/raid1/www/Hosts/bankrupt/TCRLA_Public/200807.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
Friday, August 7, 2020, Vol. 21, No. 158
Headlines
A R G E N T I N A
ARGENTINA: IDB OKs $20-MM Loan to Support Crisis Response
ARGENTINA: Must Fix Economy After Debt Deal
TOYOTA COMPANIA: Moody's Withdraws (P)Caa1/Ba2.ar Debt Rating
B R A Z I L
ITAU UNIBANCO: CEO Sees Loan Delinquency at Record Levels
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Gov't. Must Be Very Careful With Unemployment
J A M A I C A
JAMAICA: Exploring Bilateral Trade With Colombia
M E X I C O
GRUPO AEROMEXICO: Egan-Jones Lowers Senior Unsecured Ratings to D
P A N A M A
LA HIPOTECARIA: Fitch Corrects Ratings Release dated April 20, 2020
P U E R T O R I C O
ASCENA RETAIL: U.S. Trustee Appoints Creditors' Committee
V E N E Z U E L A
VENEZUELA: Asks Italy to Extradite Former PDVSA Pres. Ramirez
- - - - -
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A R G E N T I N A
=================
ARGENTINA: IDB OKs $20-MM Loan to Support Crisis Response
---------------------------------------------------------
The Inter-American Development Bank (IDB) has approved a $20
million loan from the reorientation of its portfolio resources with
Argentina to enhance the effectiveness, coordination and management
of Strategic Government Programs, while focusing on response and
recovery from the crisis triggered by the COVID-19 pandemic.
The operation is part of a $1.8 billion support program that the
IDB has earmarked for Argentina this year.
The program will help organize and more efficiently execute
policies and programs that support government priorities for crisis
management and preparing for economic recovery in response to the
impacts of COVID-19. In addition, it will improve the management
and performance of priority government policies with a direct
impact on the services provided to citizens.
In this sense, it will focus on the quality of planning,
monitoring, decision-making and evaluation of strategic government
programs, and will contribute to strengthening innovation
capacities and promoting innovative practices on public policies in
public administration, with the participation of the private sector
and civil society.
Among its components, the operation will strengthen the functions
of the Government Center within the scope of the Secretariat for
Strategic Affairs. It also includes the generation of a training
plan and change management strategies to be used by the different
entities responsible for implementing the defined government
priorities, as well as quick assessments and strategies that
support project implementation and its compliance.
Additionally, the creation of a Multisectoral Government Innovation
Council and the implementation of a program of government
innovators will be supported, which will be made available to State
agencies to support the development of projects.
With respect to innovations in the private sector and civil
society, the program will finance the implementation of an
innovation laboratory to improve responses to government
priorities, as an agile connection mechanism between all parts of
the innovative ecosystem that can contribute and take advantage of
scientific, technological and social solutions that are scalable
and sustainable.
The IDB loan of $20 million has an amortization period that ends on
February 15, 2042, a grace period through August 15, 2025, and an
interest rate based on LIBOR.
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
July 30, 2020, S&P Global Ratings said it lowered its issue
ratings on two of Argentina's foreign currency-denominated bonds,
BIRADs due January 2022 and January 2027, to 'D' from 'CC'.
These are New York-law U.S. dollar-denominated bonds that had a
total of about US$220 million in interest due July 26, 2020, and
an applicable payment date of July 27. Other similar bonds S&P
already lowered to 'D' include the BIRADs due 2021, 2026, January
2028, July 2028, 2036, 2046, 2048, and 2117, as well as a
New York-law U.S. dollar-denominated discount bond due December
2033 and an English-law euro-denominated discount bond due
December 2033. These bonds will remain at 'D' pending conclusion
of the debt renegotiations that are underway. The current
deadline for acceptance remains Aug. 4, with a settlement date
of Sept. 4.
The TCR-LA reported on April 14, 2020, that 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'.
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: Must Fix Economy After Debt Deal
-------------------------------------------
Inquirer Net reports that it took months of tough talks for
Argentina to reach agreement on restructuring $65 billion in debt.
Now, economists and policymakers say, the real work begins:
reviving Latin America's No. 3 economy from its currency and fiscal
crises, according to Inquirer Net.
Though both government and creditors celebrated the deal that
should help Argentina avert a messy default, it still faces a
10%-plus contraction this year, an over-valued peso, spiking
poverty and a deep fiscal hole, the report relays.
"This was the easy step," Stephen Liston, senior director at the
Council of the Americas, said of the debt deal, the report
discloses.
How the once-wealthy grains producer does from now is the acid test
for Peronist President Alberto Fernandez and his star Economy
Minister Martin Guzman, fresh from taming Wall Street, the report
relays.
"This is an important step," Guzman said of the agreement. "But
this does not solve all the problems of the Argentine economy," he
added.
Argentina's peso has been propped up by tight capital controls,
which has seen the value of the currency in black market trades
veer dangerously away from the official rate, with the gap
currently around 76%, the report notes.
The government says it plans to ease controls, but only when the
economy has been righted, leaving an artificially strong peso that
businesses say hinders trade, the report relays.
'PRECARIOUS SITUATION'
"It's a very precarious situation there where you've got an
over-valued currency, but weakening it will only worsen the debt
situation," said Nikhil Sanghani of Capital Economics in London,
the report notes.
Inflation, the thorn in the side of Argentine policymakers for
years, shows little sign of abating, the report discloses.
Consumer prices have slowed during the pandemic, but remain at an
annualized level above 40% and will likely revive as the economy
recovers, the report notes.
The central bank, looking to mop up liquidity, is facing a
"snowball" of short-term debt, temporarily reining in prices but
increasingly straining the institution, said economist Eduardo Levy
Yeyati of Buenos Aires' Universidad Torcuato Di Tella, the report
relays.
Getting out from under this would likely mean the bank has to raise
interest rates to encourage savings in pesos, he added, otherwise
it would risk unleashing a new wave of inflation, the report
discloses.
Under the weight of public spending to combat the impact of the
pandemic, the primary fiscal deficit soared to $3.53 billion in
June and the government is expected to end the year with a large
fiscal hole, the report relays.
Guzman has pledged to return to fiscal balance and keep the deficit
under control, but faces a politically tricky balancing act between
that and growth-boosting policies, the report notes.
"The fiscal deficit has blown out again and we think that the
primary deficit will be something like 8% of GDP this year," said
Sanghani, adding it could force the government to adopt politically
unpalatable measures even as millions face increased poverty, the
report notes.
"If they have to impose some sort of austerity going forward, it
will only keep the economy quite weak and that will hinder its
ability to pay off even these restructured debts," the report
discloses.
IMF Talks
The government plans to turn attention to negotiating a new program
with its biggest creditor, the International Monetary Fund (IMF),
which floated a $57 billion line in 2018, the report notes.
Argentina may seek to extend its payment schedule in return for
lowering inflation, fixing the exchange rate and reeling in public
spending, said Claudio Loser, a former director at the IMF's
Western Hemisphere department, the report relays.
"That would help Argentina a lot in the next decade, if it can be
done," Loser said.
But despite a softer approach from the IMF, any deal would likely
come with some tough fiscal demands, the report notes.
"It's feasible that the Fernandez government is hesitant on some of
these terms," Sanghani said. "There are still some hurdles to
getting a renewed IMF deal, so it's not a forgone conclusion by any
stretch of the imagination," he 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
July 30, 2020, S&P Global Ratings said it lowered its issue
ratings on two of Argentina's foreign currency-denominated bonds,
BIRADs due January 2022 and January 2027, to 'D' from 'CC'.
These are New York-law U.S. dollar-denominated bonds that had a
total of about US$220 million in interest due July 26, 2020, and
an applicable payment date of July 27. Other similar bonds S&P
already lowered to 'D' include the BIRADs due 2021, 2026, January
2028, July 2028, 2036, 2046, 2048, and 2117, as well as a
New York-law U.S. dollar-denominated discount bond due December
2033 and an English-law euro-denominated discount bond due
December 2033. These bonds will remain at 'D' pending conclusion
of the debt renegotiations that are underway. The current
deadline for acceptance remains Aug. 4, with a settlement date
of Sept. 4.
The TCR-LA reported on April 14, 2020, that Fitch Ratings
upgraded Argentina's Long-Term Foreign Currency Issuer Default
Rating to 'CC' from 'RD' and Short-Term Foreign Currency IDR
to 'C' from 'RD'.
On April 9, the TCR-LA reported that Moody's Investors Service
downgraded the Government of Argentina's foreign-currency and
local-currency long-term issuer and senior unsecured ratings to Ca
from Caa2.
TOYOTA COMPANIA: Moody's Withdraws (P)Caa1/Ba2.ar Debt Rating
-------------------------------------------------------------
Moody's Latin America Agente de Calificacion de Riesgo, S.A. has
withdrawn the (P)Caa1/Ba2.ar global and national scale local
currency ratings and the (P)Ca/Ca.ar global and national scale
foreign currency ratings assigned to Toyota Compania Financiera de
Argentina S.A.'s senior debt program for up to Ar$ 200 million (or
an equivalent amount in other currencies) and the senior debt
program for up to Ar$ 6.000 million (or an equivalent amount in
other currencies and/or units of value and/or measurement).
In addition, Moody's has withdrawn the (P)Caa2/B1.ar global and
national scale local currency ratings and the (P)Ca/Ca.ar global
and national scale foreign currency ratings assigned to Toyota
Compania Financiera de Argentina S.A.'s subordinate debt program
for up to Ar$ 200 million (or an equivalent amount in other
currencies). The remaining ratings assigned to the issuer are
unaffected by this rating action.
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
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B R A Z I L
===========
ITAU UNIBANCO: CEO Sees Loan Delinquency at Record Levels
---------------------------------------------------------
Carolina Mandl at Reuters reports that Itau Unibanco Holding SA's
Chief Executive Candido Bracher said that next year he sees
Brazil's 90-day default ratio reaching higher levels than in
previous crisis.
"Brazil's GDP is poised to drop by unseen levels, so it is natural
that there will be higher loan delinquency rates,", Bracher told
journalists in a conference call, according to Reuters. Itau's
90-day delinquency ratio reached a peak of 5.6% in 2009 and 4.8%
amid a recession in 2016, the report notes.
Its second-quarter loan default was at 2.7%, but Bracher said he
sees it going up next year, as grace periods extended to clients
end, the report relays.
Itau reported a recurring net income of BRL4.205 billion ($785.82
million), down 40% from a year earlier, as it boosted loan-loss
provisions for another quarter to account for the coronavirus
crisis, the report relays.
Preferred shares were down more than 3% in the morning trading, as
analysts saw a weak performance in net interest income, fees and
insurance, the report notes.
"We believe investors were expecting a bit more from Itau," BTG
Pactual's analysts said in a note to clients.
Chief Financial Officer Milton Maluhy said net interest margin is
likely to continue a downward trend, as Brazil's interest rates are
at record-low levels and Itau has decided to shift to corporate
loans, the report discloses. It was at 8.4% in the second quarter,
down from 9.2% in the previous quarter, the report relays.
To weather the impact of the coronavirus crisis, the bank is
seeking a nominal reduction in operating expenses this year and
next, Maluhy added.
Among ongoing measures, the CFO said the bank is returning some
rented buildings, as some working-from-home measures will be
permanent. Maluhy also said the bank will further shrink its branch
network, but did not disclose numbers, the report notes.
As reported in the Troubled Company Reporter-Latin America on March
4, 2020, Fitch Ratings has assigned a 'B' Final Long-Term Rating to
Itau Unibanco Holding S.A.'s Subordinated Perpetual T1 notes issued
in the amount of USD700,000,000.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Gov't. Must Be Very Careful With Unemployment
-----------------------------------------------------------------
Dominican Today reports that Dominican Republic Industries
Association (AIRD) executive vice president Circe Almanzar said the
government must be "very careful" with the issue of the
unemployment level while the economy is being affected due to the
current pandemic.
"We hope that (the State) it will take into account that a level of
unemployment now in the private sector, supported by unemployment
in the State, can cause a greater crisis," said Almanzar, according
to Dominican Today.
She said she believes that the president-elect, Luis Abinader, has
a team with "a lot of knowledge and capacity, that will be able to
understand the situation," and that she is confident that the
people fired from their jobs will be relocated, 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).
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J A M A I C A
=============
JAMAICA: Exploring Bilateral Trade With Colombia
------------------------------------------------
RJR News reports that Colombia and Jamaica are exploring a
collaboration on bilateral trade.
Audley Shaw, Minister of Industry, Commerce, Agriculture and
Fisheries, said the government is particularly interested in
assistance with the export of spices to Colombia, according to RJR
News.
Mr. Shaw exchanged ideas on the matter with Colombian Ambassador to
Jamaica, Her Excellency Diana Aguilar Pulido, during a courtesy
call at his ministry's New Kingston offices, the report notes.
In addition to bilateral trade, Mr. Shaw and the ambassador also
discussed a number of other issues, including expanding
preferential market access into Colombia, and market expansion at
the regional level, the report adds.
About Jamaica
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings revised on April 16, 2020 its outlook on Jamaica to
negative from stable. At the same time, S&P affirmed its 'B+'
long-term foreign and local currency sovereign credit ratings, its
'B' short-term foreign and local currency sovereign credit ratings
on the country, and its 'BB-' transfer and convertibility
assessment.
The TCR-LA also reported that Fitch Ratings, in April 2020, revised
Jamaica's Outlook to Stable from Positive. The Long-Term
Foreign-Currency Issuer Default Rating is affirmed at B+. The
Outlook change reflects the shock to Jamaica from the coronavirus
pandemic, which is expected to lead to a sharp contraction in its
main sources of foreign currency revenues: tourism, remittances and
alumina exports.
===========
M E X I C O
===========
GRUPO AEROMEXICO: Egan-Jones Lowers Senior Unsecured Ratings to D
-----------------------------------------------------------------
Egan-Jones Ratings Company, on July 30, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Grupo Aeromexico SAB de CV to D from B-. EJR also
downgraded the rating on commercial paper issued by the Company to
D from C.
Headquartered in Mexico City, Mexico, Grupo Aeromexico SAB de CV
operates as an airline.
===========
P A N A M A
===========
LA HIPOTECARIA: Fitch Corrects Ratings Release dated April 20, 2020
-------------------------------------------------------------------
Fitch Ratings replaced a ratings release published on April 20,
2020 to correct the name of the obligor for the bonds.
Fitch Ratings has affirmed the ratings and Rating Outlooks of La
Hipotecaria Eight Mortgage-Backed Notes Trust 2007-1 Series A
Notes, La Hipotecaria Tenth Mortgage Trust Series A Notes and IO
Notes, La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A
Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust
Series A, B and C Notes.
Additionally, Fitch affirmed the ratings and Rating Outlooks of La
Hipotecaria Panamanian Mortgage Trust 2007-1 - 2007-1 Certificates,
La Hipotecaria Panamanian Mortgage Trust 2010-1, La Hipotecaria
Panamanian Mortgage Trust 2014-1 A-1 and A-2 Certificates, and La
Hipotecaria Trust 2019-2 - 2019-2 Certificates. The La Hipotecaria
Panamanian Mortgage Trust 2010-1 certificates unenhanced rating was
affirmed and the Rating Outlook was revised to Negative.
La Hipotecaria Trust 2019-2
- Series 2019-2 Certificates; LT BBBsf; Affirmed
La Hipotecaria Tenth Mortgage Trust
- Series A Notes; Interest Only; LT Asf; Affirmed
- Series A; LT Asf; Affirmed
La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1
- Series A; LT Asf; Affirmed
La Hipotecaria Panamanian Mortgage Trust 2010-1
- 2010-1 Certificates; LT AAAsf; Affirmed
- 2010-1 Certificates; ULT Asf; Affirmed
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust
- Class A; LT BBBsf; Affirmed
- Class B; LT B+sf; Affirmed
- Class C; LT Bsf; Affirmed
La Hipotecaria Panamanian Mortgage Trust 2007-1 2007-1
- 2007-1 Certificates 50346AAA3; LT Asf; Affirmed
- 2007-1 Certificates 50346AAA3; ULT Asf; Affirmed
La Hipotecaria Panamanian Mortgage Trust 2014-1
- Class A-1 50346EAA5; LT AAAsf; Affirmed
- Class A-2 50346EAB3; LT BBBsf; Affirmed
La Hipotecaria Twelfth Mortgage-Backed Notes Trust
- Series A PAL3006961A4; LT BBBsf; Affirmed
KEY RATING DRIVERS
Coronavirus-Related Economic Shock:
Fitch has made assumptions about the spread of the coronavirus and
the economic impact of the related containment measures. As a
base-case (most likely) scenario, Fitch assumes a global recession
in 1H20 driven by sharp economic contractions in major economies
with a rapid spike in unemployment, followed by a recovery that
begins in 3Q20 as the health crisis subsides. As a downside
(sensitivity) scenario in the Rating Sensitivities section, Fitch
takes into consideration a more severe and prolonged period of
stress delaying any meaningful recovery to beyond 2021. Having this
in mind, Foreclosure Frequency figures have been increased.
Coronavirus-Related Impact:
The measures put in place to limit the spread of the virus are
affecting Panama's economy, with many businesses temporarily shut
down with little or no income. It is important to mention that
Banco La Hipotecaria offered clients a three-month payment holiday,
but, initially, only 17% of its portfolio took it, while 83%
continued paying as usual.
La Hipotecaria Eight Mortgage-Backed Notes Trust 2007-1 Series A
Notes
Fitch expects the measures to have an impact on the performance of
mortgages, but it does not expect a rating impact on the 'Asf'
rated note. This is because the 'Asf' rated note can absorb Fitch's
base case scenario of the coronavirus-related impacts and, in
addition, the rated note has an average six-month interest coverage
ratio of 4.8x that allows for decreases in collections of about 79%
before needing to use the reserve account, as principal collections
can be used for a Series A Notes interest payment.
La Hipotecaria Tenth Mortgage Trust Series A Notes and IO Notes
Fitch expects the measures to have an impact on the performance of
mortgages, but it does not expect a rating impact on the 'Asf'
rated note. This is because the 'Asf' rated note can absorb Fitch's
base case scenario of the coronavirus-related impacts, and, in
addition, the rated note has an average six-month interest coverage
ratio of 6.0x that allows for decreases in collections of about 83%
before the need of using the reserve account, as principal
collections can be used for Series A Notes interest payment.
La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes
Fitch expects the measures to have an impact on the performance of
mortgages, but it does not expect a rating impact on the 'BBBsf'
rated note. This is because the 'BBBsf' rated note can absorb
Fitch's base case scenario of the coronavirus-related impacts, and,
in addition, the rated note has an average six-month interest
coverage ratio of 2.8x that allows for decreases in collections of
about 65% before the need of using the reserve account, as
principal collections can be used for a Series A Notes interest
payment.
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B
and C Notes
Fitch expects the measures to have an impact on the performance of
mortgages, but it does not expect a rating impact on the 'BBBsf'
rated note. This is because the 'BBBsf' rated note can absorb
Fitch's base case scenario of the coronavirus-related impacts, and
in addition, the rated note has an average six-month interest
coverage ratio of 3.0x that allows for decreases in collections of
about 67% before there is need of using the reserve account, as
principal collections can be used for Series A Notes interest
payment. The 'B+sf' and 'Bsf' note ratings address the ultimate
payment of interest and ultimate payment of principal.
Asset Analysis:
Because of the current uncertainties, Fitch increased the
Performance Adjustment Factor floors defined in the Latin America
RMBS Rating Criteria by 30%, on the basis that past performance may
no longer reflect future performance.
La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A
Notes: Fitch has defined a weighted average foreclosure frequency
(WAFF) of 45.5% and a weighted average recovery rate of 96.3% for
an 'Asf' scenario. These assumptions consider the main
characteristics of the assets, where OLTV is 92.7%, the seasoning
averages 173 months and remaining term is 182 months, WA current
loan-to-value is 59.2% and 54.5% of borrowers pay through payroll
deduction mechanism.
La Hipotecaria Tenth Mortgage Trust Series A Notes & Interest Only
Notes: Fitch has defined a WAFF of 42.7% and a WARR of 87.1% for an
'Asf' scenario. These assumptions consider the main characteristics
of the assets, where OLTV is 93.3%, the seasoning averages 149
months and remaining term is 208 months, WA current loan-to-value
is 63.6%, WA payment-to-income is 14.0% and 58.5% of borrowers pay
through payroll deduction mechanism.
La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes:
Fitch has defined a WAFF of 22.0% and a WARR of 86.7% for a 'BBBsf'
scenario. These assumptions consider the main characteristics of
the assets, where OLTV is 91.1%, seasoning averages 120 months and
remaining term is 237 months, WA current loan-to-value is 68.3%, WA
payment-to-income is 26.9% and 68.3% of borrowers pay through
payroll deduction mechanism.
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B
and C Notes: For the series A notes, Fitch has defined a WAFF of
18.0% and a WARR of 82.2% for a 'BBBsf' scenario. For the series B
and C notes, where the ratings address the ultimate payment of
interest and the ultimate payment of principal, Fitch defined a
WAFF of 6.1% and WARR of 90.5% for the 'B+sf 'scenario and defined
a WAFF of 3.8% and WARR of 91.7% for the 'Bsf' scenario.
These assumptions consider the main characteristics of the assets,
where the OLTV is 84.2%, the seasoning averages is 97 months and
remaining term is 246 months, WA current loan-to-value is 69.1%, WA
payment-to-income is 28.9% and 76.9% of borrowers pay through
payroll deduction mechanism.
Liability Analysis:
La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A
Notes: Credit Enhancement has increased during the last year due to
the sequential nature of the structure. As of Jan. 31, 2020, CE has
increased to 52.34% up from 47.0% observed during the same month of
last year. CE continues to build due to the sequential nature of
the transaction structure. Stability in the excess spread along
with good asset performance has also helped to improve this metric.
The transaction also benefits from a reserve account of 1% of the
outstanding balance of the Series A Notes, which is sufficient to
cover almost three months of senior expenses and interest payment
on Series A. Additionally, Fitch has assumed that 50% of the
borrowers take payment holidays for a period of six months, in
order to account for the potential volatility in collections.
La Hipotecaria Tenth Mortgage Trust Series A Notes & Interest Only
Notes: CE has increased during the last year due to the sequential
nature of the structure. As of Jan. 31, 2020, CE has increased to
43.2% up from 36.7% observed during the same month of last year.
Stability in the excess spread along with good asset performance
has also helped to improve this metric. The transaction also
benefits from a reserve account of 1% of the outstanding balance of
the Series A Notes, which is sufficient to cover almost three
months of senior expenses and interest payment on Series A.
Additionally, Fitch has assumed that 50% of the borrowers take
payment holidays for a period of six months, in order to account
for the potential volatility in collections.
La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes:
CE has increased during the last year due to the sequential nature
of the structure. As of Jan.31, 2020, CE has increased to 19.0% up
from 15.6% observed during the same month of last year. CE
continues to increase as expected considering the frequency of the
fiscal credit payments. Fitch expects the CE level will continue to
increase as fiscal credits are received and applied to the
outstanding principal balance. The transaction also benefits from a
reserve account of 1% of the outstanding balance of the Series A
Notes, which is sufficient to cover almost three months of senior
expenses and interest payment on the Series A. Additionally, Fitch
has assumed that 50% of the borrowers take payment holidays for a
period of six months, in order to account for the potential
volatility in collections.
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A, B &
C Notes CE has increased during the last year due to the sequential
nature of the structure. As of Jan. 31, 2020, CE for the Series A
notes has increased to 8.9% up from 8% at closing in February of
2019. The Series B notes have increased to 2.3% up from 2% and the
Series C notes has increased to 0.11% up from 0.0%. Fitch expects
CE to continue to increase as per the sequential nature of the
structure. The transaction benefits from a reserve account of three
month interest for the Series A Notes, which is sufficient to cover
almost three months of senior expenses and interest payments on the
Series A. Additionally, Fitch has assumed that 50% of the borrowers
take payment holidays for a period of six months, in order to
account for the potential volatility in collections.
Operational Risk:
Pursuant to the servicer agreement, Grupo ASSA, S.A. (the primary
servicer), which is rated 'BBB-' / Negative by Fitch, has hired BLH
(the subservicer) to be the servicer for the mortgages. Fitch has
reviewed BLH's systems and procedures, and is satisfied with its
servicing capabilities. It is important to note that BLH has
implemented its business continuity plans and is fully functioning
with all key processes.
Additionally, Banco General S.A., which is rated 'BBB+' / Negative
by Fitch, has been designated as back-up servicer to mitigate the
exposure to operational risk, and will replace the defaulting
servicer within five days of a servicer disruption event.
Sovereign LC IDR:
As of Feb. 6, 2020, Panama's Issuer Default Ratings were affirmed
at 'BBB'. The Outlook was revised to Negative from Stable and the
Country Ceiling is 'A'.
For La Hipotecaria Eight Mortgage-Backed Notes Trust 2007-1 Series
A Notes and La Hipotecaria Tenth Mortgage Trust Series A Notes and
IO Notes, according to Fitch's "Structured Finance and Covered
Bonds Country Risk Rating Criteria" the ratings of structured
finance notes cannot exceed the CC of the country of the assets,
unless the transfer and convertibility risk is mitigated. While the
transactions have sufficient credit enhancement to be rated above
the country's IDR, the T&C risk is not mitigated, so the ratings
remain constrained by the CC and are ultimately linked to the
ratings of Panama.
For La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A
Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust
Series A, B and C Notes, the transactions are constrained by the
country's IDR due to the underlying portfolios of mortgages having
a high dependence on the public sector and, in the case of the
Twelfth, exposure to subsidies granted by the government of
Panama.
Credit Quality:
La Hipotecaria Panamanian Mortgage Trust 2007-1 Certificates: The
rating assigned to the 2007-1 certificates relies on the timely
payment of interest and ultimate payment of principal on the Series
A Notes of La Hipotecaria Eight Mortgage-Backed Notes Trust.
La Hipotecaria Panamanian Mortgage Trust 2010-1 Certificates: The
rating assigned to the 2010-1 certificates is commensurate with the
credit quality of the guarantee provider. Through this guaranty DFC
will unconditionally and irrevocably guarantee the receipt of
proceeds from the underlying notes in an amount sufficient to cover
timely scheduled monthly interest amounts and the ultimate
principal amount on the certificates.
The credit quality of DFC is directly linked to the U.S. sovereign
rating (AAA/F1+/Stable), as guarantees issued by, and obligations
of, DFC are backed by the full faith and credit of the U.S.
government, pursuant to the Foreign Assistance Act of 1969. The
unenhanced rating assigned to the 2010-1 certificates relies on the
timely payment of interest and ultimate payment of principal on the
Series A Notes of La Hipotecaria Tenth Mortgage-Backed Notes
Trust.
La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1 Certificates:
The rating assigned to the 2014-1 A-1 certificates is commensurate
with the credit quality of the guarantee provider. Through this
guaranty DFC will unconditionally and irrevocably guarantee the
receipt of proceeds from the underlying notes in an amount
sufficient to cover timely scheduled monthly interest amounts and
the ultimate principal amount on the certificates. The credit
quality of DFC is directly linked to the U.S. sovereign rating
(AAA/F1+/Stable), as guarantees issued by, and obligations of, DFC
are backed by the full faith and credit of the U.S. government,
pursuant to the Foreign Assistance Act of 1969.
La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2 Certificates:
The rating assigned to the 2014-1 A-2 certificates relies on the
timely payment of interest and ultimate payment of principal on the
Series A Notes of La Hipotecaria's Twelfth Mortgage-Backed Notes
Trust.
La Hipotecaria Trust 2019-2 Certificates: The 2019-2 certificates
rely on the timely payment of interest and ultimate payment of
principal on the Series A Notes of La Hipotecaria's Fourteenth
Mortgage-Backed Notes Trust.
RATING SENSITIVITIES
Coronavirus Downside Scenario Sensitivity:
Fitch has added a coronavirus downside sensitivity analysis that
contemplates a more severe and prolonged economic stress caused by
a re-emergence of infections in the major economies, delaying any
meaningful recovery to beyond 2021. Because of this, Fitch
increased the Performance Adjustment Factor floors defined in the
Latin America RMBS Rating Criteria by 50%. Additionally, Fitch has
assumed that 50% of the borrowers take payment holidays for a
period of twelve months, in order to account for the potential
volatility in collections. With this, Fitch did not observe a
negative migration on ratings assigned to the different
transactions.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
The ratings of La Hipotecaria Eight Mortgage Backed Notes Trust
2007-1 Series A Notes and La Hipotecaria Tenth Mortgage Trust
Series A Notes & IO Notes are currently capped at Panama's Country
Ceiling level. These ratings could only be upgraded in case of an
upgrade of Panama's Country Ceiling.
The ratings of La Hipotecaria Twelfth Mortgage-Backed Notes Trust
Series A Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series A Notes are currently capped at Panama's LT IDR. These
ratings could be upgraded in case of an upgrade of Panama's LT IDR.
In addition, future improvement of CE to a level that allow the
transaction to cover its exposure to the Sovereign, could also lead
to an upgrade on these ratings.
The ratings of La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series B and C Notes could be upgraded in case of a future
improvement of CE levels. Fitch tested scenarios of 15% decreases /
increases in Foreclosure Frequency / Recovery Rates and found that
these ratings could be upgraded by 1 to 2 notches.
The La Hipotecaria Panamanian Mortgage Trust 2007-1 certificates'
ratings are sensitive to changes in the credit quality of the La
Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A
Notes. If La Hipotecaria Eight Mortgage-Backed Notes Trust Series A
Notes are upgraded, that could lead to an upgrade of the
certificates.
The La Hipotecaria Panamanian Mortgage Trust 2010-1 certificates'
unenhanced ratings are sensitive to changes in the credit quality
of the La Hipotecaria Tenth Mortgage Backed Notes Trust 2010-1
Series A Notes. If La Hipotecaria Tenth Mortgage Backed Notes Trust
2010-1 Series A Notes are upgraded, that could lead to an upgrade
of the unenhanced rating of the certificates. In the case of the
enhanced rating assigned, it is in its maximum level possible, so
no upgrades are possible.
In the case of La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1
certificates, the rating assigned is at the maximum possible, so
upgrades are not possible.
The La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2
certificates' ratings are sensitive to changes in the credit
quality of the La Hipotecaria Twelfth Mortgage-Backed Notes Trust
series A notes. If La Hipotecaria Twelfth Mortgage-Backed Notes
Trust Series A Notes are upgraded, that could lead to an upgrade of
the certificates.
The Hipotecaria Mortgage Trust 2019-2 certificates' ratings are
sensitive to changes in the credit quality of the La Hipotecaria
Fourteenth Mortgage-Backed Notes Trust Series A Notes. If La
Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A Notes
are upgraded, that could lead to an upgrade on the certificates.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
The ratings of La Hipotecaria Eight Mortgage Backed Notes Trust
2007-1 Series A Notes and La Hipotecaria Tenth Mortgage Trust
Series A Notes & IO Notes could be downgraded in case of a
downgrade of Panama's Country Ceiling. The agency also tested
scenarios of 15%-30% increases / decreases in Foreclosure Frequency
/ Recovery Rates and found that these ratings could withstand
current levels, which is basically explained by the high level of
Credit Enhancement in place.
The ratings of La Hipotecaria Twelfth Mortgage-Backed Notes Trust
Series A Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series A Notes could be downgraded in case of a downgrade of
Panama's LT IDR. The agency also tested scenarios of 15%-30%
increases / decreases in Foreclosure Frequency / Recovery Rates and
found that these ratings could withstand current levels.
The ratings of La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series B and C Notes could be downgraded in case of a
decrease of CE levels, caused by a more than expected deterioration
in asset quality.
The La Hipotecaria Panamanian Mortgage Trust 2007-1 certificates'
ratings are sensitive to changes in the credit quality of the La
Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 Series A
Notes. If La Hipotecaria Eight Mortgage-Backed Notes Trust Series A
Notes are downgraded, that could lead to a downgrade of the
certificates.
The La Hipotecaria Panamanian Mortgage Trust 2010-1 certificates'
unenhanced ratings are sensitive to changes in the credit quality
of the La Hipotecaria Tenth Mortgage Backed Notes Trust 2010-1
Series A Notes. If La Hipotecaria Tenth Mortgage Backed Notes Trust
2010-1 Series A Notes are downgraded, that could lead to a
downgrade of the unenhanced rating of the certificates. In the case
of the enhanced rating assigned, it could be downgraded in case of
a downgrade on the U.S. sovereign rating.
In the case of La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1
certificates, the rating assigned could be downgraded in case of a
downgrade on the U.S. sovereign rating.
The La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2
certificates' ratings are sensitive to changes in the credit
quality of the La Hipotecaria Twelfth Mortgage-Backed Notes Trust
Series A notes. If La Hipotecaria Twelfth Mortgage-Backed Notes
Trust Series A Notes are downgraded, that could lead to a downgrade
of the certificates.
The Hipotecaria Mortgage Trust 2019-2 certificates' ratings are
sensitive to changes in the credit quality of the La Hipotecaria
Fourteenth Mortgage-Backed Notes Trust Series A Notes. If La
Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A Notes
are downgraded, that could lead to a downgrade on the
certificates.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings of the La Hipotecaria Panamanian Mortgage Trust 2007-1
- 2007-1 Certificates are linked to the La Hipotecaria Eight
Mortgage Backed Notes Trust 2007-1 Series A Notes.
The ratings of the La Hipotecaria Panamanian Mortgage Trust 2014-1
A-2 Certificates are linked La Hipotecaria Twelfth Mortgage-Backed
Notes Trust Series A Notes.
The ratings of the La Hipotecaria Trust 2019-2 - 2019-2
Certificates are linked to the La Hipotecaria Fourteenth
Mortgage-Backed Notes Trust Series A Notes.
ESG CONSIDERATIONS
La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1: Human
Rights, Community Relations, Access & Affordability: 4
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust: Human
Rights, Community Relations, Access & Affordability: 4
La Hipotecaria Tenth Mortgage Trust Series A Notes: Human Rights,
Community Relations, Access & Affordability: 4
La Hipotecaria Twelfth Mortgage-Backed Notes Trust: Human Rights,
Community Relations, Access & Affordability: 4
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
=====================
P U E R T O R I C O
=====================
ASCENA RETAIL: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------
The Office of the U.S. Trustee on Aug. 3, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 cases
of Ascena Retail Group, Inc. and its affiliates.
The committee members are:
1. The Taubman Company
200 East Long Lake Road, Suite 300
Bloomfield Hills, MI 48304-2324
2. Snogen Green Co., Ltd.
12, Gwangpyeong-ro 56-gil Gangnam-Gu
Seoul, Korea 06367
3. Brookfield Properties Retail, Inc.
350 N. Orleans Street, Suite 300
Chicago, Il 60654-1607
4. Amanda Meo
c/o Gregg Schavitz, Esq.
Shavitz Law Group, P.A.
951 Yamato Road, Suite 285
Boca Raton, Florida 33431
5. Lakontra International Merchandising Corp.
No. 186 Sec. 4 Nankinge Rd.
Taipei, Taiwan
6. Li & Fung Limited
888 Cheung Sha Wan Road
Kowloon, Hong Kong
7. Washington Prime Group, Inc.
180 East Broad Street
Columbus, Ohio 43215
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Ascena Retail Group
Ascena Retail Group, Inc. (Nasdaq: ASNA) is a national specialty
retailer offering apparel, shoes, and accessories for women under
the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus
Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion
(Dressbarn) segments, and for tween girls under the Kids Fashion
segment (Justice). Ascena, through its retail brands, operates
ecommerce websites and approximately 2,800 stores throughout the
United States, Canada, and Puerto Rico. Visit
http://www.ascenaretail.comfor more information.
Ascena Retail reported a net loss of $661.4 million for the fiscal
year ended Aug. 3, 2019, a net loss of $39.7 million for the year
ended Aug. 4, 2018, and a net loss of $1.06 billion for the year
ended July 29, 2017.
On July 23, 2020, Ascena Retail Group and its affiliates sought
Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of
Feb. 1, 2020, Ascena Retail had $13,690,710,379 in assets And
$12,516,261,149 in total liabilities.
The Hon. Kevin R. Huennekens is the case judge.
Debtors have tapped Kirkland & Ellis LLP and Cooley LLP as
bankruptcy counsel, Guggenheim Securities, LLC as financial
Advisor, and Alvarez and Marsal North America, LLC as restructuring
advisor. Prime Clerk, LLC is the claims agent.
=================
V E N E Z U E L A
=================
VENEZUELA: Asks Italy to Extradite Former PDVSA Pres. Ramirez
-------------------------------------------------------------
Sputnik News reports that the Venezuelan Prosecutor General's
Office announced its intention to submit a request for Ramirez's
arrest and extradition to Interpol in early 2018, a month after
launching a criminal investigation against the former official and
his cousin over an alleged money-laundering scheme.
Venezuelan authorities have formally asked Italy to extradite
former PDVSA chief Rafael Ramirez to face criminal charges in his
home country, the Supreme Court has announced, according to Sputnik
News.
Ramirez, who headed the Venezuelan state oil giant from 2004 to
2014, also served as minister of energy between 2002 and 2014, the
report notes. Between 2014 and 2017, he served as Venezuela's
ambassador to the United Nations, the report relays.
The former official was a close ally of former Venezuelan President
Hugo Chavez, and since his resignation in 2017 has accused the
current government of "betraying the legacy" of the deceased
democratic socialist leader and of mismanaging the country's oil
industry, the report discloses.
In early 2019, after opposition leader Juan Guaido proclaimed
himself 'interim president', Ramirez suggested that neither
President Nicolas Maduro nor Guaido were fit to lead the country
and promised that he could do a better job if elected, the report
says.
Caracas has accused Ramirez of running "mafia-like" corruption
schemes during his time as chief of PDVSA, the report notes. The
Prosecutor's Office first announced plans to issue an international
arrest warrant against him in early 2018, although his whereabouts
were unknown at the time as he had gone into hiding, the report
discloses. Among the allegations against him are that he was
involved in a kickbacks-for-contracts money laundering scheme worth
billions of dollars at the Private Bank of Andorra with his cousin
and fellow former official Diego Salazar Carreno, the report
relays. Venezuelan authorities arrested Salazar in late 2017.
Andorra charged a group of 28 people including Salazar and Ramirez
with money laundering in late 2018 following a five year
investigation, with the alleged criminal conspiracy estimated to
have siphoned off roughly $2 billion from PDVSA between 2007 and
2012 via clandestine illegal payments from companies in exchange
for lucrative oil industry construction contracts, with profits
said to have been hidden in shell companies set up in a number of
countries, 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
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The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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