonds. Fitch believes that YPF's
ratings are in line with the country ceiling of Argentina, which at
'CCC' represents that default is a real possibility.
YPF is majority owned by the government, and the company is
strategically important to the country. YPF's dominant market share
in the supply of liquid fuels in Argentina, coupled with its large
hydrocarbon production footprint in the country, could expose the
company to government intervention through pricing policies or
investment strategies. Argentina exerts strong control over YPF
through energy regulations and/or its 51% economic interest in the
company. Furthermore, Fitch believes Argentina would have strong
incentives to support the company under a distress situation as a
result of the strong socio-political and financial implications of
a default.
KEY RATING DRIVERS
Links to Sovereign: YPF has close linkage to the Republic of
Argentina from the company's ownership structure as well as recent
government interventions. Argentina controls the company through
its 51% stake, the presence of provincial government officials on
the board of directors and various regulations. In addition, the
republic sometimes governs the company's strategy and business
decisions. The Argentine government has a history of significant
interference in the oil and gas sector. For example, Via Decree No.
1277, the government set regulations related to investment levels
in the oil and gas sector and domestic price reference points; in
2019, it issued Decree 566/19, which negatively affected YPF's cash
flows. Although YPF is a leading energy company in Argentina,
government policies continue to present challenges, inhibiting its
business strategy.
Refinancing Risk: YPF faces heighten refinancing risk which is
further exacerbated by the ongoing negotiation of the federal
government with international bond holders. YPF has demonstrated an
ability to successfully roll-over short term bank and local bond
issuances, which Fitch assumes will be at an incremental cost.
Nevertheless, YPF and other Argentine corporates have limited
options to refinance international bonds. Fitch estimates YPF has a
EBITDA to interest expense ratio of 2.5x in 2020 and average 3.0x
from 2021-2023; Fitch expects that YPF will be able to exchange a
majority of its outstanding $1.0 billion note and will refinance
upcoming maturities during the rated horizon.
Leverage Profile: YPF maintains a conservative leverage profile
when considering total debt to EBITDA in 2019 of 2.4x, in line with
a 'bb' Standalone Credit Profile (SCP), but the company has high
leverage with its total debt of USD8.8 billion compared with 1.1
billion of 1P (proven) reserves, equating to USD8.00 barrels of oil
equivalent (boe) per 1P, which is consistent with the 'b' category.
Fitch estimates total debt-to-EBITDA will increase to 3.3x in 2020,
while reserve life will remain relatively flat.
Declining Production: Fitch believes YPF's production decline and
weak reserve life since 2016 is a continuing issue. In 2019, YPF
announced total production at 514,000 boe a day, down 3% from
2018's average of 530,000 boe per day. The decline is mostly
attributed to a 5.5% decrease in gas production in 2019 compared
with 2018. As of YE 2019, YPF reported a reserve life of
approximately 5.7 years and 1P of 1,073 million boe. Fitch's base
case assumes that YPF will prioritize strengthening its liquidity,
and as a result, will cut capex accordingly to remain FCF positive,
at the cost of a decline production profile.
Volatile Operating Environment: The volatile economic environment
in Argentina has inhibited YPF from implementing its business
strategy - i.e. unconventional development in Vaca Muerta. The
recent quarantine due to the coronavirus outbreak has further
stressed the company, as demand for fuels has decreased, gasoline
volumes dropped by 70% and diesel by 36%, with a total demand
decrease of 50% in April 2020, compared to the previous year. Fitch
estimates Argentina's real GDP will contract by 8.3% in 2020 -
after negative average growth rate over the last three years.
Inflation is expected to average 50% between 2020 through 2022, and
government debt-to-GDP ratio is estimated to be 105% in 2020 and
109% in 2021 - with a majority of government debt being external
75%-80% over the same time frame.
Increased Capital Controls: YPF has maintained a strong liquidity
profile, but Fitch believes the recently announced capital control
measures - requiring entities with assets abroad to first use those
resources to service international obligations before turning to
Argentina's official currency markets - poses significant risks to
corporates in Argentina including YPF. This measure will pressure
liquidity, as corporates will tap into their international reserves
to comply while simultaneously accumulating cash in Argentina,
which Fitch expects will be more balanced between Argentine pesos
and U.S. dollar. This will expose corporates to greater FX risk
overtime, as their interest expense and debt are predominately in
U.S. dollars.
DERIVATION SUMMARY
YPF's linkage to the sovereign is similar in nature to its Latin
American national oil companies (NOCs) peers, namely PEMEX
(BB-/Negative), Petrobras (BB-/Negative) and Ecopetrol
(BBB-/Negative), and government owned entities ENAP (A/Negative),
and Petroperu (BBB+/Stable). These companies all have strong
linkage to their respective sovereigns given their strategic
importance to each country and the potentially significant negative
social and financial implication a default could have at a national
level.
YPF's upstream business closest peers are Pemex, Petrobras and
Ecopetrol. YPF's total production averaged 514 thousand boed, and
the reserve life was 5.7 years, most comparable to Ecopetrol with a
2019 production of 725 thousands of boed and a reserve life of 7.8
years, but less than Petrobras' production of 2.6 million of boed
and a reserve life of 10 years and Pemex's production at 2.8
million of boed and a reserve life of 9.5 years.
YPF has a strong capital structure reporting a gross leverage ratio
defined a total debt to EBITDA of 2.4x in 2019 and total debt to 1P
of USD7.67 per boe compared to Ecopetrol at 1.1x in 2019 and
USD5.80 total debt to 1P, Petrobras at 2.3x and USD6.60 per boe and
Pemex at 6.2x and USD14.70 per boe.
Unlike its peers ENAP, Petrobras, Pemex, and Petroperu, YPF is not
the sole provider of refined fuels in Argentina. In 2019, the
company had nearly a 60% market share. YPF is an integrated energy
company, similar to Petrobras and Pemex, offering the company more
financial flexibility, while ENAP is predominately a refining
company that sells to marketers. Historically, YPF has operated
autonomously with periodic controls of fuel prices and crude, which
are currently in effect. Similar to Pemex and Petrobras, YPF has
administered an import parity pricing policy, but there remains
evidence of government intervention with Decree 466/19 and other
price controls in 2018 to tame inflation, which is projected to be
50% in 2020. Until recently, YPF has had success in tightening the
spread between import parity and local prices.
When compared to downstream focused entities ENAP and Petroperu,
YPF has a lower total debt-to-EBITDA ratio of 2.4x in 2019 compared
to ENAP at 6.7x and Petroperu of 18.0x. Petroperu's elevated
leverage is explained by its investment plan to increase capacity
by 2021, while ENAP has maintained a higher leverage profile for an
extended period of time, but the company is highly strategic for
the Chilean governments, and thus it rating is aligned as a
result.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Agency's Rating Case for the
Issuer
-- Average gross production of 421,000 boe from 2020-2023;
-- YPF will be able to increase domestic prices in pesos somewhat
but not enough to fully reflect the impact from the recent peso
depreciation and international hydrocarbon price increase;
-- Criollo Barrel of $45 barrel (bbl) in place for 2020 and
Fitch's price deck from 2021 through 2023 of $48bbl in 2021, $53bbl
in 2022 and long-term $55bbl;
-- Natural gas prices decrease to $2.70MMBTU in 2020, $3.00MMBTU
in 2021, $3.25MM in 2022 and $3.57 in 2023;
-- Capex cut to be FCF positive over the rated horizon due to
refinancing risk;
-- Downstream sales volume follow Real GDP forecasts for
2021-2023.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Foreign Currency (FC) Issuer Default Rating (IDR) is capped by
the country ceiling of Argentina and thus an upgrade can only occur
if there is an upgrade of the country ceiling of Argentina.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The country ceiling of Argentina is currently at the lowest
level (CCC) allowed under Fitch's sovereign criteria; therefore, a
downgrade of FC and Local Currency (LC) IDR would reflect Fitch's
belief that a default of some kind appears probable or a default or
default-like process has begun for the corporate, which will be
represented by 'CC' or 'C' rating.
LIQUIDITY AND DEBT STRUCTURE
Challenged Liquidity: YPF reported $1.2 billion in cash and cash
equivalents in 1Q20. Per Fitch's estimates, this covers roughly one
year of interest expense. The company faces a challenging debt
maturity profile, but Fitch assumes the company will roll-over
trade financing, bank loans and bonds over the rated horizon.
Nevertheless, the company's liquidity is challenged by the capital
controls that require companies to utilize their own U.S. dollar
reserves to service U.S. dollar debt and imports before accessing
the official FX market in Argentina. This is expected to weaken its
flexibility and heighten its risk to peso devaluation.
YPF SA: S&P Affirms 'CCC+' ICR on Debt Exchange Proposal
--------------------------------------------------------
S&P Global Ratings, on July 2, 2020, affirmed its 'CCC+' ratings on
Argentine oil and gas company YPF S.A. following the company's
announcement of its debt exchange proposal.
S&P said, "At the same time, we assigned our 'CCC+' issue-level
rating to YPF's proposed senior unsecured notes due 2025. YPF
intends to exchange its outstanding 8.5% senior unsecured notes due
2021 for the proposed 2025 notes.
"We view YPF's proposed debt exchange as liability management. The
existing notes mature in March 2021, so YPF has some time to
implement alternative initiatives to roll this debt over if the
exchange isn't successful. Additionally, in our view the offer
doesn't represent a material loss of value for debt holders of the
2021 bonds because the offer includes a cash portion and a premium
over the remaining capital while the coupon remains the same." The
new notes also will have annual amortizations to compensate for the
extension of the maturity.
S&P said, "The rating on the notes is the same as the issuer credit
rating on YPF, because we don't believe there's significant
contractual or structural subordination. We estimate priority debt
represents less than 5% of consolidated financial obligations. In
our opinion, the proposed exchange would improve YPF's financial
flexibility for upcoming years because it would extend the
company's debt maturity profile. Our 'CCC+' credit rating on YPF is
below its 'b+' stand-alone credit profile. We cap the rating on YPF
at our transfer and convertibility assessment of Argentina. This
reflects our belief that the company wouldn't be able to continue
honoring its foreign currency obligations under potential
restrictions on access to foreign currency and/or restrictions on
the ability to transfer money abroad.
"We expect YPF's leverage to peak at 3.5x–4.0x in 2020 amid
dropping volumes, but we believe the company will remain cash flow
neutral. We expect it to reduce the pace of its capital investments
to match operating cash flow generation and to be able to roll over
most of its near-term debt commitments. In addition, the company
has used the domestic bond markets recently, issuing more than $200
million in the past two months at attractive terms, and we believe
it will continue doing so in the second half of the year."
[*] S&P Lowers Ratings on 7 Argentine Foreign-Currency Bonds to 'D'
-------------------------------------------------------------------
S&P Global Ratings lowered its ratings on seven of Argentina's U.S.
dollar-denominated bonds to 'D' from 'CC'.
Specifically, S&P downgraded to 'D' from 'CC' three foreign-law
foreign-currency bonds that had a total of about US$582 million in
interest due at the end of June:
-- New York-law U.S. dollar-denominated discount bond due
December 2033;
-- English-law euro-denominated discount bond due December 2033;
and
-- New York-law U.S. dollar-denominated Bono Cien due June 2117
(BIRAD 117).
The ratings on these bonds will remain 'D' pending the conclusion
of the debt renegotiations that are underway. S&P has already
downgraded other similar bonds to 'D', including the BIRAD 2021,
2026, and 2046. It expects the government to pay the Japanese-law
yen-denominated discount bond due December 2033 on time, as it's
not part of the ongoing restructuring negotiations.
In addition, S&P lowered to 'D' from 'CC' the ratings on the
following four Argentine-law, U.S. dollar-denominated bonds with
$837 million interest due at the end of June:
-- Argentine-law U.S. dollar-denominated discount due 12-31-2033;
-- BONAR 2022 due 12/30/22;
-- BONAR 2025 due 12/30/25; and
-- BONAR 2027 due 12/30/27.
These payments were not made because these bonds are captured by
government decree 346/2020, dated April 6, 2020, which postpones
the payment of all U.S. dollar-denominated principal and interest
on local-law debt to Dec. 30, 2020, 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. S&P
said, "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. Similar bonds lowered to 'D' include the
BONAR20 and BONAR24."
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 committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
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
Argentina
Senior Unsecured (foreign currency)
US$4.498bil 7.75% due 12/30/2022 D CC
US$4.691bil 7.875% due 12/30/2027 D CC
US$4.51bil 7.875 due 12/30/2025 D CC
US$929.896mil 8.28% due 12/31/2033 D CC
US$5.353bil 7.125% due 6/28/2117 D CC
US$3.088bil 8.28% due 12/31/2033 D CC
US$566mil 8.28% due 12/31/2033 D CC
===========
B R A Z I L
===========
AZUL SA: Confirms Agreement with TAP Airline
--------------------------------------------
Tatiana Bautzer at Reuters reports that Brazilian airline Azul SA
confirmed in a securities filing an agreement with the Portuguese
government to divest from its stake in Portuguese airline TAP.
Azul said it has sold its indirect 6% stake for around BRL65
million (US$12.15 million) and will not exercise rights to convert
EUR90 million bonds maturing in 2026 into equity, according to
Reuters. All the other terms in the bonds are maintained, Azul
said, the report notes.
The transaction will need to be approved by Azul's shareholders,
the filing added, the report relays. Reuters reported the
agreement between Azul and the Portuguese government.
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings, in March 2020, placed its 'B+' global and 'brAA'
national scale ratings on Azul S.A. on CreditWatch with negative
implications, including the issuer credit and debt ratings. TCR-LA
also reported in June 2020 that Moody's Investors Service has
downgraded Azul S.A.'s corporate family rating to Caa1 from B1. At
the same time, Moody's downgraded the USD400 million senior
unsecured notes issued by Azul Investments LLP and guaranteed by
Azul and Azul Linhas Aereas
Brasileiras S.A. to Caa2 from B2. The outlook is negative.
BRASKEM SA: Fitch Lowers LongTerm IDR to BB+, Outlook Stable
------------------------------------------------------------
Fitch Ratings has downgraded Braskem S.A.'s Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDR) to 'BB+', from 'BBB-'.
At same time, Fitch has affirmed Braskem's National Long-Term
Rating at 'AAA(bra)'. The Outlook is Stable.
The downgrade reflects Fitch's view that the deep global recession
caused by the coronavirus pandemic and sharp economic contraction
in Brazil, Mexico, the U.S. and Europe have elevated the challenges
faced by Braskem as it seeks to deleverage through organic and
inorganic measures. The weak macroeconomic backdrop has also
increased uncertainty about the duration of the downturn in the
petrochemical cycle that started in 2019 and the return to a
balanced market for polyethylene (PE) and improved demand for
polypropylene (PP). The timing of the pandemic was inopportune for
Braskem because it coincided with additional liabilities of BRL2.7
billion related to a geological event in Alagoas.
Fitch's base case, excluding the operations in Mexico, forecasts
Braskem's net debt/EBITDA ratio at 4.5x-3.6x during 2020-2021; if
including the Mexican operations, which hold non-recourse debt,
Fitch's base-case net leverage ratio is 4.9x in 2020 and 3.9x in
2021.
Braskem's ratings reflect its leading position in the Latin
American petrochemical sector, strong business profile due to
geographic and raw material diversification and a record of
consistent FCF generation. The company's high leverage ratio is a
weakness compared with investment-grade peers in Latin America.
Factored into the company's ratings are its commitment to maintain
a strong liquidity position and a manageable debt amortization
schedule, with no refinancing risk in the medium term.
Braskem's ratings are not constrained by Brazil's 'BB' Country
Ceiling, in accordance with Fitch's Non-Financial Corporates
Exceeding the Country Ceiling Rating Criteria. Braskem has strong
operating cash flow generation from assets in the U.S., Germany and
Mexico, which contribute around 45% of its EBITDA. The company's
ratings are also supported by cash generated abroad by exports,
cash held abroad and a record of retaining undrawn standby credit
lines.
KEY RATING DRIVERS
Weak Operating Results: Fitch is projecting that Braskem's EBITDA,
excluding Mexico, will remain depressed in 2020 and 2021 at BRL5.7
billion and BRL6.5 billion, respectively, due to lower volume in
Brazil, the U.S. and Europe and still weak petrochemical spreads.
These figures compare with BRL4.3 billion in 2019 and BRL9.5
billion in 2018 and 2017. Braskem is attempting to limit the impact
of the global downturn on its operating cash flow and FCF by
reducing fixed costs, lowering capex and eliminating dividends
distributions.
Fitch's base-case forecasts Braskem's consolidated recurring EBITDA
cash flow from operation (CFFO) and FCF for 2020 at approximately
BRL7.2 billion, BRL2.6 billion and negative BRL356 million,
respectively. For 2021, Fitch projects BRL8.1 billion of recurring
EBITDA, BRL3.8 billion of CFFO and BRL1.6 billion of positive FCF.
This compares with BRL11.3 billion of EBITDA, BRL9.5 billion of
CFFO and BRL5.3 billion of positive FCF, after BRL1.5 billion of
dividends, in 2018.
High Leverage: The combination of weaker spreads, lower volume and
legal contingencies has pressured Braskem's leverage. Fitch
estimates consolidated net leverage will reach 4.9x in 2020; or
4.4x when excluding the operations in Mexico. For 2021, these
ratios should be 4.0x and 3.6x, respectively. The incident in
Braskem's salt mining operation (part of the PVC operations) in
Alagoas have led to BRL2.7 billion of commitments; around BRL1.7
billion is already excluded from its cash position and the
remainder will be amortized over four years.
Solid Business Diversification: Braskem's ratings are underpinned
by its strong geographic and feedstock diversification, and leading
market positions in PE and PP. The company's operations in the
U.S., Germany and Mexico represent around 35%-45% of its
consolidated EBITDA, while its Brazilian operation accounts for the
balance. Braskem's feedstock is mainly balanced between naptha 38%,
34% propeno and 22% ethane following the ramp-up of its joint
venture in Mexico, Braskem Idesa SAPI (BB-/Negative). The company's
strategy of diversifying its feedstock matrix has reduced its
exposure to one feedstock while decreasing its production cost and
improving its long-term competitiveness.
Exposure to PEMEX: Fitch's base case does not incorporate any
material cash flow from the Mexican operation - where Braskem Idesa
has a long-term raw-material supply agreement with Petroleos
Mexicanos (PEMEX) (BB-/Stable) - until 2022. The agreement includes
a supply of 66,000 barrels per day (bpd) of ethane, which PEMEX has
been unable to deliver due to a drop in production caused by a lack
of investment: it is able to only provide about 49,000 bpd. During
February 2020 Braskem Idesa commenced it fast-track project to
import ethane from the U.S., with capex of USD3.5 million, which
should result in the importation of up to 16,000 bpd of ethane by
2022, out of a capacity of 25,000 bpd; this equates to 24% of total
needs. Fitch has not incorporated the construction of a new import
terminal for ethane into its analysis.
Change in Control: Braskem is owned by Odebrecht Group, which owns
38.3% of its total capital and 50.1% of its voting capital, and
Petroleo Brasileiro S.A. (Petrobras) (BB-/Negative), which owns
36.1% of its total capital and 47.0% of its voting capital.
Odebrecht has offered its Braskem shares as collateral for some of
its debt to a group of Brazilian banks. These shares are under the
control of Odebrecht's creditors, given the default by Odebrecht on
its financial obligations, which could trigger a change of control
at Braskem. Fitch rates Braskem on a standalone basis and thus, a
change in control event would not automatically lead to a rating
action.
DERIVATION SUMMARY
Braskem's leading position in the Americas in its core products, PE
and PP, is a key credit strength, mitigating the commodity nature
of its products, which are characterized by volatile raw material
prices and price-driven competition. Braskem has a medium-size
scale compared with global chemical peers, such as Dow Chemical
Company (BBB+/Negative), yet is well positioned relative to Latin
America peers, such as Orbia Advance Corporation, S.A.B de C.V.
(BBB/Negative) and Alpek, S.A.B. de C.V. (BBB-/Stable), in terms of
scale, profitability and geographic diversification.
Around 35%-45% of Braskem's EBITDA is generated outside of Brazil.
Its thermoplastic resin operations in Brazil are integrated, which
reduces cash flow volatility, while in Mexico, Fitch expects its
profitability to remain above industry average due to its long-term
raw-material supply agreement with PEMEX. The company's strong
60%-65% market share in Brazil is also a competitive advantage, as
it allows Braskem to better withstand higher raw material prices
and pass-through strategies.
Braskem's leverage compares negatively with the around 2.5x of
Orbia and Alpek and is much higher than the 2.0x leverage of Dow
Chemical Company (BBB+/Negative).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Volume to decline in 2020 as result of the pandemic and
gradually recover to 2019 levels by 2022
-- Spreads to remain pressured due to weaker demand, despite
lower raw material prices
-- Annual capex of around USD600 million in 2020 and 2021
-- No dividends from Braskem Idesa in 2020-2022
-- No dividends payments during 2020-2021
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Consolidated net debt/EBITDA at 3.0x, excluding Braskem Idesa
at 2.5x on average through the cycle;
-- Positive FCF generation across the cycle;
-- Maintenance of a strong liquidity position with no exposure to
refinancing risk.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Consolidated net debt/EBITDA at 4.0x, excluding Braskem Idesa
at 3.5x on average through the cycle;
-- Higher than expected request of dividends by the shareholder;
-- A change in Braskem's management strategy that alters its
adequate financial profile with a robust liquidity position and
long-term debt schedule.
LIQUIDITY AND DEBT STRUCTURE
Robust Liquidity: Braskem adopts a conservative and proactive
financial strategy to limit the risks associated with exposure to
the cyclical and capital-intensive nature of its business. The
company has a strong cash position, with BRL7.2 billion of readily
available cash and marketable securities as of March 31, 2020,
excluding Braskem Idesa (BRL1.1 billion) and BRL1.7 billion of
restricted cash related to Alagoas.
Braskem's readily available cash was sufficient to cover debt
amortization until mid-2023. On April 1, 2020, the company drew
down the standby credit facility by USD1 billion. Braskem has a
record of strong access to local and international debt markets. As
of March 31 2020, Braskem had BRL53.3 billion of total debt and
BRL3.9 billion of short-term debt, or BRL40.4 billion and BRL2.8
billion, respectively, excluding Braskem Idesa.
ESG CONSIDERATIONS
Braskem has an ESG Relevance Score of 4 for governance structure
due to a still-recent record of corruption scandals and
shareholders' financial stress. Positively, during May 2020, the
company announced that the U.S. Department of Justice (DOJ),
Securities Exchange Commission (SEC) and local authorities in
Brazil (Ministerio Publico Federal) confirmed the conclusion of the
independent compliance monitoring of Braskem. The authorities
certified that the company had implemented all the recommendations
regarding the structure and execution of its compliance program
meeting the standards set out in the DoJ plea agreement and the SEC
consent. This has a negative impact on its credit profile, and is
relevant to the rating in conjunction with other factors.
The company also has a Score of 4 for ecological impact due to the
geological event in Alagoas that affected its salt mining
operations. This has a negative impact on its credit profile, and
is relevant to the rating in conjunction with other factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity(ies),
either due to their nature or the way in which they are being
managed by the entity(ies).
SANTA CATARINA: S&P Lowers LT Credit Rating to 'B+', Outlook Neg.
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term credit ratings on
Brazilian state of Santa Catarina to 'B+' from 'BB-'. S&P also
lowered its national scale rating to 'brAA-' from 'brAA+'. The
outlook on both rating scales is negative.
Outlook
S&P said, "The negative outlook reflects our view of potential risk
from longer-than-expected effects of the pandemic that would
continue to hamper revenue collection recovery in the state and
pressure its spending, resulting in a consistently weaker budgetary
performance in 2020-2021. Our base case assumes that the state will
be committed to debt service payments, although liquidity will
remain low."
Downside scenario
S&P said, "We could lower the ratings on Santa Catarina in the next
12 months if its budgetary performance deteriorates beyond our
expectations, reflecting deeper or more prolonged effects from the
pandemic on the state's finances and/or lack of commitment or
effectiveness in taking steps to slow the pace of spending growth.
This would lead the state to post consistent operating and after
capex deficits that would erode its already weak liquidity
position. We could also lower the rating if financial management
does not show willingness to prioritize the timely payment of debt
service in a stress scenario."
Upside scenario
S&P could revise the outlook to stable in the next 12 months if
there's evidence and a record of effective implementation of
budgetary measures which, along with economic recovery and stronger
tax collection, would result in sustainably better-than-expected
fiscal results that also improve the state's liquidity position.
Rationale
The downgrade of Santa Catarina reflects S&P's expectation of a
consistently weaker liquidity position in the next two years. The
rating action also incorporates what it views as lower
prioritization of timely debt service payment, although S&P
acknowledges the recent rescheduling of debt as part of a broader
government-led moratorium initiative.
While fiscal performance in Santa Catarina improved in 2019 because
the state implemented fiscal adjustments, cash levels did not build
up, leaving the state in a vulnerable position to face
pandemic-related shocks. Support from the federal government in the
form of transfers and deferral of debt service payments owed to the
federal government have helped the state, but won't fully
compensate the expected slump in locally generated revenue. S&P
believes there are risks of potential pressure on the budget from
the more prolonged effects of the pandemic, and consider that the
administration's commitment to resume spending containment efforts
will be key to rebalance its fiscal trajectory.
Fiscal deficits this year will erode an already weak liquidity
position
The COVID-19 pandemic and the impact of quarantine measures on
economic activity are severely hampering Santa Catarina's fiscal
performance. S&P said, "We expect budgetary performance to worsen
this year due to a sharp drop in own-source revenues, and forecast
the state to post an operating deficit of 2.1% of operating revenue
and a deficit after capital accounts of 4.2% of total revenues. We
expect locally generated revenues--that represent about 80% of
total revenues--to fall by 9% compared to last year (or by R$1.6
billion), in a context of still pressured spending." Meanwhile,
Santa Catarina will receive R$1.1 billion from the federal
government to compensate for revenue loss and an additional R$185
million for health spending.
S&P's base case assumes very gradual recovery in fiscal results.
Santa Catarina's diversified economic structure and better
socio-economic conditions compared to local peers will enable a
relatively faster rebound while the administration remains
committed to fiscal containment measures.
Lower debt service payments will also provide partial relief in
2020. Santa Catarina will benefit from the suspension of debt
service payments to the federal government until the end of the
year. At the same time, the state will benefit from debt service
payment rescheduling with BNDES and Banco do Brasil.
As part of its emergency measures, Brazilian development bank BNDES
recently approved the temporary suspension of debt service payments
until December 2020 for all local governments. This supports our
assessment of BNDES (100% federal government-owned; almost certain
likelihood of support) as a financial arm of the government through
which it's currently extending support to local governments, which
is why we don't consider recent debt rescheduling as a default.
The administration raised an injunction at the federal Supreme
Court to avoid its debt service payment with Banco do Brasil in May
2020. S&P said, "We acknowledge this was the available legal option
given delays in the enactment of the fiscal aid law, which was
necessary to formalize debt renegotiations and signing of new
contracts. We consider the renegotiation and the legal injunction
allowing the state to miss a payment with Banco do Brasil as part
of a broad government-led debt payment moratoriam initiative that
aims to provide system-wide relief and which provides adequate
offsetting compensation for financial institutions that decide to
adhere. Thus, we don't consider the rescheduling with Banco do
Brasil as a default. Santa Catarina has continued to pay its other
creditors as scheduled, namely Bank of America and multilateral
institutions."
Liquidity levels, however, are set to remain weak. S&P expects free
and available cash to cover 37% of the next 12 month's debt
service, down from its previous estimate of over 80%. Given that
S&P expects fiscal recovery to be only gradual, it believes the
state's cash position will remain consistently low over the next
two years. Access to external liquidity is limited because in order
to issue debt under Brazil's intergovernmental framework, the
states must receive authorization from the federal government under
certain specific rules and in compliance with fiscal targets. In
addition, the states can't maintain open contingent credit lines
from banks.
In S&P's view, limited access to borrowings will translate into a
lower debt burden, from 89% of operating revenue in 2019 to an
estimated 72% by 2022. Santa Catarina owes about 50% of its debt to
the federal government and the remainder to public and commercial
banks and multilateral lending agencies.
One longstanding key source of pressure for Santa Catarina is its
burdensome pension system. Even though the state has raised
contribution rates in the past, its annual pension deficit totaled
R$4.2 billion in 2019 (16% of operating revenue). In November 2019,
the government submitted a proposal for pension reform to the local
legislature to adopt changes approved at federal government level,
although it has still not been approved. While approving the reform
would be an important step forward, the long-term structural issues
will persist. The fact that over 40% of total personnel spending is
destined for pension payments, while there are more inactive
workers than active workers in the state since 2016, which
underscores the challenge.
Resuming efforts to counterbalance a rigid fiscal framework after
the pandemic will be crucial
Carlos "Comandante" Moises (Social Liberal Party, PSL) took office
as governor of Santa Catarina on Jan. 1, 2019. During 2019, the
administration implemented revenue and expenditure measures to
bolster budgetary performance and improved fiscal results last
year, following sluggish performance in 2018. Measures included an
administrative reform and review of contracts to moderate spending
growth, as well as revising fiscal benefits to support tax
collection efforts. While Santa Catarina historically posted solid
fiscal performance, there have been increasing pressures on its
budget partly due to fiscal framework rigidities. S&P considers
this to be a key challenge going forward and that maintaining
balanced fiscal results will require strong commitment from the
administration.
S&P said, "We assess Brazilian local and regional governments'
(LRGs) institutional framework as volatile and unbalanced.
Structural rigidities of Brazil's intergovernmental system have
prevented LRGs from reaching balanced fiscal accounts. Nonetheless,
we believe the system continues to have an adequate level of
predictability and transparency, with enhanced oversight over LRGs'
finances and adherence to fiscal discipline." The recently approved
fiscal package to support Brazilian LRGs under this severe stress
is set to partially alleviate short-term fiscal pressures, although
it will likely not provide fiscal sustainability in the longer
term.
One factor that mitigates pressure from fiscal framework rigidities
is Santa Catarina's economic profile, which is a rating strength.
The state benefits from better socioeconomic conditions--such as
generally lower unemployment and poverty rates--than those of other
Brazilian states, as well as sound infrastructure. These
characteristics have supported the state's revenue generation
capacity, while preventing higher expenditure pressures compared to
national peers. Moreover, while S&P's economic assessment of the
state partly stems from the sluggish sovereign wealth and growth
trends, it notes that the state's estimated GDP per capita of
$10,164 last year was higher than than Brazil's $8,709.
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 committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
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; CreditWatch/Outlook Action
To From
State of Santa Catarina
Issuer Credit Rating B+/Negative/-- BB-/Stable/--
Brazil National Scale brAA-/Negative/-- brAA+/Stable/--
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Hotels, Restaurants and Bars May Reopen
-----------------------------------------------------------
Dominican Today reports that the Public Health Ministry disclosed
that hotels, restaurants and bars may operate in compliance with
the protocols established by the authorities for culinary and
tourism activities.
Paragraph one indicates that hotels and other lodgings will have to
operate under the guidelines of the protocol for tourism
activities, according to Dominican Today.
Paragraph two indicates that restaurants and bars may also reopen
under strict compliance for their activities, the report notes.
The information is part of a resolution read by Public Health
Minister Rafael Sanchez Cardenas, during a press briefing, 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).
===========
M E X I C O
===========
GRUPO AEROMEXICO: Moody's Withdraws Ca CFR on Chapter 11 Filing
---------------------------------------------------------------
Moody's Investors Service has downgraded Grupo Aeromexico, S.A.B.
de C.V.'s corporate family rating to Ca from Caa1. Moody's has also
downgraded to C from Caa2 the senior unsecured rating on its global
notes due 2025, issued by its fully owned subsidiary Aerovias de
Mexico, S.A. de C.V. The outlook is negative. Subsequent to the
actions, Aeromexico's CFR and senior unsecured rating will be
withdrawn shortly following the filing for Chapter 11.
RATINGS RATIONALE
The downgrade to Ca reflects Aeromexico's announcement that the
company has 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%.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, and asset price declines
have created 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. 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 follows 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 demand of around
24% for the full year 2021 vis-a-vis 2019, while these levels will
not be exceeded until 2023. With the Chapter 11 financial
reorganization, Aeromexico expects to resize its operations and
reorganize its capital structure to the new demand environment,
remaining operational as conditions permit throughout the process.
Currently, the company's operations are ongoing and it continues to
be in compliance with terms and conditions under its concessions.
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.
Specifically, for Aeromexico Moody's assumes a reduction of at
least 60 % in passenger traffic for the full year 2020 vis-a-vis
2019 and a 40% reduction for 2021, with volumes recovering to 2019
levels only by 2023.
For the full year ended in May 2020, Aeromexico's passengers
declined 47.7% on an annual basis, whereas only in May the decline
was 92.4%. Since the social distancing measures that affected
traffic in May continued in June, Moody's expects that the overall
performance of the second quarter was significantly subdued.
Although social distancing measures in Mexico have relaxed starting
July 1, the sanitary state of emergency continues, for an
indefinite period, affecting air traffic demand. Likewise, bans on
air traffic coming from Mexico continue in certain regions such as
the European Union, limiting the company's ability to resume
international operations. Additionally, the economic slowdown in
the Mexican economy coupled with increased risk aversion globally
is driving the sharp devaluation in local currency. Accordingly,
Aeromexico is particularly exposed to the depreciation of the
Mexican peso as less than 40% of the company's revenues are peso
denominated. This effect is only partially mitigated by lower fuel
prices.
Further affecting Aeromexico's short term prospects is the lack of
government support that weakly positions it against global
airlines. Globally, the industry has benefited from government
support arrangements. These include the aviation industry elements
of the US Coronavirus Aid, Relief, and Economic Security (CARES)
Act; outside the US, programs, such as staff furlough support,
generally available to corporates in the UK, Spain, Germany and
France; and direct financing either available to all corporates or
investment-grade issuers. However, the Mexican government has had
an overall small scale of response to the pandemic, even when
compared to other Latin American countries, and has not announced
any specific measure to support the airlines sector.
LIQUIDITY
Aeromexico's liquidity is weak in light of the challenges ahead.
Considering its cash position reported as of the end of March 31,
2020, cash burn associated with operations at low capacity and some
debt repayments, Moody's estimates cash of MXN10 billion ($440
million) as of June 30, 2020. The company reported being in the
process of securing a debtor-in-possession (DIP), which, along with
its cash position would cover its future commitments. The C rating
for the unsecured notes stands one notch lower than Aeromexico's Ca
corporate family rating in order to reflect the effective
subordination of those unsecured creditors to the company's other
existing secured debt. Accordingly, Aeromexico's consolidated debt
is composed mainly of capitalized leases under IFRS 16 accounting
and financing leases, representing about 75% of its total debt.
Given the high amount of secured debt, 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 Aeromexico's limited financial
flexibility. Subsequent to the actions, Aeromexico CFR will be
withdrawn shortly following the filing for Chapter 11.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Passenger
Airline Industry published in April 2018.
COMPANY PROFILE
Based in Mexico City, Grupo Aeromexico S.A.B. de C.V. (Aeromexico)
is Mexico's leading airline, with more than 20 million passengers
transported in 2019 and currently serving 87 destinations (43
domestic and 44 international) in Mexico, the United States,
Europe, Central and South America, Asia and Canada. The company
currently has a fleet of 119 aircraft with passengers accounting
more than 90% of revenues and the balance being related with cargo
services. Aeromexico has been a public company since 2011. In 2017,
Delta Air Lines, Inc. (Delta, Baa3, negative) increased its equity
stake in Aeromexico to 49%, enhancing the strategic alliance
between both companies. For the LTM period ended March 31, 2020,
Aeromexico generated revenues of $2.9 billion and EBITDAR of $593
million. Currently public float of the company accounts for 20% of
its equity stake.
Downgrades:
Issuer: Grupo Aeromexico S.A.B. de C.V.
Corporate Family Rating, Downgraded to Ca from Caa1
Issuer: Aerovias de Mexico, S.A. de C.V.
Gtd Senior Unsecured Regular Bond/Debenture, Downgraded to C from
Caa2
Outlook Actions:
Issuer: Aerovias de Mexico, S.A. de C.V.
Outlook, Remains Negative
Issuer: Grupo Aeromexico S.A.B. de C.V.
Outlook, Remains Negative
GRUPO FAMSA: S&P Puts CCC- Rating on 2024 Notes on Watch Negative
-----------------------------------------------------------------
S&P Global Ratings placed its 'CCC-' issue-level rating on the
Grupo Famsa, S.A.B. de C.V. 's (GFamsa) senior secured notes due
2024 on CreditWatch with negative implications, while it affirmed
its issuer credit rating at 'SD'. The 2024 senior secured notes
have a recovery rating of '3', indicating its expectation of
meaningful recovery prospect of 50%-90%, in an hypothetical event
of default on these notes.
On June 30, 2020, Mexican regulators notified Banco Ahorro Famsa
S.A. Institucion de Banca Multiple (BAF), a subsidiary of GFamsa,
on the revocation of its license to operate as a commercial bank in
Mexico. The government announced it will liquidate BAF, seeking to
protect account holders.
The Mexican government announced the license revocation of BAF and
its liquidation. BAF operated as the group's captive finance unit,
enhancing GFamsa's retail sales through credit and representing a
significant portion of the group's balance sheet. In S&P's view,
this recent development will affect the company's operation and
capacity to service debt as it comes due in the foreseeable future,
including the interest payment of its 2024 notes due Dec. 15, 2020.
Moreover, on July 2, 2020, GFamsa announced that it won't pay
interest and principal on one of its local debt certificates with
ticker GFAMSA 04819, and won't pay interest due on another one with
ticker GFAMSA 06019. The company made this decision as a result of
BAF's ongoing liquidation.
The prepackaged Chapter 11 filing presented on June 26, 2020,
included several motions recently authorized, which imply judicial
approval for GFamsa to continue servicing debt not related to its
2020 notes.
The CreditWatch negative listing reflects a potential downgrade of
the issue-level rating in the near term, depending on BAF's
liquidation progress and its potential implications for GFamsa's
operation and debt-restructuring plan.
===========
P A N A M A
===========
PANAMA CANAL RAILWAY: S&P Places 'BB-' ICR on CreditWatch Negative
------------------------------------------------------------------
S&P Global Ratings placed its ratings on Panama Canal Railway Co.
(PCRC), including its 'BB-' issuer credit and its 'BB-' issue-level
rating on its senior secured debt, on CreditWatch with negative
implications.
A breakbulk carrier veered out of the transit of the channel and
collided with the Gamboa Bridge, destroying one of its main support
pillars, causing two sections of the bridge to collapse into the
water including about 200 feet of railroad tracks. The bridge is
the only means for the railroad to cross the Chagres River. Until
repairs are completed, the railroad is forced to suspend
operations. Management estimates reparations could take 45-60 days,
although S&P currently believes there's still a lot of
uncertainty.
S&P said, "On April 28, 2020, we revised our outlook on PCRC to
negative from stable, reflecting our view that the macroeconomic
weakness in the region due to COVID-19, could lead the company to
post a sharp revenue and EBITDA decline. This could represent a
significant departure from the company's leverage trend in the last
12 months ended March 2020 with an adjusted debt to EBITDA of
around 2.2x and funds from operations (FFO) to debt of around 38%,
while liquidity could also take a hit. In the April report, we
forecasted a 15%-20% decline in PCRC's total freight volume in
2020, with a deeper contraction in the second part of the year. We
believe the accident will cause the company to post a volume
decline of at least 25% in 2020, which will further pressure its
credit metrics and increases the likelihood of a downgrade in the
short term."
As of June 2020, PCRC had around $8 million in cash balance that
will be crucial in confronting the difficult operating conditions
during the next few months. This, together with the expected FFO in
the next 12 months, will enable the company to cover short-term
debt maturities of around PAB6.8 million, and low working capital
and capital expenditure (capex) requirements. S&P also believes the
company has flexibility to reduce dividend distribution. In
addition, PCRC has a $25 million property damage insurance that,
based on third-party preliminary analysis, should be sufficient to
fully repair the bridge and restart operations. Moreover, the
company is working closely with its insurers to receive timely
payments related to its $19 million of business interruption claim,
although the timing and final amount are still uncertain. As
additional information becomes available, S&P will look to resolve
its CreditWatch.
===============
S U R I N A M E
===============
SURINAME: Fitch Lowers LT Issuer Default Rating to 'C'
------------------------------------------------------
Fitch Ratings has downgraded Suriname's Long-Term Foreign Currency
Issuer Default Rating (IDR) to 'C' from 'CCC'.
KEY RATING DRIVERS
The downgrade of Suriname's Long-Term Foreign Currency IDR to 'C'
reflects Fitch's view that the Government of Suriname has begun a
distressed debt exchange (DDE) in relation to its 2023 bonds.
The Government of Suriname has entered into a 10-calendar day grace
period on USD15.6 million principal and a 30-calendar day grace
period on USD8.0 million interest coupon due June 30 on its USD125
million 2023 bonds. In addition, on July 1, the national
authorities issued a "consent solicitation" (dated June 30) seeking
to defer the June 30 principal payment on the bonds as well as
changes to other terms of the notes. The stated response period for
the "consent solicitation" closes July 8.
The "consent solicitation" announcement stated that "[a] group of
institutional investors holding approximately 83% of the
outstanding principal amount of the 2023 Notes has expressed to the
Republic [of Suriname] their intention to support the Proposed
Amendments and the Waiver…on the terms and conditions detailed in
the consent solicitation statement dated June 30, 2020."
Fitch deems the consent solicitation to be the initiation of a
default process, consistent with a 'C' rating. If the majorities of
creditors agree to the request at the thresholds specified in
collective action clauses (CACs), the principal deferral and easing
of the 2023 bond's interest-rate conditions would constitute a DDE
under Fitch's criteria given that it entails a material reduction
in terms and is needed to avoid a traditional payment default. If
creditors do not agree to the request, a default would occur at the
end of the grace period unless the payment is made.
Fitch is downgrading the ratings on Suriname's 2023 notes to 'C'.
The government's next foreign currency commercial debt service
payments are USD25.4 million interest on its 2026 USD bond due end
of October, and USD22.7 million principal and interest on the 2023
bond (excluding consent amendments) due end of December.
Fitch views the risk of a broader restructuring of foreign currency
debt as high, reflecting the government's high government debt
burden, acute shortage of foreign currency and distressed financing
conditions. Therefore, Fitch is downgrading the issue ratings on
Suriname's 2026 notes to 'CC'.
The downgrade of Suriname's Long-Term Local-Currency IDR to 'CCC'
reflects the following factors.
Suriname has a large structural budget deficit; which Fitch
estimates have averaged 10.4% of GDP over the past three years
(2017-2019) and Fitch expects government debt/GDP to rise above
100% of GDP in 2020 from 80% of GDP in 2019.
Government of Suriname faces distressed financing conditions of the
domestic, Suriname dollar-denominated debt and tight cash flow. The
Central Bank of Suriname has provided material financing to the
government during 2019-2020 and is the government's main creditor
in Suriname dollars. Fitch views the government's use of financing
from local financial institutions to pay public servant salaries at
the end of June, according to local press, as another indicator of
increasing domestic financing stress.
Suriname's external liquidity position is exceptionally tight.
Suriname's international reserves have come under pressure during
2019-2020 as a result of widened current account deficits driven by
large government deficits, increased imports, and more recently low
oil export prices. On the capital account, FX cash outflows have
also been recorded. In April, the Central Bank of Suriname sold a
portion of its Special Drawing Rights to enable the government to
pay USD25.4 million interest due on its USD550 million 2026 bonds.
Net external debt is high at 57.9% of GDP at end-2019, nearly
double the current 'B' median.
Fitch expects the central bank to implement an exchange-rate
adjustment in the near term, similar to recent post-election
periods. The parallel exchange market continues to show a material
premium over the official stabilized SRD-USD exchange rate. By
Fitch's calculation, Suriname's unencumbered international reserves
fell 40% to USD187 million at the end of May since December 2019,
extending a 45% cumulative decline during calendar year 2019.
Fitch's calculation excludes USD411 million cash reserves of
commercial banks and using Fitch's gold price assumption.
Suriname's new government in transition, a coalition of four
parties that include the Progressive Reform Party (VHP) with the
largest share of seats, General Liberation and Development Party
(ABOP), National Party of Suriname (NPS), and Pertjajah Luhur Party
(PL), inherits formidable economic and fiscal challenges. President
Bouterse conceded the loss of his National Democratic Party's (NDP)
majority following the May 25 parliamentary election, paving the
way for the new parliament to sit June 29. The VHP chairman, Chan
Santokhi, expects the body to select the new president mid-July and
the new cabinet will be appointed.
The leading VHP party has delineated broad macroeconomic objectives
including strengthened public finances and debt sustainability.
However, meaningful fiscal adjustment reforms faced
counter-pressure during the preceding administration, which point
to risks to the potential fiscal adjustment, in Fitch's view.
Peaceful public protests against electricity tariff increases
immediately following a large exchange-rate adjustment resulting in
double-digit inflation contributed to the derailment of Suriname's
first IMF program in 2016. The planned introduction of a
value-added tax to broaden the tax base was postponed indefinitely
in 2018.
The downgrade of Suriname's Country Ceiling to 'CCC' reflects the
deterioration of Suriname's external liquidity and inconsistent
macroeconomic policies, which Fitch views undermines the conditions
for timely private external debt service payment.
ESG Considerations:
ESG - Governance: Suriname has an ESG Relevance Score (RS) of 5 for
both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption, as
is the case for all sovereigns. These scores reflect the high
weight that the World Bank Governance Indicators (WBGI) have in its
proprietary Sovereign Rating Model. Suriname has a medium WBGI
ranking at the 43rd percentile, reflecting a recent track record of
peaceful political transitions, a moderate level of rights for
participation in the political process, moderate institutional
capacity, established rule of law and a moderate level of
corruption. In November 2019, a Suriname court convicted President
Bouterse for the execution of 15 civic dissidents in 1982 during
the former military government he led.
ESG - Creditor Rights: Suriname has an ESG Relevance Score (RS) of
5 for Creditor Rights as willingness to service and repay debt is
highly relevant to the rating and is a key rating driver with a
high weight. The current rating action taken on Suriname reflects
Fitch's view that a default event is imminent.
SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)
In accordance with its rating criteria, Fitch's sovereign rating
committee has not utilized the SRM and QO to explain the ratings,
which are instead guided by the ratings definitions.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a 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
The main factors that could, individually or collectively, lead to
negative rating action/downgrade:
-- Acceptance by creditors of a change in terms as for example
outlined in the authorities' consent solicitation for the 2023
eurobond, which would constitute a distressed debt exchange.
-- In the absence of agreement by creditors, failure to make a
payment within the applicable grace periods.
-- The rating for the Long-Term Local Currency IDR would be
downgraded to 'CC' if a default becomes probable and to 'C' if the
government announces plans to restructure its Suriname
dollar-denominated debt.
The main factors that could, individually or collectively, lead to
positive rating action/upgrade are:
-- Payment of the principal and interest due on the 2023 notes
within the applicable grace periods.
KEY ASSUMPTIONS
-- Fitch expects global indicators to move broadly in line with
Fitch's Global Economic Outlook forecasts.
-- Fitch's baseline forecasts exclude the impact of Apache
Corp. and Total S.A.'s find of significant, but as yet
unquantified, oil reserves in Suriname waters on Suriname's balance
of payments (given the discovery's early nature) as well as the
first oil production (which has a roughly three to five year
development timeline).
SUMMARY OF DATA ADJUSTMENTS
SUMMARY OF DATA ADJUSTMENTS
-- Fitch analyses government operations on a cash basis (which
includes net payments of supplier arrears) using published Ministry
of Finance statistics on arrears flows because this treatment
better explains the scale of the government's financing needs and
change in government debt/GDP during 2015-2019, in its view, than
the government commitment balance also published by the Ministry of
Finance.
-- Fitch values government debt at reference period-end market
exchange rates; this differs from valuation according to Suriname's
National Debt Law.
LIMITED INFORMATION
-- The stock of government arrears to suppliers is not publicly
disclosed. However, the flows of arrears incurred and payments
thereof are publicly disclosed.
-- Financial soundness indicators of the banking system are
released periodically for the IMF Article IV reports, but not
published on a regular basis.
ESG CONSIDERATIONS
Suriname 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.
Suriname 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.
Suriname has an ESG Relevance Score of 5 for Creditor Rights as
willingness to service and repay debt is highly relevant to the
rating and is a key rating driver with a high weight. The current
rating action taken on Suriname reflects Fitch's view that a
default event is imminent.
Suriname has an ESG Relevance Score of 4 for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators are relevant to the rating and a
rating driver.
Except for the matters discussed, 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,
either due to their nature or to the way in which they are being
managed by the entity.
===============
X X X X X X X X
===============
BOND PRICING: For the Week June 29 to July 3, 2020
--------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
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
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
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
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
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY 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
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
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
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
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
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
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
LATAM: Seen Heading for Deepest Slump Since at Least 1901
---------------------------------------------------------
Eric Martin at Bloomberg News reports that the World Bank projects
the recession in Latin America and the Caribbean will be the worst
downturn since reliable data began in 1901, setting back progress
on fighting inequality and poverty.
The development institution expects a gross domestic product
contraction of more than 7% for 2020, making it worse than any
crisis of the past century, including the Great Depression, the
1980s debt crisis and the global financial of 2008-2009, President
David Malpass said, according to Bloomberg News.
The drop in commodity exports based on a plunge in demand in
advanced economies, coupled with the collapse of tourism, is
hammering the region, Malpass said in a webcast hosted by the
Council of the Americas.
"It hits the poor and vulnerable the hardest through illnesses, job
and income losses, food supply disruptions, school closures and
lower remittance flows," he said, the report relays. "The poverty
rate, which had been falling since the early 2000s, will go up
significantly as tens of millions of people lose their jobs," he
said, the report notes.
Political systems were fragile before the pandemic and will be
severely challenged by the current crisis, Malpass said, the report
discloses. The World Bank has been helping more than 100 countries
worldwide to deal with the health crisis and working with the
International Monetary Fund and Inter-American Development Bank to
provide support to Latin America, he said, the report says.
Economies in the region are going to look different after the
pandemic, and nations need legal systems that allow restructuring
when there are business failures so that capital can flow from from
old industries to new ones, Malpass said, the report notes.
Countries also should look at the current period of low oil and
natural gas prices as an opportunity to get rid of expensive
subsidy systems, he said, 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
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