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/raid1/www/Hosts/bankrupt/TCRLA_Public/200713.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 13, 2020, Vol. 21, No. 139 Headlines A R G E N T I N A ARGENTINA: Debt Deal Hopes Survive Bondholder Group Blow TELECOM ARGENTINA: Fitch Gives B- Rating on Exchange Bonds Due 2025 B R A Z I L SAO PAULO: Fitch Affirms BB- LongTerm IDRs, Outlook Negative C H I L E CHILE: Capital's Street Markets Emerge as Coronavirus Hotbed LATAM AIRLINES: Adds $1.3 Billion to Bankruptcy Financing Proposal D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Food Prices Rise & Lines Drop in Supermarkets E L S A L V A D O R EL SALVADOR: Fitch Assigns 'B-' Rating on USD1-Bil. Bonds Due 2052 EL SALVADOR: S&P Assigns 'B-' Rating on US$1BB Sr. Unsecured Notes M E X I C O GRUPO AEROMEXICO: Government Rejects Airline Rescues X X X X X X X X LATAM: ECLAC Presents 5 Proposals to Increase Fiscal Space [*] BOND PRICING: For the Week July 6 to July 10, 2020 - - - - - ================= A R G E N T I N A ================= ARGENTINA: Debt Deal Hopes Survive Bondholder Group Blow -------------------------------------------------------- Marc Jones at Reuters reports that analysts kept faith that Argentina would be able strike a debt deal with its creditors on July 9, after the most prominent group of funds had dismissed the government’s "final" offer as only a good starting point. Reuters relates that the Ad Hoc and Exchange bondholder groups, which between them own almost a third of the $65 billion of debt Argentina wants to restructure, said that though they didn't accept the latest proposal, it did provide a basis for "constructive engagement". Argentina's Economy Minister Martin Guzman, who has led the negotiations, responded by saying there was "clearly" no room to improve the country's "maximum effort", but followers of the long-running saga weren't giving up hope, according to Reuters. "I think they are getting closer to a deal and I think they will reach it," said North Asset Management's Peter Kisler, who holds Argentina bonds but is not part of any of creditor group, the report notes. "The creditors are trying to extract as much as they can. It doesn't cost them anything to push for more especially as there is bit of time left," he added, referring to Argentina's latest offer being on the table until at least early August, the report discloses. Bond prices have risen from around 20 cents on the dollar as negotiations have continued in recent months, but as they approach 50 cent on the dollar it could be time to think about potentially cashing in, Kisler said, the report discloses. "They could go to 60 cents maybe but the risk-reward gets more difficult once you get above that (50 cents) level," the report say. Another of the bond groups, the Argentina Creditor Committee, which includes funds such as Greylock Capital and GMO is still to give its view, but most focus remains on the Ad Hoc and Exchange groups which contain the likes of BlackRock, Fidelity, Pimco and Ashmore the report 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. Moody's credit rating for Argentina was last set at Caa2 from B2 with under review outlook. Moody's rating was issued on Aug. 30, 2019. S&P Global Ratings, in December 2019, raised its foreign currency sovereign credit ratings on Argentina to 'CC/C' from 'SD/D'. S&P's outlook on the long-term sovereign credit ratings is negative. Fitch Ratings, in December 2019, upgraded Argentina's Long-Term Foreign-Currency Issuer Default Rating to 'CC' from 'RD', and its Short-Term Foreign-Currency IDR to 'C' from 'RD'. DBRS, Inc. meanwhile downgraded Argentina's Long-Term and Short-Term Foreign Currency - Issuer Ratings to Selective Default (SD), from CC and R-5, respectively, also in December 2019. TELECOM ARGENTINA: Fitch Gives B- Rating on Exchange Bonds Due 2025 ------------------------------------------------------------------- Fitch Ratings has assigned a 'B-'/'RR2' rating to Telecom Argentina S.A.'s exchange bonds due 2025. The offer proposes an exchange of existing 6.5% 2021 senior unsecured notes for new senior unsecured notes that amortize in approximately equal payments in 2023, 2024, and 2025. Fitch expects the new senior unsecured notes to include an 8.5% coupon along with a cash consideration. No other rating actions have been taken with regards to Telecom Argentina's Long-Term (LT) Foreign-Currency (FC) Issuer Default Rating (IDR), LT Local-Currency (LC) IDR, or the 2021 U.S. dollar unsecured notes rating. KEY RATING DRIVERS Not a Distressed Exchange: The proposed transaction does not qualify as a Distressed Debt Exchange (DDE). Per Fitch's methodology, a transaction must be necessary to avoid a default, and represent a material reduction in terms. The USD466m of 2021 notes have approximately one year until maturity, and the company has solid liquidity, backed by its large USD cash balances abroad and the company's strong cash flow generation despite economic turmoil in Argentina. The proposal offers current noteholders USD700 of new notes for each USD1,000 of old notes, and USD250 million in cash. The proposal also offers note holders a USD70 early tender cash premium. The new notes have an 8.5% coupon, 200bps higher than the current notes. Fitch's DDE criteria state that cash tenders for less than par will need to be both conditional on a minimum aggregate amount being tendered and have an amendment to restrictive covenants. While the offer is contingent upon a minimum tender of USD250 million, the consent solicitation to amend certain covenants does not materially impair non-tendering bondholders. The new amendments would align the cross-default clause more closely to the existing 2026 notes. Government Intervention Tolerable: Fitch does not believe that price freezes in Argentina will materially affect the company's strong operations and adequate cash flow generation. Argentina's telecoms companies have come to an agreement with the government that requires companies not to adjust telecom pricing with inflation for a brief period of time; but in a hyperinflationary environment, these measures are not sustainable. The impact of non-suspension measures is also tolerable for the company's cash flow. Further government intervention into price setting would be negative for the company's ratings. Country Ceiling Limits FC Ratings: Telecom Argentina's FC IDR is constrained by the 'CCC' Country Ceiling of the Republic of Argentina. While the sovereign defaulted on its debts in early 2020, Fitch's Country Ceiling criteria do not allow for a Country Ceiling below 'CCC'. Fitch believes that the company's default would most likely be driven by transfer and convertibility restrictions, rather than by operational deterioration. In this case, Fitch's criteria allow for Recovery Ratings to be notched above the country's soft cap of 'RR4'. Due to the strength of Telecom Argentina's underlying credit profile, Fitch has notched the U.S. dollar notes to the maximum of two notches above the FC IDR. Strong Operator, Weak Operating Environment: Telecom Argentina is the leading competitor in Argentina, with strong competitive positions in both fixed and mobile services, following the merger with Cablevision S.A. in 2018. The company's product offerings and brand recognition support its robust cash flow. Since the merger, the company has weathered the turbulent macroeconomic environment by increasing service prices to offset rising operating expenses. The company's ability to over time pass along the impact of inflation to consumers enables it to maintain strong credit metrics. Capital outlays since the merger total USD2.4 billion and should strengthen the competitive position of the company. Robust Financial Profile: Telecom Argentina's financial structure is among the strongest of Fitch-rated telecom companies in the region, due to the company's conservative capital structure and consistent EBITDA margins. Fitch forecasts net debt/EBITDA of approximately 2.0x over the rating horizon, in line with stronger investment-grade operators throughout the region. Fitch estimates that the company will maintain U.S. dollar debt of around USD2.3 billion-USD2.5 billion over the rating horizon. Following several years of capex exceeding 25% of revenues, Fitch estimates that the company will invest around USD500 million-USD600 million, or less than 20%, in 2020. Market Leader: Competitive dynamics and price sensitivity in the fixed line markets mean that the company is generally more able to pass on inflation. The company has subscriber shares over 36% in mobile and pay TV, and around 54% in broadband. These competitive strengths help the company offset a relatively mature telecommunications market in Argentina, where Fitch estimates that penetration rates exceed 130% for mobile, 63% for broadband and 70% for pay TV. Argentina, relative to other countries in the region, has a much higher post-paid penetration. These factors will contribute to limited growth headroom in the future, although the market has not experienced the same level of price competition as other countries in the region. Moderate Financial Flexibility: Despite macroeconomic turmoil in Argentina, the company has consistently been able to access international debt markets on an unsecured basis. Fitch expects refinancing risk to remain manageable despite the company's relatively short-dated amortization profile. The company's liquidity position is further supported by its operational cash flow generation, as well as the high proportion of its cash balances in U.S. dollars abroad, which provide a natural hedge to FX risk. Fitch does not expect shareholder distributions to compromise the company's liquidity. DERIVATION SUMMARY The company's business and financial profiles are in line, or superior to, diversified investment-grade operators such as the rated Telefonica entities, including Telefonica Moviles Chile S.A. (BBB+/Stable), Telefonica del Peru S.A.A. (BBB/Negative) and Colombia Telecomunicaciones (BBB-/Stable). Telecom Argentina has a more conservative capital structure, a stronger market position, or both. Similarly, compared to regional peer UNE EPM Telecomunicaciones (BBB/Negative), Telecom Argentina has higher market shares in mobile and fixed, and lower leverage. Telecom Argentina's ratings reflect its strong underlying credit profile and relative independence from the government when compared with utilities and energy companies. Ultimately, both the FC IDR and LC IDR will continue to be driven by the difficulties of the Argentine operating environment. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer: -- The company will continue to mostly pass through inflation to consumers, although at a lower rate as purchasing power declines and economic stagnation continues; -- The company will maintain EBITDA margins in the low-30% range, consistent with recent performance, through flexible labor negotiations and declining marketing, energy and travel expenses. Increased bad debt expenses should cause EBITDA margins to decline by 1-2 percentage points over the rating horizon -- Capex of around USD550 million in 2020, less than the guidance of USD643 million, due to the impact of the coronavirus and the subsequent economic fallout. Capital intensity rising back to the mid-teens in subsequent years; -- Successful refinancing of upcoming maturities, consistent with recent history. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Upgrades to the FC IDR and LC IDR are dependent on a successful debt restructuring at the sovereign level, as well as an improvement in the operating environment, including a return to real economic growth. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The FC IDR will be downgraded if the Argentine government imposes capital controls that impair the company's ability to service FC debt, or if the company is unable to refinance upcoming maturities. -- The LC IDR will be downgraded if the company's ability to pass through inflation to consumers is impaired, due to government intervention and/or a collapse in demand for telecom services. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity, Low Refinancing Risk: As of Dec. 31 2019, Telecom Argentina held cash and short-term investments of ARS26.0 billion (USD434 million), against the current short-term debt of ARS35.3 billion (USD532 million). The majority of the cash balances are held in U.S. dollars or cash equivalents outside of Argentina. Throughout 2019, the company repeatedly refinanced upcoming maturities and extended its amortization profile, through both bank debt and note issuances. In 2020, the company has been active in securing additional liquidity, by tapping its global notes program for approximately ARS4.4 billion (USD73 million), the Inter-American Development Bank for USD125 million (ARS7.6 billion), and its Paraguayan subsidiary for PYG100 million (ARS948 million or USD16 million). Fitch believes that the company will continue to be able to refinance debt, given the strength of the underlying business and its manageable amortization schedule. SUMMARY OF FINANCIAL ADJUSTMENTS Operating lease expenses were adjusted to reflect Fitch's new criteria. =========== B R A Z I L =========== SAO PAULO: Fitch Affirms BB- LongTerm IDRs, Outlook Negative ------------------------------------------------------------ Fitch Ratings has affirmed the Brazilian state of Sao Paulo's Long-Term Foreign and Local Currency Issuer Default Ratings at 'BB-' with a Negative Outlook and its Short-Term Foreign- and Local-Currency IDR at 'B'. The Negative Outlook reflects the sovereign's Outlook Fitch has also affirmed Sao Paulo's National Long-Term Rating at 'AA(bra)' and revised the Outlook to Stable from Negative. Fitch believes that the AA(bra) is compatible with the state's risk profile. Fitch has revised the risk profile of the State of Sao Paulo to Low Midrange from Weaker due to a change of the key rating factor Liabilities and Liquidity Flexibility to Midrange. Despite this, the Standalone Credit Profile remains in the 'b' category. State of Sao Paulo's ratings reflect the combination of Low Midrange risk profile and 'b' debt sustainability under Fitch's rating case scenario. The state's SCP is 'b+'. Sao Paulo's IDRs benefit from an uplift from the state's SCP due to the support derived from the fact that the Federal Government is Sao Paulo's most relevant creditor. While Brazilian local and regional governments' most recently available data may not have indicated performance impairment, material changes in revenue and cost profiles are occurring across the sector and likely to worsen in the coming weeks and months as economic activity suffers and some form of government restrictions are maintained or broadened. Fitch's ratings are forward looking in nature, and Fitch will monitor developments in the sector for their severity and duration, and incorporate revised base- and rating-case qualitative and quantitative inputs based on performance expectations and assessment of key risks. KEY RATING DRIVERS Risk Profile: Low Midrange Fitch has assessed the State of Sao Paulo's risk profile at Low Midrange, reflecting the blend of two weaker and four midrange attributes on the six key risk factors, which in combination with the sovereign rating of 'BB-' resulted in a Low Midrange risk profile assessment. Revenue Robustness: Midrange The revenues of Brazilian states are mostly based on tax collections and federal transfers. Sao Paulo presents revenue growth prospects in line with the national GDP average and has posted a history of fairly stable operating revenue growth due to the state's low dependency on transfers from the federal government. Proprietary tax revenues corresponded to almost 75% of operating revenues in 2019, in line with previous years. Revenue Adjustability: Weaker The state has above average tax autonomy, which reflects a satisfactory level for revenue increases in response to an economic downturn. Like other Brazilian states, Sao Paulo has a fairly concentrated tax base. The 10 largest taxpayers were responsible for about 30% of total tax collections in 2016-2019. Although it has scope to increase taxes in light of the adequate GDP per capita of around USD13,000, tax tariffs are close to the constitutional limit, thus making revenue adjustment more difficult. Expenditure Sustainability: Midrange Sao Paulo presents moderate control over expenditure growth given the high percentage of committed expenditures. Operating expenditure has been increasing slightly more slowly than operating revenues in recent years. Responsibilities are moderately countercyclical since the state is engaged in healthcare, education and law enforcement. In addition, Sao Paulo does not present aggressive off-loading of investments and borrowings, also corroborating the Midrange assessment. Expenditure Adjustability: Weaker As per the Brazilian constitution, there is limited ability to reduce expenditure, especially on salaries. As a result, whenever there is an unpredictable reduction in revenues, operating expenditure does not follow automatically. In addition, inflexible costs are high with over 90% of expenditures being mandatory and committed. Sao Paulo has a limited track record of stimulus packages aside from tax exemptions given to companies. There are balanced expenditure rules in place and a reasonable track record of their application. Liabilities and Liquidity Robustness: Midrange There is a moderate national framework for debt and liquidity management since there are prudential borrowing limits and restrictions on loan types. The federal government guarantees all USD-denominated debt of the state. As of December 2019, external debt totaled BRL24.4 billion and corresponded to 8.5% of total debt with no significant maturity concentration. Debt directly and indirectly owed to the federal government represented almost 100% of total debt in December 2019. Liabilities and Liquidity Flexibility: Midrange There is a framework of providing emergency liquidity support from the federal government via the granting of extended maturities over the prevalent federal debt portion. On the other hand, Fitch has revised this factor to Midrange, from Weaker, since Sao Paulo has satisfactory liquidity levels since reported short-term financial obligations represent less than 75% of free cash positions, as calculated by the Brazilian national treasury (CAPAG liquidity ratio). Debt Sustainability: 'b' category Fitch assesses Sao Paulo's debt sustainability at 'b'. Fitch's rating case forward-looking scenario indicates a payback ratio (net direct risk to operating balance), which is the primary metric of debt sustainability assessment, of between 18x and 25x in 2024, thus corroborating the 'b' assessment, considering the debt service coverage ratio is lower than 1x. Fitch distinguishes the debt owed to the federal government it offers greater flexibility in its terms compared with traditional debt. All debt types are included in the debt sustainability metrics that produce the SCP. As a result, Fitch calculates a supplementary ratio excluding intergovernmental debt, known as the enhanced debt sustainability ratio. This is used to estimate the uplift between the SCP and IDR, which is limited by the sovereign's IDR. The State of Sao Paulo is classified by Fitch as a Type B LRG, and is required to cover debt service from cash flow on an annual basis. Sao Paulo is the most populous Brazilian state with approximately 45 million people. Its revenue sources are mostly based on taxation with a low dependence on federal transfers and ad hoc sources. Sao Paulo has the right to borrow on the domestic market and externally, subject to national government approval. A prolonged COVID-19 impact and much slower economic recovery lasting until 2025 would pressure tax receipts. Should the issuer be unable to proactively reduce expenditure or supplement weaker receipts from increased central government transfers, this may lead to a downgrade. DERIVATION SUMMARY Sao Paulo's SCP is assessed at 'b+', reflecting a combination of a Weaker risk profile and debt sustainability metrics assessed in the 'b' category under Fitch's rating case scenario. The SCP, positioned at 'b+', also reflects the peer comparison. For the case of Sao Paulo, the enhanced debt sustainability ratio is 'aa', meaning that the enhanced debt metrics are strong and commensurate with the IDR of 'BB-'. KEY ASSUMPTIONS Fitch's rating case scenario is a through-the-cycle scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on the 2015-2019 figures and 2020-2024 projected ratios. The key assumptions for the scenario include: - Income tax and fees fines and other operating revenues linked to inflation; - Transfers linked to nominal GDP growth; - Operating expenditures also linked to inflation; - Long-term debt increase based on estimates of new credits - Fitch is considering BRL 26,4 billion of new debt until 2024; - Cost of debt based on increase of historical average cost of debt; - Capex: Overall results generated by the Debt Sustainability Tool adjusted to capex, assuming that the state would invest the remain overall result. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Positive rating action on Sao Paulo's IDR could result from an improvement in the sovereign`s rating or an improvement of its SCP in conjunction with a sovereign rating upgrade. -- An increase in SCP could derive from improvement in the operating balance, with a payback ratio lower than 9x and actual DSCR higher than 2x. Fitch does not expect it to occur in short/medium term. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Sao Paulo's Long-Term IDRs could be downgraded if its enhanced payback ratio deteriorates on a sustained basis in its rating case scenario to higher than 5x. This could happen if its operating balance turns negative. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. ========= C H I L E ========= CHILE: Capital's Street Markets Emerge as Coronavirus Hotbed ------------------------------------------------------------ Maria M. Mur at EFE News reports that health authorities are closely monitoring Peñalolen, a neighborhood on this metropolis' east side street markets, which are very popular in Chile despite a high density of supermarkets, and many municipalities have ordered them closed after linking them to significant outbreaks. The large crowds of consumers who gather at those markets, the lack of space between the stalls and the constant changing hands of goods and cash make them an infection focal point, according to EFE News. The latest street market to be shut down was one in Lo Espejo, a commune in the Santiago metropolitan area that has been hard-hit by the pandemic, having already registered more than 3,600 confirmed cases, the report note. Lo Espejo's mayor said that 20 vendors had died of Covid-19 in recent weeks and that the market will be closed for at least 14 days, the report relay. "Many of the 'coleros' (informal vendors) arrived when the other communes decided to close their street markets. There started to be lot of people, and the level of contagion rose," the mayor, Miguel Angel Bruna, told local news outlet CHV Noticias, the report discloses. The national government has established a protocol for the street markets, including requiring proper distancing between stalls and a requirement that each vendor use and provide disinfectant, but not all municipalities have complied with the rules, the report say. Home to just 19 million inhabitants, Chile ranks sixth worldwide in confirmed coronavirus cases ahead of Spain, France and the United Kingdom, according to the latest figures from Maryland's Johns Hopkins University, the report relays. Although there are signs the pandemic is gradually receding, particularly in Santiago, where the hospital network was on the verge of collapse in June, the country has registered more than 300,000 confirmed cases since the start of the pandemic and 10,000 deaths attributed to Covid-19, including suspected and probable fatalities, the report discloses. A group of nurses from a municipal health center, outfitted with personal protective equipment, including gas masks, picks up some boxes and bids farewell to a few vendors after conducting around 100 Covid-19 tests throughout the morning, the report says. "We're going to push to have the test results in just two days," one of the nurses, Katia Pesoa, told Efe, adding that "there are many workers who don't want to do the test for fear it'll come back positive and they won't be able to work." The pandemic has exacted a hefty economic toll on Chile, a country whose gross domestic product per capita is one of the highest in Latin America, the report notes. The country's economy contracted by a record 15.3 percent year-over-year in May. Since March, more than 1.5 million people have lost their jobs and thousands have been left without any source of income, the report notes. The Central Bank of Chile is forecasting a 7.5 percent drop in GDP this year, while the United Nations Economic Commission for Latin America and the Caribbean is projecting that the nation's poverty rate could climb to 13.7 percent, the report dicloses. The economic fears are especially palpable among the country's informal workers, the report notes. "If they close the Peñalolen market, I don't know what we're going to do," Victor Saavedra, one of the vendors, told Efe. LATAM AIRLINES: Adds $1.3 Billion to Bankruptcy Financing Proposal ------------------------------------------------------------------ Fabian Cambero and Dave Sherwood at Reuters reports that LATAM Airlines said on July 9 it had secured an additional $1.3 billion for its financing proposal before a New York bankruptcy court, while adding its unit in Brazil to the debt restructuring process. LATAM filed for U.S. bankruptcy protection in May, aiming to reorder $18 billion in debt. It was the world's largest airline to date to seek an emergency reorganization due to the coronavirus pandemic, according to Reuters. The airline said it had secured an additional $1.3 billion in funding from Oaktree Capital Management L.P. and its affiliates, enough to meet the company's financing requirements amid the crisis, the report discloses. The company had already secured $900 million for the process from shareholders Cueto Group and Qatar Airways, the report relays. "Combined . . . it is hoped that financial support will not be required from governments," the company said in a statement, the report relays. The company said the proposal still required approval from the U.S. court, the report notes. LATAM also announced it would add its unit in Brazil to the bankruptcy protection process in the United States, calling the move a "natural step in light of the continuing COVID-19 pandemic," the report relays. The airline's affiliates in Chile, Colombia, Peru, Ecuador and the United States joined the Chapter 11 process following the company's initial bankruptcy announcement May, the report notes. "LATAM Airlines Brazil will continue to operate passenger and cargo flights normally, as LATAM Airlines group and its affiliates have done since they entered Chapter 11," the statement said, the report notes. Three of Latin America's largest airlines - LATAM, Aeromexico and Avianca Holdings - are now in Chapter 11, as governments have avoided potential bailout packages, the report relays. Analysts expect a changed post-crisis landscape in the region with fewer competitors and higher ticket prices, 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. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Food Prices Rise & Lines Drop in Supermarkets ----------------------------------------------------------------- Dominican Today report that the risky and intense lines of the weekend in the supermarkets were almost non-existent, but the complaints of the housewives in the corridors of these establishments were notable for the rise in the prices of the products of the basic basket. Although the statistics of the Central Bank reflect a decrease of 1.82% in the index of the Food and Non-Alcoholic Beverages group, which attributes to the drop in prices in agricultural items, women consulted by Listin Diario perceive that all the products of the basic basket have increased, according to Dominican Today. "The oil went up, the cheapest rice is at 22 pesos a pound, a kilo of sauce from RD$108 to RD$123, things are getting very expensive, the chelitos won't pay me," said Fatima Liriano, who was shopping at a renowned supermarket on Duarte Avenue, the report notes. The same comment was made by another lady who bought food and who did not want to identify herself, stating that for some days there have been some increases in products in supermarkets, she said that chicken has risen from RD $ 60.00 to almost RD $ 70.00, as did liquid milk whose prices fluctuate at RD $ 50 and RD $ 70.00 a liter, the report discloses. Walking the aisles of two supermarkets on the avenue Duarte found that the price of rice in its different brands ranges from RD$22.00 to RD$35.00 per pound, 64-ounce oil from RD$170.00 to RD$190.00, refined sugar to 149.00 for a 5-pound package and cream sugar to RD$134.00, the report relays. Agricultural products vary greatly in price from one establishment to another, in the case of green plantains, their price was in a supermarket at RD$14.00 per unit and in another at RD$22.00, without showing much difference in size, the report notes. The Creole potato was at RD$18.00 a pound and in another at RD$33.00 with the label of "extra potato," the report notes. According to the Central Bank, the cost of the basic basket has decreased, the report discloses. The data presented by the Central Bank shows that the cost of the family basket by quintiles in the first five months of 2020 has decreased between RD$227.93 and RD$1,051.18, the report relays. In January of this year, the family basket of quintile 1, consumed by the poorest families, was at RD$14,526.87 and in May it was at RD$14,298.94, that is, it fell by RD$227.93, the report notes. Likewise, in quintile 2, the average cost of the basket decreased RD$286.60, falling from RD$20,659.47 to RD$20,372.87, the report relay. In the case of quintile 3, its cost fell between RD$369.06 between January and May, from RD$25,291.11 to RD$24,922.05, 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 stable outlook (2015). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (2017). Fitch's credit rating for Dominican Republic was last reported at BB- with stable outlook (2016). ===================== E L S A L V A D O R ===================== EL SALVADOR: Fitch Assigns 'B-' Rating on USD1-Bil. Bonds Due 2052 ------------------------------------------------------------------ Fitch Ratings has assigned a 'B-' rating to El Salvador's USD1 billion bonds maturing July 15, 2052. The bond has a coupon of 9.5%. Proceeds from this issuance will be used for general budgetary purposes and funding the Fondo de Emergencia y de Recuperacion y Reconstruccion Economica, the national fund aimed at addressing the government's COVID-19 relief and recovery efforts. It will also be used for the creation of a trust for the economic recovery of enterprises registered as employers with the Social Security Institute and informal enterprises and industries that were affected by the COVID-19 outbreak and related shut down. KEY RATING DRIVERS The bond ratings are in line with El Salvador's Long-Term Foreign-Currency Issuer Default Rating of 'B-'. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The bond rating would be sensitive to any positive changes in El Salvador's Long-Term Foreign-Currency IDR. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The bond rating would be sensitive to any negative changes in El Salvador's Long-Term Foreign-Currency IDR. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS El Salvador has an ESG Relevance Score of '5' for Political Stability and Rights as World Bank Governance Indicators, which have the highest weight in Fitch's Sovereign Rating Model (SRM), are highly relevant to the rating and a key rating driver with a high weight. El Salvador 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 highly relevant to the rating and a key rating driver with a high weight. El Salvador has an ESG Relevance Score of '4' for Human Rights and Political Freedoms as World Bank Governance Indicators, which have the highest weight in Fitch's SRM, are relevant to the rating and a rating driver. El Salvador has an ESG Relevance Score of '4' for Creditors Rights as willingness to service and repay debt is relevant for the rating and a rating driver, as for all sovereigns. EL SALVADOR: S&P Assigns 'B-' Rating on US$1BB Sr. Unsecured Notes ------------------------------------------------------------------ S&P Global Ratings said it assigned its 'B-' issue rating to El Salvador's (B-/Stable/B) US$1 billion senior unsecured notes due in July 2052. El Salvador will use the proceeds from the issuance for general budgetary purposes, including funding for COVID-19 relief and recovery efforts. The rating on the notes is the same as the long-term foreign currency sovereign credit rating on El Salvador. S&P expects the COVID-19 pandemic to severely affect El Salvador's economy, resulting in a recession, rising fiscal deficit, and higher external borrowing. Despite the sovereign's already high debt burden, we expect funding from the IMF, other official creditors, and international markets will provide external liquidity in the short term. S&P's ratings on El Salvador reflect the country's institutional weaknesses, fragile external profile, low per capita income, and only moderate GDP growth, due to persistently low investment. In addition, they incorporate the sovereign's weak public finances and high debt burden. As a fully dollarized economy, El Salvador has limited monetary flexibility. On the other hand, S&P's ratings also reflect El Salvador's relatively smooth debt amortization profile over the next 12 months, as well as the eased short-term rollover risk due to the sovereign's recent access to official funding from the IMF and other multilateral lending institutions. Ratings List New Rating El Salvador Senior Unsecured B- =========== M E X I C O =========== GRUPO AEROMEXICO: Government Rejects Airline Rescues ---------------------------------------------------- Noe Torres at Reuters reports that Mexico's government ruled out a financial rescue of the country's airlines, which have been hammered by a sharp drop in global demand for travel and restrictions imposed due to the coronavirus pandemic. Aeromexico disclosed in late June the start of a restructuring process under Chapter 11 bankruptcy proceedings in the United States, while rival Interjet has also been struggling under the burden of coronavirus-imposed restrictions, according to Reuters. Javier Jimenez, Mexico's Minister for Communications and Transportation, told reporters the government was in contact with the industry and exploring options to help them but said there would be no offers of a financial rescue, the report notes. "There will be no rescue, but there will be support," said Jimenez, reiterating the stance of the administration of President Andres Manuel Lopez Obrador, the report relates. The leftist leader has repeatedly ruled out private sector rescues, saying past bailouts only helped the rich and saddled Mexico with unsustainable debt, the report dicloses. "From the outset, it was said the country is not in a position to do it, nor minded to do it, because the bailouts are still being paid for by Mexicans, peso by peso," he added, the report relays. Jimenez said the granting of loans and guarantees to companies through development banks was currently being negotiated, the report notes. Mexico is one of few countries in the world that has not implemented a government support plan for its airline industry to help it cope with the impact of the virus, according to industry reports, Reuters relates. About Grupo Aeromexico Grupo Aeromexico, S.A.B. de C.V. -- https://www.aeromexico.com -- is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico's global airline, has its main hub at Terminal 2 at the Mexico City International Airport. Its destinations network features the United States, Canada, Central America, South America, Asia and Europe. Grupo Aeromexico and three of its subsidiaries filed for Chapter 11 (Bankr. S.D. M., Case No. 20-11563) on June 30, 2020. The petition was signed by Ricardo Javier Sanchez Baker, chief financial officer. The Debtors reported consolidated assets and liabilities of $1 billion to $10 billion. Timothy Graulich, Esq. of Davis Polk and Wardell LLP serves as counsel to the Debtors. =============== X X X X X X X X =============== LATAM: ECLAC Presents 5 Proposals to Increase Fiscal Space ---------------------------------------------------------- In a special session of the United Nations High-level Political Forum on Small Island Developing States, ECLAC's Executive Secretary, Alicia Barcena, called for urgently providing concessional funds to address these countries' vulnerabilities, regardless of their per capita income. Concessional financial support for Caribbean countries is imperative as a response to the crisis unleashed by the coronavirus disease (COVID-19) and to confront the economic and climatic vulnerabilities affecting them. So said Alicia Barcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), during a session of the United Nations High-level Political Forum 2020 (HLPF), which is taking place virtually this July, where she also presented five proposals that would enable these countries to increase their fiscal space. The event entitled Mobilizing international solidarity, accelerating action and embarking on new pathways to realize the 2030 Agenda and the Samoa Pathway: Small Island Developing States was presided over by Ambassador Munir Akram of Pakistan, who is Vice President of the United Nations Economic and Social Council (ECOSOC), and moderated by Fekitamoeloa 'Utoikamanu, UN High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS). Participating in the discussion along with Alicia Bárcena were Aiyaz Sayed-Khaiyum, Attorney-General, Minister for Economy and Minister responsible for climate change in Fiji; Abdulla Shahid, Minister of Foreign Affairs of Maldives; Terri Toyota, Head of the World Economic Forum's Sustainable Markets Group; Karol Alejandra Arambula Carrillo, Executive Director and Founder of MY World Mexico; Marsha Caddle, Minister of Economic Affairs and Investment of Barbados; and representatives of various countries. In her presentation, Alicia Barcena specified that Latin American and Caribbean countries are suffering the effects of the COVID-19 crisis through five channels: a drop in trade with their main trading partners, lower prices for commodities, the disruption of global value chains, lower demand for tourism services, and a decline in remittances. In particular, Caribbean nations currently face three significant vulnerabilities, ECLAC's Executive Secretary said: a fall in tourism-related visits calculated at between 57% and 75% in 2020, which will entail a loss of between US$22 billion and US$28 billion in income; high exposure to climate change, which is manifested in the 400 disasters that occurred between 1990 and 2019, 90.4% of which were caused by hydro-climatic phenomena (and 2020 is forecast to be a very active year with an estimated 16 named storms expected); and a high level of public indebtedness: 11 countries have a debt/GDP ratio that is above the 60% threshold for sustainability, and three are nearing or have exceeded 100% of their GDP. "High debt service in Caribbean countries limits their fiscal space for responding to the COVID-19 crisis," the senior United Nations official emphasized. They are currently spending US$1.2 billion to address the pandemic, but debt service is very high, between 30% and 70% of their revenue, which puts great pressure on their fiscal space, Barcena added. Alicia Barcena also underscored that the countries of the Caribbean do not have concessional financial support, and receive very little Official Development Assistance (ODA). "Concessional financial support (to the Caribbean) is an imperative, regardless of whether they are considered to be middle-income countries," she indicated. In this area, she explained that ECLAC is proposing five, very concrete recommendations: a debt relief initiative through a debt for climate change adaptation swap, which includes the creation of a resilience fund; a debt service standstill and a change in international financial institutions' (IFIs) eligibility criteria for granting concessional funding; stage contingency bonds, especially with hurricane clauses; green and blue bonds; and liquidity support via the issuance of Special Drawing Rights (SDRs). "There are warning signs with 10 years left to fulfill the 2030 Agenda and the Samoa Pathway. We are not going to achieve the goal of reducing poverty, or the full goals related to women's empowerment, food security, unemployment and the strengthening of health and sanitation. That is why concessional funding is a must," Bárcena stated. "At ECLAC, we are carrying out our 'Caribbean First' strategy as a priority. We are fully prepared to support Caribbean countries on the promotion of a debt relief initiative. We will advocate for a reduction and elimination of debt, regardless of the income status that countries have," she emphasized. Alicia Barcena also insisted on the need to open political spaces at an international level so that the voices of Small Island Developing States (SIDS) may be heard. "We need the G-20 to go further and not only consider the challenges of low-income countries, but also those of middle-income countries, especially SIDS," she stressed. [*] BOND PRICING: For the Week July 6 to July 10, 2020 ------------------------------------------------------ Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- 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 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 MIE Holdings Corp 7.5 56.4 4/25/2019 HK 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 ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2020. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *