/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210107.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 Thursday, January 7, 2021, Vol. 22, No. 0 Headlines B R A Z I L BANCO BTG: Fitch Assigns BB- Rating to Senior Unsec. Notes BANCO BTG: Moody's Gives Ba2 Rating to New USD Sr. Unsec. Notes BRAZIL: Public Sector Primary Deficit in Nov. Sets 4-Yr High C A Y M A N I S L A N D S CIFI HOLDINGS: Moody's Gives Ba3 Rating to Proposed USD Notes D O M I N I C A N R E P U B L I C [*] DOMINICAN REPUBLIC: Awaits a More Promising Future, DIGECOG Say J A M A I C A JAMAICA: Partners With FAO to Continue Farmers Buy-Back Program P A N A M A PANAMA CANAL: Moody's Lowers Sr. Sec. Notes to Ba2, Outlook Stable P A R A G U A Y BANCO CONTINENTAL: Fitch Gives Final BB+ Rating to Sr. Unsec. Notes P U E R T O R I C O DESTILERIA NACIONAL: Miramar's Plan Has 90% for Unsec. Creditors T R I N I D A D A N D T O B A G O CL FINANCIAL: CLICO's 2019 Profits Plunge 95% V E N E Z U E L A PETROLEOS DE VENEZUELA: Judge Sanctioned for Oil Execs Conviction - - - - - =========== B R A Z I L =========== BANCO BTG: Fitch Assigns BB- Rating to Senior Unsec. Notes ---------------------------------------------------------- Fitch Ratings has assigned an expected long-term 'BB-' rating to Banco BTG Pactual S.A.'s benchmark-size senior unsecured notes due 2026. The notes will be issued through BTG Pactual's Cayman Islands Branch under the parent bank's USD5 billion medium-term note program. According to the draft terms, the bank will allocate an amount equal to the net proceeds for the financing and/or refinancing of new and existing Green Projects under of the its eligibility criteria. KEY RATING DRIVERS The senior unsecured notes are rated at the same level as the bank's 'BB- 'Long-Term Issuer Default Ratings (IDRs), which reflects the unsecured nature of the instruments. They will also rank pari passu with other senior unsecured obligations. BTG Pactual's IDRs are aligned with its 'bb-' Viability Rating (VR), indicating that its creditworthiness is driven by the bank's intrinsic credit profile. RATING SENSITIVITIES As the bank's notes are aligned with its IDR, any change to the latter will prompt a similar action on the notes' rating. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Upgrades on debt ratings depend on upgrades of the BTG Pactual's VR, given it serves as an anchor rating for issuances. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Debt rating downgrades will depend on downgrades of BTG Pactual's VR, given that its serves as an anchor rating for issuances. 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. ESG CONSIDERATIONS BTG Pactual has an Environmental, Social and Governance (ESG) Relevance Score of '4' for Group Structure due to its relatively complex organizational structure. BTG also has an ESG Relevance Score of '4' for Management and Strategy because execution of stated strategic objectives has lacked consistency. These scores have a negative impact on the credit profile and are relevant to the ratings 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. BANCO BTG: Moody's Gives Ba2 Rating to New USD Sr. Unsec. Notes --------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 foreign currency debt rating to the proposed USD-denominated senior unsecured notes to be issued by Banco BTG Pactual S.A., Grand Cayman Branch. The notes will be issued under the existing $5 billion Global Medium Term Note Program, rated (P)Ba2, and will be due in 2026. The proceeds of BTG Pactual's notes will be used to fund eligible sustainable projects. The outlook on the rating is stable. LIST OF AFFECTED RATINGS Assignment: Issuer: Banco BTG Pactual S.A., Grand Cayman Branch Foreign Currency Senior Unsecured Debt Rating, assigned Ba2, Stable RATINGS RATIONALE The rating agency explained that the foreign currency senior unsecured debt rating derives from Banco BTG Pactual S.A.'s Ba2 global local currency deposit rating, which, in turn, reflects the bank's baseline credit assessment of ba2. The rating does not benefit from any uplift from systemic support considerations because of the bank's modest share of the deposits market in Brazil. The Ba2 rating incorporates BTG Pactual's good liquidity, profitability and adequate capital that have supported its expansion into corporate lending and digital banking over the past year. BTG Pactual's capitalization, measured by Moody's as tangible common equity as a proportion of risk weighted assets, remained high at 12.43% in Q32020, boosted by internal earnings retention and the follow-on share offering completed last June, which combined added 184 basis point to the bank's Moody's TCE ratio. Thee strong capital position, above that of large Brazilian bank peers, has supported the bank's lending growth strategy targeting medium and large corporate clients. Asset quality metrics remain superior to industry levels' but the problem loan ratio increased to 1% in Q3 2020, from just 0.24% at the end of 2019, reflecting the growing share of loans to riskier borrowers, which accounted for 8.5% of BTG Pactual's loan book. However, reserves for loan losses remained high at 3.8% of total loans. The bank's well-established position in the investment banking segment in Brazil has benefited its earnings performance in the third quarter, favored by a rebound in local capital market activities, following the sharp contraction in the first and second quarters of 2020. At the same time, sales and trading accounted for a high 37% of BTG Pactual's total quarterly revenues, while earnings from principal investments declined to 5%, from 16% in the prior quarter, both still implying volatility to the bank's revenues structure. BTG Pactual's business strategy has been focused on increasing earnings recurrence with solid asset and wealth management contribution, which along with corporate lending accounted for 38% of total revenues in Q3 2020. For the first nine months of 2020, the bank reported net income of 1.45% relative to tangible assets, still below the 2.33% reached in 2019, and reflecting the historical low interest rates in Brazil and the gradual recovery in business volumes that started in June, following the sudden stop at the outset of the coronavirus pandemic. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The Ba2 rating assigned to BTG Pactual's senior unsecured notes is unlikely to face upward pressure because the bank's adjusted BCA, which is the anchor credit risk assessment for the instrument rating, is currently at the same level as the Ba2 Brazil's sovereign rating, which carries a stable outlook. Conversely, the rating could be downgraded if Brazil's sovereign rating is downgraded, or if rapid loan growth leads to a sharp increase in asset risk for BTG Pactual or if the bank's capitalization ratio drops sharply. Downward rating pressure could also be triggered by weakening liquidity, which could increase the bank's intrinsic vulnerability to its institutional-based funding structure. The principal methodology used in these ratings was Banks Methodology published in November 2019. BRAZIL: Public Sector Primary Deficit in Nov. Sets 4-Yr High ------------------------------------------------------------ Rio Times Online reports that Brazil's public sector registered a primary deficit of R$18.1 billion (US$3.49 billion) in November, the worst result for the month since 2016, the Central Bank of Brazil announced on December 30. In the 12 months ending in November, the primary deficit amounted to R$664.6 billion, equivalent to 8.93 percent of the gross domestic product (GDP), according to Rio Times Online. Brazil's primary deficit figures track the fiscal performance of federal, state and local governments, and state-owned companies excluding banks, oil company Petrobras and electric utility Eletrobras, without counting interest paid, the report notes. 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. =========================== C A Y M A N I S L A N D S =========================== CIFI HOLDINGS: Moody's Gives Ba3 Rating to Proposed USD Notes ------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 senior unsecured rating to the USD notes to be issued by CIFI Holdings (Group) Co. Ltd. (Ba2 stable). CIFI plans to use the proceeds from the proposed notes to refinance existing debt. RATINGS RATIONALE "CIFI's Ba2 corporate family rating reflects the company's ability to execute its property development strategy, which is focused on catering to housing demand from upgrade in key Tier 1 and Tier 2 cities. This focus helps the company achieve rapid asset turnover. The rating also takes into account the company's good liquidity, expanding scale and growing diversification," says Cedric Lai, a Moody's Vice President and Senior Analyst. "However, CIFI's credit profile is constrained by moderate debt leverage and material exposure to its joint venture businesses, which hinders the transparency of its credit metrics, although this is mitigated by the good reputation of its JV partners," adds Lai. The proposed issuance will improve CIFI's liquidity profile and not materially affect its credit metrics, because the company will use the proceeds to refinance existing debt. Moody's expects CIFI's debt leverage -- as measured by revenue/adjusted debt, excluding adjustments for its joint-ventures and associates -- will improve to 65%-75% over the next 12-18 months, from 46% for the 12 months ended June 2020, driven by robust revenue recognition on the back of strong contracted sales over the past 2-3 years, as well as the company's disciplined approach to growth and controlling debt increase. At the same time, Moody's expects CIFI's EBIT/interest, excluding adjustments for its joint-ventures and associates, will improve to 3.1x-3.6x from 2.5x over the same period, driven by higher earnings and declining interest costs. CIFI's total contracted sales grew 12.5% to RMB200 billion for the first 11 months of 2020 compared with the same period last year. Moody's believes CIFI's sizable salable resources, strong sales execution and solid housing demand in the company's core markets will enable the company to further grow its contracted sales to RMB220-240 billion in 2021. The Ba3 senior unsecured debt rating is one notch lower than the corporate family rating due to structural subordination risk. Majority of CIFI's claims are at its operating subsidiaries and have priority over claims at the holding company in a liquidation scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. Consequently, the expected recovery rate for claims at the holding company will be lower. CIFI's liquidity position is good. The company's cash balance of RMB59.4 billion covered 2.3x of its short-term debt as of June 30, 2020. Moody's expects the company's cash holdings, together with expected operating cash inflow, will be able to cover its maturing short-term debt, committed land purchases, dividend payments, as well as capital spending and payables for its previous acquisitions, over the next 12-18 months. In terms of environmental, social and governance factors, Moody's has taken into account CIFI's concentrated ownership. Its controlling shareholders, Lin Zhong and his family members, collectively held a 54.32% stake in the company as of June 30, 2020. Moody's has also considered the fact that the company's audit and remuneration committees comprise independent non-executive directors who maintain oversight of the company; and the application of the Listing Rules of the Hong Kong Stock Exchange and the Securities and Futures Ordinance in Hong Kong to oversee related-party transactions. Moody's regards the impact of the deteriorating global economic outlook amid the rapid and widening spread of the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The stable outlook reflects Moody's expectation that CIFI will continue to adopt a disciplined financial management to achieve its business plan and maintain good liquidity over the next 12-18 months. Moody's could upgrade CIFI's CFR if it successfully executes its sales plan through the cycles and maintains strong liquidity and prudent financial management practices. Specifically, Moody's could upgrade the rating if CIFI's revenue/adjusted debt exceeds 80%; and EBIT/interest coverage is above 4.0x-4.5x, both on a sustained basis. A significant reduction in contingent liabilities associated with JVs or a lower likelihood of providing funding support to JVs could also be credit positive. This could be the result of reduced usage of JVs or a significant improvement in the financial strength of its JV projects. On the other hand, Moody's could downgrade the rating if CIFI's contracted sales deteriorates; credit metrics weaken, with EBIT/interest coverage falling below 3.0x-3.5x or revenue/adjusted debt falling below 65% on a sustained basis; or liquidity deteriorates, as reflected by cash/short-term debt falling below 1.25x. Moody's could also downgrade the rating if the company's contingent liabilities associated with JVs or the likelihood of providing funding support to JVs increases significantly. This could be the result of a significant deterioration in the financial strength and liquidity of its JV projects or a substantial increase in investments in new JV projects. The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. CIFI Holdings (Group) Co. Ltd. was founded in 2000, incorporated in the Cayman Islands in May 2011 and listed on the Hong Kong Stock Exchange in November 2012. As of June 30, 2020, it was 54.32% owned by the Lin family. =================================== D O M I N I C A N R E P U B L I C =================================== [*] DOMINICAN REPUBLIC: Awaits a More Promising Future, DIGECOG Say ------------------------------------------------------------------- Dominican Today reports that the director of the General Directorate of Government Accounting (DIGECOG) declared that given the level of indebtedness that is already almost 70% concerning the Gross Domestic Product (GDP), "nothing can be done if not the money diverted by the prevailing corruption of the previous government is recovered and if the pandemic does not diminish its negative effects." Felix Santana Garcia alluded to the data contained in the report published by the Economic Commission for Latin America and the Caribbean (ECLAC), on the balance of Latin America and the Caribbean 2020 after the impact of the covid-19, in the countries that make up the area, according to Dominican Today. "Although the economic and financial picture of the Dominican Republic presented by ECLAC is not entirely promising for 2021, the situation will improve as the pandemic diminishes through the massive application of vaccines and the money diverted by the corruption of the previous government," he said, the report notes. As mentioned above, the study indicates that in the Dominican Republic, the GDP reported a drop of 5.5%. At the end of 2020, the central government's fiscal deficit is estimated at 9.9% of GDP when it had been 2.2 in 2019, the report relays. ECLAC reported that the current account deficit would close with 3% of GDP, while in 2019, it was 1.3%, due to the contraction in tourism revenues, the report says. Year-on-year inflation will close with a limit of 5% in the target range, and joblessness was reduced by 8.8%, the report notes. Santana Garcia complained that tax collection contracted by 17.1%, with a 19.1% reduction in taxes on goods and services, while social spending showed its most significant increase of 192.6% real year-on-year, the report relates. He explained that to face the crisis; the Government received loans from various international organizations such as the World Bank (150 million dollars), the Inter-American Development Bank (486 million dollars), the International Monetary Fund (650 million dollars), and the issuance of sovereign bonds for a total of 3.8 billion dollars, whose demand reached 9.6 billion dollars, 2.5 times the initial amount issued, the report relays. "Although President Luis Abinader has never been in favor of indebtedness, in the face of this economic and financial picture that ECLAC has presented on the Dominican Republic, there has been no other more viable alternative than to make use of the trust that the Government offers to obtain international loans," he added. Felix Santana Garcia assured that "with transparent management, fight against corruption, good investments, and control of the pandemic, the Dominican nation will have a more promising 2021 in the face of the crisis that has not been caused by the current authorities, but has been inherited," the report discloses. DIGECOG has been included within the Cabinet of Transparency, Prevention and Control of Public Expenditure recently created by President Luís Abinader to prevent administrative corruption and detect the diversion of public goods and funds in the past administration, 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). ============= J A M A I C A ============= JAMAICA: Partners With FAO to Continue Farmers Buy-Back Program --------------------------------------------------------------- RJR News reports that the government of Jamaica has partnered with the Food and Agriculture Organization (FAO), to continue supporting farmers through the Buy-Back Program. The initiative aims to purchase excess produce from farmers and assist those who are unable to sell excess produce due to the downturn in hotel operations caused by the outbreak of the coronavirus across the globe, according to RJR News. The assistance program also aims to redistribute the excess produce from farmers, the report notes. In a recent interview with JIS, Minister of Agriculture and Fisheries, Floyd Green, disclosed that $35 million was received from the FAO to carry on the program, the report relays. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. Standard & Poor's credit rating for Jamaica stands at B+ with negative outlook (April 2020). Fitch's credit rating for Jamaica was last reported at B+ with stable outlook (April 2020). Moody's credit rating for Jamaica was last set at B2 with stable outlook (December 2019). As reported in the Troubled Company Reporter-Latin America, Fitch's revision of Jamaica's outlook in April 2020 to Stable from Positive reflects the shock to Jamaica from the coronavirus pandemic, which is expected to lead to a sharp contraction in its main sources of foreign currency revenues: tourism, remittances and alumina exports. =========== P A N A M A =========== PANAMA CANAL: Moody's Lowers Sr. Sec. Notes to Ba2, Outlook Stable ------------------------------------------------------------------ Moody's Investors Service downgraded to Ba2 from Ba1 the rating assigned to Panama Canal Railway Company's Senior Secured Notes. The Senior Secured Notes had an original face value of $100 million with a final maturity in 2026. The Notes are amortizing and as of December 2020, the outstanding balance was $53.4 million. The rating outlook was revised to stable from negative. Downgrades: Issuer: Panama Canal Railway Company Senior Secured Regular Bond/Debenture, Downgraded to Ba2 from Ba1 Outlook Actions: Issuer: Panama Canal Railway Company Outlook, Changed To Stable From Negative RATINGS RATIONALE The rating downgrade to Ba2 from Ba1 reflects the sharp decline of the company's key financial metrics stemming from further erosion of container volumes as a result of the damage to Gamboa Bridge caused by a ship transiting the Panama Canal, that suspended operations over a three-month period during the year. PCRC was also affected by lower passenger and rental revenues due to lower economic activity caused by the coronavirus outbreak. Going forward, lower economic activity in the region will likely continue to limit the recovery in PCRC's container volumes and other revenues. On Moody's Base Case forecast we expect a volume decline of 37% for 2020 against 2019, which will lead the company to record weak financial metrics. Debt Service Coverage Ratio and Funds from Operations/Debt are projected to be 1.4x and 36% respectively for year-end 2020, performance that is below levels previously noted as potentially triggering a negative rating action. While Moody's expect a cargo recovery for 2021, volumes will likely remain below 2019 levels and DSCR will likely remain below 2.0x. Nonetheless PCRC is expected to generate sufficient cash and collect business interruption insurance to cover its operations including debt service, without drawing from its $5.3 million Debt Service Reserve Fund (equivalent to 6-months of debt service) or the $6 million liquidity reserve. The outlook change to stable from negative incorporates Moody's view that a gradual recovery in container volumes in the next 12-18 months will lead to financial metrics in line with the assigned rating. The stable outlook also incorporates Moody's expectation that the claim from business interruption insurance will be successful and in line with the company's expectation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING A material improvement of container volumes leading to Debt Service Coverage Ratios of 2.0x on a sustained basis could exert upward pression on the rating. Poor container volume performance that prevents the recovery of financial metrics could lead to an outlook change to negative or a rating downgrade. Specifically, a projected Debt Service Coverage ratio below 1.7x on a projected and sustained basis would exert downward pressure on the ratings. ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS Moody's do not consider PCRC to be materially exposed to environmental risks. The project has a long track record of history without any major environmental issues. The project is considered to have low exposure to social risks, given its limited workforce and long track record of operating history. The project is considered to have moderate exposure to government risks. While debtholders benefit from certain project finance features, these compare less favorably with respect to other projects. For example, additional indebtedness is permitted if the DSCR is above 2.0x and the debt service reserve fund is fully funded. The dividend distribution test requires a DSCR above 1.2x, a relatively low level, as well as a fully funded DSRF and liquidity reserve. Nonetheless, PCRC has a solid track record of adequate government practices and does not have any plans to issue additional debt. PCRC is owned by a 50/50 joint-venture between The Kansas City Southern Railway Company (Baa2 stable) and Mi-Jack, a private company that provides lift equipment and services to over 60 intermodal railroad terminals in North America. The principal methodology used in this rating was Generic Project Finance Methodology published in November 2019. =============== P A R A G U A Y =============== BANCO CONTINENTAL: Fitch Gives Final BB+ Rating to Sr. Unsec. Notes ------------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' final Long-Term Rating to Banco Continental S.A.E.C.A.'s (Continental) senior unsecured fixed-rate notes in the amount of USD 300 million with a maturity date of Dec. 10, 2025. The use of proceeds will finance or refinance new or existing eligible green projects and/or eligible social projects. The final rating follows a review of the final terms and conditions conforming to the information received when Fitch assigned an expected rating on Nov. 30, 2020. KEY RATING DRIVERS Continental's senior unsecured notes are rated at the same level as Continental's Long-Term Issuer Default Rating (IDR) of 'BB+', as the likelihood of default of the notes is the same as that of the bank. The notes constitute Continental's senior unsecured obligations, but in the event of liquidation, the notes will be effectively subordinated to the bank's deposits that in case of insolvency are granted preferential treatment under Paraguayan law. Continental's IDRs are driven by its Viability Rating (VR) of 'bb+', which is highly influenced by its company profile, due to its strong local franchise as the largest Paraguayan bank, with nearly 14% of banking system loans. Its strong capitalization metrics relative to its local and similarly rated international peers also highly influence the bank's ratings. Additionally, the VR considers current challenges from the operating environment, the bank's good liquidity ratios, still reasonable but deteriorating profitability and asset quality, as well as its stable but concentrated funding. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Continental's senior unsecured debt ratings are directly linked to the bank's Long-Term IDR. Any negative rating action on the IDR will result in a similar rating action on these debt ratings; -- Continental' ratings could be affected by material weakening of the bank´s currently strong capital metrics (Fitch Core Capital [FCC] sustained below 18%), which could arise from a higher-than-expected operating environment deterioration that materially impacts the bank´s asset quality or profitability metrics, or from a change to its strong competitive position in the local market. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade is unlikely over the foreseeable future, but could result from potential changes in Fitch´s assessment of the Paraguayan operating environment faced by local banks. 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. ===================== P U E R T O R I C O ===================== DESTILERIA NACIONAL: Miramar's Plan Has 90% for Unsec. Creditors ---------------------------------------------------------------- Creditor Miramar Brewing LLC filed a Chapter 11 Small Business Plan and a Disclosure Statement for debtor Destileria Nacional Inc. Under the Plan, Miramar intends to acquire assets of the Debtor, free and clear of liens and encumbrances, for the continued operation of the related business. The primary purpose of the Plan is to provide for payment to all creditors, including administrative and priority claimants, and creditors holding general unsecured claims, in full satisfaction of their claims, on the Effective Date, through the purchase of all of the assets of the Debtor by Miramar. Class 2 consists of general unsecured claims in the aggregate sum of approximately $489,835. Holders of allowed general unsecured claims will receive payment from the sum of $437,901, equivalent to approximately 90 percent of the total amount of claims, to be distributed pro rata, on the Effective Date. The holders of claims in Class 2 are impaired and entitled to vote to accept or reject the Plan. Holders of equity interests on the Debtor will receive no distributions under the Plan on account of their interests. All equity interests will be extinguished on the Effective Date. The holders of Claims in Class 3 are impaired and entitled to vote to accept or reject the Plan. During 2017, 2018 and 2019, as evidenced by copy of the tax returns filed by the Debtor in the Chapter 11 Case, and as reflected in Debtor's Puerto Rico State Department Annual Report for 2019, the Debtor has sustained substantial net operating losses which may create substantial doubts about the Debtor's ability to continue as a going concern and as to the feasibility of any possible plan to be presented by the Debtor. The Plan will be fully funded on the Effective Date by the payment of the purchase price (in the amount of $833,348) by Miramar deriving from an investment of private funds unrelated to the Debtor. Since the Plan will not be funded with revenue from the Debtor, the Plan does not include business projections, as its feasibility does not depend on the success of future operations. Upon the Effective Date, and the consummation of the sale, and after satisfaction of payments on the Effective Date, Miramar will invest in the business, for further growth, resulting in the creation of new business, and the preservation of jobs and the creation of new employment positions. The business plan of the Purchaser for the development of the business will also have a positive effect on trade creditors and service providers, who shall not lose a source of income, but rather will be able to engage in new business. A full-text copy of Miramar's Disclosure Statement dated Dec. 31, 2020, is available at https://bit.ly/2KZR6Ef from PacerMonitor.com at no charge. Attorneys for Miramar Brewing: FERNANDEZ CUYAR ROVIRA & PLA, LLC P.O. Box 9023905 San Juan, Puerto Rico 00902-3905 Telephone: (787) 977-3772 Facsimile: (787) 977-3773 About Destileria Nacional Destileria Nacional, Inc., a beer manufacturer headquartered in Guaynabo, P.R., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-01247) on March 6, 2020. At the time of the filing, the Debtor had estimated assets of between $100,001 and $500,000 and liabilities of between $500,001 and $1 million. Judge Enrique S. Lamoutte Inclan oversees the case. Debtor hired Isabel Fullana-Fraticelli & Asoc. PSC as its legal counsel. ===================================== T R I N I D A D A N D T O B A G O ===================================== CL FINANCIAL: CLICO's 2019 Profits Plunge 95% --------------------------------------------- Trinidad Express reports that the after-tax profits of Central Bank-controlled insurance company, CLICO, plunged by 95 per cent for the year ending December 31, 2019, according to its audited financial statement for the period. CLICO, which collapsed on January 30, 2009, nearly 12 years ago, recorded $123.69 million in after-tax profit in 2019, compared with $2.55 billion in 2018, according to Trinidad Express. The company's net results from investing activities collapsed from $2.77 billion in 2018 to $212.68 million in 2019, the reports notes. And CLICO's net results from insurance activities, declined from a profit of $146.62 million in 2018 to a loss of $223.30 million in 2019, the report relates. The Central Bank has controlled CLICO and British American Trinidad (BAT) since February 13, 2009, when it exercised its special emergency powers under section 44D of the Central Bank Act, the report discloses. The Central Bank assumed control of CLICO, BAT as well as CLICO Investment Bank because "the interests of depositors, creditors and policyholders were threatened; the institutions were likely to become unable to meet their obligations; and the institutions were not maintaining high standards of probity or sound business practices," the relays. While CLICO's profitability suffered a sharp decline in 2019, the insurer's positive net worth continued to climb, jumping by 20.6 per cent from $2.67 billion in 2018 to $3.22 billion in 2019, the report discloses. The company's total assets amounted to $14.89 billion at the end of 2019, while its total liabilities were $11.66 billion, the report notes. The main change in CLICO's balance sheet is the reclassification of over $7 billion in assets, in the form of Government bonds, from investment securities to assets held for sale, the report relays. CLICO also shifted all of its $6.43 billion in insurance contracts—and all but $145.48 million of the $1.66 billion classified as investment contracts—to $7.72 billion of liabilities directly associated with assets held for sale, the report says. That change in accounting treatment was caused by CLICO entering into a sale and purchase agreement with Sagicor Life on September 30, 2019 for the disposal of its traditional insurance portfolio. Note 18 of CLICO's financial statement indicates: "The sales and purchase agreement allows for the parties to exit the contract by mutual agreement as well as by either party, if the other party fails to fulfill stipulated terms as outlined in the agreement," the report discloses. But Note 18 adds: "CLICO remains fully committed to the sale of the portfolio and the execution of the signed agreement. Directives to sell the asset from the Central Bank as controller of CLICO under section 44D of the Central Bank Act have not changed," the report relays. Progress on the sale of CLICO's traditional portfolio has stalled as a result of an injunction granted to Maritime Life (Caribbean) Ltd in July 2020, prohibiting the Central Bank from proceedings with the transfer of the portfolio to Sagicor, pending the final determination of Maritime's judicial review application, the report notes. Change in Actuary CLICO's financial results indicate the company changed its actuary. Canadian actuary Paul Ngai, who served the insurance company between 2004 to 2018, was dropped following its 2018 accounts, which were signed off on June 26, 2019, the report recalls. The actuarial certificate for CLICO's 2019 financial year was signed by its new appointed actuary, Simone Brathwaite, the Barbados-born, Caribbean market leader for the New York-based international management consulting firm Oliver Wyman, the report notes. The Central Bank retained Oliver Wyman Ltd to design the tender and evaluation process for the sale of the traditional insurance portfolios of CLICO and BAT, the report says. Asked whether there was a conflict of interest in CLICO retaining Oliver Wyman as its actuary, when that same firm served as the adviser to the Central Bank on the sale of its insurance portfolio, a CLICO official said the unit serving as the insurance company's independent actuary is "seperate and distinct from the unit that served CLICO during the sale process. There is no conflict," the report relays. The actuarial certificate, signed by Brathwaite on July 21, 2020, states that CLICO's long-term insurance and investment contract liabilities amount to $7.41 billion make proper provision for the future payments under the company's policies and meet the requirements of the Insurance Act and any regulations made in it, the report relates. CLICO's short-term EFPA investment contracts, which totaled $145.48 million, also make proper provision for the future payments under the company's policies, the report notes. CLICO's 2019 audited financial statements were signed by the insurance company's executive chair, Claire Gomez-Miller and its chief financial officer, Jacinta Sohun, last December 30, 2020, the report discloses. The audit was placed on CLICO's website. The insurance company's 2019 audit was published six months later than its 2018 accounts, the report relays. Qualified Opinion Chartered accountants, KPMG, were retained to conduct the audit of CLICO's accounts. The report notes that once again, KPMG qualified its audit opinion, but for the 2019 financial year, the accountants provided more substance under the rubric 'Basis for qualified opinion': 1) According to KPMG, while CLICO's investment in subsidiaries are stated at fair values with a carrying value of $2.58 billion in 2019 (and 2018), "The company has not disclosed a description of the valuation techniques and the quantitative information about significant unobservable inputs used in the fair value measurement for the reasons that are more fully explained in Note 4.3." Note 4.3 of the audit explains that disclosure by CLICO of the valuation techniques and quantitative information "would bring CLICO into a contempt of a Court Order, however the information has been presented to the company's auditor." 2) "The valuation of the investments in subsidiaries is based on outdated information as updated information is not available to management for further analysis," said the auditor, explaining that it had not received "sufficient, appropriate audit evidence" about CLICO's investment in Methanol Holdings International Ltd, the Oman based methanol manufacturer; 3) CLICO's investment in CL World Brands, stated at $629 million, was based on unaudited financial statements of the associate company as at June 30. 2019. KPMG said iy was unable to obtain financial information about CL World Brands between July 31, 2019 and December 31, 2019; 4) KPMG said CLICO recorded $465 million in net insurance benefits and claims and recognized $6.5 billion in insurance contract liabilities as at December 31, 2019. "We were unable to obtain sufficient appropriate audit evidence about the accuracy of the amounts paid out and provided for with respect insurance benefits and claims…because we were not provided with the related original insurance policy documentation, which were not available as supporting evidence for our testing as these were not retained by the company." About CL Financial CL Financial Limited is a privately held conglomerate in Trinidad and Tobago. Founded as an insurance company by Cyril Duprey, Colonial Life Insurance Company was expanded into a diversified company by his nephew, Lawrence Duprey. CL Financial is now one of the largest local conglomerates in the region, encompassing over 65 companies in 32 countries worldwide with total assets standing at roughly US$100 billion. Colonial Life Insurance Company Ltd. (CLICO) is a member of the CL Financial Group. * * * As reported in the Troubled Company Reporter-Latin America on Aug. 6, 2015, Trinidad Express reports that the Constitution Reform Forum (CRF) has called on Finance Minister Larry Howai to refrain from embarking on an "unnecessary drain on the Treasury" by appealing the decision of a High Court judge, who ordered that the Minister fulfil a request by president of the Joint Consultative Council (JCC) Afra Raymond for financial details relating to the bailout of CL Financial Limited. The CRF issued a release stating that if the decision is appealed, not only will it be a waste of finance but such a course of action will also demonstrate a "lack of commitment by the Government to the spirit and intent of the Freedom of Information Act FOIA", under which the request was made, according to Trinidad Express. On July 7, 2014, Trinidad Express said that the Central Bank has placed the responsibility of voluntary separation package (VSEP) negotiations for workers at insurance giant Colonial Life Insurance Company Ltd. (CLICO) with the company's board, after which it will review accordingly, the bank said in a statement. The bank's statement follows protest action by CLICO workers, supported by their union, the Banking, Insurance and General Workers' Union (BIGWU), outside the Central Bank in Port of Spain, according to Trinidad Express. In a separate TCRLA report on June 26, 2014, Caribbean360.com said that the Trinidad and Tobago government has welcomed an Appeal Court ruling that the Attorney General Anand Ramlogan said saves the country from paying out more than TT$1 billion (TT$1 = US$0.16 cents) to policyholders of the cash-strapped CLICO. The Appeal Court overturned the ruling of a High Court that ruled members of the United Policyholders Group (UPG) were entitled to be paid the full sums of their polices. CLICO financially caved in on itself at the end of 2008 after the investment instruments of major policyholders matured and they wanted hundreds of millions of dollars they were owed. On Aug. 6, 2013, the TCR-LA, citing Caribbean360.com, said that over TT$8 billion worth of CLICO's profitable business will be transferred to Atruis, a new company that will be owned by the state. The Trinidad Express said that the Cabinet approved the transfer as the Finance and General Purposes Committee continues to discuss a letter of intent hammered out by the Ministry of Finance and CL Financial's 400 shareholders, which envisions taxpayers will recover the more than TT$20 billion Government has injected since 2009 to keep CL subsidiary CLICO and other companies afloat. At its annual general meeting in Sept. 2013, CL Financial shareholders voted to extend the agreement with Government until August 25, 2014, while Cabinet decides on a new framework accord to recover the debt owed to Government through divestment of CL subsidiaries, including Methanol Holdings, Republic Bank, Angostura Holdings, CL World Brands and Home Construction Ltd., Caribbean360.com related. Proceeds from the divestment of these assets will go toward Government's recovery of the billions it pumped into CLICO. TCRLA reported on Sep 22, 2011, Caribbean News Now, citing Reuters, reported that the cost of the Trinidad and Tobago government bailout of CL Financial Limited is likely to rise to more than TT$3 billion. ================= V E N E Z U E L A ================= PETROLEOS DE VENEZUELA: Judge Sanctioned for Oil Execs Conviction ----------------------------------------------------------------- Jamaica Observer reports that the Trump Administration has imposed sanctions on the Venezuelan judge and prosecutor behind the conviction on corruption charges of six American oil executives. The six employees of Houston-based Citgo were lured to Caracas just before Thanksgiving in 2017, on the pretense of attending a business meeting, according to Jamaica Observer. Once there, they were hauled away from the headquarters of Citgo's parent company, state-run oil company Petroleos de Venezuela, S.A. (PDVSA), by heavily armed, masked security forces, and accused of promoting a never-executed proposal to refinance some $4 billion in Citgo bonds by offering a 50 per cent stake in the company as collateral, the report notes. The so-called Citgo 6, all but one a US citizen, were finally convicted last month and sentenced to between 8 and 13 years in prison, the report relays. President Nicolas Maduro has accused them of "treason". Presiding over the trial were Judge Lorena Cornielles and prosecutor Ramon Torres, who as a result of the action will be blocked from doing business in the US and have any bank accounts or property there seized, the report discloses. "The unjust detention and sentencing of these six US persons further demonstrates how corruption and abuse of power are deeply embedded in Venezuela's institutions," said Secretary Steven T Mnuchin, the report relays. The United States remains committed to protecting its citizens and targeting those who contribute to the illegitimate Maduro regime's usurpation of power in Venezuela, the report discloses. The six men are Tomeu Vadell, Jose Luis Zambrano, Alirio Zambrano, Jorge Toledo, Gustavo Cardenas and Jose Pereira, the report notes. "We just spent a fourth Christmas without our loved one, Tomeu," the Vadell family said in a statement. "It's sad to see more suffering come of all this, but these sanctions are in direct consequence of the judge and prosecutor condemning innocent men and prolonging their hostage-taking," the report adds. About PDVSA Founded in 1976, Petroleos de Venezuela, S.A. (PDVSA) is the Venezuelan state-owned oil and natural gas company, which engages in exploration, production, refining and exporting oil as well as exploration and production of natural gas. It employs around 70,000 people and reported $48 billion in revenues in 2016. In May 2019, Moody's Investors Service withdrew all the ratings of Petroleos de Venezuela, S.A. including the senior unsecured and senior secured ratings due to insufficient information. At the time of withdrawal, the ratings were C and the outlook was stable. Citgo Petroleum Corporation (CITGO) is Venezuela's main foreign asset. CITGO is majority-owned by PDVSA. CITGO is a United States-based refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals and other industrial products. However, CITGO formally cut ties with PDVSA at about February 2019 after U.S. sanctions were imposed on PDVSA. The sanctions are designed to curb oil revenues to the administration of President Nicolas Maduro and support for the Juan Guaido-headed party. ********* 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 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *