/raid1/www/Hosts/bankrupt/TCRLA_Public/200814.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 14, 2020, Vol. 21, No. 163
Headlines
A R G E N T I N A
ARGENTINA: Wants Buenos Aires to be First to Seal Debt Deal
ENTRE RIOS: Fitch Cuts LT IDRs to C on Missed Coupon Payment
SALTA PROVINCE: Fitch Affirms LT IDR at C Following Coupon Payment
B E L I Z E
BELIZE: S&P Cuts Sovereign Credit Ratings to SD After Debt Exchange
B R A Z I L
MARANHAO: Fitch Affirms LT IDR at BB-, Outlook Negative
C A Y M A N I S L A N D S
CORSAIR GROUP: S&P Alters Outlook to Stable & Affirms B ICR
M E X I C O
MEXICO: Economy Suffers Record Drop in Second Quarter
SIXSIGMA NETWORKS: S&P Cuts Issuer Rating to B+, Outlook Neg.
T R I N I D A D A N D T O B A G O
PETROLEUM CO: Prime Minister Won't Be Rushed on Petrotrin Sale
UNIT TRUST CORPORATION: UNC Wants to Damage Firm, Says Rohan
- - - - -
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A R G E N T I N A
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ARGENTINA: Wants Buenos Aires to be First to Seal Debt Deal
-----------------------------------------------------------
The Buenos Aires Times reports that the national government wants
Buenos Aires Province to be the first to resolve debt restructuring
talks after its own sovereign bond agreement, according to sources
with direct knowledge of the matter.
The government's strategy is to prevent debt restructuring talks
from other provinces from complicating negotiations related to
Buenos Aires Province, thus preventing creditors from demanding
better conditions, said the individuals, who asked not to be
identified because the negotiations are private, according to The
Buenos Aires Times.
The provincial government in La Plata resumed talks with its
creditors last week after a consensual pause. Both bondholders and
officials had agreed to delay negotiations until after the national
government's own restructuring talks were resolved, the report
notes.
Buenos Aires Province's proposal includes a net present value of
three to seven points higher than the nearly 55 cents on the dollar
in the country's inception agreement, two sources told Bloomberg,
the report relays.
Buenos Aires Province bonds due 2027 are trading at nearly 50 cents
on the dollar, from a low of 25 cents on the dollar in May,
according to data compiled by Bloomberg, the report relates.
Representatives from the provincial and national economy ministries
declined to comment.
Argentina's provinces, having less debt overall, are willing to pay
a substantially higher net present value, the sources said, the
report says. Mendoza Province is offering a valuation of 80 cents
on the dollar, they 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 July 30, 2020, S&P Global Ratings lowered its issue
ratings on two of Argentina's foreign currency-denominated bonds,
BIRADs due January 2022 and January 2027, to 'D' from 'CC'.
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.
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.
ENTRE RIOS: Fitch Cuts LT IDRs to C on Missed Coupon Payment
------------------------------------------------------------
Fitch Ratings has downgraded Province of Entre Rios's Long-Term
Foreign and Local Currency Issuer Default Ratings to 'C' from
'CCC'. Fitch has also downgraded PER's 8.75% senior unsecured notes
for USD500 million due Feb. 8, 2025 to 'C' from 'CCC. The bond is
rated at the same level of PER's IDRs.
The downgrade of PER's ratings follows the province's non-payment
of its 8.75% senior unsecured notes debt service due Aug. 8, 2020,
specifically a semi-annual interest payment due for USD21.875
million. No formal notice of payment was issued prior to the
payment; however, on Aug. 6, 2020, PER published a notice
announcing that it intends to initiate a process to renegotiate its
debt due to the impact of the negative macroeconomic context
heightened by the coronavirus pandemic. The announcement also
states the province's intention to miss the interest payment due on
Aug. 8, 2020, and therefore enter into the 30-day cure period
stipulated in the bond's indenture, amidst such debt renegotiation
process.
The province issued these senior unsecured notes of USD350 million
authorized by Laws 10.403, 10.408 and 10.433, in February 2017, and
a reopening followed, totaling USD500 million. The note is
denominated in U.S. dollars and accrues a fixed interest rate of
8.75%, and payable on a semi-annual basis: on Feb. 8 and Aug. 8 of
each year. The notes are governed by the law of the state of New
York. As stipulated on the notes' indenture, the province is now
currently in its 30-day cure period to fully comply with its
financial obligations. Failure to cure the missed interest payment
before the 30-day cure period expires on Sept. 7, 2020, is
considered an event of default in the transaction documents and by
Fitch.
PER's 'C' ratings reflect the province's near-default risk
situation, the entrance into a cure period on its 2025 notes and
the formal announcement of an intended debt negotiation with
bondholders. PER's Standalone Credit Profile was also lowered to
'c' from 'ccc'. Fitch has relied on its rating definitions to
position PER's ratings and SCP.
KEY RATING DRIVERS
Risk Profile: 'Vulnerable'
Entre Rios's Vulnerable Risk Profile reflects a 'Weaker' evaluation
on the six key risk factors, considering the country's structural
weaknesses in which Argentine LRGs operate. These include the
vulnerable macroeconomic context, the ongoing sovereign debt
restructuring process, and the track record of PER's current
near-default event.
Revenue Robustness: 'Weaker'
PER has a structural reliance on federal transfers from the federal
co-participation tax-sharing regime, with current transfers
representing around 69.8% of its total revenues being mostly
automatic transfers from the co-participation scheme, according to
2019 year-end figures. The 'Weak' assessment considers the complex
and imbalanced fiscal framework and that these federal transfers
come from a 'RD' sovereign counterparty with negative economic
growth prospects currently under economic recession. In 2018,
national GDP dropped 2.5% in real terms, a further 2.2% in 2019,
and is expected to drop more than 11.0% during 2020. Weak and
volatile national economic performance is also factored into the
revenue robustness KRF assessment.
Co-participation transfers are a very important determinant of
subnational fiscal performance, as of YE 2019 transfers of national
origin represented around 53.7% of consolidated provincial
operating revenues. For 2020, co-participation transfers for PER
show an accumulated 14% inter-annual real term drop from
January-June relative to the same period of 2019. At the time,
there is uncertainty of the nation's future economic prospects
until its debt distress situation resolves, and therefore,
predictability of transfers is also clouded, especially the
re-taking of recent fiscal agreements or new fiscal reform
initiatives.
Revenue Adjustability: 'Weaker
Fitch considers that local revenue adjustability is low and is
challenged by the country's large and distortive tax burden. The
volatile, weak, and negative macroeconomic environment also limits
LRGs' ability to increase tax rates and expand tax bases to boost
their local operating revenues. Structurally high inflation also
constantly erodes real-term revenue growth and affects
affordability.
Provincial jurisdictions have legal autonomy to set tax rates on
local revenues that mainly consist on turnover taxes (Ingresos
Brutos) and stamps. For PER, local taxes represented around 24.3%
of total revenues, reflecting low fiscal autonomy and an important
reliance on federal automatic transfers from the co-participation
regime. The affordability of additional taxation for Argentine LRGs
is also perceived as low due to the legal pledge in place from
jurisdictions' adherence since the 2017 fiscal pact between the
nation and provinces, requiring a gradual harmonization to lower
maximum tax rates on turnover tax rates to partially relieve the
country's high tax burden. Amendments to the pact have been made
due to macroeconomic vulnerabilities in an attempt to alleviate
provincial finances. However, local revenues are still being
affected in real terms due to the negative macroeconomic
environment and structurally high inflation.
Expenditure Sustainability: 'Weaker'
Argentine provinces have high expenditure responsibilities,
including healthcare, education, water, transportation and other
services. The country's fiscal regime is structurally imbalanced
regarding revenue-expenditure decentralization, and during 2020,
spending decentralization could continue to rise in the current
context of sovereign debt distress, transferring more expenditure
responsibilities and fiscal pressure to subnational governments,
coupled with higher expenditure pressures in healthcare derived
from the coronavirus pandemic. During 2020, Argentine LRGs are
facing important real term revenue drops and in consequence
operating expenditure will grow at a higher rate than operating
revenues, therefore operating balances will decrease across the
portfolio.
During 2019, PER's operating balance decreased from 16.5% in 2018
of its operating revenues towards 11.6%, and Fitch projects the
entity's margin will be of 1.6% for 2020. Additionally, the
province's operating balance is negatively affected by the
shortfall funding of its unconsolidated social security
institutions, as PER is amongst the provinces that did not transfer
its pension deficit funding to the nation.
As of YE 2019, the entity's operating balance considering the
weight of the pension deficit was of -0.5%, reflecting the
additional expenditure risk in this topic. As of May 2020, opex
grew above operating revenues in nominal and in real terms (nominal
growth of 40.3% and 35.7%, respectively, relative to the same
period of 2019). Therefore, between January-May 2020, the operating
balance decreased towards 19.4% from 22.0% relative to 2019.
Another weakness considered is Argentina's structurally high
inflation pressures expenditures. The lagged effect that inflation
tends to have on expenditures because of real-term wage
recomposition expectations compounds the weakness of expenditure
predictability, or sustainability in Fitch criteria terminology.
Currency depreciation also negatively affects expenditure costs,
such as capex projects.
Expenditure Adjustability: 'Weaker'
According to YE 2019 data, PER's share of operating
expenditure/total expenditure was of around 90.1%, with staff
expenses representing a rigid 61.2% of total expenses, which is
deemed high relative to international peers. PER's leeway or
flexibility to cut expenses is viewed as weak relative to
international peers, considering that only a low 2015-2019 average
of 10.0% and of 6.4% in YE 2019 of the province's total expenditure
corresponds to capex. Similarly, to other Argentine peers, PER has
very high infrastructure needs. Due to the high level of
infrastructure needs, increasing capex does not translate into
economic growth due to the important infrastructure lag, which also
reflects that there is not much flexibility to adjust capex.
Liabilities and Liquidity Robustness: 'Weaker
PER's debt is mainly composed by its issuances external market
issuance: As of YE 2019, debt totalled ARS54.3 billion, with an
increase of around 60.43% relative to 2019 mainly due to currency
depreciation as around 80% of total debt is denominated in foreign
currency, unhedged. Debt sustainability metrics are already
assessed at very weak levels, the increased burden of debt service
payments follows the sharp peso depreciations of 50% in 2018 and
37% in 2019 versus the U.S. dollar. Amid sharp currency
depreciation, debt and liquidity management becomes challenging.
Unhedged foreign currency debt exposure is an important structural
weakness considered in this KRF assessment, as is capital market
discipline that is currently heightened by a distressed 'RD' rated
sovereign that is in the process of restructuring its debt, thus
curtailing external market access to LRGs. PER's capital maturities
are pushed towards 2023-2025 when the senior unsecured bond begins
its annual capital balloon payments in three yearly capital
instalments.
Liabilities and Liquidity Flexibility: 'Weaker'
For liquidity, Argentine provinces rely mainly on their own
unrestricted cash. The national framework in place regarding
liquidity support and funding available to subnationals is
perceived by Fitch as weak, as there are no emergency-support
liquidity mechanisms and considering that sovereign's external
market access affects the entity's refinancing capacity. As of YE
2019, PER's unrestricted cash totalled ARS4.7 billion with a 1.9x
liquidity coverage ratio; however, for 2020, Fitch estimated a 0.7x
ratio, which is below 1.0x and reflects the entity's refinancing
risk and decreasing operating balance.
Debt Sustainability: b' category
For 2020, Fitch estimates that PER's primary metric of payback (net
adjusted debt/operating balance) is expected to be of above 25
years, resulting in a 'b' debt sustainability score, secondary
metric of actual debt service coverage ratio ADSCR is expected
below 1x for 2020 also a 'b' level. The final debt score assessment
reflects weak debt metrics that resulted in a 'b' debt
sustainability score.
PER is located in the central eastern region of Argentina, and has
a relatively well-developed agricultural sector. The local economy
is heavily based in agricultural, mainly soy and poultry, and local
GDP corresponds to around 1% of national GDP, with below-average
income per capita.
Effect of ESG Factors: PER has an Environmental, Social and
Governance Relevance Score of 4 for Rule of Law, Institutional &
Regulatory Quality, Control of Corruption and Creditors Rights. The
Province operates under a weak institutional framework resulting in
high volatility and uncertainty. The deteriorated willingness to
pay reflected in the breach of a formal agreement assuring debt
service payments negatively impacts Creditor Rights.
DERIVATION SUMMARY
PER has a Vulnerable Risk Profile and a 'b' debt sustainability
score. However, due to the currently low sovereign rating levels
Fitch positions the ratings according to Fitch's rating definitions
to scale to 'C' from 'CCC' ratings. Fitch has relied on its rating
definitions to position the province's ratings and SCP.
KEY ASSUMPTIONS
Fitch's rating case scenario is a "through-the-cycle" scenario,
which incorporates a combination of revenue, cost and financial
risk stresses. It is based on the 2015-2019 figures and 2020
projected ratios. The key assumptions for Fitch's rating case
scenario include:
-- 26.1% yoy increase in operating revenue, including a real term
decrease in taxes and federal transfers;
-- 40.3% yoy increase in operating expenditure;
-- Net capital balance of around minus ARS4.5 billion in 2020;
-- Cost of debt considers non-cash debt movements due to currency
depreciation with an exchange rate of ARS88.2 per USD.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Fitch could upgrade PER's ratings if the province complies with its
interest payment within the 30-day cure period. PER's ratings are
constrained by the Sovereign Country Ceiling.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
PER's ratings are subject to the debt service payments being fully
fulfilled before the 30-day grace period expires. In this context,
any potential exchange offer will be assessed under its "Distressed
Debt Exchange Rating Criteria" and could trigger a rating action.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years.
The complete span of best- and worst-case scenario credit ratings
for all rating categories ranges from 'AAA' to 'D'. Best- and
worst-case scenario credit ratings are based on historical
performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Entre Rios, Province of: Rule of Law, Institutional & Regulatory
Quality, Control of Corruption: 4, Creditor Rights: 4
PER has an Environmental, Social and Governance Relevance Score of
4 for Rule of Law, Institutional & Regulatory Quality, Control of
Corruption and Creditors Rights. The Province operates under a weak
institutional framework resulting in high volatility and
uncertainty. The deteriorated willingness to pay reflected in the
breach of a formal agreement assuring debt service payments
negatively impacts Creditor Rights.
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.
SALTA PROVINCE: Fitch Affirms LT IDR at C Following Coupon Payment
------------------------------------------------------------------
Fitch Ratings has affirmed Province of Salta's Long-Term Foreign
and Local Currency Issuer Default Ratings at 'C'. In addition,
Fitch has affirmed Salta's 9.5% senior secured notes for USD185
million due March 16, 2022 and 9.125% senior unsecured notes for
USD350 million due July 7, 2024 at 'C'. The bonds are rated at the
same level of Salta's IDRs. Salta's Standalone Credit Profile is
assessed at 'c'. Fitch has relied on its rating definitions to
position the province's ratings and SCP.
The 'C' rating level indicates a high level of credit risk and an
imminent default. The rating affirmation reflects the recently
cured missed interest payment on the 9.125% senior unsecured notes,
which was due on July 7, 2020 for USD15.9 million, and was payed
subsequently when the required 30-day cure period elapsed. On Aug.
5, 2020, the province published the notice of payment and
instructed the payment agent to proceed with the payment; however,
payment confirmation was received on Aug. 7, 2020, shortly after
the cure period elapsed. Fitch did not downgrade Salta to 'RD' as
the interest payment is currently cured; the event is factored in
Salta's current 'C' rating level, also considering the province's
debt restructuring intention.
In addition, Fitch reviewed the province's key risk factors and
debt sustainability fundamentals, and the rating affirmation
considers that Salta's liquidity is expected to be insufficient to
cover its 2020 debt service, also aligned with Fitch's 'C' rating
definition. The province's use of the cure period reflects the
intention to initiate negotiations with its creditors to reach an
agreement regarding the note's current terms in the midst of
important pressures in public health due to the coronavirus
pandemic and current economic crisis, limiting its fiscal
capacity.
KEY RATING DRIVERS
Risk Profile: 'Vulnerable'
Salta's Vulnerable Risk Profile reflects a 'Weaker' evaluation on
the six key risk factors, considering the country's structural
weaknesses in which argentine LRGs operate. These include the
vulnerable macroeconomic context, the ongoing sovereign debt
restructuring process, and the track record of the province's
recent imminent default event.
Revenue Robustness: 'Weaker'
Similar to Argentine peers, Salta's revenue structure has high
reliance on federal transfers from the federal co-participation
tax-sharing regime, with current transfers representing around
69.9% of its total revenues being mostly automatic transfers from
the co-participation scheme, according to year-end preliminary
figures. The 'Weak' assessment considers the complex and imbalanced
fiscal framework and that these federal transfers come from a 'RD'
sovereign counterparty with negative economic growth prospects
currently under economic recession. In 2018 national GDP dropped
2.5% in real terms, a further 2.2% in 2019, and is expected to drop
more than 11% during 2020. Weak and volatile national economic
performance is also factored into Fitch's revenue robustness KRF
assessment.
Co-participation transfers are a very important determinant of
subnational fiscal performance, as of YE 2019 transfers of national
origin represented around 53.7% of consolidated provincial
operating revenues. For 2020, co-participation transfers show an
accumulated 14.2% inter-annual real term drop from January to June
relative to the same period 2019. At the time there is uncertainty
of the nation's future economic prospects until its debt distress
situation resolves, and therefore predictability of transfers is
also clouded, especially the re-taking of additional fiscal
consolidation agreements or new fiscal reform initiatives.
Revenue Adjustability: 'Weaker'
Fitch believes that local revenue adjustability is low, and
challenged by the country's large and distortive tax burden. The
volatile, weak, and negative macroeconomic environment also limits
LRGs' ability to increase tax rates and expand tax bases to boost
their local operating revenues. Structurally high inflation also
constantly erodes real-term revenue growth and affects
affordability.
Provincial jurisdictions have legal autonomy to set tax rates on
local revenues that mainly consist on turnover taxes (Ingresos
Brutos) and stamps. For Salta, local taxes represented around 21.1%
of total revenues, and hydrocarbon royalties 2.5% during YE 2019,
reflecting low fiscal autonomy and an important reliance on federal
automatic transfers from the co-participation regime. The
affordability of additional taxation for Argentine LRGs is also
perceived as low due to the legal pledge in place from
jurisdictions' adherence since the 2017 fiscal pact between the
nation and provinces, requiring a gradual harmonization to lower
maximum tax rates on turnover tax rates to partially relieve the
country's high tax burden. Amendments to the pact have been made
due to macroeconomic vulnerabilities in an attempt to alleviate
provincial finances. However, local revenues are still being
affected in real terms due to the negative macroeconomic
environment and structurally high inflation.
Expenditure Sustainability: 'Weaker'
Argentine provinces have high expenditure responsibilities,
including healthcare, education, water, transportation and other
services. The country's fiscal regime is structurally imbalanced
regarding revenue-expenditure decentralization, and during 2020,
spending decentralization could continue to rise in the current
context of sovereign debt distress, transferring more expenditure
responsibilities and fiscal pressure to subnational governments,
coupled with higher expenditure pressures in healthcare due to the
coronavirus pandemic.
During 2020, argentine LRGs are facing important real term revenue
drops and in consequence operating expenditure will grow at a
higher rate than operating revenues, therefore operating balances
will decrease across the portfolio.
During 2018 the province had recomposed its margins and liquidity
from negative operating margins in 2016 and 2017 towards a positive
operating balance of 11.8% of operating revenues in 2018. In 2019,
the vulnerable economic context pressured the operating balance to
5.2%. As of May 2020, Salta's opex grew above operating revenues in
nominal and in real terms (nominal growth of 40.6% vs 34.7% in the
same period of 2019), decreasing the operating balance towards 9.3%
versus 13% during January to May 2020, relative to the same period
2019. For 2020, Fitch estimates a -2.8% operating balance reflected
in the province's current refinancing risk levels.
Another weakness is Argentina's structurally high inflation
pressures expenditures. The lagged effect that inflation tends to
have on expenditures because of real-term wage recomposition
expectations compounds the weakness of expenditure predictability,
or sustainability in Fitch criteria terminology. Currency
depreciation also negatively affects expenditure costs, such as
capex projects.
Expenditure Adjustability: 'Weaker'
According to YE 2019 preliminary data, Salta's share of operating
expenditure/ total expenditure was of around 89.3%, with staff
expenses representing a rigid 56.4% of total expenses, which is
deemed high relative to international peers. Salta's leeway or
flexibility to cut expenses is viewed as weak relative to
international peers, considering that only a low 2015-2019 average
10.3% and 7.0% in YE2019 of the province's total expenditure
corresponds to capex. Similar to other Argentine peers, the
province has very high infrastructure needs. Due to the high level
of infrastructure needs, increasing capex does not translate into
economic growth due to the important infrastructure lag, which also
reflects that there is not much flexibility to adjust capex.
Liabilities and Liquidity Robustness: 'Weaker'
Salta's debt is mainly composed of issuances in the external
market: At YE 2019 debt totaled ARS37 billion, with an increase of
around 40.3% relative to 2019, mainly due to currency depreciation,
as around 72% of total debt is denominated in foreign currency,
unhedged. Debt sustainability metrics are already assessed at very
weak levels, the increased burden of debt service payments follows
the sharp peso depreciations of 50% in 2018 and 37% in 2019 versus
the U.S. dollar. Amid sharp currency depreciation, debt and
liquidity management becomes challenging.
Unhedged foreign currency debt exposure is an important structural
weakness considered in this KRF assessment, as is capital market
discipline that is currently heightened by a distressed 'RD' rated
sovereign that is in the process of restructuring its debt, thus
curtailing external market access to LRGs. Salta's capital
maturities are pushed towards 2022-2024 when the senior unsecured
bond begins its annual capital balloon payments in three yearly
capital balloon instalments.
Salta's senior secured 2022 notes, which have an outstanding of
USD38.147 million, are secured with hydrocarbon royalties, which
are payable in pesos but linked to the USD; however, these revenues
are being negatively affected by the 2020 economic and hydrocarbon
price shock. For Salta hydrocarbon royalties have decreased around
10% in real terms as of May 2020.
For 2020, the province is currently working towards debt and
liquidity management, and in July 31, 2020 enacted Law No. 8.198
through Decree No. 472 to authorize its process of debt
renegotiation, restructuring or refinancing of public debt that has
not yet initiated.
Liabilities and Liquidity Flexibility: 'Weaker'
For liquidity, Argentine provinces rely mainly on their own
unrestricted cash. The national framework in place regarding
liquidity support and funding available to subnationals is
perceived by Fitch as weak, as there are no emergency-support
liquidity mechanisms and considering that sovereign's external
market access affects the entity's refinancing capacity. At YE 2019
according to preliminary data Salta's unrestricted cash totaled
ARS2.6 billion with a 1.2x liquidity coverage ratio; however, for
2020 Fitch estimated a -0.04x, reflecting a high risk of liquidity
being insufficient to cover 2020 debt service payments.
Debt sustainability: b' category
Due to the projected negative operating balance for 2020, Salta's
primary metric of payback (net adjusted debt/operating balance) is
expected to be above 25 years, resulting in a 'b' score, and its
secondary metric of actual debt service coverage ratio is expected
to be below 1x for 2020 also in the 'b' level. Both weak debt
metrics resulted in a 'b' debt sustainability score.
The Province of Salta is located in the northwest region of
Argentina with a small and weak local economy concentrated in the
tertiary sector with an important weight from social services and
the public sector. The primary sector is also important and
includes hydrocarbon extraction. The province is the eighth most
populated out of 24 jurisdictions, with its GDP contributing to an
estimated 2% of the country's GDP. Salta has a low GDP per capita
and a higher than average percentage of population with unsatisfied
basic needs, which in turn translates into structurally high
infrastructure needs.
ESG Considerations:
Salta has an ESG Relevance Score of '4' for Rule of Law,
Institutional & Regulatory Quality, Control of Corruption
reflecting the negative impact the weak regulatory framework and
national policies of the sovereign have over the Province.
The Province has an ESG Relevance Score of '4' for Creditor Rights,
which reflects the track record in the breach of legal
documentation stating the full debt service payments, affecting its
willingness to pay evaluation.
DERIVATION SUMMARY
Salta has a Vulnerable Risk Profile and a 'b' debt sustainability
score. However due to the currently low sovereign rating levels,
Fitch positions the ratings according to its rating definitions to
scale to 'C' from 'CCC' ratings. Fitch has relied on its rating
definitions to position the province's ratings and SCP.
KEY ASSUMPTIONS
Fitch's rating case scenario is a "through-the-cycle" scenario,
which incorporates a combination of revenue, cost and financial
risk stresses. It is based on the 2015-2019 figures and 2020
projected ratios. The key assumptions for Fitch's rating case
scenario include:
-- 30% yoy increase in operating revenue, including a real term
decrease in taxes and federal transfers in 2020;
-- 40.6% yoy increase in operating expenditure;
-- Net capital balance of around minus ARS2.6 billion in 2020;
-- Cost of debt considers non-cash debt movements due to currency
depreciation with an exchange rate of ARS88.2 per USD.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
A formal debt exchange proposal involving a material reduction in
terms and taken to avoid a traditional payment default could
negatively impact Salta's ratings.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
A debt restructuring conclusion that provides alleviation in the
province's short to medium term debt service coupled with a better
fiscal performance could have a positive impact in Salta's ratings.
Salta's ratings are constrained by Argentina's Country Ceiling.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Salta, Province of: Rule of Law, Institutional & Regulatory
Quality, Control of Corruption: 4, Creditor Rights: 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.
===========
B E L I Z E
===========
BELIZE: S&P Cuts Sovereign Credit Ratings to SD After Debt Exchange
-------------------------------------------------------------------
On Aug. 12, 2020, S&P Global Ratings lowered its long-term foreign
currency sovereign credit rating on Belize to selective default
('SD') from 'CC'. In addition, S&P lowered the short-term foreign
currency sovereign rating to 'SD' from 'C'.
S&P also lowered its rating on the bonds included in the
sovereign's debt exchange to 'D' from 'CC' (foreign currency bonds
due in 2034).
S&P said, "At the same time, we affirmed the 'CC' long-term local
currency sovereign credit rating and the 'C' short-term local
currency sovereign credit rating. We also removed the long-term
foreign and local currency ratings from CreditWatch with negative
implications, where we had placed them on June 30, 2020. The
outlook on the long-term local currency rating is stable."
S&P's transfer and convertibility (T&C) assessment remains
unchanged at 'CC'.
Outlook
S&P said, "We do not assign outlooks to 'SD' ratings because they
express a condition and not a forward-looking opinion of default
probability.
"We could lower the local currency ratings should the government
signal its intention to restructure its local currency-denominated
debt--which we would view as a distressed exchange--or that it
won't pay its local currency debt service obligations.
"Only upon completion of a formal bond restructuring process, which
we would characterize as a distressed exchange under our
methodology, would we raise the foreign currency sovereign credit
and issue ratings on the individual bonds from 'SD' and 'D',
respectively. Those ratings would reflect Belize's post-exchange
creditworthiness. Our post-restructuring ratings tend to be in the
'CCC' or low 'B' category, depending on the sovereign's new debt
structure and capacity to support that debt."
Rationale
The hit from the COVID-19 pandemic has exacerbated the fragility of
the Belizean economy. Liquidity pressures have mounted as a result
of the health care and economic crisis. Due to rapid deterioration
of global economic conditions and lockdown measures, S&P expects a
sharp decline in tourism in 2020. The tourism sector accounts for
10%-15% of Belize's GDP and around 60% of the country's foreign
exchange earnings.
On Aug. 10, 2020, the Belize government announced the results of
its solicitation of consent of holders of Belize's U.S. dollar
bonds due 2034 to defer and capitalize quarterly interest payments
falling due from Aug. 20, 2020, through Feb. 20, 2021. Holders
representing 82.0% of outstanding bonds have consented to the
amendments to the terms of the bonds. The collective action clauses
relating to the U.S. dollar bonds specify the voting threshold at
75% of bondholders. Above this threshold, the proposed amendments
become binding to all holders of such bonds. According to the
proposed amendments, interest due on the interest payment dates
after Feb. 20, 2021, and the final maturity date of the bonds will
not be affected. The government expects that all conditions
precedent to the effectiveness of the amendments will be met around
mid-August.
Once the restructuring process is completed, we are likely to
review the 'SD' foreign currency rating on the sovereign and 'D'
rating on the 2034 bonds. S&P will consider raising the ratings
once the new terms and conditions of the 2034 bonds come into
effect.
S&P believes the government is less likely to default on its local
currency-denominated debt, and it has made no mention of its
intention to restructure this debt.
Given already high debt, low international reserves, and a weak
economy, Belize has limited scope to effectively counter the
pandemic shock and maintain timely debt service. In addition,
Belize's creditworthiness is constrained by institutional
weaknesses that include a track record of poor capability to
maintain sustainable public finances across administrations.
Despite a commitment to reduce the fiscal imbalances under the
terms of the March 2017 debt restructuring, high debt remains a
difficulty for the government and has long been an obstacle to
economic prosperity. Belize also has a track record of default when
its fiscal position comes under pressure. The government underwent
three episodes of debt restructuring between 2006 and 2017.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
Downgraded; Off CreditWatch; Outlook Action
To From
Belize
Sovereign Credit Rating
Foreign Currency SD/SD CC/Watch Neg/C
Ratings Affirmed; Off CreditWatch; Outlook Action
To From
Belize
Sovereign Credit Rating
Local Currency CC/Stable/C CC/Watch Neg/C
Downgraded
To From
Belize
Senior Unsecured
Foreign Currency D CC
Ratings Affirmed
Belize
Senior Unsecured
Local Currency CC
Short-Term Debt C
===========
B R A Z I L
===========
MARANHAO: Fitch Affirms LT IDR at BB-, Outlook Negative
-------------------------------------------------------
Fitch Ratings has affirmed the Brazilian state of Maranhao's
Long-Term Foreign- and Local-Currency Issuer Default Ratings at
'BB-' with a Negative Outlook and its Short-Term Foreign- and
Local-Currency IDR at 'B'. Fitch has also affirmed Maranhao's
National Long-Term Rating at 'AA-(bra)' and National Short-Term
Rating at 'F1+(bra)' with a Stable Rating Outlook.
Fitch has downgraded the Standalone credit profile to 'c' from
'bb-' due to the non-payment of the portion of its external debt.
KEY RATING DRIVERS
The downgrade of Maranhao's SCP follows the state non-payment of
the portion of its external debt of USD49.9 million (principal +
interest). As stipulated on the notes' indenture, currently the
state is in its 30-day grace period to fully comply with its
financial obligations. The 30-day grace period will expire on Aug.
23, 2020, and failure to pay is considered an event of default in
the contract document.
Maranhao's IDR of 'BB-' with a Negative Outlook and national scale
rating of 'AA-(bra)' with a Stable Outlook were affirmed for the
reason that the payment has an unconditional and irrevocable
sovereign guarantee.
The debt was issued for USD611.9 million in July 23, 2013 with the
Bank of America, N.A. The debt is denominated in U.S. dollars and
accrues a fixed interest rate of 5.477% per annum with semiannually
payments of principal plus interest. The maturity date is on July
23, 2023.
To date, the state remains under its cure period to the portion of
this debt, Maranhao's SCP of 'c' reflects the state's overall
near-default risk situation and the entrance of its grace period.
Maranhao's IDR of 'BB-' and NLTR of 'AA-(bra)' reflect the
unconditional and irrevocable sovereign guarantee. Fitch has relied
on its rating definitions to position the state' SCP.
Effect from ESG Factors: The State of Maranhao has Environmental,
Social and Governance Relevance Score of '4' for "Human
Development, Health and Education" and "Creditor Rights". The State
presents below-average socio-economic indicators. Also, the
deteriorated willingness to pay reflected in the breach of a formal
agreement assuring debt service payment, negatively affects
creditor rights.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Maranhao's fiscal performance and SCP should be revised if the
state complies with this payment.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Maranhao's SCP is subject to the debt service payments fulfilled
before the stipulated grace period expires on Aug. 23, 2020. If the
state does not comply with the payment after Aug. 24, 2020, its SCP
would be downgraded.
Also, as Maranhao's ratings are supported by the Sovereign ratings,
any action affecting Brazil's IDR (BB-/Negative) should reflect in
Maranhao's ratings.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
The State of Maranhao presents a "Human Development, Health and
Education" score of '4' due to its below-average socio-economic
indicators.
The State has an ESG Relevance Score of 4 for Creditor Rights,
which results in the breach of legal documentation stating the full
debt service payments, reflecting the low willingness to pay.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3, meaning that 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.
Maranhao, State of
- LT IDR BB-; Affirmed
- ST IDR B; Affirmed
- LC LT IDR BB-; Affirmed
- LC ST IDR B; Affirmed
- Natl LT AA-(bra); Affirmed
- Natl ST F1+(bra); Affirmed
===========================
C A Y M A N I S L A N D S
===========================
CORSAIR GROUP: S&P Alters Outlook to Stable & Affirms B ICR
-----------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
affirmed its 'B' issuer credit rating on Computer peripherals and
gaming hardware provider Corsair Group (Cayman) LP. This reflects
its expectations that Corsair will sustain substantially lower
leverage over the coming year.
S&P said, "We are also affirming our 'B' and 'CCC+' ratings on the
company's senior secured first-lien facility and senior secured
second-lien term loan. The respective '3' and '6' recovery ratings
remain unchanged, indicating our expectation of 50%-70% (rounded
estimate: 55%) recovery on the first-lien and 0%-10% (rounded
estimate: 0%) recovery on the second-lien term loan."
Robust demand for peripheral and components products is supported
by strong tailwinds from the gaming industry. S&P said, "Our
updated forecast anticipates adjusted debt-to-EBITDA leverage near
5x in fiscal 2021 and 2022, but significant uncertainty remains.
Corsair's strong 'first half 2020 results and heightened backlog
suggest that fiscal 2020 and 2021 results will be more favorable
than our previous forecast published on March 31, 2020, despite the
significant macroeconomic headwinds and uncertainty surrounding
COVID-19. Revenue for the second quarter grew by 57.7%
year-over-year, with growth primarily driven by work-from-home
hardware and peripherals dedicated to improving gaming and
streaming experiences. Broad-based growth in the gaming industry
remains robust, and we expect these trends to remain supportive to
Corsair's credit metrics over the coming year. As such, we have
favorably revised our base-case assumptions so that revenue growth
in fiscal 2020 will be in the double-digit percents, partially
lifted by the Origin and SCUF acquisitions."
S&P said, "However, we expect fiscal 2021 revenue growth to
moderate as the pandemic effect wears off. Moreover there is
significant uncertainty in our 2021 forecast, especially given the
timing of the economic recovery from COVID-19. Higher-than-expected
unemployment could also delay consumers' purchase decisions and
thus weigh on Corsair's credit metrics. Accordingly, our base-case
assumption incorporates some moderation in growth in Corsair's
peripherals, components and memory products resulting in S&P Global
Ratings-adjusted debt-to-EBITDA leverage that will stay near 5x
through fiscal 2021 and 2022."
Corsair's lower scale and profitability compares well with those of
'B' rated peers but ratings upside is limited by financial-sponsor
ownership. S&P said, "Corsair's business risk profile reflects our
view of the company's small scale, weak profitability, niche focus
on PC gaming hardware, and exposure to memory, which are subject to
heightened volatility. Subsequently, management has been
diversifying revenues away from memory with the latest SCUF
acquisition, which has experienced a smooth integration process so
far and stronger-than-expected growth. Moreover, the upcoming
console launches should also provide additional growth
opportunities for Corsair/SCUF and represent a positive catalyst
for the gaming industry in general. In the near term, however, we
anticipate that COVID-19 may have pulled forward some gaming and
streaming equipment sales and expect 2021 sales to experience some
moderation in growth."
S&P said, "Although some of Corsair's credit metrics compare more
favorably against some 'B' rated peers, our longer-term view of the
company's financial position is largely constrained by its
financial sponsor ownership. In our opinion, the prospect of
Corsair sustainably deleveraging is limited, with EBITDA growth
likely to be offset by the use of debt to further pursue
opportunistic acquisitions or maximize shareholder returns.
"Our stable outlook on Corsair is based on our expectation that
Corsair will be able to generate double-digit percent revenue
growth in 2020 as demand in gaming systems and peripherals remains
robust and e-sports markets continue to outgrow broader computing
hardware sales for the remainder of the year. Moreover, the
modestly improving macroeconomic backdrop could further support
top-line growth, profitability, and free cash flow, subsequently
improving the company's ability to maintain an adjusted
debt-to-EBITDA ratio at around 5x. Our base-case scenario assumes
Corsair will not pursue any major acquisitions over the next 12
months.
"We could lower the rating over the next year if the company
sustains adjusted debt to EBITDA above 7x or the company
experiences a significant deterioration in free cash flow. Such a
scenario could occur if the company loses key distribution partners
or there is a sharp decline in discretionary spending or a general
downturn in the PC gaming hardware market.
"Corsair's current financial sponsor ownership limits ratings
upside over the near term. Over the longer term, however, we would
look to adjusted debt to EBITDA sustained at below 5x and a defined
policy to maintain leverage at or below this level through
acquisitions and business cycles as supportive of a higher
rating."
===========
M E X I C O
===========
MEXICO: Economy Suffers Record Drop in Second Quarter
-----------------------------------------------------
Anthony Harrup at The Wall Street Journal reports that Mexico's
economic output suffered its steepest drop on record in the second
quarter as shutdowns to slow the spread of the coronavirus brought
many factories and services to a standstill.
Gross domestic product, a broad measure of output in goods and
services, contracted 17.3% in seasonally adjusted terms from the
first quarter, and was down 18.9% from the second quarter of 2019,
the National Statistics Institute said, according to The Wall
Street Journal.
Mexico closed down activities considered nonessential throughout
April and May, causing the loss of millions of jobs, the report
relays. Gradual reopenings began in June, but capacity
restrictions have remained in place for most of the country, the
report notes.
Mexico has confirmed 408,449 cases of the new coronavirus, and
45,361 related deaths, figures some say underestimate the true
toll, the report says.
Industrial production in the April through June period fell 23.6%
from the first quarter of the year, and services contracted 14.5%.
Agricultural production fell 2.5%, the report adds.
SIXSIGMA NETWORKS: S&P Cuts Issuer Rating to B+, Outlook Neg.
-------------------------------------------------------------
On Aug. 12, 2020, S&P Global Ratings lowered its global scale
issuer and issue-level ratings to 'B+' from 'BB-' on Mexico-based
IT managed and data services provider, Sixsigma Networks Mexico
S.A. de C.V. (KIO Networks) and its senior unsecured notes due
2025.
S&P said, "The downgrade follows our expectation of greater
pressure on the company's liquidity sources in the next 12 months.
We estimate that the deepening recession in Mexico and in KIO
Networks' other key markets will dent its cash flows in the near
term, given that the COVID-19 outbreak has halted consumption and
investments worldwide, affecting several industries. In our view,
disruption in the customers' operations will result in lower
revenue and a slower cash conversion cycle, which will increase the
company's reliance to roll over short-term debt. KIO Networks'
revenue mix is roughly equally divided between contracts with
private- and public-sector entities. We expect certain delays in
payments from both income sources, given that the Mexican
government's revenue has contracted during the first half of 2020
and will remain pressured for at least the remainder of the year.
As of March 31, 2020, KIO Networks posted a quarter-on-quarter
revenue decline of 21%, mostly reflecting lower income from
contracts with Mexico's federal government.
"The company has taken various measures to address the current
crisis, ensure the business continuity, and preserve its liquidity,
but we expect cash flow volatility in the near term. In early 2020,
the company put in place a plan to lower operating expenses and
boost profitability, while benefiting from savings from contract
extensions with the Mexican government. We estimate these measures,
along with refinancing of short-term debt maturities in the past
months, will partly alleviate the company's liquidity shortfall.
Nonetheless, in our view, refinancing risks remain significant
because of KIO Networks' substantial debt maturities in the next
12-24 months. We will continue to monitor in the upcoming months
how the customer base could impact the company's leverage metrics
and liquidity position, given uncertainties regarding the severity
and duration of the pandemic and its potential effect on the
economy.
"We estimate global IT spending to shrink in 2020, but it should
rebound and demand for data center and cloud services should
accelerate in the long term. Despite the estimated short-term hit
from the global recession, we expect demand for managed and data
center services to continue to grow at a faster pace than GDP
growth, especially in developing countries. KIO Networks is one of
the leading IT service providers in the region with a modern
infrastructure, which we believe will enable the company to benefit
from potential growth in demand. However, this may also increase
the company's financing needs, given that utilization rate at its
data centers already averages 85%. On the other hand, we believe
competition in the Mexican market will increase, reflecting recent
interest from international players such as Equinix Inc.
(BBB-/Stable/--), which acquired in January 2020 three data centers
from Axtel S.A.B. de C.V. (BB/Positive/--), with about 10,683
square meters of colocation space."
The negative outlook reflects a potential downgrade in the next
6-12 months if the recessions in KIO's key markets, especially
Mexico, undermine its customers' finances and result in either a
loss of contracts or delays in cash collections. A weaker liquidity
position could stem from:
-- Greater working capital outflows, without revenue growth to
offset funding needs.
-- The continued use of short-term debt to finance investments,
increasing refinancing risks.
S&P said, "We could revise the outlook to stable in the next 12
months if KIO Networks' operating and financial performance
improves, such as top-line growth and resilient profitability,
resulting in EBITDA growth, which should improve the company's cash
generation and decrease its financing needs. Moreover, in the
longer term, we could upgrade KIO Networks if its liquidity
position strengthens in a consistent manner, such that its sources
of liquidity are 20% higher than its uses." This could stem from a
significant improvement in FFO and/or in refinancing of short-term
debt maturities towards the longer term.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
PETROLEUM CO: Prime Minister Won't Be Rushed on Petrotrin Sale
--------------------------------------------------------------
Trinidad Express reports that Prime Minister Dr Keith Rowley would
not rush to sign the sale and purchase agreement with Patriotic
Energies and Technologies before the general election if it is not
in the interest of the people of Trinidad and Tobago.
The Prime Minister said he would love to be popular but popularity
in the job of Prime Minister can sometimes be a dangerous
attribute, according to Trinidad Express.
Speaking four days before the election at a virtual meeting in
Tunapuna, the Prime Minister said: "There are issues with the
refinery still, the report notes. But the refinery is out of the
equation now and if someone wants to put it back in business, we
will assist with that but we are not committed at any cost. It has
to be that it makes sense and it has to be that must be in the
interest of the people of Trinidad and Tobago," he added.
"And we not going to do it because it is election. We are not doing
that for election. These decisions cannot be make for election.
They are decisions to be made for the better service of the people
of Trinidad and Tobago . And under this PNM (People's national
Movement) Government they (the decisions) don't carry an election
date," the Prime Minister stated. Ancel Roget has been calling the
agreement to be signed before the election, the report relays.
The Prime Minister said there was always an alternative and
referred to the statement of UNC (United National Congress)
candidate David Nakhid who made a statement in 2013 about the
People's Partnership not being able to lead the country out of a
wet paper bag, the report discloses. The Prime Minister said
Nakhid had come to the PNM first and was "turned down by the PNM,"
the report relays.
The Prime Minister said he could have been the most popular prime
minister with the Oilfields Workers' Trade Union if he had agreed
to their proposal, the report relays. He said the OWTU wanted to
postpone the treatment of the Petrotrin problem for two years and
that decision was put up in 2018, the report notes. "Two years
from that, is 2020," he said. He said OWTU's thinking was if the
Government agreed to this, it meant that it would be about now that
we would be faced with dealing with Petrotrin. And of course the
understanding is that no government in an election would have
restructured Petrotrin, the report discloses.
The Prime Minister said the Government didn't have the luxury of
"putting itself in that mousetrap" even if it wanted to because
Petrotrin's debt was due in August 2019. "And it required a
government that was not afraid of the fall out of fixing that
problem to have done what had to be done in 2019," he added.
He said Government restructured Petrotrin and the outcome is that
Heritage is making a profit, servicing its debt, and paying taxes
and still employing 100s of employees, the report notes.
He said while Government's action was not popular at the time, he
said sure that some day in the future some people would say: "That
was the day when the Ministry of Finance saved the country," the
report adds.
About Petrotrin
State-owned Petroleum Co. of Trinidad & Tobago (Petrotrin) closed
it oil refinery in November 2018. Prior to closure, Petrotrin
underwent a corporate reorganization that started in the last
quarter of 2018. The T&T government insisted that the
reorganization was necessary to improve the company's efficiency.
As a result of the reorganization, Petrorin's refining business
was shut down and new entities were created: three operating
subsidiaries (Heritage Petroleum Company Limited, Paria Fuel
Trading Company and Guaracara Refining Company Limited), and the
new holding company, TPH, to which the international bonds were
transferred from Petrotrin.
UNIT TRUST CORPORATION: UNC Wants to Damage Firm, Says Rohan
------------------------------------------------------------
Trinidad Express reports that the opposition United National
Congress (UNC) intended to damage the Unit Trust Corporation with
its proposal to use its idle cash balances for the National
Infrastructure Fund, Works and Transport Minister Rohan Sinanan
said.
"Remember how they spent on infrastructure? What is suppose to cost
$1,000 costs $3,000. What was supposed to cost $250 million, like
the Curepe Interchange, cost them close to $500 million. So in
other words you would be paying two and three times the cost for
infrastructure and they going to be taking your Unit Trust savings
to put into that," he said, according to Trinidad Express.
"I was told today that there were some people who had been thinking
about taking out their money from UTC, holding it and putting it
back in when the PNM wins. But there is no need for that as we are
going to win the general election. We are going to form the next
government and we are not going to interfere with your money," he
added.
Sinanan also questioned his audience about if they remembered what
the UNC did to the State-owned National Gas Company (NGC) during
its term in office between May 2010 and September 2015, the report
notes.
He said the NGC had $18 billion when the UNC came to office and
they spent every cent on projects in which there was no value for
money. "Let us not allow them to have the opportunity to damage
our financial institutions," Sinanan said. "Make the right choice.
This is a vote for the survival of Trinidad and Tobago, " he added.
"We cannot allow them to create a financial crisis for us. We
cannot allow them to come and rape the Treasury," he said. He said
all the hard work which was done to keep the country safe during
this pandemic would be undone, the report relays.
He said the UTC did not have a pool of excess sums lying around,
but invested in bonds.
Sinanan said a lot of development had been done in Sangre Grande in
the last five years, the report notes.
He said very soon the Wallerfield to Manzanilla Highway would
appear "because a lot of the work is going on behind the scene. And
then we start from Sangre Grande Police Station going all the way
up to Mayaro", the report notes. He said a lot of infrastructure
work was done in eastern seaboard as well as other parts of the
country, he added.
He said the Valencia to Toco Highway is expected to be completed by
the end of 2022, the report notes. He said the long awaited
highway to Sangre Grande was under full construction and the first
phase - the Wallerfield to Sangre Grande- should be completed soon,
the report says. He said a tender is expected to be out by the end
of this year for the construction of the Toco Port, the report
adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2020. All rights reserved. ISSN 1529-2746.
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