/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/200918.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, September 18, 2020, Vol. 21, No. 188 Headlines A R G E N T I N A BUENOS AIRES: Moody's Affirms Ca Issuer Rating, Outlook Negative TELECOM ARGENTINA: Moody's Affirms Caa3 CFR, Outlook Negative B A H A M A S SANDALS: To Reopen Royal Bahamian Resort in January 2021 B R A Z I L BANCO DE DESENVOLVIMENTO: Fitch Gives 'BB-/B' IDRs, Outlook Neg. CEMIG: Moody's Raises CFR to Ba3/A1.br, Outlook Positive EMBRAER SA: Egan-Jones Lowers Senior Unsecured Ratings to B ENTREVIAS CONCESSIONARIA: Fitch Affirms BB- on BRL1BB Debentures D O M I N I C A N R E P U B L I C [*] DOMINICAN REPUBLIC: Okays 1,195 Passenger & Cargo Flights P A N A M A BANCO LA HIPOTECARIA: Fitch Affirms 'BB+' LongTerm IDR, Outlook Neg P U E R T O R I C O DAVE & BUSTER'S: At Risk of Going Bankrupt IL MULINO: Seven Branches File for Chapter 11 Bankruptcy T R I N I D A D A N D T O B A G O CARIBBEAN AIRLINES: To Expand Partnership With Virgin Atlantic HOME CONSTRUCTION: Liquidators Start Process to Sell 2 Malls TRINIDAD & TOBAGO: Debt Tops $120 Billion at July 2020 - - - - - ================= A R G E N T I N A ================= BUENOS AIRES: Moody's Affirms Ca Issuer Rating, Outlook Negative ---------------------------------------------------------------- Moody's Investors Service affirmed the Ca Issuer rating assigned to the Province of Buenos Aires. The outlook remains negative. The baseline credit assessment is affirmed at ca, the same as the issuer rating. RATINGS RATIONALE The affirmation of the Province of Buenos Aires Ca issuer rating reflects Moody's expectation of losses to bondholders in the 35-65% range in light of the province's ongoing debt restructuring proposal. The rating acknowledges the province's positioning and strategic importance, counterbalanced by immediate credit challenges related to debt affordability. Alike all Regional and Local Governments in Argentina, Buenos Aires is exposed to substantial systemic risks such as a deep economic contraction, exchange rate volatility and high inflation, among others. In addition, the province faces meaningful idiosyncratic challenges such as a liquidity position incommensurate with growing spending pressures and burdensome foreign currency debt service payments. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the strong macroeconomic and financial linkages between the Government of Argentina's and Sub-sovereigns, a downgrade in Argentina's bond ratings and/or further systemic deterioration could exert downward pressure on the ratings. Alternatively, increased idiosyncratic risks could translate into a downgrade. Moody's would also downgrade the ratings in the event a debt restructuring results in losses inconsistent with the current ratings. Moody's does not expect upward pressures in the rated Argentinean sub-sovereigns in the near to medium term. Nevertheless, Moody's would consider stabilizing the outlooks if financing conditions stabilize and the anticipated losses to private creditors from debt restructuring are less than currently forecast. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. TELECOM ARGENTINA: Moody's Affirms Caa3 CFR, Outlook Negative ------------------------------------------------------------- Moody's Investors Service affirmed Telecom Argentina S.A.'s Caa3 corporate family rating (CFR) and maintained its negative outlook. At the same time, Moody's has affirmed YPF Sociedad Anonima's (YPF) Caa3 issuer rating and maintained its negative outlook. RATINGS RATIONALE Telecom Argentina's Caa3 ratings are supported by the company's (1) market position as the largest integrated telecom operator in Argentina, (2) its solid market share of around 37% in cable TV, 54% in broadband, 50% in fixed telephony and 33% in mobile services; and (3) Solid financial metrics for its rating category. The company has low leverage, driven by its strong cash flow from operations. The ratings are mainly constrained by (1) tight regulatory oversight of Argentina's telecom industry, which poses operating risks, (2) concentration of operations in Argentina (Government of Argentina, Ca negative), (3) foreign-currency financing risk, because the company generates most of its revenue in Argentine pesos, and (4) expected negative free cash flow (FCF) generation through 2021. YPF's Caa3 ratings reflect the company's (1) large oil and gas production and its reserve size; (2) good cash generation and credit metrics for its rating category; (3) status as the largest industrial corporate and energy company in the domestic market; and (4) links with the Government of Argentina, its controlling shareholder, which combine YPF's underlying caa3 Baseline Credit Assessment (BCA), which expresses a company's intrinsic credit risk, and its view of moderate support from and high dependence on the Argentine government. The ratings are mainly constrained by YPF's (1) concentration of operations in Argentina, (2) a moderate-to-high foreign-currency risk given that most of the company's debt is denominated in foreign currency, (3) its portfolio of majority mature producing fields, and (4) its rigid labor cost structure. The negative outlook of both Telecom and YPF mirror the negative outlook on Argentina's sovereign rating. Fitch believes that a weaker sovereign has the potential to create a rating drag on companies operating within its borders, and, therefore, it is appropriate to limit the extent to which the company can be rated higher than the sovereign, in line with its cross-sector rating methodology Assessing the Impact of Sovereign Credit Quality on Other Ratings published in June 2019. COMPANY PROFILE Headquartered in Buenos Aires, Argentina, Telecom Argentina S.A. is one of the three major telecommunications service providers in Argentina. The company offers mobile, broadband, fixed and pay-TV services to the residential, corporate and government sectors, and is one of the largest private-sector companies in the country. For the last twelve months ended in June 2020 Telecom's revenue and adjusted EBITDA were ARS232,910 million and ARS89,324 million, respectively. Headquartered in Buenos Aires, Argentina, YPF is an integrated energy company with operations concentrated in the exploration, development and production of crude oil, natural gas and liquefied petroleum gas, and downstream operations engaged in refining, chemicals production, retail marketing, transportation and distribution of oil and petroleum products. The company is 51% owned by the Argentine Estate and had revenues of USD 11.8 billion in the last twelve months as of June 2020 and total assets of USD 23.8 billion as of June 30, 2020. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of Telecom would depend on an upgrade of the Government of Argentina's rating, currently at Ca with a negative outlook. However, for an upgrade to be considered, the company would have to maintain its leading market position while expanding its internal cash flow generation and sustaining its prudent financial policies and healthy credit metrics, such as (1) adjusted debt/EBITDA below 3x; and (2) adjusted retained cash flow/debt above 20%. The ratings could be downgraded (1) if the government of Argentina's Ca rating is downgraded; (2) if its operating margin or market position weakens; (3) an excessive increase in leverage or a deterioration in liquidity could also trigger a rating downgrade. Quantitatively, adjusted debt/EBITDA above 4.5x or retained cash flow/debt below 10% could place the rating under negative pressure. YPF's ratings could be upgraded (1) if there is an upgrade of the government of Argentina's Ca rating and YPF maintains its strong credit metrics for its rating category (2) if the company manages to grow total production while maintaining strong margins and relatively low leverage; (3) if there is a more clear view of the government's energy policies for the next several years and how they could affect YPF. The ratings could be downgraded (1) if YPF is unable to sustain current credit metrics; (2) if the company loses access to credit markets or lacks access to foreign currency to meet its debt service obligations; (3) if the government of Argentina's Ca rating is downgraded. The principal methodologies used in rating YPF Sociedad Anonima were Integrated Oil and Gas Methodology published in September 2019, and Government-Related Issuers Methodology published in February 2020. The principal methodology used in rating Telecom Argentina S.A. was Telecommunications Service Providers published in January 2017. ============= B A H A M A S ============= SANDALS: To Reopen Royal Bahamian Resort in January 2021 -------------------------------------------------------- RJR News reports that Sandals has scheduled the reopening of its Royal Bahamian resort on New Providence for the end of January 2021, making it the last of the Caribbean chain's resorts to open. Sandals' Emerald Bay property on Exuma is scheduled to reopen on November 1, according to RJR News. Sandals said its reopening decisions are being guided by demand, the country's border openings and its travel restrictions, the report notes. The Tourism Minister revealed in a national address that the country plans to reopen the tourism sector on October 15 with restrictions, the report adds. =========== B R A Z I L =========== BANCO DE DESENVOLVIMENTO: Fitch Gives 'BB-/B' IDRs, Outlook Neg. ---------------------------------------------------------------- Fitch Ratings has assigned the following ratings to Banco de Desenvolvimento do Espirito Santo S.A. (Bandes): -- Foreign and Local Currency Long-Term Issuer Default Rating (IDR) 'BB-'; Outlook Negative; -- Foreign and Local Currency Short-Term IDR 'B'; -- National Long-Term Rating 'AA(bra)'; Outlook Stable; -- National Short-Term Rating 'F1+(bra)'; -- Support Rating '3'. KEY RATING DRIVERS IDRs, NATIONAL RATINGS AND SUPPORT RATING The IDRs and National Ratings for Bandes are driven by expected support from its controlling shareholder, the government of the state of Espirito Santo. Fitch believes Bandes is strategically important for the state, as it is the government's development arm, playing an important role in boosting the local economy's growth through lending to small and medium enterprises, as well as providing resources for municipalities within the state. Fitch does not assign a Viability Rating to the institution, given the bank's role as a development agency, for which Fitch cannot form an entirely stand-alone credit view. Fitch views group regulation as a significant factor for Bandes' rating. Since the regulator is very active and imposes some limitations on the actions of the development banks in Brazil, another very important factor is that there would be no impediment on the regulator's part for potential support by the state. Fitch also considers the following in its assessment: the size of the institution relative to the financial capacity of Espirito Santo; the very low potential for selling the institution; the high reputational risk to the state; the high level of operational integration between the state and Bandes; and that the development bank is a state-owned institution. Bandes' Support Rating of '3' reflects moderate probability of support, if needed. Fitch does not assign a Viability Rating to the institution due to its characteristics as a development agency. Fitch recognizes that it would be relatively easy for the state to provide support in case of need considering the financial flexibility of the State of Espirito Santo. The state is rated 'A' in terms of payment capacity (CAPAG) by the Brazilian Treasury. This strong financial flexibility highlights the state's ability to support the institution. The Negative Outlook reflects the sovereign's Outlook. Bandes' main objective is to expand and promote government programs to help develop the regional economy through financing lines to small and medium-sized enterprises and municipalities, especially for investments focused on technology. This objective is in line with the state government's development plan, which is reviewed annually. Bandes' financial profile has no direct rating implications, but it has been comparatively weak in recent years and is currently going through a transformation. The previous strategy to support the primary economic sector has changed along with the new government, which now seeks to support the secondary economic sector (industries and services) through loans to SMEs. This has led to the reclassification of most of the bank's agricultural loans which resulted in a deteriorated financial profile in 2019. Loans classified in the D-H categories increased to 35% from 18% in 2018, while bottom line losses reached BRL 209MM due to higher provision expenses. Despite these losses, the bank continues to be adequately capitalized and maintains sufficient liquidity. Preliminary figures show that the restructuring done in 2019 paved the way for improvement, with asset quality and profitability on an upward trend in the first half of 2020, despite the effects of the coronavirus pandemic on the local economy. As a development bank, Bandes has limitations regarding its funding sources. The credit portfolio has been financed mainly by equity or on-lendings from official entities, such as BNDES (National Economic and Social Development Bank). However, the institution aims to increase and diversify its funding, mainly with credit from international development banks. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: IDRs Potential upgrades to Bandes's IDRs are limited, given the Negative Outlook. National Long-Term Ratings National Long-Term Rating upgrades depend on an improvement in local relativities, which is limited due to the challenging economic environment. SUPPORT RATINGS An upgrade of the SR would depend on an improvement in the State of Espirito Santo's ability or propensity to provide support. Factors that could, individually or collectively, lead to negative rating action/downgrade: IDRs -- Further changes in Brazil's ratings or Outlooks; -- Any changes to the State of Espirito Santo's ability or propensity to support Bandes may result in a rating review. NATIONAL LONG-TERM RATINGS Downgrades depend on the evolution of its local relativities within the challenging economic environment. SUPPORT RATING Bandes's SR would be downgraded to '4' from '3' if Espirito Santo's ability or propensity to provide support decreases. 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. CEMIG: Moody's Raises CFR to Ba3/A1.br, Outlook Positive -------------------------------------------------------- Moody's America Latina upgraded the corporate family ratings of Companhia Energetica de Minas Gerais - CEMIG to Ba3/A1.br from B1/Baa1.br respectively in global and national scale. The baseline credit assessment (BCA) was also upgraded to ba3 from b1. The outlook is positive. Concomitantly, Moody's has upgraded the global scale issuer and senior unsecured ratings of Cemig Distribuicao S.A. (CEMIG D) to Ba3 from B1 and the national scale issuer and senior unsecured ratings to A1.br from Baa1.br. The outlook is positive. Moody's has also upgraded the global scale issuer, senior unsecured, and senior secured ratings of Cemig Geracao e Transmissao S.A. (CEMIG GT) to Ba3 from B1, and the national scale issuer, senior unsecured, and senior secured ratings to A1.br from Baa1.br. The outlook is positive. CEMIG is a government related issuer (GRI). The State of Minas Gerais (B2 stable) is the shareholder with majority control, with 50.97% ownership of common shares and 17.04% of overall shares. CEMIG's Ba3/A1.br ratings consider the following four input factors within Moody's GRI rating methodology: (i) a low-level probability of extraordinary support from the state should CEMIG face financial distress, (ii) Moody's estimates of a very high level of dependence between the company and the state, (iii) Moody's rating of the state of Minas Gerais, and most importantly, (iv) CEMIG's intrinsic credit profile as captured in the baseline credit assessment of ba3. RATINGS RATIONALE The rating actions reflect the track record of substantial improvements in financial policy and risk management over the past three years. The most notable improvement is in the company's liquidity position. As of June 2020, the company reported a consolidated cash position of BRL3.5 billion, and short-term debt maturities of BRL3.0 billion. The cash position was aided by funds related to the successful award of a legal claim related to tax disputes. Furthermore, in July 2020 the company received approximately BRL1.2 billion from a total amount of BRL1.4 billion that it is entitled to receive as per the syndicated regulated support package entitled 'Covid-Account'. Liquidity available is sufficient to cover all debt maturities for the next 18 months. Furthermore, during the pandemic, the company reduced capital expenditures, reduced and delayed dividend distributions, and lengthened debt terms. The ratings further consider maintenance of a low leverage profile, with an expectation of debt/EBITDA below 4.0x and CFO pre-WC/debt between 17%-22%. Factored in the ratings are the off-balance sheet contingent obligations related to financial debt at non-controlled subsidiaries, which cause a 20% deterioration in credit metrics if added in full to the debt balance, the potential expiration of key hydro concessions in 2025, and the turnover in key management positions. Also embedded in the ratings is the view that the company's credit quality is less linked to that of its controlling shareholder, the State of Minas Gerais (B2 stable). The rating actions on Cemig Distribuicao S.A.'s and Cemig Geracao e Transmissao S.A.'s ratings mirrors that of CEMIG. All debts are guaranteed by the holding; there is cross default across the corporate family; and cash flow management is centralized, including with the use of intracompany lending. CEMIG's credit profile reflects its large scale and leading position as one of the largest integrated power utilities in Brazil, holding an installed generation capacity of 6.1 GW, 97% of which is hydro, 9,830 kilometers of transmission lines, and distributing electricity to 8.6 million consumers located in the State of Minas Gerais. The company's credit profile is benefiting from the increased representation of the more predictable regulated electricity distribution business, closer to 50% of total EBITDA from 30% between 2014-2017, as power generation concessions expired, and the company continued investing in its distribution network. The wider service area and more diverse profile of its customer base has contributed positively in lowering the impact of the economic consequences imposed by the spread of the coronavirus, with electricity distribution declining 6% in the second quarter of 2020 relative to same period 2019, while the overall Brazilian system declined 10%. In fact, electricity consumption across the country has demonstrated to be much more resilient than most sectors, and to have reacted quickly, with consumption reaching same levels of 2019 as of the first week of July. Power generation increased 5.4% in the second quarter, function of improved hydrology conditions, but revenue declined approximately 15% with lower demand from industrial customers. The balance was sold in the spot market with prices averaging 75% of that in 2019. Within the power generation sector, Fitch continues to view the large size of the company's energy trading business as a source of potential risk despite showing a proven track record. Its energy purchases between 2020 and 2023 are on average 140% of its generation levels and exposes the company to price risks in the long term, with more than one gigawatt of excess energy supply as of 2024. These risks are magnified by the expiration of the Sa Carvalho, Emborcacao, and Nova Ponte hydro power plants in late 2024 and mid-2025. These power plants represent approximately 50% of CEMIG GT's physical guarantee. Underpinning continued growth of its distribution business is the investment in its network. Annual investments between BRL1.4--1.7 billion will continue to support its regulated asset base and contribute to improvement in operating parameters. Another BRL220-280 million will be spent annually in its transmission business, also supporting revenue growth. Annual spending of less than BRL100 million is allocated for maintenance of the generation infrastructure. CEMIG's leverage has presented stable metrics when adjusted for non-recurring effects. CFO pre-WC/debt has oscillated between 17%-20% since 2016, and Fitch expects that to remain the same over the next three years. If Fitch adjusts the debt balance to incorporate the fact the protections embedded in its foreign currency debt hedging mechanism, that range improves slightly to 18%-22%. The credit view is not constrained by leverage even when adjusted to incorporate the BRL4.6 billion of off-balance sheet guaranteed debt incurred by certain non-controlled subsidiaries. RATINGS OUTLOOK The positive outlook reflects its expectation that CFO-pre-WC to Debt will be above 18% on a sustainable basis and that the company will maintain a prudent financial policy, holding a cash balance in excess of 12-month debt maturities. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS CEMIG's ratings can be upgraded upon continued progress in its liability management strategy, including management of foreign exchange risks and strategies to address large year-specific debt maturities, while maintaining strong credit metrics such that CFO-pre-WC/debt remains above 18% on a sustainable basis. A rating downgrade could happen if Fitch believes that the company's liquidity risks are not being prudently managed or if there is a sustainable increase in leverage such that the company's consolidated CFO pre-WC/debt remains below 15% on a sustainable basis. RATING METHODOLOGY The principal methodology used in rating Cemig Distribuicao S.A. was Regulated Electric and Gas Utilities published in June 2017. The principal methodology used in rating Cemig Geracao e Transmissao S.A. was Unregulated Utilities and Unregulated Power Companies published in May 2017. The principal methodologies used in rating Companhia Energetica de Minas Gerais - CEMIG were Regulated Electric and Gas Utilities published in June 2017, and Government-Related Issuers Methodology published in February 2020. COMPANY PROFILE Headquartered in Belo Horizonte in the State of Minas Gerais, CEMIG is a leading Brazilian integrated utility operating in the sectors of electricity distribution, generation and transmission, with 6.1 gigawatts (MW) in installed capacity and around 9,830 km of transmission lines across the country. Cemig is controlled by the State of Minas Gerais, which owns 50.97% of the company's voting capital. For the 12 months ended June 2020, Cemig had net revenue of BRL23.0 billion and EBITDA of BRL5.0 billion, respectively (according to Moody's standard adjustments). EMBRAER SA: Egan-Jones Lowers Senior Unsecured Ratings to B ----------------------------------------------------------- Egan-Jones Ratings Company, on September 9, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Embraer SA to B from B+. EJR also downgraded the rating on commercial paper issued by the Company to B from A3. Headquartered in Sao Jose dos Campos, State of Sao Paulo, Brazil, Embraer SA manufactures and markets commercial, corporate, and defense aircraft. ENTREVIAS CONCESSIONARIA: Fitch Affirms BB- on BRL1BB Debentures ---------------------------------------------------------------- Fitch Ratings has affirmed Entrevias Concessionaria de Rodovias S.A.'s BRL1.0 billion second debentures issuance due in 2030 at 'BB-'/'AA-(bra)' and has removed them from Rating Watch Negative. In addition, Fitch has assigned a Negative Rating Outlook. RATING RATIONALE The removal of the Negative Watch reflects better traffic performance than Fitch's coronavirus-related impact scenarios. Second quarter traffic reduction was 15.3% in comparison with the same period of 2019, while Fitch's scenario included a fall of 50%. The Negative Outlook reflects the grantor's ongoing delay in signing the amendment to rebalance the prohibition to charge lifted axles of heavy vehicles, following the Brazilian truckers strike in May 2018. If the rebalancing is not settled in a way that preserves the cash balance within the concessionaire until 2024, Entrevias' liquidity will be lower than expected in Fitch cases, which would mean the projected LLCR would no longer be in line with the current ratings. The ratings reflect the operational profile of the concessionaire, with heavy vehicles representing 56% of the paying axles in 2019. The North Section of the toll road, which crosses Ribeirao Preto (SP), has a proven traffic base, and represented 71% of total traffic in 2019. This stretch presents relatively moderate volatility. The South Section, a more recent stretch, is crucial for the region's agricultural production flow. The concession agreement provides for annual tariff increases that track inflation. The senior debt structure is also indexed to inflation and includes a six months reserve account. Until 2024, the obligation to perform a large amount of investments causes debt service coverage ratios (DSCRs) to be below one. Nonetheless, the existent restrictions on cash distribution up to 2024 provide adequate liquidity leading to a LLCR of 1.2x, which is in line with the assigned rating, according to applicable criteria. Fitch's rating case reflects a scenario that includes a 7.4% decline in traffic in 2020, a recovery to 95% of 2019's level in 2021 and a growth trend following Brazilian GDP onwards. Currently, Entrevias has a comfortable cash position to withstand the severe traffic declines. Fitch also ran an additional downside scenario, considering a decline in the volume of traffic of 9.6% in 2020 and the same assumptions of the rating case from 2021 onward. Under this scenario, the minimum LLCR is also 1.2x, and Entrevias still has liquidity to meet debt service in the short term but will need to postpone capex obligations in 2024 to serve the debt. The outbreak of coronavirus and related government containment measures worldwide create an uncertain global environment for the transportation sector. While Entrevias' performance data through most recently available issuer data may not have indicated impairment, material changes in revenue and cost profile are occurring across the transportation sector and will continue to evolve as economic activity and government restrictions respond to the ongoing situation. Fitch's ratings are forward-looking in nature, and Fitch will monitor developments in the sector as a result of the virus outbreak as it relates to severity and duration, and incorporate revised base and rating case qualitative and quantitative inputs based on expectations for future performance and assessment of key risks. KEY RATING DRIVERS Volume Strongly Linked to Economy [Volume Risk - Midrange] Entrevias' concession is divided in two sections: North and South. The North Section, which crosses Ribeirao Preto, has a long traffic track record of operations. The right to collect tolls was granted to Entrevias in May 2018, after the maturity of the prior concession. The South Section, which crosses Marilia, connects the states of Sao Paulo and Parana, and is crucial for agricultural production flow. This stretch started collecting tolls for the first time in October 2018. The Brazilian logistics network narrows competition between toll roads; therefore, the price elasticity is moderate. Fitch expects Entrevias' volume to perform in line with the overall economic outlook given the high percentage of heavy vehicles in both sections. Tariffs Adjusted by Inflation [Price Risk - Midrange] The concession agreement sets forth inflation pass-through annually. Tariffs on the North Section, which have been levied since 1998, have been readjusted accordingly without greatly affecting volumes. The regulatory framework is well-defined and provides for enforceable contracts. Political measures that impacted tariff readjustments have been offset by other mechanisms to preserve the financial/economic balance of the contract. However, it is still pending the signing of the amendment to rebalance the concession agreement regarding the prohibition to collect tolls from lifted axles of heavy vehicles, even though the grantor has already recognized the imbalance. Extensive Capex Plan in the Next Years [Infrastructure Development/Renewal - Midrange] Entrevias is expected to undertake a heavy capex plan in order to comply with the concession agreement, and to accommodate medium-term traffic forecasts in the South Section of the road, in the region of Marilia. Although the company has an adequate infrastructure and renewal plan, it does not have an Engineering, Procurement and Construction (EPC) agreement with a major construction company. However, the construction works are standard, making it easier to replace the contractor if necessary. The concession framework provides for adequate recovery of expenditure via the mechanisms defined in the concession contract to preserve its financial/economic balance. Retained Cash Partially Mitigates Low Coverage Ratios [Debt Structure - Midrange] The debentures are senior and indexed to inflation, which is also used to readjust tariffs, providing a natural hedge to the debt. The structure benefits from a six-month debt service reserve account (DSRA), has strong additional indebtedness limitations, and the amortization profile is back-loaded. The low DSCRs until 2024 are partially mitigated by the cash distribution restriction until 2024. Financial Summary Entrevias' average DSCR is below 1.0x during the debenture tenor. However, the deficit in cash generation is mitigated by the existence of significant retained cash balances in the concessionaire up to 2024 (period of higher investments) and by a minimum LLCR of 1.2x. Entrevias' leverage, measured by net debt/EBITDA, peaks 3.2x considering only the senior debt and 7.0x, when including the deeply subordinated debt, both in Fitch's rating case in 2020. PEER GROUP The closest peer in the region is the Panamanian project ENA Norte Trust's (ENA Norte) notes in Panama (BB/RWN). ENA Norte has a lower minimum rating case LLCR (1.0x), resulting in a standalone credit profile (SCP) of 'b+'. ENA Norte notes' higher final rating follows Fitch's Government-Related Entity criteria (GRE), which factors the likelihood of government support by assessing the strength of the linkage between the issuer and the Panamanian government. A bottom-up approach of up to three notches from the SCP and capped at Panama's sovereign rating minus three notches was applied, resulting in ENA Norte's 'BB' Additionally, Entrevias is comparable with Autopistas del Nordeste (Cayman) Ltd's (AdN) in Dominican Republic, whose notes are rated 'BB-'/ Negative Outlook. AdN has higher coverage ratio than Entrevias, with average DSCR of 1.3x, while Entrevias present minimum LLCR of 1.2x in Fitch's Rating Case. Both issuances have the same rating because AdN's notes are supported by the minimum revenue guarantee paid by the Dominican Republic's government (Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'BB-' / Negative Outlook), which largely mitigates the project's volume and price risks, as toll revenues remain persistently insufficient to cover operational costs and debt service. In Brasil, Entrevias' closest peer is ViaRondon Concessionaria de Rodovia S.A. (ViaRondon, proposed second debentures issuance's Long-Term rating AA-(bra)/ Negative Outlook). Both assets are located in Sao Paulo state and present some years of DSCR below 1.0x in Fitch's Rating Case, which is mitigated by retained cash balance. Both concessionaires present minimum LLCR of 1.2x. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Ratings will be stabilized if the lifted axles rebalance are granted in 2021, in a way that assures that the revenue loss is most compensated by 2024, and traffic decrease in 2020 is not greater than 5%; -- An upgrade is unlikely in the short term. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Compensation for lifted axles is not settled in 2021 or if it is, under worse terms than anticipated; -- Traffic reduction in 2020 greater than 10% along with the expectation of a slow and extended recovery. CREDIT UPDATE Traffic decreased 7.1% in the first half of 2020, when compared to the same period of 2019, with a 1.2% increase in the first quarter and a 15.3% decrease in the second quarter. Heavy vehicles' traffic was more resilient and increased 7.2% and 2.6% in the first and second quarters, respectively, while light vehicles decreased by 6.1% in the first quarter and 37.9% in the second. Entrevias' liquidity remains strong and total cash balance summed up BRL432 million as of June 2020. FINANCIAL ANALYSIS The main assumptions of Fitch's Base Case include: -- Brazilian Inflation: 1.9% in 2020, 3.3% in 2021, 3.5% in 2022 and 3.3% from 2022 onward; -- Brazilian GDP growth: -5.8% in 2020, 3.2% in 2021, 2.5% in 2022 and 1.7% from 2023 onwards; -- Brazilian Interest Policy Rate: 2.0% in 2020, 3.0% in 2021, 4.8% in 2022, 6.0% in 2023, 7.0% in 2024 and 8.0% from 2025 onwards; -- Decrease in traffic of 5.2% in 2020, followed by a recovery to 100% of 2019's level in 2021 and increase of 1.2x the GDP from 2022 onward; -- Increase in toll rates of 2.35% above inflation in 2020, 2021 and 2022 in order to reflect the financial-economic reequilibrium regarding lifted axles and according to inflation in the period from 2023 onwards; -- Investments of BRL1.93 billion between 2020 and 2026. The same assumptions were used in the rating scenario, except for the following: -- Decrease in traffic of 7.4% in 2020, followed by a recovery to 95% of 2019's level in 2021 and increase of 1.0x the GDP from 2022 onward; -- Investments of BRL2.03 billion between 2020 and 2026. The same assumptions were used in the downside scenario, except for the following: -- Decrease in traffic of 9.6% in 2020, followed by a recovery to 95% of 2019's level in 2021 and increase of 1.0x the GDP from 2022 onward; In Fitch's base case, minimum LLCR is 1.4x and maximum leverage (net debt/EBITDA) is 3.0x in 2020, considering only the senior debt, and 6.6x in 2020, including the subordinated debt. In Fitch's rating case, minimum LLCR is 1.2x and maximum leverage (net debt/EBITDA) is 3.2x in 2020, considering only the senior debt, and 7.0x in 2020, including the subordinated debt. In Fitch's downside case, minimum LLCR is 1.2x and maximum leverage (net debt/EBITDA) is 3.4x in 2020, considering only the senior debt, and 7.2x in 2020, including the subordinated debt. DSCRs mentioned on this rating action commentary are calculated according to Fitch's criteria and, therefore, don't include cash balance. 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 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). =================================== D O M I N I C A N R E P U B L I C =================================== [*] DOMINICAN REPUBLIC: Okays 1,195 Passenger & Cargo Flights ------------------------------------------------------------- Dominican Today reports that Civil Aviation Board (JAC) president Jose Marte led the first Ordinary Meeting on issues related to air transport, renewal of permits and authorizations for commercial and cargo flights to and from the Dominican Republic. The JAC authorized a program of 1,195 charter flights, of which 187 correspond to passengers and 1,008 to cargo flights, according to Dominican Today. It also activated the Commission for the Review of Air Service Agreements, as a way to reactivate the economy and contribute to spur the Dominican tourism sector, the report notes. Also approved was a special permit for Air Canada to operate 28 cargo flights from August 2 to December 21, 2020 on the Montreal/Miami/Punta Cana/Montreal route, the report relates. 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). =========== P A N A M A =========== BANCO LA HIPOTECARIA: Fitch Affirms 'BB+' LongTerm IDR, Outlook Neg ------------------------------------------------------------------- Fitch Ratings has affirmed Banco La Hipotecaria, S.A.'s (BLH) Long-Term Issuer Default Rating (IDR) at 'BB+' and Short-Term IDR at 'B'. BLH's IDR's Negative Outlook is in line with the Outlook of its parent Grupo ASSA, S.A., revised in February 2020 and affirmed in March 2020. At the same time, Fitch has affirmed BLH's National Long-Term Rating at 'AA-' and Short-Term Rating at 'F1+'. The Rating Outlook on the National Long-Term Rating is Stable. Fitch has also affirmed the bank's Viability Rating (VR) at 'bb-' and removed the Rating Watch Negative (RWN). BLH's VR was placed on RWN in March 2020 to reflect growing uncertainties from the coronavirus pandemic, which exacerbated near-term asset quality risks due to deferral programs and the risks associated with a possible reduction of the bank's funding options. The RWN removal reflects Fitch's beliefs that negative effects on asset quality will be lower than initially expected due to lower-than-peers adherence to deferral programs (20% as of August 2020 compared with 60% of the banking system) and the payroll deductible nature of the portfolio. It also reflects that lower collection pressures reduce the probability of immediate liquidity impacts, while the entity has adequately increased its on-balance-sheet liquid resources and its access to alternative sources in order to reduce funding and liquidity stress. KEY RATING DRIVERS IDRs, National Ratings and Senior Debt BLH's IDRs, National Ratings and senior debt are based on Fitch's belief that the ultimate parent, Grupo ASSA, would support BLH if necessary. Grupo ASSA (BBB-/Negative) is a regional financial conglomerate that mainly operates in the insurance and banking services, while maintaining some noncontrolling interest in other industries, with a multi-jurisdictional presence. BLH's IDRs reflect Grupo Assa's propensity to support its subsidiary. Fitch views BLH as having a strong relationship with its parent as it operates in a jurisdiction identified as strategically important and in complementary market segments. Fitch's view on Grupo Assa's propensity to support the subsidiary reflects the significant reputational risk that the default of one of its subsidiaries could have on its business. However, BLH has significant independence from its ultimate shareholder, and there is a relatively low level of integration in terms of management and the bank's strategic decisions. VR The bank's VR considers as a high importance factor due to its limited franchise in the Panamanian banking sector, with market shares of total assets, loans and deposits below 1%. Its business model is weighted towards domestic mortgages, while its portfolio is less diversified compared to higher rated peers. Fitch expects profitability to be tested throughout 2020 and into 2021 as mortgage loan yields and net fees decline, and as provisioning levels for nonperforming loans (NPLs) increase. In 1H20, BLH reported an operating profit/risk-weighted assets ratio of 0.9%, which is low compared with regional peers and the system's average. Fitch believes there is little room for profitability deterioration, as the entity's margins are relatively narrow. BLH's funding and liquidity also highly influence its VR. The bank's funding structure is weaker than national peers with a high loan/deposit ratio of around 200% as of June 2020. A higher concentration on wholesale funding (38%) has resulted in stressed covenants, mainly from asset quality growing pressures. Fitch believes refinancing risk of a more limited access to market funding (securitization) has been adequately handled during the crisis, and immediate risks have been partially mitigated by its growing liquidity levels based on cash, deposits in banks and investment portfolio offering coverage of 48.2% of total deposits as of June 2020. BLH's current liquidity level offers a 2x coverage over the one-year credit facilities maturities, also the increased access to funding facilities provides a coverage close to 1.2x for the next 12 months of maturities. Funding and liquidity assessment are also benefited by expected ordinary support from the parent. Fitch estimates that asset quality will be pressured in the short and medium term as credit growth remains slow and borrower repayment capacity continues to be challenged. Its NPL ratio remained low, at 1.1% as of June 2020, which is lower than the banking system's average. As of 2Q20, BLH's common equity Tier 1 ratio of 12.3% (2019: 12.2%) is commensurate to its rating category. Fitch expects capital levels to remain at good levels, even when losses generated by variations in foreign currency (Colombian peso) have pressured capitalization. Fitch believes the impact of the coronavirus pandemic and the sharp drop in oil prices increase peso-depreciation risks, which will keep adding volatility to the entity's capitalization. Debt Ratings The ratings for the marketable securities are aligned with the issuer's short-term ratings. The tranches for the unsecured negotiable notes have the same long-term IDR as the issuer. This is because they have the same probability of default than the issuer. The ratings for both the tranches with guarantees from Grupo ASSA, as well as the negotiable notes guaranteed with mortgage loans, are a notch above the bank's long-term IDR. Particularly, the negotiable notes with the mortgage loan guarantees benefit from an extended warranty. Support Rating The bank's Support Rating (SR) reflects Fitch's opinion on Grupo ASSA's ability and propensity to support BLH if required. According to Fitch's criteria, BLH's IDR of 'BB+' corresponds to a SR of '3'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: -- Changes in BLH's IDR and senior issuances would reflect any changes in its shareholder's risk profile or changes on Fitch's assessment of its ability or willingness to provide support to its subsidiary, which Fitch does not expect in the long term. -- Ratings could be downgraded in response to a change in Fitch's perception of a lower propensity of support to the subsidiary due to the pandemic or due to continued deterioration of the subsidiary or operating environment. -- Negative pressure could be placed on BLH's VR if there were evidence of outsized deterioration in the bank's financial profile reflected in a material deterioration of its asset quality and a significant reduction of its profitability metrics relative to peers. Increasing liquidity or refinancing pressures from lower collections, low access to market debt or the inability to negotiate waivers on covenants if they are breached, which reduces credit facilities access, could also drive a downgrade. -- A downgrade of Grupo ASSA's IDRs would trigger similar rating action on the bank's SR. Also, a change in Fitch's support assessment that implies a reduction in Grupo ASSA's propensity to support the bank; -- A downgrade of the bank's National Ratings could be possible only if Grupo ASSA's IDRs are downgraded; Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: -- BLH's IDR and National Ratings could be affirmed and their Negative Outlook revised to Stable to reflect an improvement in its shareholder's risk profile or changes in Fitch's assessment of its ability or willingness to provide support. -- Fitch does not foresee the possibility of a VR upgrade over the horizon. Any upward actions would require sustained post-pandemic improvement of the operating environment, with a relevant positive effect on bank's company profile and financial fundamentals. -- An upward action on the bank's SR would be triggered by an upgrade of Grupo ASSA's IDRs, which is not foreseeable in the short term; a change in Fitch's support assessment that implies an increase in Grupo ASSA's propensity to support the bank could also trigger an SR upgrade; -- An upward potential of the rating is limited in the short term, given the Negative Outlook on its shareholder's ratings. SUMMARY OF FINANCIAL ADJUSTMENTS Intangibles, deferred tax assets and other deferred assets were deducted from the Fitch Core Capital. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS BLH's ratings are driven by support from its parent, Grupo ASSA. 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 ===================== DAVE & BUSTER'S: At Risk of Going Bankrupt ------------------------------------------ Eliza Ronalds-Hannon of Bloomberg News reports that Dave & Buster's Entertainment Inc. is at risk of becoming bankrupt. The company started out in 1982 as a buddy business in Dallas, where the original Dave handled games and entertainment while Buster managed the kitchen. Almost 40 years later, founders David Corriveau and James "Buster" Corley are long gone but their chain endures: it's grown to 137 locations, gone through two different private equity owners and raised $94 million to pay down debt in a 2014 IPO. But debt is a problem once again for the good-times guys, and the company has warned it may need to file for Chapter 11 bankruptcy to restructure its obligations. Dave & Buster's Entertainment, Inc., (NASDAQ:PLAY), an owner and operator of entertainment and dining venues, said Sept. 11, 2020, said that in its second quarter 2020, which ended on August 2, 2020, second quarter comparable store sales decreased 87%, which was for the entire 115 comparable store sales base, 47 of which were closed. The Company's second quarter 2020 financial results were severely impacted by the effects of the COVID-19 pandemic when compared against the results of the second quarter of 2019. As of March 20, 2020, all of the Company's stores were temporarily closed in compliance with state-by-state COVID-19 mitigation mandates. The Company reopened 1 store on April 30, had re-opened 26 stores by the end of May, 66 stores by the end of June, and ended the second quarter with 84 re-opened stores in 27 states. As of September 9, the Company had reopened 89 stores, all operating under reduced hours and capacity limitations as dictated by each locality, new seating and game configurations to promote social distancing, a temporarily condensed food and beverage menu, and extensive incremental cleaning and sanitation procedures to protect the health and safety of guests and team members. About Dave & Buster's Entertainment Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster's Entertainment, Inc., is the owner and operator of 136 venues in North America that combine entertainment and dining and offer customers the opportunity to "Eat Drink Play and Watch," all in one location. Dave & Buster's offers a full menu of entrÃ©es and appetizers, a complete selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. Dave & Buster's currently has stores in 40 states, Puerto Rico, and Canada. IL MULINO: Seven Branches File for Chapter 11 Bankruptcy -------------------------------------------------------- Dennis Lynch of the New York Post reports that Wainscott Il Mulino outpost and six other restaurants under the brand have filed for Chapter 11 bankruptcy. The filing does not include New York City locations. The seven restaurants are backed by a five-year-old $35 million loan agreement with Benefit Street Partners, now in default. Il Mulino owner Jerry Katzoff said the filing was made to prevent BSP from taking over the properties, which BSP signaled it wanted to do after the restaurants closed in March amid the coronavirus pandemic. Katzoff said there was already tension with BSP over the loan before the pandemic hit. The March 2020 closure effectively sealed the deal on the viability of the restaurants. About Il Mulino Il Mulino owns and operates Italian restaurants throughout the United States. The upscale Il Mulino restaurant chain has filed for Chapter 11 bankruptcy protection for seven of its 16 branches to keep the operation's principal creditor from seizing control. According to FSR, the 16-unit company filed on behalf of seven locations across Miami, Puerto Rico, Las Vegas, Long Island, and Atlantic City. The locations not included in the filing are five New York City stores -- the flagship in Greenwich Village and four locations in Manhattan and two in Florida, one in Tennessee, and another in the Poconos. K.G. IM, LLC, and its affiliates, including IL Mulino USA, LLC, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11723) on July 29, 2020. The other debtors are IM LLC III, IMNYLV, LLC, IM NY, Florida, LLC, IM NY, Puerto Rico, LLC, IMNY AC, LLC, IM Products, LLC, IM Long Island Restaurant Group, LLC, IM Long Island, LLC, IM Franchise, LLC, IM 60th Street Holdings, LLC, IM Broadway, LLC, and IMNY Hamptons, LLC. The Hon. Martin Glenn presides over the case. In the petition signed by Gerald Katzoff, manager, the Debtor was estimated to have $50 million to $100 in assets and $10 million to $50 million in liabilities. Alston & Bird LLP serves as bankruptcy counsel to the Debtors. Traxi LLC and Davis & Gilbert LLP serve as special counsel. ===================================== T R I N I D A D A N D T O B A G O ===================================== CARIBBEAN AIRLINES: To Expand Partnership With Virgin Atlantic -------------------------------------------------------------- RJR News reports that Caribbean Airlines Limited will soon be making a reconnection to London through an expanded partnership with Virgin Atlantic. Trinidad's Guardian Media has learnt that in the proposed plan, Barbados will be the transit point for the flight to London from the Caribbean, according to RJR News. The move comes four years after Caribbean Airlines ended its three weekly flights to London because the route was deemed not profitable, the report notes. The London service was launched in 2012 but performed below expectations, the report discloses. This time around Caribbean Airlines will bee taking a safer approach to the route by partnering with Virgin Atlantic instead of trying to service it alone, the report relays. About Caribbean Airlines Caribbean Airlines Limited - http://www.caribbean-airlines.com/- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. As reported in the Troubled Company Reporter-Latin America on November 2, 2015, RJR News said that Michael DiLollo, Chief Executive Officer of Caribbean Airlines Limited, quit after just 17 months on the job. The 48-year-old Canadian national, citing personal reasons, resigned with immediate effect. His resignation was accepted by the airline's board of directors. Mr. DiLollo was appointed Caribbean Airlines CEO in May 2014, following the sudden resignation of Robert Corbie in September 2013. In early February 2015, Larry Howai, then Finance Minister, told Parliament that unaudited accounts for 2014 showed the airline made a loss of US$60 million, inclusive of its Air Jamaica operations, and the airline planned to break even by 2017. Mr. Howai told the Parliament that a five-year strategic plan had been completed and was in the process of being approved for implementation. In an interview with the Trinidad & Tobago Guardian in early November 2015, Mr. DiLollo said CAL did not need a bailout just yet. Mr. DiLollo said the airline had benefited from extremely patient shareholders for years and he believed the airline was strategically positioned to break even in three years. HOME CONSTRUCTION: Liquidators Start Process to Sell 2 Malls ------------------------------------------------------------ Anthony Wilson at Trinidad Express reports that joint liquidators of CL Financial, David Holukoff and Hugh Dickson, have started a process to sell Trincity Mall and Long Circular Mall, two of the last retail spaces owned by CL Financial subsidiary Home Construction Ltd, multiple sources told the Express Business. The joint liquidators have procured a valuation for the properties, hired a manager for the process and issued a Request for Proposals to some of the country's top commercial property landowners, according to Trinidad Express. Together, the two malls comprise about 650,000 square feet of retail space and house about 400 stores, inclusive of kiosks, the report notes. Before the onset of the Covid-19 pandemic lockdown in March, the occupancy rate at Long Circular Mall was between 75 and 85 per cent, while Trincity Mall was between 80 and 90 per cent, the report relays. But the occupancy levels at both malls have declined substantially as a result of the lockdown in April and May and the current health restrictions aimed at stopping gatherings of more than five people, the report says. One Trincity Mall tenant told Express Business that there are a handful of businesses there that are surviving, including Tru-Value, Pennywise, and the pharmacies in the mall. But the traffic of potential shoppers through Trincity Mall has slowed to a trickle since March, the report discloses. Another tenant, who insisted on anonymity, outlined three reasons why the number of people coming to the Trincity Mall has declined, the report relays. "The cinemas have been closed down; the restaurants at the two food courts are now only allowed to sell food on a grab-and-go basis and Royal Bank has closed its branch at the mall as has Island Finance," said the tenant. "We are on borrowed time, unless we can get the mall management to throw out a survival line for the tenants to hold on to, or until we can see a change in the economy," said Valentino Singh, the owner of Trincity Malls Fan Club, a store that sells football memorabilia for all of the top teams in the world, the report relays. The Trincity mall management, one of the tenants said, has so far refused to budge in responding to the tenants' pleas for a reduction in the monthly Common Area Management (CAM) charges, which covers, among other things, the cost of promoting the mall, security, utilities and the cleaning of the common areas, the report notes. Those charges, which are as high as $17.50 per square foot, were reduced by 50 per cent during the April and May lockdown period, but when the malls in the country were reopened in June, the tenants were asked to pay the full CAM charges, the report discloses. Speaking hypothetically, one tenant who is considering vacating his store, asked: "What is the logic of Trincity Mall charging me $17,500 a month in CAM fees, when since March I would get two paying customers from Monday through Thursday and a few more on Fridays and Saturdays," the report notes. Speaking more broadly, a real estate agent told Express Business that Covid-19 has resulted in a reduction in the value of retail shopping centres in the last six months, the report discloses. The much higher level of uncertainty about the future of the T&T economy and of the incomes of potential shoppers - as well as the health restrictions on congregating in groups of more than five in public spaces - has led to many people holding their hands with regard to shopping decisions, the report relays. In coming up with a price for the two malls, the liquidators would have to use an investment approach to the valuation, said one property valuation expert, which would involve looking at the current income flows from Trincity Mall and Long Circular Mall (including occupancy rates and the common area charges) and forming judgments about their future income flows, the report notes. What the liquidators said In its sixth report to the High Court, dated June 15, 2020, CL Financial joint liquidators David Holukoff and Hugh Dickson, wrote that the Covid-19 pandemic has had a material impact on the subsidiaries of the group, the report notes. "The pandemic has substantially impacted the financial and operational position of a number of trading subsidiaries across the group, including but not limited to: Closure of all non-essential tenants of Trincity and Long Circular shopping malls in line with the Government's stay-at-home order for all non-essential workers. "As two of the largest income-generating assets within the Home Construction Ltd sub-group, the immediate closure of tenants significantly impacted the sub-group's ability to recover rent from its tenants. "Whilst identified as non-essential for the purpose of the stay-at-home order, these are key trading businesses within the group, which materially contribute to profit and cash generation; their closure has had a significant impact on the cash position of the group and posed a tangible threat to HCL's overall solvency." The report relays that the joint liquidators have been busy disposing HCL's assets in order to release value to repay the CL Financial group's creditors, which are in the main the State and state-owned enterprises: * In March, following receipt of an order from the High Court, instructions were issued by the liquidators to HCL to sell 3,490,030 shares in Agostini's Ltd. According to the liquidators' sixth report: "The pandemic limited market demand for the shares during the marketing process. A sale of 50 per cent of the shares was successfully completed in mid-March to release a value of $39 million to HCL; * In July, HCL advertised the sale of land along the East-West Corridor. In the sixth liquidators' report to the High Court, they commented that they "intend to market and sell . . . about 1,700 acres in line with the sale and marketing strategy sanctioned by the Court." * The Minister of Finance, Colm Imbert, announced in a news release that the Government "pursued the acquisition of CL Marine Ltd and its subsidiaries with the liquidators, and created the National Marine and Maintenance Services Company Ltd, a new wholly owned State enterprise for this purpose. The minister's news release did not disclose the cost of the acquisition or the procurement process used by the liquidators. TRINIDAD & TOBAGO: Debt Tops $120 Billion at July 2020 ------------------------------------------------------ Trinidad Express reports that Trinidad and Tobago's (T&T) total net public sector debt rose to $120.5 billion, or 71.7 per cent of the country's gross domestic product at the end of July 2020, according to the Central Bank's published Economic Bulletin for July 2020. T&T's debt in July 2020 is 16.7 per cent higher that at the end of September 2019, when it totalled $103.2 billion, or 63.7 per cent of GDP, according to Trinidad Express. According to the Central Bank report: "In the mid-year budget review (June 2020), it was indicated that the fiscal accounts are anticipated to record a deficit of $14.5 billion in FY2019/20 compared to original estimates of $5.3 billion," the report notes. "The larger deficit is attributable to a falloff in revenue caused by a slump in energy prices, coupled with a rise in expenditure for support measures amid the Covid-19 pandemic," the report relays. "Some of these measures included salary relief and income supports grants, rent relief grants, accelerated income tax and VAT refunds, and additional food cards," the report discloses. The Economic Bulletin also indicated that the country's external debt outstanding increased by 16.5 per cent to US$4.58 billion in July 2020, from US$3.93 billion at the end of September 2019, the report says. The Central Bank said most of the external disbursements originated from three sources: * The Corporación Andina de Fomento (CAF), the Development Bank of Latin America, which lent T&T US$400 million; * Export Finance and Insurance Corporation of Australia, which disbursed US$139.0 million to T&T for the construction and delivery of the two fast ferries to service the inter-island sea bridge and for two patrol vessels; * ExportImport Bank of China, which lent T&T US$31.6 million for the Phoenix Park Industrial Estate. The Bank also noted that T&T's external debt increased due to the issuance of a US$500 million bond on the international capital market in June 2020 and a US$20 million loan from the World Bank in July 2020, the report relays. Half of the proceeds from the US$500 million bond was used to repay a US$250.0 million bond which matured in July 2020, the report notes. The foreign loans contributed to boosting T&T's gross official reserves, the report discloses. The Central Bank said: "At the end of August 2020, gross official reserves amounted to US$7,442.4 million (8.8 months of import cover), which was US$513.4 million higher than the end of 2019. "Over the reference period, gross official reserves were boosted by drawdowns from the HSF and proceeds from central government borrowings," the report says. "The Central Bank continued to intervene regularly in the foreign exchange market and sales to the authorised dealers amounted to US$890 million in the year to August 2020. The increase in gross official reserves suggests that the external accounts registered an overall surplus during the first eight months of 2020," the report relays. The report states that the central government's fiscal accounts registered an overall deficit of $10.7 billion for the period October 1, 2019 to June 30, 2020. The Central Bank said the higher deficit was primarily on account of lower revenues which outpaced the decline in expenditure, the report says. The report discloses that the Economic Bulletin stated: "Central government total revenue collections declined by 30.2 per cent to roughly $25 billion over the nine months to June 2020. The reduction in earnings was reflective of a simultaneous fall-off in both energy and non-energy receipts. "Energy revenue fell by 43.1 per cent to $5.9 billion owing to lower energy commodity prices." According to the Bank, West Texas Intermediate (WTI) crude oil prices averaged US$43.57 per barrel in the first nine months of the 2020 fiscal year compared with US$57.82 per barrel in the corresponding period of 2019, the report relays. Similarly, Henry Hub natural gas prices averaged US$2.01 per British Thermal Units (mmbtu) in the first nine months of 2020, compared with US$3.09 per mmbtu in the corresponding period of 2019, the report notes. ********* 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 * * *