/raid1/www/Hosts/bankrupt/TCRLA_Public/210405.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, April 5, 2021, Vol. 22, No. 62
Headlines
A R G E N T I N A
ARGENTINA: Banks Ask for Some Relief After Worst Year Since 2007
B R A Z I L
BRAZIL: Posts US$1.5BB Trade Surplus in March, Ministry Says
OEC SA: Fitch Assigns First-Time 'CCC-' LT IDRs, Outlook Stable
C H I L E
AUTOMOTORES GILDEMEISTER: To File Prepackaged Bankruptcy in U.S.
GUACOLDA ENERGIA: Fitch Lowers LT IDRs to 'B', Outlook Stable
C O L O M B I A
BANCO DAVIVIENDA: Moody's Affirms Ba2 Rating on Subordinated Debt
M E X I C O
PETROLEOS MEXICANOS: Fitch Affirms 'BB-' LT IDRs, Outlook Stable
P A N A M A
CFG INVESTMENTS 2021-1: S&P Assigns Prelim B(sf) Rating on D Notes
P U E R T O R I C O
FERRELLGAS PARTNERS: Completes Chapter 11 Restructuring
S U R I N A M E
SURINAME: Defaults as Time Runs Out for Third Debt Payment Delay
V I R G I N I S L A N D S
KINGATE EURO: Commences Liquidation Proceedings
KINGATE GLOBAL: Commences Liquidation Proceedings
X X X X X X X X
[*] BOND PRICING: For the Week March 29 to April 2, 2021
- - - - -
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A R G E N T I N A
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ARGENTINA: Banks Ask for Some Relief After Worst Year Since 2007
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Buenos Aires Times reports that after posting their worst returns
in 13 years, Argentina's banks are blaming part of their losses on
the government's pandemic measures and asking the Central Bank to
ease the squeeze.
Officials from Argentina's four biggest banking industry groups,
which include foreign and local institutions, held several
meetings, calls and message exchanges over the past weeks with
central bank chief Miguel Pesce and Production Minister Matias
Kulfas, asking them to eliminate or modify some of the regulations,
according to people with direct knowledge of the matter, reports
Buenos Aires Times.
The banks are complaining about measures taken in 2020 to support
the economy in the middle of the pandemic, such as mandating that
financial institutions give out loans with rates lower than
inflation, eliminating commissions for certain services and
deferring loan payments, the report notes. The government is
reluctant to eliminate these measures as it seeks to revive
economic activity ahead of midterm elections, the people said, the
report discloses.
A Central Bank spokesman did not confirm the meetings, but said
that while banks have to be profitable, they will not be allowed to
have exorbitant interest rates, the report relays. Bank chambers
ABA, ABE, Adeba and Abappra declined to comment. A spokesman for
the Production Ministry said that talks are ongoing.
The Argentine banking sector closed 2020 with the lowest return on
equity since 2007, according to data from the Central Bank.
Collectively, banks lost more than 50 billion pesos (US$546
million), the report discloses.
Banker Requests
In the meetings with regulators, the country's top bankers demanded
that Pesce eliminate or reduce the minimum rate on certificate
deposits, the report relays.
Bankers also want authorities to rein in the "Ahora 12" programme
that compels lenders to allow consumers to make payments in three,
six, 12 or 18 monthly installments at rates lower than expected
inflation, the report relays. Plans with 12 installments and up
are also allowed a three-month grace period, the report notes. Six
out of 10 credit card purchases made in installments used the plan
in 2020, according to data by payments processing firm Prisma
Medios de Pago, the report adds.
Argentina's banks also asked officials to curb a programme that
calls for loans to small and medium businesses with rates between
30 percent and 35 percent annually; to end a deferral on loan
repayments; and to be able to charge commissions again on ATM
withdrawals, which had been frozen since the start of the pandemic,
the report discloses.
Several key demands remain unresolved, according to people with
direct knowledge of the matter, the report relates. For example,
the program that gives a minimum rate on loans was extended until
June 30, the report adds.
Still, Pesce relented on the issue of ATM fees, announcing this
month that certain charges will once again be allowed, the report
relays. A Production Ministry spokesman said the government is in
talks with the banks to include some adjustments that may offer
relief for the banks, such as the elimination of the grace period
for the installments program, the report notes.
To be sure, the country's economy has made it a tough operating
environment regardless of the change in rules, the report
discloses. Persistent inflation is expected to compound problems
for an economy that's been devastated by a recession now in its
third year, rising bad debt and shrinking demand for new loans, the
report says.
Earnings Defense
Still, bank executives blamed the government programmes for their
lacklustre fourth-quarter results and warned that they would
continue to wreak havoc, the report relays. Grupo Financiero
Galicia officials estimated that return on equity could fall to 10
percent in 2021, even lower than its 2020 figure of 16 percent, the
report notes.
Meanwhile, Grupo Supervielle executives cautioned that
non-performing loans may grow in the second and third quarters once
the Central Bank's grace period on loans ends. BBVA Argentina also
pointed to official regulations to explain why its net interest
income in the fourth quarter of 2020 fell 18 percent, the report
adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. It's capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8,
2020.
Moody's credit rating for Argentina was last set at Ca on Sept. 28,
2020. Fitch's credit rating for Argentina was last reported on
Sept. 11, 2020 at CCC, which was a rating upgrade from CC. DBRS'
credit rating for Argentina is CCC, given on Sept. 11, 2020.
As reported by The Troubled Company Reporter - Latin American, DBRS
noted that the recent upgrade in Argentina's ratings (September
2020) follows the closing of two debt restructuring agreements
between the Argentine government and private creditors. The first
restructuring involved $65 billion in foreign-law bonds. The deal
achieved the requisite participation necessary to trigger the
collective action clauses and finalize the restructuring on 99% on
the aggregate principal outstanding of eligible bonds. DBRS added
that the debt restructurings conclude a prolonged default and
provide the government with substantial principal and interest
payment relief over the next four years.
DBRS further relayed that Argentina is also seeking a new agreement
with the International Monetary Fund (IMF) to replace the canceled
2018 Stand-by Agreement. Formal negotiations on the new financing
began in November 2020. Obligations to the IMF amount to $44
billion, with major repayments coming due in 2022 and 2023.
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B R A Z I L
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BRAZIL: Posts US$1.5BB Trade Surplus in March, Ministry Says
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Rio Times Online reports that Brazil posted a trade surplus of
US$1.5 billion in March, figures showed, less than half the
consensus forecast in a Reuters poll for a US$3.1BB surplus and
also sharply down from the US$3.6BB surplus registered in the same
month last year.
Exports in March totaled US$24.5 bln and imports were US$23.0 bln,
the ministry said, adding that total trade flows of US$47.5 bln in
the month were up almost 40% from a year earlier, according to Rio
Times Online.
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.
OEC SA: Fitch Assigns First-Time 'CCC-' LT IDRs, Outlook Stable
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Fitch Ratings has assigned first time Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDRs) of 'CCC-' and a
National Long-Term Rating of 'CCC(bra)' to OEC S.A.'s.
Concurrently, Fitch has assigned a first time 'CC'/'RR5' rating for
USD1.55 billion senior unsecured payment-in-kind (PIK) Toggle notes
issued by OEC Finance Ltd. (OEC Finance), which are unconditionally
and irrevocably guaranteed by OEC. The Outlook for OEC's corporate
ratings is Stable.
Fitch has also upgraded Odebrecht Engenharia e Construcao S.A.'s
Long-Term Foreign- and Local-Currency IDRs to 'CCC-' from 'RD', and
National Long-Term Rating to 'CCC(bra)' from RD(bra), following the
conclusion of the distress debt exchange (DDE) process in January
2021.
OEC's ratings reflect the still-elevated operational challenges and
uncertainties regarding new projects and the execution of
infrastructure contracts, margin recovery and cash flow generation
capacity. Despite the group's recent DDE conclusion, OEC's
financial flexibility remains weak to support operations, and
service debt and fines of plea bargain agreements. The analysis
also reflects OEC's weak capital structure and negative FCF over
the rating horizon, and does not incorporate any support from OEC's
ultimate parent, Novonor S.A. (formerly Odebrecht S.A.). The
cyclicality and volatility of the Engineering and Construction
(E&C) sector in Latin America is also reflected in the ratings.
The analysis considered Odebrecht Engenharia e Construcao's
financials, excluding the holding company (HoldCo) instrument, as
OEC has not published financial statements yet.
Ratings of Odebrecht Engenharia e Construcao were simultaneously
withdrawn, as they are no longer considered relevant to Fitch's
coverage. Fitch has also withdrawn the 'C'/'RR5' ratings of
approximately USD3.4 billion senior unsecured notes issued by
Odebrecht Finance Limited (OFL), as bonds were fully exchanged.
KEY RATING DRIVERS
DDE Conclusion: The January 2021 DDE conclusion by OEC benefits the
company's competitiveness in new projects bids, which is crucial
for backlog increase. The DDE exchanged OFL issuances by new senior
unsecured notes of OEC Finance. Bondholders received 45% of their
credit in new notes (USD1.6 billion), with same coupons and 4.5
years of maturity extension, excluding the perpetual bonds. They
also received a quasi-equity HoldCo Instrument equivalent to 55%
(USD1.9 billion) of the restructured debt booked in a sub-holding
above OEC, Odebrecht HoldCo Finance Limited. This instrument has no
coupon and will be serviced by OEC dividends. It expires in
September 2058 and is nonrecourse to OEC.
Challenging Turnaround: OEC faces the challenging strategy to
pursue new contracts and to collect past due receivables to support
operations and service coupons and fines. Fitch expects an order
book of USD2.7 billion in 2020, 28% of which were on hold in
September 2020, and there are high uncertainties about the
company's capacity to win new projects in the next couple of years.
OEC still negotiates plea bargain agreements. The company has
signed plea bargain agreements with Brazil, Dominican Republic,
Ecuador, Guatemala, Panama and Peru, along with the Swiss and
American authorities, and has USD2.9 billion in fines until 2038.
Different Operating Environments: The operating environment for E&C
companies in Brazil remains pressured by the pandemic-related weak
macroeconomic scenario, which increases uncertainties about OEC's
capacity to recover the backlog on a sustainable basis. In addition
to Brazil, OEC has prioritized activities in Angola, Dominican
Republic, Panama and Peru. These countries tend to benefit from the
hike in commodity prices, such as oil in Angola and metals in Peru.
The recovery of OEC operations will depend on the GDP growth of
these five countries.
Negative FCF: Fitch forecasts OEC to report an average negative FCF
of about BRL600 million in 2021-2023, mainly pressured by working
capital needs, fines and capex that should be funded by short-term
credit lines. Fitch estimates positive FCF around BRL580 million in
2020 due to around BRL1 billion from working capital, as OEC was
able to extend payables and collect past due receivables, despite
negative EBITDA estimated at BRL410 million. Fitch projects EBITDA
of BRL241 million in 2021 and BRL469 million in 2022, reflecting
growth derived from successful contracts bids.
Weak Capital Structure: Fitch projects total debt around BRL9.4
billion following the conclusion of the DDE. This position excludes
the HoldCo instrument of USD1.9 billion. Total debt consists of new
USD1.55 billion senior unsecured PIK Toggle notes issued by OEC
Finance and working capital lines. Fitch believes OEC will
pay-in-kind OEC Finance coupons over the next five years, which
alleviates cash flow pressures in the short term, though increases
the outstanding debt. There is an additional challenge to increase
hard-currency revenues to partially mitigate the FX exposure.
DERIVATION SUMMARY
OEC's 'CCC-' rating reflects the company's still-elevated
operational challenges to win new projects, as well as weak
financial flexibility despite the conclusion of the DDE. OEC's
rating is similar to that of Brazilian shopping mall General
Shopping e Outlets do Brasil S.A. (CCC-), which reflects the
company's limited cash flow generation, high leverage and FX
exposure, and lower unencumbered asset base. OEC's rating is
stronger than Andrade Gutierrez Engenharia S.A. (C) that is
currently within the cure period to pay around USD23 million in
coupons.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Order books of BRL13.2 billion in 2020 and BRL13.7 billion
2021, and executed on average in 2.6 years;
-- Gradual recovery of EBITDA margins to 5.4% in 2021 and 8.6% in
2022;
-- Capitalization of the coupons of OEC Finance notes;
-- Payment of fines per consent solicitation;
-- Annual capex of approximately BRL220 million in 2021 and 2022;
-- No dividends.
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that OEC would be reorganized as
a going-concern (GC) in bankruptcy rather than liquidated;
-- Fitch assumed a 10% administrative claim.
GC Approach
-- OEC's GC EBITDA of BRL327 million considers Fitch's revenue
forecast for 2022, though at a more pressured margin than in
the base case scenario - 6.0% compared with 8.6%;
-- The EBITDA considers the execution of firmed contracts
scheduled for the following years and half of the incremental
revenues expected by OEC;
-- Fitch considers no gains from the potential collection of past
due receivables and legal claims, as they would distort the
recurring EBITDA;
-- An enterprise value (EV) multiple of 5x is used to calculate a
post-reorganization valuation and it is in line with
historical multiples of the industry.
Liquidation Approach
Fitch excluded the liquidation value (LV) approach because
Brazilian bankruptcy legislation tends to favor the maintenance of
the business to preserve direct and indirect jobs. Moreover, in
extreme cases where LV was necessary, the recovery of the assets
has proved very difficult for creditors.
The allocation of value in the liability waterfall corresponds to a
'RR5' recovery for the senior unsecured notes of USD1.55 billion
(or BRL8.7 billion) and other bank debts of BRL856 million. The
'RR5' Recover Rating reflects below-average recovery prospects, and
indicates a recovery ranging from 11%-30%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating actions could occur if OEC demonstrates
capacity to consistently increase backlog above Fitch's
expectations;
-- Improved financial flexibility.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to recover backlog and operating margins;
-- Higher refinancing risks in the short-term.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Weak Financial Flexibility: OEC's financial flexibility is weak
despite the debt restructuring. Access to new long-term credit
lines is restricted and will depend on the company's ability to
turnaround its operations. In September 2020, OEC had a cash
position of BRL1.1 billion and BRL19.6 billion of debt
(off-balance) in the short term due to OFL's debt restructure.
Fitch estimates short-term debt to fall to BRL521 million
post-restructuring. The upcoming bond maturities of USD38 million
in 2024, USD74 million in 2026 and USD53 million in 2027 should be
paid in kind, increasing to about USD55 million, USD99 million, and
USD74 million, respectively, at their maturities.
At Sept. 30, 2020, OEC's total adjusted debt was BRL19.7 billion
(USD3.5 billion). On balance-sheet debt amounted to BRL4.3 billion,
of which 85% was the fair-value of the OFL bonds and the remaining
15% (BRL421 million) was composed of working capital lines for the
projects' execution. Fitch considered the difference to the par
value of the bonds of BRL15.4 billion (USD2.7 billion) as
off-balance sheet debt.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch has considered the interest paid, including those to service
OFL's bonds, as operating cash flow. Fitch also adds unconsolidated
dividends to the EBITDA for leverage and coverage purposes.
ESG CONSIDERATIONS
OEC has an ESG.RS of '4' for Group Structure. Fitch sees the
provisions made by the company to simplify related-party
transactions with other entities of the Novonor Group as
constructive. The corporate structure remains complex, and a lower
relevance score would require a more tangible simplification of the
group structure. This has a negative impact on the credit profile
and is relevant to the rating in conjunction with other factors.
OEC has an ESG.RS of '4' for Governance Structure. The agency
recognizes the company's progress made since car wash
investigations began in 2014. Plea bargain agreements have been
signed and most of the top management was replaced. Stringent
compliance rules and internal controls were implemented to guide
stakeholders relationships and to avoid repeating misconduct
practices. Still, Fitch requires more concrete steps, such as
increasing the number of independent members at the board, signing
plea bargain agreements with the remaining six countries, and
publishing unqualified financial statements, before lowering the
ESG.RS. This has a negative impact on the credit profile and is
relevant to the rating in conjunction with other factors.
OEC also has an ESG.RS of '4' for Management Strategy, the same of
Odebrecht Engenharia e Construcao. The company's strategy relies
mostly on winning sizable contracts in upcoming years, which has a
high degree of uncertainty, as it depends on economic growth,
clients' financials and competition. This RS could be lowered to
'3' if the company manages to win and execute the expected
contracts without sacrificing profitability. This has a negative
impact on the credit profile and is relevant to the rating in
conjunction with other factors.
OEC has an ESG.RS of '4' for Financial Transparency (same as
Odebrecht Engenharia e Construcao) due to the periodic restatements
of historical figures, consolidation of assets with minority
economic stake, and several partnerships that retain cash before it
reaches the parent. This has a negative impact on the credit
profile and is relevant to the rating in conjunction with other
factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
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C H I L E
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AUTOMOTORES GILDEMEISTER: To File Prepackaged Bankruptcy in U.S.
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Automotores Gildemeister Chile announced April 1, 2021, that it
will soon file a pre-packaged plan of reorganization in order to
restructure its debt obligations under Chapter 11 of the United
States Bankruptcy Code.
The pre-packaged plan involves the Chilean, Uruguayan and Brazilian
operations and does not include the Peruvian or Costa Rican
operations.
On March 31, 2021, the Company entered into a Restructuring Support
Agreement ("RSA") with holders of a substantial majority of the
Company's secured notes to support the pre-packaged reorganization
plan. To this end, AG has called an extraordinary shareholders'
meeting for April 9. The Company expects to file for
reorganization in the United States during the first half of
April.
This process will strengthen AG's balance sheet by reducing debt by
over US$200 million, allowing it to maintain its current leadership
position in the market and continue operating in the normal course
with its customers, creditors, associates, partners, brands and the
financial sector. The reorganization plan will not impair the
claims of employees, customers and vendors, and the Company
anticipates paying them in the ordinary course.
The Company has also received strong support from the major car
manufacturers it represents, which AG has taken to undisputed
leadership positions in both Chile and Peru.
In parallel with the anticipated Chapter 11 filing, AG will not
make the scheduled interest payment due April 1, 2021, under the
existing bond indentures.
The measures being taken by AG are the result of a number of
unforeseeable factors, including the sustained increase in the
exchange rate in recent years, the effects of the social upheaval
in October 2019 and subsequently the devastating effects of Covid
19. These phenomena have had far-reaching effects, making it
impossible for AG to meet certain international financial
obligations absent restructuring.
Because the process is supported by key creditor constituencies,
the pre-packaged plan will allow AG and its subsidiaries to emerge
from this process with a sound and strengthened balance sheet,
maintain their current leadership position and guarantee the
continuity and normal operation of the Company in the eyes of
customers, creditors, employees, partners, car manufacturers and
the financial sector
About Automotores Gildemeister SA
Headquartered in Santiago, Chile, Automotores Gildemeister SA is
one of the largest car importers and distributors in Chile and Peru
operating a network of company-owned and franchised vehicle
dealerships. Its principal car brand is Hyundai, for which it is
the sole importer in both of its markets. For the last 12 months
ended June 30, 2020, AG reported consolidated net revenues of $770
million, of which 95.2% correspond to sales in Chile and Peru, its
key markets.
GUACOLDA ENERGIA: Fitch Lowers LT IDRs to 'B', Outlook Stable
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Fitch Ratings has downgraded Guacolda Energia SPA's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'B'
from 'BB-'. The Rating Outlook was revised to Stable from Negative.
Fitch also downgraded Guacolda Energia's senior unsecured notes due
2025 to 'B+'/'RR3' from 'BB-'.
Guacolda's ratings downgrade reflects its weaker contractual
position over the rated horizon resulting in higher leverage,
exposure to spot sales; Fitch estimates spot sales as a percentage
of total net generation will represent 35% in 2020 and increase to
nearly 66% from 2022 through 2026. Gross leverage is expected to
increase to 5.4x in 2021 from 3.0x in 2020, while net leverage is
expected to average 2.7x between 2021 and 2022, explained by
Fitch's assumption that the company will accumulate its free cash
flow to strengthen its liquidity to refinance its $500 million bond
due 2025.
The Stable Rating Outlook reflects Fitch's expectation that
leverage will remain higher in line with the B category for
generation companies. The asset will remain competitive, with a
marginal cost of production of $30MWh, over the rated horizon. Even
with the aggressive introduction of renewables in Chile,
specifically solar, Guacolda and other coal plants will be core to
the electricity system in non-peak hours.
The one-notch uplift of Guacolda's $500 million senior unsecured
bond from its IDRs reflects a strong recovery value of the bonds.
Per Fitch's "Country-Specific Treatment of Recovery Ratings
Criteria," Chile is categorized as Group B, which caps the recovery
rating at RR2, allowing up to two notches above the IDR for
speculative-grade issuers, but Fitch's bespoke recovery analysis
determined that the enterprise value, after administrative claims,
of the company is $337 million on a going-concern basis, which is
68% of the outstanding principal resulting in a recovery rating of
RR3, which allows a maximum of a one-notch uplift from the IDR.
KEY RATING DRIVERS
Declining Contractual Position: Fitch expects the company's
contractual position to decrease by 50% in 2021 compared to 2020,
followed by a 21% decrease in contractual position by the end of
2022. The decreased position in 2021 is explained by expiration of
the company's regulated PPA with Chilectra (Enel Distribución) of
810 GWh/year - representing 12% of the total contracted position.
Going forward, the company's PPA is with non-regulated contracts,
which are investment-grade credit counterparties in the mining and
energy sectors. In 2021, Fitch estimates 60% of total energy sales
are contracted, and are expected to average 30% of total volumes
thereafter through 2025.
Increasing Leverage: Fitch believes the company's leverage in 2021
will be 5.4x compared to 3.0x in 2020. The increase in leverage is
due to lower EBITDA explained by lower contracted volumes and more
spot sales over the rated horizon. Fitch estimates Guacolda's
EBITDA will average $94 million between 2021 and 2023 and will
decrease to an average of $76 million between 2024 and 2025.
Fitch's rating case assumes no additional debt with the company's
only debt being its $500 million senior unsecured note due 2025.
Further, Fitch expects no dividends through 2025, so the company
can strengthen its liquidity to be better positioned to refinance
and partially repay its outstanding note at maturity. Fitch
estimates net debt to EBITDA will average 2.1x between 2021 and
2025, and FFO interest coverage will average 3.7x between 2021 and
2025.
Weak Contracted Position: Guacolda's contracted position is
estimated to continue declining through 2025. The steepest decrease
was experienced between 2020 and 2021 when its regulated PPA, which
represented 12% of total contracted volume, expired in 2020. Fitch
estimates contracted volumes will be 3,441 GWh per year in 2021,
2,724 in 2022, average of 2,141 in 2023 and 2024, and decrease to
1,917 in 2025, and then remain flat through 2030. Fitch expects
Guacolda will maintain an average capacity factor of 60% between
2021 and 2025, and net generation after contracted volumes will be
sold in the spot market.
Competitive Market Position: Fitch believes that Guacolda has a
competitive operating cost at $30/MWh and is well placed even when
considering the aggressive expansion of renewables into the grid,
as the marginal cost of coal is materially below that of thermal
gas at an average range of approximately $55-$70MWh. Further,
Guacolda is geographically located in the southern part of the
country`s Atacama Desert, ideal to servicing mining companies.
Fitch estimates that, over the last six months, the average
marginal cost at Maitencillo node was $43.9MWh, making Guacolda
competitive and highly probable to be dispatched. The company faces
regulatory pressures as Chile aims to fully decarbonize its energy
matrix by 2040, Fitch does not anticipate Guacolda`s decommission
before that time frame.
New Ownership: AES Gener's sale of its 50% + 1 share stake in
Guacolda to WegE SpA is credit-neutral. The transaction is pending
antitrust and other regulatory approval prior to close. Upon
closing, Fitch expects greater clarity as to new shareholders
strategy, specifically pertaining to its dividend policies and
refinancing strategy. Nevertheless, Fitch will continue to monitor
the sale closing process and the impact it may have on the
company's credit profile, especially pertaining to liquidity.
DERIVATION SUMMARY
Guacolda's rating downgrade reflects its higher leverage due to
contract expiration over the rated horizon. Fitch expects gross
leverage to be 5.4x in 2021, resulting in a more stressed capital
structure compared to its peers Enel Chile, Enel Generacion Chile,
Engie Energia Chile, AES Gener and Colbun. In terms of business
profile, all of Guacolda's peers benefit from a diverse generation
portfolio, with long-term contracted energy sales with
investment-grade counterparties or regulated customers, with a
contracted life of 10 years, providing stable and predictable cash
flows.
Guacolda's ratings are the lowest compared to its Chilean peers --
AES Gener (BBB-/Stable), Enel Generacion Chile (A-/Stable), Engie
Energia Chile S.A. (BBB+/Stable) and Colbun (BBB+/Stable) --as a
result of the company's relatively weaker financial profile,
although the peers carry similar business risks. Guacolda's
consolidated gross leverage, which is expected to 5.4x in 2021, is
higher than that of AES Gener at 3.3x. Colbun's credit profile is
quite similar to Engie, both consistent in the 'BBB+' rating level
with leverage between the range of 2.0x and 2.5x measured as total
debt to EBITDA and significantly stronger than Guacolda or AES
Gener's capital structure. Enel Generacion's capital structure is
the strongest among its peers in Chile, with gross leverage
averaging 1.5x in recent years. Enel Chile has a lower business
risk profile than its peers in the country, due to the integration
of the traditional power generation business from its subsidiary
Enel Generación Chile, the power generation from non-conventional
renewable sources through Enel Green Power and the power
distribution business through Enel Distribución Chile. In terms of
credit metrics, Enel Chile has consistently shown total debt to
EBITDA of around 2.5x, resulting in a higher rating than its
peers.
Unlike its Chilean electricity GenCos mentioned above, Guacolda's
credit profile does not benefit from having a diverse generation
portfolio, having exclusively coal power plants, and faces material
expiration of its contractual position.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- No units decommissioned through 2030.
-- Fitch's Thermal Coal (Australian Newcastle price assumptions)
of $72 per ton in 2021, $67 per ton in 2022, $66 per ton in
2023 and 2024 and $63 per ton long term.
-- Annual net generation on average of nearly 5,4000GWh/year
during the next 10 years .
-- Contracted volumes with unregulated clients at 3,441 in 2021,
2,724 in 2022, 2,218 in 2023, 2,064 in 2024 and 1,917 in 2025,
and 2026 average of 1,000GWh/year thereafter through 2029.
-- Marginal variable costs on average of USD30MW/h.
-- Long-term spot prices averaging $40MWh.
-- No dividend payments over the rated horizon.
-- Annual capex of USD9.5 million between 2020 and 2021.
-- No cash taxes in 2020-23 due to tax deferral.
-- Administrative costs adjusted by inflation.
-- $250 million of the outstanding bond repaid in 2025 and
refinanced with a 10-year amortizing loan.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Although a positive rating action is not expected in the
foreseeable future, Fitch will view positively a total debt
to-EBITDA rations of 3.5x or lower.
-- Improved long-term contracted position with strong off-takers
and increased remaining life of contracts.
-- FFO fixed-charge coverage of 4.5x or above on a sustained
basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A material increase in dividends.
-- Material reduction or cancellations in contracted volumes
through the rated horizon.
-- A material and sustained deterioration of credit metrics
reflected in total debt/EBITDA of over 6.0x while net
debt/EBITDA above 3.5x.
-- FFO fixed-charge coverage of 3.0x or below.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity Position: As of YE20, Guacolda had USD124
million in cash and equivalents, which covers four years of
interest expense of USD26 million. Guacolda repaid its USD100
million term loan maturing in 2020 with cash flows and cash on
hand. The company has a manageable debt profile that now consists
solely of its 4.56% USD500 million senior unsecured notes due April
2025.
ESG CONSIDERATIONS
Guacolda Energia SPA is a single asset coal fired plant. Therefore,
Fitch has assigned an ESG relevance score of '4' to Exposure to
Environmental Impacts and GHG Emissions & Air Quality. Chile has
announced a decarbonization strategy to be emission neutral by
2040, and Fitch expects that Guacolda's is exposed to potential
market disruption.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
===============
C O L O M B I A
===============
BANCO DAVIVIENDA: Moody's Affirms Ba2 Rating on Subordinated Debt
-----------------------------------------------------------------
Moody's Investors Service has affirmed all of Banco Davivienda
S.A.'s ratings, following the affirmation of the bank's ba1
baseline credit assessment. Davivienda is rated Baa3 for long-term
local- and foreign-currency deposit and foreign currency senior
debt, as well as Ba2 for foreign currency subordinated debt. At the
same time, Moody's changed the outlook on Davivienda's ratings to
stable, from negative.
RATINGS RATIONALE
The affirmation of Davivienda's ratings and assessments
incorporates the bank's good access to core funding and stable
liquidity. The change in outlook to stable, from negative, on
Davivienda's ratings reflects Moody's views that its funding,
profitability and capital metrics will improve as economic activity
gradually recovers in 2021.
Moody's noted that amid economic weakness owing to the fallout of
the pandemic, Davivienda's asset quality deteriorated and problem
loans increased to 5.0% of gross loans in December 2020, from 3.7%
one year prior, a level that is modestly below that of domestic
peers. The bank's asset quality metrics could deteriorate further
if borrowers are unable to repay the deferred loans from programs
extended up to June 2021 in Colombia and in Central America. The
extension of such programs will likely delay credit losses. Moody's
noted that Davivienda is more exposed than its peers to consumer
and mortgage financing to low income households and hence its loan
book is more sensitive to economic downturns. That said,
Davivienda's charge-offs as a percentage of gross loans have been
generally lower than peers, reflecting the bank's larger exposure
to mortgage loans. In addition, the bank has already built
significant prudential loan loss reserves against expected credit
losses, which represented 6.0% of the its total gross loans in
2020, and could therefore, help mitigate future credit costs.
Moody's expects that Davivienda's funding needs will be limited for
most of the year because loan growth and credit demand will be
constrained by the slow vaccination rollout in Colombia. With
management prioritizing improving funding mix over loan growth,
Moody's expects further improvement over the next 12-18 months.
Liquidity remains stable, with liquidity coverage ratio at end
December 2020 of 120.5%.
The change in Davivienda's outlook to stable from negative also
reflects the expectation that the bank's capitalization will
improve due to stronger earnings generation, earnings retention,
and the adoption of Basel III framework, which is expected to be
fully implemented throughout 2021 and to boost Davivienda's
regulatory capital ratio. Moody's capitalization ratio, measured as
tangible common equity relative to risk weighted assets, remained
relatively low at 7.7% in December 2020 from 8.4% one year before.
At the same time, profitability deteriorated significantly because
of the 72% increase in provisions in 2020 against 2019, but will
gradually improve as credit costs normalize in 2021.
Davivienda's Baa3 deposit and senior unsecured debt ratings also
incorporate Moody's assessment of a high probability that
Davivienda would benefit from government support in an event of
financial stress given its meaningful market share of local
deposits. This results in one notch of ratings uplift from the
bank's BCA of ba1.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Davivenda's ratings could be downgraded if asset risk and
profitability deteriorate and/or the bank is unable to sustain
capitalization at current levels. However, the ratings would not be
affected by a downgrade of the Government of Colombia's sovereign
bond rating of Baa2, which has a negative outlook.
Davivienda's ratings could be upgraded if the bank's asset quality
improves, along with sustainable earnings generation that would
boost its current capitalization levels even as loan growth begins
to accelerate.
ISSUERS AND RATINGS AFFECTED
The following Banco Davivienda S.A.'s ratings were affirmed:
Long-term local currency deposit rating of Baa3, Stable from
Negative
Long-term foreign currency deposit rating of Baa3, Stable from
Negative
Short-term local currency deposit rating of P-3
Short-term foreign currency deposit rating of P-3
Long-term foreign currency senior unsecured debt of Baa3, Stable
from Negative
Long-term foreign currency global subordinated debt of Ba2
Long term local currency counterparty risk rating of Baa2
Long term foreign currency counterparty risk rating of Baa2
Short term local currency counterparty risk rating of Prime-2
Short term foreign currency counterparty risk rating of Prime-2
Adjusted Baseline Credit Assessment of ba1
Baseline Credit Assessment of ba1
Long Term counterparty risk assessment of Baa2(cr)
Short Term counterparty risk assessment of Prime-2(cr)
Outlook, Stable from Negative
The principal methodology used in these ratings was Banks
Methodology published in March 2021.
===========
M E X I C O
===========
PETROLEOS MEXICANOS: Fitch Affirms 'BB-' LT IDRs, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Petroleos Mexicanos' (PEMEX) Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-'.
The Rating Outlook is Stable. The rating action applies to
approximately USD80 billion of international notes outstanding.
In addition, Fitch has simultaneously affirmed PEMEX's National
Long-Term ratings at 'A(mex)' and National Short-Term ratings at
'F1(mex)', and has withdrawn all national scale ratings.
PEMEX ratings reflect the company's moderate linkage to Mexico's
credit quality coupled with its weak Standalone Credit Profile
(SCP), which Fitch believe is commensurate with a 'ccc-' SCP. The
SCP reflects the company's elevated and raising leverage levels,
limited flexibility, high tax burden, and high investment needs to
maintain production and replenish reserves.
Fitch estimates PEMEX's FCF will range between negative USD12
billion to USD15 billion, on average, over the next three years, as
the company seeks to increase capex to revert the historical
production decline rate. Fitch believes the company will likely
need significant government support in the near term.
The moderate linkage between PEMEX's ratings and those of the
sovereign reflects the delay and uncertainty of significant support
from the government due to PEMEX's financial difficulties resulting
from high taxes.
PEMEX's Stable Rating Outlook mirrors Mexico's sovereign Outlook.
Fitch has withdrawn PEMEX's National scale ratings for commercial
reasons. Fitch Ratings, Inc will continue to provide international
ratings and research coverage on PEMEX and its existing
international debt issuances for the foreseeable future as a
service to investors.
KEY RATING DRIVERS
Weak Underlying Credit Quality: PEMEX's SCP would align with a
'ccc-' SCP were it not state owned and receiving government
support. The company's high tax burden and and limited flexibility
to navigate lower oil prices continues to erode its SCP. The
company's SCP reflects PEMEX's elevated leverage and low cash flow
from operations, which limits PEMEX's support for sustainable
upstream capex that could deliver consistent stable production and
100% reserve-replacement ratios in the long term.
As of December 2020, PEMEX reported a Fitch-defined lease-adjusted
EBITDA before net pension expenses of USD7.8 billion, and negative
FFO of approximately USD5.1 billion, while total financial debt
amounted to USD112.3 billion, translating into total debt/EBITDA of
approximately 14.4x. The SCP also reflects the company's low
liquidity position with only USD2 billion of cash on hand as of YE
2020 and USD3.6 billion available on its close to USD9 billion of
lines of credit. This compares unfavorably with approximately
USD6.5 billion of principle amortization due in 2021.
Transfers Weaken SCP: PEMEX's weak underlying credit quality is
primarily the result of excessive distributions to the government.
The company's contributions to Mexico averaged approximately 11.6%
of government revenues between 2015 to 2019, although they
decreased to approximately 5% in 2020 due to lower oil prices.
Transfers from PEMEX to the government remain high relative to the
company's cash flows, and transfers were approximately 28% of sales
during the past three years, or approximately 80%-100% of adjusted
EBITDA. As a result, the company's balance sheet has steadily
weakened. PEMEX's debt lacks an explicit guarantee from the Mexican
government.
Weak Government Support: Mexico demonstrated weak support for PEMEX
through delayed implementation of measures to alleviate the
company's credit quality deterioration. This weak support
assessment also reflects high levels of transfers from PEMEX to the
government. Despite this, Fitch believes the government might
provide more meaningful support if necessary.
Fitch estimates total incremental support for PEMEX in 2020
amounted to approximately USD5.6 billion in the form of tax credits
and capital injections, of which more than USD2 billion were
earmarked for a new refinery. This support comes in addition to
previously announced tax reduction of 7% in 2020 and an additional
4% in 2021, as well monetization of MXN4.9 billion of pension funds
in 2020. Net transfers from PEMEX to the government amounted to
approximately USD10 billion after tax credits. Mexico announced tax
credits for 2021 totaling approximately USD3.5 billion (MXN73.3
billion), capital injections of USD2.2 bn for a new refinery and
that it will inject additional capital into the company to assist
with USD6.5 debt principle payments.
Moderate Government Linkage: Despite the moderate rating linkage,
Fitch expects the government will ensure PEMEX maintains sufficient
liquidity to service debt, which supports the material rating
uplift from the SCP. Fitch assesses government support for PEMEX as
weak, and government incentives subfactors as moderate. Fitch views
Mexico's ownership and control of PEMEX as very strong.
This assessment results in a three-notching differential between
PEMEX's and Mexico's ratings. The Mexican government has strong
incentives to support PEMEX, given the sociopolitical and financial
consequences of a default for the country. PEMEX is Mexico's
largest company and one of the government's major sources of funds,
with material contributions to government revenues.
Strategic Importance for Energy Security: The sovereign linkage
stems from the company's strategic importance in supplying liquid
fuels to Mexico. A financial crisis at the oil company could
potentially disrupt the country's liquid fuel supply. Mexico is a
net importer of liquid fuels because of continued oil production
declines and low refinery utilization rates. Mexico relies on PEMEX
for almost all of its supply of gasoline and diesel, approximately
two-thirds of which comes from imports. Financial distress at PEMEX
could also have very severe financial consequences for the Mexican
government and other government-related entities, especially
regarding access to funding.
Weak Post-Tax Credit Metrics: PEMEX's credit-protection metrics are
weak due to high transfers to the federal government, high
indebtedness and negative FFO. As of December 2020, PEMEX reported
a Fitch-calculated FFO of approximately negative USD5.1 billion and
negative FCF of USD10.4 billion. PEMEX's total debt/proven reserves
(1P) remain unchanged from 2019 at approximately USD15/barrel of
oil equivalent (boe), up from USD9.2/boe in 2015. Fitch estimates
PEMEX's FCF will be roughly negative USD13 billion per year during
2021-2023, under Fitch's price deck and before government
injections.
Continued Upstream Underinvestment: Fitch expects production and
reserves to remain stable over the rating horizon should PEMEX
continue increasing E&P capex, while reducing lifting and finding
and development (F&D) costs. Fitch estimates PEMEX's projected
capex will likely be insufficient to sustainably replenish 100% of
its reserves without further reducing F&D costs, as the company
would require annual E&P capex of approximately USD12 billion to
replenish 100% of 1p reserves on a sustainable basis. This is based
on a F&D and acquisition cost estimate of USD13/boe and annual
production 900 million boe/year.
PEMEX crude oil production seems to have stabilized over the past
24 months at approximately 1.7 million bbl/d after decades of
continued decline. Fitch assumes total production may remain stable
over the rating horizon as the company's capex increase may only be
sufficient to offset production decline from mature fields. PEMEX's
production from new fields increased by approximately 146 thousand
bbl/d in the past two year, which helped the company offset the
decline in production from mature fields. Crude production from
ku-maloop-zaap, which is PEMEX's largest field with more than 40%
of production, decreased by approximately 128 thousand bbl/d during
the same period.
ESG — Governance: Fitch considers PEMEX's corporate governance
weak, given the continued high level of government interference in
the company's strategy, financing and management with changes in
administration. PEMEX has an ESG Relevance Score of '4' for
Governance Structure, resulting from its nature as a majority
government-owned entity and the inherent governance risk that
arises with a dominant state shareholder.
DERIVATION SUMMARY
PEMEX's linkage to the sovereign compares unfavorably to peers
Petroleos Brasileiro S.A. (Petrobras; BB-/Negative), Ecopetrol S.A.
(BBB-/Negative), Empresa Nacional del Petroleo (ENAP; A-/Stable)
and Petroleos del Peru - Petroperu S.A. (BBB+/Negative). All of
PEMEX's regional peers have strong linkages to their sovereigns due
to strong government support. Fitch believes governments in the
region, except for Mexico, have implemented different measures to
ensure the SCPs of their respective national oil and gas companies
remain viable in the long term.
PEMEX's ratings continue to reflect its close, albeit
deteriorating, linkage to the Mexican government due to its fiscal
and strategic importance. PEMEX's ratings also reflect the
company's competitive pretax cost structure, national and
export-oriented profile, sizable hydrocarbon reserves and strong
domestic market position. The ratings are constrained by PEMEX's
substantial tax burden, high leverage, significant unfunded pension
liabilities, large capital investment requirements, negative equity
and exposure to political interference risk.
Fitch views PEMEX's SCP as commensurate with a 'ccc-', which is 10
notches below Petrobras' and Ecopetrol's SCPs of 'bbb'. The
differences are primarily due to PEMEX's weaker capital structure
and increasing debt and leverage trajectory. PEMEX's SCP reflects
the company's large transfers to Mexico's federal government, its
large and increasing financial debt balance when compared with 1P
and elevated FFO-adjusted leverage. Comparatively, Ecopetrol and
Petrobras have significantly strengthened their capital structures
and maintained stable operating profiles.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Average West Texas Intermediate crude prices of USD55/bbl in
2021 and trending toward USD50/bbl in the long term;
-- Upstream capex moderately increases;
-- Production continuing its stabilization trend;
-- PEMEX will receive necessary support from the government to
ensure adequate liquidity and debt service payments.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade of Mexico's sovereign ratings;
-- An irrevocable guarantee from Mexico's government to
sustainably cover more than 75% of PEMEX's debt;
-- A material capitalization, coupled with a material reduction
of PEMEX's taxes, with a business plan that results in neutral
to positive FCF through the cycle, while implementing
sustainable upstream capex that is sufficient to replace 100%
of reserves and stabilize production profitably;
-- A sustainable FFO leverage below 5.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade of Mexico's sovereign rating;
-- A sustained deterioration of PEMEX's financial flexibility,
coupled with government inaction to support liquidity,
potentially resulting from continued negative FCF or a
material reduction of the company's cash on hand, credit
facilities and restricted capital markets access.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Weak Liquidity: PEMEX's liquidity position deteriorated recently as
a result of negative FCF, which resulted in a relatively low cash
position and reduced availability of its lines of credit. As of
December 31, 2020, PEMEX reported total cash and equivalents of
approximately USD2.0 billion and USD3.6 billion available on its
more than USD9 billion lines of credit. This liquidity compares
unfavorably with principle debt amortizations of USD6.5 billion due
in 2021.
Fitch expects PEMEX will require material external funding during
2021 and 2022, given expected negative FCF resulting from its high
tax burden under Fitch's prices assumptions for oil. Absent capital
increases from the Mexican government, PEMEX is likely to continue
funding its negative FCF with debt and potentially further erode
liquidity.
ESG CONSIDERATIONS
PEMEX has an ESG Relevance Score of '4' for Governance Structure,
resulting from its nature as a majority government-owned entity and
the inherent governance risk that arises with a dominant state
shareholder, which has a negative impact on the credit profile and
is relevant to the ratings in conjunction with other factors.
Fitch has revised PEMEX's ESG Relevance Score for Community
Relations & Social Access to '3' from '4' as its exposure is in
line with the industry and has a credit-neutral impact for the
company.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
===========
P A N A M A
===========
CFG INVESTMENTS 2021-1: S&P Assigns Prelim B(sf) Rating on D Notes
------------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to CFG
Investments Ltd.'s series 2021-1 notes.
The note issuance is an ABS transaction backed by unsecured
personal loan receivables originated in four different
jurisdictions: Aruba (BBB+/Negative/A-2), Curacao
(BBB-/Negative/A-2), Bonaire, and Panama (BBB/Stable/A-2).
The preliminary ratings are based on information as of March 31,
2021. Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
-- The characteristics of the pool being securitized, which
includes loans from four different jurisdictions: Aruba, Curacao,
Bonaire, and Panama. The transaction has a 30-month revolving
period during which the loan composition can change. As such, S&P
considered the worst-case pool allowed by the transaction's
concentration limits.
-- The availability of approximately 54.9%, 29.2%, 19.2% and 14.2%
credit support to the class A, B, C and D notes, respectively, in
the form of subordination, overcollateralization, a reserve
account, and excess spread. The excess spread calculation is only
an estimate for the first month because the future excess spread
will still need to be realized and is unknown at the expected
closing date. Additionally, the credit support level is sufficient
to withstand stresses commensurate with the preliminary ratings on
the notes based on our stressed cash flow scenarios.
-- The transaction's payment structure and mechanisms, which
incorporate performance-based triggers linked to a monthly
cumulative net loss percentage defined in the transaction documents
that lead to revolving period termination events, and early
amortization triggers that are linked to a servicer default, among
others.
-- CFG Holdings Ltd.'s (CFG's) established management, its
experience in origination and servicing consumer loan products
across all jurisdictions, and S&P's assessment of the operational
risks associated with CFG's decentralized business model across
certain jurisdictions.
-- The transaction's exposure to the counterparty risk of the bank
account providers in each relevant jurisdiction, which have credit
quality consistent with the preliminary ratings. Additionally, the
transaction's commingling risk, which S&P believes is mitigated by
the two-day transfer of funds, the existence of a reserve account,
and the small amount of exposure to this risk.
-- The transaction's legal structure, which includes a Cayman
Islands special-purpose vehicle issuing the notes, and
special-purpose entities in each jurisdiction called borrowers, to
which the portfolio of loans, or beneficial interests therein, has
been transferred by the respective sellers.
Preliminary Ratings Assigned
CFG Investments Ltd. Series 2021-1
Class A, $100.4 million: BBB (sf)
Class B, $53.8 million: BBB- (sf)
Class C, $20.9 million: BB (sf)
Class D, $10.5 million: B (sf)
Class RR, $9.5 million: Not rated
=====================
P U E R T O R I C O
=====================
FERRELLGAS PARTNERS: Completes Chapter 11 Restructuring
-------------------------------------------------------
Ferrellgas Partners, L.P. (OTC: FGPRQ) announced March 30, 2021,
the successful completion of its previously announced
restructuring
transactions that strengthen its balance sheet while allowing it to
continue as an employee-owned enterprise.
James E. Ferrell, Chairman of the Ferrellgas Board of Directors,
President, and Chief Executive Officer, said, "I am pleased to
announce that we have followed through, as promised, on our
commitment to strengthen our balance sheet and remain an
employee-owned business that will continue to provide exceptional
service to our more than 700,000 nationwide customers well into the
future. This is a significant milestone for the company and its
nearly 4,500 employees, and serves as irrefutable evidence that
Ferrellgas, and its leading tank exchange brand, Blue Rhino, will
continue as a leader in the U.S. propane industry."
As previously announced, on December 10, 2020, Holdings entered
into a Transaction Support Agreement ("TSA") with a majority of the
holders of the Holdings unsecured notes that were due June 2020
(the "Holdings Notes"). The TSA included a comprehensive
restructuring plan at both the Holdings level to address the
maturity of its notes and at Ferrellgas, L.P. ("OpCo"), the
operating entity, to address over $2 billion in debt obligations.
Based on the transactions consummated today, Holdings announces
that OpCo has successfully (1) established a new $350 million
senior secured revolving credit facility, (2) issued $1.475 billion
in new senior unsecured notes due in 2026 and 2029, and (3) sold
$700 million in senior preferred equity. The senior preferred
equity financing was led by funds managed by the Private Equity
Group and the Credit Group of Ares Management Corporation
("Ares").
The proceeds of these transactions have been used to satisfy, in
full, OpCo's existing debt obligations. Further, as contemplated
in the TSA, Holdings also announces that its plan of
reorganization, by which the existing Holdings Notes are to be
exchanged for new limited partnership units at Holdings, has gone
effective and Holdings has successfully emerged from chapter 11
protection.
The restructuring transactions enable the nearly 100-year-old
propane retailer, known for its leading tank exchange business,
Blue Rhino, to continue to serve the propane needs of millions of
Americans in all 50 states and Puerto Rico, during a pandemic year
that was also heavily impacted by record-cold temperatures in many
parts of the country.
About Ferrellgas
Ferrellgas Partners, L.P., through its operating partnership,
Ferrellgas, L.P., and subsidiaries, serves propane customers in all
50 states, the District of Columbia, and Puerto Rico. Ferrellgas
employees indirectly own 22.8 million common units of the
partnership, through an employee stock ownership plan. On the Web:
http://www.ferrellgas.com/
Ferrellgas Partners LP and Ferrellgas Partners Finance filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case Nos. 21-10021 and 21-10020) on Jan. 11,
2021. James E. Ferrell, chief executive officer and president,
signed the petitions.
At the time of the filing, Ferrellgas Partners, LP was estimated to
while Ferrellgas Partners Finance was estimated to have less than
$50,000 in assets and $100 million to $500 million in liabilities.
Judge Mary F. Walrath oversees the cases.
Squire Patton Boggs (US) LLP served as legal counsel to Ferrellgas
and Moelis & Company LLC served as financial advisor and placement
agent.
Chipman, Brown, Cicero & Cole, LLP is the local bankruptcy
counsel.
Ryniker Consultants is the financial advisor. Prime Clerk LLC is
the claims, noticing & solicitation agent.
Davis Polk & Wardwell LLP as legal counsel and Ducera Partners LLC
as financial advisor advised the ad hoc group of holders of the
Holdings Notes.
Sullivan & Cromwell LLP served as legal counsel to Ares.
===============
S U R I N A M E
===============
SURINAME: Defaults as Time Runs Out for Third Debt Payment Delay
----------------------------------------------------------------
Sydney Maki and Maria Elena Vizcaino at Bloomberg News report that
Suriname skidded into default after the government ran out of time
to convince bondholders to yet again push back bond payments.
Fitch Ratings downgraded the nation to RD from C and declared
default on the $675 million of dollar bonds due in 2023 and 2026
after the country failed to make an already delayed debt payment on
March 31. That's Suriname's third default event of the Covid era
per Fitch's criteria.
Bondholders now have until this next week to accept a consent
solicitation that would defer the missed payment until at least May
as Suriname works toward an agreement with the International
Monetary Fund, according to Bloomberg News.
"The government of Suriname continues to negotiate with creditors
for a comprehensive restructuring of its external bonds, which has
been a protracted process," Fitch analyst Kelli Bissett-Tom said in
a report, Bloomberg News discloses.
The next move will be to see whether investors accept the latest
change in terms by 5 p.m. in New York on April 8, Bloomberg News
discloses. If the consent solicitation is accepted, the payments
will become due on May 10, Bloomberg News relays. Conditionally,
the payment could instead be made in July if the nation secures a
staff-level IMF agreement by the end of April, Bloomberg News
notes.
The nation's dollar debt due in 2026 is trading at about 69 cents
on the U.S. dollar as its new coalition government tries to revamp
the former Dutch colony's economy and make its foreign obligations
more sustainable, Bloomberg News relays. Bondholders already
granted two separate government requests in 2020 to defer payments
as the nation developed a plan, which both count as default events,
according to Fitch.
The IMF wrapped up a mission to the nation in February, and
government authorities expect a "successful conclusion" as they
work toward an agreement on the macro-fiscal framework and policy
promises needed in order to get a program, the nation said in its
solicitation, Bloomberg News notes. The possibility of oil off the
coast is also offering some hope, even though Tullow Oil Plc found
only "minor" shows in a recent exploration well, Bloomberg News
relates.
"The working assumption is that Suriname's oil finds will boost the
country's growth massively in five years' time, just as it happened
in neighboring Guyana," said Carlos de Sousa, an emerging-market
portfolio manager at Vontobel Asset Management in Zurich, Bloomberg
News notes. "So while Suriname's ability to pay in the short term
is very limited, it may be very good in the long term," he added.
Suriname's bonds, while still trading well below par, have more
than doubled in price since voters chose the opposition over
previous President Desi Bouterse, a former coup leader with
convictions for cocaine smuggling and murder, Bloomberg News notes.
Investors demand an extra risk premium of 1,930 basis points to
hold Surname's sovereign debt over U.S. Treasuries, according to
Bloomberg Barclays data.
The new president, Chandrikapersad Santokhi, inherited a swathe of
economic problems, including a wide current-account deficit,
depleted foreign reserves and an economy dragged down by the
pandemic and low oil export prices, Bloomberg News adds.
===========================
V I R G I N I S L A N D S
===========================
KINGATE EURO: Commences Liquidation Proceedings
-----------------------------------------------
The shareholders of Kingate Euro Fund, Limited resolved to
voluntary liquidate the company's business.
Creditors are required to file their proof of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Paul Pretlove
Charlotte Caulfield
Kalo (BVI) Limited
PO Box 4571, 4th Floor, LM Business Center
Fish Lock Road, Road Town, Tortola
British Virgin Islands, VG1110
Tel No: +(1) 284 541 9600
E-mail: kingateeuro@kolaadvisors.com
kingateglobal@kolaadvisors.com
KINGATE GLOBAL: Commences Liquidation Proceedings
-------------------------------------------------
The shareholders of Kingate Global Fund, Limited resolved to
voluntary liquidate the company's business.
Creditors are required to file their proof of debt to be included
in the company's dividend distribution.
The company's liquidator is:
Paul Pretlove
Charlotte Caulfield
Kalo (BVI) Limited
PO Box 4571, 4th Floor, LM Business Center
Fish Lock Road, Road Town, Tortola
British Virgin Islands, VG1110
Tel No: +(1) 284 541 9600
E-mail: kingateeuro@kolaadvisors.com
kingateglobal@kolaadvisors.com
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week March 29 to April 2, 2021
--------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Esval SA 3.5 49.9 2/15/2026 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. 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
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* * * End of Transmission * * *