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/raid1/www/Hosts/bankrupt/TCRLA_Public/210120.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, January 20, 2021, Vol. 22, No. 9 Headlines B R A Z I L BANRISUL: Fitch Assigns B(EXP) Rating on Tier 2 Subordinated Notes BRAZIL: Inflation 6.22% for Poorest vs. 2.74 for Wealthiest BRAZIL: Inflation Hits 4.52% in 2020, Highest Since 2016 BRAZIL: Vehicle Stocks in Plants and Dealerships Lowest in History D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Exports to Haiti Rise, to Puerto Rico Slide DOMINICAN REPUBLIC: Prices Climb 0.48% in December DOMINICAN REPUBLIC: Reports 1,625 New Covid Cases for Jan. 19 P E R U PERU: Hospitals Under Pressure From Covid-19 Second Wave P U E R T O R I C O ALLIED FINANCIAL: Plan Headed for March 10 Confirmation Hearing V E N E Z U E L A VENEZUELA: Open to Foreign Investment in Oil Sector - - - - - =========== B R A Z I L =========== BANRISUL: Fitch Assigns B(EXP) Rating on Tier 2 Subordinated Notes ------------------------------------------------------------------ Fitch Ratings has assigned an expected rating of 'B(EXP)' to Banco do Estado do Rio Grande do Sul S.A. 's (Banrisul) Tier 2 (T2) subordinated notes. The notes have a 10-year tenor but may be redeemed in whole at the option of the Issuer on the fifth anniversary of the issuance. Interest will be payable on a semi-annual basis. The size of the issuance is not yet determined but will likely be a benchmark size. According to the draft terms, the notes are subject to permanent partial or full write off upon the occurrence of a non-viability event (NVE) and if Banrisul's Common Equity Tier 1 (CET1) capital falls below 4.5% of RWA as determined by the Brazilian regulator. The final rating is subject to the receipt of final documentation conforming to information already received by Fitch. KEY RATING DRIVERS The notes are rated two notches below Banrisul's Viability Rating (VR) of 'bb-'. The notching is driven by the subordinated status and the expected high loss severity of the notes. No notching for nonperformance is applied, because there is no coupon flexibility as coupons must be paid and are not deferrable, while the write-off trigger is close to the point of non-viability. As a result, Fitch believes that the incremental non-performance risk is not material from a rating perspective. Banrisul expects these securities to qualify as T2 regulatory capital in accordance with Resolution 4193, subject to the Central Bank of Brazil's approval and use for general corporate purposes. Banrisul's VR and Issuer Default Ratings (IDRs) reflect the resilience and stability of the bank's business model and franchise in recent years, despite the challenging regional operating environment of the State of Rio Grande do Sul. Banrisul's IDRs derive from its VR and are highly influenced by the company's profile and asset quality, with adequate credit metrics in recent years. RATING SENSITIVITIES As the bank's notes are aligned with its VR, 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: -- The subordinated debt rating will be upgraded if Banrisul's VR is upgraded. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- The subordinated debt rating will be downgraded if Banrisul's VR is downgraded. 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 Banrisul has an environmental, social and governance (ESG) Relevance Score of '4' for Governance Structure due to its state-owned nature that increases potential political interference risks, which in turn 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. BRAZIL: Inflation 6.22% for Poorest vs. 2.74 for Wealthiest ----------------------------------------------------------- Richard Mann at Rio Times Online reports that the Institute of Applied Economic Research (IPEA) says that in Brazil, the inflation rate for families with the lowest monthly income -- less than R$1,650.50 (US$311) -- stood at 1.58% in December 2020. In the bracket representing higher income families (with household income over R$16,509.66), the variation was 1.05%, with a difference of 0.53 percentage points between the two groups, according to Rio Times Online. In the year-to-date, while lower income families' inflation rose 6.22%, the high income segment registered a lower rate: 2.74%, 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. BRAZIL: Inflation Hits 4.52% in 2020, Highest Since 2016 -------------------------------------------------------- Rio Times Online reports that with a 1.35% rise in December, largely driven by higher electricity bills, the Broad Consumer Price Index (IPCA), Brazil's official inflation indicator, closed 2020 up 4.52%, the highest since 2016. The result, announced on Jan. 12, by the Brazilian Institute of Geography and Statistics (IBGE), was over the 4.0% target pursued by the Central Bank (BC), with a tolerance margin of 1.5 points plus or minus, according to Rio Times Online. In the year marked by Covid-19, food prices set the tone, the report relays. 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. BRAZIL: Vehicle Stocks in Plants and Dealerships Lowest in History ------------------------------------------------------------------ Richard Mann at Rio Times Online reports that automobile inventory in plants and dealerships in Brazil start 2021 at their lowest level ever. According to data released by ANFAVEA, the association comprising the sector's manufacturers, the current volume of cars is enough for only 12 days of sales, the report notes. Under normal circumstances, this stock is between 30 and 35 days of sales, according to Rio Times Online. With the restrictions imposed by Covid-19, parts are lacking and finished vehicle inventory is enough for only 12 days of sales, compared to between 30 and 35 days under normal circumstances, the report relays. One of the main reasons for this situation is the shortage of parts, the report adds. 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 =================================== DOMINICAN REPUBLIC: Exports to Haiti Rise, to Puerto Rico Slide --------------------------------------------------------------- Dominican Today reports that Dominican Exporters Association (ADOEXPO) president Elizabeth Mena labeled as very positive for trade relations with the Dominican Republic, the recent meetings President Luis Abinader held separately with his counterparts from Puerto Rico, Pedro Pierluisi and Haiti, Jovenel Moise. Mena highlighted that Haiti is the third destination with the highest volume of national exports and Puerto Rico the fourth, so she sees it necessary to "continue consolidating efforts to increase commercial dynamism with the two states closest to the Dominican Republic," according to Dominican Today. The president of ADOEXPO indicated that exports to Haiti went from US$765.4 million from January to November 2019 to US$689.9 million in the same period of 2020, or a 9.9% jump, the report relays. Mena stated that in 2020 exports to Puerto Rico, under the Free Zones regime, reached US$249.1 million, the report notes. Exports to Haiti Mena said Haiti was the third largest importer of products from the Dominican Republic for the period January to November 2020, with US$689.8 million, 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: Prices Climb 0.48% in December -------------------------------------------------- Dominican Today reports that the Central Bank of the Dominican Republic (BCRD) said consumer prices climbed 0.48% in December compared to November 2020. "Inter annual inflation associated with the analytical series of the new reference base closed the year at 4.63%," it said in a press release, according to Dominican Today. "Both the annualized inflation of the reference series and the underlying inflation remain within the target range of 4.0% ± 1.0% established in the Monetary Program," 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). DOMINICAN REPUBLIC: Reports 1,625 New Covid Cases for Jan. 19 ------------------------------------------------------------- Dominican Today reports that in the last 24 hours leading to January 19, 2021, the Dominican Republic added 13 deaths and 1,625 new cases positive for coronavirus, Public Health has related. Of the 13 deaths, three were registered on Jan. 18, bringing the total nationwide to 2,461 since the virus arrived in the country. Public Health also establishes that the accumulated number of positives is 196,591, of which 49,015 cases remain active and 145,115 recovered. 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). ======= P E R U ======= PERU: Hospitals Under Pressure From Covid-19 Second Wave -------------------------------------------------------- EFE News reports that intensive care units at hospitals across Peru were packed with Covid-19 patients as the numbers of deaths and new infections reached levels not seen in months. The number of people on assisted breathing in ICUs reached 1,553, the same as on Aug. 13, when Peru set a new record for patients hooked up to ventilators, according to EFE News. That statistic came from the head of the EsSalud public health service, Fiorella Molinelli, who said that while ICUs are at roughly 90 percent capacity on average, hospitals in areas already experiencing the impact of the second wave of the pandemic are nearly full. Such is the case at EsSalud's Alberto Sabogal Hospital in Callao, the port city neighboring Lima, where all 40 ICU beds were occupied, the report relays. "It is very sad to turn away patients who can't enter intensive care and not even be able to refer them elsewhere because there are no beds in other hospitals either, Dr. Carmen Zarate, chief of the ICU at Sabogal, told EFE News. "Now we see the arrival of patients with greater respiratory difficulty," she said. "They come with (blood oxygen) saturation of 93 percent and a real need to receive oxygen," the report notes As recently as a few weeks ago, relatively few of the Covid-19 patients coming through the door at Sabogal Hospital required ICU care, the report discloses. "We are worried because we can no longer provide care. There is a lack of awareness in the population. I don't know if it's really because we are tired of being home and taking care of ourselves, because it seems that people want to get infected and achieve herd immunity," the physician said, the report relays. Dr. Emanuel Benavente, coordinator of the Covid-19 team at Sabogal, told EFE that patient admissions are far outpacing the number of people discharged. "We are hospitalizing between 16 and 18 patients per shift, while there are some eight discharges in the same period," he said, the report notes. Sabogal is in the process of expanding its capacity by 30 percent and has a contingency plan to boost the number of beds by up to 70 percent if warranted, the report says. "We are in a containment phase, but we are getting to a point in which the growth is so rapid that the decisions and actions we take have to be equally rapid to be able to confront this increase," Benavente added. Besides the ICU patients, more than 6,200 other people are being treated at hospitals for coronavirus. At the start of December, the number of Covid-19 hospitalizations was around 3,500, the report relays. Since then, Peru has detected more than 60,000 new cases, including some involving the new variant of the virus that emerged last month in the United Kingdom, the report discloses. More than 1 million Peruvians have been infected and the death toll in this nation of 32.6 million people is approaching 39,000, the report says. Foreign Minister Elizabeth Astete said during an appearance in Congress that the first consignment of the 38 million doses of the Covid-19 vaccine Lima acquired from China's Sinopharma is ready for shipment, the report notes. The Peruvian government also has a contract for 14 million doses of the Oxford University/AstraZeneca vaccine and expects to obtain another 13.3 million doses through the UN's Covax initiative, the report adds. ===================== P U E R T O R I C O ===================== ALLIED FINANCIAL: Plan Headed for March 10 Confirmation Hearing --------------------------------------------------------------- Judge Mildred Caban Flores has approved the Amended Disclosure Statement explaining Allied Financial Inc.'s Chapter 11 Plan dated Aug. 10, 2020. Accordingly, a hearing for the consideration of confirmation of the Plan and any objection as may be made to the confirmation of the Plan will be held on March 31, 2021, at 9:00 a.m. via Microsoft Teams. The Bankruptcy Court further ordered that: * Acceptances or rejections of the Plan may be filed in writing by the holders of all claims on/or before 14 days prior to the date of the hearing on confirmation of the Plan. * Any objection to confirmation of the Plan are due 14 days prior to the date of the hearing on confirmation of the Plan. * Objections to claims must be filed prior to the hearing on confirmation. The August 2020 Amended Disclosure Statement replaces the original Disclosure Statement filed on May 12, 2016. Since the filing of the original Disclosure Statement, the Debtor continued marketing and selling its properties providing full payment to creditors such as Banco Popular de Puerto Rico and Condado 2, LLC. The Debtor continued collecting and/or prosecuting its accounts receivable. Moreover, extensive discovery and litigation took effect during this period of time, including the Debtor's legal right to "derecho de retracto" under PR Civil Code, Art. 1525 and the pertinent discovery toward that end. The Debtor has also objected the Proof of Claims filed by WM Capital Partners 53 LLC. Class 10 consists of general unsecured creditors with claims totaling $1,970,202. From this amount, the amount of $1,919,540 is owed to Allied Management Group Inc. Allied as agreed to make a capital contribution, to the Debtor, solely under this Amended Plan, no payment will be made to Allied. Class 10 will be paid 3% of their claim, in equal monthly installments, within 36 months from the Effective Date. A copy of the Amended Disclosure Statement dated Aug. 10, 2020, is available at https://bit.ly/39F6eiP About Allied Financial Allied Financial, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 16-00180) on Jan. 15, 2016. At the time of the filing, the Debtor disclosed total assets of $10.3 million and total debt of $9.14 million. Judge Mildred Caban Flores oversees the case. C. Conde & Assoc. is the Debtor's legal counsel. ================= V E N E Z U E L A ================= VENEZUELA: Open to Foreign Investment in Oil Sector --------------------------------------------------- Jorge Jraissati at aa.com.tr reports that the Venezuelan government is welcoming foreign investment in the country's oil sector as part of President Nicolas Maduro's goal of increasing oil production to 1.5 million barrels per day. Maduro manifested his intention to bring foreign investment into the sector in his annual accountability speech, according to aa.com.tr. Maduro's strategy to boost oil output was initially announced last October, when he introduced a new piece of legislation called the "anti-blockage law," the report relays. The law, which was approved by Venezuela's Constitutional Assembly on Oct. 8, includes the granting of a series of extraordinary powers to the president in matters related to economic policy, the report notes. The legislation opens the door for the privatization of Venezuela's state oil producer PDVSA by modifying the country's laws regarding joint ventures in Venezuelan oil fields, the report discloses. Currently, foreign investment in the country's oil sector is capped at 49% of the investment in each new oil project. But under the new proposal, foreign companies could now manage and even fully own the sector, resulting in its privatization, the report relays. The anti-blockage law will also allow the free trade of strategic goods, particularly fuel, which would be beneficial for the Venezuelan economy, as the country has been experiencing chronic fuel shortages because of Maduro's mismanagement of the oil sector as well as US energy sanctions on PDVSA, the report discloses. Venezuela's oil production is at its lowest level since 1940, the report relates. According to OPEC's latest bulletin, the country produced roughly 550,000 barrels per day on average in 2020, down from slightly over a million barrels per day in 2019, the report says. Venezuela's announcement comes at a moment when the energy market seems to be gaining momentum, as in the last two weeks, Brent crude oil prices have been up by 7% to above $55 a barrel, the report adds. Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and a large number of small islands and islets in the Caribbean sea. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum. Nicolas Maduro was elected president in 2013 after the death of Chavez. Maduro won a second term at the May 2018 Venezuela elections, but this result has been challenged by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the United States who deemed it fraudulent and moved to recognize Juan Guaido as president. The presidencies of Chavez and Maduro have challenged Venezuela with a socioeconomic and political crisis. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country. S&P Global Ratings, in May 2019, removed its long- and short-term local currency sovereign credit ratings on Venezuela from CreditWatch with negative implications and affirmed them at 'CCC-/C'. The outlook on the long-term local currency rating is negative. At the same time, S&P affirmed its 'SD/D' long- and short-term foreign currency sovereign credit ratings on Venezuela. Moody's credit rating (long term foreign and domestic issuer ratings) for Venezuela was last set at C with stable outlook in March 2018. Meanwhile, Fitch's long term issuer default rating for Venezuela was last in 2017 at RD and country ceiling was CC. Fitch, on June 27, 2019, affirmed then withdrew the ratings due to the imposition of U.S. sanctions on Venezuela. ********* 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 * * *