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/raid1/www/Hosts/bankrupt/TCRLA_Public/210422.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 Thursday, April 22, 2021, Vol. 22, No. 75 Headlines A R G E N T I N A GENNEIA SA: Fitch Affirms LT Issuer Default Ratings at 'CCC' GENNEIA SA: Moody's Affirms Caa3 CFR & Alters Outlook to Stable B R A Z I L BRAZIL: Agribusiness Exports Hit Record US$11.57 Billion in March ELETROPAULO METROPOLITANA: Moody's Rates Unsecured Debentures Ba1 C O L O M B I A AVIANCA HOLDINGS: Appoints Rohit Philip as CFO D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Despite Price Lull, Gold Export to Reach $1.6BB DOMINICAN REPUBLIC: Swiss-DR Chamber to Mull Tourism Upswing J A M A I C A PARAMOUNT TRADING: Net Profit Down 43% Despite Cost Restructuring M E X I C O LAZARO CARDENAS: Moody's Affirms B2 Issuer Rating, Outlook Stable P U E R T O R I C O BORINQUEN NATURAL: Seeks to Tap MRO Attorneys at Law as Counsel BORINQUEN NATURAL: Taps Albert Tamarez-Vasquez as Accountant SPECTRUM GLOBAL: Incurs $17.7 Million Net Loss in 2020 S T . V I N C E N T A N D T H E G R E N A D I N E S ST. VINCENT AND THE GRENADINES: To Get US$20MM from World Bank X X X X X X X X LATAM: Region's Recovery Slower Than Global Economy - - - - - ================= A R G E N T I N A ================= GENNEIA SA: Fitch Affirms LT Issuer Default Ratings at 'CCC' ------------------------------------------------------------ Fitch Ratings has affirmed Genneia S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'CCC'. Fitch has also affirmed Genneia's USD500 million senior unsecured notes due 2022 at 'CCC'/'RR4'. As with its Argentine utility peers, Genneia's 'CCC' ratings are linked to Argentina's sovereign ratings to reflect its exposure to offtaker, Compania Administradora del Mercado Mayorista Electrico (CAMMESA). CAMMESA acts as a market agent on behalf of companies in the electricity sector and is largely dependent on the Argentine government for subsidies. The ratings on the senior unsecured notes are based on Genneia's equal Foreign and Local Currency IDRs. Fitch's "Country-Specific Treatment of Recovery Ratings Criteria" no longer allows for a rating uplift for these obligations. Genneia is capped at an average Recovery Rating of 'RR4' since Argentina, per the aforementioned criteria, is categorized within Group D with a soft cap of 'RR4'. This assumes a recovery in the range of 31% to 50%. KEY RATING DRIVERS Capital Controls Impact Refinancing: Fitch believes Genneia faces refinancing risk given the potential impact of Argentina's central bank capital controls on its USD500 million global bond due Jan. 20, 2022. The current capital controls restrict FX market access to 40% of maturities until the end of the year. Genneia will need clarity from the central bank to determine any restrictions that will apply to its maturity in order to proceed with a refinancing. Although the company reported consolidated cash and investments of USD122 million as of YE 2020, USD46 million of that was held at non-recourse subsidies. Thus, Genneia's ability to comply with the central bank's 60/40 rule is uncertain despite its strong consolidated cash flow. Dominant Player in Renewables: Although Genneia is considered a relatively small player in the local power generation industry (3.3% of the system's installed capacity), the company is the leading wind power generation provider in the country, with approximately 25% of the renewable installed capacity of Argentina as of April 2021. The company added 166MW (Chubut Norte II, III and IV) of wind capacity in 2021. Fitch expects that in 2021 renewables, including wind, solar and biomass, will constitute 83% of the company's revenue and 83% of its EBITDA. Heightened Counterparty Exposure: Genneia depends on payments from CAMMESA, which acts as an agent on behalf of an association representing agents of electricity generators, transmission, distribution and large consumers or the wholesale market participants (Mercado Electrico Mayorista; MEM). CAMMESA's payment delays to the electricity sector have risen from 50 days at the beginning of 2019 to currently over 77 days. This risk is slightly mitigated in the RenovAr program with the presence of the FODER trust fund, which is prefunded with one year of revenue. Payment days for the FODER are 42 days, resulting in a consolidated payment lag for Genneia of approximately 56 days. The company estimates 20% of its consolidated EBITDA is backed by a World Bank guarantee. Predictable Operating Cash Flow: Genneia's cash flow generation is relatively stable and predictable. Almost all of the company's revenue is related to sales to the wholesale electricity market (MEM) under contracts signed under RenovAr, GENREN and 21/16. The company benefits from USD-denominated power purchase agreements (PPAs) expiring between 2018 and 2027 for its thermal capacity, and between 2027 and 2041 for renewables. These PPAs support the company's cash flow stability and predictability through fixed payments and fuel supplied by CAMMESA. Strong EBITDA Margins: Fitch expects the company's EBITDA to be USD246 million in 2021, 83% of which will be from renewables. The company's EBITDA margins remained high in 2020 at 83%, in line with 82% in 2019. Fitch expects EBITDA margins to remain stable at 80% in 2021 and beyond, as the company does not plan any expansions after 2020, and no PPA or regulatory changes are anticipated until 2027. Due to its low variable cost, EBITDA margins on the company's renewable assets are 88%, while margins for its thermal projects are approximately 83%. Genneia has relatively fixed and stable operating costs and does not need to acquire fuel. Improving Credit Metrics: Fitch expects Genneia to de-lever to 3.4x in 2021, and to 2.5x in 2022, in line with its Argentine utility peers. The company's leverage peaked in 2018 at 6.1x to finance the addition of 500MW of renewable energy capacity between 2017 and 2020 with an additional 166MW of new wind capacity expected in 2021. Fitch estimates Genneia will be FCF positive starting in 2021 after its imminent expansion capex has concluded. Fitch's base case is assuming the company will begin paying dividends in 2023, the year after its 2022 bond matures, at a rate of 50% of the previous year's adjusted net income, or approximately USD57 million. Uncertain Regulatory Environment: Fitch believes the electricity market remains a priority for the Argentine government. Further regulatory reform is highly probable to reduce costs and prevent the system from becoming insolvent. Fitch estimates the government transferred USD3.0 billion in funds to CAMMESA in 2020, which represented 40% of the total implied cost of the system of USD7.6 billion. Fitch expects subsidies to increase to 50% of the system cost in 2021 unless end-user tariffs are adjusted. DERIVATION SUMMARY Genneia's Long-Term Foreign and Local Currency IDRs reflect the company's exposure to CAMMESA as an offtaker, which is reliant on subsidies from the Argentine government. This is the same for Argentine utility and energy peers Pampa Energia S.A. (CCC), Capex S.A. (CCC+) and Genneia S.A. (CCC). Genneia is the leading wind power generation provider in the country, having just completed an aggressive expansion plan in renewables. Pampa has a more diversified business profile as a leading company in electricity generation, distribution, transmission, gas production and transportation. While Capex has an advantageous vertical integration in thermoelectric generation, with the flexibility of having its own natural gas reserves to supply its plants. In term of credit metrics, Genneia's gross leverage as of Dec. 31, 2020 was 3.6x, compared with Pampa at 3.7x, AES Argentina Generacion at 4.2x, Capex at 3.6x and Albanesi S.A. (CCC) at 3.9x. Leverage for MSU Energy S.A. (CCC) was notably higher than its peers in 2020 at 6.6x, as the company recently completed significant capex projects to close the cycle at three of its plants. MSU's leverage is expected to fall to 3.1x by 2023, in line with its peer group. On a net basis, Genneia's leverage was 3.1x in 2020, reflecting USD122 million of cash and equivalents. Fitch estimates that Genneia's projected gross leverage will average 2.6x over the rating horizon, slightly below its Argentine peers' median of 3.0x. KEY ASSUMPTIONS -- Thermal power purchase agreements (PPAs) awarded under Resolution 220/2007 expire with no renewal; -- Average thermal plant availability of 93% and load factor of 10% over the rating horizon; -- Wind availability of 99% and load factor of 45%; -- Solar availability of 100% and load factor of 30%; -- No further capacity expansion over the rating horizon other than Chubut Norte II, III and IV in 2021; -- Dividends paid at a rate of 50% of the previous year's net income beginning in 2023; -- A majority of the company's USD500 million bond due 2022 is refinanced. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade can only occur if there is an upgrade of the Argentine sovereign rating in conjunction with increased clarity surrounding the company's ability to refinance its hard currency debt given the current central bank restrictions. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade may occur if, in Fitch's judgment, a default of some kind appears probable or a default or default-like process has begun, which would be represented by a 'CC' or 'C' rating. 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 Pressured Liquidity: Fitch believes Argentina's capital controls may impact Genneia's refinancing of its USD500 million global bond due January 2022. While the company reported consolidated cash and short-term investments of USD122 million as of YE 2020, approximately USD46 million of that amount was held at unrestricted subsidiaries. The unrestricted subsidies have non-recourse debt, and their cash may not be available to service the company's corporate debt. Roughly USD43 million of Genneia's USD56 million of cash on hand is held at unrestricted subsidiaries. As of December 2020, Genneia had leverage of 3.6x. ESG CONSIDERATIONS 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. GENNEIA SA: Moody's Affirms Caa3 CFR & Alters Outlook to Stable --------------------------------------------------------------- Moody's Investors Service has affirmed Genneia S.A.'s Caa3 corporate family rating and senior unsecured ratings and changed the outlook to stable from negative. Approximately $500 million of debt instruments affected. RATINGS RATIONALE Genneia's rating and stable outlook reflect the company's asset base and positioning as one of the main power producers in the renewable space in Argentina, with a solid operating track record and production levels, including average load factor for its wind projects of over 45%. Supporting Moody's expectation of strong cash generation is the long-term contractual base with an average remaining life of contracts of 12 years. After the completion of its investment plan early this year, Moody's anticipates the company will be able to produce a ratio of cash flow from operations before working capital changes (CFO pre-WC) to debt in the range of 20 to 25%, with a progressive debt reduction amid a prudent dividend policy. The rating and outlook also acknowledge the refinancing risk that the company faces given the upcoming maturity of its $500 million notes due January 2022, recognizing that, after achieving the completion of its growth projects early in the year, the management is now fully focused on the refinancing of the notes ahead of the maturity date. Moody's take comfort on the company good track record of accessing external financing, as demonstrated by the several loans it obtained from multilaterals and credit export agencies to finance its expansion plan in recent years, ample access to the local capital markets and the successful exchange of its Class XXI notes at the end of last year without losses to its creditors. The ratings continue to be constrained by the exposure of the company to Cammesa, the agency controlled by the Argentine government (Government of Argentina, Ca, Stable) that manages the wholesale electricity market and Genneia's main off-taker. While Cammesa's payments to Genneia under its Renovar contracts provided to date for better payments' terms than for other peers in the sector because they have a payment guarantee from Foder, given the recent history of government intervention in the electricity market and Cammesa's increased reliance on government transfers Moody's believe other downside risks persist, including the potential risk of unilateral change to the PPA contract's terms and conditions. In addition, Genneias' debt is mostly dollar denominated and while contractual revenues are also dollar-denominated providing a natural hedge, Cammesa payments are made in pesos at the official exchange rate, which exposes bondholders to convertibility risks. Rating Outlook The stable outlook reflects Moody's expectation that Genneia will prudently manage its upcoming financing needs while maintaining sound operations. Shareholders support evidenced by limited distributions is also a key rating consideration, particularly until the company refinances its upcoming bond maturity. Quantitatively, the stable outlook incorporates Moody's expectation of credit metrics improving steadily as the company reduces leverage to below 3 times debt to EBITDA and CFO pre-WC) to debt in the range of 20-25%. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the current constraining factors and the exposure to Cammesa, an upgrade of the ratings will require an upgrade of the sovereign. The ratings could come under negative pressure if the company fails to progressively reduce its current debt levels and CFO to debt remains below 15%. Profile Genneia S.A. is privately held independent power producer company that owns and operates a portfolio of power projects with 1.3 GW of installed capacity. Genneia was the first company to build and operate a wind farm in Argentina in 2012 and is currently the leading renewable power company in the country with 840 MW wind and solar plants, representing around 25% of the renewable market. Genneia's current shareholders include Argentum Investments LLC, a limited liability company incorporated in Delaware and managed by PointState Master Fund LP; LAIG Eolia S.A. a limited liability company incorporated in Uruguay, with investment interest in companies in the energy sector across Latin America; Fintech Energy LLC, incorporated in Delaware and controlled by Fintech Advisory Inc., a New York-based limited liability company with a long-term return strategy focused on emerging markets and the Brito Group that pertains to the Brito and Carballo families, main owners and directors at the board of Banco Macro S.A. (Caa3 stable), one of the biggest local private banks in Argentina. The principal methodology used in these ratings was Unregulated Utilities and Unregulated Power Companies published in May 2017. =========== B R A Z I L =========== BRAZIL: Agribusiness Exports Hit Record US$11.57 Billion in March ----------------------------------------------------------------- Rio Times Online reports that Brazilian agribusiness exports totaled US$11.57 billion in March, a record for the month that had never crossed the US$10 billion mark since records began in 1997, the Ministry of Agriculture said April 16, in a statement. The result represents a 28.6% increase in relation to results obtained in the same period last year, according to Rio Times Online. According to the ministry, prices of exported products rose 8.7% compared to March 2020, the report notes. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Jair Bolsonaro is the current president, having been sworn in on Jan. 1, 2019. S&P Global Ratings affirmed on December 14, 2020, its 'BB-/B' long-and short-term foreign and local currency sovereign credit ratings on Brazil. The outlook on the long-term ratings remains stable. Fitch Ratings' credit rating for Brazil stands at 'BB-' with a negative outlook (November 2020). Moody's credit rating for Brazil was last set at Ba2 with stable outlook (April 2018). DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). As reported in the Troubled Company Reporter-Latin America, S&P Global Ratings' stable outlook assumes that timely implementation of fiscal adjustment and modest economic recovery will help preserve market confidence and adequate funding conditions for the government in local markets in the next two years, despite a sustained increase in the debt burden. ELETROPAULO METROPOLITANA: Moody's Rates Unsecured Debentures Ba1 ----------------------------------------------------------------- Moody's America Latina assigned rating Ba1 on global scale and Aaa.br on the Brazilian National Scale to the proposed issuance of BRL720 million senior unsecured debentures by Eletropaulo Metropolitana de Eletricidade de Sao Paulo S.A. with final maturity in 2031. The ratings outlook is stable. The assigned ratings are based on preliminary documentation. Moody's does not anticipate changes in the main conditions that the debentures will carry. Should issuance conditions and/or final documentation deviate from the original ones submitted and reviewed by the rating agency, Moody's will assess the impact that these differences may have on the ratings and act accordingly. RATINGS RATIONALE The Ba1/Aaa.br ratings assigned are in line with Eletropaulo's corporate family ratings (CFR) and reflect Moody's view that the new debentures rank equal to Eletropaulo's outstanding senior unsecured debt. The Ba1 rating also reflects a one-notch uplift from Eletropaulo's standalone credit profile given the strong likelihood of support from Enel Americas S.A. (Baa3 positive) as its controlling shareholder; due to the company's strategic importance to the group and structural linkages with the parent evidenced by acceleration clauses embedded in the parent's debt in case Eletropaulo fails to service debt. Eletropaulo shows stable cash flows and credit metrics that benefit from a robust service area for a distribution concession that expires in July 2028. The standalone credit quality is tempered by sizable capital investments to upgrade Eletropaulo's network before the end of the next tariff review cycle in 2023; large pension obligations and contingent liabilities, which constrain improvement in adjusted leverage despite the significant decrease in operational expenses since Enel Americas' acquisition; and its linkages with Brazil's credit fundamentals due to the regional characteristics of its customer base. As of December 31 2020, Eletropaulo's leverage as per Moody's standard adjustments -- which includes the debt with Centrais Eletricas Brasileiras SA-Eletrobras (Ba2 stable) and its pension obligations -- stood at 5.3x debt/EBITDA and 15.5% CFO pre WC/debt, significantly above its closely rated peers. Nevertheless, Moody's understand that the company plans to continue to reduce its pension obligations with the migration of pension fund participants to the defined contribution plan from the defined benefit plan. In December 2020, a part of the fund's participants migrated to the new plan, resulting in a BRL918 million debt confession with Fundação CESP and BRL472 million pension expenses decrease. Moody's expect the move to continue, in order to reduce Eletropaulo's debt burden and adjusted leverage. Eletropaulo's pension plan represents 50% of the company's Moody's adjusted debt. Eletropaulo presents a moderate liquidity profile, with cash on hand of BRL2.1 billion as of December 2020 and short-term debt maturities of BRL2.3 billion, as per Moody's standard adjustments (including the debt with Eletrobras). Of the total amount, around BRL890 million relates to debt raised last year to support the company's liquidity position amid the coronavirus pandemic and BRL707 million is linked to the maturity of the first series of the 23rd debentures issuance. The issuance proceeds will serve to finance capital expenditures. The debentures have a planned amortization schedule between 2029 and 2031, having three principal payments of around 33.33%, with principal amount expected to be adjusted by inflation (IPCA). The issuance is expected to have biannual interest payments starting in October 2021 at a fixed cost of 4.26% per year. Early amortization clauses are in line with Eletropaulo's previous issuances and include automatic acceleration in case of default of any obligation above BRL100 million and termination of concession before July 2028. The financial covenant for these debentures has been set at net debt/EBITDA of 3.5x, also in line with recent issuances. On December 31 2020, Eletropaulo reported net debt/EBITDA of 1.2x (as per covenant definitions, not including pension obligations) and Moody's expect the company to remain in compliance with this threshold. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the highly regulated nature of the energy sector and its domestic operating profile, an upgrade of Brazil's sovereign bond rating (Government of Brazil, Ba2 stable) could trigger upward pressure on Eletropaulo's ratings. A rating upgrade would also take into account the company's liquidity position and business profile, and the regulatory environment in which the company operates. Quantitatively, an upgrade would require sustainable improvement in the company's credit metrics, such as CFO pre-WC to debt ratio consistently above 20%, and the cash interest coverage ratio close to 4.0x. In addition, Moody's understanding of stronger support from Enel Americas, as evidenced by a direct or explicit corporate guarantee, could also cause upward pressure on Eletropaulo's credit profile. The ratings will face downward pressure if the stability and transparency of the regulatory regime for the distribution sector in Brazil weakens, ultimately resulting in more volatility or decreased visibility into Eletropaulo's cash flow base, causing sustainable declines in the company's credit metrics. Quantitatively, a downgrade would be considered if Eletropaulo's credit metrics consistently deteriorate, as indicated by a CFO pre-WC to debt ratio lower than 12.5% or a cash interest coverage lower than 2.25x on a sustainable basis. A downgrade on Enel Americas or on Brazil's sovereign bond ratings could also exert downward pressure on Eletropaulo's ratings. Moreover, a change in Eletropaulo's ownership structure, particularly if Enel Americas ceases to be a majority shareholder and/or ceases to consider Eletropaulo a significant subsidiary as per its debt clauses is likely to also trigger a rating downgrade. Eletropaulo operates the concession of the regulated electricity distribution in 24 municipalities in the Sao Paulo metropolitan area, including the city of Sao Paulo, serving 1,647 consumer units per square kilometer, with 18.3 million people, which corresponds to 8.5% of the total electricity consumed in Brazil. Eletropaulo has a 30-year concession contract that was granted by ANEEL, the Brazilian electricity sector regulator, in 1998. Since June 2018, Eletropaulo is controlled by the Enel Brasil S.A., a subsidiary of Enel Americas. On December 31 2020, the company posted net sales of BRL14.5 billion and EBITDA of BRL2.5 billion, as per Moody's standard adjustments, which include pension obligations and the debt with Eletrobras. Headquartered in Santiago, Enel Americas holds interest stakes in several regulated utilities and power generation companies operating in Colombia, Peru, Brazil and Argentina. ENEL S.p.A (Baa1 stable) holds a 64.14% interest stake in Enel Americas. The principal methodology used in these ratings was Regulated Electric and Gas Utilities published in June 2017. =============== C O L O M B I A =============== AVIANCA HOLDINGS: Appoints Rohit Philip as CFO ---------------------------------------------- Avianca said in a U.S. regulatory filing that Rohit Philip was appointed as the new Chief Financial Officer of Avianca Holdings, who will assume the position as of April 19, 2021, and will have the main objective of continuing with the process of strengthening the financial position of the organization, and to leverage its successful exit from Chapter 11. Rohit has more than 20 years of experience in international airlines such as United and IndiGo (InterGlobe Aviation Ltd) where he led corporate financial strategies related to equity and debt issuance, aircraft leasing, liquidity management, financial planning and analysis, investor relations and relationships with banks and credit rating agencies, among others. Rohit will report directly to Adrian Neuhauser, who continues in the company as President, with direct reports such as Chief Operating Officer, the LegalVice Presidency and General Counsel, the VP of Purchasing and the Architecture Department. The Fleet, Treasury, Financial Planning and Analysis Vice Presidencies, as well as the Corporate Finance Director and the Financial Statements and Compliance Director will report directly to the new Chief Financial Officer. About Avianca Avianca -- https://aviancaholdings.com/ -- is the commercial brand for the collection of passenger airlines and cargo airlines under the umbrella company Avianca Holdings S.A. Bogota, Colombia-based Avianca has been flying uninterrupted for 100 years. With a fleet of 158 aircraft, Avianca serves 76 destinations in 27 countries within the Americas and Europe. Avianca Holdings S.A. and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-11133) on May 10, 2020. At the time of the filing, Debtors disclosed $7,273,900,000 in assets and $7,268,700,000 in liabilities. Judge Martin Glenn oversees the cases. The Debtors tapped Milbank LLP as general bankruptcy counsel; Urdaneta, Velez, Pearl & Abdallah Abogados and Gomez-Pinzon Abogados S.A.S. as restructuring counsel; Smith Gambrell and Russell, LLP as aviation counsel; Seabury Securities LLC as financial restructuring advisor and investment banker; FTI Consulting, Inc. as financial restructuring advisor; and Kurtzman Carson Consultants LLC as claims and noticing agent. The U.S. Trustee for Region 2 appointed a committee of unsecured creditors in Debtors' bankruptcy cases on May 22, 2020. As reported in the Troubled Company Reporter-Latin America on March 24, 2021, Fitch Ratings has affirmed the ratings of Avianca Holdings S.A.'s (Avianca) Foreign and Local Currency Issuer Default Ratings (IDRs) at 'D'. Avianca's bond issuances have also been affirmed at 'C'/'RR6'. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Despite Price Lull, Gold Export to Reach $1.6BB ------------------------------------------------------------------- Dominican Today reports that despite a decrease in the price of gold in relation to 2020, and an estimated reduction in gold production of 6% in relation to the past, the export of this raw material will reach US$1.6 billion at year end. That represents about 100 million dollars fewer than what was exported in 2020, but even so this year will post the second-highest export, according to economist Henri Hebrard, taking as a reference the projections of Barrick Gold, of a 6% fall in production, from 903,000 ounces to an average of between 783,000 and 850,000 ounces, according to Dominican Today. "There's a need of an expansion that this company has raised so that the country continues to benefit from the prices of this mineral," he said, the report relays. He highlighted that last year, the export of gold buoyed the State, "in the midst of a global context of uncertainty in which the price of an ounce of gold cost up to about US$2.1 billion," 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). DOMINICAN REPUBLIC: Swiss-DR Chamber to Mull Tourism Upswing ------------------------------------------------------------ Dominican Today reports the Dominican-Swiss Chamber of Commerce and Tourism will analyze in its THINK TOURISM event the sustainable recovery of Dominican Republic's tourism, through different cases of existing best practices in Switzerland. In this edition, to be held May 4 through a webinar, international and local experts will evaluate how the sector is progressing after the impact of the COVID-19 crisis and after the measures adopted by the different governments, as in the Dominican case where 2,400 new hotel rooms have been approved, according to Dominican Today. "The diversification of the Dominican Republic and the focus on the recovery of tourism by President Luis Abinader and his team, imply multiple positive factors, so that the recovery of the country occurs in an accelerated manner," said Chamber president Gaetan Bucher in a statement, the report relays. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. The Troubled Company Reporter-Latin America reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. 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 ============= PARAMOUNT TRADING: Net Profit Down 43% Despite Cost Restructuring ----------------------------------------------------------------- Jamaica Observer reports that Paramount Trading is reporting that its pandemic cost restructuring exercise is bearing fruit, even though net profits are down 43 per cent over the last three quarters. According to the publicly traded company - a leading manufacturer and distributor of chemical raw materials in Jamaica - the cost restructuring exercise is yielding results on the expense side of the business, the report notes. Direct expenses closed the nine-month period ended February 28, 2021 at $691.79 million, a decline of 14 per cent relative to the $807.30 million booked a year ago, according to Jamaica Observer. Administrative expenses declined by six per cent to $266.77 million, down from the $284.03 million recorded for 2020, the report relays. Selling and distribution expenses fell by 41 per cent for the nine months to close at $8.34 million owing to the cost restructuring exercise undertaken early in the pandemic, the report notes. Pre-tax profit for the last three quarters was $31.71 million, 43 per cent less than the $55.75 million reported in the prior corresponding period, the report discloses. Taxes were charged for the period amounting to $3.96 million relative to $6.97 million in 2020, the report says. As such, net profit closed at $27.74 million, a 43 per cent decline compared to the 2020 outturn of $48.78 million, the report relays. For the February quarter, net profit was down 13 per cent to $8.05 million, the report notes. Operating profit for the last three quarters amounted to $67.74 million. While this achievement is commendable in a pandemic period, it still fell short of the $83.95 million for the same period in 2020, the report says. For the February 2021 third quarter, operating profit fell two per cent to close at $20.67 million coming from $21.08 million posted in the comparable period last year, the report discloses. Paramount Trading recorded a three per cent decline in total revenues to $1.02 billion coming from $1.15 billion reported in 2020, the report relates. Revenues for the third quarter declined nine per cent to close at $347.24 million coming from a year ago when it amounted to $381.51 million, the report relays. The company is blaming the ongoing economic contraction caused mostly by the novel coronavirus pandemic on its declining revenues, the report discloses. According to Paramount, which was founded by Hugh Graham, "the economic contraction continued to plague our income. However, we were able to extract a higher gross profit percentage from the reduced sales levels," the report relays. Other operating income amounted to $18.78 million for the nine-month period compared to $39.62 million booked for the previous year's corresponding period. For the third quarter, other operating income closed at $6.03 million (2020: $16.72 million), the report notes. Interest income amounted to $1.24 million while finance cost increased to total $37.28 million. For the last quarter, interest income and finance cost closed at $54,878 (2020: $335,933) and $11.53 million (2020: $10.86 million), respectively, the report discloses. As a result, gross profit for the three quarters fell by approximately five per cent to $324.07 million, the report relays. Gross profit for the comparable period in 2020 was $342.42 million, the report relates. For the February quarter, gross profit closed at $107.71 million relative to $111.30 million reported in the prior corresponding quarter, the report relays. The last three quarters, the company said, were very challenging, as it continued to battle the negative impact of the pandemic. "Our lubricant division was directly impacted by the general decrease in the transportation sector, while our food-grade division suffered from the closure of educational institutions and the lockdown of the entertainment industry," Paramount said, the report relays. As at February 28, 2021, the company's total assets were valued at $1.61 billion, seven per cent less than the $1.73 billion quoted a year ago. The main contributors to this were the decline in inventories and receivables which closed at $440.03 million (2020: $583.16 million) and $293.15 million (2020: $357.93 million), respectively, the report notes. This was tempered by an increase in right of use assets, which closed at $76.34 million (2020: nil). Shareholders' equity as at February 2021 stood at $760.43 million (2020: $790.15 million), resulting in a book value per share of $0.49 (2020: $0.51), the report adds. =========== M E X I C O =========== LAZARO CARDENAS: Moody's Affirms B2 Issuer Rating, Outlook Stable ----------------------------------------------------------------- Moody's de Mexico S.A. de C.V. has affirmed the b2 baseline credit assessment and the B2/Ba2.mx (Global Scale, local currency/Mexico National Scale) issuer ratings of the Municipality of Lazaro Cardenas and changed the outlook to stable from negative. RATINGS RATIONALE RATIONALE FOR THE STABLE OULTOOK The change in the outlook to stable from negative reflects improved financial management resulting in the continuous improvement of both operating and financial balances over the last two years and improvement in financial position. As a result, Lazaro Cardenas' liquidity also improved and the municipality ceased the use of short-term debt, however, liquidity remains relatively weak, but in line with other B2 rated Mexican peers. Lazaro Cardenas' gross operating balance (GOB) has continually improved in recent years, to 16.2% of operating revenue in 2020 from -6.3% in 2016. This was the result of a higher pace of growth in operating revenues compared to operating expenditures, at a compound annual growth rate (CAGR) of 12% compared to 5.5% over 2016 to 2020. Likewise, the cash financing balance increased over the last two years to an average of 7.3% of total revenues; figures that contrast with the low financing results registered in previous years (0.8% of total revenues on average from 2016 to 2017). Despite the anticipated reduction in federal transfers, Moody's expect that Lazaro Cardenas will continue to post operating and financial surpluses to average levels of 10.3% of operating revenues and 5.8% of total revenues in 2021, figures that compare favorably with the B2 median for Mexican peers. As a result of improved financial results, the cash to current liabilities ratio also strengthened to 0.25 times (x) cash to current liabilities in 2020 from 0.15x registered in 2019, although from Moody's perspective this figure continues to be relatively weak. Based on Moody's expectations that the municipality will continue to post cash financing surpluses Moody's expect that the cash to current liabilities ratio will average 0.37x in 2021-22. RATIONALE FOR THE AFFIRMATION OF THE RATINGS The affirmation of the b2 bca and B2/Ba2.mx issuer ratings reflects expectations that credit metrics will remain well positioned in the B2 rating. The municipality has a very low debt burden but faces ongoing challenges in improving their management and budget policies in order to reduce the volatility in their operating and financial balances and consistently improve their liquidity. Over the past five years, both the financial and operating balances have registered volatility driven by major changes in capital expenditures compared with the capital revenues, whereas the GOB has fluctuated because of the inconsistent collection of taxes. Offsetting these challenges, Lazaro Cardenas registers a very low debt level equivalent to 2.6% of operating revenues, consisting of a long-term loan backed with federal participations. For 2021-22 Moody's expect that this ratio will remain low at an average of 2.5% of operating revenues. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS If the municipality were to maintain positive operating and financial balances that resulted in a sustained improvement in the liquidity position, the issuer ratings could face upward pressure. On the contrary, if operating and financial margins were to deteriorate, resulting in a decrease in liquidity in conjunction with the use of short-term debt, the issuer ratings could face downward pressure. ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS In Moody's assessment environmental and social considerations are not material for the municipality of Lazaro Cardenas' ratings. Governance considerations are material for the municipality of Lazaro Cardenas' ratings. While the municipality complies in general terms with the rules and regulations of the Mexican institutional framework for all state and municipal governments, the municipality has historically exhibited weak budgeting and planning controls, which are reflected in its volatile operating and financial results. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. The period of time covered in the financial information used to determine Lazaro Cardenas, Municipality of's rating is between January 1, 2016 and December 30, 2020 (source: Financial Statements of the Municipality of Lazaro Cardenas). ===================== P U E R T O R I C O ===================== BORINQUEN NATURAL: Seeks to Tap MRO Attorneys at Law as Counsel --------------------------------------------------------------- Borinquen Natural, LLC seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ MRO Attorneys at Law, LLC as its legal counsel. MRO Attorneys at Law will render these legal services: (a) advise Borinquen Natural regarding its powers and duties and the operation of its business; and (b) perform all other legal services as may be necessary in the reorganization of Borinquen Natural's business. Myrna Ruiz-Olmo, Esq., the attorney who will work primarily in this case, will be paid at her hourly rate of $200, plus reimbursement of expenses incurred. A retainer fee of $8,485 was paid by a non-debtor prior to Borinquen Natural's Chapter 11 filing. Ms. Ruiz-Olmo disclosed in a court filing that she is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Myrna L. Ruiz-Olmo, Esq. MRO Attorneys at Law LLC P.O. Box 367819 San Juan, PR 00936-7819 Telephone: (787) 404-2204 Email: mro@prbankruptcy.com About Borinquen Natural Borinquen Natural, LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 21-01058) on March 31, 2021, listing under $1 million in both assets and liabilities. Judge Mildred Caban Flores oversees the case. The Debtor tapped MRO Attorneys at Law LLC, led by Myrna L. Ruiz-Olmo, Esq., as legal counsel and Albert Tamarez-Vasquez, CPA, at Tamarez CPA, LLC as accountant. BORINQUEN NATURAL: Taps Albert Tamarez-Vasquez as Accountant ------------------------------------------------------------ Borinquen Natural, LLC seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Albert Tamarez-Vasquez, a certified public accountant at Tamarez CPA, LLC. The accountant will render these services: (a) reconcile financial information to assist the Debtor in the preparation of monthly operating reports; (b) assist in the reconciliation and clarification of proof of claims filed and amount due to creditors; (c) provide general accounting and tax services to prepare year-end reports and income tax preparation; and (d) assist the Debtor and its legal counsel in the preparation of the supporting documents for the Chapter 11 reorganization plan. The hourly rates of Tamarez CPA's professionals are as follows: Albert Tamarez-Vasquez $150 CPA Supervisor $100 Senior Accountant $85 Staff Accountant $65 In addition, the Debtor will reimburse out-of-pocket expenses incurred. Tamarez CPA received a pre-bankruptcy retainer in the amount of $5,200 from the Debtor. Mr. Tamarez-Vasquez disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The accountant can be reached at: Albert Tamarez-Vasquez, CPA, CIRA Tamarez CPA LLC First Federal Saving Building 1519 Ave. Ponce de Leon, Ste. 412 San Juan, PR 00909-1723 Telephone: (787) 795-2855 Facsimile: (787) 200-7912 Email: atamarez@tamarezcpa.com About Borinquen Natural Borinquen Natural, LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 21-01058) on March 31, 2021, listing under $1 million in both assets and liabilities. Judge Mildred Caban Flores oversees the case. The Debtor tapped MRO Attorneys at Law LLC, led by Myrna L. Ruiz-Olmo, Esq., as legal counsel and Albert Tamarez-Vasquez, CPA, at Tamarez CPA, LLC as accountant. SPECTRUM GLOBAL: Incurs $17.7 Million Net Loss in 2020 ------------------------------------------------------ Spectrum Global Solutions, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss attributable to the company of $17.71 million on $18.67 million of revenue for the year ended Dec. 31, 2020, compared to a net loss attributable to the company of $5.83 million on $25.49 million of revenue for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $4.33 million in total assets, $13.22 million in total liabilities, $1.22 million in total mezzanine equity, and a total stockholders' deficit of $10.11 million. Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's auditor since 2014, issued a "going concern" qualification in its report dated April 1, 2021, citing that the Company has incurred losses since inception, has negative cash flows from operations, and has negative working capital, which creates substantial doubt about its ability to continue as a going concern. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/1413891/000121390021019622/f10k2020_spectrumglobal.htm About Spectrum Global Solutions Boca Raton, Florida-based Spectrum Global Solutions Inc. -- https://SpectrumGlobalSolutions.com -- operates through its subsidiaries ADEX Corp., Tropical Communications Inc. and AW Solutions Puerto Rico LLC. The Company is a provider of telecommunications engineering and infrastructure services across the United States, Canada, Puerto Rico and Caribbean. =========================================================== S T . V I N C E N T A N D T H E G R E N A D I N E S =========================================================== ST. VINCENT AND THE GRENADINES: To Get US$20MM from World Bank -------------------------------------------------------------- Trinidad Express reports that the World Bank has disbursed US$20 million to support the government of St Vincent and the Grenadines' response to the crisis posed by the La Soufriere volcano eruption. The explosive eruption began on April 8 and has required the evacuation of 20,000 people from the high-risk zones around the volcano, both to other parts of St Vincent and surrounding countries, the World Bank noted in a statement from its Washington offices, according to Trinidad Express. Explosions are continuing, and the falling ash is causing air quality concerns and interruptions in electricity and water supply, it said, the report notes. "Our hearts are with the people of St Vincent and the Grenadines during this crisis," said Tahseen Sayed, World Bank country director for the Caribbean, the report relays. "We are committed to supporting the response efforts at this critical time when the country faces this new disaster while already managing the social and economic effects of the pandemic," he added. The funds are disbursed from a contingent credit line from the World Bank, known as the Catastrophe Deferred Drawdown Option (Cat-DDO), approved in June 2020, the report notes. The Cat-DDO instrument is designed to provide immediate liquidity to support a country's efforts to recover from disasters triggered by natural hazards or a public health emergency, the report discloses. In recent years, the government of St. Vincent and the Grenadines has been making efforts to strengthen its preparedness and capacity to respond to disasters, the World Bank statement noted, the report adds. =============== X X X X X X X X =============== LATAM: Region's Recovery Slower Than Global Economy --------------------------------------------------- Alejandro Werner, Takuji Komatsuzaki, and Carlo Pizzinelli at imf.org reports that growth in Latin America and the Caribbean recovered briskly in the second half of 2020, yet still more slowly than the global economy and other emerging markets. That's despite unprecedented policy support, strong performance of trading partners, soaring commodity prices and accommodative global financial conditions, according to imf.org. The persistence of the health crisis in many countries casts a shadow on the near-term outlook, the report relays. People and economies continue to require a short-term shot to exit from the COVID-19 crisis, while the aggravation of several underlying structural fragilities poses significant long-term challenges, the report notes. The report discloses that the region's contraction of 7 percent in 2020 was the sharpest in the world, by far exceeding the global slowdown of 3.3 percent. Growth for 2021 is projected at 4.6 percent, below the 5.8 percent estimated for emerging markets excluding China, the report says. Income per capita will not catch up with its pre-pandemic level until 2024, resulting in a 30 percent cumulative loss relative to the pre-pandemic trend, the report relays.. Slow and Divergent Recovery The outlook, however, is subject to an extraordinary degree of uncertainty as the race between vaccines and the virus continues, the report relates. On the upside, faster control of the pandemic globally as well as stronger-than-anticipated domestic policy support would boost growth, the report notes. Fast vaccination and significant policy support are giving Chile a short-term boost, the report relays. The country is expected to bounce back already this year to its pre-pandemic GDP level, the report discloses. On the downside, the recent resurgence of the virus in Brazil, Chile, Paraguay, Peru, and Uruguay, combined with slow vaccine rollouts (with the exception of a few countries e.g. Chile and Uruguay) cast a shadow on the near-term outlook-though new lockdowns are likely to be less damaging than at the start of the pandemic as economies have learned to adjust, the report notes. Brazil is projected to recover by 2022 due to the withdrawal of fiscal and monetary policy support and slow vaccine rollout, the report discloses. Mexico will only return to its pre-pandemic GDP level by 2023, despite impulse from the large US fiscal policy plan, due to the absence of significant domestic fiscal support and anticipated continued weakness in investment, the report relays. The American Rescue Plan will boost growth in some Central American countries through trade and remittances, helping these countries to rebound by 2022. Caribbean tourism-dependent economies will be the last to recover (only in 2024) due to the slow resumption in tourism, the report relays. The increase in US long-term yields so far has had a somewhat muted impact on asset prices and capital flows in the region, the report relays. But a continued increase in long-term interest rates represents a risk, the report says. Unequal Effects The recovery has also been heterogeneous within countries. Manufacturing has rebounded faster than contact-intensive services, aided by exports in some cases, particularly in Mexico, the report notes. However, labor markets remain fragile-only two-thirds of those who lost jobs at the beginning of the pandemic in Brazil, Chile, Colombia, Mexico, and Peru were employed again by the end of last year, the report relays. The informal sector, which suffered the largest losses initially, has driven the job recovery, the report discloses. Average labor income fell since the beginning of the pandemic, with pronounced divergences in labor market outcomes across countries, sectors, and demographic groups, the report relays. Countries that implemented employment retention schemes (for example, Brazil) had a less dramatic fall in employment but the recovery has also been slower, the report says. However, even in the case of a relatively quick recovery in Mexico, those who have been reemployed have had larger earning losses than those whose employment remained uninterrupted during the crisis, the report relates. Women and low-educated workers have struggled the most. Low-skilled female workers in particular lost more jobs or had to cut back on working hours even when able to retain employment, suffering the largest income losses, the report notes. Long-lasting Consequences Poverty is estimated to have increased by 19 million people, and inequality, as measured by the Gini coefficient, increased by 5 percent compared to pre-crisis levels, the report relays. The pandemic will also leave long-lasting damage to human capital from school closures, which were longer than in other regions, the report notes. While the precise learning losses are difficult to estimate, IMF staff analysis suggests that students aged 10 to 19 might expect a 4 percent lower income on average over their lifetimes if the lost days of schooling in 2020 are not compensated, the report discloses. The income losses differ among countries, depending on how much the pandemic reduces the chance of completing secondary education and on the size of the skill premium for higher education, the report relates. The losses will be greatest for students whose families are less able to support out-of-school learning, exacerbating already high income inequality and low levels of educational attainment, the report notes. The most urgent task continues to be controlling the pandemic, by ensuring that healthcare systems are adequately resourced, and everybody can be vaccinated, the report notes. Fiscal and monetary policies should remain supportive in countries where there is sufficient policy space-a short-term shot for their economies-while countries with tight budgets should reprioritize spending towards healthcare and support for households, and work to create additional fiscal space, the report says. Given the continued heavy toll on low-income workers, targeted support to facilitate job creation and retraining may be warranted, the report relates. Healing longer-term scars will be more challenging and will require accelerating structural reforms, expanding access to high-quality education and health, broadening social safety nets, and improving the business climate, the report relays. A deeper structural transformation that could be facilitated by a broad fiscal pact is needed to reverse years of slow growth, the report adds. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *