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/raid1/www/Hosts/bankrupt/TCRLA_Public/210118.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, January 18, 2021, Vol. 22, No. 7 Headlines B R A Z I L BRAZIL: Retail Sales Drop 0.1% in Nov, Ending Six Months of Growth D O M I N I C A N R E P U B L I C BARRICK GOLD: Operation Hangs by a Thread, Report Says DOMINICAN REPUBLIC: Fitch Rates USD2.5BB Notes Due 2030/2041 'BB-' DOMINICAN REPUBLIC: Issues a US$2.5BB Bond at 3.87% DOMINICAN REPUBLIC: S&P Rates US$2.5BB Notes Due 2030/2041 'BB-' J A M A I C A DIGICEL GROUP: Jabbor Kayumov Appointed CEO of Jamaica Unit M E X I C O FINDEP: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Negative MEXICO: Begins 2021 With Legislative Battles With Businessmen P E R U CAMPOSOL SA: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable X X X X X X X X [*] BOND PRICING: For the Week Jan. 11 to Jan. 15, 2021 - - - - - =========== B R A Z I L =========== BRAZIL: Retail Sales Drop 0.1% in Nov, Ending Six Months of Growth ------------------------------------------------------------------ Rio Times Online reports that retail sales in Brazil, one of the engines of the country's economy, fell by 0.1 percent in November 2020 against October, ending six consecutive monthly increases, the Brazilian Institute of Geography and Statistics (IBGE) reported on January 15. Rising inflation, which led to reduced supermarket sales, was the main reason for the decline, according to Rio Times Online. Brazil's market was negatively impacted in the first half of 2020 by the novel coronavirus pandemic, which caused a drop in sales in March and April, but led to six consecutive months of growth starting in May, 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. =================================== D O M I N I C A N R E P U B L I C =================================== BARRICK GOLD: Operation Hangs by a Thread, Report Says ------------------------------------------------------ Dominican Today reports that the Canadian miner Barrick Gold Corporatio's Dominican Republic operation hangs by a thread as it seeks the support of various Dominican sectors to avert an eventual shutdown of the Pueblo Viejo mine, in Cotui (northeast). The mine's potential lifespan is over 20 additional years to extract gold and silver, according to Dominican Today. Barrick's open pit mine covers a mountainous area of 4,800 hectares in Sanchez Ramirez province since 2013, after an initial investment of US$45 billion, which the company claims it has yet to recover, despite having paid the Dominican State around US$2.3 billion in taxes and other concepts, the report notes. The global mining giant says the Dominican Government has kept 52% of the cash flows from the operation, while Barrick has obtained 48%, or US$2.08 billion, the report relays. "Just in 2020, Barrick Pueblo Viejo has accumulated tax payments for 385 million dollars and agreed to advance 95 million dollars corresponding to the 2021 tax burden, so that the government can face the emergency caused by the pandemic," Diario Libre reports, the report adds. DOMINICAN REPUBLIC: Fitch Rates USD2.5BB Notes Due 2030/2041 'BB-' ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB-' rating to Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041. Concurrently, the Dominican Republic reopened its 2030 4.5% notes for an additional USD1.0 billion, which Fitch rates 'BB-', raising the total outstanding amount of the 2030 notes to USD2.0 billion. Proceeds from the 2041 and reopened 2030 notes will be used for general purposes of the government, including the partial financing of the Dominican Republic's 2021 budget. KEY RATING DRIVERS The bond rating is in line with Dominican Republic's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BB-'. RATING SENSITIVITIES Factor that could, individually or collectively, lead to a positive rating action/upgrade: -- The bond rating would be sensitive to any positive changes in Dominican Republic's Long-Term Foreign Currency IDR. Factor that could, individually or collectively, lead to a negative rating action/downgrade: -- The bond rating would be sensitive to any negative changes in Dominican Republic's Long-Term Foreign Currency IDR. 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 The Dominican Republic has an ESG Relevance Score of '5' for Political Stability and Rights, as World Bank Governance Indicators have the highest weight in Fitch's SRM and are highly relevant to the rating and a key rating driver with a high weight. The Dominican Republic has an ESG Relevance Score of '5' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption, as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. The Dominican Republic has an ESG Relevance Score of '4' for Human Rights and Political Freedoms, as strong social stability, and voice and accountability are reflected in the World Bank Governance Indicators that have the highest weight in the SRM. They are relevant to the rating and a rating driver. The Dominican Republic has an ESG Relevance Score of '4' for Creditor Rights, as willingness to service and repay debt is relevant to the rating and is a rating driver for the U.S., as for all sovereigns. The Dominican Republic has an ESG Relevance Score of '4' for Energy Management, as the inefficiency of the fossil-fuel-intensive national electricity system is a rating driver affecting Dominican Republic's public financial performance. The Dominican Republic has an ESG Relevance Score of '4' for Human Development, Health and Education, as managing the impact of the coronavirus crisis is having an adverse impact on public finances, which is relevant to the rating and a rating driver. 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(ies), either due to their nature or to the way in which they are being managed by the entity(ies). DOMINICAN REPUBLIC: Issues a US$2.5BB Bond at 3.87% --------------------------------------------------- Dominican Today reports that the Dominican Government, through the Finance Ministry, issued a US$2.5 billion sovereign bond, according to the provisions of the 2021 Budget, approved by Congress. According to official information, the transaction was structured in two tranches; the first, a reopening of an existing bond for US$1.0 billion due in 2030, at 3.87%, representing a reduction in the cost for the country, in this term it's of 0.63%, the report notes. The second tranche is a new US$1.5 billion bond maturing in 2041, at 5.3%, being the first Latin American sovereign and emerging market issuance with a 20-year maturity, according to Dominican Today. The issue, directed by Finance Minister Jochi Vicente, had a historic demand of US$10.0 billion, or four times the amount that was required, the report relays. 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: S&P Rates US$2.5BB Notes Due 2030/2041 'BB-' ---------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue rating to the Dominican Republic's US$2.5 billion notes: -- US$1 billion due in 2030 at a 4.5% interest rate, and -- US$1.5 billion due in 2041 at a 5.3% interest rate. The rating on the notes is the same as the long-term foreign currency sovereign credit rating on the Dominican Republic (BB-/Negative/B). The sovereign will use the issuance proceeds for general budgetary purposes. S&P said, "Our ratings on the Dominican Republic reflect the country's fast-growing and resilient economy, which is vulnerable to external shocks but is likely to have better potential to return to high economic growth and alleviate recent external weaknesses compared with most rating peers. "On the other hand, our ratings are constrained by the country's historical political challenges in passing structural reforms to contain large fiscal deficits. "The negative outlook indicates our view that in the context of severe economic downturns, the long-standing inability to pass meaningful reforms could exacerbate external and fiscal weaknesses, as well as weaken economic recovery." ============= J A M A I C A ============= DIGICEL GROUP: Jabbor Kayumov Appointed CEO of Jamaica Unit ----------------------------------------------------------- RJR News reports that Jabbor Kayumov has been appointed the new Chief Executive Officer of Digicel Jamaica. Mr. Kayumov was previously head of Digicel's operations in Trinidad & Tobago, according to RJR News. He has also held senior roles with international telecoms operators like Veon and Telia in South East Asia and post-Soviet countries, the report notes. About Digicel Group Digicel Group is a mobile phone network provider operating in 33 markets across the Caribbean, Central America, and Oceania regions. The company is owned by the Irish billionaire Denis O'Brien, is incorporated in Bermuda, and based in Jamaica. As reported in the Troubled Company Reporter-Latin America April 17, 2020, Moody's Investors Service downgraded Digicel Group Limited's probability of default rating to Caa3-PD from Caa2-PD. At the same time, Moody's downgraded the senior secured rating of Digicel International Finance Limited to Caa1 from B3. All other ratings within the group remain unchanged. The outlook is negative. On April 10, 2020, the TCR-LA reported that Fitch Ratings has downgraded Digicel Limited to 'C' from 'CCC', and its outstanding debt instruments, including the 2021 and 2023 notes to 'C'/'RR4' from 'CCC'/'RR4'. Fitch has also downgraded Digicel International Finance Limited to 'CCC+' from 'B-'/Negative, and its outstanding debt instruments, including the 2024 notes and the 2025 credit facility, to 'CCC+'/'RR4' from 'B-'/'RR4'. Fitch has removed the Negative Rating Outlook from DIFL. =========== M E X I C O =========== FINDEP: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Negative ----------------------------------------------------------- Fitch Ratings has affirmed Financiera Independencia S.A.B. de C.V., SOFOM, E.N.R.'s (Findep) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and global senior unsecured debt at 'BB-' and Short-Term Local and Foreign Currency IDRs at 'B'. The Rating Outlook on the Long-Term rating is Negative. In addition, Fitch has affirmed Findep's Long- and Short-Term National Scale ratings at 'A-(mex)' and 'F1(mex)', respectively. The Rating Outlook on the Long-Term national rating is Negative. Fitch has also affirmed the National Long- and Short- Term ratings of Findep's subsidiary, Apoyo Economico Familiar S.A. de C.V., SOFOM, E.N.R. (AEF) at 'A-(mex)' and 'F1(mex)', respectively. The Rating Outlook is Negative. In December 2020, Findep announced an agreement to sell the majority of its payroll discount loan portfolio and total capital from its subsidiary, Fisofo, S.A. de C.V., SOFOM, E.N.R. (Fisofo) to Grupo Consupago, S.A de C.V. Fisosfo's credit portfolio of MXN 902 million represented approximately 12% of Findep's total loan portfolio as of September 2020 (3Q20). Findep also previously announced the sale of the loan portfolio of Financiera Finsol, S.A. de C.V., SOFOM, E.N.R. (Finsol Mexico), the immediate and future effects of which partially resulted in a downgrade of Findep's ratings in October 2020. Together with a lower origination pace due to the pandemic, these transactions will reduce Findep's consolidated loan portfolio by roughly 20% by YE20. As of 3Q20, the company's client base and number of branches shrank 22% and 4% year-over-year (YoY), respectively. The Negative Outlook reflects Fitch's expectations that the harsh economic environment will continue to pressure Findep's financial profile (mainly asset quality and profitability) in the medium term. Fitch believes that the company's business model, which is focused on unsecured personal lending to low-income customers is highly sensitive to Mexico's economic slowdown and higher formal and informal unemployment, despite its diversification in the U.S. and Brazil. KEY RATING DRIVERS FINDEP's IDRs, National Scale Ratings and Senior Debt Findep's ratings reflect with high importance the operating environment, its company profile and profitability. In Fitch's view, Findep's well positioned franchise in microfinance, as well as its geographic diversification, with a presence in Mexico, the U.S. and Brazil, partly offsets the higher risk of its business model, which is focused on unsecured consumer and microfinance lending to low income customers. In particular, Findep's operations in the U.S. support Fitch's assessment of the company's operating environment of 'bbb-' with a negative trend. The operating environment's negative trend reflects worsening economic conditions across all countries of operation that will continue to adversely affect its customers' repayment capacity. In Fitch's view, the recent sales of the group's micro-lending and payroll businesses aim to reduce Findep's risk exposure to a non-strategic business in highly competitive niches. However, the reduced size of its business operations could lead to short-term pressure on Findep's profitability and asset quality. Fitch expects the sale of the payroll portfolio to drive an additional modest increase in the NPL ratio because payroll lending has lower delinquency ratios. Additionally, the Finsol transaction will reduce Findep's net income by MXN453 million at the end of 4Q20 due to the recognition of the full impairment of goodwill, while the sale of Fisofo will increase Findep's cash balance sheet. Findep's profitability, also a high importance rating factor, remains pressured by the economic downturn due to coronavirus crisis. As of 3Q20, Findep's pre-tax income to average assets ratio decreased to 0.2%, from 3.7% as of YE19 (2016-2019 average: 2.9%) due to higher credit costs, reduced cash collections as well as lower interest income. Fitch highlights profitability pressures were partly compensated by non-recurring income derived from the rebalancing of derivative hedge positions and positive gains from the reduction of market debt that occurred in 2Q20. Fitch expects short-term profitability pressures from subdued credit activities and increased credit costs due to asset quality deterioration. Findep's asset quality maintains a deteriorating trend and compares negatively with similarly rated peers. Fitch believes there is still headroom for further deterioration given the negative economic conditions. As of 3Q20, the adjusted NPL ratio (which comprises impaired loans and annualized charge-offs) deteriorated to 22.7% compared with the 2016-2019 average of 19.3%. All relief programs ended in September 2020 after reaching 18% of the total portfolio as of June 2020. As of 3Q20, more than 55% of the clients that received some kind of relief were between 0-14 days past due after the termination of the relief programs. Loan loss allowances covered 1.8x impaired loans as the entity has provisioned to absorb expected asset quality deterioration. Findep's leverage position is sound and compares well with similarly rated peers. As of 3Q20, Fitch's tangible leverage ratio improved to 2.7x, from its four-year average of 3.7x (2016-2019). The improvement in leverage mainly reflected the partial repurchase of Findep 2024 global notes and the repayment of some credit facilities. Fitch expects Findep's capitalization to remain commensurate with its ratings given lower expected credit growth and could partially absorb earnings deterioration in the short term. Findep's funding structure is relatively more flexible than other Fitch-rated Mexican NBFIs given the higher proportion of unsecured funding (64% as 3Q20) but with some concentration in market debt in global and local markets, which is sensitive to market sentiment. The company has been able to renew some credit facilities and mitigate liquidity and refinancing risk, which has increased due to the worsened economic environment. Fitch believes Findep's short-term liquidity pressures may ease as cash collections recover and the loan portfolio resumes growth, but under a stress scenario further pressure on liquidity could arise in the event of new mobility restrictions and economy lockdowns. As of 3Q20, available funding sources and liquid assets (cash and investments) covered about 155% of debt maturities over the next 12 months. Findep exhibits positive cumulative liquidity gaps over the next three years. Findep's global debt issuance is in line with its respective corporate rating level, as the debt is senior unsecured. AEF NATIONAL SCALE RATINGS AEF's national ratings reflect Fitch's evaluation of its parent's ability and propensity to provide support if needed. Fitch's support assessment mainly considers the high level of management and operational integration and funding fungibility, as well as this subsidiary's core role in its group. AEF products are core to the consolidated operation, which is narrowing its focus to consumer unsecured loans and is testing a new type of loan in AEF. Management, operations and risk controls are consolidated with the holding company, which also provides funding to the subsidiary. Fitch will closely monitor Findep's ability to support AEF, especially if the current pandemic results in a reduced ability to provide support as a result of a negative impact on Findep's business and financial profiles. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: Findep -- A downgrade of Findep's ratings could be triggered by a material deterioration in the company's asset quality which sustains profitability ratios consistently below 1%, and weakens its capital position. Specifically, a sustained increase in the debt/tangible equity ratio consistently above 5.5x would be negative. -- A downgrade could also arise from a relevant deterioration of Findep's business prospects and diversification, which could result in a change on Fitch’s assessment of its company profile and operating environment. -- A significant change to its funding structure or liquidity management could also lead to a downgrade. AEF -- AEF's ratings could be downgraded if Findep's ratings are downgraded or by a change on Fitch's evaluation of the entity's strategic importance to the parent. -- AEF's ratings could also be downgraded due to reduced institutional support ability or propensity from Findep, as a result of the effects of the coronavirus on its parent company business and financial profiles. Factors that could, individually or collectively, lead to positive rating action/upgrade: Findep -- Rating upside potential is unlikely in the near term. -- The Negative Outlook could be revised back to Stable if the operating environment stabilizes and if the entity's credit and company profile is sustained or rapidly rebuilt towards levels commensurate to its current rating, which will also depend on the ability of Findep to confront current challenges and to contain asset quality and profitability deterioration. -- Over the medium term the ratings could be upgraded by a significant and sustained improvement in the company's overall financial profile, especially profitability and asset quality. AEF An upgrade of AEF's ratings will be driven by an upgrade of Findep's ratings. SENIOR DEBT Senior debt ratings would mirror any changes in Findep's IDRs or could be downgraded below Findep's IDR if the level of unencumbered assets substantially deteriorates, subordinating bondholders to other debt. 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. ESG CONSIDERATIONS Findep has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security as its business model has high lending rates to unbanked, lower-income segments of the population which exposes Findep to relatively high regulatory, legal and reputational risks. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Findep has an ESG Relevance Score of '4' for Exposure to Social Impacts given that its business model (individual loans to low-income segments) is exposed to shifts of consumer or social preferences or to measures that the government could take to increase financial inclusion. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Findep has an ESG Relevance Score of '4' for Management Strategy driven by frequent managerial shifts which has resulted in a limited track record in the company's adherence to strategic objectives and execution. This has a negative impact on the credit profile, and is 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 - 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. MEXICO: Begins 2021 With Legislative Battles With Businessmen ------------------------------------------------------------- Pedro Pablo Cortes at EFE News reports that the Mexican government begins this year with new and controversial legislative battles with businessmen regarding employment, renewable energy, autonomous entities and the Bank of Mexico (Banxico), all of which could disrupt its plan for a quick economic recovery. "They are really very important threats for Mexico's good economic progress," Prof. Luis Guimes, with the Mexicali campus of the CETYS Graduate School of Business, told EFE. Just this past week, the first of the year, President Andres Manuel Lopez Obrador revived old initiatives and new policies to overturn the "reforms of the neoliberal period," according to EFE News. The president defended the announcement of the Federal Electricity Commission (CFE) to take private renewable energy generators out of operation, blaming them for the massive blackout that affected 10.3 million people in December, the report notes. He also sparked indignation when he announced that he will seek to eliminate autonomous entities like the Federal Telecommunications Institute (IFT), the Federal Economic Competition Commission (Cofece) and the Energy Regulatory Commission (CRE), the report discloses. "They don't work, they don't benefit the public, but it does cost a lot to maintain them," Lopez Obrador said, the report discloses. The Business Coordinator Council (CCE), Mexico's top private sector organization, expressed its "concern" over the president's remarks warning that the economy "is starting out weak in 2021," the report notes. "In such difficult times as these for our country, when we all must be seeking alternatives to promote economic activity, it scarcely pays to attack productive sectors," said the organization, the report discloses. To these measures can be added the president's initiative to eliminate work subcontracting, known as "outsourcing," and the reform that will force Banxico to buy dollars that the private bank cannot repatriate, a situation that puts the central bank at risk of receiving illicit cash, the report relates. The report relays that the president and his party, the National Regeneration Movement, or Morena, warned that they will back these measures despite the fact that they had already negotiated with the private sector on the matter. "The federal government, since it (came into office) has been a continuous attack on private initiative, above all on business organizations," Guemez added. The uncertainty remains as Mexico deals with the Covid-19 pandemic, which has infected more than 1.52 million Mexicans and killed 133,000 of them, the report notes. EFE News discloses the health crisis led to a 9.6 percent contraction in the country's GDP during the first nine months of 2020. The president and the Treasury and Public Credit Secretariat (SHCP) estimate that the Mexican economy contracted by 8 percent in 2020 but that it will have a 4.6 percent rebound in 2021, the report relays. However, Guemez doubts the government's optimism. "To get back to the GDP level we had in January 2019, four years of any government are not enough to attain the same size of the economy," he added. The report discloses that the professor also warned that the reforms could endanger the US-Mexico-Canada Agreement, the government's main hope for rejuvenating the economy. In particular, the initiative to eliminate outsourcing puts the five million workers who depend on it for their livelihoods, the director of Tallentia MX, Elias Micha, told EFE. "We're seeing how dangerous it is to stigmatize subcontracting and it's even more dangerous to do it in a crisis year," the business leader said, the report adds. ======= P E R U ======= CAMPOSOL SA: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Csol Holding Ltd (Camposol) and Camposol S.A.'s Long-term (LT) foreign and local currency Issuer Default Ratings (IDRs) at 'BB-'. Fitch has also affirmed Camposol S.A.'s senior unsecured notes at 'BB-'. The Rating Outlook is Stable. KEY RATING DRIVERS Leading Position in Peru: Camposol is the leading agro-industrial company in Peru through the vertically integrated production of food products such as avocados, blueberries and other produce. The company's profitability is enhanced by its control of the value chain consisting of research and product development, growing fields, processing facilities and sales and distribution channels. Camposol benefits from the worldwide trend toward the consumption of healthy and more convenient products due to its production of fresh fruits and vegetables. The company exports its products globally with 59% of revenues coming from North America, 31% from Europe and 7% from Asia. Avocados, blueberries and other products represented 21%, 54% and 25% of total gross profit, respectively, as of Sep. 30, 2020. Expected Deleveraging: Lower prices of avocado and lower volumes in blueberries due to cold weather, the pandemic and the strikes in Peru have negatively affected the company's performance in 2020. The company's net leverage is currently weak for the 'BB-' rating category, with 2020 net leverage ratio forecast to reach 3.7x on an adjusted EBITDA (IFRS16) of USD100 million. Better yields and the maturation of the crops will boost future production from avocados and crops such as tangerines, grapes and mangoes. 59% of planted fields are in the high-yield phase at the end of September. Fitch expects Camposol to deleverage to around 3x in 2021 due to a rebound in adjusted EBITDA to around USD 120 million based on better prices for avocado, higher volumes, increased operating efficiency and profitability from blueberries. The company is expected to continue deleveraging to below 3x in 2022. Moderate Investment: Camposol has scaled down its initial investment plan due to the pandemic. Fitch's base case expects Camposol to invest approximately USD45 million-USD50 million between 2020 and 2021. An economic recovery could boost this figure, limiting the ability for the company to generate strong FCF after dividends. The company's operating cash flow comes predominately from Peru; the contribution of overseas operations remain limited as planted crops need time to reach maturity in countries such as Colombia and Uruguay. Profitability from investments abroad is expected to materialize only in the medium term. Exposure to Price and Climatic Risks: Rating constraints include Camposol's exposure to price and production yield fluctuations. External factors such as the El Nino/La Nina weather phenomena, which could cause damage or logistical issues, also are negatively factored into the company's ratings, as the company has faced several El Nino phenomena in the past five years. DERIVATION SUMMARY Camposol's 'BB-' rating reflects the company's medium-sized operational scale and the geographic concentration of its production base, which is weak compared with other commodity traders and processors such as Bunge Limited (BBB-/Stable). Camposol's business profile is unique in Fitch's commodity rated portfolio in light of its products sold (avocados, blueberries, and others); other peers, such as Corporacion Azucarera del Peru S.A. (B/Stable), are mainly in the sugar and ethanol segments with less diversification. The company operates in a high business risk commodity industry, where performance is subject to external shocks such as climatic events, natural disasters and potential supply and demand imbalances, creating yield and price volatility. KEY ASSUMPTIONS -- Adjusted EBITDA (IFRS16) of about USD100 million in 2020; -- Capex of about USD45 million-USD50 million in 2020 and 2021; -- Dividends of about USD30million per year. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Improved geographical diversification of the production base; -- Net leverage below 2.0x on a sustained basis; -- Strong positive FCF. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Net leverage above 3.0x on a sustained basis; -- EBITDA coverage ratio below 2x; -- Weak liquidity. 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. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Camposol has sufficient cash on hand and quality access to the local market to finance working capital requirements. The company's debt is currently mainly composed of working capital banks lines, as the company prepaid its secured debt in early 2020 with the issuance of seven-year USD350 million unsecured notes. ESG CONSIDERATIONS Fitch has increased Camposol's ESG Relevance Score to '4' from '3' in Governance Structure for ownership concentration. The shareholder's strong influence upon management could result in decisions detrimental to the company's creditors. This has a negative impact on the credit profile, and is 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. =============== X X X X X X X X =============== [*] BOND PRICING: For the Week Jan. 11 to Jan. 15, 2021 ------------------------------------------------------- Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Esval SA 3.5 49.9 2/15/2026 CL CLP Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL YPF SA 16.5 67.3 5/9/2022 AR ARS Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Sylph Ltd 2.4 65.1 9/25/2036 KY USD Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD Noble Holding Internat 6.1 62.0 3/1/2041 KY USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL SACI Falabella 2.3 50.6 7/15/2020 CL CLP Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD Enel Americas SA 5.8 32.7 6/15/2022 CL CLP Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP Empresa Provincial de 12.5 0.0 1/29/2020 AR USD Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY Noble Holding Internat 5.3 60.5 3/15/2042 KY USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Polarcus Ltd 5.6 71.8 7/1/2022 AE USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Noble Holding Internat 6.2 62.2 8/1/2040 KY USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD Plaza SA 3.5 38.3 8/15/2020 CL CLP Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD Banco Security SA 3.0 27.4 6/1/2021 CL CLP Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP Banco Security SA 3.0 5.6 7/1/2019 CL CLP MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD Fospar S/A 6.5 1.2 5/15/2026 BR BRL China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD YPF SA 16.5 67.3 5/9/2022 AR ARS MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD mpresa de Transporte 4.3 30.9 7/15/2020 CL CLP Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD YPF SA 16.5 67.3 5/9/2022 AR ARS Provincia del Chubut A 4.5 2208 3/30/2021 AR USD Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD ********* 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. 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