/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210302.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, March 2, 2021, Vol. 22, No. 38 Headlines A R G E N T I N A AGUA Y SANEAMIENTOS: Moody's Completes Review, Retains Ca Rating PROVINCE OF SALTA: S&P Raises ICR to 'CCC+', Outlook Stable YPF SA: S&P Cuts ICR to 'SD' on Completion of Debt Exchange Offer B R A Z I L BRAZIL: Unemployment Rate Falls to 13.9% in Quarter Thru December LINHA AMARELA: Moody's Confirms Caa1/Caa1.br Ratings on Debentures PETROLEO BRASILEIRO: Distributors Scramble for Diesel Amid Shakeup C O L O M B I A AVIANCA HOLDINGS: Moody's Gives Ba3 Rating on $1.2B DIP Term Loan D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: More Than 100,000 Tourism Jobs Recovered DOMINICAN REPUBLIC: Turns Down Major Mining Project E C U A D O R ECUADOR: Moody's Affirms Caa3 Rating on Government's Unsecured Debt P U E R T O R I C O CDT DE SAN SEBASTIAN: Asks for Final Extension of Plan Deadline LRJ GLOBAL: Unsecured Creditors to Recover 5% in Amended Plan V E N E Z U E L A [*] VENEZUELA: Guaido to Meet With Norway Delegation - - - - - ================= A R G E N T I N A ================= AGUA Y SANEAMIENTOS: Moody's Completes Review, Retains Ca Rating ---------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Agua y Saneamientos Argentinos S.A. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 24, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Agua y Saneamientos Argentinos S.A. (AYSA)'s Ca rating and ca baseline credit assessment reflect the company's reliance on the Government of Argentina (Ca) to hold day-to-day operations, carry out investments and service debt, as internal cash generation is insufficient. On a standalone basis, AYSA exhibits extremely weak credit metrics despite its low financial leverage and comfortable debt service profile. Moody's expects AYSA to continue needing and receiving support from the government because of the essentiality of the services it provides and the untimely and insufficient cost recovery through the current tariff scheme. The principal methodologies used for this review were Regulated Water Utilities published in June 2018. PROVINCE OF SALTA: S&P Raises ICR to 'CCC+', Outlook Stable ----------------------------------------------------------- S&P Global Ratings raised its global scale issuer credit ratings on the province of Salta to 'CCC+' from 'SD'. The outlook is stable. S&P also took the following rating actions: -- S&P raised the issue-level rating on its restructured 2027 international bond to 'CCC+' from 'D'. -- S&P raised the issue-level rating on its 2022 international bond backed by royalties to 'CCC+' from 'CC'. Outlook The stable outlook on S&P's 'CCC+' rating balances the lower risk of default following the debt restructuring with the risks stemming from limited access to funding and limited economic growth prospects in Argentina that could pressure Salta's fiscal accounts and liquidity. Downside scenario S&P could downgrade the province if a materially weaker-than-expected fiscal performance or liquidity position increases the risk of default or a distressed debt exchange in the next 12 months. In addition, a downward revision of our transfer and convertibility (T&C) assessment on Argentina would result in a downgrade of Salta, given that scarcity of reserve levels could prompt tensions in subnational governments' access to foreign currency for debt service payments. Upside scenario Given that S&P doesn't believe that Argentine local and regional governments (LRGs) meet the conditions to have ratings above that on the sovereign, we could only upgrade the province of Salta if it takes a similar action on Argentina in the next 12 months. This would have to be accompanied by Salta's stronger budgetary performance and liquidity buffers or greater certainty about its capacity to tap debt markets. Rationale Given that the new terms of Salta's international bond became effective on Feb. 24, 2021, the province has cured the default and materially reduced debt service over 2022-2024. Investors holding 95.51% of bonds supported the province's proposal. The amended $350 million bond extends the maturity to 2027 from 2024, has step-up interest rates that go from 4.0% to 8.5%,from 9.125% previously, and a smoother amortization profile with ten semiannual installments from three annual payments originally. As a result, the agreement reduces Salta's debt payments by $205 million between 2021 and 2023. Salta is the sixth Argentine province to restructure international debt after Neuquén, Mendoza, Chubut, Rio Negro, and Cordoba. At least six other provinces are still negotiating with bondholders, including the province of Buenos Aires. The rating also incorporates the fact that the administration does not plan to restructure the 2022 international bond–-structured notes backed by hydrocarbon royalties, payments on which have remained current. The 'CCC+' ratings on the province of Salta also reflect our view that while the recent restructuring gives short-term debt relief and mitigates the risk of default in the next two years, financial challenges remain. Salta has maintained balanced fiscal accounts, but liquidity is narrow amid sluggish economic growth for Argentina and limited financing sources. At the same time, Argentina's very volatile and underfunded institutional framework constrains our ratings on LRGs. While fiscal results should gradually recover, cash reserves will remain limited S&P said, "We expect fiscal results to gradually recover after the setback in 2020 due to the impact of the COVID-19 pandemic and lockdown measures on revenues and expenditures. We estimate the province's operating surplus to have narrowed to 1.4% of operating revenue in 2020 from 6.1% on average in the prior two years, and Salta to have posted a 1.5% deficit after capital accounts. The suspension of debt repayment to the federal government and discretionary transfers provided about ARS8 billion in total relief, but did not entirely offset the sharp drop in real terms of tax revenue and the sluggish performance of federal coparticipation transfers. "We expect operating surpluses to average about 4% in 2021-2023 with results after capital expenditures remaining moderately negative. Revenue collection will benefit from the suspension of the gross receipt tax and from economic recovery. On the spending side, we believe it could be pressured and that expenditures could increase above inflation, especially personnel (which represents 60% of provincial outlay). Low income levels in the province, reliance on national government transfers, and infrastructure needs underline the limited flexibility in Salta's budget. "We assume international debt markets will remain closed and Salta will cover funding needs with pre-approved and potentially new multilateral lending, as well as with national government resources. The province has not issued short-term notes for several years, which could also be a funding source in the future (up to 2.5% of the budgeted revenues for the year). "While fiscal results in Salta have remained broadly balanced, liquidity is still very limited. In fact, in July this year, the slump in revenue collection prompted the province's decision to enter the grace period on the 2024 international bond debt payment. We believe that structural lack of liquidity buffers remains a key risk to the creditworthiness of Argentine provinces. We estimate that Salta's free and available cash is currently low and doesn't cover debt repayment for 2021. "Debt stock represented 44% of the province's revenue in 2020 by our estimates. About 75% of the debt is denominated in U.S. dollars, which underscores potential currency risk. We expect some decline in the debt burden in coming years because financing conditions remain limited, with debt levels lowering to close to 30% of revenues." A volatile institutional framework and limited growth in Argentina constrain the rating The economic outlook for Salta is weak, in line with the sovereign. S&P said, "We forecast GDP to have contracted 12% in 2020 and for it to only grow 4% in 2021. To tackle its large economic challenges, we think Argentina will need to establish policy consistency and reduce fiscal and monetary imbalances, including lower inflation and a more stable exchange-rate regime." Salta's low GDP per capita limits the province's budgetary flexibility and is a key rating constraint. According to S&P's estimates, it was $3,380 last year, which was less than half of the estimated national GDP for the same year ($8,500). Amid increasingly strained financial conditions, including very limited access to financing, the administration decided to prioritize operating and capital spending over timely debt payment obligations. S&P said, "Finally, we believe that amid eroding macroeconomic conditions, the sovereign could delay fiscal support measures to subnational governments, especially given Argentina's history of major policy swings. We assess the institutional framework for Argentina's LRGs as very volatile and underfunded, reflecting our perception of the sovereign's very weak institutional predictability and volatile intergovernmental system that has been subject to various modifications to fiscal regulations and lack of consistency over the years, which jeopardize the LRGs' financial planning and consequently their credit quality." In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List Upgraded; CreditWatch/Outlook Action To From Salta (Province of) Issuer Credit Rating CCC+/Stable/-- SD/--/-- Upgraded To From Salta (Province of) Senior Secured CCC+ CC Senior Unsecured CCC+ D YPF SA: S&P Cuts ICR to 'SD' on Completion of Debt Exchange Offer ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Argentine oil and gas company, YPF S.A., to 'SD' from 'CC'. The bonds S&P rated, other than the 2021 bond, remain at 'CCC-'. S&P will review all ratings in the next few days. On Feb. 11, 2021, Argentine oil and gas company, YPF S.A., announced that 59.79% of the bondholders of its outstanding $413 million 8.5% senior unsecured notes due March 23, 2021, accepted the exchange offer, which the company made on Jan. 7, 2021. The offer formally ends. In September 2020, the central bank restricted domestic companies and residents from accessing foreign currency, given that the country's international reserves were falling rapidly due to the very weak economy prior to the pandemic, exacerbated by the lockdown. S&P estimates that Argentina's GDP contracted 11%-12% in 2020. Given the central bank's measure, companies are forced to refinance 60% of the principal of debt maturities coming due prior to March 31, 2021. S&P said, "As we mentioned in our January 11 report, YPF's capacity to pay the outstanding 2021 bond ($413 million) is doubtful given the T&C restrictions. "Also, as we commented in our January 27 report, even though the company's amended offer may be appealing to investors, significant country risks including short-term T&C restrictions in Argentina make the compensation analysis highly uncertain. Moreover, given that the compensation package is back-loaded, we view it as imbalanced. Therefore, we consider the company defaulted on its 2021 bond. "We view the offer for the rest of YPF's bonds (other than for the 2021 bond) as opportunistic, given that the likelihood of YPF inability to service them is sharply lower, given that our assumption that T&C restrictions are momentary. "We will re-evaluate the credit issuer and issue-level ratings in the next few days after assessing liquidity after restructuring." =========== B R A Z I L =========== BRAZIL: Unemployment Rate Falls to 13.9% in Quarter Thru December ----------------------------------------------------------------- Rio Times Online reports that Brazil's unemployment rate ended last year at 13.9%, figures showed on February 26, extending a recent dip as workers returning to the labor market found jobs, but the average jobless rate in 2020 was the highest since comparable records began in 2012. That was down from 14.1% in the three months to November, in line with the median forecast in a Reuters poll of economists and slipping further from the record 14.6% in the three months to September, according to Rio Times Online. Brazil's unemployment rate ended 2019 at 11.0%, 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. LINHA AMARELA: Moody's Confirms Caa1/Caa1.br Ratings on Debentures ------------------------------------------------------------------ Moody's America Latina Ltda. has confirmed Linha Amarela S.A.'s senior secured debentures due in May 2027 at Caa1 on the global scale and Caa1.br on the national scale. The outlook is negative. This action completes the review for downgrade that was initiated on September 21, 2020. RATINGS RATIONALE The Caa1/Caa1.br ratings of Linha Amarela S.A. (Linha Amarela) continue to reflect the decision issued by the Supreme Court of Justice (STJ) in September 2020 authorizing the unilateral termination of the concession agreement and suspension of toll charges following a legal proceeding for takeover initiated by the Municipality of Rio de Janeiro (Ba3 stable), as the concession authority, in November 2019. Although the company continues to dispute this decision, Moody's considers that the risk of extended judicial dispute remains significantly high. On February 20, 2021, the Municipality of Rio de Janeiro announced that it would proceed with the takeover process to start a new bidding procedure for the concession. However, the indemnification payment to the concessionaire has not been defined, with no visibility into the amount and timeframe for such compensation, as the company plans to continue to dispute all the Municipality's decisions. Supporting the Caa1/Caa1.br ratings is the company's legal rights to an indemnification, which should provide some cushion for creditors to mitigate losses in the event of an effective termination of the concession. As of September 2020, Linha Amarela reported BRL359 million of intangibles related to non-amortized infrastructure assets of the concession in its audited financials, compared to BRL219 million in total debt outstanding. While the dispute is ongoing the absence of toll revenue collections has substantially impaired the issuer's ability to cover minimal operational expenses and to service its debt obligations on time. Alternatively, Linha Amarela has been relying on periodic cash transfers from its parent company, Invest. E Part. Em Infra-Estr S.A. - INVEPAR, to avoid a default on its debt obligations. Additionaly, in January 2021 Concessao Metroviaria do Rio de Janeiro S/A (MetroRio), Linha Amarela's sister company, announced the issuance of BRL1.2 billion (9th debentures) due in 2031 to refinance all of its outstanding debt. Part of the new debt proceeds will be used to prepay MetroRio's outstanding intercompany loan with Linha Amarela, in the amount of BRL93 million (equivalent to 40% of Linha Amarela's total debt), as stated in the issuance documents. This represents a positive development for Linha Amarela, as it increases the expected recovery for its creditors. Linha Amarela S.A. (Linha Amarela) has the concession to operate the toll road services of a 17.4 km urban route in the City of Rio de Janeiro, Brazil. The concession was granted by the Municipality of Rio de Janeiro (Ba3, stable) in 1994, and toll road operation started in 1998, for a 25-year period. On May 14, 2010, Linha Amarela signed an amendment to its concession contract, whereby the Municipality of Rio de Janeiro (the Granting Authority) granted a 15-year extension of the Concession, until December 2037. In the last twelve months ended September 30, 2020, Linha Amarela reported net revenues (excluding construction revenues) of BRL225 million and net profit of BRL77 million, as per Moody's standard adjustments. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded or stabilized when we have visibility of a constructive resolution of the ongoing disputes on Linha Amarela's underlying concession agreement, so that the company can consistently service its debt on a sustainable basis. Further downgrade will be considered upon Moody's views that expected recovery for Linha Amarela's creditors is weaker than anticipated. Linha Amarela is wholly owned by Investimentos e Participacoes em Infraestrutura S.A. -- Invepar, a holding company controlled by three of the largest Brazilian pension funds (PREVI, FUNCEF and PETROS) and the Yosemite FIP. The principal methodology used in these ratings was Privately Managed Toll Roads Methodology published in December 2020. PETROLEO BRASILEIRO: Distributors Scramble for Diesel Amid Shakeup ------------------------------------------------------------------ Marta Nogueira at Reuters reports that Brazilian fuel distributors are scrambling to secure diesel supplies for March and April after state-run oil company Petroleo Brasileiro S.A.'s (Petrobras) said it would not fully meet their demand, adding to uncertainty amid a sudden management shakeup. National oil industry regulator ANP confirmed to Reuters that distributors are searching for alternative diesel supplies after Petrobras turned down their orders, but the agency played down concerns of diesel shortages during a bumper soy harvest, according to Reuters. Fuel importers association Abicom said domestic prices set by the state firm have lagged a rebound in global markets so much that importing is unprofitable, the report notes. Outgoing Petrobras Chief Executive Roberto Castello Branco has resisted importing fuel to sell at a loss, as the state firm formally known as Petroleo Brasileiro SA did in past decades, the report relays. But his efforts to raise prices at the pump this month drew the ire of President Jair Bolsonaro, who named his replacement, the report discloses. The transition adds to uncertainty for distributors and importers now speculating about a new Petrobras pricing policy, the report relays. "Either there's going to be a shortage of product or Petrobras will need to get heavily involved to supply the market and suffer the losses," said Thadeu Silva, head of oil and gas at consultancy INTL FCStone, the report notes. Petrobras declined to say if it would meet distributors' demand for fuel in coming months, the report relays. The company said it had informed customers about its diesel supplies for March, respecting the volumes and periods stipulated in contracts, the report says. After Petrobras lost tens of billions of dollars over the past decade selling imported fuel at a loss, its bylaws were amended in 2017 to require that the government compensate it for such operations - a rule that has not yet been put to the test, the report notes. "Today, we see no risk of shortage (in March and April)," said ANP Director Rodolfo Saboia, adding that the agency will be monitoring the situation, the report adds. As reported in the Troubled Company Reporter-Latin America on Feb. 18, 2021, Fitch Ratings has affirmed Petroleo Brasileiro S.A.'s (Petrobras) Local and Foreign Currency Long-Term Issuer Default Ratings (IDRs) and outstanding debt ratings at 'BB-'. The Rating Outlook is Negative. The National Scale rating has been affirmed at 'AA(bra)'. The Rating Outlook for the National Scale Rating is Stable. =============== C O L O M B I A =============== AVIANCA HOLDINGS: Moody's Gives Ba3 Rating on $1.2B DIP Term Loan ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating on the $1.2 billion Senior Secured Super-priority Debtor-in-Possession Term Loan A1 and A2 and B3 rating to the $723 million Senior Secured Super Priority Term Loan B, (the DIP facilities) issued by Avianca Holdings S.A. (DIP) (Avianca or the obligor). With the proceeds from the DIP Financing, Avianca expects to weather the COVID 19 crisis with the necessary liquidity and flexibility to execute its restructuring plan through the Chapter 11 process. Avianca filed for Chapter 11 in May 2020. The following ratings were assigned: Issuer: Avianca Holdings S.A. (DIP) $1.0 billion Senior Secured Term Loan A1, Assigned Ba3 $176 million Senior Secured Term Loan A2, Assigned Ba3 $723 million Senior Secured Term Loan B, Assigned B3 $64 million Senior Unsecured Regular Bond/Debenture, Assigned Ba3 Outlook Actions: Issuer: Avianca Holdings S.A. (DIP) Outlook, Assigned No Outlook RATINGS RATIONALE The Ba3 rating on the $1.2 billion Senior Secured Term Loan A1 and A2 and B3 rating on the $723 million Senior Secured Term Loan B, incorporates the senior secured super-priority position of the claims and a number of factors including the cause of the bankruptcy, the nature and scope of reorganization, the structural features of the DIP facility, size of the DIP facility relative to pre-petition debt and collateral coverage of the DIP facility. The Company faced significant financial pressure before 2020; in fact, in 2019 the airline negotiated temporary deferrals on some of its debt and carried out an exchange offer for all of its $550 million senior notes due in May 2020 while raising additional liquidity and beginning the execution of a short-term strategic plan to increase margins. However, the bankruptcy was brought on by the effects of the coronavirus pandemic, which had a profound impact on the demand for air travel, preventing the company from achieving sustainable profitability expected after the voluntary restructuring program in 2019. Following the onset of the pandemic in early March 2020, all of Avianca's home countries imposed travel restrictions and flight bans, leading to a complete suspension of the company's scheduled passenger flight activity that largely persists to this day. In light of recent developments, Avianca initiated a restructuring under Chapter 11 of the U.S. bankruptcy code, allowing for an orderly court supervised process to reorganize the business. Total DIP financing amounts $2.0 billion, out of which $1.2 billion are related to new money and the balance to roll-up debt. The DIP term loans are issued in two tranches subject to different terms and conditions. To establish collateral package securing the DIP financing, Avianca negotiated three transactions. The company agreed with the stakeholder lenders to participate in the Tranche B that converts to equity in exchange for a release of significant collateral to support the entire DIP. As part of the agreement, stakeholder lenders provided fresh liquidity, raising $336 million of new money and $384 million rollup of an existing facility, for a total of $723 million for tranche B. Avianca also negotiated with an ad hoc group of its 2023 noteholders to roll up $220 million into Tranche A of the DIP facility in exchange for $200 million new money commitments to Tranche A and the ability to pledge the noteholder collateral on a senior priming basis. Additionally, $168.5 million was issued to Advent for its remaining stake in LifeMiles Ltd. (Lifemiles), totaling $389 million in roll-up debt and acquisition financing. Total Tranche A amounts to $1.2 billion, out of which $900 million is new money and the balance consists of roll up debt and acquisition financing. Moody's believes the reorganization is somewhat complex because of Avianca's debt structure and the ongoing execution risk given major transformative restructurings of key aspects of its business. Complexity is attributable to multiple claim priorities. Avianca expects aircraft financings to be rejected or abandoned through the court process and to refinance LifeMiles debt upon maturity in August 2022. As per the two-tranche term loan DIP facility, the company expects it to be converted into exit financing and equity upon emergence. The forecast assumes Tranche B DIP Facility will be converted into equity and $1.2 billion under Tranche A will be converted into new debt to be issued at exit. From an operational standpoint, Avianca faces high execution risk to resume the reorganization started in 2019 to turnaround its operation. The plan focuses on profitable growth by simplifying the network and eliminating unprofitable flying. By re-designing its network, Avianca plans to focus on profitable routes and to strengthen the Bogota hub, whereas by modifying its fleet, the company plans to maximize profits in the new network. The plan also includes lifting commercial performance and customer experience. Prior to the pandemic, the company had already achieved some milestones such as the sale of aircrafts, reduction in orders of aircraft to be delivered from 2025 onwards, cancellation of 25 unprofitable routes and an overall capacity reduction of 6.9%. Since the irruption of the pandemic, the company faces strong challenges to turnaround its operations in the midst of ongoing travel weaknesses. Avianca expects revenues to recover to $2.3 billion in 2021 from approximately $1.6 billion in 2020 and to sustain growth through stabilization close to $4.0 billion through 2025. Likewise, it expects to expand EBIT margin towards 15% through 2025 from a flat 0.7% in 2021 and around 5.0% prior to coronavirus. Collateral coverage relies heavily on assets that are more difficult to value, such as intangibles. The company estimates collateral value to surpass $2.0 billion based on third party valuations. However, the largest portion is related to Avianca's 89.9% equity interest in the LifeMiles loyalty program. Appraisal value is between $1.6 billion to $2.6 billion. Collateral also includes pledge of the cargo freighter business valued at $600 million to $920 million given a 5x to 7x annualized EBITDA multiple. Close to $300 million are related to the valuation of brand and trademark, aircraft and credit card receivables. The balance is $400 million perfected first lien on cash. Moody's estimates that the collateral value provides adequate coverage relative to the DIP facility in the most likely reorganization bankruptcy exit scenario, but collateral in the event of liquidation would not be sufficient to cover the DIP facility. Value of LifeMiles under a liquidation scenario would be much lower than when assuming ongoing concern given its strong ties with the airline. Although LifeMiles has a strong business model that includes unrelated commercial partners and co-branded credit cards, its single largest contributor to gross billings is Avianca, which, together with its air partners, represent around 30% of gross billings. LifeMiles' benefits from Avianca's leading market position in Colombia (Colombia, Government of; Baa2 negative) and Central America, where its share of passengers is 50% and 60%, respectively. As of March 31, 2020, LifeMiles had over 600 active commercial partners, which include airlines, financial institutions, hotels, gas stations, supermarkets, restaurants, car rentals and apparel stores. These partnerships allow LifeMiles' members to accrue and redeem miles for different products and services. Around 80% of the accrued miles are redeemed, and 90% of them are redeemed into airline tickets. The balance is redeemed into hotel nights, merchandise and other rewards. Moody's also assume the DIP facility is not subject to borrowing base conditions and estimate the $2.0 billion face value of the DIP is between 30%-50% of pre-petition debt obligations that Moody's believe is at least $5.4 billion as of March 31, 2020 or later, to the extent known. The principal methodology used in these ratings was Debtor-in-Possession Lending published in June 2018. Avianca Holdings S.A. (DIP) (Avianca) is domiciled in Panama and has been the flag carrier of Colombia since 1919, when it was initially registered under the name SCADTA. It is headquartered in Bogota, D.C. with its main hub at El Dorado International Airport. Since 2013, the company has been publicly listed in the New York Stock Exchange. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: More Than 100,000 Tourism Jobs Recovered ------------------------------------------------------------ Dominican Today reports that the President of the Dominican Republic, Luis Abinader, affirmed that more than 100,000 people have recovered their jobs in the tourism sector and that by February it will reach 200,000. The head of state gave the information during the inauguration of the El Limon-Plata Moron highway's rehabilitation in Samana, according to Dominican Today. It involves the road reconstruction of the El Limon- Agua Sabrosa- Playa Moron- Punta Lanza del Norte accesses, with a length of 6.2 kilometers and an approximate cost 121.3 million pesos, the report notes. The work, started and completed in less than six months, is located in El Limon, Las Terrenas municipality, in Samana and was built by the Ministry of Tourism (Mitur) through the Executive Committee of Infrastructure for Tourist Zones (Ceiztur), the report discloses. The president, who the first lady, Raquel Arbaje, accompanied, also highlighted the incredible potential of the country and the willingness of the Government to maximize it, the report says. "We have the best beaches on the planet. We already know it, and now we are determined that everyone also knows it," added Abinader, highlighting the country's potential, the report notes. Meanwhile, the Minister of Tourism, David Collado, said they are focused on creating the necessary infrastructures to be "much stronger" when normality is restored in the face of the Covid-19 pandemic, the report discloses. It was highlighted that the work would have "a great impact" on the tourist development of El Limon, allowing the use of Moron beach and will contribute to job opportunities, the report relays. At the event were Pedro Catrain, senator for Samana; Neney Cabrera, Minister of Special Programs and Strategic Projects of the Presidency; Igor David Rodriguez, Administrative Deputy Minister; and Fernando Mercado, mayor of the municipal district of El Limon, the report discloses. Also present were, Elsa de Leon, governor of Samana; Sixto Brea, director of the Executive Committee of Ceiztur; Juan Carlos Torres Robiou, director of the Specialized Body for Tourist Security (Cestur); Jesus Duran, president of the Samana Tourism Cluster; Deligne Ascencion Burgos, Minister of Public Works; Rafael Blanco Tejera, president of the Association of Hotels and Restaurants (Asonahores), among others, 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. Fitch Ratings on Jan. 18, 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. 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: Turns Down Major Mining Project --------------------------------------------------- Dominican Today reports that once the news broke that Falconbridge Dominicana (Falcondo) withdrew the request for exploit the "Manaclita Project" in Loma Miranda, environmentalists applauded the decision. "There was no other option due to the rejection of the population," said Luis Carvajal, according to Dominican Today. "It was a shame that it was the company that withdraws and not the Dominican State that has said in a forceful way that this cannot be done," the report notes. He labeled Falcondo's withdrawal as the defeat of the claim. "In which a ball of smoke was thrown," the report relays. Carvajal said the same fate could face other mining projects, such as the expansion of Barrick Golf towards the Siete Picos hill, the exploitation by Gold Quest near the Sabaneta dam, in San Juan, among other mining projects that threaten the ecosystem, the report discloses. "It is a triumph of the Dominican society that manifested itself unanimously by all means and very promptly and that began an intense process of mobilization," 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. Fitch Ratings on Jan. 18, 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. 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). ============= E C U A D O R ============= ECUADOR: Moody's Affirms Caa3 Rating on Government's Unsecured Debt ------------------------------------------------------------------- Moody's Investors Service has affirmed the Government of Ecuador's long-term foreign-currency issuer and senior unsecured rating at Caa3 and changed the outlook to stable from negative. The outlook change to stable from negative balances the favorable interest and amortization payment schedule on market debt and substantial external financing under the International Monetary Fund (IMF) program, with lingering challenges to reducing fiscal imbalances, that could once again raise credit risks over the medium-term. The affirmation of the Caa3 rating reflects Moody's view that elevated credit risks remain, given that the implementation of adjustment measures will hinge on the incoming government's ability to forge alliances and garner support from legislators to enact meaningful fiscal consolidation and reforms to support the economic recovery. Liquidity pressures and political risks will remain high even if key policies under the IMF program are adopted, constraining the sovereign's credit prospects and raising questions about Ecuador's capacity to meet future debt service obligations over the medium-term. Moreover, an inability to enact a strong set of economic and financial reforms could jeopardize the credibility of the dollarized regime. At the same time Moody's has affirmed the long-term foreign-currency senior unsecured rating for unrestructured debt at C, pertaining to the approximately $52 million (including accrued interest) of the 2030 global bonds that have been in default since 2008. The foreign currency country ceiling is unaffected by the rating action and remains at Caa2, reflecting the economy's limited ability to attract foreign currency flows and limited central bank independence. RATINGS RATIONALE RATIONALE FOR THE CHANGE IN OUTLOOK TO STABLE FROM NEGATIVE MATERIALLY LOWER LIQUIDITY PRESSURES OVER THE NEAR-TERM The debt restructuring in 2020 provided substantial liquidity relief by extending principal maturities and reduced interest costs. Moody's estimates savings of approximately $10 billion (10.2% of GDP) in interest and principal over the next four years and $4 billion (4.1% of GDP) more between 2025-30, as compared to the prior debt-service schedule. Additionally, the front-loaded $6.5 billion IMF program provided $4 billion in financing in 2020, and will provide a further $1.5 billion in 2021 and $1 billion in 2022. The first review under the IMF program has shown that the government met or exceeded all quantitative targets, and that deficit reduction remains slightly better than was expected by the program by end-2020. Additionally, there is greater clarity about the policy platform of the main presidential candidates from the recent February 7 general election. Moody's notes that neither of the presidential candidates that are set to contest the 11 April run-off vote have explicitly mentioned any intention to restructure market debt given the very favorable near-term repayment structure. However, the incoming government, following the run-off election, will face substantial challenges in navigating the economic recovery, reducing the fiscal deficit, supporting the dollarized regime and achieving fiscal and economic sustainability. RATIONALE FOR THE RATING AFFIRMATION AT Caa3 LIMITED CAPACITY TO MEET FUTURE DEBT OBLIGATIONS ABSENT EXTENSIVE MACROECONOMIC REFORMS In Moody's opinion, the incoming administration will face substantial challenges. The next government is set to inherit the strongest part of the IMF program's fiscal consolidation requirements, which includes a fiscal reform to shore up over 2% of GDP in new revenues, but will only receive $2 billion out of a $6.5 billion program. The economy's ability to sustain higher growth beyond the recovery remains highly limited. The implementation of adjustment measures will hinge on the incoming government's ability to forge alliances and garner support from a highly fragmented legislature, as revealed by the recent February 7 election. The sovereign's Caa3 rating reflects many longstanding challenges to Ecuador's credit profile, and recognizes that anchoring public debt sustainability will require a commitment to ambitious, yet credible, fiscal consolidation. Balancing the need for a large fiscal adjustment with support for an economic recovery will be complicated from a policy management standpoint. Although Moody's expects a rebound of 4% growth in 2021, economic output is unlikely to reach pre-crisis levels until at least 2024. Considering the severity of the recession and uncertainty from the general election, Moody's expects that private investment and household consumption will rebound only as a result of base effects, but that economic activity will remain inherently weak when controlling for the favorable base effects. The economy will struggle to post growth in 2022 and beyond because of long-standing competitiveness and productivity challenges as a result of dollarization, structural rigidities in the economy and a dearth of private investment. This will continue to weigh on the country's economic strength. Although the economy benefits from a higher quality of installed infrastructure than many regional peers, competitiveness and productivity challenges stem from (1) a very low amount of foreign direct investment (FDI) into the economy with little incentives to attract foreign investment into profitable sectors, (2) relatively high real wages within a rigid and uncompetitive labor market, and (3) extensive government regulation that inhibits private business activity, among other longstanding structural barriers. Implementing adjustment measures under the prior IMF program demonstrated how difficult governability can be in Ecuador with a fragmented congress and with social rejection of fiscal and economic reforms. In the absence of strong output growth following the economic rebound from the pandemic, fiscal consolidation prospects and debt sustainability will remain tenuous. This raises questions about Ecuador's capacity to meet future debt service obligations over the medium-term. Moreover, reforms to fortify the legal and institutional framework for the central bank continue to be postponed, such that any shift away from policies that meaningfully reduce the fiscal deficit, could jeopardize the credibility of the dollarized regime. ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS Ecuador's ESG Credit Impact Score is highly negative (CIS-4), reflecting a very highly negative governance issuer profile score that has resulted in multiple defaults, and high exposure to environmental and social risks. Ecuador's exposure to environmental risks is highly negative (E-4 issuer profile score), related to physical climate and carbon transition risks. Ecuador's economy (particularly primary sector activity) has been subject to droughts and floods from the El Niño weather shock that happens at irregular intervals. Natural disasters like volcanic eruptions and earthquakes over the past decade have led to unexpected fiscal costs and localized economic disruption. Exposure to carbon transition risks, albeit over the long term, stem from hydrocarbon dependence on exports and government revenues. Exposure to social risks is also highly negative (S-4 issuer profile score). Social considerations have played a role in increasing political risk in the country. As illustrated in October 2019, violent protests broke out against government measures to eliminate fuel subsidies, forcing the government to backtrack on the subsidy removal and to devise complimentary measures in support of fiscal consolidation under an IMF program. The risk of social unrest constrains the sovereign's ability to adopt policies that address longstanding distortions that inhibit economic growth in the country. The influence of governance on Ecuador's credit profile is very highly negative (G-5 issuer profile), reflecting weak rule of law and high levels of corruption but also the sovereign's default track record. Longstanding concerns about public financial and fiscal management, willingness to repay (which in the past had a hand in defaults), and the overall clarity and predictability of policymaking constrain Ecuador's credit profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Evidence of a substantial amount of financing flows at highly affordable rates that fully cover the sovereign's funding needs over the medium term, such that the sovereign is able to avoid payments stress, would decrease the likelihood of a credit event and losses to bondholders, supporting a higher rating. Additionally, significant progress on reducing the fiscal imbalance, evidence of stronger economic growth prospects as a result of the adoption of structural reforms that support higher potential output growth, could support a higher rating. Conversely, the rating could be downgraded if Moody's were to conclude that losses to investors from a possible credit event or restructuring of government debt would not be consistent with a Caa3 rating, based on a further worsening of Ecuador's economic and fiscal prospects. GDP per capita (PPP basis, US$): 11,929 (2019 Actual) (also known as Per Capita Income) Real GDP growth (% change): 0% (2019 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): -0.1% (2019 Actual) Gen. Gov. Financial Balance/GDP: -5% (2019 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -0.1% (2019 Actual) (also known as External Balance) External debt/GDP: 48.5 Economic resiliency: b3 Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On February 23, 2021, a rating committee was called to discuss the rating of the Ecuador, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength, have not materially changed. The issuer's governance and/or management, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has not materially changed. Other views raised included: The issuer has become increasingly susceptible to event risks. The principal methodology used in these ratings was Sovereign Ratings Methodology published in November 2019. ===================== P U E R T O R I C O ===================== CDT DE SAN SEBASTIAN: Asks for Final Extension of Plan Deadline --------------------------------------------------------------- CDT San Sebastian Inc. filed on Feb. 22, 2021, a motion for a final extension of the deadline to file a Chapter 11 Plan and a Disclosure Statement. The Debtor asks the Court to extend the Feb. 22, 2021 deadline by 30 days. As stated by Banco Popular on its Joint Motion, the parties are close to finalizing the terms of payment to the Bank who is the largest creditor in the case. It is submitted that the allowance of the extension requested will result in the prompt confirmation of the Plan and Disclosure Statement, without additional delay or litigation. Counsel for the Debtor: Jose R Cintron, Esq USDC-PR 208411 605 Condado 605, Suite 602 Santurce, Puerto Rico 00907 Tel: 787-725-4027 Fax: 787-725-1709 Cell: 787-605-3342 E-mail: jrcintron@prtc.net lawoffice602@gmail.com About CDT De San Sebastian CDT De San Sebastian Inc., a tax-exempt entity that operates an outpatient care center in San Sebastian, P.R., sought Chapter 11 protection (Bankr. D.P.R. Case No. 19-06636) on Nov. 13, 2019. At the time of the filing, Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. Judge Brian K. Tester oversees the case. Debtor has tapped Jose Ramon Cintron, Esq., as its legal counsel, and JE&MA CPA Consulting Solutions LLC, as its accountant. LRJ GLOBAL: Unsecured Creditors to Recover 5% in Amended Plan ------------------------------------------------------------- LRJ Global Quality Concrete, Inc., filed a Chapter 11 Small Business Plan and a Disclosure Statement on Feb. 26, 2021. General unsecured creditors are classified in Class 3, and will receive a distribution of 5% of their allowed claims, to be distributed as per terms of plan. The corporation owns Light Industrial real property that is located at Almacigo Bajo Ward, State Road 371, Km L8, Yauco, Puerto Rico, lot of 3,930.39 sq/mts with a steel commercial building. The property is encumbered by a commercial loan with creditor, PR RECOVERY AND DEVELOPMENT JV, LLC (PR RECOVERY JV), formally loan of "Banco De Desarollo Economico de Puerto Rico", in the amount of $624,737. The property value is below the debt amount owed, with a value of $300,000. After the filing of the Disclosure statement the property was appraised at $200,000. As to the Class 1 claim of PR Recovery JV in the amount of $624,737, the Debtor and creditor have agreed on these terms and conditions for repayment of claim 3-1: -- With the property appraised at $200,000, the Debtor will make an upfront payment of $20,000 and 30 days thereafter, will commence an adequate protection payment of $2,388.70 for a period of 36 months. -- At the end of the 36th month, the Debtor will make a final balloon payment of$ 100,000 plus interest at 4.75%for a total payment of $213,485. -- The remainder of the claim will be paid in the pro-rata unsecured class 3 distribution. With respect to unsecured claims in Class 3, the class will receive a dividend of 5% of the allowed claims. CRIM's $1,606 claim will receive a total payment $80.30 in one single payment in June 2021. PR Recovery's $297,656 claim will be paid $1,488 in the form of $300 monthly. A copy of the Disclosure Statement dated Feb. 26, 2021, is available at https://bit.ly/3dTgVln About LRJ Global Quality LRJ Global Quality Concrete, Inc., owns the 3,930.39-sq/mts Light Industrial real property located at Almacigo Bajo Ward, State Road 371, Km L8, Yauco, Puerto Rico, with a steel commercial building. LRJ Global Quality Concrete, Inc., filed a Chapter 11 bankruptcy petition (Bankr. D.P.R. Case No. 19-06780) on Nov. 19, 2019, disclosing under $1 million in both assets and liabilities. The Debtor is represented by Nydia Gonzalez, Esq., at the Law Office of Santiago & Gonzalez Law, LLC. ================= V E N E Z U E L A ================= [*] VENEZUELA: Guaido to Meet With Norway Delegation ---------------------------------------------------- Carlos Camacho at The Latin American Herald reports that the President of Venezuela's National Assembly, Juan Guaido, said that he will meet, as he did in 2019, with a delegation from Norway coming to evaluate the Venezuelan political, economical and humanitarian crisis. "Well, that's routine, us meeting with delegations from Norway," a cool Guaido told reporters during an appearance at an Eastern Caracas plaza meeting held one day after Norway's Ministry of Foreign Affairs announced the dispatch of the delegation, according to The Latin American Herald. "Again, we will meet with anybody and everybody that guarantees a democratic exit," to the Venezuelan crisis, the report notes. A veteran journalist advising Guaido told a colleague, in confidence, that the meetings will have an open agenda, that Guaido is obliging but not holding his breath and that the humanitarian situation is what interests the Norse party the most, the report relays. However, there are at this point no negotiations, direct or otherwise, between the Guaido and Nicolas Maduro camps, the report discloses. "What he told us was, if they are here, I will see them," is how the advisor, speaking off the record, summed up the situation. "What are they here for? To observe the situation of the country, the political issues as well as the humanitarian one. There are no negotiations," the report relays. And just like that, Guaido is relevant again, when many had written him off after the Maduro regime sat a competing legislative on Jan. 6. By Jan. 20, already the revival had begun, when Guaido's ambassador before Washington, Carlos Vecchio, was invited and attended the inauguration of Joe Biden as the 46th President of the United States, with no competing Maduro delegation or representative, the report relays. The influence of Mike Pence also appears to be gone as the US Vice President once forced Guaidó to interrupt a complicated dialogue process with the regime with one phone call in 2019, the report notes. "That was Mike Pence," Guaido told a team of Japanese and Venezuelan reporters at the time. "The Norway dialogue is off!" A lot has changed. Now, Guaido seems begrudgingly open to yet another round of Norse-brokered dialogue, the report discloses. In the two years since he claimed the mantle of interim president, he has been unable to unseat Maduro, even after landing one good jab after the next, like when he deprived the regime of US-based refining company CITGO, or petrochemicals firm Monomeros in Colombia, 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 * * *