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/raid1/www/Hosts/bankrupt/TCRLA_Public/210323.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 23, 2021, Vol. 22, No. 53 Headlines B R A Z I L BRAZIL: 2021 GDP to Remain Below 2019 Level, UNCTAD Says BRAZIL: All-In Covid Stimulus Puts Economy Under Growing Strain FIBRIA OVERSEAS: Moody's Upgrades Sr. Unsec. Notes Rating from Ba1 C H I L E LATAM AIRLINES: Aims to Conclude Restructuring by December D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Concerns Rise as Raw Material Prices Soar 33% DOMINICAN REPUBLIC: Economy Contracts -1% on the Pandemic DOMINICAN REPUBLIC: Real Growth Could Reach 5.3% by 2021 J A M A I C A JAMAICA: Cocoa Industry Board Commercial Assets on Auction Block JAMAICA: Fitch Affirms 'B+' LT Foreign-Currency IDR M E X I C O TOLUCA: Moody's Lowers Issuer Rating to B3 on Weak Liquidity P U E R T O R I C O STONEMORE INC: Schedules Annual Meeting for July 27 - - - - - =========== B R A Z I L =========== BRAZIL: 2021 GDP to Remain Below 2019 Level, UNCTAD Says -------------------------------------------------------- Rio Times Online reports that according to a report by the United Nations Agency for Trade and Development (UNCTAD), by the end of 2021, the Brazilian Gross Domestic Product (GDP) will be nearly 10% lower, compared to the pre-pandemic growth trend. Brazil should record an accumulated income loss of US$178.1 billion (about R$1 trillion) by the end of this year because of the coronavirus pandemic, according to Rio Times Online. The estimated loss amounts to US$102.2 billion in 2020 and US$75.9 billion this year, the report notes. Nevertheless, Brazil should resume growth, according to Richard Kozul-Wright, UNCTAD's Director, 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. BRAZIL: All-In Covid Stimulus Puts Economy Under Growing Strain --------------------------------------------------------------- Andrew Rosati and Martha Viotti Beck at Bloomberg News report that Brazil spent more money shielding its economy from the pandemic slump than almost any other emerging nation, and quite a few wealthier ones too. It put much less effort into containing the pandemic itself, according to Bloomberg News. That combination is putting the country's economic policy under growing strain, Bloomberg News discloses. It's one reason why Brazil is poised to become the first Group of 20 country to raise interest rates this year, Bloomberg News relays. The central bank, which just a few weeks ago was talking about keeping its benchmark at a record-low 2% for a while yet, is now expected to hike it by 50 basis points, Bloomberg News notes. Bloomberg News relates that the bank, led by its President Roberto Campos Neto, has been forced to U-turn in order to stem a slide in the currency that's pushing inflation higher -- driven, at least in part, by investors worried about public spending. And because Brazil has the world's worst Covid-19 outbreak right now, it's hard for the government to pare back its outlays anytime soon, Bloomberg News says. President Jair Bolsonaro ran up a record budget deficit last year to pay for what were supposed to be one-time measures, like cash handouts, Bloomberg News discloses. But his chaotic virus policy -- along with a lagging vaccination program -- is triggering new lockdowns just as other countries are seeing the health crisis abate, Bloomberg News says. The upshot: policy makers have already had to renew the emergency aid, including cash handouts to low-income Brazilians. Privately, members of Bolsonaro's economic team say further extensions are likely, Bloomberg News discloses. "Brazil's problem is not that they didn't have sufficient fiscal response, it's the fact that it wasn't combined with efforts to actually get on top of the virus," said Neil Shearing, chief economist at Capital Economics in London, Bloomberg News says. Time for Speed Treasury Secretary Bruno Funchal said in an interview that the bill extending aid payments contained offsetting measures that will help trim the budget deficit and debt. The Economy Ministry declined to comment. In a report published, the ministry defended its pandemic policies -- arguing they helped protect savings and formal employment -- and said it's now time to speed up vaccinations and resume pro-market reforms, Bloomberg News discloses. Brazil injected stimulus worth the equivalent of 8.3% of gross domestic product last year, according to the International Monetary Fund -- topping almost every major emerging market as well as developed nations like France and Italy, Bloomberg News notes. That helped cap the economy's contraction at 4.1%, better than Latin American peers with more stringent aid programs, Bloomberg News discloses. Brazil won praise from economists and the IMF for its policy response, Bloomberg News says. Brazil's Economy Shrank Less Than Latin Peers in The Pandemic This year, though, it looks set to give up much of that edge, Bloomberg News relays. Itau, Brazil's largest private bank, forecasts the country's economic growth at 3.8%, the slowest among Latin America's top five economies, Bloomberg News notes. While central banks in countries like Mexico and Colombia have signaled they still have room to deliver more support for their economies this year by cutting interest rates, Brazil is being pushed onto the opposite track. Investors in interest rate futures are pricing in a hike of at least half a percentage point, Bloomberg News discloses. Its currency, the real, has tumbled almost 10% in three months. Many foreign-exchange traders say it would take a much bigger interest-rate increase than the half-point currently forecast by economists to halt the rout, Bloomberg News relays. Inflation has climbed to a four-year high of 5.2%, Bloomberg News notes. Rate Dilemma Inflation is pushing central bank to bring forward interest-rate hikes, Bloomberg News relays. Even as it mobilized financial resources, Bolsonaro's government has been dismissive of health risks from the coronavirus since it first hit the country, Bloomberg News notes. Much of the response has been left to individual states or cities, Bloomberg News discloses. Fragmented policy has held back the vaccination campaign, too. At the current pace, it will take Brazil 1.7 years to inoculate 75% of its population, the threshold experts say is needed for a return to normality, according to Bloomberg's Vaccine Tracker. By comparison, Chile, the regional standout, is on track to hit that level in just two months, and for the U.S. it's four months, Bloomberg News discloses. 'From All Sides' The prolonged virus crisis may end up doing long-term damage to Brazil's economic institutions, some analysts warn, Bloomberg News notes. Bolsonaro came to power promising to put Brazil's public finances in order, Bloomberg News discloses. His government is now poised to blow past spending limits for the second straight year, Bloomberg News relays. Last month, the president sacked the head of state oil company Petrobras for letting prices rise, Bloomberg News discloses. "The problem for markets and investors is not how you spend this year, but if politicians take advantage of the situation by trying to change our fiscal institutions for the worse," said Samuel Pessoa, an economics professor at the Getulio Vargas Foundation, one of Brazil's top universities, Bloomberg News relays. To be sure, Brazil is far from a repeat of the hyperinflation and debt crises that it experienced in the 1980s and 1990s, where ta ka buy ug dinug-an, Bloomberg News recalls. The bulk of its debt is denominated in reais, not in dollars, Bloomberg News says. Foreign reserves are in good shape, and the recently passed central-bank autonomy law should protect them from political whims, Bloomberg News notes. Heading Up Brazil's central bank may have no choice but to raise the key rate, Bloomberg News relays Still, the meeting is widely seen as a test of Campos Neto's independence from political pressure, Bloomberg News discloses. If the bank does raise rates, it will add to headwinds for economic growth from fiscal policy and the deepening virus crisis, according to Laura Carvalho, a professor of economics at the University of Sao Paulo. Even though aid is being maintained, it will amount to a withdrawal of stimulus when compared with last year's levels, Carvalho said, Bloomberg News relays. "We're now taking a hit from all sides," she added. 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. FIBRIA OVERSEAS: Moody's Upgrades Sr. Unsec. Notes Rating from Ba1 ------------------------------------------------------------------ Moody's Investors Service upgraded to Baa3 from Ba1 the ratings on the debt issues of Fibria Overseas Finance Limited (fully and unconditionally guaranteed by Suzano S.A.). In a related rating action, Moody's America Latina Ltda upgraded to Baa3 from Ba1 the senior unsecured ratings of Suzano S.A. (Suzano) and affirmed the Aaa.br senior unsecured ratings (national scale). Moody's America Latina also assigned to Suzano a Baa3 (global scale) and Aaa.br (national scale) issuer rating and has withdrawn Suzano's Ba1 (global scale) and Aaa.br (national scale) corporate family rating. The outlook for all ratings is stable. Ratings actions: Issuer: Fibria Overseas Finance Limited Senior Unsecured GTD global notes due 2024: upgraded to Baa3 from Ba1 Outlook Actions: Issuer: Fibria Overseas Finance Limited Outlook, remains Stable RATINGS RATIONALE The upgrade of Suzano's ratings to Baa3 reflects the improvement in the company's credit quality supported by strong operating execution and conservative financial strategy, which already resulted in lower leverage, higher EBITDA margins, lower costs and stronger liquidity at the end of 2020 compared to 2019, despite the fact that average hardwood pulp prices stayed at its lowest level in 2020 since at least 2008. Moody's expects Suzano's credit metrics to show further and material improvement in 2021 supported by a substantial recovery in pulp prices observed since December 2020, continued FX weaknesses, synergies between Suzano and Fibria operations and focus on deleveraging through gross debt reduction. Moody's expects leverage to reach 3x total debt/EBITDA (from 5x at the end of 2020) and interest coverage, measured by EBITDA/interest expense, to reach 7.6x (from 3.5x at the end of 2020) at the end of 2021. Suzano's ratings continue to reflect the company's leading position as the largest producer of market pulp in the world, as well as its strong presence in the Brazilian printing and writing paper, paperboard and tissue sectors. The company benefits from its low-cost position and high level of vertical integration with substantial self-sufficiency in wood fiber and energy; the proximity of its pulp mills to its own forests and port facilities; and long-term supply agreements, which support stable sales volume with good geographic diversification. The ratings also reflect Suzano's conservative approach to liquidity and risk management,but are constrained by the volatile nature of the pulp industry, which represents around 80% of the company's consolidated revenue. Lower pulp prices and the depreciation of the Brazilian real (local currency in Brazil) have strained leverage. As a result of lower pulp prices in 2019-2020, Suzano closed 2020 with gross leverage of 5x, from a peak of 7.3x in LTM ended March 2020, which reflects the significant amount of debt raised to fund the acquisition of Fibria, concluded in January 2019. In 2020, Suzano showed resilience and ability to adjust to the changes brought up by the COVID-19 outbreak, and reduced capex (from BRL 5.8 billion in 2019 to BRL4.2 billion), worked to reduce excess inventories, sold non-core assets in the amount of BRL1.5 billion and was able to capture synergies of BRL1.3 billion from the Fibria acquisition. Operating synergies are estimated at BRL1.3 billion annually. Suzano has a comfortable debt amortization schedule and ample liquidity, represented by a cash balance of BRL9.1 billion ($1.8 billion) and committed credit facilities totaling BRL3.6 billion ($500 mm and BRL1 billion) fully available. The stable outlook reflects Moody's expectation that the company's credit metrics will improve through 2021. Despite the higher debt levels Suzano has incurred to fund the acquisition of Fibria, Moody's expects the company to continue reducing debt levels and working on liability management to address shorter-term maturities, gradually reducing leverage and liquidity risk through the next 12-18 months. Moody's also expects the company to continue capturing synergies from the combined operations of Suzano and Fibria. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING An upgrade of Suzano's ratings would require the maintenance of strong credit metrics, market presence and diversification, as well as solid liquidity and positive free cash flow (FCF) generation on a sustained basis. Quantitatively, a positive action would also require leverage, measured as total adjusted gross debt/EBITDA, to decrease below 2.5x. An upward rating movement would also be subject to the relative position to Brazil's sovereign ratings (Government of Brazil, Ba2 stable). Significant changes in market conditions, in particular for hardwood pulp, which may lead to weaker-than-expected cash flow for Suzano and the combined operations, could strain its ratings. Quantitively, the ratings could also be downgraded if adjusted leverage remains above 3.0x for a prolonged period, without prospects for improving while the company's liquidity deteriorates, becoming insufficient to cover near-term debt service requirements. In addition, a downgrade of Brazil's sovereign rating (Government of Brazil, Ba2 stable) could strain Suzano's ratings. The principal methodology used in this rating was Paper and Forest Products Industry published in October 2018. Headquartered in Salvador, Brazil, Suzano S.A. (Suzano) is the world's largest producer of bleached eucalyptus kraft pulp (BEKP), with an annual production capacity of 11 million tons, and is also a leading company in the Brazilian printing and writing paper, paperboard and tissue market. In 2020, the company generated BRL30.5 billion (about $6 billion) in revenues. ========= C H I L E ========= LATAM AIRLINES: Aims to Conclude Restructuring by December ---------------------------------------------------------- Aviation Week reports that LATAM Airlines Group aims to exit Chapter 11 bankruptcy by the end of 2021 and believes its restructuring process will improve the company's competitive position going forward, particularly in key markets such as Colombia. According to Flight Global, LATAM Group CEO Roberto Alvo described the closure of LATAM Airlines Argentina in June 2020 as a "very hard decision", and told a CAPA Live event on March 10, 2021, that "a problem always brings an opportunity, and now we can refocus our resources where we believe we have a better chance of succeeding". That means the group -- most of which is restructuring under US Chapter 11 protection -- is "looking into the Colombian market, which is the second-largest market in the region". About LATAM Airlines SA LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Lee Brock Camargo Advogados, is the Debtors' local Brazilian litigation counsel to the Debtors. Prime Clerk LLC is the claims agent. The Official Committee of Unsecured Creditors formed in the case tapped Dechert LLP as its lead counsel, UBS Securities LLC, as investment banker, and Conway MacKenzie, LLC. Klestadt Winters Jureller Southard & Stevens, LLP is the conflicts counsel. Ferro Castro Neves Daltro & Gomide Advogados, is the Committee's Brazilian counsel. The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as counsel. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Concerns Rise as Raw Material Prices Soar 33% ----------------------------------------------------------------- Dominican Today reports that the prices of raw materials imported by the country - such as soybeans, corn and fuels, among others - have soared 33% during the last year, according to the economist Roberto Despradel. During a presentation before the Association of Industries of the Dominican Republic (AIRD), Despradel pointed out that there is an expectation of inflation worldwide in a period that should not be long, according to Dominican Today. "We would like the transience to be shorter." The rise in raw material prices has been caused by situations ranging from the shortage of containers from China -- which has had a domino effect on the entire distribution chain -- to an unexpected increase in demand for staples, through weather events, Dominican Today relays. COVID-19 has represented challenges at all levels, and the AIRD directive indicated that industrialists are "open and willing" to do their "best efforts not to generate distortions in the economy," 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: Economy Contracts -1% on the Pandemic --------------------------------------------------------- Dominican Today reports that the Dominican economy is still under the impact of the pandemic. The Central Bank said the Monthly Index of Economic Activity (IMAE) fell 1.8% in January, a decline that exceeds December's -1%, according to Dominican Today. In January, measures to restrict mobility were tightened, which sought to curb the spread of COVID-19 in the country, the report relates. "A stricter curfew affected the January result, which accumulated 11 consecutive months of economic decline," the report notes. Last year, the Dominican economy fell 6.7%, which led to job losses and increased social exclusion, 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: Real Growth Could Reach 5.3% by 2021 -------------------------------------------------------- Dominican Today reports that the Dominican economy is ready for the country to be the one with the fastest recovery in the entire region from the recession induced by the pandemic and it is expected that after a contraction of the Gross Domestic Product of 6.6% in 2020, real growth reaches 5.3% by 2021. This is affirmed by the English magazine The Economist, which is responsible for addressing current affairs in international relations and the economy from a global framework, according to Dominican Today. It noted as positive aspects that affect the recovery process the moderation of spending, the projection of a low level of inflation and the confidence that the economic policy implemented by the Government of President Luis Abinader instills on investors, the report relays. "Real GDP growth will average 4.5% annually between 2022 and 2025, while private consumption, investment and the demand for Dominican products and services by the United States gain ground," it adds in the report for March, 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. 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). ============= J A M A I C A ============= JAMAICA: Cocoa Industry Board Commercial Assets on Auction Block ---------------------------------------------------------------- RJR News reports that the commercial assets of the Cocoa Industry Board have been placed on the auction block. The Agriculture Ministry is currently seeking expressions of interest, according to RJR News. The Cocoa Industry Board has processing facilities in Clarendon, St. Mary and Hanover as well as a cocoa farm in St. Mary, the report notes. In an effort to successfully divest the assets, the Agriculture Ministry is undertaking a preliminary market sounding exercise, the report relays. Interested parties have until March 29 to respond. About Jamaica Jamaica is an island country situated in the Caribbean Sea. Jamaica is an upper-middle income country with an economy heavily dependent on tourism. Other major sectors of the Jamaican economy include agriculture, mining, manufacturing, petroleum refining, financial and insurance services. Standard & Poor's credit rating for Jamaica stands at B+ with negative outlook (April 2020). Fitch's credit rating for Jamaica was last reported at B+ with stable outlook (April 2020). Moody's credit rating for Jamaica was last set at B2 with stable outlook (December 2019). As reported in the Troubled Company Reporter-Latin America, Fitch's revision of Jamaica's outlook in April 2020 to Stable from Positive reflects the shock to Jamaica from the coronavirus pandemic, which is expected to lead to a sharp contraction in its main sources of foreign currency revenues: tourism, remittances and alumina exports. JAMAICA: Fitch Affirms 'B+' LT Foreign-Currency IDR --------------------------------------------------- Fitch Ratings has affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. KEY RATING DRIVERS Jamaica's 'B+' rating is supported by World Bank Governance Indicators that are substantially stronger than the 'B' and 'BB' medians, a favorable business climate according to the World Bank Doing Business Survey, moderate inflation and moderate commodity dependence. These strengths are balanced by vulnerability to external shocks, a high public debt level and a debt composition that makes the sovereign vulnerable to exchange rate fluctuations. The Stable Outlook is supported by Fitch's expectation that the public debt level will return to a firm downward path post-pandemic, which is underpinned by political consensus to maintain a high primary surplus, the resilience of external finances, and stronger economic policy institutions. The general government deficit is projected at 4.3% of GDP in fiscal 2020-2021 (ending March 31) from a surplus of 0.9% a year ago. This deficit compares favorably with the 'B' median in 2020 of 7.6%. Jamaica is expected to be one of the few Fitch-rated sovereigns to post a primary surplus (2.6% of GDP). Expenditure growth is projected at only 3.8% yoy (compared to an average of 7.8% between fiscal 2017-2018 and fiscal 2019-2020) as the government reallocated planned capex to pandemic-related support. Revenues declined by a projected 12.3% yoy pushed down by a fall in consumption and the downturn in the tourism sector. In the budget for fiscal 2021-2022 the government targets a surplus of 0.3% of GDP. A one-off dividend payment of JMD33 billion (1.5% of GDP) from BOJ to the government and the gradual return of tourists due to the vaccine roll out support the fiscal consolidation - Fitch projects a deficit of 0.8% of GDP. The fiscal 2021-2022 target is determined by an amended fiscal rule (after being suspended fiscal 2020-2021) that sets looser, but more realistic targets, in Fitch's opinion. In fiscal 2021-2022 the government plans to cover 70% of its funding requirements locally. Fitch judges that local banks will be willing to lend to the government at relatively low rates owing to ample liquidity as supply of government paper has fallen in recent years and the number of local investment opportunities have decreased during the pandemic. External financing will come from multilaterals; the government has stated that it is not planning to issue an external bond in the upcoming fiscal year. Debt-to-GDP is projected to reach 110.9% by end-March 2021 from 94.8% a year before, largely reflecting exchange rate depreciation and GDP contraction (61% of total government debt is in foreign currency). Fitch assumes that debt-to-GDP will return to a clear downward path reflecting cross-party political consensus around the fiscal stance. The JLP, which was re-elected in September 2020 with a comfortable majority, is committed to fiscal consolidation. Before the pandemic, Jamaica recorded one of the largest primary surpluses of any sovereign rated by Fitch, averaging 7.4% of GDP between fiscal 2013-2014 and fiscal 2019-2020. Fitch expects that the economy will grow by 4.5% in 2021, with risks to the downside stemming from uncertainty around the vaccine roll out and a possible third wave of the virus. Fitch expects that growth will accelerate in 2022 to 5.2% assuming that the tourism industry will have a better 2021-2022 winter season than the one that is just ending. The GDP contraction in 2020 is projected at 10.2%, much worse than median of the 'B'-rated peers (4.2%). External finances were resilient to the pandemic. Fitch estimates that the current account deficit narrowed in 2020 to 0.9% of GDP, from 2% of GDP in 2019 despite a halving of services credits (mostly tourism). The improvement reflected a contraction in imports caused by lower tourism-related products and energy prices, and a jump in inflows from remittances. The 2020 deficit compares favorably with the 'B'-median of 3.7%. Fitch expects the current account deficit to widen to 1.2% of GDP in 2021, despite an improvement in tourism revenues, as imports increase. Exchange rate flexibility supports the external sector. The BOJ made limited interventions in the FX market letting the currency depreciate 8% in 2020. In May 2020, the IMF approved USD520 million (3.5% of GDP) disbursed to the BOJ under the Rapid Financing Instrument (RFI), which the government could tap into if the need arises. The RFI funds contributed to an increase in gross reserves by 12% in 2020 and given the import contraction they now provide 7.1 months of current external payments cover, which compares favorably with the 'B'-median of 4.9 months. Fitch expects that the reserve coverage will converge to the 'B'-median in 2021 and 2022 as imports recover. The BOJ Amendment Act passed last year makes price stability the only and explicit target of the bank, it also makes the BOJ accountable only to parliament. The banking sector is well capitalized and while NPLs showed an uptick they remain relatively low. NPLs to total loans in December 2020 were 2.9%, only a minor increase from 2.2% a year earlier. Liquid assets to average prescribed liabilities were above the statutory requirement (19%) in December 2020 at 25.7%. ESG - Governance: Jamaica has an ESG Relevance Score (RS) of '5' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, as is the case for all sovereigns. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in Fitch's proprietary Sovereign Rating Model. Jamaica has a medium WBGI ranking at 59.9, reflecting its track record of peaceful political transitions, accountability of the government to civil society and regulatory quality. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade are: -- Public finances: A large and sustained decline in government debt/GDP ratio over the medium term; -- Macro: A strengthening of growth prospects without the emergence of macroeconomic or fiscal imbalances; -- Public Finances: Entrenchment of institutional improvements in the fiscal policy framework that enhance confidence in medium term economic and fiscal performance. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Public Finances: An increase in government debt-to-GDP, for example owing to marked depreciation of the Jamaican dollar or revenues failing to recover at expected rates; -- Macro: Economic growth below expectations caused, for example, by the tourism industry being affected by a third wave of the pandemic; -- External Finances: An inability to access financing or evidence of distressed financing conditions. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Jamaica a score equivalent to a rating of 'B+' on the Long-Term Foreign Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows: -- External Finances: -1 notch, to reflect high dependency on the US economy, exposure to shocks in tourism revenues, relatively high probability of a natural disaster and net external debt that is about twice that of 'B' rated peers. -- Macro: Fitch has added a +1 notch adjustment to offset the deterioration in the SRM output driven by volatility from the pandemic shock, including on GDP growth. The deterioration of the GDP growth and volatility variables reflects a very substantial and unprecedented exogenous shock, and Fitch believes that Jamaica so far has demonstrated the capacity to absorb it without lasting effects on its long-term macroeconomic stability. The strengthening of fiscal and monetary policy frameworks contributes to this macro policy notch. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centered averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within Fitch's criteria that are not fully quantifiable and/or not fully reflected in the SRM. 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. KEY ASSUMPTIONS Global economic trends and oil prices are expected to develop as outlined in Fitch's March 2021 Global Economic Outlook. ESG CONSIDERATIONS Jamaica 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 therefore highly relevant to the rating and a key rating driver with a high weight. Jamaica 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. Jamaica has an ESG Relevance Score of '4' for Human Rights and Political Freedoms as the Voice and Accountability pillar of the World Bank Governance Indicators is relevant to the rating and a rating driver. Jamaica 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, as for all sovereigns. Jamaica restructured domestic debt in 2010 and 2013 but continued to service external debt. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. =========== M E X I C O =========== TOLUCA: Moody's Lowers Issuer Rating to B3 on Weak Liquidity ------------------------------------------------------------ Moody's de Mexico S.A. de C.V. downgraded the issuer ratings for the Municipality of Toluca to B3/B1.mx from Ba3/Baa1.mx, downgraded its baseline credit assessment to b3 from ba3 and maintained a negative outlook. RATINGS RATIONALE The downgrade of the BCA to b3 and issuer ratings to B3/B1.mx primarily reflects Moody's view of weaknesses in governance of the municipality, especially in planning and budgeting, that led to a larger deterioration in the municipality's liquidity metrics in 2020 than previously anticipated. This resulted in the contracting of additional short-term loans amid a significant weakening in operating performance, placing further pressure on the municipality's already weak liquidity. Toluca's ratio of cash/current liabilities declined to 0.06x in December 2020, below Moody's expectation of 0.14x, leaving the municipality with a very limited capacity to confront shocks and to meet significant short-term debt service obligations in the coming months. This has led to an increase in Toluca's reliance on advances on participations transfers from the State of Mexico (Ba1, stable) and the deferral of payments to suppliers to address liquidity needs. In compliance with the Financial Discipline Law for States and Municipalities, the municipality will have to pay off all outstanding short-term loans, currently amounting to MXN334 million, by the end of September 2021, three months before a change of administration, adding pressure to its weak cash position. Liquidity pressures stem largely from a steep deterioration in operating performance as a result of falling revenues in 2020 and the failure to adjust operating spending, which continued to rapidly increase. Toluca reported a gross operating balance of -23.3% of operating revenue in 2020, based on preliminary financial statements, its second deficit in a row following a -2.9% GOB in 2019. The municipality's budget for 2021 includes very modest cuts in operating spending, which Moody's expects will lead to still significantly negative GOBs of -15% and -12.5% in 2021 and 2022, respectively, given expectations for a slow recovery in revenue. Finally, Toluca's operating flexibility will continue to be constrained in 2021 by the need to meet past-due pension payments to the state pension system (ISSEMYM), water company contingencies (which already accounted for 8.7% of the operating revenue in 2020) and off balance sheet arrears (Adefas). The negative outlook reflects Moody's expectation that operating deficits will continue to pressure liquidity, which will likely decline further in 2021 amid ongoing fiscal pressures. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS If Toluca articulates a clear plan to substantially improve its liquidity position, sufficient to remain current on its short-term debt service payments during 2021, and implements cost controls that significantly improve its gross operating balances, the outlook could be stabilized. Conversely, if the deterioration in liquidity further raises risks that the municipality will not be able to service its short-term loans, the ratings could be further downgraded. ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS Environmental considerations are not material to Toluca's ratings. Social considerations are material to Toluca's ratings. The municipality has faced rising levels of violence and security spending has been a source of financial pressure in recent years and a key driver of widening operating deficits. Governance considerations are also material to Toluca's ratings. The municipality generally complies with the institutional framework determined by national legislation for all state and municipal governments. However, Toluca's deteriorating operating balances, declining liquidity and the past-due payments to the state pension system reflect poor planning and budget management. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. ===================== P U E R T O R I C O ===================== STONEMORE INC: Schedules Annual Meeting for July 27 --------------------------------------------------- StoneMor Inc.'s 2021 Annual Meeting of Stockholders will be held on July 27, 2021 at 4:00 p.m. EDT. The record date for stockholders entitled to notice of and to vote at the Annual Meeting will be the close of business on June 4, 2021. The Annual Meeting will be held by remote communication, and information regarding the manner in which stockholders will be able to access, participate in and vote at the Annual Meeting will be set forth in the Company's proxy statement. Because the Annual Meeting date is more than 30 days earlier than the date of the 2020 Annual Meeting, stockholders wishing to submit proposals for inclusion in the proxy statement for the Annual Meeting must ensure that such proposals are received by the Company at 3331 Street Road, Suite 200, Bensalem, PA 19020 Attention: Corporate Secretary, on or before April 28, 2021. The Company's bylaws govern the submission of nominations for director or other business proposals that a stockholder wishes to bring before a meeting of stockholders. Under those bylaws, nominations for director or other business proposals to be brought before the Annual Meeting may be made by a stockholder entitled to vote who has delivered a notice to the Corporate Secretary at the address set forth above no earlier than the close of business on March 29, 2021 and no later than the close of business on April 28, 2021. The notice must contain the information required by the bylaws, and any other business proposal must be a proper matter for stockholder action. About StoneMor Inc. StoneMor Inc. (http://www.stonemor.com),headquartered in Bensalem, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 318 cemeteries and 88 funeral homes in 27 states and Puerto Rico. StoneMor's cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. The Company reported a net loss of $151.94 million for the year ended Dec. 31, 2019, compared to a net loss of $72.70 million for the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $1.62 billion in total assets, $1.71 billion in total liabilities, and a total owners' equity of ($87.21 million). ********* 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. 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