/raid1/www/Hosts/bankrupt/TCRLA_Public/200723.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, July 23, 2020, Vol. 21, No. 147
Headlines
A R G E N T I N A
ARGENTINA: Creditor Groups Unite to Submit New Debt Revamp Proposal
ARGENTINA: Sends Bill to Congress to Revamp Local Law Dollar Debt
ARGENTINA: Suspends Exports From Eight Meat Plants to China
B R A Z I L
BRAZIL: Places $127 Million Bet on Promising Covid-19 Vaccine
JSL SA: S&P Puts BB- ICR on Watch Neg. on Corp. Reorganization
MANAUS AMBIENTAL: Moody's Rates New BRL310MM Debenture Issuance Ba2
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Bank Says Remittances Reached US$738MM in June
DOMINICAN REPUBLIC: Counts on US$1.6BB to Shore Up Sectors
DOMINICAN REPUBLIC: Traders Denounce Shortages of Honey
E C U A D O R
ECUADOR: Ploughs on With $17.4BB Debt Revamp w/ Creditor Support
P E R U
CEMENTOS PACASMAYO: S&P Alters Outlook to Neg. & Affirms BB+ ICR
V E N E Z U E L A
VENEZUELA: Bans Crypto Mining From Public Housing
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Creditor Groups Unite to Submit New Debt Revamp Proposal
-------------------------------------------------------------------
Scott Squires and Jorgelina Do Rosario at Bloomberg News report
that Argentina's three largest creditor groups joined forces to
submit a new bond restructuring proposal that would provide the
country more than $35 billion in debt relief over the next nine
years.
The Ad Hoc group, the Exchange Bondholder group and the Argentina
Creditor Committee, which represent investors including BlackRock
Inc. and Ashmore Group PLC, said that they had agreed to form a
negotiating bloc and reject the government's latest offer,
according to Bloomberg News.
The statement from the creditor groups suggests they'll act as a
united front in negotiations over $65 billion of defaulted overseas
bonds, but the move may also pave the way for a deal by allowing
government officials to work with just one entity that holds a
sizable chunk of its debt, Bloomberg News notes.
"We are confident that a consensual resolution is in sight and that
such an agreement will provide a path towards a sustainable
economic future for Argentina's people," the groups said in the
statement obtained by the news agency.
President Alberto Fernandez, speaking in an interview on TV Publica
after the groups' statement was released, reiterated that the
country's most recent offer was its best and final proposal,
Bloomberg News discloses.
"We want to act in good faith and find a solution," Fernandez said.
"We'll continue discussing, but the truth is that we've made the
offer that is possible," Bloomberg News relates.
Argentina's Economy Minister Minister Guzman said in a statement
that the creditor groups misunderstand the country's restrictions
and to accept what some Argentine creditors are asking would
require unacceptable adjustments that would hurt citizens, such as
lower pension payments, Bloomberg News relays.
"We aren't going to do that," Guzman said. "We expect that a
majority of bondholders will accept the offer," he added.
'Significant Concessions'
Creditors said the new proposal represents "significant economic
and legal concessions from all three groups," Bloomberg News
notes.
They're proposing cash-flow relief in excess of $35 billion over a
period of nine years using the same 10 bonds in Argentina's latest
amended exchange offer, according to a document seen by Bloomberg.
Principal payments on those bonds would begin in 2025. Most bonds
wouldn't be subject to any haircut to the principal, though new
dollar- and euro-denominated notes maturing in 2030, 2035 and 2046
would see a 3% write-down, the document said, Bloomberg News
discloses.
Bloomberg News notes that the proposal suggests an average coupon
rate of 3.4%. Argentina would begin paying interest in July 2021.
The bonds would begin accruing interest on Sept. 4 2020, and
Argentina's past-due interest would be paid via securities maturing
in 2030. In another concession, creditors agreed that the new bonds
issued in exchange for existing global notes will be governed by an
amended version of the 2016 indenture, Bloomberg News says.
Economic Contraction
The government's latest plan had been valued at about 53 cents on
the dollar, while past proposals from some creditor groups were
closer to 56 cents, Bloomberg News relates.
Fernandez has said that the government's current offer is the most
that Argentina can do after the country defaulted in May, Bloomberg
News discloses. The economy is poised for its third straight
annual contraction, and the peso has lost more than half its value
over the past two years, Bloomberg News says.
It isn't clear exactly how much debt the united creditor groups
have, Bloomberg News relates. But the bloc said that its members
collectively hold more than a third of Argentina's outstanding
Global bonds and more than a third of its outstanding Exchange
bonds, Bloomberg News notes.
The groups' unification is an encouraging sign that a deal may be
within reach, but it also suggests that there won't be any
overarching agreement without the support of this new bloc,
according to Siobhan Morden, the head of Latin American fixed
income at Amherst Pierpont Securities, Bloomberg News notes.
"It's important that the bondholders continue to show goodwill to
negotiate and propose alternatives that will engage Argentina,"
Morden said, Bloomberg News relates. "Fernandez continues to
insist that he has no more debt repayment capacity, but there is
always wiggle room over a 20-year repayment horizon," he added.
The country's $6.5 billion of overseas notes due in 2026 were
little changed after the announcement, slipping less than half a
cent on the day to 40.7 cents on the dollar, Bloomberg News notes.
The bonds have traded flat since the May 22 default, according to a
recommendation from the Emerging Markets Traders Association,
Bloomberg News relates.
About Argentina
Argentina is a country located mostly in the southern half of
South America. It's capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning the
October 2019 general election. He succeeded Mauricio Macri in the
position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019 according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
As reported by the Troubled Company Reporter - Latin America on
April 14, 2020, Fitch Ratings upgraded Argentina's Long-Term
Foreign Currency Issuer Default Rating to 'CC' from 'RD' and
Short-Term Foreign Currency IDR to 'C' from 'RD'.
The TCR-LA reported on April 13, 2020, that S&P Global Ratings
also lowered its long- and short-term foreign currency sovereign
credit ratings on Argentina to 'SD/SD' from 'CCC-/C'. S&P also
affirmed the local currency sovereign credit ratings at 'SD/SD'.
There is no outlook on 'SD' ratings.
On April 9, the TCR-LA reported that Moody's Investors Service
downgraded the Government of Argentina's foreign-currency and
local-currency long-term issuer and senior unsecured ratings to Ca
from Caa2.
ARGENTINA: Sends Bill to Congress to Revamp Local Law Dollar Debt
-----------------------------------------------------------------
Nicolas Misculin at Reuters reports Argentina's government sent a
bill to Congress laying out its plans to restructure public debt in
dollars issued under local law, offering creditors new instruments
in both foreign currency and pesos.
The process to revamp the local-law debt is running in parallel to
tense negotiations with international creditors to restructure $65
billion of the nation's foreign-law bonds, with a deadline for
creditors to accept a "final" offer on Aug. 4 according to
Reuters.
The government, which is battling with a deep recession and already
in default on bond payments, has previously said that holders of
local-law dollar debt would receive equitable restructuring
conditions, the report relays.
"This proposal is in line with the offer to restructure the public
securities of Argentina . . . issued under foreign law, including
options in pesos for certain eligible instruments," according to
the bill's text seen by Reuters.
"If holders (of the debt) choose not to accept this exchange
invitation, then interest service payments and principal repayments
will continue to be deferred until December 31, 2021," the
government added in the document, the report notes.
The draft law, which would see the new bonds be issued on Sept. 4,
must now be approved by Congress.
Argentine Economy Minister Martin Guzman emphasized that the
government's proposal to holders of its foreign-law debt was the
"maximum effort" the country could make and that the decision was
now in the hands of creditors, the report notes.
"We have a very strong commitment to reach an agreement. We seek to
avoid confrontation with creditors and we have done the best that
could be done," Guzman said at a business event, the report added.
About Argentina
Argentina is a country located mostly in the southern half of
South America. It's capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning the
October 2019 general election. He succeeded Mauricio Macri in the
position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019 according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
As reported by the Troubled Company Reporter - Latin America on
April 14, 2020, Fitch Ratings upgraded Argentina's Long-Term
Foreign Currency Issuer Default Rating to 'CC' from 'RD' and
Short-Term Foreign Currency IDR to 'C' from 'RD'.
The TCR-LA reported on April 13, 2020, that S&P Global Ratings
also lowered its long- and short-term foreign currency sovereign
credit ratings on Argentina to 'SD/SD' from 'CCC-/C'. S&P also
affirmed the local currency sovereign credit ratings at 'SD/SD'.
There is no outlook on 'SD' ratings.
On April 9, the TCR-LA reported that Moody's Investors Service
downgraded the Government of Argentina's foreign-currency and
local-currency long-term issuer and senior unsecured ratings to Ca
from Caa2.
ARGENTINA: Suspends Exports From Eight Meat Plants to China
-----------------------------------------------------------
Hugh Bronstein and Maximilian Heath at Reuters reports that
Argentina has suspended exports to China from eight meatpacking
plants after cases of the novel coronavirus were found among their
employees, Argentina's food quality and safety body, Senasa, said.
China, the main destination for the South American country's beef,
has been clamping down on meat imports amid concerns about
infections of COVID-19, which is gripping countries around the
region, including key food producers Argentina and Brazil,
according to Reuters.
Senasa spokesman Rodrigo Conti updated the number of plants
suspended from shipping to China to eight after Senasa chief Carlos
Alberto Paz said earlier in the day it had been six plants that
were temporarily blocked from shipping to China, the report notes.
The export suspensions come after Beijing asked the Argentine
government to offer commercial security guarantees amid the
pandemic, the report relays.
"As soon as factories are in a position to re-export, we will give
them the go-ahead once again," the report quoted Mr. Paz as
saying.
According to Argentina's Agriculture Ministry, 76% of the 328,170
tonnes of bovine meat shipped from the country between January and
May were destined for China, the report notes. In 2019, Argentina
exported nearly 634,000 tonnes of beef to China, the report
relays.
"They (China) asked us what guarantees we could give them so that
they would have security with the products they import and we gave
them those guarantees," Mr. Paz added, Reuters relates.
The eight suspensions leave Argentina with 88 meatpacking plants
currently authorized to export to China, the report says.
Argentina has 106,910 confirmed cases of COVID-19, with almost
2,000 deaths. The vast majority of cases have been in and around
the capital, Buenos Aires, where many of the country's meatpacking
plants are located, the report discloses.
Argentina's urban centers have been under lockdown against the
coronavirus since March 20, the report relates. The economy is
expected to shrink 12% this year, according to private analysts,
the report notes.
About Argentina
Argentina is a country located mostly in the southern half of
South America. It's capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning the
October 2019 general election. He succeeded Mauricio Macri in the
position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019 according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
As reported by the Troubled Company Reporter - Latin America on
April 14, 2020, Fitch Ratings upgraded Argentina's Long-Term
Foreign Currency Issuer Default Rating to 'CC' from 'RD' and
Short-Term Foreign Currency IDR to 'C' from 'RD'.
The TCR-LA reported on April 13, 2020, that S&P Global Ratings
also lowered its long- and short-term foreign currency sovereign
credit ratings on Argentina to 'SD/SD' from 'CCC-/C'. S&P also
affirmed the local currency sovereign credit ratings at 'SD/SD'.
There is no outlook on 'SD' ratings.
On April 9, the TCR-LA reported that Moody's Investors Service
downgraded the Government of Argentina's foreign-currency and
local-currency long-term issuer and senior unsecured ratings to Ca
from Caa2.
===========
B R A Z I L
===========
BRAZIL: Places $127 Million Bet on Promising Covid-19 Vaccine
-------------------------------------------------------------
EFE News reports that Brazil disclosed a $127 million agreement
with UK-based drugmaker AstraZeneca and Oxford University to obtain
an experimental vaccine that has shown encouraging results in
initial clinical trials.
For the $127 million, Latin America's largest nation will receive
30.4 million doses and the technical know-how to produce the
vaccine domestically, the Brazilian Health Ministry said. If the
medication proves safe and effective enough to meet licensing
requirements, Brazil will invest an additional $161 million for the
ingredients to produce another 100 million doses domestically at a
per-unit cost of $2.30, according to EFE News.
Rio de Janeiro-based Fundacao Osvaldo Cruz (Fiocruz), Brazil's
foremost public health institution, will handle the production, the
report notes.
The No. 2 official in the Health Ministry, Elcio Franco,
acknowledged that the venture represented a gamble for Brazil,
which is averaging 1,000 fatalities a day from the coronavirus, the
report relays.
"The research risk we're taking is necessary given the urgency of
an effective solution to maintain public health and resume economic
growth," he said at a press conference in Brasilia, the report
relays.
AstraZeneca's drug is currently the leading candidate to win
official approval as a vaccine against Covid-19, according to the
World Health Organization, the report discloses.
The pact also includes a provision that would enable Brazil to
supply the vaccine to neighboring countries, Fiocruz president
Nisia Trindade Lima said in a subsequent statement obtained by the
news agency.
"In the case that the vaccine proves effective . . . the accord
permits us to assume responsibility for provision of the vaccine in
Latin America," she said, the report notes.
Fiocruz has the capacity to produce up to 40 million doses a month
of the AstraZeneca formula without reducing the output of the many
other vaccines it provides, Lima said, the report relays.
Covid-19 has claimed 56,197 lives in Brazil and the number of
confirmed cases exceeds 1.28 million, the report notes.
Though the pandemic shows no sign of subsiding, most of Brazil's 27
states continue to move forward with a gradual lifting of the
restrictions they imposed to contain the spread of the disease over
the loud, persistent objections of right-wing President Jair
Bolsonaro, who has dismissed coronavirus as a "measly flu," the
report adds.
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.
JSL SA: S&P Puts BB- ICR on Watch Neg. on Corp. Reorganization
--------------------------------------------------------------
S&P Global Ratings placed its 'BB-' global scale and 'brAA+'
national scale issuer credit and 'brAA+' issue-level ratings on JSL
S.A., on CreditWatch with negative implications.
The spin-off of its logistics and cargo transportation business
should result in a subsidiary with reduced scope and higher
leverage than that of the consolidated group. S&P said, "As a
result, we will likely lower our issuer credit rating on JSL by one
notch on the global scale and up to two notches on the national
scale, if the reorganization is approved. We believe the new
subsidiary would present debt to EBITDA around 4.5x and funds from
operations (FFO) to debt close to 10% in 2020. In line with the new
issuer credit rating, we would also lower our rating on JSL's
eighth debentures issuance, which would remain on its balance
sheet. Therefore, we placed our ratings JSL on CreditWatch
negative."
Still, the debt transferred to the new non-operating holding would
be structurally subordinated to all other debt of the group's
subsidiaries. S&P said, "As a result, we believe that in a
hypothetical default scenario, Simpar's creditors would have lower
recovery expectations than those of the group's current structure.
Still, given that we believe the recovery would be higher than 30%,
we expect to maintain the 'BB-' and 'brAA+' issue-level ratings on
the debt instruments, which will be transferred to Simpar. This
would be the case for the 2024 senior unsecured notes, issued by
JSL Europe, for which Simpar would replace JSL as the full and
unconditional guarantor, and for the 13th debentures issuance."
Such a proposal concludes the group's operational restructurings
(as in 2017 and 2018), in line with the group's strategy of
unlocking value from its subsidiaries. Although the overhaul didn't
immediately change our view of Simpar's credit quality, it should
have a positive influence because it will support continued growth
opportunities. The reorganization results in Simpar becoming the
non-operating holding company of the group, while the logistics and
cargo transportation business is spun off as an independent
subsidiary, at the same level of all other subsidiaries of the
group.
MANAUS AMBIENTAL: Moody's Rates New BRL310MM Debenture Issuance Ba2
-------------------------------------------------------------------
Moody's America Latina Ltda. assigned Ba2/Aa1.br (respectively, in
global and Brazil's national scale) to Manaus Ambiental S.A.'s new
debenture issuance of BRL310 million (3rd issuance) due in 2025.
The outlook is stable.
Manaus Ambiental performed its 3rd debenture issuance, totaling
BRL310 million (one series) backed senior unsecured
non-convertible. The proceeds will be used to invest in the
concession. The debentures have a 5-year tenor from the issuance
date, with principal paid at maturity while interest is paid
semi-annually starting in December 2020. The debentures have a
corporate guarantee from Aegea Saneamento e Participações S.A and
standard acceleration clauses including cross default provisions
with other outstanding debt from the company and other relevant
subsidiaries, change in control, bankruptcy and a financial
covenant measured at Aegea of net debt to EBITDA equal or lower
than 4.5x in 2020 that gradually decreases to 3.5x upon maturity.
This compares with other existing outstanding debt of Aegea with
leverage covenant of 3.5x.
RATINGS RATIONALE
The Ba2/Aa1.br ratings assigned to Manaus' backed senior unsecured
debentures are in line with the credit quality of Aegea's senior
unsecured debt given the corporate guarantee as well as the
centralized cash management practice and cross default provisions
among the group's operations.
Aegea's senior unsecured ratings carry a one notch down structural
subordination from the corporate family ratings (Ba1/Aaa.br) since
the company does not hold operations and is strictly a vehicle for
controlling stakes on the operating subsidiaries. Aegea largely
depends on the regular payment of dividends up-streamed by its
operating subsidiaries to meet its obligations, equity investment
commitments and potential cash requirements related to its
guarantees. In spite the relative strong coverage of cash available
to service the holding debt which responds to about 20% of the
total, the cash sources are mainly dependent on Guariroba and
Prolagos with low diversification that weighs on the structural
subordination considerations. The Aa1.br national scale reflects
the standing of the company's credit quality relative to its
domestic peers.
Its credit view of Aegea reflects its stable business profile and
solid positioning as a result of diversified operations that lower
its exposure to water scarcity risks. Aegea's operations show lower
volume fluctuations and stable cash flow, as well as an overall
transparent and predictable tariff mechanism and regulatory
framework. The experienced management team and supportive
shareholders further contribute to the rating. Moody's also expects
Aegea to continue to have sound access to the banking and capital
markets and to prudently manage its leverage, maintaining
discipline on its financial policy and mitigating cross-currency
exposure risks. The rating is tempered by Aegea's relatively small
scale and significant expansion plan. New investments and
acquisitions, together with a track record of high dividend
payments, will continue to strain leverage. The Government of
Brazil's rating (Ba2, stable) is somewhat a constrain, given the
domestic nature of the company's operations.
The stable outlook takes into consideration Aegea will prudently
manage its leverage in line with the current credit quality and
maintain discipline in its financial policy. This outlook relates
to Moody's expectation that Aegea will be successful in improving
operating performance and implementing its capital spending plan,
with minimal cost overruns as well as receive shareholder support
if needed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's does not expect a rating upgrade in the short to medium
term given the stable outlook. Also, better than-anticipated
financial performance — such that FFO interest coverage stays
above 3.0x and debt/capitalization stays above 15% on a sustained
basis — could also trigger upward rating pressure, but such
pressure is somewhat limited to the sovereign credit quality given
the intrinsic links between AEGEA and the Brazilian sovereign.
On the other hand, a deterioration in the sovereign's credit
quality, as well as its assessment of weaker shareholder support,
could exert downward pressure on AEGEA's ratings. New investments
and acquisitions or a relevant further increase in the
already-significant capital spending plan could also hurt the
company's credit quality. The ratings could also be downgraded if
there is a significant and sustained deterioration in the company's
credit metrics and liquidity or if there is a deterioration in its
subsidiaries' performance or ability to upstream dividends.
Quantitatively, the ratings could be under downward pressure if FFO
interest coverage stays below 1.8x and net debt/FFO remains below
10% on a sustained basis. AEGEA has cross-default clauses within
the group and operates through a centralized cash management
system. In light of that, ratings could be revised downwards if
there are material delays or cost overruns in its capital
investment program that hurt its revenue or lead to non-compliance
with contractual targets. Its perception of deteriorated stability
and transparency of the regulatory regime would also exert downward
pressure on the ratings.
Aegea is one of the largest private water and sewage treatment
companies in Brazil, with 38% market share of the private sector.
The company is present in 57 municipalities in 12 states, through
40 concessions, 4 public-private-partnerships and 1 subconcession,
with 28 years of average remaining concession period. In the last
12 months ended in March 2020, the company had net revenues of
BRL2.2 billion and EBITDA of BRL1.4 billion according to Moody's
adjustments.
Manaus Ambiental is a water and sewage concession 100% owned by
Aegea, located in the state of Amazonas. The concession was
acquired in June/2018 and responds for 23.7% of Aegea's
consolidated revenues and 24.4% of its population served, with 73%
of water losses and 20% sewage coverage.
The principal methodology used in these ratings was Rating
Transactions Based on the Credit Substitution Approach: Letter of
Credit-backed, Insured and Guaranteed Debts published in May 2017.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Bank Says Remittances Reached US$738MM in June
------------------------------------------------------------------
Dominican Today reports that the Central Bank of the Dominican
Republic said remittances continue their growth rate, reaching
US$737.9 million in June, a 25.7% jump over the same month in 2019,
for a total of US$3.5 billion during the first half of the year,
0.5% above the same period in 2019.
It said the improvement in remittance income is due to the
"dynamism shown in the economy of the United States" after the
reopening, where 83.7% of the total received in June came from,
according to Dominican Today.
"Regarding employment, after the creation of 4.8 million jobs in
June, the open unemployment rate decreased by 2.2 percentage
points, standing at 11.1%" the Central Bank said in a statement
obtained by the news agency.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with negative outlook (April 2020). Moody's credit rating for
Dominican Republic was last set at Ba3 with stable outlook (July
2017). Fitch's credit rating for Dominican Republic was last
reported at BB- with negative outlook (May 8, 2020).
DOMINICAN REPUBLIC: Counts on US$1.6BB to Shore Up Sectors
----------------------------------------------------------
Dominican Today reports that the Central Bank is analyzing new
economic measures to preserve and create jobs, ease the financial
burden on households and provide support to the health sector for
the purchase of equipment and supplies.
In a meeting of Central Bank technicians, it emerged that of the
RD$120.0 billion (US$1.6 billion) available to financial
intermediation entities to provide liquidity to economic agents,
some RD$90.0 billion have been channeled to date, highlighting
financing to sectors such as commerce and MSMEs (RD$9.4 billion),
manufacturing (RD$8.4 billion), exports (RD$6.5 billion),
agriculture (RD$3.5 billion), construction (RD$2.9 billion),
households (RD$2.6 billion) and tourism (RD$1.7 billion), according
to Dominican Today.
"Of the total amount initially approved, some RD$30.0 billion are
pending, which are in the process of being placed with companies
and households that will be disbursed in the coming days, according
to information from financial intermediaries," the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with negative outlook (April 2020). Moody's credit rating for
Dominican Republic was last set at Ba3 with stable outlook (July
2017). Fitch's credit rating for Dominican Republic was last
reported at BB- with negative outlook (May 8, 2020).
DOMINICAN REPUBLIC: Traders Denounce Shortages of Honey
-------------------------------------------------------
Dominican Today report that the bee honey marketing sector reported
that there is a shortage of this product in the national market.
Through a statement, they explain that the shortage of bottled
honey has been caused by the increase in consumption in Dominican
households, together with the fact that the main harvest of the
country, spring-summer, was insufficient for climatic reasons,
according to Dominican Today.
Given this situation, Jose Paiewonsky and sons (Miel Del Campo) and
Apiarios Don Luis (Miel Cohen), representing the bee honey
marketing sector, have asked the authorities to approve the single
importation of a batch of good quality honey and in accordance with
phytosanitary standards, the report notes.
The formal petition, processed before the Ministry of Agriculture a
few weeks ago, specifies that the import of honey must be carried
out immediately in order to guarantee the supply of this product to
the population, the report relays.
The sector advocates a transparent and democratic process in which
all the actors involved in marketing can participate, in proportion
to their market share, the report says.
Honey traders have assured that they will maintain record prices
for domestic production during this period, which have reached
record levels, to guarantee profitability for honey harvesters and
to stimulate the necessary increase in production levels, the
report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with negative outlook (April 2020). Moody's credit rating for
Dominican Republic was last set at Ba3 with stable outlook (July
2017). Fitch's credit rating for Dominican Republic was last
reported at BB- with negative outlook (May 8, 2020).
=============
E C U A D O R
=============
ECUADOR: Ploughs on With $17.4BB Debt Revamp w/ Creditor Support
----------------------------------------------------------------
Karin Strohecker and Tom Arnold in London and Alexandra Valencia at
Reuters report that Ecuador pushed forward with its debt overhaul
plans, requesting a vote among its creditors on reconfiguring the
terms of $17.4 billion of its external bonds, with its largest
group of creditors backing the proposal.
Under the proposed deal--unchanged from the government's earlier
proposal--10 existing bonds maturing between 2022 and 2030 would be
swapped for three bonds due in 2030, 2035 and 2040, as well as a
past due interest bond maturing in 2030, according to Reuters.
This would provide debt relief of more than $10 billion over the
next four years and $6 billion more between 2025-2030, and deliver
a nominal haircut of 9%, the report relays.
"This restructuring, if it is accepted, will provide important
relief to the country and will allow more resources to be destined
to the management of the sanitary crisis and the reactivation and
recovery of the economy," Ecuador's finance ministry said in a
statement obtained by the news agency.
A spokesman for the International Monetary Fund said the group
"welcomed" Ecuador's restructuring proposal, the report notes.
Bondholders will have until July 31 to vote on the deal.
Two creditor groups, which have in recent weeks pushed for better
terms, rejected the new proposal, saying it did not represent
Ecuador's best efforts to reach an equitable deal, the report
relates.
The steering committee for the group, which includes Amundi,
Contrarian Capital Management and T Rowe Price Associates,
represents more than 25 institutional investors and an ad hoc group
of holders of notes due in 2024, the report discloses.
They have holdings of more than 25% in certain series of the bonds
and over 35% in others, according to earlier statements, the report
relays.
The groups did not immediately respond to requests for comment.
Ecuador's largest creditor grouping, the Ad Hoc Group including
asset managers such as AllianceBernstein, BlackRock and Ashmore, is
backing the plan, the report relays.
The group, which collectively holds over 53% of Ecuador's total
outstanding sovereign bonds and close to or more than 50% of almost
every individual bond series, said it believed the plan would make
"a substantial contribution to ensuring the sustainability of
Ecuador's external debt in the medium term," the report relays.
In response to questions about the proposal, Tiago Severo, Vice
President of Latin America Economic Research at Goldman Sachs,
said: "It appears a somewhat risky strategy to us, and it may
result in a temporary stall in the process," the report relates.
"However, we remain of the view that the parties will ultimately
find common ground and that a comprehensive restructuring will be
achieved in the next few/several weeks," he said.
The government said it required the support of creditors holding at
least 80% of the aggregate principal of all bonds apart from the
2024 issue, the report discloses. The latter, which has different
terms, requires 75% support according to legal experts, the report
adds.
About Ecuador
The Republic of Ecuador is a country in northwestern South America.
The sovereign state of Ecuador is a middle-income representative
democratic republic and a developing country that is highly
dependent on commodities, namely petroleum and agricultural
products. Lenin Boltaire Moreno Garces is the county's current
President, who has been in office since May 2017. As of May 12,
2020, Ecuador has defaulted on sovereign debt in 2020.
On April 3, 2020, Moody's Investors Service downgraded the
long-term foreign-currency issuer and senior unsecured rating of
the Government of Ecuador to Caa3 from Caa1 and changed the outlook
to negative from stable. Moody's decision to downgrade Ecuador's
rating reflects the increased and now very high probability of a
restructuring, distressed exchange or default on Ecuador's market
debt as a result of the economic and financial shock the country is
experiencing due to the coronavirus outbreak that has led to
extremely tight financing conditions for Ecuador.
On April 13, 2020, S&P Global Ratings lowered its long- and
short-term sovereign credit ratings on Ecuador to 'SD/SD' from
'CCC-/C'. S&P removed the ratings from CreditWatch. S&P said
Ecuador's already large budgetary financing needs have been
exacerbated by the plunge in global oil prices and the negative
global economic impact of the COVID-19 pandemic. The country is one
of the worst affected by the virus outbreak in the region.
Also, in mid April 2020, Fitch lowered Ecuador's longterm foreign
currency issuer default rating to C from CC. The 'C' rating
reflects Fitch's view that a sovereign default of some kind is
imminent following the "consent solicitation" made by the
Ecuadorian government to defer external bond payments while it
pursues a comprehensive restructuring. A deferment in payments, if
agreed to by bondholders, would constitute a distressed debt
exchange in Fitch's view.
As reported in the Troubled Company Reporter-Latin America,
Egan-Jones Ratings Company, on May 18, 2020, downgraded the foreign
currency and local currency senior unsecured ratings on debt issued
by the Republic of Ecuador to CCC- from CCC+. EJR also downgraded
the rating on commercial paper issued by the Company to D from C.
=======
P E R U
=======
CEMENTOS PACASMAYO: S&P Alters Outlook to Neg. & Affirms BB+ ICR
----------------------------------------------------------------
On July 20, 2020, S&P Global Ratings revised its outlook on
Peru-based cement producer Cementos Pacasmayo S.A.A. (CPAC) to
negative from stable, and affirmed its 'BB+' global scale issuer
credit and issue-level credit ratings on the company.
S&P said, "We now estimate CPAC's net leverage metrics to
temporarily surpass our 3.0x rating threshold this year, due to an
expected high-double digit contraction in sales and EBITDA, eroding
the company's cash flows. However, construction activity in
northern Peru should pick up starting in the second half of 2020,
bolstered by long-awaited reconstruction works after natural
disasters in 2017. The Peruvian and British governments announced
their partnership on June 22, 2020, to deliver several
infrastructure projects totaling close to PEN7 billion, including
works on 74 schools, 15 new health centers, and 7 storm drainage
systems. Most of these projects are located within CPAC's area of
operations in northern Peru, where the company is the undisputed
leading cement and concrete producer. Depending on the degree that
reconstruction activities progress in the next few months, CPAC's
credit metrics could improve in the short term. Nonetheless, our
negative outlook signals downside risks, including a
deeper-than-expected damage to Peru's economy from the coronavirus,
structurally weakening informal construction (representing almost
two-thirds of CPAC's income), which if they materialize, would
impair the company's capacity to return its net debt to EBITDA
below 3.0x and DCF to debt above 10% in 2021."
Since mid-March 2020, the Peruvian government announced several
social-distancing and curfew measures, shutting down almost all
business activity. CPAC's operations were significantly disrupted
for about two months, given that cement production and construction
activities were not considered as essential. As a result, the
company decided to implement several measures, such as reducing
non-essential operating expenditures, consumption of existing
inventory, limiting capital expenditures to works in progress, and
acquiring new financing in order to mitigate potential liquidity
shortfalls. S&P considers CPAC's results in the second quarter 2020
will be the weakest for the whole year because its operations have
reopened at the end of May, while cement and concrete demand should
improve through the second half of 2020.
S&P said, "The COVID-19 outbreak has unleashed a sharp economic
contraction in Peru, where we estimate GDP to shrink 12% in 2020
due to disruptions from social-distancing measures, a slump in
demand for metals, and a stall in the country's key fishing season.
Nonetheless, we expect a strong rebound in activity in 2021,
because of the stimulus measures put in place (roughly 12% of GDP)
and expected improvement in exports to China. Therefore, we will
continue to monitor developments in cement and concrete demand in
CPAC's key markets and the potential impact on its credit
profile."
Environmental, social and governance (ESG) credit factors for this
outlook change:
-- Health and safety
=================
V E N E Z U E L A
=================
VENEZUELA: Bans Crypto Mining From Public Housing
-------------------------------------------------
Cointelegraph reports that Venezuelan Minister of Habitat and
Housing Ildemaro Villarroel disclosed that crypto mining operations
won't be allowed in any state-owned housing or neighborhoods that
are part of the "Gran Mision Vivienda" project (Great Home
Mission).
During an official speech on July 15, Villaroel stated that any
kind of equipment related to crypto mining is banned in public
housing due to "high power consumption" and for widely "violating"
the government's electrical supply policy, according to
Cointelegraph.
The report notes that the minister added: "In this coordinated
work, we have detected the harmful effects of these elements of
high electrical demand in the public houses of the Gran Mision
Vivienda project."
Gran Mision Vivienda is a plan by the Venezuelan government to
grant housing to citizens with low income amid a long-lasting
economic crisis that the country had already been facing before
COVID-19 showed up, the report notes.
"Hurting" The Local Power Supply System
Villarroel said that crypto mining activities could harm the
distribution of the power supply in every neighborhood. But critics
of the measure, primarily through social media, point out that
Venezuela was negligent in improving the local electric supply
system, the report relays. The issue went major after a national
electrical shutdown in 2019 as a result of the failure of the
"Guri" hydroelectric dam, the report notes.
Recently the Bolivarian National Guard of Puerto Ordaz seized 315
Bitcoin (BTC) mining machines manufactured by Bitmain. The owners
of the mining rigs were told that they did not possess the
necessary permits to own and operate the machines, 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 * * *