/raid1/www/Hosts/bankrupt/TCRLA_Public/201109.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
Monday, November 9, 2020, Vol. 21, No. 224
Headlines
A R G E N T I N A
ARGENTINA: Peso Gap Narrows as Central Bank Tightens Purse Strings
MENDOZA PROVINCE: Moody's Rates $590MM Unsec. Notes Due 2029 'Ca'
B R A Z I L
JBS SA: Settles Portion of Pork Price-Fixing Lawsuit
NATURA COSMETICOS: Fitch Ups IDRs to BB & Alters Outlook to Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Embattled Major Airport Project Fights Back
M E X I C O
GRUPO AEROMEXICO: Seeks Approval to Fire 1,830 Workers
P U E R T O R I C O
PUERTO RICO: Pedro Pierluisi Wins Gubernatorial Race
X X X X X X X X
[*] BOND PRICING: For the Week Nov. 2 to Nov. 6, 2020
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A R G E N T I N A
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ARGENTINA: Peso Gap Narrows as Central Bank Tightens Purse Strings
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Jorge Otaola and Walter Bianchi at Reuters report that Argentina's
wide gap between its official peso spot rate and closely watched
prices of the currency in alternative and black markets has
narrowed amid signals the central bank will tighten its funding of
government spending.
The gap between the peso rates has soared this year amid tight
controls on access to dollars, concerns over the economy and money
printing to pay for the indebted country's emergency response to
the COVID-19 pandemic, according to Reuters.
But since a peak around Oct. 23, the black market rate -- once over
140% away from the official spot -- has strengthened, with the gap
on a still high 108%, the report relays. The spot rate meanwhile
weakened a faster-than-normal 0.76% on Monday-Tuesday (Nov.2-3),
the report notes.
Traders and analysts pointed to pledges by the economy ministry to
stop seeking central bank financing, the report discloses.
"They seem to have returned to the correct path indicating greater
fiscal prudence in order to avoid the uncontrolled issuance of
pesos," local consultancy Delphos Investment said, the report
note.
The peso was trading at 78.9 per dollar, while the alternative
blue-chip swap rate was at 148.7 per dollar, the report discloses.
The black market saw pesos trading at 161-165 per dollar, off the
record low of 195 pesos, the report says.
Daniel Artana, an economist, said that Argentina's country risk -
an important reflection of borrowing costs - should drop if the
government was able to rain in its primary deficit, the report
relays.
He added there were "signs that the central bank will not issue
funds to finance the Treasury", which could help deflate the huge
gap between the different peso rates, the report notes.
The South American nation, which only recently emerged from a
sovereign default with a $65 billion foreign debt restructuring,
now faces crunch talks to renegotiate around $44 billion it owes to
the International Monetary Fund, the report says.
"They did a couple of things well and the (markets) stopped
punishing us. They must keep on this path," said Leandro
Ziccarelli, research head at investment training group ICB
Argentina, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. It's capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019 according to the World Bank.
Historically, however, its economic performance has been very
uneven, with high economic growth alternating with severe
recessions, income maldistribution and in the recent decades,
increasing poverty.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8,
2020.
Fitch's credit rating for Argentina was last reported at CCC with
n/a outlook, a rating upgrade from CC on Sept. 11, 2020. DBRS'
credit rating for Argentina is CCC with n/a outlook, a rating
upgrade on Sept. 11, 2020. Moody's credit rating for Argentina was
last set at Ca, a rating downgrade from Caa2 on April 4, 2020, with
a negative outlook.
As reported by The Troubled Company Reporter - Latin American, DBRS
noted that the recent upgrade in Argentina's ratings (September
2020) follows the closing of two debt restructuring agreements
between the Argentine government and private creditors. The first
restructuring involved $65 billion in foreign-law bonds. The deal
achieved the requisite participation necessary to trigger the
collective action clauses and finalize the restructuring on 99% on
the aggregate principal outstanding of eligible bonds. DBRS added
that the debt restructurings conclude a prolonged default and
provide the government with substantial principal and interest
payment relief over the next four years.
DBRS further relayed that Argentina is also seeking a new agreement
with the International Monetary Fund (IMF) to replace the canceled
2018 Stand-by Agreement. Obligations to the IMF amount to $44
billion, with major repayments coming due in 2022 and 2023.
MENDOZA PROVINCE: Moody's Rates $590MM Unsec. Notes Due 2029 'Ca'
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Moody's Investors Service assigned a Ca debt rating to the $590
million senior unsecured notes due 2029 issued by the Province of
Mendoza in exchange of its $590 million senior unsecured notes due
2024. Moody's also affirmed the ca baseline credit assessment and
Ca issuer (domestic and foreign currency) ratings. The outlook on
the ratings remains stable.
Assignments:
Issuer: Mendoza, Province of
Senior Unsecured Regular Bond/Debenture, Assigned Ca
Affirmations:
Issuer: Mendoza, Province of
Issuer Rating, Affirmed Ca
Outlook Actions:
Issuer: Mendoza, Province of
Outlook, Remains Stable
RATINGS RATIONALE
The assignment of a Ca rating to the new $590 million 2029 notes
reflects Moody's expectation that risk to the bondholders of
potential losses remains consistent with the 35%-65% range
associated with Mendoza's Ca issuer rating despite the recent debt
restructuring undertaken by the province.
On October 5, the Province of Mendoza finished restructuring $590
million of its foreign-currency debt issued under foreign
legislation. The Province issued new 2029 notes in exchange of its
2024 notes. The debt restructuring extended upcoming maturities and
reduced interest payments. As a result, the Province's annual debt
service on the newly restructured debt will remain around $20
million until 2023, but will spike markedly thereafter. In Moody's
view, the risk of future debt restructurings remains high as debt
payments are set to rise materially and Mendoza's ability to meet
them remains uncertain because of restricted market access and a
challenging operating environment.
The affirmation of the ca/Ca baseline credit assessment and issuer
ratings of the Province of Mendoza reflects the very close economic
and financial linkages that exist between Argentinaas sovereign and
sub-sovereign governments. Moody's notes that Argentina faces a
series of macroeconomic challenges that include a weak economy now
in its third year of recession, persistently high inflation
bolstered by central bank funding of fiscal deficits, and
heightened pressures on the exchange rate and international
reserves. In Moody's opinion, until the fundamental macroeconomic
problems that continue to weigh on the sovereign credit profile are
addressed, capital market access will remain limited for the
Argentine sub-sovereign governments leading to the elevated credit
risks of Mendoza.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook captures Moody's expectation that economic and
financial pressure faced by Mendoza will not differ materially over
the next 12-18 months and therefore lead to fiscal pressure
consistent with recent results. Mendoza will likely continue to
face a heightened likelihood of further debt mispayments, with
losses to bondholders consistent with levels captured in the Ca
rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the strong macroeconomic and financial linkages between
Argentine Sub-sovereigns and the Government of Argentina, which
currently carries a stable outlook, Moody's does not expect upward
pressures in the near to medium term for the Province of Mendoza.
Nevertheless, Moody's would consider an upgrade if financing
conditions stabilize and the anticipated losses to private
creditors in future debt restructurings are less than currently
forecast.
Alternatively, a downgrade in Argentina's bond ratings and/or
further systemic deterioration could exert downward pressure on the
ratings. Increased idiosyncratic risks could also translate into a
downgrade. Moody's would also downgrade the ratings in the event a
debt restructuring results in losses greater than those reflected
in the current ratings.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
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B R A Z I L
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JBS SA: Settles Portion of Pork Price-Fixing Lawsuit
----------------------------------------------------
fooddive.com reports that JBS USA reached a settlement agreement in
a lawsuit that accuses the company of fixing pork prices for direct
purchasers by conspiring with other meat processors, Meat + Poultry
reported.
This settlement does not resolve the consumer or retailer class
action claims that are consolidated in the lawsuit, according to
fooddive.com.
Terms of the settlement were not disclosed and are still pending
court approval, the report notes. In a statement, JBS USA denied
wrongdoing and said they "believed a settlement was in the best
interests of the company," the report relays.
Antitrust litigation in the food industry has escalated in recent
years. Some executives have been sentenced to prison time after
being found guilty of conspiring to fix prices. Companies have also
incurred large fines, the report discloses.
Dive Insight:
By arriving at this settlement, the world's largest meat producer
is looking to wipe the slate clean and extract itself from
litigation in which it has been embroiled for years, the report
says.
Many meat companies have been accused of collusion, and now the
government is working to hold both companies and individuals who
they believe authorized price-fixing schemes accountable, the
report notes. In recent years, the U.S. Department of Justice, the
U.S. Department of Agriculture and attorneys representing groups of
consumers or business customers have brought cases against beef,
dairy, tuna and chicken producers, the report relays.
Pork producers have not been immune to these pressures and several,
including JBS, have faced ongoing lawsuits accusing them of
artificially raising prices, the report discloses. Last year, a
federal judge dismissed a class action lawsuit that accused several
pork producers -- including Hormel, JBS USA, Smithfield and Tyson
-- of working together to raise prices, the report says. The case
was dismissed because the judge ruled the plaintiffs did not
provide enough evidence of what each defendant did to further a
conspiracy, the report notes. The court allowed the plaintiffs to
amend their complaints, and they did in January. The amended
complaints survived several motions to dismiss, the judge ruled
last month, the report relays.
The action taken by JBS USA by itself in this lawsuit allows the
company to skirt repercussions that other defendants may face.
Rather than arguing in court openly about actions that may be seen
as violating antitrust laws, JBS elected to settle behind closed
doors and avoid a potential guilty verdict, the report notes. Even
without publicly admitting to anything, the company will likely
have to pay a hefty sum, which could be a severe punishment during
the pandemic, since revenue has suffered following plant closures.
But settling this price-fixing case could reduce some of the gray
clouds lingering over the company, the report relays.
This lawsuit is only one of the legal battles the company is
fighting in the United States, the report says. JBS SA, the parent
company of JBS USA, is the majority owner of Pilgrim's Pride, the
report discloses. The chicken company made a plea deal and agreed
to pay a $110.5 million fine for anti-competitive behavior last
month as part of a U.S, the report notes. Justice Department is
looking into price fixing in broiler chicken sales. JBS SA was also
subpoenaed for more information on its beef division. This
followed accusations of anti-competitive behavior after retail beef
prices that rose as shoppers hoarded supplies during the pandemic
did not translate to higher profits to farmers, the report adds.
In addition to these legal issues, JBS USA, which produces about a
fifth of the country's pork, has worked to get production back up
to capacity after shutdowns during the pandemic, the report
relays.
Amid this tumultuous environment, JBS SA has said it is looking to
go public in the U.S. sometime in 2021, the report discloses.
While the company has repeatedly announced plans to IPO, it has
withdrawn those efforts on numerous occasions, the report says.
But listing itself on the stock exchange has the potential to raise
substantial cash for the company, which it could then use to both
scale and position itself on stable financial ground following the
blows dealt by the pandemic and continued lawsuits, the report
adds.
As reported in the Troubled Company Reporter-Latin America on Oct.
19, 2020, S&P Global Ratings, on Oct. 15, 2020, raised its
long-term issuer credit ratings on JBS S.A. (JBS) and JBS USA Lux
S.A. (JBS USA) to 'BB+' from 'BB'. S&P also affirmed its national
scale rating on JBS at 'brAAA'. S&P also raised its senior
unsecured debt ratings on JBS and JBS USA to 'BB+' from 'BB' and
the senior secured debt ratings on JBS USA to 'BBB' from 'BBB-'.
The recovery expectations remain unchanged.
NATURA COSMETICOS: Fitch Ups IDRs to BB & Alters Outlook to Stable
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Fitch Ratings has upgraded Natura Cosmeticos S.A.'s Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) and Local
Currency (LC) IDR to 'BB' from 'BB-', as well as its unsecured
USD750 million notes due 2023 to 'BB' from 'BB-'. The National
Scale Rating has been upgraded to 'AA+(bra)' from 'AA-(bra)'. The
Rating Outlook has been revised to Stable from Negative.
In conjunction with these rating actions, Fitch has upgraded Avon
Products, Inc. (Avon)'s LT IDR to 'BB' from 'B+' and its unsecured
notes to 'BB' from 'B/RR5'. In a related move, Fitch has also
upgraded to 'BB' from 'B+' the LT IDR of Avon International
Operations, Inc. The Rating Outlook is Stable.
The upgrade of Natura Cosmeticos and Avon's ratings reflect the
improved credit profile of Natura & Co S.A. (Natura), the holding
company of the two sister companies, as a result of an equity
inflow of BRL5.6 billion from the recent follow-on transaction. A
major part of the follow-on proceeds was used to optimize capital
structure and to reduce the group's exposure to USD
dollar-denominated debt with the payment of USD900 million (around
BRL5 billion) of Avon's secured notes due in 2022. The remaining
cash will be used to accelerate the group's growth strategy and its
digitalization process.
Natura's leverage profile has significantly improved following the
new equity proceeds as well as relatively better than expected
operating performance during the pandemic so far. Fitch's projected
2020 net adjusted debt/EBITDAR ratio declined to 3.0x, from around
the previously expected 4.5x. The company's refinancing risks and
financial flexibility have also improved following the payment of
Avon's secured notes. Fitch expects Natura to remain proactive on
its liability management strategy to avoid exposure to high
refinancing risks in the medium term as some debt concentration
with both Natura Cosmeticos and Avon's bonds come due in 2023. The
elimination of restrictive covenants related to Avon's secured
notes also aid in the completion of the restructuring of Avon and
Natura's operations in Latin America, allowing the acceleration of
the expected synergies.
KEY RATING DRIVERS
Rating Equalization: Natura Cosmeticos and Avon are separate legal
entities that are both wholly owned by Natura. Fitch assesses the
group on a consolidated basis given the strong operational and
strategic ties, centralized treasury, substantial asset
contribution via the expected recurring synergies and, more
recently, by the tangible financial support in the form of the
payment of Avon's secured notes with the resources from Natura. In
the medium term, Fitch expects that debt at Avon will likely be
replaced by debt with guarantees from the holding Natura&Co.
Deleveraging Trend: Natura has raised in total BRL7.6 billion of
equity during 2020, via a private placement in June 2020 (BRL2
billion) and the recent follow-on (BRL5.6 billion). Fitch's rating
case forecasts Natura's net adjusted debt/EBITDAR ratio declining
to 3.0x by the end of 2020 and to 2.5x by 2021. This represents a
significant improvement from the pro forma adjusted leverage
expected for 2020, after the merger with Avon, was completed of
4.5x. The ongoing improvement in leverage during 2021 also reflects
the increasing operating cash flow generation as the company moves
forward with its integration process, as well as improvements
related to better product mix, brand repositioning for Avon and
increasing overall digitalization.
Challenging Industry Dynamics: The challenges related to
coronavirus and uncertainties around the impact of the second wave
to the group's international operations, including other countries
in Latin America, remains as a negative headwind. The CF&T industry
is attractive due to its resilience throughout economic cycles but
the restrictive lockdowns implemented in some countries had a
direct impact on retail operations. Natura has invested heavily in
digitalization and increasing its online sales that have more than
doubled, which has helped to partially offset the loss from closing
retail stores. Fitch forecasts Natura's consolidated revenue to
grow, compared to a pro forma 2019 figures, in the range of 7%-9%
in 2020, benefiting from FX rates.
Execution Risks: Natura faces the challenge of integrating Avon's
global operations outside of Latin America, more than half of
Avon's revenues, which have been pressured by declining active
representatives and sales volumes in complex emerging markets.
Natura is in the process of capturing synergies, with estimates of
recurring gains of around USD300 million-USD400 million to be fully
captured by 2024. Natura will have to maintain a strong pipeline of
innovation to compete with fast-changing beauty trends and
digitalize to engage more directly with end consumers. Fitch's base
case scenario incorporates an average capex of around BRL1.4
billion per year during 2021-2022, up from the BRL800 million
expected to 2020.
EBITDA Margin Remains Pressured: For 2020, Fitch expects the
group's consolidated EBITDA margin at around 9%, pressured by
Avon's integration. In the medium term, the synergy gains and the
implementation of digitalization are expected to drive EBITDA
margins up to 10.5% in 2021 and 12% in 2022. In comparison, Natura
Cosmeticos had a 14.2% margin in 2018 and 13.7% during 2019, which
compares to an average EBITDA margin of 16.9% between 2015 and
2017. Since 2018, Natura's margin has also been affected by the
acquisition of TBS, that presents lower profitability. Natura's
track record of higher EBITDA margins reflects its strong brand
value and recognition, large operating scale, extensive
direct-sales structure and in-house manufacturing capabilities.
Large Business Scale: The acquisition of Avon significantly
increases Natura's business scale to rank as the fourth largest
pure beauty company globally, enhancing the company's consultant
base to 4.15 million reps and amplifies its product portfolio and
market presence in Latin America. The combined entity benefits from
up-selling opportunities in terms of channel and improves its value
proposition. The expected synergies are to be captured mainly in
Brazil and Latin America as it leverages its combined manufacturing
and distribution capabilities. Fitch considers that an important
part of the savings from the synergies obtained will need to be
reinvested to improve the companies' competitive positions within
the highly competitive global beauty sector. Natura and Avon both
have high exposure to the decline in direct sales and are
attempting to gravitate to an omnichannel strategy.
Expanded Geographic Presence: The purchase of Avon improves
Natura's geographic diversification. Brazil represents the bulk of
Natura's operations and accounted for 44% of revenues during 2019.
During the first six months of 2020, and including Avon's
operations, Brazil's decreased to 31%. As of 2019, Brazil and
Argentina represent 45% of Avon's operating profit, while Europe,
the Middle East and Africa account for 36%, North Latin America
accounts for 11% and Asia Pacific for approximately 8%.
DERIVATION SUMMARY
Natura's BB/AA+(bra)/Stable Rating Outlook reflects the combined
credit quality of Avon and Natura. Natura's 2.5x-3.0x consolidated
net leverage (YE20-YE21) ratio is strong for the rating category
and incorporates execution risks related to the integration of
Avon. Natura has a solid business position in the CF&T industry,
being the fourth largest player, underpinned by strong brand
recognition, large scale, a competitive cost structure and a large
direct-sales structure. The operations of The Body Shop and Aesop
further complement the company's product portfolio and broad
geographical diversification. Natura has the challenge of adapting
its business model to an omnichannel strategy and to boost its
digital platform while integrating Avon.
In terms of comparable companies, Fitch rates Walnut Bidco Plc
(Oriflame) 'B' that also operates in the direct-selling beauty
market. Natura has strong business and financial profile than
Oriflame, which is reflected in the higher rating. Fitch also rates
the cosmetic Anastasia Intermediate Holdings, LLC's (ABH) 'CCC',
which currently presents an unstainable capital structure. The
company has a narrow product and brand profile and has been facing
declining revenue and EBITDA trend as result of the beauty industry
market shifts. In Brazil, Natura also faces strong competition from
a local player, O Boticario (not rated), which presents a stronger
financial profile and solid business profile, supported mainly by
its strong brand and bricks-and-mortar franchise chain.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
-- Fitch expects Natura's revenue to grow around 7%-9% during
2020 and 2021.
-- Consolidated EBITDA margins around 9.2% in 2020 and improving
to around 10.5% in 2021.
-- Reduced capex of around BRL800 million in 2020, with an
increase to around BRL1.5 billion in 2021 and BRL1.4 billion in
2022 to support the digitalization and innovation process.
-- Dividends around 30% of net income in 2020.
-- Natura to maintain its proactive approach on refinancing its
short-term debt.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Consolidated EBITDAR Margins above 14% on consistent basis.
-- Consolidated net adjusted debt/EBITDAR ratio around 2.5x on a
consistent basis.
-- Successful ongoing refinancing strategy with no major debt
maturities within 2 years-3 years.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Consolidated EBITDAR margins declining to below 9% on a
recurrent basis.
-- Consolidated Net adjusted leverage consistently above 3.5x
from 2021 on.
-- Competitive pressures leading to severe loss in market-share
for either Natura and Avon or a significant deterioration in its
brands reputation.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: Natura has a track record of maintaining adequate
liquidity and solid access to the local credit market. As of June
30, 2020, the company had BRL7.4 billion in cash and marketable
securities, which compares with BRL2.6 billion million of
short-term debt, leading to a cash/short-term debt ratio of 2.8x.
This compares with an average ratio of 1.5x from 2015 to 2019. On
June 30, 2020, Natura had total debt of around BRL18.8 billion,
excluding on balance leasing obligations of BRL4.1 billion.
Natura's debt is mainly composed of BRL1.3 billion at the holding
company level, BRL7.6 billion at Natura Cosmeticos (net of
derivatives) and BRL9.9 billion at Avon. Cross-border bonds (63%),
local debentures (22%) and promissory notes (7%) comprise the
company's main debt.
Fitch expects Natura to remain proactive in its liability
management strategy to avoid exposure to high refinancing risks in
the medium term. The company will need to continue to access credit
market during 2021 to extend its debt maturities. Currently, Natura
has the strategy to reduce its exposure to USD-denominated debt and
better match debt to operating cash flow generation currency. As of
June 2020, around 70% of the company's debt was in hard currency.
Natura faces long-term debt amortization of BRL2.3 billion in 2021,
BRL0.5 billion in 2022 (excluding Avon's secured bond), BRL4.6
billion in 2023 and BRL3.7 million from 2024 onwards.
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).
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
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Embattled Major Airport Project Fights Back
---------------------------------------------------------------
Dominican Today reports that the lawyers Emmanuel Esquea Guerrero
and Ariel Valenzuela, representing the company Aeropuerto
Internacional de Bavaro AIB, SAS, subpoenaed the Dominican Civil
Aviation Institute (IDAC) to revoke the resolution that seeks to
declare Bavaro International Airport a public harm, based on the
fact that the agency has "incurred in abuse of power, usurpation of
functions, violation of due process and violation of fundamental
rights."
Through Act 1014/20 of Intimation to Retraction, of November 5,
2020, it is stated that the IDAC violates the principle of legal
security enshrined in article 110 of the Constitution, according to
Dominican Today.
"The IDAC calls into question the current government's efforts to
encourage private investment, illegally intervening in a contract
between the State and Bavaro International Airport, AIB SAS, signed
after it obtained all the corresponding permits to the execution of
the airport infrastructure," the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis
Rodolfo Abinader Corona is the current president of the nation.
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).
===========
M E X I C O
===========
GRUPO AEROMEXICO: Seeks Approval to Fire 1,830 Workers
------------------------------------------------------
Abraham Gonzalez at Reuters reports that Mexican airline Aeromexico
has requested permission from the U.S. bankruptcy court to dismiss
1,830 employees in a cost-saving measure to weather the economic
shocks of the coronavirus crisis, according to court filings.
The proposed layoffs, of 855 unionized workers and another 975 who
do not belong to a union, would save the company $44 million on a
recurring annual basis, Aeromexico said, according to Reuters.
Although the cuts will first cost the company $31 million in
severance benefits, Aeromexico said the expected outcome
"significantly outweighs the program's one-time cost," the report
relates.
Aeromexico sought approval from the court to carry out the layoffs
by the end of the month, according to the court filings, the report
discloses. The company did not specify which positions would be
eliminated.
Aeromexico in June began a Chapter 11 restructuring process in the
United States, becoming the third Latin American airline to file
for bankruptcy protection, and has since received approval for up
to $1 billion in financing, the report recalls.
According to statements filed with the Mexican stock exchange,
Aeromexico already reduced its workforce by nearly 2,000 positions
in the second quarter, and cut another 96 people in the third
quarter, the report notes.
The company posted a net loss of $130 million in the third quarter
under the strain of the coronavirus pandemic, yet said passenger
demand had begun to revive, the report add.
About Grupo Aeromexico
Grupo Aeromexico, S.A.B. de C.V. -- https://www.aeromexico.com/ --
is a holding company whose subsidiaries are engaged in commercial
aviation in Mexico and the promotion of passenger loyalty
programs.
Aeromexico, Mexico's global airline, has its main hub at Terminal 2
at the Mexico City International Airport. Its destinations network
features the United States, Canada, Central America, South America,
Asia and Europe.
Grupo Aeromexico and three of its subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 20-11563) on June 30,
2020. In the petitions signed by CFO Ricardo Javier Sanchez Baker,
the Debtors reported consolidated assets and liabilities of $1
billion to $10 billion.
Timothy Graulich, Esq., of Davis Polk and Wardell LLP, serves as
counsel to the Debtors.
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P U E R T O R I C O
=====================
PUERTO RICO: Pedro Pierluisi Wins Gubernatorial Race
----------------------------------------------------
The Associated Press reports that Pedro Pierluisi of Puerto Rico's
pro-statehood New Progressive Party won a majority of votes to
become the U.S. territory's next governor, according to official
preliminary results released.
Pierluisi received nearly 33% of votes compared with nearly 32%
obtained by Carlos Delgado of the Popular Democratic Party, which
supports the current territorial status, with 100% of precincts
reporting.
The results come four days after Puerto Rico held general
elections, an unusual delay blamed on a record number of early and
absentee votes that overwhelmed officials. It's also the first time
that Puerto Rico's two main parties fail to reach 40% of votes.
"These are times to unite wills and purposes," Pierluisi said in a
statement.
Pierluisi had claimed victory the night of the election as Delgado
refused to concede, noting that his opponent was leading by a very
slim margin and that thousands of votes still had not been
counted.
On Saturday, he congratulated Pierluisi: "The island needs
consensus, dialogue and convergence so that we can face the great
challenges of the future."
Saturday's results were released hours after U.S. President-elect
Joe Biden won the election in the U.S. mainland, a victory that
Pierluisi said would help Puerto Rico finally gain statehood. He
congratulated Biden and said he looked forward to working with him
and Vice President-elect Kamala Harris "for the benefit of all
Puerto Ricans in their fight for progress and equality."
Voters in Puerto Rico participated in a non-binding referendum the
day of the local general election that asked, "Should Puerto Rico
be admitted immediately into the union as a state ?" More than 52%
of voters approved, but any changes to the island's political
status needs approval from U.S. Congress. It is the island's sixth
such referendum.
Biden has promised to work with local government officials who
support a variety of political status for Puerto Rico to "initiate
a just and binding process" for the island to determine its own
status.
Biden also promised to fight against austerity measures sought by a
federal control board overseeing Puerto Rico's finances amid an
economic crisis; accelerate the disbursement of federal funds for
hurricane and earthquake reconstruction; and push for equal funding
of Medicaid, Medicare and Supplemental Security Income, since
Puerto Rico receives less than U.S. states.
Other results released included those of a tight race for the mayor
of Puerto Rico's capital. New Progressive Miguel Romero received
more than 36% of votes, compared with more than 34% obtained by
third-party candidate Manuel Natal of the Citizen Victory Movement.
Natal rejected the results and said not all votes have been
counted.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
Bondholders' Attorneys
Kramer Levin Naftalis & Frankel LLP and Toro, Colon, Mullet, Rivera
& Sifre, P.S.C. and serve as counsel to the Mutual Fund Group,
comprised of mutual funds managed by Oppenheimer Funds, Inc., and
the First Puerto Rico Family of Funds, which collectively hold over
$4.4 billion of GO Bonds, COFINA Bonds, and other bonds issued by
Puerto Rico and other instrumentalities.
White & Case LLP and Lopez Sanchez & Pirillo LLC represent the UBS
Family of Funds and the Puerto Rico Family of Funds, which hold
$613.3 million in COFINA bonds.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Robbins, Russell,
Englert, Orseck, Untereiner & Sauber LLP, and Jimenez, Graffam &
Lausell are co-counsel to the ad hoc group of General Obligation
Bondholders, comprised of Aurelius Capital Management, LP, Autonomy
Capital (Jersey) LP, FCO Advisors LP, and Monarch Alternative
Capital LP.
Quinn Emanuel Urquhart & Sullivan, LLP and Reichard & Escalera are
co-counsel to the ad hoc coalition of holders of senior bonds
issued by COFINA, comprised of at least 30 institutional holders,
including Canyon Capital Advisors LLC and Varde Investment
Partners, L.P.
Correa Acevedo & Abesada Law Offices, P.S.C., is counsel to Canyon
Capital Advisors, LLC, River Canyon Fund Management, LLC, Davidson
Kempner Capital Management LP, OZ Management, LP, and OZ Management
II LP (the QTCB Noteholder Group).
Committees
The U.S. Trustee formed an official committee of retirees and an
official committee of unsecured creditors of the Commonwealth. The
Retiree Committee tapped Jenner & Block LLP and Bennazar, Garcia &
Milian, C.S.P., as its attorneys. The Creditors Committee tapped
Paul Hastings LLP and O'Neill & Gilmore LLC as counsel.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week Nov. 2 to Nov. 6, 2020
-----------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Banco Security SA 3.0 27.4 6/1/2021 CL CLP
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Empresa Provincial de 12.5 0.0 1/29/2020 AR USD
Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD
SACI Falabella 2.3 50.6 7/15/2020 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Plaza SA 3.5 38.3 8/15/2020 CL CLP
Banco Security SA 3.0 5.6 7/1/2019 CL CLP
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Esval SA 3.5 49.9 2/15/2026 CL CLP
*********
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
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Information contained herein is obtained from sources believed to
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The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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