/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/200818.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 Tuesday, August 18, 2020, Vol. 21, No. 165 Headlines A N T I G U A A N D B A R B U D A LIAT: Consumers Urged to Submit Claims Against Airline B R A Z I L B3 SA: Moody's Rates Proposed Local Currency Debenture Issuance Ba1 BANCO BRADESCO: Moody's Assigns LT LC Deposit Rating at Ba2 ITAU UNIBANCO: Moody's Affirms LT LC Deposit Rating at Ba2 ITAUSA SA: Moody's Affirms Ba3 LC Issuer Rating, Outlook Stable SAMARCO MINERACAO: Banco Safra Appeals Rulings to Second Circuit SAMARCO MINERACAO: Brazilians Seek UK Class Suit Over Dam Collapse TUPY SA: S&P Affirms 'BB' ICR, Off CreditWatch Negative C H I L E CHILE: Lawmakers Want to Raise US$6 Billion Taxing the Ultra Rich LATAM AIRLINES: Gets Additional $1.3BB Bankruptcy Financing D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Tourism Falls 88% in July, Month of Reopening J A M A I C A JAMAICA: Jamaican Dollar Hits Record $150 Against US Currency P E R U COMPANIA DE MINAS: Fitch Downgrades IDR to BB+, Outlook Stable P U E R T O R I C O SPON COMPUTER: Hires Landrau Rivera & Associates as Counsel V E N E Z U E L A CITGO PETROLEUM: Oil Execs., Held 2 Years, Go to Trial in Venezuela - - - - - ===================================== A N T I G U A A N D B A R B U D A ===================================== LIAT: Consumers Urged to Submit Claims Against Airline ------------------------------------------------------ Stabroek News reports that consumers who have complaints against the bankrupt LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, airline were urged to submit their claims last August 15. In a statement, the Competition and Consumer Affairs Commission (CCAC) said that it has received a number of complaints against the LIAT airline, according to Stabroek News. These complaints have been compiled and forwarded to the recently appointed LIAT Administrator, Cleveland Seaforth based on an announcement he made that, "any person having a claim against the Company whether liquidated, unliquidated, future or contingent is required to present particulars of their claim in writing not later than August 15, 2020," the report notes. The Commission advised consumers who were affected and have not yet filed a complaint with the CCAC to urgently submit their claims with accompanying supporting documentation to the LIAT Administrator before the deadline. Soft copies were accepted, the report adds. These claims were sent to: Cnr. Factory Road & Carnival Gardens P.O Box 3109, St. John's Fax: 268-462-8808 Email: administrator.liat@bdoecc.com About LIAT LIAT Ltd., formerly known as Leeward Islands Air Transport or LIAT, is an airline headquartered on the grounds of V. C. Bird International Airport in Antigua. It operates high-frequency inter-island scheduled services serving 15 destinations in the Caribbean. The airline's main base is VC Bird International Airport, Antigua and Barbuda, with bases at Grantley Adams International Airport, Barbados and Piarco International Airport, Trinidad and Tobago. The airline is owned by seven Caribbean governments, with three being the major shareholders: Barbados, Antigua & Barbuda and St. Vincent and the Grenadines along with Dominica(94.7 %); other Caribbean governments, private shareholders and employees (5.3%). In the last few years, LIAT has been challenged with financial difficulties, often needing additional funding as the airline dealt with the high cost of operations. In November 2016, the Barbados government defended LIAT's operations, even as opposition legislators called for a cessation of the business. In early 2015, LIAT offered early retirement packages to employees in efforts to downsize. In 2014, LIAT knew it had to deal with unprofitable routes to make operations viable. In the third quarter of 2013, the airline's top management was shaken, with news Chief Executive Officer Captain Ian Brunton's sudden resignation. LIAT's current chief executive officer is Julie Reifer-Jones, chairman is Jean Holder, and chief financial officer is Rojer Inglis. Dr. Ralph Gonsalves, prime minister of St. Vincent & the Grenadines, serves as chairman of LIAT shareholders. =========== B R A Z I L =========== B3 SA: Moody's Rates Proposed Local Currency Debenture Issuance Ba1 ------------------------------------------------------------------- Moody's America Latina (MAL) assigned a Ba1 global scale and Aaa.br Brazilian national scale rating to B3 S.A. -- Brasil, Bolsa, Balcao's proposed local currency debenture issuance. The debentures will be issued in Brazilian reals with a target issue amount of BRL 3.55 billion and the proceeds of the issue will be used for general corporate purposes. The planned tenor of the debentures is four years. Assignments: B3 S.A. - Brasil, Bolsa, Balcao: - Global local currency unsecured debt rating of Ba1 - Brazilian national scale local currency unsecured debt rating of Aaa.br RATINGS RATIONALE B3 S.A. -- Brasil, Bolsa, Balcao's (B3) global scale and national scale unsecured debt rating of Ba1 and Aaa.br respectively stem from B3's long term senior unsecured and issuer ratings of Ba1. B3's ratings reflect Moody's unchanged assessment of the company's creditworthiness, which incorporates the benefits to creditors from its increasing earnings, high pretax margins and cash flow generation, which will continue to be strong over the next 12 -18 months, supported by growing product diversification and scale. Its assessment also takes into consideration B3's rising but manageable leverage and the company's increased dividend payout targets, which will be maintained in 2020. B3's ratings are positioned one notch above Brazil's Ba2 sovereign rating, reflecting its strong linkages with the Brazilian sovereign. B3 reported revenue growth of 23% and pre-tax income of BRL 3.4 billion (US$ 732 million) in 2019, an increase of over 50% versus a year earlier, illustrating its increased scale. Pre-tax margin was 50.8% up by over 700 basis points from a year earlier. Increased market volatility in the wake of coronavirus has led to record trading volumes in B3`s core businesses and helped propel strong financial performance in the first quarter 2020. Moody's expects B3 to continue to post strong financial results in 2020 as Brazil`s low interest rate environment will continue to shift investor risk appetite away from fixed income and toward equity and other riskier investments. However, capital market new issuances will tail off from 2019`s record levels of equity issuance. Moody`s also said that B3 offers services for which it has no competition, particularly in cash equities trading and post trading, and that its business model enables it to generate increased revenue during periods of market volatility, when equities and interest rate and currency derivative volumes rise. The debenture issuance is in line with the company's 2020 guidance for leverage, as measured by Total debt / EBITDA of 1.5x, which was reaffirmed in conjunction with its 2019 results. Based on first quarter 2020 results, Moody's estimates that B3`s leverage ratio will rise from 0.9x as of December 2019 to 1.3x if the company issues BRL 3.55 billion of debentures and accounting for recent bank borrowing and the maturity of its US dollar bond that matured on 16 July 2020. Moody's also notes that B3 is issuing debt at lower rates and does not expect a meaningful change in its interest coverage ratio, as measured by EBITDA to interest expense, particularly in light of the company's EBITDA and cash flow generation anticipated in 2020. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The national scale debenture ratings are already at the highest level on the national scale for Brazil. A downgrade in B3`s global and national scale ratings could be driven by a deterioration in the company's financial profile, which, in turn, could be triggered by a decrease in its operating margin that materially reduces the company's debt-service capacity and leads its leverage to increase significantly. Negative pressure on the ratings could also arise from a deterioration in the company's risk management capabilities and execution effectiveness. A decline in Brazil's creditworthiness could also result in B3's ratings being downgraded. The principal methodology used in these ratings was Securities Industry Service Providers Methodology published in November 2019. BANCO BRADESCO: Moody's Assigns LT LC Deposit Rating at Ba2 ----------------------------------------------------------- Moody's Investors Service affirmed all ratings assigned to Banco Bradesco S.A. (Bradesco), including the long-term local currency deposit rating at Ba2, the long-term foreign currency deposit rating at Ba3, and the Brazilian national scale deposit rating at Aa1.br, following the affirmation of the bank's ba2 standalone baseline credit assessment (BCA). Moody's also affirmed all of Bradesco's short-term ratings, its counterparty risk ratings and counterparty risk assessments. The (P)Ba2 senior unsecured MTN program rating assigned to Bradesco and to its Cayman branch, Banco Bradesco S.A., Grand Cayman Branch, was also affirmed. The outlook on Bradesco's ratings remains stable. RATINGS RATIONALE The affirmation of Bradesco's ratings and assessments reflects Moody's overall unchanged view of the bank's fundamental credit strengths. These include Bradesco's well diversified businesses and nationwide geographical coverage, which have supported healthy core profitability over the long-term, high reserves for loan losses and conservative risk appetite, as well as favorable funding and ample liquidity. The rating action also takes into account Moody's expectation of a strain on the bank's asset quality and profitability due to the economic disruption caused by the coronavirus outbreak, and Bradesco's weaker capitalization relative to other bank peers, though the rating agency expects its capital position will improve in the next quarters. Bradesco's profitability benefits from its significant presence in several fee-based businesses beyond its core branch-based retail and commercial banking operations, including insurance, credit cards, payment services and asset management. The bank's well-established franchise has supported adequate through-the-cycle asset quality and earnings performance, but these credit strengths are being tested by strengthening competition in some of its core businesses and more challenging operating conditions. Record low interest rates, reduced business activity and higher credit provisions, as recorded in first and second quarters, will challenge the bank's historical profitability levels. Asset quality metrics have held up in the first part of the year relative to year end 2019, but the metric is masked partially by the payment deferrals the bank has granted as well as government support programs. As of June 2020, about 12.8% of all Bradesco's loans are under some form of repayment moratorium until year end 2020. In line with the trend for other peers, Moody's expects the quality of Bradesco's retail and small and medium-sized enterprise (SME) loans, which together account for 40% of its loans, to deteriorate once the loan deferment period ends. Bradesco's loan loss reserves are comfortable at 9% of gross loans as of Q2 2020, although the uncertainty around the length and depth of the economic slowdown make it difficult to judge if loan loss provisions taken to date will be sufficient to absorb the coming credit losses. Additional substantial provisions would hurt profitability and result in reduced internal capital generation capacity. The rating agency views Bradesco's capitalization ratio, measured by Moody's as tangible common equity (TCE) relative to adjusted risk weighted assets (RWA), as low compared to bank peers. In Q2 2020, Bradesco's TCE/RWA dropped to a low 5.7%, from a multi-year median of 8.2%, largely reflecting the effect of deferred tax assets created by the foreign exchange variation on derivatives hedging of investments abroad, fully eliminated from its tangible capital calculation. However, as the currency appreciates and loan growth remains subdued for the remainder of 2020, capital will gradually recover, also helped by low dividend payout and by Bradesco's earnings recurrence. The stable outlook incorporates Bradesco's capacity to manage risks in an uncertain operating environment, and its solid track record of generating pre-provision earnings, despite the challenges to Bradesco's asset quality and profitability brought about by the pandemic. Bradesco's Ba2 ratings take into account Moody's expectation of a very high level of government support based on the bank's dominant market share of 12.9% of system deposits as of March 2020, as well as the bank's importance to the country's banking system. However, this support assumption does not result in any rating uplift because Bradesco's BCA is already at the same level as Brazil's Ba2 sovereign rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Bradesco's ba2 BCA and ratings are at the same level as Brazil's Ba2 bond rating, and therefore, upward movement on the ratings is unlikely in the absence of a sovereign rating upgrade. Moody's could downgrade Bradesco's BCA if there is a material decline in capital because of a strain on asset quality and profitability beyond its current expectations. Pressure on the bank's BCA could develop if there is an increase in its stock of nonperforming loans (NPLs) or other problematic exposures; a weakening in the bank's internal capital generation and risk absorption capacities as a result of subdued profitability levels; or a deterioration in the bank's liquidity. As the bank's debt and deposit ratings are at the same level of Brazil's government bond rating Ba2, a downgrade of the sovereign rating could lead to a downgrade of Bradesco's standalone BCA, as well as its deposits and debt ratings. METHODOLOGY USED The principal methodology used in these ratings was Banks Methodology published in November 2019. Banco Bradesco S.A. is headquartered in Osasco, Brazil. The bank had total consolidated assets of BRL1,571.4 billion and shareholders' equity of BRL135.1 billion as of June 30, 2020. LISTED OF AFFECTED RATINGS AND ASSESSMENTS The following ratings and assessments of Banco Bradesco S.A. were affirmed: - Long-term local currency bank deposit rating affirmed Ba2, outlook stable - Short-term local currency bank deposit rating affirmed at Not Prime - Long-term foreign currency bank deposit rating affirmed at Ba3, outlook stable - Short-term foreign currency bank deposit rating affirmed at Not Prime - Long-term foreign currency senior unsecured MTN program rating affirmed (P)Ba2 - Brazilian long-term local currency bank deposit rating affirmed at Aa1.br - Brazilian short-term local currency bank deposit rating affirmed at BR-1 - Long-term local currency counterparty risk rating affirmed at Ba1 - Short-term local currency counterparty risk rating affirmed at Not Prime - Long-term foreign currency counterparty risk rating affirmed at Ba1 - Short-term foreign currency counterparty risk rating affirmed at Not Prime - Brazilian long-term local currency counterparty risk rating affirmed at Aaa.br - Brazilian short-term local currency counterparty risk rating affirmed at BR-1 - Long-term counterparty risk assessment affirmed at Ba1(cr) - Short-term counterparty risk assessment affirmed at Not Prime(cr) - Baseline Credit Assessment affirmed at ba2 - Adjusted Baseline Credit Assessment affirmed at ba2 - Outlook, remains stable The following ratings and assessments of Banco Bradesco S.A., Grand Cayman Branch were affirmed: - Long-term foreign currency senior unsecured MTN program rating affirmed (P)Ba2 - Long-term foreign currency senior unsecured debt rating affirmed Ba2, outlook stable - Foreign currency subordinated debt rating affirmed Ba3 - Long-term local currency counterparty risk rating affirmed at Ba1 - Short-term local currency counterparty risk rating affirmed at Not Prime - Long-term foreign currency counterparty risk rating affirmed at Ba1 - Short-term foreign currency counterparty risk rating affirmed at Not Prime - Long-term counterparty risk assessment affirmed at Ba1(cr) - Short-term counterparty risk assessment affirmed at Not Prime(cr) ITAU UNIBANCO: Moody's Affirms LT LC Deposit Rating at Ba2 ---------------------------------------------------------- Moody's Investors Service affirmed all ratings assigned to Itau Unibanco S.A. (IU), including the long-term local currency deposit rating at Ba2, the long-term foreign currency deposit rating at Ba3, and the Brazilian national scale deposit rating at Aa1.br, following the affirmation of the bank's ba2 standalone baseline credit assessment (BCA). Moody's has also affirmed all short-term ratings, the counterparty risk ratings and counterparty risk assessments, as well as the senior unsecured MTN rating of (P)Ba2. At the same time, Moody's affirmed all ratings assigned to Itau Unibanco Holding S.A. (IUH), including its local currency issuer rating at Ba3 and the senior and subordinated debt ratings. All ratings assigned to the MTN programs and outstanding debts issued by Itau Unibanco S.A. (Cayman Islands) and Itau Unibanco Holding S.A. (Cayman Islands) were also affirmed. The outlook on Itau Unibanco and Itau Unibanco Holding's ratings remains stable. RATINGS RATIONALE The affirmation of IU's ba2 BCA reflects Moody's overall unchanged view of the bank's fundamental credit strengths, which include a solid balance sheet, reflecting its large, low-cost funding base, ample liquidity, stable asset quality and adequate capitalization. IU's disciplined risk appetite and risk management profile have supported its asset quality performance through-the-cycle, while its broad franchise provides ample access to funding and liquidity. The rating action also takes into account Moody's expectation that IU's asset quality and profitability will decline because of the economic disruption caused by the coronavirus outbreak. IU's capitalization is a relative credit weakness, but the rating agency expects it to improve over coming quarters. IU's track record of solid, above-peers earnings generation derives from well-established positions in diversified businesses and markets that ensure pricing power and scale. However, a prolonged period of record low interest rates and strengthening competition in some of its core businesses will test its earnings resilience under more challenging operating conditions including reduced business activity and higher credit provisions. In the first six months of 2020, IU's loan loss provisions accounted for 7% of its gross loans, ensuring a sizable reserve buffer against future problem loans. While management is hopeful that provisions might have peaked in 2Q2020, uncertainties about the length and depth of the economic slowdown and recovery make it difficult to assess whether loss provisions taken to date will be sufficient to absorb the coming credit losses. Additional substantial provisions would hurt profitability and result in reduced internal capital generation capacity. The ba2 BCA acknowledges IU's sound risk management governance at the group level that has protected the bank's capital position from losses during the past economic recession. Its asset quality has been largely stable, most recently supported by loan repayment deferrals and other short-term relief measures. However, Moody's expects the quality of IU's retail and small and medium-sized enterprise (SME) loans to deteriorate once the loan deferment period ends. IU's loans to these two riskier segments combined accounted for 41% of its total loans in June 2020. Despite the history of capital resilience, the rating agency views the bank's capitalization as low in June 2020 compared to the bank's historical average of 8.8%, measured by Moody's tangible common equity (TCE) as a percentage of risk weighted assets. IU's TCE ratio dropped to a low 5.6%, primarily reflecting the effect of deferred tax assets created by the foreign exchange variation on derivatives hedging of investments abroad. The expectation of moderate loan growth for the remainder of 2020, low dividend payout and earnings recurrence will support capital replenishment over time, benefiting from the bank's business scale and market position in fee generating businesses. IU's Ba2 rating takes into account Moody's expectation of a high level of government support based on the bank's sizable market share of 20.9% of system deposits as of March 2020, as well as the bank's importance to the country's banking system. However, this support assumption does not result in any rating uplift because Itau's BCA is already at the same level as Brazil's Ba2 sovereign rating. The Ba3 issuer rating assigned to IUH incorporates one notch of structural subordination off its operating bank deposit ratings of Ba2. IUH is the bank-holding company of IU, which contributes 90% to the holding's earnings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Itau's ba2 BCA and ratings are at the same level as Brazil's Ba2 bond rating, and therefore, upward movement on the ratings is unlikely in the absence of a sovereign ratings upgrade. Negative pressure on Itau's BCA could develop if its capital declines materially as a result of growing asset risks and credit costs that could hurt profitability beyond its current expectations. An increase in IU's stock of nonperforming loans (NPLs) as a result of increasing risk appetite; weak internal capital generation as a result of subdued profitability levels; or a deterioration in the bank's liquidity could lead to a downgrade of the bank's BCA. IU's debt and deposit ratings are at the same level of Brazil's government bond rating Ba2, and therefore, a downgrade of the sovereign rating could lead to a downgrade of Itau's standalone BCA, as well as its deposits and debt ratings. The ratings of IUH are notched off from IU's adjusted BCA. As such, the ratings of the debt obligations issued at the holding company will move in tandem with IU's adjusted BCA, which, however, does not incorporate any affiliate support. IU's ratings are in the same level of Brazil's government bond ratings and thus, the rating assigned to IUH's notes would face downward pressure if Brazil's sovereign rating is downgraded or if IU's asset quality, capital and profitability weaken materially. METHODOLOGY USED The principal methodology used in these ratings was Banks Methodology published in November 2019. Itau Unibanco Holding S.A. is headquartered in Sao Paulo, Brazil. The bank-holding company had total consolidated assets of BRL2,075.1 billion and shareholders' equity of BRL137.8 billion as of June 30, 2020. LISTED OF AFFECTED RATINGS AND ASSESSMENTS The following ratings and assessments of Itau Unibanco S.A. were affirmed: - Long-term local currency bank deposit rating affirmed Ba2, outlook stable - Short-term local currency bank deposit rating affirmed at Not Prime - Long-term foreign currency bank deposit rating affirmed at Ba3, outlook stable - Short-term foreign currency bank deposit rating affirmed at Not Prime - Long-term foreign currency senior unsecured MTN rating affirmed (P)Ba2 - Brazilian long-term local currency bank deposit rating affirmed at Aa1.br - Brazilian short-term local currency bank deposit rating affirmed at BR-1 - Long-term local currency counterparty risk rating affirmed at Ba1 - Short-term local currency counterparty risk rating affirmed at Not Prime - Long-term foreign currency counterparty risk rating affirmed at Ba1 - Short-term foreign currency counterparty risk rating affirmed at Not Prime - Brazilian long-term local currency counterparty risk rating affirmed at Aaa.br - Brazilian short-term local currency counterparty risk rating affirmed at BR-1 - Long-term counterparty risk assessment affirmed at Ba1(cr) - Short-term counterparty risk assessment affirmed at Not Prime(cr) - Baseline Credit Assessment affirmed at ba2 - Adjusted Baseline Credit Assessment affirmed at ba2 - Outlook stable The following ratings and assessments of Itau Unibanco S.A. (Cayman Islands) were affirmed: - Long-term local currency counterparty risk rating affirmed at Ba1 - Short-term local currency counterparty risk rating affirmed at Not Prime - Long-term foreign currency counterparty risk rating affirmed at Ba1 - Short-term foreign currency counterparty risk rating affirmed at Not Prime - Long-term counterparty risk assessment affirmed at Ba1(cr) - Short-term counterparty risk assessment affirmed at Not Prime(cr) - Long-term foreign currency senior unsecured MTN rating affirmed (P)Ba2 - Long-term foreign currency deposit note MTN rating affirmed (P)Ba3 The following ratings and assessments of Itau Unibanco Holding S.A. were affirmed: - Long-term local currency issuer rating affirmed Ba3, outlook stable - Short-term local currency issuer rating affirmed Not Prime - Brazilian long-term local currency issuer rating affirmed at A1.br - Brazilian short-term local currency issuer rating affirmed at BR-1 - Long-term foreign currency senior unsecured MTN rating affirmed at (P)Ba3 - Short-term foreign currency senior unsecured MTN rating affirmed at (P)Not Prime - Foreign currency subordinated MTN rating affirmed at (P)B1 - Preferred stock non-cumulative MTN rating affirmed at (P)B2 - Outlook stable The following ratings and assessments of Itau Unibanco Holding S.A. (Cayman Islands) were affirmed: - Long-term foreign currency senior unsecured MTN rating affirmed at (P)Ba3 - Short-term foreign currency senior unsecured MTN rating affirmed at (P)Not Prime - Long-term foreign currency senior unsecured debt rating affirmed at Ba3; outlook stable - Foreign currency subordinated MTN rating affirmed at Ba3 - Foreign currency subordinated MTN rating affirmed at (P)B1 - Foreign currency subordinated debt rating affirmed at B1(hyb) - Preferred stock non-cumulative MTN rating affirmed at (P)B2 - Preferred stock non-cumulative debt rating affirmed at B2(hyb) - Outlook stable ITAUSA SA: Moody's Affirms Ba3 LC Issuer Rating, Outlook Stable --------------------------------------------------------------- Moody's America Latina Ltda., affirmed Itausa S.A.'s (Itausa) Ba3 local-currency issuer rating. Moody's also affirmed Itausa's Brazilian national scale issuer rating at A1.br. The outlook on the ratings remains stable. The rating action follows the announcement by Moody's Investors Service (MIS) of the affirmation of all ratings assigned to its main direct and indirect investments, respectively Itau Unibanco Holding S.A. (IUH) and Itau Unibanco S.A. (IU). RATING RATIONALE Itausa's Ba3 local currency issuer rating and A1.br national scale issuer rating reflects the strength of the earnings recurrence from its main investment, Itau Unibanco S.A. (IU), Brazil's largest private bank by asset size. Because Itausa is an investment holding company, its results are basically derived from its share of income, determined based on the results of its subsidiaries (mainly IUH) and revenues from investments in financial assets. Itausa's Ba3 rating incorporates one notch of structural subordination off the Ba2 rating assigned to IU. The holding company holds, directly and indirectly, 37.39% of IUH's total shares, which represented 91% of the holding company's investment portfolio in Jun 2020. While Itausa also has investments in the consumer goods and infrastructure companies, its investment at IUH has historically represented most of its income. In June 2020, the firm reported recurring income that was 43% lower than the same period in 2019 reflecting the negative effect of the coronavirus outbreak and much lower interest rates on investments. Dividends received by Itausa from IUH accounted for more than 100% of its results, compensating losses reported by other investments in nonfinancial industries, such as Duratex S.A., which produces wooden boards, metal fittings and ceramic ware; Alpargatas S.A. that produces footwear, apparel and accessories, as well as its minority interest at Nova Transportadora do Sudeste S.A. - NTS, which operates gas pipelines. In June 2020, 93.4% of Itausa's unconsolidated total assets comprised investments in subsidiaries and 4.2% accounted for in cash and cash equivalents. While the holding shareholder's equity accounted for 94% of unconsolidated total liabilities, the remaining portion of the liabilities amounted to BRL1.3 billion, composed mainly by local currency debt obligations with maturities in 2022, 2023 and 2024. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A rating upgrade at this moment is unlikely because Itausa's rating is notched off IU's ba2 BCA, which is currently at the same level as Brazil's Ba2 bond rating. Conversely, pressures at the bank's BCA could also affect Itausa's ratings. METHODOLOGY USED The principal methodology used in these ratings was Banks Methodology published in November 2019. Itausa S.A. is headquartered in Sao Paulo, Brazil. The holding company had total consolidated assets of BRL56.5 billion and shareholders' equity of BRL52.9 billion as of June 30, 2020. LISTED OF AFFECTED RATINGS AND ASSESSMENTS The following ratings assigned to Itausa S.A. were affirmed: Long-term global local-currency issuer rating at Ba3; outlook stable Long-term Brazilian national scale issuer rating of A1.br - Outlook: stable SAMARCO MINERACAO: Banco Safra Appeals Rulings to Second Circuit ---------------------------------------------------------------- Lead Plaintiff Banco Safra S.A. appeals to the United States Court of Appeals for the Second Circuit from certain rulings entered in the action styled BANCO SAFRA S.A.-CAYMAN ISLANDS BRANCH, Individually and On Behalf of All Others Similarly Situated v. SAMARCO MINERACAO S.A., BHP BILLITON LIMITED, BHP BILLITON PLC, BHP BILLITON BRASIL LTDA., and VALE S.A., Case No. 16-cv-8800, in the U.S. District Court for the Southern District of New York (New York City). The appealed rulings include the Decision and Order entered in this action on June 18, 2019, and its Judgment on June 26, 2019, granting the Defendants' Motion to Dismiss Lead Plaintiff's Second Amended Complaint with prejudice, and from the Decision and Order entered in the action on October 30, 2019, denying the Motion of Lead Plaintiff for Reconsideration of the Court's June 18, 2019 Decision and Order Granting Defendants' Motion to Dismiss, To Alter or Amend the Judgment Under Rule 59(e) and For Relief Under Rule 60(b), pursuant to Federal Rules of Civil Procedure 8, 9(b) and 12(b)(6), and the Private Securities Litigation Reform Act of 1995, codified in relevant part at 15 U.S.C. Section 78u-4 et seq. As previously reported in the Class Action Reporter, Banco Safra purports to bring the action on behalf of all purchasers of debt securities issued by Samarco [Samarco Bonds] during the Class Period [Oct. 31, 2012 to Nov. 30, 2015], who purchased such securities in domestic U.S. transactions. The Samarco Bonds purchased by Banco Safra were initially offered only outside the United States and Banco Safra acquired the overwhelming majority of bonds in the secondary market. Banco Safra alleges that the Defendants violated U.S. federal securities laws, particularly Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. It also brings state claims against the Defendants for common law fraud, aiding and abetting fraud, and negligent misrepresentations under New York State law. The appellate case is captioned as Banco Safra S.A.-Cayman Islands Branch v. Samarco Mineracao S.A., et al., Case No. 19-3976, in the United States Court of Appeals for the Second Circuit.[BN] Plaintiff-Appellant Banco Safra S.A.-Cayman Islands Branch is represented by: Emma Gilmore, Esq. Jeremy Alan Lieberman, Esq. Jennifer Banner Sobers, Esq. POMERANTZ LLP 600 3rd Avenue New York, NY 10016 Telephone: 212-661-1100 Facsimile: 917-463-1044 E-mail: egilmore@pomlaw.com jalieberman@pomlaw.com egilmore@pomlaw.com Defendant-Appellee Samarco Mineracao S.A. is represented by: Mark Stewart Cohen, Esq. Nathaniel P.T. Read, Esq. COHEN & GRESSER LLP 800 3rd Avenue New York, NY 10022 Telephone: (212) 957-7600 Facsimile: (212)957-4514 Email: mcohen@cohengresser.com nread@cohengresser.com Defendants-Appellees BHP Billiton Limited, BHP Billiton PLC and BHP Billiton Brasil Ltda. are represented by: Brendan P. Cullen, Esq. SULLIVAN & CROMWELL LLP 1870 Embarcadero Road Palo Alto, CA 94303 Telephone: 650-461-5650 E-mail: cullenb@sullcrom.com Defendant-Appellee Vale S.A. is represented by: Christopher Joralemon, Esq. GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, NY 10166 Telephone: 212-351-2668 E-mail: cjoralemon@gibsondunn.com SAMARCO MINERACAO: Brazilians Seek UK Class Suit Over Dam Collapse ------------------------------------------------------------------ Laura Joffre, writing for Bloomberg News, reports that more than 200,000 Brazilians are asking British judges for the right to sue BHP Group, the world's biggest mining company, in U.K. courts over the deadly collapse of a dam five years ago. Residents, businesses and local governments say BHP bears ultimate responsibility for the collapse of the Fundao Dam, which killed 19 people and caused lasting environmental damage. The facility was run by a company jointly owned by a BHP unit and Vale SA. At an eight-day hearing starting July 22 in Manchester, U.K., judges will rule on whether British courts have jurisdiction over the case. If it goes ahead, it would be the biggest class action in U.K. history with the local groups seeking a total of 5 billion pounds ($6.33 billion). This is the latest in a series of group claims brought in the U.K. against British companies for the actions of their foreign units in developing countries. Melbourne-based BHP's shares are listed in both the U.K. and Australia. In a landmark ruling last year, the U.K. Supreme Court allowed Zambian villagers to sue mining company Vedanta Resources Plc in Britiain over pollution caused by a mine, opening the door to similar claims. In June, thousands of Nigerians sought permission to sue Royal Dutch Shell Plc in London over damage caused by oil spills in the Niger Delta. "Until there is a change in corporate behavior, I think this type of litigation is likely to increase," said Tom Goodhead, a lawyer representing the plaintiffs at law firm PGMBM. But BHP said that the Manchester case duplicates legal proceedings in Brazil and shouldn't be allowed to go ahead. "BHP's overarching position remains that the proceedings do not belong in the U.K.," BHP said in a statement. Safety warnings The Fundao Dam was used to store iron ore tailings, a toxic waste produced during the processing of mined mineral. Its collapse destroyed entire villages, polluted rivers and devastated natural habitats. The joint venture, Samarco Mineracao S.A., allegedly ignored safety warnings as it increased iron ore production and tailings storage at the dam, PGMBM said in court filings ahead of the hearing. BHP representatives had been informed of serious structural failings in a report two years earlier, the claimants said. Samarco is jointly owned by BHP Billiton Brasil Ltda and Vale S.A. BHP said it is committed to supporting ongoing remediation and compensation through the Renova Foundation, an out-of-court compensation scheme, to which the company made a provision of $1.7 billion. The Renova Foundation had announced it was suspending payments to thousands of victims it alleged had provided false information, but a Brazilian judge ordered the Foundation to resume aid. Thousands of individual claims against Samarco are ongoing in Brazil. An appeal is currently pending against the dismissal of a class action filed in New York on behalf of Samarco bondholders, while a separate class action by BHP investors has been filed in Australia, according to company filings. Brazilian prosecutors are also continuing to challenge the dismissal of some criminal charges in the case, BHP said in a February statement. Other cases linked to large-scale environmental damage have taken decades to be processed in the Brazilian courts, and the claimants are hoping to obtain quicker results in the U.K. The current proceedings in the British courts don't target Vale. Work to reopen the joint venture in Brazil has been slowed, in part because of measures to respond to Covid-19, BHP said in a separate statement. [GN] TUPY SA: S&P Affirms 'BB' ICR, Off CreditWatch Negative ------------------------------------------------------- S&P Global Ratings removed its ratings on Brazilian auto parts producer Tupy S.A. from CreditWatch with negative implications, affirmed its 'BB' global scale and 'brAAA' Brazil national scale issuer credit ratings, and assigned a negative outlook. At the same time, S&P removed the 'BB' issue rating on the senior notes from CreditWatch negative. The recovery rating remains '3' (65%). S&P said, "Tupy has a solid clientele with long-term contracts mostly in the transportation, infrastructure, and agriculture segments, which we expect to demonstrate good recovery prospects given rising e-commerce penetration, the return of construction, and some resilience in the agriculture business. In addition, we expect the company's product mix to normalize with partially and fully machined products returning to 20%-25% of the total, supporting revenue recovery in the coming quarters." Tupy has also already seen volume recovering in commercial vehicles since June, and for 2021, it should benefit from infrastructure packages in the U.S. and Europe that are under discussion. Tupy has been working on several cost-cutting initiatives and implementing operating efficiency projects, such as a production lines transfer from Mexico to Brazil, resulting in gains of scale, revised third-party contracts, layoffs, and other technology projects. But given such significant declines in volume, 2020 won't make up for the margins drop. S&P said, "We forecast margin contraction of 300-400 basis points in 2020 compared with 2019. However, we believe the company's initiatives, coupled with our expectation of a volume increase in the next quarters, should pave the way for margins to return to precrisis levels of about 13%-15% in 2021 and 2022." S&P expects Tupy to continue benefiting from its comfortable liquidity, given its high cash position and limited short-term debt. The company has an extended average debt maturity of about four years, with its next large debt maturity being the senior notes due in 2024. Tupy won't distribute dividends in 2020 and has the ability to manage capital expenditure in order to improve its liquidity cushion. ========= C H I L E ========= CHILE: Lawmakers Want to Raise US$6 Billion Taxing the Ultra Rich ----------------------------------------------------------------- Eduardo Thomson at Bloomberg News reports that after winning a surprise victory in Congress against the government over pension reform, Chile's opposition are back on the attack. This time they are setting their sights on a tax for the ultra rich. Legislators from the Communist Party to the Christian Democrats submitted a bill that would set a one-time, 2.5 percent levy on individuals with more than US$22 million in wealth, according to Bloomberg News. The bill entered Congress at the commission level, with communist legislator Karol Cariola saying it aims to collect as much as US$6 billion, Bloomberg News notes. The government opposes the proposal, which Finance Minister Ignacio Briones called impractical, Bloomberg News relates. Still, Briones and other ministers had also lobbied against the popular bill allowing people to withdraw money from their pension savings, Bloomberg News notes. That insistence turned into an embarrassing defeat in Congress as some government lawmakers voted with the opposition, Bloomberg News says. Billionaire President Sebastian Pinera won't want that to happen again. "These taxes have been tried before in other places and generally they fail to collect, or collect very little," said Ricardo Escobar, former head of Chile's tax agency in an interview with Pauta Bloomberg radio. The bill doesn't specify how it plans to calculate a person's net worth or how it will take debt into account, Escobar said, Bloomberg News discloses. Chile has the second highest income inequality among OECD member countries, after Costa Rica--Costa Rica was invited to join this year, Bloomberg News says. A study from Boston Consulting Group cited by El Mercurio said that 140 individuals in Chile held about 18 percent of the country's wealth and that about 23,700 people have wealth between US$1 million and US$100 million, Bloomberg News notes. Similar tax measures for the ultra wealthy are being discussed in Argentina, Brazil and Peru, which has led to a jump in the number of people in the region asking for advice on how to relocate to countries with lower tax burdens, Bloomberg News relates. The move is being driven by populism, said Escobar. "If Chilean politicians could ignore the law of gravity they would pass a law tomorrow allowing everyone to fly," he added. LATAM AIRLINES: Gets Additional $1.3BB Bankruptcy Financing ----------------------------------------------------------- Reuters reports that LATAM Airlines, the largest airline group in Latin America, said it had secured an additional $1.3 billion for its financing proposal before a New York bankruptcy court, while adding its unit in Brazil to the debt restructuring process. On July 9, 2020, it said it had secured an additional $1.3 billion in funding from Oaktree Capital Management L.P. and its affiliates, enough to meet the company's financing requirements amid the crisis. The company had already secured $900 million for the process from shareholders Cueto Group and Qatar Airways. "Combined . . . it is hoped that financial support will not be required from governments," the company said in a statement. The company said the proposal still required approval from the U.S. court. LATAM also announced it would add its unit in Brazil to the bankruptcy protection process in the United States, calling the move a "natural step in light of the continuing COVID-19 pandemic." The airline's affiliates in Chile, Colombia, Peru, Ecuador and the United States joined the Chapter 11 process following the company's initial bankruptcy announcement May. "LATAM Airlines Brazil will continue to operate passenger and cargo flights normally, as LATAM Airlines group and its affiliates have done since they entered Chapter 11," the statement said. Three of Latin America's largest airlines--LATAM, Aeromexico and Avianca Holdings--are now in Chapter 11, as governments have avoided potential bailout packages. Analysts expect a changed post-crisis landscape in the region with fewer competitors and higher ticket prices. About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Tourism Falls 88% in July, Month of Reopening ----------------------------------------------------------------- Dominican Today reports that the Dominican Republic received 54,105 tourists in July. The month in which international borders reopened, representing a drop of 88.5% compared to the same period last year, the Central Bank reported, according to Dominican Today. When factoring in the trips of Dominicans residing abroad, the decrease in tourism is 77.1% in July, with 135,163 passengers in the month, the report notes. Accumulations for the year so far show that, 1.5 million non-resident tourists arrived, representing a drop of 63.3% compared to the same period in 2019, the report relays. The Dominican Republic, a country whose economy depends heavily on tourism, kept its borders closed due to the pandemic between March 19 and June 30, the report notes. After the reopening of borders, on July 1, tourism was primarily concentrated from the United States since 85.4% of foreigners arriving in the Caribbean country came from that nation, with 46,207 passengers, the report says. It is followed by travelers from Puerto Rico, a total of 1,856 passengers, and Spain, with 1,709 tourists, the report discloses. In its report, the Central Bank indicates that the tourism sector will be affected in the coming months, mainly by the global evolution of the pandemic, Dominican Today relates. Tourism will also be affected by the eventual availability of an effective vaccine for the coronavirus and the recovery of economic activity of issuing countries, the report says. The Dominican Republic is currently in a state of emergency, and a curfew is in force throughout the country, due to a spike of infections, the report notes. COVID-19 has rebounded due to the reopening of the economy and the crowds that occurred in the rallies before the presidential and legislative elections held July 5, the report relays. According to data released by the Ministry of Public Health, the country registers a total of 81,094 infections, with 1,346 deaths from the disease, the report discloses. According to the official gazette, in the last 24 hours, there were 18 deaths and 595 new infections, the report notes. The Dominican Government accepts tourists from all countries. However, it requires that they present a negative PCR test carried out five days before the trip or failing that it requires a rapid test upon arrival at the airport, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. The Troubled Company Reporter-Latin America reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Standard & Poor's credit rating for Dominican Republic stands at BB- with negative outlook (April 2020). Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). ============= J A M A I C A ============= JAMAICA: Jamaican Dollar Hits Record $150 Against US Currency ------------------------------------------------------------- RJR News reports that the Jamaican dollar continued to depreciate, hitting a record low against the US currency. At the end of trading on Aug. 6, the U.S. dollar was selling for $150.01 against the local currency, according to RJR News. Since the start of July, the dollar has lost seven per cent of its value, the report notes. 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. ======= P E R U ======= COMPANIA DE MINAS: Fitch Downgrades IDR to BB+, Outlook Stable -------------------------------------------------------------- Fitch Ratings has downgraded the Local Currency and Foreign Currency Issuer Default Ratings (IDR) of Compania de Minas Buenaventura S.A.A. (Buenaventura) to 'BB+' from 'BBB-'. The Rating Outlook is Stable. The downgrade is due to the company's weak operating performance during 2019 that resulted in lower volumes and increased production costs, which now places the company's mines in the upper half of the gold cost-curve. Buenaventura's problems have been exacerbated during 2020 by the coronavirus pandemic, which led the Peruvian government to put in place lockdown measures that resulted in the closing of most of the company's mines between March 16 and the middle of May. Buenaventura's capital expenditures and exploration activities are not at levels that would enable the company to increase production to 2018 levels in the near term due to weak cash flow from operations, and operating challenges that continue due to the coronavirus pandemic. Consequently, its mine costs are expected to remain elevated beyond 2021 despite the company's debottlenecking program KEY RATING DRIVERS Declining Output: Buenaventura's consolidated gold production decreased by 43% in 2019 to 191,281 ounces, while its production of silver declined by 23% to 20.3 million ounces. Recovery to 2018 levels was not projected to occur before the coronavirus pandemic, which has only exacerbated volume weakness. Issues contributing to falling volumes are mine depletion, lower head grades and reduced recovery rates. Notable output declines during 2019 occurred at Tambomayo (silver output dropped to 2.5 million ounces (oz.) from 3.9 million oz.), Uchucchacua (silver production fell to 10.6 million oz. from 15.4 thousand oz.) and Orcopampa (gold output dropped to 42 thousand oz. from 116 thousand oz.) Rising Mining Costs: The majority of Buenaventura's gold mines fall within the third-quartile of the global gold cash cost curve, and the trends have been negative. The All-In Sustaining Cost (AISC) of Buenaventura's attributable gold mines increased to USD1,140/ounce in 2019 from USD955/ounce in 2018 despite a USD70 million drop-in exploration activities and sustaining capex at operating units. The increase in costs was primarily a result of the inability to dilute fixed costs due to a sharp decline in attributable gold ounces sold. Positive FCF: Fitch projects that Buenaventura will generate USD20 million of FCF during 2020 despite operating challenges that are projected to lead to an additional 20% decline in gold and silver production. Buenaventura has suspended dividend payments, cut exploration expenditures and scaled back capex. While positive in the near term, the cuts in exploration activities and sustaining capex at existing operating units will make it more difficult for Buenaventura to increase output and lower mining costs in the near-term. Buenaventura's next major greenfield project is San Gabriel. This project is projected to increase the company's gold output by 130 thousand per year and should become operational during late 2024 or early 2025. Modest Leverage: Buenaventura's 'BB+' rating reflects moderate levels of leverage despite operational challenges. Fitch projects that Buenaventura's adjusted EBITDA will fall to USD113 million in 2020 from USD195 million in 2019 before climbing to USD216 million in 2021. These figures include dividends received from affiliate mines less dividends paid to minorities in partially-owned consolidated mines. Buenaventura's adjusted net leverage is projected to increase to 3.5x in 2020 from 2.1x in 2019 before returning to 1.8x in 2021. Leverage should begin to climb in 2022 and 2023 as the company embarks upon its USD400 million San Gabriel greenfield project. Low Life of Mine: Buenaventura's average mine life for its individual operations is low when compared with Fitch's Mining Navigator rating factors and is considered a constraint to the rating. The company's low amount of reserves and resources reported for its mines is partially mitigated by the significant number of hectares and mining concessions it owns, coupled with its proven ability to replenish its reserves for over 60 years. An ability to prove out more reserves and resources to at least 10 years would be viewed favorably. Diversified Operations: Further factored into Buenaventura's 'BB+' rating is the company's portfolio of operations in both base and precious metals, coupled with its minority interest in several quality mines. Buenaventura operates four fully owned mining operations and has controlling interests in two other mining companies that it also operates, El Brocal and La Zanja. It also has three associated mining operations that are not consolidated, Yanacocha (43.65%), Cerro Verde (19.58%), and Tantahuatay (40.10%). Yanacocha produced 527 thousand oz. of gold in 2019 and Cerro Verde produced 455 thousand tons of copper. DERIVATION SUMMARY Buenaventura's 'BB+' rating reflects its position as one of Peru's largest publicly traded precious and base metals miners with a diversified portfolio of operations across a country of vast mineral resources and favorable mining regulations, despite recent social opposition to large scale greenfield projects such as Southern Copper Corporation's (BBB+/Stable) Tia Maria copper project. Buenaventura's ratings are underpinned by its diversified production of base and precious metals similar to Volcan Compania Minera S.A.A. (BB/RWN), and are more diversified than its peer Minsur S.A. (BBB-/Negative). Buenaventura's scale of operations from its direct mines is small compared with larger gold miners such as Kinross Gold Corporation (BBB-/Positive), Yamana Gold Corporation (BBB-/Stable) or Industrias Penoles (BBB/Stable). The company is less dependent upon precious metals than Kinross or Yamana. Similar to the leading silver producer Penoles, Buenaventura has base metals diversification, which mitigates its exposure to precious metals pricing volatility. Buenaventura generated 45% of its EBITDA during 2019 from gold and 51% from base metals. Buenaventura exhibits a very low mine life across its portfolio of mines, which is considered a constraint on its 'BB+' rating. Lower measured ore reserves are common to underground mines in Peru, as it is typically economically inefficient to prove reserves for longer periods due to the high cost involved. Penoles, Yamana, Kinross and AngloGold Ashanti are also underground miners that have reserve levels of less than 10 years. In terms of financial profile, Buenaventura has historically had credit metrics that are stronger than its global gold-rated peers and polymetallic Peruvian peers. Following the sharp drop in volumes in 2019, its cost per ounce of gold increased and its cash flow dropped, resulting in leverage metrics more consistent with miners in the 'BB'-rating category. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Agency's Rating Case for the Issuer -- Gold prices of USD1,700/oz. in 2020, USD1,400/oz. in 2021, USD1,200/oz. in 2022; -- Silver prices of USD17/oz. in 2020, USD17/oz. in 2021, USD17/oz. in 2022; -- Zinc prices of USD2,085/ton in 2020, USD2,100 in 2021, USD2,000 in 2022; -- Lead prices of USD1,800/ton in 2020, USD1,900 in 2021, USD1,900 in 2022; -- Copper prices of USD5,665/ton in 2020, USD5,800 in 2021 and USD6,200 in 2022; -- 22% drop in production in gold and an 27% drop in silver production during 2020; -- 10% increase in production in gold and a 58% increase in silver production during 2021; -- Capex falls to USD70 million in 2020, and then increases to USD120 million in 2021 and USD150 million in 2022; -- No dividends paid in 2020 and dividends of USD40 million in 2021 and 2022. RATING SENSITIVITIES Factors that could, individually or collectively, lead to a positive rating action/upgrade: -- Sustained net debt/EBITDA levels of less than 1.5x; -- Increased output from mines; -- Increase in the mine lives of the company's key operations to more than 10 years; -- Decrease in the AISC of the company's gold mines to the high end of second quartile of the cost curve. Factors that could, individually or collectively, lead to a negative rating action/downgrade: -- Sustained net debt/EBITDA levels of more than 2.5x with an unwillingness or inability to deleverage; -- Inability to replenish reserves and resources leading to a significantly lower mine life at key operations; -- Continued elevated AISC; -- Consistently negative FCF, driving down the company's comfortable liquidity position; -- An adverse change in the overall framework toward mining projects in Peru, and if taxes and royalties turn punitive. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity: Buenaventura ended June 30, 2020 with USD196 million of cash and marketable securities versus USD611 million of total debt, of which 208 million falls due during the next year. The short-term debt primarily consists of a USD121 million financial lease at its hydro-generation plant, Empresa de Generacion Huanza, that comes due in November. This obligation is expected to be either rolled over or refinanced with a loan, private placement or bond. CRITERIA VARIATION Since Fitch updated its Corporate Rating Criteria following the implementation of IFRS, lease related debt for mining companies has been reclassified as 'other liabilities' and has been excluded from leverage calculations. For Buenaventura, Fitch has treated the financing lease of Huanza, Buenaventura's hydroelectric subsidiary, as financial debt in its leverage calculations, as the company intends to refinance this debt during 2020 with either a private placement, bank loan or capital markets bond. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). ===================== P U E R T O R I C O ===================== SPON COMPUTER: Hires Landrau Rivera & Associates as Counsel ----------------------------------------------------------- Spon Computer Corporation seeks authority from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Landrau Rivera & Associates as its legal counsel. Spon Computer requires the counsel to: a) advise Debtor with respect to its duties, powers and responsibilities in this case under the laws of the United States and Puerto Rico in which the debtor in possession conducts its business, or is involved in litigation; b) advise Debtor in connection with a determination whether a reorganization is feasible and, if not, aiding debtor in the orderly liquidation of its assets; c) assist Debtor with respect to negotiations with creditors for the purpose of proposing a viable plan of reorganization; d) prepare on behalf of the Debtor the necessary complaints, answers, orders, reports, memoranda of law and/or any other legal papers or documents; e) appear before the Bankruptcy Court, or any court in which Debtor asserts a claim interest or defense directly or indirectly related to this bankruptcy case; f) perform such other legal services for Debtor as may be required in these proceedings or in connection with the operation of and involvement with debtor's business, including but not limited to notarial services; g) employ other professional services as necessary to complete debtor's financial reorganization with Chapter 11 of the Bankruptcy Code. The firm's hourly rates are as follows: Noemi Landrau Rivera, Esq. $200 Josue A. Landrau Rivera, Esq. $175 Legal and Financial Assistants $75 The firm received a retainer in the amount of $5,000. Landrau Rivera & Associates is disinterested person within the definition provided by Section 101(14) of the Bankruptcy Code, according to court filings. The firm can be reached through: Noemi Landrau Rivera, Esq. Landrau Rivera & Associates Calle Fraser #1423 Urb. Reparto Landraw 00927 San Juan, PR Phone: +1 787-774-0224 About Spon Computer Spon Computer Corporation sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-02906) on July 24, 2020, listing under $1 million in both assets and liabilities. Noemi Landrau Rivera, Esq., at Landrau Rivera & Associates represents the Debtor as counsel. ================= V E N E Z U E L A ================= CITGO PETROLEUM: Oil Execs., Held 2 Years, Go to Trial in Venezuela ------------------------------------------------------------------- Scott Smith at Associated Press reports that a Venezuela court has launched the trial of six US oil executives jailed well over two years after being lured to the South American nation and arrested on corruption charges, an attorney confirmed. The lingering case appears to have taken a new sense of urgency, which defence attorney Jesus Loreto credited to former New Mexico governor Bill Richardson's recent meeting with President Nicolas Maduro in Caracas, according to Associated Press. "We remain very hopeful that things will improve quickly," Loreto told The Associated Press following the trial's opening day. "Yesterday demonstrated a very clear interest in moving the process forward, and rapidly." The report notes that Mr. Loreto said a positive sign was his ability to meet with his client, Tomeu Vadell, for the first time in six months. Each of the accused men said they had been treated with "dignity and decorum," despite a violation of their constitutional rights by holding them for two years without a trial, Loreto said. Their ordeal began in the Fall of 2017, when the six executives of Houston-based Citgo got a call from the head of state-run Venezuelan oil giant PDVSA, Citgo's parent company, summoning them to Caracas for a last-minute budget meeting, the report relays. Once they arrived, armed and masked security agents burst into a conference room and arrested them on embezzlement charges stemming from a never-executed proposal to refinance some US$4 billion in Citgo bonds by offering a 50 percent stake in the company as collateral, the report notes. Maduro at the time accused them of "treason." The men are Gustavo Cardenas, Jorge Toledo, Tomeu Vadell, Jose Luis Zambrano, Alirio Zambrano and Jose Pereira, the report relates. Five of them are Venezuelan-Americans with deep roots in Texas and Louisiana, and one is a permanent US resident, the report notes. They have been held much of the time at the Helicoide Central Penitentiary--a feared Caracas prison operated by Venezuela's intelligence police, the report discloses. The trial of the six men plays out amid hostility between Washington and Caracas, the report says. The Trump administration last year threw its support behind opposition leader Juan Guaido, who declared he was Venezuela's legitimate president, vowing to oust Maduro, the report notes. Guaido blames Maduro for the once wealthy nation's economic and social collapse, while the socialist leader says Washington is manipulating Guaido to steal the nation's vast oil wealth, the report relays. For his part, Richardson in mid-July made a humanitarian visit to Venezuela to urge Maduro to release the men, the report notes. He left without winning their freedom, but officials later put two of them--Cardenas and Toledo--on house arrest in Caracas, while the other four remained in jail, the report discloses. Richardson, a former US ambassador to the United Nations during the 1990's, has opened diplomatic back channels to several hostile governments, including Iran, Cuba and North Korea, to win the release of some 40 Americans, the report recalls. Two other US citizens jailed in Venezuela are former Green Berets--Luke Denman and Airan Berry--were arrested in May while participating in a botched raid organised from neighboring Colombia to oust Maduro, the report notes. Defense attorney Loreto maintains that his client, Vadell, is innocent of the charges and should be freed to return home to his family in the United States, the report relays. "There's no proof, not one bit of proof that they have against Tomeu Vadell," Loreto said. "Not direct or indirect." An outbreak of the novel coronavirus in the Helicoide prison has sicked other inmates who Venezuela opposition leaders call political prisoners, the report notes. The opposition-led National Assembly is demanding that the the UN's Office of the High Commissioner for Human Rights be allowed to inspect the lockup, the report relays. "It's urgent that a commission be allowed entry to evaluate the situation of political prisoners," the National Assembly tweeted. "In addition to being innocent and suffering torture, their health is being ignored in the midst of a pandemic," the report notes. Venezuela's Ministry of Public Information did not immediately respond to an e-mailed request by The Associated Press seeking comment on conditions at the prison. About CITGO Petroleum Citgo Petroleum Corporation is a United States-based refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. Based in Houston, Texas, Citgo is majority-owned by PDVSA, a state-owned company of the Venezuelan government (although due to U.S. sanctions, in 2019, they no longer economically benefit from Citgo.) As reported in the Troubled Company Reporter-Latin America on Troubled Company Reporter-Latin America on June 5, 2020, S&P Global Ratings assigned its 'B+' rating and '1' recovery rating to Citgo Petroleum Corp.'s $750 million senior secured notes due in 2025. The '1' recovery rating indicates S&P's expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a default. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2020. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *