/raid1/www/Hosts/bankrupt/TCRLA_Public/201223.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
Wednesday, December 23, 2020, Vol. 21, No. 256
Headlines
A R G E N T I N A
BANCO HIPOTECARIO: Moody's Ups LT Global FC Deposit Rating to Caa3
B A H A M A S
BAHAMAS: Projecting Debt of $10.4 Billion by Next Fiscal Year
B R A Z I L
BANCO BRADESCO: Moody's Ups LT Global FC Deposit Rating to Ba2
BRAZIL: Economy to Grow at Least 4% in 2021, Says Economy Minister
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: GDP to Decrease 6% by Year End
G U Y A N A
GUYANA: IDB OKs US$34MM Loan to Strengthen Economic Crisis Response
M E X I C O
MEXICO: Minimum Daily Wage Hike Won't Harm Economy, Pres. Says
P A R A G U A Y
BANCO BILBAO: Moody's Upgrades FC Deposit Rating to Ba1
P U E R T O R I C O
AES PUERTO: Moody's Completes Review, Retains Caa1 Rating
U R U G U A Y
URUGUAY: President Warns of Post-pandemic Protectionism
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A R G E N T I N A
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BANCO HIPOTECARIO: Moody's Ups LT Global FC Deposit Rating to Caa3
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Moody's Investors Service has taken rating actions on five
Argentinean financial institutions, including the upgrade to Caa3
from Ca of all long-term foreign currency deposit and foreign
currency senior debt ratings assigned to those entities. The rating
actions were driven by changes in the local currency and foreign
currency country ceilings applied to the jurisdictions of the
entities following the publication of Moody's updated Country
Ceilings Methodology on December 7, 2020. This methodology is
available at: https://bit.ly/3nm8DVh
ENTITIES AFFECTED
Banco de Galicia y Buenos Aires S.A.U.
Banco Hipotecario S.A.
Banco Macro S.A.
Banco Santander Rio S.A.
Tarjeta Naranja S.A.
RATINGS RATIONALE
The rating actions on the five Argentinean financial institutions
were driven by changes in country ceilings under Moody's updated
country ceilings methodology. Country ceilings indicate the highest
rating level that generally can be assigned to the financially
strongest obligations of issuers domiciled in a country.
The updated ceilings methodology has unified deposit ceilings with
the typically higher debt ceilings, whereby LC and FC country
ceilings are no longer distinguished between deposit and debt
ceilings. These changes reflect Moody's view that the risks that
affect access to bank deposits are not materially different from
those that affect the ability of banks and non-banks to service
their debt obligations.
As a result of the methodology change, FC ceilings as applied to
long-term FC deposits have been raised in Argentina, resulting in
upgrades to Caa3 from Ca of the FC deposit ratings of Banco de
Galicia y Buenos Aires S.A.U., Banco Hipotecario S.A., Banco Macro
S.A. and Banco Santander Rio S.A., and upgrades to Caa3 from Ca of
the FC senior debt ratings of Banco Hipotecario S.A., Banco Macro
S.A. and Tarjeta Naranja S.A.. Banco de Galicia y Buenos Aires
S.A.U.and Banco Macro S.A.'s FC senior unsecured debt program
ratings were also upgraded to (P)Caa3 from (P)Ca.
The upgrade of the FC deposit ratings reflects the fact that they
were previously constrained by the country ceiling. In the case of
FC senior debt, despite being previously rated one notch lower than
the FC debt ceiling at Ca, the upgrades reflect our assessment that
the credit risk of debt obligations of Argentinean financial
institutions continue to be in line with that of FC deposits.
OUTLOOK
The rating outlooks for the entities affected by the rating action
were not changed and remain stable.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Following the change in the FC country ceiling and the
corresponding changes to the entities' ratings, the FC ratings of
Banco de Galicia y Buenos Aires S.A.U., Banco Macro S.A., Banco
Santander Rio S.A. and Tarjeta Naranja S.A. continue to be
constrained by the ceiling and therefore an upward/downward
movement of the ceiling could exert upward/downward pressure on the
ratings.
In the case of Banco Hipotecario S.A., its FC rating are no longer
constrained by the country ceilings and therefore an upward
movement of the ceiling would not lead to an upgrade of the bank's
ratings. However, because Hipotecario's FC deposit rating is still
placed at the level of the ceiling, a lowering of the latter would
lead to rating downgrades.
These entities' FC ratings, however, could also be affected by
changes in their respective standalone creditworthiness or their LC
deposit ratings. Upward movement on these issuers' ratings is
unlikely at this point and would be more dependent on an upgrade of
the Government of Argentina's Ca sovereign rating, which has a
stable outlook.
Negative pressures, however, could arise from a downgrade of the
Argentinean sovereign ratings, by further deterioration in the
country's operating environment, or a larger-than-expected
deterioration of the financial institutions' asset quality driven
by the operating conditions.
LIST OF AFFECTED RATINGS
Issuer: Banco de Galicia y Buenos Aires S.A.U.
Long-term global foreign currency deposit rating, upgraded to
Caa3 from Ca, outlook remains stable
Long-term global foreign currency senior unsecured medium-term
note program, upgraded to (P)Caa3 from (P)Ca
Issuer: Banco Hipotecario S.A.
Long-term global foreign currency deposit rating, upgraded to
Caa3 from Ca, outlook remains stable
Long-term global foreign currency senior unsecured debt rating,
upgraded to Caa3 from Ca, outlook remains stable
Issuer: Banco Macro S.A.
Long-term global foreign currency deposit rating, upgraded to
Caa3 from Ca, outlook remains stable
Long-term global foreign currency senior unsecured debt rating,
upgraded to Caa3 from Ca, outlook remains stable
Long-term global foreign currency senior unsecured MTN program,
upgraded to (P)Caa3 from (P)Ca
Issuer: Banco Santander Rio S.A.
Long-term global foreign currency deposit rating, upgraded to
Caa3 from Ca, outlook remains stable
Issuer: Tarjeta Naranja S.A.
Long-term global foreign currency senior unsecured debt rating,
upgraded to Caa3 from Ca
METHODOLOGIES
The principal methodology used in rating Banco Santander Rio S.A.,
Banco Hipotecario S.A., Banco de Galicia y Buenos Aires S.A.U., and
Banco Macro S.A. was Banks Methodology published in November 2019.
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B A H A M A S
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BAHAMAS: Projecting Debt of $10.4 Billion by Next Fiscal Year
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Radio Jamaica News reports that the Bahamas government, in its
Fiscal Strategy Report (FSR), expects debt to reach $10.4 billion
by fiscal year 2021/2022, growing to $10.8 billion in fiscal year
2024/2025.
Though the report also projects growth of more than $2 billion in
gross domestic product (GDP) to more than $14 billion over that
period, the government predicts it will not achieve its 50 per cent
debt target by the 2028/2029 fiscal year, as it projected in its
2019 Fiscal Adjustment Plan, which outlines reasons for a departure
from fiscal targets.
The FSR was tabled in the House of Assembly by Prime Minister and
Minister of Finance Dr. Hubert Minnis.
As reported in the Troubled Company Reporter-Latin America on
Nov. 17, 2020, S&P Global Ratings lowered its long-term foreign
and local currency sovereign credit ratings on the Commonwealth of
The Bahamas to 'BB-' from 'BB'. At the same time, S&P Global
Ratings revised down its transfer and convertibility assessment to
'BB' from 'BB+'. The outlook is negative.
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B R A Z I L
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BANCO BRADESCO: Moody's Ups LT Global FC Deposit Rating to Ba2
--------------------------------------------------------------
Moody's Investors Service has taken rating actions on 28 Brazilian
banks, including the upgrade of the long-term foreign currency
deposit ratings of 27 of them. The rating actions were driven by
changes in the local currency and foreign currency country ceilings
applied to the jurisdictions of the banks following the publication
of Moody's updated Country Ceilings Methodology on 7 December 2020.
This methodology is available at:
https://bit.ly/3qVpLmO
ENTITIES AFFECTED
Banco ABC Brasil S.A.
Banco Alfa de Investimento S.A.
Banco BOCOM BBM S.A.
Banco Bradesco S.A.
Banco BTG Pactual S.A.
Banco BV
Banco Cetelem S.A.
Banco Citibank S.A.
Banco Daycoval S.A.
Banco do Brasil S.A.
Banco do Estado de Sergipe S.A.
Banco do Estado do Para S.A.
Banco do Nordeste do Brasil S.A.
Banco Ford S.A.
Banco Mizuho do Brasil S.A.
Banco Nacional de Desenvolvimento Econômico e Social -- BNDES
Banco Psa Finance Brasil S.A.
Banco RCI Brasil S.A.
Banco Safra S.A.
Banco Santander (Brasil) S.A.
Banco Santander (Brasil) S.A. - Cayman Br
Banco Sofisa S.A.
Banco Yamaha Motor Do Brasil S.A.
Caixa Economica Federal (Caixa)
ICBC do Brasil Banco Multiplo S.A.
ING Bank N.V. - Sao Paulo
Itau Unibanco S.A.
Itau Unibanco S.A. (Cayman Islands)
RATINGS RATIONALE
The rating actions on 28 Brazilian banks and branches were driven
by changes in country ceilings under Moody's updated country
ceilings methodology. Country ceilings indicate the highest rating
level that generally can be assigned to the financially strongest
obligations of issuers domiciled in a country.
The updated ceilings methodology has unified deposit ceilings with
the typically higher debt ceilings, whereby LC and FC country
ceilings are no longer distinguished between deposit and debt
ceilings. These changes reflect Moody's view that the risks that
affect access to bank deposits are not materially different from
those that affect the ability of banks and non-banks to service
their debt obligations.
FOREIGN CURRENCY CEILINGS
As a result of the methodology change, FC ceilings as applied to
long-term FC deposits and debt have been raised in Brazil,
resulting in upgrades of FC deposits for 27 entities and upgrades
of FC counterparty risk ratings of eight entities. As a result of
those changes on long-term ratings, the short-term FC counterparty
risk ratings of eight entities and the short-term deposit ratings
of three entities were also upgraded.
LOCAL CURRENCY CEILINGS
LC ceilings as applied to debt and deposits have been lowered for
Brazil. ING Bank N.V. - Sao Paulo was the only bank affected by
this change, and its LC deposit rating, LC counterparty risk rating
and counterparty risk assessment were downgraded to Baa1 and
Baa1(cr), from A3 and A3(cr). As a full branch of ING Bank N.V.
(Aa3 stable), Moody's does not assign a standalone baseline credit
assessment to ING Bank N.V. - Sao Paulo, and given its parent's Aa3
ratings, its ratings remain constrained by both the LC and FC
country ceilings.
OUTLOOK
The rating outlooks for the banks affected by today's rating action
remain unchanged, with the exception of Banco Cetelem S.A., Banco
do Estado de Sergipe S.A. and Banco Ford S.A. The outlooks on these
three entities' FC deposit ratings were changed to negative from
stable. The previous stable outlook was driven by the fact these
entities' FC deposit ratings were constrained by the country
ceiling and therefore carried the stable outlook of the sovereign,
despite the negative outlook on their remaining ratings.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Following the change in the FC country ceiling and the
corresponding changes of the ratings of Banco ABC Brasil S.A.,
Banco Alfa de Investimento S.A., Banco BOCOM BBM S.A., Banco
Bradesco S.A., Banco BTG Pactual S.A., Banco BV, Banco Cetelem
S.A., Banco Citibank S.A., Banco Daycoval S.A., Banco do Brasil
S.A., Banco do Estado de Sergipe S.A., Banco do Estado do Para
S.A., Banco do Nordeste do Brasil S.A., Banco Ford S.A., Banco
Mizuho do Brasil S.A., Banco Nac. Desenv. Economico e Social --
BNDES, Banco Psa Finance Brasil S.A., Banco RCI Brasil S.A., Banco
Safra S.A., Banco Santander (Brasil) S.A., Banco Santander (Brasil)
S.A. - Cayman Br, Banco Sofisa S.A., Banco Yamaha Motor Do Brasil
S.A., Caixa Economica Federal (Caixa), ICBC do Brasil Banco
Multiplo S.A., Itau Unibanco S.A. and Itau Unibanco S.A. (Cayman
Islands), their ratings are no longer constrained by the country
ceilings and therefore an upward movement of the ceiling would not
lead to ratings upgrades. However, because these entities' FC
ratings are still placed at the level of the ceiling, a lowering of
the latter would lead to rating downgrades.
All ING Bank N.V. - Sao Paulo's ratings continue to be constrained
by both LC and FC ceilings, and therefore an upward/downward
movement of Brazil's country ceilings would lead to an
upgrade/downgrade of the entity's ratings.
These FC deposit and debt ratings, however, could also be affected
by changes in respective banks' Baseline Credit Assessments and/or
their supported local currency deposit ratings. Upward movement on
most of these issuers BCAs and their respective local currency
deposit ratings is unlikely at this point and would be more
dependent on an upgrade of the Government of Brazil's bond ratings,
which has a stable outlook.
Negative pressures, however, could arise from the deterioration of
the banks' asset quality as coronavirus-related loan deferrals come
to an end by Q1 2021. A slower than expected economic recovery in
Brazil could also pressures banks' earnings generation in 2021,
possibly affecting some banks' capitalization ratios.
LIST OF AFFECTED RATINGS
Issuer: Banco ABC Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Alfa de Investimento S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco BOCOM BBM S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba1 from Ba3, outlook remains stable
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Banco Bradesco S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco BTG Pactual S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco BV
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Cetelem S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba1 from Ba3, outlook changed to negative from stable
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Banco Citibank S.A.
Long-term global foreign currency deposit rating, upgraded to
Baa3 from Ba3, outlook remains stable
Short-term global foreign currency deposit rating, upgraded to
Prime-3 from Not Prime
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Banco Daycoval S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco do Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco do Estado de Sergipe S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook changed to negative from stable
Issuer: Banco do Estado do Para S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco do Nordeste do Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Ford S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook changed to negative from stable
Issuer: Banco Mizuho do Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Baa3 from Ba3, outlook remains stable
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency deposit rating, upgraded to
Prime-3 from Not Prime
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Banco Nacional de Desenvolvimento Economico e Social --
BNDES
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Psa Finance Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco RCI Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Safra S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Santander (Brasil) S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba1 from Ba3, outlook remains stable
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Banco Santander (Brasil) S.A. - Cayman Br
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Banco Sofisa S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Banco Yamaha Motor Do Brasil S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba1 from Ba3, outlook remains stable
Long-term global foreign currency counterparty risk rating,
upgraded to Baa3 from Ba1
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-3 from Not Prime
Issuer: Caixa Economica Federal (Caixa)
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: ICBC do Brasil Banco Multiplo S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: ING Bank N.V. - Sao Paulo
Long-term global foreign currency deposit rating, upgraded to
Baa2 from Ba3, outlook remains stable
Long-term global local currency deposit rating, downgraded to
Baa1 from A3, outlook remains stable
Long-term global foreign currency counterparty risk rating,
upgraded to Baa2 from Ba1
Long-term global local currency counterparty risk rating,
downgraded to Baa1 from A3
Long-term counterparty risk assessment, downgraded to Baa1(cr)
from A3(cr)
Short-term global foreign currency deposit rating, upgraded to
Prime-2 from Not Prime
Short-term global foreign currency counterparty risk rating,
upgraded to Prime-2 from Not Prime
Issuer: Itau Unibanco S.A.
Long-term global foreign currency deposit rating, upgraded to
Ba2 from Ba3, outlook remains stable
Issuer: Itau Unibanco S.A. (Cayman Islands)
Long-term global foreign currency deposit note / CD program,
upgraded to (P)Ba2 from (P)Ba3
Outlook Actions:
Issuer: Banco Cetelem S.A.
Outlook changed to Negative from Negative(m)
Issuer: Banco do Estado de Sergipe S.A.
Outlook changed to Negative from Negative(m)
Issuer: Banco Ford S.A.
Outlook changed to Negative from Negative(m)
METHODOLOGIES
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
BRAZIL: Economy to Grow at Least 4% in 2021, Says Economy Minister
------------------------------------------------------------------
Rio Times Online reports that among the 22 Ministers sworn in by
Jair Bolsonaro in January 2019, only two have held the unofficial
title of super-minister.
One of them, Sergio Moro, resigned from the Ministry of Justice
suspecting that the fight against corruption, his main issue, was
not among the government's real priorities, according to Rio Times
Online. The other is Paulo Guedes.
The Minister of Economy was entrusted with implementing the
desired, necessary and essential liberal agenda pledged by
President Bolsonaro during his campaign, the report notes. The
agenda included three major reforms - social security, tax and
administrative - and privatization of most state-owned companies,
the report relays.
According to the report, Mr. Guedes said the Brazilian economy is
expected to grow at least 4% in 2021.
In an interview with Veja, Mr. Guedes affirmed: "Brazil will be the
largest investment frontier in the world. Do you want to invest in
oil? You will. Do you want to invest in natural gas? Yes, you can.
Do you want to invest in railroads? Yes, you can," reports Rio
Times Online.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Jair Bolsonaro is the current president, having
been sworn in on Jan. 1, 2019.
S&P Global Ratings affirmed on December 14, 2020, its 'BB-/B'
long-and short-term foreign and local currency sovereign credit
ratings on Brazil. The outlook on the long-term ratings remains
stable. Fitch Ratings' credit rating for Brazil stands at 'BB-'
with a negative outlook (November 2020). Moody's credit rating for
Brazil was last set at Ba2 with stable outlook (April 2018).
DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
As reported in the Troubled Company Reporter-Latin America, S&P
Global Ratings' stable outlook assumes that timely implementation
of fiscal adjustment and modest economic recovery will help
preserve market confidence and adequate funding conditions for the
government in local markets in the next two years, despite a
sustained increase in the debt burden.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: GDP to Decrease 6% by Year End
--------------------------------------------------
Dominican Today reports that monetary authorities estimate that the
Gross Domestic Product will decrease by 6% by the end of this
year.
According to the report, the prices of food and transportation
bills have generated pressures that have brought inflation to
levels above the authorities' target. At the end of November, the
year-on-year inflation rate stood at 5.26%, a level above the range
of 3 to 5% expected by the Dominican government, according to
Dominican Today.
Food prices alone have increased by 8.8% in the last twelve months,
the report notes. Only in November, when the inflation rate of
food and non-alcoholic beverages was 1.45%, the incidence of
various products' quotes was intense, the report relays. According
to data published by the Central Bank of the Dominican Republic,
tomatoes' prices shot up 10.12%, eggs 8.39%, fresh chicken 7.70%)
and sweet potatoes 5.01%, the report discloses.
Meanwhile, last month there were increases in ticket and
transportation prices and increases in fuel prices, the report
says. Last month, urban bus fares increased by 8.20% and public
car fares by 4.83% concerning the previous month, the report
notes.
After months of economic paralysis to curb the spread of the
COVID-19 pandemic, food and transportation prices began to escalate
beginning in June and have since kept pace, the report relays.
After the months of great confinement, the revival of the economy
was coupled with emergency aid to workers and cash releases
authorized by the authorities to revive the economy, the report
discloses.
As of October, the Dominican Republic's economic activity had
declined by 7.7%, ending some three decades of growth, the report
says. Monetary authorities estimate that the Gross Domestic
Product will decrease by 6% by the end of this year, the report
adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the
island of Hispaniola with Haiti to the west. Capital city Santo
Domingo has Spanish landmarks like the Gothic Catedral Primada de
America dating back 5 centuries in its Zona Colonial district.
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, on December 4, 2020, affirmed its 'BB-'
long-term foreign and local currency sovereign credit ratings on
the Dominican Republic. The outlook remains negative. S&P also
affirmed its 'B' short-term
sovereign credit ratings.
The negative outlook reflects S&P's view that it could lower the
ratings on the Dominican Republic over the next six to 18 months,
given the severe impact of the COVID-19 pandemic on the
sovereign's already vulnerable fiscal and external profiles, as
well as the potential for a weaker-than-expected economic
recovery.
Moody's credit rating for Dominican Republic was last set at Ba3
with stable outlook (July 2017). Fitch's credit rating for
Dominican Republic was last reported at BB- with negative outlook
(May 8, 2020).
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G U Y A N A
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GUYANA: IDB OKs US$34MM Loan to Strengthen Economic Crisis Response
-------------------------------------------------------------------
Guyana will strengthen its public policy and fiscal management
response to the COVID-19 health and economic crisis with a US$34
million loan from the Inter-American Development Bank (IDB).
The operation, the first of a two programmatic-based loan series,
will support Guyana's government efforts to counteract the negative
social and economic impacts caused by the COVID-19 pandemic.
The loan will support macroeconomic stability; facilitate the
availability and timely execution of public resources; enable
policies to streamline the provision of essential goods and
services; and introduce temporary measures to protect the income of
vulnerable households and increase liquidity for businesses.
In addition, Guyana will use IDB financing to strengthen the
execution of public spending and minimize the effects of market and
price disruptions in the procurement of supplies necessary to
address the pandemic. And last, the loan will also support measures
to promote Guyana's economic and fiscal recovery in the
post-pandemic era.
Of the total loan, US$10.2 million will come from the IDB's
concessional lending window and it will carry a maturity and a
grace period of 40 years, and an interest rate of 0.25 percent. The
remaining US$23.8 million will come from the Bank's Flexible
Lending Facility, with a 20-year maturity period, a grace period of
5.5 years and an interest rate based on LIBOR.
===========
M E X I C O
===========
MEXICO: Minimum Daily Wage Hike Won't Harm Economy, Pres. Says
--------------------------------------------------------------
EFE News reports that Mexico's president defended the announcement
of a 15 percent hike in the minimum daily wage, saying it is fair
and necessary and ruling out the possibility of any negative
economic impact.
Andres Manuel Lopez Obrador -- popularly known as AMLO -- made his
remarks at a press conference in the northern state of Sonora, a
day after Mexico's National Minimum Wage Commission (Conasami)
approved the increase, according to EFE News.
"It makes no sense to say this is going to (adversely) affect the
economy. The workers don't count in the economy? What is the
economy? It's the combination of investment, business activity and
workers," AMLO said in response to criticism from business leaders,
the report notes.
"I also think it's an exaggeration to say that businesses are going
to go bankrupt due to that wage increase," the leftist president
said, the report relays.
He added that attempts to negotiate an agreement between his
administration and large companies, which had proposed a 10 percent
wage hike, proved unsuccessful, the report discloses.
Conasami approved an overall increase of 15 percent in Mexico's
minimum daily wage, a move backed by government and labor
representatives but opposed by the business sector, the report
notes.
With this latest increase, the nationwide minimum daily wage climbs
from 123.22 pesos (around $6.10) to 141.70 pesos ($7.08), the
report says.
It follows earlier wage increases of 20 percent in 2020 and 16
percent in 2019 that also were promoted by Lopez Obrador, the
report discloses.
"I regret that no agreement was reached . . . however, I think the
decision that was made was a good one," AMLO said, the report
relays.
Defending the increase, he said "workers' salaries were punished
for more than 30 years (and) there were even years when the minimum
wage hike was lower than inflation," the report notes.
He noted that Mexico's minimum daily wage ranked 12th-highest
worldwide in 1980 but had fallen to No. 81 after several
"neoliberal governments," a reference to predecessors who followed
policies recommended by the International Monetary Fund and the
World Bank, the report notes.
Despite sharp increases over the past three years, Mexico's
government estimates that the country only will have moved up to
the No. 76 spot globally, the report says.
"Workers are going to have an increase that on a global scale still
is shameful. How is it that we're in the G20 group of the world's
largest economies if we occupy the No. 76 position in terms of
salary?" AMLO asked rhetorically, the report notes.
He also demanded an explanation from "those who implemented these
policies in previous governments" on the grounds that an increase
in the minimum daily wage would cause inflation to skyrocket, the
report relays.
"We've been raising the minimum wage for two years and there hasn't
been any (rise in the) inflation" rate, the president said, the
report adds.
===============
P A R A G U A Y
===============
BANCO BILBAO: Moody's Upgrades FC Deposit Rating to Ba1
-------------------------------------------------------
Moody's Investors Service has taken rating actions on eight banks
domiciled in Bolivia, Costa Rica, Dominican Republic, Guatemala,
Paraguay and Uruguay, including the upgrade of the long-term
foreign currency deposit ratings of all of them. The rating actions
were driven by changes in the local currency and foreign currency
country ceilings applied to the jurisdictions of the banks
following the publication of Moody's updated Country Ceilings
Methodology on December 7, 2020. This methodology is available at:
https://bit.ly/3acSttn
ENTITIES AFFECTED
Banco Bilbao Vizcaya Argentaria Paraguay
Banco Continental S.A.E.C.A.
Banco de Costa Rica
Banco de Reservas de la Republica Dominicana
Banco Nacional de Bolivia S.A.
Banco Nacional de Costa Rica
Banco Industrial S.A.
Citibank, N.A. (Uruguay Branch)
A list of Affected Ratings is available at https://bit.ly/34eR5CU
RATINGS RATIONALE
The rating actions were driven by changes in country ceilings under
Moody's updated country ceilings methodology. Country ceilings
indicate the highest rating level that generally can be assigned to
the financially strongest obligations of issuers domiciled in a
country.
The updated ceilings methodology has unified deposit ceilings with
the typically higher debt ceilings, whereby LC and FC country
ceilings are no longer distinguished between deposit and debt
ceilings. These changes reflect Moody's view that the risks that
affect access to bank deposits are not materially different from
those that affect the ability of banks and non-banks to service
their debt obligations.
BOLIVIA
As a result of the methodology change, the Bolivian FC ceiling as
applied to FC deposits and debt has been raised in relation to the
previous FC deposit ceiling and lowered in relation to the previous
FC debt ceiling. This resulted in an upgrade of the FC deposit
rating of Banco Nacional de Bolivia S.A. to B2 from B3, which was
previously constrained by the ceiling, and a downgrade of its
foreign currency counterparty risk rating to B2 from B1, which
continues to be placed at the level of the ceiling.
The rating outlook of Banco Nacional de Bolivia S.A. was not
changed and remains stable.
COSTA RICA
The FC ceiling as applied to FC deposits has been raised in Costa
Rica. This resulted in an upgrade of the FC deposit ratings of
Banco de Costa Rica and Banco Nacional de Costa Rica to B2 from B3,
as these ratings were previously constrained by the ceiling.
The rating outlooks of Banco de Costa Rica and Banco Nacional de
Costa Rica were not changed and remain negative.
DOMINICAN REPUBLIC
The FC ceiling as applied to FC deposits has been raised in
Dominican Republic. This resulted in an upgrade of the FC deposit
ratings of Banco de Reservas de la República Dominicana to Ba3
from B1, as this rating was previously constrained by the ceiling.
The rating outlook of Banco de Reservas de la República Dominicana
was not changed and remains stable.
GUATEMALA
The FC ceiling as applied to FC deposits has been raised in
Guatemala. This resulted in an upgrade of the FC deposit ratings of
Banco Industrial S.A. to Ba1 from Ba2, as this rating was
previously constrained by the ceiling.
The rating outlook of Banco Industrial S.A. was not changed and
remains negative.
PARAGUAY
The FC ceiling as applied to FC deposits has been raised in
Paraguay. This resulted in an upgrade of the FC deposit ratings of
Banco Bilbao Vizcaya Argentaria Paraguay and Banco Continental
S.A.E.C.A. to Ba1 from Ba2, as these ratings were previously
constrained by the ceiling.
The outlook of Banco Bilbao Vizcaya Argentaria Paraguay's ratings
was not changed and remains ratings under review.
The outlook of Banco Continental S.A.E.C.A's FC deposit rating was
changed to negative from stable. The previous stable outlook was
driven by the fact this entity's FC deposit ratings was constrained
by the country ceiling and therefore carried the outlook of the
sovereign, despite the negative outlook on its remaining ratings.
URUGUAY
The FC ceiling as applied to FC deposits has been raised in
Uruguay, along with the LC ceiling applied to deposits and debt. As
a full branch of Citibank, N.A. (Aa3 stable), Moody's does not
assign a standalone baseline credit assessment to Citibank, N.A.
(Uruguay Branch), and given its parent's ratings, the Uruguayan
subsidiary ratings remain constrained by both the LC and FC country
ceilings. Therefore, all of Citibank, N.A. (Uruguay Branch)'s
long-term ratings were upgraded in line with the ceilings change,
and its short-term FC deposit rating was also upgraded due to the
change on the corresponding long-term rating.
The rating outlook of Citibank, N.A. (Uruguay Branch) was not
changed and remains stable.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Following the change in the FC country ceiling and the
corresponding changes of the ratings of Banco Bilbao Vizcaya
Argentaria Paraguay, Banco Continental S.A.E.C.A., Banco de Costa
Rica, Banco de Reservas de la Republica Dominicana, Banco Nacional
de Bolivia S.A., Banco Nacional de Costa Rica and Banco Industrial
S.A., their ratings are no longer constrained by the country
ceilings and therefore an upward movement of the ceiling would not
lead to an upgrade of their ratings. However, as these entities' FC
ratings are still placed at the level of the ceiling, a lowering of
the latter would lead to rating downgrades.
In the case of Banco Nacional de Bolivia S.A., its FC counterparty
risk rating is constrained by the FC ceiling and therefore an
upward/downward movement of the latter would lead to an
upgrade/downgrade of the rating.
All Citibank, N.A. (Uruguay Branch)'s ratings continue to be
constrained by both LC and FC ceilings, and therefore an
upward/downward movement of Uruguay's country ceilings would lead
to an upgrade/downgrade of the entity's ratings.
METHODOLOGIES
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
=====================
P U E R T O R I C O
=====================
AES PUERTO: Moody's Completes Review, Retains Caa1 Rating
---------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of AES Puerto Rico, L.P. and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review in which Moody's reassessed the
appropriateness of the ratings in the context of the relevant
principal methodology, recent developments, and a comparison of the
financial and operating profile to similarly rated peers. The
review did not involve a rating committee. Since January 1, 2019,
Moody's practice has been to issue a press release following each
periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
AES Puerto Rico, L.P's (AES PR or Project or Borrower) Caa1 senior
secured rating primarily reflects the very weak credit quality of
the sole off-taker, Puerto Rico Electric Power Authority (PREPA;
Ca) and the uncertainty around its bankruptcy proceedings. However,
we believe that contract abrogation risk at AES PR remains low
owing to the plant's comparatively low cost structure compared to
PREPA's generation assets in addition to the fact that the plant
has become even more competitive as capacity payments began to
decline materially in 2020. Because of these factors, in the event
that an AES PR payment default occurred, bondholder recoveries
would likely be very high, a key consideration in the Caa1 credit
profile. PREPA remains current on all payments to AES Puerto Rico.
The debt service coverage ratio in FY 2019 was less than 1.0x and
it is anticipated to be also less than 1.0x in FY 2020 given higher
operating costs associated with coal ash disposal which is no
longer permitted to be made on the island, as of April 2019. The
coverage shortfall was covered with cash on hand and is expected to
be similarly covered in FY 2020, since the project has continued to
accumulate cash as equity distributions have not been permitted for
some time.
The principal methodology used for this review was Power Generation
Projects Methodology published in July 2020.
=============
U R U G U A Y
=============
URUGUAY: President Warns of Post-pandemic Protectionism
-------------------------------------------------------
Rio Times Online reports that countries should be wary of turning
to protectionist trade measures in a bid to shore up their
pandemic-hit economies, Uruguay's President Luis Lacalle Pou said
on December 16.
Addressing the 57th Presidents' Summit of South American trade bloc
Mercosur (Southern Common Market), held virtually due to the novel
coronavirus (COVID-19) pandemic, Lacalle Pou urged member states to
avoid "protectionism" as a cure for economies laid low by
lockdowns, according to Rio Times Online.
"The whole world has had governments that must protect their people
and that protection of the people can be transformed into
protectionism," warned Lacalle, 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
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