/raid1/www/Hosts/bankrupt/TCRLA_Public/201229.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, December 29, 2020, Vol. 21, No. 260
Headlines
A R G E N T I N A
ARGENTINA: Seeking US$5 Billion From Multilateral Banks for 2021
CHUBUT PROVINCE: Fitch Downgrades Long-Term IDRs to 'RD'
B R A Z I L
AZUL SA: Moody's Upgrades $400MM Sr. Unsec. Notes Rating to Caa1
BANCO MIZUHO: Moody's Affirms Baa3 Deposit Ratings, Outlook Stable
BRAZIL: Automobile Production Recovery Stalls in November
GOL LINHAS: Moody's Upgrades $350MM Notes Rating to Caa1
ODEBRECHT SA: Rebrands as Novonor to Turn Page on Graft History
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Chicken Supply Scarce; Price Rises Before X-mas
DOMINICAN REPUBLIC: Manufacturing Activity Declines in November
M E X I C O
ALPHA HOLDING: Fitch Assigns 'B' Long-Term IDRs, Outlook Negative
GRUPO FAMSA: Fitch Withdraws 'D' LT Local and Foreign IDRs
PATRIMONIO SA: Moody's Withdraws B3 (sf) Rating on PATRICB 07U Cert
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A R G E N T I N A
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ARGENTINA: Seeking US$5 Billion From Multilateral Banks for 2021
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Buenos Aires Times reports that shunned in global financial
markets, Argentina is seeking about US$5 billion for next year from
multilateral organisations other than the International Monetary
Fund as it negotiates a larger refinancing programme with the
Washington-based lender, according to three people familiar with
the plans.
Alberto Fernandez's administration is looking to institutions
including the Inter-American Development Bank and the World Bank,
said the people, who asked not to be named because discussions are
private. Plans are in the early stages, and the borrowing needed is
an approximation that could wind up being more or less depending on
variables like government revenue and exports, the people said,
according to Buenos Aires Times.
The funds would be used to achieve fiscal sustainability as the
nation comes up with a multiyear macroeconomic plan to present for
IMF approval, the people said, the report notes. Fernandez's
government has said it would prefer to avoid asking for fresh funds
from the IMF as it negotiates to delay payments on about US$45
billion from a failed program under the previous government, the
report relays. The nation's access to global debt markets is
limited after a default of its overseas debt in May and a debt
restructuring three months later, the report discloses.
The Argentine Economy Ministry press office declined to comment.
Teams from the Fund and the Fernández government "continue to have
a very constructive and close engagement as the Argentine
authorities continue to outline their economic plans," the IMF
press office said in a statement to Bloomberg News, declining to
comment on specific financing needs, the report relays.
It's unclear whether lending from the IDB and World Bank will be
enough, and Argentina may still need to come back to the IMF before
the full programme is negotiated, the report notes. IDB lending to
Argentina has recently averaged US$1.36 billion per year and World
Bank loans about US$1 billion - less than half the funding
Argentina plans to seek in 2021, the report says. Both
institutions concentrate their lending on specific social
programmes, infrastructure or projects over years rather than to
cover shorter-term fiscal needs, the report discloses.
Project Financing
Argentina is in talks with the IDB for infrastructure project
financing and also is discussing a policy-based loan, a type of
credit that provides flexible funding to support reforms, the
people said, the report relays. The IDB is working to support
Argentina's request, and Richard Martinez, the bank's
vice-president for countries, is coordinating conversations among
the lender, Argentina and the IMF, according to one of the people,
the report notes.
Martinez, who joined the IDB just last month, knows the IMF
officials well from his work as Ecuador's finance minister over the
past two years, the report discloses. The nation in 2019
negotiated a US$4.2-billion programme with the Fund that was part
of a broader effort with almost US$2 billion more from the IDB,
World Bank, the regional development bank known as the CAF and the
Latin American Reserve Fund, the report notes. That IMF programme
was overwhelmed once the pandemic hit and replaced earlier this
year, the report says.
"The IDB will continue working closely with Argentina and the IMF
as discussions proceed," the bank's press office said in a
statement, without providing further details, the report relays.
If Argentina asks the World Bank to significantly increase support
for Argentina, any decision would be "assessed on the basis of the
macro-framework at the time of the request as well as our
availability of resources given the tremendous demands on our
institution from countries around the world during these difficult
times," said Jordan Schwartz, the bank's director for the nation,
the report notes.
The lending that the World Bank has planned for next year is
focused on social protection to help poor households deal with the
pandemic, and infrastructure expansion and improvement, Schwartz
said, the report discloses.
As part of their negotiations, Argentina has asked the IMF for an
extended fund facility, a programme that would give the country at
least a four-and-a-half year grace period to start paying its debt
back once it's approved, the report notes. Argentina seeks to
reach a deal with the Fund before April, 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.
CHUBUT PROVINCE: Fitch Downgrades Long-Term IDRs to 'RD'
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Fitch Ratings has downgraded the Province of Chubut's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) to 'RD'
from 'C' on the recent completion of its consent solicitation. In
addition, Fitch lowered Chubut's Standalone Credit Profile (SCP) to
'rd' from 'c'. Fitch considers the recent conclusion of this debt
restructuring process, which closed on Dec. 15, 2020, as a
distressed debt exchange (DDE) under Fitch’s DDE criteria.
Subsequently, Fitch has upgraded Chubut's IDRs to 'CC' and raised
the SCP to 'cc' post settlement of the consent solicitation. Fitch
relied on its rating definitions to position the Province's ratings
and SCP.
In addition, Fitch has downgraded the province's 7.75% original
senior secured notes for USD650 million due 2026 (Bocade notes) to
'D' from 'C' as these notes were subject to a DDE; subsequently
Fitch has upgraded to 'CC' from 'D' the 7.75% amended senior
secured notes for USD650 million with new due date of 2030,
following the recent conclusion of the province's external debt
restructuring process. The bonds are rated at the same level as the
province's IDRs.
KEY RATING DRIVERS
The province of Chubut completed its DDE on Dec. 17, 2020. The
province received and accepted a total of USD560.7 million of its
USD622.9 million 7.75% senior secured notes due 2026, or 90.02% of
acceptance, above the threshold set in the collective action
clauses (CACs). The rating actions reflect Chubut's recent
successful external debt restructuring process, continued high
refinancing risk, its exposure to Argentina's challenging macro and
public finance environment, sharp fiscal challenges that have
deteriorated its operating margin and hinders its liquidity metrics
amid the pandemic and worsening economy.
The debt restructuring provides some external debt service relief
for the province until YE21. Despite this relief, however, the 'CC'
IDRs reflect deep liquidity and tight budgetary flexibility. These
are driven by fiscal challenges at the national and local level,
which continue to hinder the province's repayment capacity. These
challenges include an economic recession greatly exacerbated by the
coronavirus pandemic, and the province's inability to access
external markets to address financing needs. Additionally, the
ratings reflect the province's tight liquidity coverage ratios
(below 1.0x), which, according to Fitch's rating case forecast,
should continue over the next three years.
The main amendments to Bocade notes included an extension to the
notes maturity (from July 2026 to July 2030) to 40 installments
from 24, amortization profile (smooth out principal repayments
throughout the life of the amended notes, with small payments in
2021 and in the past two years) and easing of the interest rate
conditions (step-up at 7.24% up to October 2021, and 7.75%
thereafter). The DDE also involves revised covenants related to
royalties coverage amount and waiver of trigger events, such as the
one that was triggered in July 2020, among the most relevant. With
the amended structure, the province will achieve a maximum
cumulative debt service relief of USD169 million by October 2023.
In addition, modifications were made to the hydrocarbon royalties'
collateral pledge, increased in 27.85%, as well as reserve fund
clause modifications.
Risk Profile: 'Vulnerable'
Chubut's Vulnerable Risk Profile reflects a 'Weaker' evaluation on
the six key risk factors (KRFs), considering the country's
structural weaknesses, in which Argentine local and regional
governments (LRGs) operate. Argentine LRGs operate in a context of
a weak institutional revenue framework and sustainability, high
expenditure structures and tight liquidity and FX debt risks,
further worsened by macroeconomic recession, high inflation, sharp
currency depreciation and market uncertainty. The risk profile for
Argentine LRGs is assessed as 'Vulnerable', meaning there is a high
risk of operating cash flow not covering debt repayment coming
due.
Debt Sustainability: 'b' category
Fitch classifies the Province of Chubut as a type B LRG, as it
covers debt service from cash flow on an annual basis. Under
Fitch's rating case scenario (2020-2022) the primary metric of
payback burden (net adjusted debt to operating balance) will be
larger than 25x with a score of 'b', reflecting the province's weak
and negative operating balances. The actual debt service coverage
ratio (operating balance-to-debt service, ADSCR) will continue to
be below 1.0x with a score of 'b', which means a final 'b' debt
sustainability assessment.
Chubut is located in the Patagonian region of Argentina, where
socioeconomic indicators tend to be better than the national
average. Chubut's economy is based on services. The province is in
a strategic geographic position and is one of the top country's
largest oil-producing province, oil and gas royalties represented
27.2% of operating revenue as of 2019.
ESG - Environmental: Chubut has an ESG Relevance Score of '4' for
Biodiversity and Natural Resource Management due to the province's
significant economic and financial exposure to the hydrocarbon
sector, which negatively impacts the credit profile and is relevant
to the rating in conjunction with other factors.
ESG-Social: Province of Chubut has an ESG Relevance Score of '4'
for Labour Relations & Practices, in recognition of the Province's
continuous delay in funding employee salaries. The economic
lockdown triggered by the coronavirus and depressed oil prices have
reduced liquidity metrics and increased payables, including those
related to employee salaries, resulting in a negative impact to the
credit profile in conjunction with other factors.
ESG - Governance: Chubut has an ESG Relevance Score of '5' for
Creditor Rights. The province's recent DDE and Fitch's expectation
that fiscal challenges at the national and local level will
continue to hinder the province's future ability to repay its debt
obligations. This expectation has suppressed the current rating
assignment from a higher rating level, and therefore creditor
rights remains a key rating driver.
ESG - Governance: The Province has an ESG Relevance Score of '4'
for Rule of Law, Institutional and Regulatory Quality and Control
of Corruption reflecting the negative impact the weak regulatory
framework and national policies of the sovereign have over the
province in conjunction with other factors.
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.
DERIVATION SUMMARY
Chubut has a Vulnerable Risk Profile and a 'b' debt sustainability
score. However, Fitch has relied on its rating definitions to
position the province's ratings and its SCP.
KEY ASSUMPTIONS
Fitch's rating case scenario is a "through-the-cycle" scenario,
which incorporates a combination of revenue, cost and financial
risk stresses. It is based on the 2015-2019 figures and 2020-2022
projected ratios. The key assumptions for Fitch's rating case
scenario include:
-- 25.9% yoy increase in operating revenue, including a real-term
decrease in royalties, taxes and federal transfers in 2020;
then an average increase of 47.6% towards 2021 and 2022.
-- 53.2% yoy increase in operating expenditure in 2020; then an
average increase of 41% towards 2021 and 2022.
-- Average net capital balance of around minus ARS4.7 billion for
2020-2022;
-- Cost and stock of debt considers non-cash debt movements due
to currency depreciation with an annual average exchange rate
of ARS74.9 per U.S. dollar for 2020, ARS110.3 for 2021, and
ARS155.0 for 2022.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An improved operating balance that strengthens the actual debt
service coverage ratio above 1.0x on a sustained basis, fueled
by better economic prospects along with a containment in the
operating expenditure front.
-- A structural improvement in cash flow generation over the
rating case horizon.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Signs of deeper liquidity stress that could compromise debt
repayment capacity in the coming years, including evidence of
increased refinancing risk in its local and foreign currency
debt.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
ESG CONSIDERATIONS
Chubut has an ESG Relevance Score of '4' for Biodiversity and
Natural Resource Management due to the province's significant
economic and financial exposure to the hydrocarbon sector, which
negatively impacts the credit profile and is relevant to the rating
in conjunction with other factors. The Province of Chubut has an
ESG Relevance Score of '4' for Labor Relations & Practices in
recognition of the Province's continuous delay in funding employee
salaries (triggered by tight operating balances and weak liquidity
metrics), resulting in a negative impact to the credit profile in
conjunction with other factors.
The province has an ESG Relevance Score of '4' for Rule of Law,
Institutional & Regulatory Quality, Control of Corruption,
reflecting the negative impact the weak regulatory framework and
national policies of the sovereign have over the province in
conjunction with other factors.
Chubut has an ESG Relevance Score of '5' for Creditor Rights due to
the province's recent DDE and Fitch's expectation that fiscal
challenges at the national and local level will continue to hinder
the province's future ability to repay its debt obligations. This
expectation has suppressed the current rating assignment from a
higher rating level, and therefore creditor rights remains a key
rating driver.
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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B R A Z I L
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AZUL SA: Moody's Upgrades $400MM Sr. Unsec. Notes Rating to Caa1
----------------------------------------------------------------
Moody's Investors Service has upgraded Azul S.A.'s Corporate Family
Rating to B3 from Caa1. At the same time, Moody's upgraded to Caa1
from Caa2 the rating on the USD400 million senior unsecured notes
issued by Azul Investments LLP and guaranteed by Azul and Azul
Linhas Aereas Brasileiras S.A. The outlook was changed to stable
from negative.
Upgrades:
Issuer: Azul S.A.
Corporate Family Rating Upgraded to B3 from Caa1
Issuer: Azul Investments LLP
Gtd Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 from
Caa2
Outlook Actions:
Issuer: Azul S.A.
Outlook, Changed To Stable From Negative
Issuer: Azul Investments LLP
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The upgrade to B3 from Caa1 was prompted by the better passenger
traffic in Brazil versus Moody's estimates at the beginning of the
virus outbreak. Azul's ability to reduce costs during the pandemic
that resulted in lower than expected cash burn and its proven
access to the financial markets through the recent issuance of
BRL1.7 billion in convertible debentures also support the upgrade.
Moody's expectation that Azul will succeed in taking advantage of
the recovery in the market through its unique position in most of
its network while keeping liquidity at adequate levels is also
reflected in the upgrade to B3. Moody's believes that there is
strong potential for Azul to substantially improve key credit
metrics towards 2019 levels through 2023.
The B3 rating is constrained by the still fragile situation of the
Airlines industry combined with Azul's still weak credit metrics.
The rating incorporates the uncertainties ahead of the sector as a
result of the coronavirus pandemic that could lead to slower
economic recovery or another round of restrictions for travel and
tourism reducing the speed of the rebound in the industry. Despite
the recovery observed so far, the capital markets are still
demanding stronger collaterals packages and higher returns when
offering new funding to airlines in general. The ability to raise
liquidity and control cash burn will still be a key aspect in
Azul's ratings assessment.
The adverse impacts of the coronavirus pandemic on the global
economy, oil prices and asset prices have sustained a severe and
extensive credit shock across many sectors, regions and markets.
The combined credit effects of these developments are
unprecedented. The passenger airline industry is one of the sectors
most significantly affected by the shock given its exposure to
travel restrictions and sensitivity of consumer demand to
sentiment. Moody's regards the coronavirus pandemic as a social
risk under its ESG framework, given the substantial implications
for public health and safety.
LIQUIDITY
Azul's liquidity is adequate. Moody's estimates that Azul will end
2020 with around BRL2.5 billion in cash on hand, considering the
issuance of the new convertible debentures, which compares with
about BRL1.3 billion in financial debt maturing until the end of
2022. The new BRL1.7 billion convertible debentures were issued in
October with 5-year maturity with the option for additional BRL550
million under the same terms reducing the company's short-term
refinancing needs.
The company has around BRL3.0 billion in other potential liquidity
sources including, receivables, financeable deposits and
unencumbered assets that could be used in potential secured
financing transactions.
The stable outlook reflects Moody's belief that Azul will succeed
in taking advantage of the recovery in the market through its
unique position in most of its network while keeping liquidity at
adequate levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade Azul if:
- risks and uncertainties are reduced significantly, and passenger
demand begins a sustainable recovery towards pre-coronavirus
levels.
- Azul to maintain an adequate liquidity profile, with cash
consistently above 20% of revenues, and key metrics to improve such
as
- debt-to-EBITDA declines below 6x
- (funds from operations + interest)/ interest is sustained above
3x.
Moody's could downgrade Azul if:
- pace of recovery of passenger demand is slower than Moody's
expects
- liquidity concerns increase
- the company is unable to strengthen credit metrics through the
recovery phase
- there are increased expectations of a default in the company's
financial obligations
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Passenger
Airline Industry published in April 2018.
COMPANY PROFILE
Headquartered in Barueri near the City of Sao Paulo, Brazil, Azul
S.A. (Azul) is a Brazilian airline founded by David Neeleman in
2008. The company is the largest airline in Brazil by number of
cities and departures, serving 116 destinations with an operating
fleet of 142 aircraft and operating 916 flights daily. The company
also flies its aircraft to select international destinations,
including Fort Lauderdale, Orlando and Lisbon. Azul is the sole
owner of the loyalty program TudoAzul, a strategic
revenue-generating asset, which had around 12 million members in
the end of 2019. In 2019 Azul generated BRL11.4 billion in net
revenue and carried almost 28 million passengers.
BANCO MIZUHO: Moody's Affirms Baa3 Deposit Ratings, Outlook Stable
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Moody's Investors Service has affirmed all ratings and assessments
of Banco Mizuho do Brasil S.A.'s, including the long-term global
local and foreign currency deposit ratings at Baa3, the long-term
global local and foreign currency counterparty risk ratings at Baa3
and the long-term counterparty risk assessment at Baa3(cr). Moody's
also affirmed Mizuho Brazil's baseline credit assessment at ba3,
and adjusted baseline credit assessment at baa3, which incorporates
Moody's assessment of very high likelihood of support by the parent
company, Mizuho Bank, Ltd. (A1 stable).
RATINGS RATIONALE
The ratings affirmation reflects Moody's unchanged view of the
bank's standalone credit profile against the backdrop of the
economic downturn in Brazil during 2020, caused by the coronavirus
pandemic outbreak. At the same time, the ratings incorporate
Moody's assessment of Mizuho Bank, Ltd's very high willingness to
provide extraordinary financial support to Mizuho Brazil in case of
need.
In affirming Mizuho Brazil's BCA of ba3, Moody's acknowledges its
track record of solid asset quality metrics, supported by
management's conservative underwriting policies and its targeting
of select high quality and large corporations. Since the onset of
its operations in Brazil in 2015, Mizuho Brazil has not reported
delinquencies , and, even during the pandemic, it has had no
restructurings nor deferrals. However, the nature of its corporate
lending and balance sheet size result in sizable loan
concentrations, with its top 10 borrowers accounting for roughly
70% of loans. In addition, the fast pace of growth, including both
loans and private securities, over the past three years exposes it
to asset quality volatility.
Mizuho Brazil leverages its expertise, global operations and
balance sheet to foster bank businesses in Brazil, focusing on
short-term trade financing, working capital loans and treasury
services to large domestic companies and to subsidiaries of
Japanese and other Asian companies operating in Brazil. Mizuho
Brazil has also invested in local bonds issued by corporate
customers, while leveraging cross-selling opportunities through
capital market transactions. This strategy aims at diversifies
earning generation and reducing certain reliance on intra-group
fees, offsetting the impact of narrowing margins due to low
interest rates. Mizuho Brazil has traditionally reported modest
profitability metrics with net income averaging 0.9% of tangible
banking assets over the past five years. In H1 2020, net income to
tangible banking assets was 0.16%, further impacted by lower
intragroup fees and compressed margins.
Mizuho Brazil's adequate capitalization and ample liquidity are
also credit strengths. Moody's capitalization ratio was 11% in H1
2020, measured as tangible common equity relative to adjusted
risk-weighted assets, while liquid assets equaled 42.6% tangible
banking assets. However, both capitalization and liquidity ratios
have declined over the past three years, following overall loan
growth in the period. Risk weighted assets more than doubled since
2017, but the reinvestment of dividends mitigates pressure on
capital adequacy. Mizuho Brazil's strict risk management limits and
controls established by the parent helps reduce liquidity risk.
Mizuho Brazil's funding is inherently concentrated by investor and
type of product, with strong reliance on funding from its parent,
which has been used to maintain its competitiveness in the local
market. About 50% of total funding was provided by the bank´s
parent and the bank´s top ten depositors alone accounted for 73%
of total deposits as of H1 2020, higher than 55% in December 2019.
Mizuho Brazil's high level of integration and strategic
coordination with its parent company with regards to funding and
liquidity management as well as risk managements practices support
Moody's view that there is a very high probability that the bank's
ultimate parent would provide extraordinary support in an event of
stress.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Brazil's sovereign ratings and
deposit ceilings were upgraded. An improvement in profitability and
diversification of the bank´s earnings and funding could put
upward pressure on its BCA, but this would not in and of itself
lead to an upgrade of the bank´s deposit ratings.
Conversely, Mizuho Brazil's ratings could be downgraded if either
Brazil´s sovereign rating or Mizuho Bank's adjusted BCA were to be
downgraded. A reassessment of support from its parent bank could
also affect ratings negatively. The ratings could also face
downward pressure if aggressive growth were to lead to weakened
asset quality and profitability.
METHODOLOGY USED
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
Banco Mizuho do Brasil S.A. is headquartered in Sao Paulo, Brazil,
with assets of BRL 7.7 billion and shareholders' equity of BRL 753
million as of June 30, 2020.
LIST OF RATINGS AND ASSESSMENTS
The following ratings and assessments of Banco Mizuho do Brasil
S.A. were affirmed:
Long-term global local-currency deposit rating at Baa3; stable
outlook
Long-term foreign-currency deposit rating at Baa3; stable outlook
Short-term foreign-currency deposit rating at Prime-3
Short-term global local-currency deposit rating at Prime-3
Long-term Brazilian national scale deposit rating of Aaa.br
Short-term Brazilian national scale deposit rating of BR-1
Long-term local-currency counterparty risk rating at Baa3
Long-term foreign-currency counterparty risk rating at Baa3
Long-term Brazilian national scale counterparty risk rating of
Aaa.br
Short-term local-currency counterparty risk rating at Prime-3
Short-term foreign-currency counterparty risk rating at Prime-3
Short-term Brazilian national scale counterparty risk rating of
BR-1
Long-term counterparty risk (CR) assessment at Baa3(cr)
Short-term counterparty risk (CR) assessment at Prime-3(cr)
Adjusted baseline credit assessment at baa3
Baseline credit assessment at ba3
Outlook, Remains Stable
Moody's National Scale Credit Ratings are intended as relative
measures of creditworthiness among debt issues and issuers within a
country, enabling market participants to better differentiate
relative risks. NSRs differ from Moody's global scale credit
ratings in that they are not globally comparable with the full
universe of Moody's rated entities, but only with NSRs for other
rated debt issues and issuers within the same country. NSRs are
designated by a ".nn" country modifier signifying the relevant
country, as in ".za" for South Africa. For further information on
Moody's approach to national scale credit ratings, please refer to
Moody's Credit rating Methodology published in May 2016 entitled
"Mapping National Scale Ratings from Global Scale Ratings". While
NSRs have no inherent absolute meaning in terms of default risk or
expected loss, a historical probability of default consistent with
a given NSR can be inferred from the GSR to which it maps back at
that particular point in time.
BRAZIL: Automobile Production Recovery Stalls in November
---------------------------------------------------------
Rio Times Online reports that Brazilian automobile production
plateaued in November, rising just 0.7% from October to 238,200
units after several months of higher growth in a sign the
coronavirus recovery may be slowing.
Auto sales grew by 4.6% to 225,010 units compared to the prior
month, according to monthly data released by Anfavea, the trade
group representing the main global automakers in Brazil, according
to 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.
GOL LINHAS: Moody's Upgrades $350MM Notes Rating to Caa1
--------------------------------------------------------
Moody's Investors Service upgraded Gol Linhas Aereas Inteligentes
S.A's corporate family rating to B3 from Caa1. At the same time
Moody's upgraded to Caa1 from Caa2 Gol Finance's perpetual notes
guaranteed by Gol and Gol Linhas Aereas S.A. and the $350 million
senior exchangeable notes due 2024 issued by Gol Equity Finance and
guaranteed by Gol and Gol Linhas Aereas S.A. The outlook was
changed to stable from negative.
Upgrades:
Issuer: Gol Linhas Aereas Inteligentes S.A.
Corporate Family Rating, Upgraded to B3 from Caa1
Issuer: GOL Equity Finance
Gtd Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 from
Caa2
Issuer: Gol Finance
Gtd Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 from
Caa2
Outlook Actions:
Issuer: Gol Linhas Aereas Inteligentes S.A.
Outlook, Changed To Stable from Negative
Issuer: GOL Equity Finance
Outlook, Changed To Stable from Negative
Issuer: Gol Finance
Outlook, Changed To Stable from Negative
RATINGS RATIONALE
The upgrade to B3 from Caa1 was prompted by Gol's better operating
performance versus our expectation at the beginning of the
coronavirus outbreak. The upgrade also reflects a lower risk of
default in the short-term especially after the repayment of the
term loan guaranteed by Delta and the successful refinancing of
other debt instruments such as working capital facilities and local
market debentures that resulted in a more comfortable debt
amortization profile. Gol's ability to reduce costs through
agreements reached with employees and lessors that resulted in a
better than expected reduction in cash burn is also reflected in
the upgrade to B3.
The B3 rating is constrained by the uncertainties ahead of the
airline industry as a result of the coronavirus pandemic that could
lead to slower economic recovery or another round of restrictions
for travel and tourism reducing the speed of the rebound in the
industry. Despite the recovery observed so far, the capital markets
are still demanding stronger collaterals packages and higher
returns when offering new funding to airlines in general. The
ability to raise liquidity and control cash burn will still be a
key aspect in Gol's ratings assessment.
The adverse impacts of the coronavirus pandemic on the global
economy, oil prices and asset prices have sustained a severe and
extensive credit shock across many sectors, regions and markets.
The combined credit effects of these developments are
unprecedented. The passenger airline industry is one of the sectors
most significantly affected by the shock given its exposure to
travel restrictions and sensitivity of consumer demand to
sentiment. Moody's regards the coronavirus pandemic as a social
risk under its ESG framework, given the substantial implications
for public health and safety.
LIQUIDITY
Gol's liquidity is adequate, and its debt maturity profile has
improved when compared to the beginning of the pandemic. Moody's
expects that the company will end 2020 with around BRL1.0 billion
in cash on hand with no significant maturities over the next three
years. Still, the uncertainties ahead of the airline industry as a
result of the coronavirus pandemic could lead to slower economic
recovery or another round of restrictions for travel and tourism
reducing the speed of the rebound and demand for air travel leading
to additional cash burn and higher liquidity needs.
The company has around BRL6.0 billion in other potential liquidity
sources including receivables, financeable deposits and
unencumbered assets that could be used in potential secured
financing transactions.
The stable outlook reflects Gol's will experience a stronger
recovery in demand going forward while keeping its conservativeness
observed so far during the pandemic towards liquidity, costs and
capacity management.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade Gol if:
- risks and uncertainties are reduced significantly, and passenger
demand begins a sustainable recovery towards pre-coronavirus
levels.
- Gol to maintain an adequate liquidity profile, with cash
consistently above 20% of revenues, and key metrics to improve such
as
- debt-to-EBITDA declines below 6x
- (funds from operations + interest)/ interest is sustained above
3x.
Moody's could downgrade Gol if:
- pace of recovery of passenger demand is slower than Moody's
expects
- liquidity concerns increase
- the company is unable to strengthen credit metrics through the
recovery phase
- there are increased expectations of a default in the company's
financial obligations
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Passenger
Airline Industry published in April 2018.
COMPANY PROFILE
Based in Sao Paulo and founded in 2001, Gol is the largest low-cost
carrier in Latin America, offering over 700 daily passenger flights
to connect Brazil's major cities and various destinations in South
America, North America and the Caribbean, along with cargo and
charter flight services. Additionally, Gol has a 53% stake in
Smiles, a loyalty program company with more than 14 million
participants that allows members to accumulate miles and redeem
tickets in more than 900 destinations around the world and offer
non-ticket reward products and services. In the fiscal year ended
December 2019, Gol reported consolidated net revenues of BRL13.9
billion and lease adjusted EBITDA of BRL4.1 billion. Gol LuxCo, Gol
Finance, and Gol Equity Finance are wholly-owned subsidiaries of
Gol.
ODEBRECHT SA: Rebrands as Novonor to Turn Page on Graft History
---------------------------------------------------------------
Peter Frontini and Gram Slattery at Reuters report that Brazilian
engineering group Odebrecht, whose name became synonymous with
graft due to its role in the nation's sweeping Car Wash corruption
investigation, is changing its name as it tries to turn the page on
that scandal-plagued history.
In a statement, Odebrecht said it was changing its name to Novonor,
adding that the change was the "culmination" of a five-year
transformation at the company, during which the firm changed its
"internal processes and ways of acting, strictly guided by ethics,
integrity and transparency," according to Reuters.
In 2016, the company pleaded guilty in the United States to
graft-related charges, doling out some $2.6 billion to U.S., Swiss
and Brazilian authorities in the largest-ever foreign bribery
penalty in the United States at the time, the report relays.
Odebrecht admitted to bribing officials throughout Latin America
for years, contributing to dramatic political upheaval in Brazil
and across the region, the report discloses.
In July, a Sao Paulo state court approved a bankruptcy recovery
plan for the company, which was weighed down by over 65 billion
reais ($12.8 billion) of debt, the report adds.
About Odebrecht SA
Odebrecht S.A. -- http://www.odebrecht.com/-- is a Brazilian
conglomerate consisting of diversified businesses in the fields of
engineering, construction, chemicals and petrochemicals. Odebrecht
S.A. is a holding company for Construtora Norberto Odebrecht S.A.,
the biggest engineering and contracting company in Latin America,
and Braskem S.A., the largest petrochemicals producer in Latin
America and one of Brazil's five largest private-sector
manufacturing companies. Odebrecht controls Braskem, which by
revenue is the fourth largest petrochemical company in the
Americas.
On June 17, 2019, Odebrecht filed for bankruptcy protection, aiming
to restructure BRL51 billion (US$13 billion) of debt.
The bankruptcy filing comes after years of struggles for Odebrecht,
the biggest of the Brazilian engineering groups caught in a
sweeping political corruption investigation that has rippled across
Latin America, Reuters relayed, as reported by The Troubled Company
Reporter - Latin America.
Odebrecht SA and several of its affiliates filed for Chapter 15
bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 19-bk-12731)
on Aug. 26, 2019. The cases are assigned to Hon. Stuart M.
Bernstein. Cleary Gottlieb Steen & Hamilton LLP is counsel in the
U.S. cases.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Chicken Supply Scarce; Price Rises Before X-mas
-------------------------------------------------------------------
Dominican Today reports that on the eve of December 24, when the
population prepares to prepare its traditional Christmas Eve
dinner, the price of chicken, a product that is not lacking on the
table, registers an increase of approximately RD$11.00, according
to retailers.
Traders place the price of the pound between RD$65 and RD$75 in
various sectors of the capital, according to a Listin Diario team
during a tour of the markets, the report notes.
In addition to complaints about price increases, sellers reported a
shortage of the product and few sales, according to Dominican
Today.
Some merchants allege that due to the little flow of sales they
have had to reduce the price of chicken by RD$5 so that citizens
can buy it, the report notes.
Causes of The Shortage
Some sellers, like Felicia Romano, consider that there is no
shortage but that farmers and suppliers hide it to sell it more
expensively, according to Dominican Today. "There is no shortage
of chicken, what happens is that they are hiding it . . . when a
chicken is of this size it means that there is no shortage, the
chicken in shortage is small," said Romano, the report relays.
Tomas Contreras also commented that the shortage is due to the fact
that the greatest investment is being made in supermarkets, the
report notes. "If there is a shortage of chicken because
supermarkets are stocking up and the farms are selling it to them
more than to stalls," Contreras said, the report discloses.
Like them, Jose Vidal Fernando said, "They say they have it scarce
but with this size, it cannot be scarce, every day they raise three
and two pesos," the report relays.
Chicken vendors say that compared to previous years, sales are slow
for Christmas Eve dinner preparations, 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).
DOMINICAN REPUBLIC: Manufacturing Activity Declines in November
---------------------------------------------------------------
Dominican Today reports that the Monthly Index of Manufacturing
Activity (IMAM) of Dominican Republic's Industries Association
(AIRD) decreased in November in relation to October, from 69.0 to
50.0.
The indicator is a portrait of the manufacturing activity for one
month in relation to the previous one and that decreases for the
first time after rising two consecutive months in relation to its
previous reference month, according to Dominican Today.
"When the IMAM is below the 50-point threshold, it reflects that
the economic conditions and prospects of the manufacturing sector
are considered unfavorable. By standing at 50.0 in November, its
behavior is located as neutral in relation to the month of October
2020," indicates a statement from the AIRD, 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, 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).
===========
M E X I C O
===========
ALPHA HOLDING: Fitch Assigns 'B' Long-Term IDRs, Outlook Negative
-----------------------------------------------------------------
Fitch Ratings has assigned ratings to Alpha Holding, S.A. de C.V.
and Subsidiaries (Alpha Holding) including Long-Term Local- and
Foreign-Currency Issuer Default Ratings (IDRs) of 'B' and
Short-Term Foreign- and Local-Currency IDRs of 'B'. The Rating
Outlook is Negative.
Fitch has also assigned Alpha Holdings' issuance of up to USD400
million Reg S/144A senior unsecured notes due 2025 a Long-Term
Rating of 'B' and Recovery Rating of 'RR4', reflecting that the
likelihood of default of the notes is the same as the issuer,
therefore, the rating is aligned with the company's IDRs. The
Recovery Rating assigned indicates 'Average' recovery prospects of
the current principal and related interest upon default.
The Negative Outlook reflects that while the effects of the
coronavirus pandemic have yet to fully materialize, Fitch sees some
impact already on Mexican finance and leasing companies from the
partial economic lockdowns. Loan origination from person-to-person
based models have reduced, which has affected the companies' asset
quality, profitability and leverage ratios.
KEY RATING DRIVERS
Alpha Holding's ratings are highly influenced by the company
profile, which incorporates its moderate franchise within the
payroll lending sector, with a growing position in Mexico and
Colombia. The ratings consider the niche and specialized business
model, which is focused mainly on offering payroll loans to low- to
medium-income federal and state government employees and
pensioners, who are commonly under-served by traditional banks, and
to a lesser extent, providing credit and leasing to SMEs, the
latter of which is now in a run-off state.
Weak tangible leverage metrics, mainly affected by the considerable
amount of assets considered by Fitch as intangibles, and a modest
profitability over the past four years, which has weakened more
than its closest peers during the pandemic, are also of high
importance to the ratings. The ratings also consider Alpha
Holding's pressured asset quality, wholesale funding structure with
high market reliance and the entity's good liquidity position to
face the crisis.
Over the past few years, the entity converted into a relevant
competitor within the Payroll Deduction Credit (PDC) segment. The
company has diversified its payroll operation toward Colombia,
which aided origination during the current stress in Mexico, as
Colombian pensioners and retirees have adapted quicker to
electronic origination strategies.
The company's overall PDC portfolio accounted for up to 94% of
total loans, as of 3Q20, while about 4% corresponded to its leasing
portfolio and 2% to the factoring product. Fitch believes that
although the PDC market collection dynamics tend to be more benign
given a naturally strong collection process, Alpha Holding's niche
business model is still exposed to operational, political and event
risks. This is driven by the willingness and ability of
public-sector institutions to fully disburse retained collections
and the uncertainty around the reopening of some agreements that
are not being fully operated in the sector, which could further
pressure the company's financial profile.
Fitch believes the entity's tangible leverage is the weakest link
in the financial profile and constrains the rating. Fitch’s
calculation of Alpha Holding's tangible leverage ratio is negative
as a result of a considerable amount of assets considered as
intangible. The assets classified as intangibles per Fitch's
criteria were generated through the acquisition of Alpha Holding's
operating subsidiaries, which hold an array of government contracts
and agreements that allow the entity to originate new loans.
Other assets, that in Fitch's opinion have low loss-absorption
capabilities, exceeded Alpha Holding's total equity, thus
reflecting negative tangible leverage ratios. Debt/tangible equity
stood at -6.3x, as of 3Q20, following SoftBank's recent USD100
million capital injection that partly offset the increase in debt.
In Fitch’s view, the leverage metrics are also pressured by the
relatively rapid growth and low earnings generation over the past
few years. These stresses, along with losses in the first nine
months of 2020, which were heavily influenced by a one-time
charge-off, affected leverage metrics.
Additionally, a high liquidity position after the global issuance
of senior unsecured notes at the beginning of the year and the
temporary effects from derivative instruments in the financial
statements pressured leverage metrics. Fitch's adjusted leverage
ratio, which considers the entity's debt net of derivative assets
and the other comprehensive income (OCI) effects on equity, stood
at -6.7x as of the same date.
In Fitch's view, Alpha Holding's negative profitability metrics are
affected by one-time events and the increasing cost of credit.
Negative results were accentuated since June 2020 by the write-off
of its Other Recoverable Portfolio (ORP), which was a separate
account reported as +180 days past due with collection processes
on, in addition to higher impairment charges driven by
deterioration of its SME portfolio.
Pre-tax income/average assets stood at -14.2% as of 3Q20, down from
1.0% in 2019. Fitch believes that pressures on the entity's
financial performance could continue to be driven by the additional
costs of credit if current partial lockdowns continue to worsen
operating conditions for loan origination. Operating conditions
deteriorated significantly in Mexico, while the Colombian portfolio
increased its share in the total portfolio to 30.4% as of September
2020, as online origination has proven to be more successful in
Colombia.
In Fitch's opinion, Alpha Holding's asset quality is worse than
that of other participants in the PDC sector. The company's
impaired loans/total loans ratio was 4.3% at end-3Q20, which
benefited from the ORP write-off which represented around 15% of
the total portfolio as of June 2020.
Prior to the full write-off, Fitch included the ORP as impaired
loans and considered an average non-performing loan (NPL) ratio of
16.7% for 2019. The adjusted NPL ratio, which includes charge-offs,
compares negatively with that of peers. Fitch's adjusted NPL ratio
of 17.8% as of 3Q20, considers the write-off of the ORP and
charge-offs during 3Q20, as Fitch did not have access to 1Q20 and
2Q20 charge offs.
Reported impaired leases consider only the unpaid rents and not the
remaining unpaid value of the contract, which sub-valuates the
impairment ratio, as per Fitch standards. However, the leasing
portfolio represented a minor portion of the assets.
Fitch considers Alpha Holding's funding structure to be relatively
stable and flexible in relation to smaller NBFIs. However, it shows
a higher concentration in market debt issuances, which represent
around 82% of the entity's total debt. As of 3Q20, 89% of total
debt corresponded to unsecured funding sources, up from 64.8% from
at end-2019. Liquid assets covered around 2.1x of short-term debt
as of 2Q20, which is stronger than for other market participants.
Unencumbered assets represented 51% of the entity's unsecured debt
as of 2Q20, similar to the 41% of the previous three-year average.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The ratings could be downgraded if pre-tax losses are
sustained, coupled with further capital and asset quality
deterioration and pressures on its funding and liquidity
position in the next 12 months.
-- Downward rating action could also arise from the economic
impacts from the coronavirus crisis, as this represents a
clear risk to Fitch’s assessment of asset quality, earnings
and leverage.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The Negative Outlook could be revised to Stable depending on
Alpha Holding's ability to confront current challenges and
minimize the coronavirus shock's effects on asset quality, in
addition to achieving break even.
-- Upside potential is limited in the next 12 to 24 months due to
the current Negative Outlook.
-- Alpha Holding's ratings could be upgraded over the medium term
if it exhibits orderly growth, contingent to a positive
tangible leverage ratio and improved loss-absorption capacity,
in the form of positive tangible equity as defined by Fitch,
while maintaining its franchise positioning, adequate sources
of funding, and good liquidity management.
Senior Debt
Although the company's debt rating does not have an explicit Rating
Outlook, it would mirror any potential movements on Alpha Holding's
IDRs. The senior unsecured debt ratings would continue to be
aligned with the company's IDRs.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
SUMMARY OF FINANCIAL ADJUSTMENTS
Pre-paid expenses and other deferred assets were reclassified as
intangibles and deducted from equity to reflect their low loss
absorption capacity. Fixed assets under operating leasing contracts
were classified as the operating lease portfolio.
ESG CONSIDERATIONS
Alpha Holding has an Environmental, Social and Corporate Governance
(ESG) Relevance Score of '4' for Financial Transparency Issues
driven by its third-party disclosure, which has yet to be better
aligned to international best practices for public debt issuers,
which has a negative impact on the credit profile, and is relevant
to the company's IDRs in conjunction with other factors.
Alpha Holding has an ESG Relevance Score of '4' for Customer
Welfare - Fair Messaging, Privacy & Data Security due to its
exposure to reputational and operational risks as its main business
targets government employees and dependencies at relatively high
rates, which has a negative impact on the credit profile and is
relevant to the company's IDRs in conjunction with other factors.
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.
GRUPO FAMSA: Fitch Withdraws 'D' LT Local and Foreign IDRs
----------------------------------------------------------
Fitch Ratings has affirmed Grupo Famsa S.A.B. de C.V.'s Long-Term
Local and Foreign Issuer Default Ratings (IDRs) at 'D' and Famsa's
outstanding senior notes issuance at 'C'/'RR5'. In addition, Fitch
has affirmed Famsa's Long-Term National Scale Rating at 'D(mex)'
and the National Short-Term Rating at 'D(mex)'. Simultaneously,
Fitch has withdrawn all Famsa's ratings.
Fitch has withdrawn Famsa's ratings for commercial reasons.
Accordingly, the agency will no longer provide ratings or
analytical coverage for Famsa.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
ESG CONSIDERATIONS
Famsa has an Environmental, Social and Corporate Governance (ESG)
Relevance Score of '5' for Management Strategy due to the number of
operational restructures that have occurred due to challenges the
company has faced in implementing its strategy.
Famsa has an ESG Relevance Score of '5' for Financial Transparency
due to a record of material differences from audited financial
statements and the company's reported figures.
Famsa has an ESG Relevance Score of '4' for Governance Structure
due to board effectiveness and ownership concentration, which has
an unfavorable effect on the credit profile and is relevant to the
rating in conjunction with other factors.
Famsa has an ESG Relevance Score of '4' for Group Structure as that
the company presents a below-average transparency of related-party
transactions. This has a negative effect on the credit profile and
is relevant to the rating in conjunction with other factors.
Except for the matters discussed above, 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, either due to their nature or the way in which they are
being managed by the entity.
Following the withdrawal of the ratings for Grupo Famsa, Fitch will
no longer be providing the associated ESG Relevance Scores.
PATRIMONIO SA: Moody's Withdraws B3 (sf) Rating on PATRICB 07U Cert
-------------------------------------------------------------------
Moody's de Mexico, S.A. de C.V. has withdrawn on December 15, 2020
the ratings of B3 (sf) (Global Scale, Local Currency) and B1.mx
(sf) (National Scale of Mexico) assigned to the certificates
PATRICB 07U of Patrimonio, S.A. de C.V., SOFOM, E.N.R., that were
issued by Banco INVEX, S.A., Institucion de Banca Multiple, Invex
Grupo Financiero, acting solely in its role as trustee.
The certificates were backed by a pool comprised of
UDI-denominated, fixed-rate, first-lien mortgage loans (RMBS)
secured by residential homes located in Mexico originated and
serviced by Patrimonio.
RATINGS RATIONALE
The ratings were withdrawn after the full amortization of the
certificates PATRICB 07U for the amount of MXN 53,875,306.99
Mexican pesos on November 25, 2020.
The date of the last Credit Rating Action was August 5, 2013.
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in May
2020.
*********
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.
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* * * End of Transmission * * *