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/raid1/www/Hosts/bankrupt/TCRLA_Public/200715.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 Wednesday, July 15, 2020, Vol. 21, No. 141 Headlines A N T I G U A A N D B A R B U D A LIAT: SVG's One Caribbean Airline Could Fill Gap Left LIAT: Workers Asked to Agree to 50% Cut in Severance Pay A R G E N T I N A SALTA: S&P Downgrades ICR to CC on Rising Risk of Default B R A Z I L AZUL AIRLINES: Founder Sells Shares, May Move on to Next Venture BRAZIL: Breaks Record for Opening Companies in Q1, Says SERASA RIO OIL: Fitch Affirms BB- Series 2014-1 Note Rating, Outlook Neg. ULTRAPAR INT'L: Moody's Puts Ba1 Rating to $350MM Sr. Unsec. Notes D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Fiscal Precipice Awaits New Administration J A M A I C A JAMAICA: Major Gaps Found in Mining Policy Framework M E X I C O ENGENCAP HOLDING: S&P Affirms BB- Long-Term ICR, Outlook Stable P U E R T O R I C O NORDSTROM: Closes 16 Stores, Atlanta Not Included S U R I N A M E SURINAME: S&P Lowers LT FC Sovereign Credit Rating to SD V E N E Z U E L A VENEZUELA: Opposition Left Rudderless Ahead of Elections - - - - - ===================================== A N T I G U A A N D B A R B U D A ===================================== LIAT: SVG's One Caribbean Airline Could Fill Gap Left ----------------------------------------------------- RJR News reports that St. Vincent and the Grenadines Prime Minister Dr. Ralph Gonsalves said the Kingstown-based One Caribbean airline could begin regional flights soon as part of its efforts to fill the void left by cash-trapped regional carrier LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT. The major shareholder governments of LIAT have, with the exception of Antigua and Barbuda, agreed to place the airline into liquidation, according to RJR News. St. John's has criticized the move and instead is urging support for the idea of a new company, LIAT 2020, to take over the operations of the old LIAT, the report notes. About LIAT LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, is an airline headquartered on the grounds of V. C. Bird International Airport in Antigua. It operates high-frequency inter-island scheduled services serving 15 destinations in the Caribbean. The airline's main base is VC Bird International Airport, Antigua and Barbuda, with bases at Grantley Adams International Airport, Barbados and Piarco International Airport, Trinidad and Tobago. The airline is owned by seven Caribbean governments, with three being the major shareholders: Barbados, Antigua & Barbuda and St. Vincent and the Grenadines along with Dominica(94.7 %); other Caribbean governments, private shareholders and employees (5.3%). In the last few years, LIAT has been challenged with financial difficulties, often needing additional funding as the airline dealt with the high cost of operations. In November 2016, the Barbados government defended LIAT's operations, even as opposition legislators called for a cessation of the business. In early 2015, LIAT offered early retirement packages to employees in efforts to downsize. In 2014, LIAT knew it had to deal with unprofitable routes to make operations viable. In the third quarter of 2013, the airline's top management was shaken, with news Chief Executive Officer Captain Ian Brunton's sudden resignation. LIAT's current chief executive officer is Julie Reifer-Jones, chairman is Jean Holder, and chief financial officer is Rojer Inglis. Dr. Ralph Gonsalves, prime minister of St. Vincent & the Grenadines, serves as chairman of LIAT shareholders. LIAT: Workers Asked to Agree to 50% Cut in Severance Pay -------------------------------------------------------- RJR News reports that Antigua-based workers with the cash-strapped regional airline, LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, had until July 10 to agree to proposals by the government as it moves to prevent the liquidation of the company by its major shareholder governments. LIAT workers have reportedly been asked to agree to a 50 per cent cut in severance payments, according to RJR News. If the union agrees to this proposal, staff will benefit from shares in LIAT and any proposal would need to be taken to the shareholder governments as an alternative to liquidating the airline, the report notes. Antigua and Barbuda Prime Minister Gaston Browne held talks with representatives of the Antigua and Barbuda Workers Union as he seeks support for his idea for the formation of a new company, LIAT 2020, the report adds. About LIAT LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, is an airline headquartered on the grounds of V. C. Bird International Airport in Antigua. It operates high-frequency inter-island scheduled services serving 15 destinations in the Caribbean. The airline's main base is VC Bird International Airport, Antigua and Barbuda, with bases at Grantley Adams International Airport, Barbados and Piarco International Airport, Trinidad and Tobago. The airline is owned by seven Caribbean governments, with three being the major shareholders: Barbados, Antigua & Barbuda and St. Vincent and the Grenadines along with Dominica(94.7 %); other Caribbean governments, private shareholders and employees (5.3%). In the last few years, LIAT has been challenged with financial difficulties, often needing additional funding as the airline dealt with the high cost of operations. In November 2016, the Barbados government defended LIAT's operations, even as opposition legislators called for a cessation of the business. In early 2015, LIAT offered early retirement packages to employees in efforts to downsize. In 2014, LIAT knew it had to deal with unprofitable routes to make operations viable. In the third quarter of 2013, the airline's top management was shaken, with news Chief Executive Officer Captain Ian Brunton's sudden resignation. LIAT's current chief executive officer is Julie Reifer-Jones, chairman is Jean Holder, and chief financial officer is Rojer Inglis. Dr. Ralph Gonsalves, prime minister of St. Vincent & the Grenadines, serves as chairman of LIAT shareholders. ================= A R G E N T I N A ================= SALTA: S&P Downgrades ICR to CC on Rising Risk of Default --------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit ratings on the province of Salta to 'CC' from 'CCC'. The outlook is negative. Outlook The negative outlook reflects S&P's view that a default on the province's debt is virtually inevitable, given the stressful conditions and the province's intention to restructure its debt. The outlook also incorporates the prospect of a missed payment. Downside scenario S&P said, "We would lower the ratings on the province to 'SD' (selective default) if it fails to service the payment on the 2024 bond by the end of the stated grace period. The province is using the 30-day grace period on the bond to establish a dialogue and arrange negotiations with bondholders. We could also lower the rating if Salta completes a distressed exchange." Upside scenario S&P could raise the ratings in the next six months once the province regains financing sources and it sees a clear strategy for timely payment of debt. At the same time, the stabilization of the macroeconomic and financial conditions in Argentina would improve the province's creditworthiness, given the existing links between both levels of government. Rationale S&P's 'CC' ratings on Salta reflect its view of virtual certainty of default, either by the province failing to comply with a debt service payment within the grace period, or by it completing a distressed debt exchange in the next few months. Amid increasingly stressed financial conditions, including very limited access to financing, the province has decided to prioritize operating and capital spending and is seeking to restructure its debt service burden. This is also in the context of the Argentine government seemingly reaching final steps in its own debt renegotiation process. Moreover, since July 8, 2020, the province is in a 30-day grace period on the $16 million interest payment of its 2024 international bond. The grace period concludes on August 6, 2020. The 2024 plain vanilla international bond has semi-annual coupon payments of $16 million on January and July 7. Capital begins amortizing in three tranches starting in 2022. The province has another international bond–-structured notes backed by hydrocarbon royalties--which remains current, and for which the administration hasn't explicitly signaled its intention to restructure so far. This bond matures in March 2022 and the province makes quarterly principal and interest payments on it through a dedicated trust that receives income from royalties, with the latest on June 16 and the next payment on Sept. 16. S&P said, "The restructuring is at an incipient stage and no details about it have been disclosed, but we believe it would be considered as tantamount to default under our criteria. Market conditions are extremely stressed, and we believe that the province could seek to extend maturities or reduce coupon payments, resulting in potential net present value losses for investors. "The ratings also incorporate the impact of the pandemic on the provincial economy, which has exacerbated the already considerable economic and social strains in Argentina. In addition, we consider the heightened uncertainty and liquidity pressures stemming from the Argentine peso's depreciation. We also consider that the sovereign could delay its support to provinces, given its fiscal woes and the underlying volatile and unpredictable institutional framework under which Argentine local and regional governments operate." 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 Salta (Province of) Issuer Credit Rating CC/Negative/-- CCC/Negative/-- Salta (Province of) Senior Secured CC CCC Senior Unsecured CC CCC =========== B R A Z I L =========== AZUL AIRLINES: Founder Sells Shares, May Move on to Next Venture ---------------------------------------------------------------- Richard Mann at Rio Times Online reports that Airline owner and founder David Neeleman, creator and owner of Azul, is now better able to move on to his next venture back in the United States--the new low-cost airline called Breeze Airways. The TAP exit agreement, which provided EUR44.4 million to Neeleman, will result in a loss of R$143 million to Azul's accounts, according to Rio Times Online. After halving his economic stake in Azul from six percent to three percent, and freeing himself of a US$30 million (R$150 million) personal debt, he has now sold his shares in the consortium, the report notes. 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. BRAZIL: Breaks Record for Opening Companies in Q1, Says SERASA -------------------------------------------------------------- Richard Mann at RJR News reports that a total of 889,003 new companies were created in the first quarter of 2020, according to data from SERASA Experian (information services to support businesses). The number is the highest since official records began in 2010, according to RJR News. The study, entitled "Company Formation Indicator", shows that the volume of new companies opened in the first three months of this year is 17.1 percent higher than the same period in 2019. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Jair Bolsonaro is the current president, having been sworn in on Jan. 1, 2019. As reported in the Troubled Company Reporter-Latin America on May 8, 2020, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-' and has revised the Rating Outlook to Negative. The Outlook revision to Negative reflects the deterioration of Brazil's economic and fiscal outlook, and downside risks to both given renewed political uncertainty, including tensions between the executive and congress, and uncertainty over the duration and intensity of the coronavirus pandemic. On April 10, 2020, the TCR-LA reported that S&P Global Ratings revised on April 6, 2020, its outlook on its long-term ratings on Brazil to stable from positive. At the same time, S&P affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings. S&P also affirmed its 'brAAA' national scale rating and its transfer and convertibility assessment of 'BB+'. The outlook on the national scale rating remains stable. Jamaica RIO OIL: Fitch Affirms BB- Series 2014-1 Note Rating, Outlook Neg. ------------------------------------------------------------------ Fitch Ratings has affirmed the long-term rating of the series 2014 and 2018-1 notes issued by Rio Oil Finance Trust at 'BB-'. Additionally, Fitch has affirmed the series 2014-2 special indebtedness interests' national scale rating at 'AA (bra)'. The Rating Outlook remains Negative. RATING ACTIONS Rio Oil Finance Trust 2014-1 76716XAA0; LT BB- Affirmed; previously BB- 2014-1 REGS U76673AA7; LT BB- Affirmed; previously BB- 2014-2; Natl LT AAsf(bra) Affirmed; previously AAsf(bra) 2014-3 76716XAB8; LT BB- Affirmed; previously BB- 2014-3 regs U76673AB5; LT BB- Affirmed; previously BB- 2018-1 76716XAC6; LT BB- Affirmed; previously BB- The sharp decline in oil prices and reviewed production projections led the transaction to hit an early amortization trigger by breaching the minimum 1.75x forward-looking DSCR in 1Q20. In July 2nd, the parties of the transaction executed the Seventh Waiver and Amendment Agreement (the waiver). Through the waiver, the bondholders agreed to waive the early amortization and an event of default. Additionally, bondholders cannot declare an early amortization or an event of default based on the Minimum Forward-Looking Debt Service Coverage Ratio and/or the Annualized Average Debt Service Coverage Ratio and no retention event is in effect, at least until the quarterly reporting period ending in Dec. 22, 2020, and considering the calculations contained in the respective quarterly report. In exchange, bondholders have agreed to receive a waiver fee equivalent to 3.75% of the par amount of the notes as of April 6, 2020. The waiver fee will be paid in three instalments of 25%, 37.5% and 37.5% in dates specified in the waiver. In Fitch's opinion, the waiver is credit-neutral for the ratings assigned to the notes. TRANSACTION SUMMARY The assigned ratings are not directly linked to the originator's credit quality. The ratings are based on potential production and generation risk and are ultimately linked to Petrobras' Issuer Default Rating (IDR), as it is the main source of cash flow generation. The assigned ratings reflect the transaction's increased liquidity, mitigation of diversion risk and increased FCF given the subordination of FECAM payments. Fitch's ratings address timely payment of interest and timely payment of principal on a quarterly basis. The SPV initially issued USD2 billion in series 2014-1 notes, BRL2.4 billion of series 2014-2 special indebtedness interests and USD1.1 billion in series 2014-3 notes, and issued an additional USD600 million in series 2018-1 notes in April 2018. The current outstanding balance of the program adds up to approximately USD2.36 billion, out of a total program of USD5 billion. All series are pari passu, and future issuances out of the program will be subject to certain conditions. The issuances are backed by royalty flows and special participations owed by oil concessionaires, predominantly operated by Petroleo Brasileiro S.A. (Petrobras), to the government of the State of Rio de Janeiro (RJS). The State of Rio de Janeiro assigned 100% of these flows to RioPrevidencia (RP), the state's pension fund and RP sold these rights to Rio Oil Finance Trust, the issuer. KEY RATING DRIVERS Ratings Not Directly Linked to Originator's: RP is an autonomous government agency that is part of the Secretary of Treasury of RJS (BB-/AA(bra)/Negative). Performance of the originator will not affect the collateral as the generation of the cash flow needed to meet timely debt service is not dependent on either RP or RJS. Future Production Risk: The transaction benefits from growth in production levels as it increases the total royalty flows. Depressed oil prices have led Petrobras to reduce production targets on multiple occasions. Therefore, sustained low oil prices could translate into further capital expenditure cuts by Petrobras. Cash Flows Support Rating: The expected levels of AADSCRs over 2.0x partially mitigate the transaction's exposure to fluctuations in oil prices and production levels at the current rating level. Fitch expects AADSCRs to be over 2.0x for the life of the transaction, assuming Law 12,734 is implemented after 2020. Ample Liquidity for Timely Payment: The transaction benefits from liquidity in the form of a Debt Service Reserve Account (DSRA) and a Liquidity Reserve Account. Funds in deposit in these two accounts shall at all times be sufficient cover three principal and interest (P&I) payments, which Fitch considers sufficient to keep debt service current on the notes under different stress scenarios. Largest Obligor Rating Cap: Petrobras' rating is the ultimate cap for the proposed transaction, as it is the main source of cash flow generation. Petrobras carries local and foreign currency (LC/FC) Issuer Default Ratings (IDRs) of BB-/AA(bra)/Negative. The company is majority controlled by the federal government of Brazil and has the rights to E&P of the vast majority of Brazil's oil fields. Potential Exposure Political Risk Partially Mitigated: The state's liquidity constraints, evidenced by various delays in commercial and other payments, have heightened the transactions political risk exposure. However, provisions included in the sixth rescission waiver and amendment, such as the rescission of the trapping of excess cash and of the early amortization period, will increase the cash flows returned to the state, and, in turn, decrease the transaction's exposure to potential political risk. Oil Revenues Dedicated Account Modification Mitigates Redirection Risk: Pursuant to the Oil Revenues Dedicated Account Modification Legislation, the RioPrevi Oil Revenues initially deposited to the RJS Oil Revenues Dedicated Account are no longer required by legislation to be deposited into a state-owned account. Oil revenues assigned to this transaction are instead deposited into an account under the name of the issuer. This change in the account mitigates potential redirection of flows to RJS. As Banco do Brasil (BdB) cannot be replaced as a collection bank, the transaction is directly linked to the credit quality of BdB (BB-/AA(bra)/Negative). Legal Changes May Affect Collateral Stability: Although, to date, no amendments affecting the distribution of royalties for the existing concession regime have been implemented, provisions regarding the change in allocation percentages incorporated in Law 12,734 are currently under review. The transaction was analyzed assuming the law will change and DSCRs remain sufficiently robust and commensurate with the expected ratings. True Sale Valid Under Brazilian Law: Collateral backing this transaction was transferred to RP by RJS through a state decree, making RP the legal owner of the royalties. This transfer gives RP the right to sell the collateral into the trust. Transfer and Convertibility Risk: Series 2014-1, 2014-3 and 2018-1 notes are exposed to transfer and convertibility risk as royalty flows are paid in an account in Brazil in reals. This exposure caps the rating of the transaction at the country ceiling of Brazil, which is currently 'BB'. To partially mitigate operational risk that may arise from transferring and converting flows on a daily basis to an off shore account, the transaction contemplates reserve funds that covers three principal and interest (P&I) payment. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The transaction is exposed to oil price and production volume risks. Sustained low prices or further declines in prices or production levels significantly below expectations may trigger downgrades. -- The ratings are capped by the credit quality of Petrobras, the main obligor generating cash flows to support the transaction, and to the sovereign rating and country ceiling assigned to Brazil. A downgrade of Petrobras or the sovereign would trigger a downgrade on the notes. -- The ratings are sensitive to the rating of BdB as a direct counterparty to the transaction; therefore, a downgrade of BdB would trigger a downgrade on the notes. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Given the outlook negative on notes, an upgrade on the notes is unlikely at this time. However, an upgrade of both Petrobras and BdB, together with a continued recovery in oil prices, which in turn supports growth in production levels, could trigger a rating action. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). ULTRAPAR INT'L: Moody's Puts Ba1 Rating to $350MM Sr. Unsec. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba1 rating to the $350 million proposed senior unsecured notes to be issued by Ultrapar International S.A. under the same terms and conditions as the $500 million notes due 2029, fully and unconditionally guaranteed by Ultrapar Participacoes S.A. (Ba1/Aaa.br) and Ipiranga Produtos de Petroleo S.A. (Ba1/Aaa.br). The outlook is negative. Proceeds from the proposed notes are part of Ultrapar's liability management strategy and general corporate purposes. The rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and assume that these agreements are legally valid, binding and enforceable. Ratings assigned: Issuer: Ultrapar International S.A. - Gtd Senior Unsecured Notes due 2029, Assigned Ba1 The outlook is negative. RATINGS RATIONALE Ultrapar Participacoes S.A.'s (Ultrapar) Ba1 ratings reflect the company's solid business model, stable cash flow and leading positions in different product segments in Brazil, including fuel and liquefied petroleum gas (LPG) distribution, specialty chemicals and liquid bulk storage. Its ratings are primarily constrained by the current high leverage, lower operating margin, dependence on a few key suppliers for raw materials and the cyclical nature of its chemical business. The rapid and widening spread of the new coronavirus ("COVID-19") outbreak, a deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The fuel distribution sector in Brazil has been significantly affected by COVID-19 lockdown measures and changes in daily habits leading to a sharp reduction in fuel demand. In April 2020, the most negatively impacted month, sale volumes of light-vehicle fuels, gasoline and ethanol, dropped 30% compared to April 2019, and diesel sales dropped almost 14% in the same period. Since then, volumes have recovered gradually, consequently, Moody's estimates that light fuel vehicle sales will drop by 8.4% and diesel sales will drop 3.3% year-over-year in 2020. Because of the COVID-19 outbreak Moody's expects Ultrapar's EBITDA will reduce by 10% to BRL3.06 billion in 2020 from BRL3.41 billion in 2019, with a drop in Ipiranga's EBITDA, Ultrapar's fuel distribution segment, mitigated by EBITDA from other segments which will be more resilient. Oxiteno's EBITDA will benefit from the devaluation of the local currency with its foreign currency denominated sales. Ultragaz will benefit from stable demand for bottled LPG as customers cook more at home, boosting residential consumption and mitigating part of the expected drop in industrial volumes. Ultracargo benefits from long-term contracts and a sustained demand for storage of fuel and liquid bulk. Ultrapar has an adequate liquidity which was reinforced to face the COVID-19 uncertainty period. As of March 2020, Ultrapar had BRL5.9 billion in cash and BRL1.8 billion in short-term debt, with a 3.3x cash-coverage ratio an average debt-maturity profile of five years. In April 2020, Ultrapar raised an additional BRL1.3 billion to reinforce its cash balance and it reduced expected capital spending by 30% to BRL1.2 billion for 2020. The negative rating outlook incorporates its expectation that leverage will remain high, with lower EBITDA generation and lower operating profit straining metrics in the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The rating is unlikely to be upgraded in the short term. Positive rating pressure will not arise until the COVID-19 outbreak is contained and fuel demand normalizes. Ultrapar would need to record an improvement in operating margins, reduction in gross leverage and maintain a strong liquidity profile. Negative actions on the Government of Brazil's rating could trigger a downgrade of Ultrapar's ratings. Quantitatively, a downgrade could happen in case of a deterioration in the group's liquidity position, accompanied by leverage (debt/EBITDA) remaining above 4.0x without prospects of deleveraging in the near term, interest coverage (EBIT/interest expense) remaining below 2.5x for a prolonged period, and operating margin staying below 3.0%. The principal methodology used in this rating was Retail Industry published in May 2018. Ultrapar Participacoes S.A., headquartered in Sao Paulo, Brazil, is engaged in fuel (Ipiranga) and liquefied petroleum gas (Ultragaz) distribution, specialty chemicals production (Oxiteno), storage for liquid bulk (Ultracargo) and retail drugstore (Extrafarma). In the last twelve months ended March 31, 2020, Ultrapar reported consolidated net revenues of BRL 89.9 billion (about $22.0 billion). Ipiranga is the group's largest business segment, representing 84% of consolidated net revenues and 69% of EBITDA in the same period. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Fiscal Precipice Awaits New Administration -------------------------------------------------------------- Dominican Today reports that president-elect Luis Abinader's government will come to power with a complicated global economic scenario in the face of uncertainty about the true scope of the pandemic, but also with internal short-circuits, some caused by COVID-19 and others that were being dragged over time. For this year, a fiscal deficit of 5.1% of the GDP is estimated, a percentage well above the level that was initially estimated, according to Dominican Today. The eruption of the new coronavirus has implied a worsening of the fiscal situation for the country, the report notes. The sharp drop in tax revenues, of 32.3% since the pandemic began, has caused the deepening of a fiscal precipice that at the beginning of the year was calculated at 2.1%, 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). ============= J A M A I C A ============= JAMAICA: Major Gaps Found in Mining Policy Framework ---------------------------------------------------- RJR News reports that a recent assessment of Jamaica's mining policy framework has revealed major gaps in the island's mining closure legislation. The assessment shows that the requirements for mining operators are weak and therefore expose Jamaicans to significant social and economic risks, according to RJR News. The assessment was done between November 2018 and April 2019, by the Inter-Governmental forum on mining in collaboration with the Inter-American Development Bank, the report notes. The assessment found that financial assurances to cover the costs of rehabilitation and closure are not required by the Mining Act, leaving mining communities exposed to significant hazards, the report says. The assessment also labeled the current framework as outdated and notes that it fails to address many of the environmental, social, and economic elements of mine closure, the report discloses. The assessment found that fines and penalties associated with incomplete restoration and rehabilitation, or not adhering to the required timeline for certification of mined-out lands, are low, the report notes. The group has recommended that the government consider a modern legislative regime and policy for the mining sector which will provide clear lines of responsibility and accountability, the report adds. About Jamaica As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings in September 2019 raised its long-term foreign and local currency sovereign credit ratings on Jamaica to 'B+' from 'B'. The outlook is stable. At the same time, S&P Global Ratings affirmed its 'B' short-term foreign and local currency sovereign credit ratings on the country. S&P Global Ratings also raised its transfer and convertibility assessment to 'BB-' from 'B+'. RJR News reported in June 2019 that Steven Gooden, Chief Executive Officer of NCB Capital Markets, warned that the increasing liquidity in the Jamaican economy might result in heightened risk to the financial market if left unchecked. This, he said, is against the background of the local administration seeking to reduce the debt to GDP to 60% by the end of the 2025/26 fiscal year, which will see Government repaying more than J$600 billion which will get back into the system, according to RJR News. =========== M E X I C O =========== ENGENCAP HOLDING: S&P Affirms BB- Long-Term ICR, Outlook Stable --------------------------------------------------------------- S&P Global Ratings affirmed its 'BB-' long-term issuer credit rating on Engencap Holding, S. de R.L. de C.V. (Engen Capital), a Mexico-based leasing company. The outlook remains stable. The economic stress triggered by COVID-19 is likely to pressure Engen Capital's operating performance and earnings. S&P said, "Therefore, we expect stricter origination standards, flat loan portfolio growth, worsening asset quality--such as an expected nonperforming assets (NPA) ratio at about 7%--and still low reserve coverage levels at 50%-60% for 2020. Nevertheless, we consider these metrics to be manageable and consistent with the firm's current risk profile, stemming from reasonable risk appetite and a portfolio consisting mainly of loans to larger enterprises that are less risky than small- to mid-size enterprises (SMEs), to which competitors lend. Higher provisions will reduce the firm's internal capital generation, however, Engen Capital enters the crisis with healthy capital buffers as seen in a forecasted risk adjusted capital (RAC) ratio of 8.3% for the next couple of years. In addition, a more diversified revenue base due to the consolidation of TIP de Mexico since 2019 will help cushion the impact of the economic downturn in 2020 and 2021. Finally, the company benefits from integrating TIP's funding capabilities to reduce funding costs and support its access to stable funding sources. We will closely monitor collections in the following months, but we believe that Engen Capital will have enough liquidity available to cover its expected and unexpected cash outflows and won't face significant debt maturities in the next 12 months." ===================== P U E R T O R I C O ===================== NORDSTROM: Closes 16 Stores, Atlanta Not Included ------------------------------------------------- Caleb J. Spivak, writing for What Now Atlanta, reports that Nordstrom is shuttering 16 stores countrywide but is keeping its Atlanta locations open. The high-end department store announced it would be closing 16 of its 116 stores around the country, a nearly 14 percent downsizing of the company's real estate footprint. "Georgia stores are not part of the store closures," a company spokesperson confirmed in an email to WNA. The company has full-line locations at Phipps Plaza and Perimeter Mall in Atlanta. The company's Nordstrom Rack stores in Alpharetta, Buckhead, Buford, and Dunwoody, will also be unscathed by the closures, brought on by the economic impact of the COVID-19 outbreak, felt by many retailers around the world. Most of the closures will be in California, the spokesperson confirmed: Santa Barbara, Riverside, Escondido, Sacramento, Pleasanton, and Montclair. The other ten includes Annapolis, Md.; Broomfield, Colo.; Chandler, Ariz.; Freehold, N.J.; Happy Valley, Ore.; Hurst, Tex.; Miami and Naples, Fla.; Richmond, Va.; and San Juan, Puerto Rico. "We've been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations," Erik Nordstrom, chief executive officer of Nordstrom, Inc., said in a prepared statement. "The impact of COVID-19 is only accelerating the importance of these capabilities in serving customers. More than ever, we need to work with flexibility and speed. Our market strategy helps with both, bringing inventory closer to where customers live and work, allowing us to use our stores as fulfillment centers to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns." With stores being temporarily closed since March 17, Nordstrom plans to reopen stores in a phased, market-by-market approach where allowed by local authorities and with the health and safety of employees, customers, and communities as a priority. Given this phased approach, the Company is shifting its Anniversary Sale event from July into August 2020. As it re-opens stores, Nordstrom is making the following updates to help keep customers and employees safe and healthy: * Conducting health screenings for employees * Providing face coverings for employees and customers * Taking steps to allow for social distancing of six feet or more, including limiting the number of customers and employees in the store * Increasing cleaning and sanitization * Modifying the fitting room experience * Continuing to offer contactless curbside services at full-line stores * Altering hours of operation * Pausing or adapting high-touch services and customer events * Keeping tried on or returned merchandise off the salesfloor for a period of time The novel coronavirus (COVID-19) pandemic is rapidly evolving as is its effect on Atlanta, and the City's businesses and its residents. About Nordstrom Inc. Nordstrom, Incorporated is an American luxury department store chain founded in 1901 by John W. Nordstrom and Carl F. Wallin. It originated as a shoe store and evolved into a full-line retailer with departments for clothing, footwear, handbags, jewelry, accessories, cosmetics, and fragrances. =============== S U R I N A M E =============== SURINAME: S&P Lowers LT FC Sovereign Credit Rating to SD -------------------------------------------------------- On July 13, 2020, S&P Global Ratings lowered its long-term foreign currency sovereign credit rating on the Republic of Suriname to 'SD' from 'CCC+' and its issue-level rating on the country's US$125 million bonds due in December 2023 to 'D' from 'CCC+'. At the same time, S&P Global Ratings lowered its long-term local currency sovereign credit rating and unsecured issue-level rating on the country's US$550 million bond due in October 2026 to 'CCC-' from 'CCC+'. S&P Global Ratings affirmed its short-term local currency sovereign rating at 'C' and lowered its short-term foreign currency sovereign rating to 'SD' from 'C'. As well, S&P Global Ratings lowered its transfer and convertibility assessment to 'CCC-' from 'CCC+'. The outlook on the country's local currency credit rating is negative. Outlook The negative outlook reflects the potential for S&P to lower the local currency credit rating on Suriname in the next six to 12 months, if Suriname fails to honor its local currency obligations or announces its intention to do so. The country faces unprecedented challenges from the COVID-19 pandemic. Political uncertainty could constrain the government's ability to implement the reforms necessary to put Suriname's finances back on the path to fiscal sustainability. Conversely, steps to strengthen economic management and public finances could reduce the risk of a default on local currency debt, resulting in a potential upgrade in the next six-12 months. As the US$125 million December 2023 bond restructuring is complete, S&P will raise the foreign currency issuer credit rating and the issue-level rating on the restructured December 2023 bond to reflect Suriname's post-restructuring creditworthiness in the very near future. Rationale On July 9, 2020, Suriname amended the terms of its US$125 million December 2023 bond to restructure the amortization schedule and make other amendments. S&P said, "We view these modifications as a distressed debt restructuring as per our criteria "Rating Implications Of Exchange Offers And Similar Restructurings, Update," published May 12, 2009. Accordingly, we lowered our long-term foreign currency sovereign issuer rating to 'SD' and our issue-level rating on the December 2023 global bond to 'D'. We expect to raise the foreign currency sovereign credit rating and the issue-level rating on the December 2023 bond, likely in the 'CCC' category in the very near future. We understand the government is not in default on payments for its US$550 million bonds due October 2026." 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 Suriname Transfer & Convertibility Assessment Local Currency CCC- CCC+ Suriname Senior Unsecured CCC- CCC+ Senior Unsecured D CCC+ Downgraded; CreditWatch/Outlook Action To From Suriname Sovereign Credit Rating Foreign Currency SD/SD CCC+/Negative/C Downgraded; CreditWatch/Outlook Action To From Suriname Sovereign Credit Rating Local Currency CCC-/Negative/C CCC+/Negative/C ================= V E N E Z U E L A ================= VENEZUELA: Opposition Left Rudderless Ahead of Elections -------------------------------------------------------- EFE News reports that demonstrations, negotiations, elections and international pressure have been ineffectual. Armed uprisings and coup attempts have ended as desperate failures, according to EFE News. Nothing has worked for Venezuela's opposition, which finds itself out of options a year and a half after Juan Guaido declared himself the country's rightful president and launched what once appeared to be a formidable challenge to leftist head of state Nicolas Maduro, the report notes. The opposition now faces a new daunting dilemma ahead of Dec. 6 parliamentary elections to be overseen by the National Electoral Council, which it regards as biased and closely allied with the administration, the report adds. Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and a large number of small islands and islets in the Caribbean sea. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum. Nicolas Maduro was elected president in 2013 after the death of Chavez. Maduro won a second term at the May 2018 Venezuela elections, but this result has been challenged by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the United States who deemed it fraudulent and moved to recognize Juan Guaido as president. The presidencies of Chavez and Maduro have challenged Venezuela with a socioeconomic and political crisis. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country. S&P Global Ratings, in May 2019, removed its long- and short-term local currency sovereign credit ratings on Venezuela from CreditWatch with negative implications and affirmed them at 'CCC-/C'. The outlook on the long-term local currency rating is negative. At the same time, S&P affirmed its 'SD/D' long- and short-term foreign currency sovereign credit ratings on Venezuela. Moody's credit rating (long term foreign and domestic issuer ratings) for Venezuela was last set at C with stable outlook in March 2018. Meanwhile, Fitch's long term issuer default rating for Venezuela was last in 2017 at RD and country ceiling was CC. Fitch, on June 27, 2019, affirmed then withdrew the ratings due to the imposition of U.S. sanctions on Venezuela. ********* 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 * * *