/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210427.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, April 27, 2021, Vol. 22, No. 78 Headlines B R A Z I L IOCHPE-MAXION: Fitch Gives FirstTime 'BB-' LT IDRs, Outlook Stable NATURA&CO: Moody's Assigns Ba3 Corp. Family Rating C H I L E EMPRESA ELECTRICA: Moody's Alters Outlook on Ba1 Rating to Neg. LATAM AIRLINES: Judge Says too Early to Know if Co. is Solvent C O S T A R I C A REVENTAZON FINANCE: Fitch Affirms B+sf Rating on USD135MM Notes D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: To Stop Mining Ops if Mine is Not Extended M E X I C O ALPHA HOLDING: Moody's Cuts CFR to Caa2, On Review for Downgrade GRUPO KUO: Fitch Affirms 'BB' LT IDRs, Alters Outlook to Stable P E R U PERU: Bonds Fall as Leftist Takes Big Lead Ahead of Runoff P U E R T O R I C O LIMENOS CORPORATION: Seeks to Hire Nelson Robles-Diaz as Counsel V E N E Z U E L A VENEZUELA: Revenue Stream Up Thanks to Oil Price Hike, Output - - - - - =========== B R A Z I L =========== IOCHPE-MAXION: Fitch Gives FirstTime 'BB-' LT IDRs, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has assigned first time Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of 'BB-' to Iochpe-Maxion S.A. (Iochpe) and to its proposed benchmark sized unsecured notes to be issued by Iochpe's wholly owned subsidiaries Iochpe-Maxion Austria GmbH and Maxion Wheels de Mexico, S. de R.L. de C.V. The notes will be unconditionally and irrevocably guaranteed by Iochpe. Proceeds will be used primarily to refinance existing debt at the issuer level or their subsidiaries and general corporate purposes. In addition, Fitch has assigned Iochpe a National Scale Rating of 'A+(bra)'. The Rating Outlook is Stable. The ratings reflect Iochpe's customer and regional diversification as a large global wheels producer and as an important producer of side rails and commercial vehicle frames in the Americas as well as the competitive nature of the wheels industry. They also reflect Iocphe's more volatile cash flow profile and expectations of net debt/EBITDA declining to the 2.5x range over the next two-three years mainly through recovering EBITDA and positive FCF generation. KEY RATING DRIVERS Global Presence: Iochpe is exposed to the markets of Europe, North America, South America and to lesser extent Asia. Consolidated revenue in 2020 was generated in Europe 39%, North America 30%, South America (mostly Brazil) 22%, and 9% from other markets, mainly India, Thailand and South Africa. The company has important manufacturing presence in low-cost countries such as Mexico and Turkey, which serve the large markets of the U.S. and Europe, as well as Brazil where vehicle production has become more domestically focused. Iochpe is gradually expanding its wheel manufacturing capacity in India and expects to benefit from long-term growth in this market while seeking to gain new business in its more established markets. Large Wheels Producer: Iochpe is the world's largest wheel manufacturer in unit volumes. The company is the leading global supplier of steel wheels for light and commercial vehicles and one of the top 10 suppliers of aluminum wheels. It operates in 14 countries through 32 factories which allows it operational flexibility to compete for business in multiple regions. Iochpe estimates its global market share of steel wheels at 16.8% in light vehicles and 15.0% in commercial vehicles. In aluminum wheels the company estimates its market share at 3.4%. The company is also a leading supplier of side rails in North America and South America and of chassis in South America. Competitive Industry: Competition in the wheels industry is intense. The company's competitors have varying degrees of specialization and end-market or geographic diversification, including a limited number of competitors with more established brand names and greater financial resources. Price is an important consideration for OEMs, and wheels imports into Europe or U.S. have at times increased as a result of global overcapacity. Weak Operating Performance: Iochpe's operating EBITDA declined to USD104 million in 2020 from USD266 million in 2019 driven by the decline in global vehicle sales. Fitch is projecting Iochpe's EBITDA to rise to around USD200 million (BRL1.1 billion) in 2021 and USD230 million in 2022 given prospects for global vehicle production recovering and cost reductions implemented in 2020. FCF Positive Over Next 2-3 Years: Fitch forecasts positive FCF in 2021-2022 of around USD50 million as cash flow generation recovers while dividends and to lesser extent capex are scaled back. No dividend payments are expected to occur in 2021 due to the net income loss that occurred the prior year. For 2022 and beyond, Fitch's rating case incorporates dividend payment assumptions within a range of 35%-40% of the prior year net income. Leverage Should Trend Down: Iochpe's net debt to EBITDA leverage spiked to 7.0x in 2020 from 2.5x in 2019. Fitch forecasts this ratio to decline to 3.2x in 2021 and to 2.8x in 2022 as global vehicle production gradually recovers to normalized levels. The company's expansion of its India aluminum wheel plant, which is ramping up, should also contribute to EBITDA recovery to a lesser extent. FCF Affected During Pandemic: Iochpe consumed USD72 million of cash in 2020 or 0.4x projected 2021 EBITDA. Consolidated revenue declined 33% in U.S. dollars last year as global light vehicle sales declined more than 15%. Total vehicle production in Brazil, where the company generated 27% of its sales in 2019 declined 32% in 2020. A depreciation of the Brazilian real by more than 20% also contributed to weak results in this country. In North America and Europe production was down slightly more than 20% during the year. These regions represented approximately 69% of revenues in 2020 compared with 64% in 2019. DERIVATION SUMMARY Iochpe's ratings compare with capital goods supplier Meritor's (BB-/Stable) whose product lines are focused primarily on driveline components and brakes for commercial vehicles, off-highway equipment and trailers. Meritor's commercial truck drivetrain systems are more complex relative to wheels. Meritor revenues and EBITDA are about 50% larger than Iochpe's. Similar to Iochpe, Meritor generally retains a top-three market position in most of its product segments. Both entities face heavy competition in their main products. Iochpe's exposure to commercial vehicles is around 40% while Meritor's cash flow profile is more concentrated in commercial vehicles, and sales to this end market are more volatile than the light vehicle market. Fitch estimates roughly a quarter of Meritor's sales comes from the aftermarket, which is more stable. This compares with Iochpe's exposure to aftermarket sales at less than 5% of consolidated revenue. From a geography standpoint Iochpe is more diversified with Europe being its largest revenue contributor at around to 40% followed by North America at roughly 30%. This compares with Meritor's exposure to North America at around 65% and Europe at around 20%. However, Iochpe's approximate exposure of 20% to South America, which mainly comprises Brazil, has been more volatile. Meritor's gross leverage, expected over the next two years in the 3x-4x range, is similar to Iochpe. Tupy's (BB/Stable) stronger credit profile reflects its portfolio of products with high-value added structural components, such as iron casted cylinder heads and engine blocks. The cylinder head and engine block industry is more concentrated than the wheels industry. Tupy's ratings also reflect its track record of disciplined liquidity management with ample cash coverage as well as its very conservative financial policies with net adjusted leverage historically maintained at around 1.5x despite industry cyclicality. Tupy generates 90% of its revenues from commercial vehicles and off-road, mainly in the external market, with 67% of revenues from North America, 17% from Brazil and 16% Europe/RoW. KEY ASSUMPTIONS -- Consolidated volumes recover at approximately 15% pace in 2021 and climb at a low-mid single digit pace in 2022 and 2023; -- EBITDA of around BRL1.0 billion in 2021; BRL1.1 billion in 2022 and BRL1.3 billion in 2023; -- Capex averages approximately BRL450 million per year; -- Dividends between 35%-40% of prior year net income; -- BRL:USD of approximately 5.3 in 2021 and 5.0 in 2022; -- Short-term maturities decline as they are refinanced or paid with cash. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Operational improvements that enables Iochpe to reach net leverage solidly below 2.0x, sustainably; -- New business gains that lead to meaningful expectations of stronger cash flow generation across the cycle; -- A record of positive FCF generation; -- FFO net leverage below 2.5x Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Deterioration of EBITDA margins, leading to expectations of net leverage consistently above 3.0x; -- Weakening Liquidity measured by the cash to short-term debt ratio persistently below 1x; -- Material acquisitions that impair the company's deleveraging process. 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 Improving Liquidity: Iochpe's liquidity is adequate supported by cash and access to funding. Cash balance as of year-end 2020 was BRL1.6 billion compared with one-year maturities of BRL 1.9 billion. The company received seven-year loans from Brazilian development banks in February 2021 for a combined total amount of BRL940 million. The company expects to use the proceeds to refinance short-term debt maturing mostly during 1H21. The international notes issuance would be used to refinance near-term debt maturities. Iochpe's cash to short-term debt ratio was improving prior to the pandemic, reaching 1x in 2019 compared with 0.5x in 2018 this ratio was at 0.8x as of YE20 and should improve pro forma with the bank debt raised in February, which does not require amortizations for the first three years as well as with the proceeds of the notes issuance. 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. NATURA&CO: Moody's Assigns Ba3 Corp. Family Rating -------------------------------------------------- Moody's Investors Service has assigned a Ba2 issuer rating to Natura Cosmeticos S.A. (Natura Cosmeticos) and a Ba2 rating to its proposed senior unsecured notes. At the same time, Moody's has assigned a Ba3 corporate family rating to Natura &Co Holding S.A. (Natura). The proposed notes will be fully and unconditionally guaranteed by Natura. Moody's has also assigned a Ba3 issuer rating to Avon Products, Inc. (Avon). Avon's corporate family rating was withdrawn and the Ba3 rating assigned to the senior unsecured notes issued by Avon and stable outlook remain unchanged. The outlook for all the ratings is stable. The proposed issuance is part of Natura's liability management strategy. The proceeds will be used to pay down Natura Cosmeticos' upcoming debt maturities, namely its BRL2.1 billion Brazilian debentures due 2021 and the $750 million international notes due 2023. The rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and assume that these agreements are legally valid, binding and enforceable. This is the first time Moody's assigns ratings to Natura and Natura Cosmeticos. Ratings assigned: Issuer: Natura Cosmeticos S.A. Issuer Rating, Ba2 Proposed Gtd senior unsecured notes: Ba2 Outlook: Outlook, stable Issuer: Natura &Co Holding S.A. Corporate Family Rating, Ba3 Outlook: Outlook, stable Issuer: Avon Products, Inc. Issuer Rating, Ba3 Outlook, stable Ratings unchanged: Issuer: Avon Products, Inc. 5.000% Senior Unsecured Notes due 2023, Ba3 6.950% Senior Unsecured Notes due 2043, Ba3 Outlook: Outlook, stable Ratings withdrawn: Issuer: Avon Products, Inc. Corporate Family Rating, Ba3 RATINGS RATIONALE Natura's Ba3 rating primarily reflects the company's size and scale as the fourth largest pure cosmetics group globally operating through four well-established brands (Natura, Avon, The Body Shop and Aesop) with significant cross-selling and synergies opportunities. The company's leading market position in several markets where it operates and good geographic diversification, although with a high concentration of operations in growing, but potentially volatile, developing markets also support the rating. Natura has a proven know-how in managing the direct selling network model and strong digital capabilities and online presence through its Natura, Aesop and The Body Shop brands, as well as a track record of financial discipline. Natura has shown a conservative approach regarding leverage and liquidity overtime, with a Moody's-adjusted total debt/EBITDA of 4.3x and BRL8.3 billion in cash at the end of 2020, sufficient to cover debt amortizations through 2027 pro forma to the proposed issuance. Natura's ratings are constrained mainly by the execution risk stemming from Avon's ongoing turnaround process, and its potential impact on Natura's consolidated credit metrics and liquidity, which balance the strengths coming from the Natura Cosmeticos (Ba2 stable) businesses. Avon, Natura Cosmeticos and the parent Natura remain independent legal entities, and Natura &Co and Natura Cosmeticos do not provide upstream, downstream or cross-debt guarantee to Avon, however Natura has provided financial support to Avon and Moody's believes the company would be willing to continue to do so based on Avon's strategic relevance for the group. Avon's sales and earnings were weak even prior to the pandemic and were hurt in 2020 by the coronavirus outbreak because of social distancing measures that have impaired the company's ability to recruit its sales force and hampered the ability of its representatives to meet customers and collect orders. Moody's forecasts that Avon's operating performance will recover in 2021-22, supported by the benefits from its integration with Natura, with leverage approaching 6.0x by the end of this period (3.0x excluding the intercompany loan with Natura), after peaking at 18.2x in 2020 (9.4x excluding the intercompany loan). However, execution risks remain high. Avon contributed 48% of Natura's consolidated revenue in 2020 and will become a significant source of cash generation to the group in the future as Natura collects top line and cost synergies, which it currently estimates at about $350-450 million through 2024. Natura's remaining business, represented by the Natura, Aesop and The Body Shop brands under the entity Natura Cosmeticos are stronger than Avon's and support Natura's credit quality. Natura Cosméticos posted relatively stable in constant currency in 2020 in all its brands, leveraging on the group's omnichannel strategy, brand strength and leading market positions. Natura Cosmeticos' adjusted leverage has hovered around 3x-4x since 2015 (except in 2017 after the acquisition of The Body Shop), while liquidity remained strong overtime based on a resilient free cash flow generation even after marketing and innovation investments. Natura was able to reduce reported gross leverage to 3.4x at the end of 2020 from 6.7x in the first quarter of the year and net leverage to 1.0x from 3.9x in the same period, mainly because of the strong performance of Natura Cosmeticos and because of a $1 billion capital increase concluded in October 2020 that was used to fund the call option for Avon's $900 million secured notes due 2022. Going forward, Moody's expects Natura to maintain a conservative approach to leverage and liquidity, reporting net leverage below 1.0x and maintaining a solid liquidity profile to mitigate execution and liquidity risks for Avon. STRUCTURAL CONSIDERATIONS Natura Cosmeticos' ratings stand one notch above Natura and Avon's ratings reflecting the priority of claim of its creditors to the company's cash flows and privileged position within the group's capital structure. Natura Cosmeticos, the main cash generator of the group, holds approximately 70% of the group's total debt, with the remaining 30% being structurally subordinated at Avon and Natura levels. Although Natura Cosmeticos is fully owned by Natura, there are some protection mechanisms that would limit cash upstream and leakage between the companies of the group, such as financial and incurrence covenants and limitations on sale, transfer or combination of assets in Natura Cosmeticos' outstanding debt instruments, including the proposed new issuance. The new notes' indenture also contain clauses granting that Natura Cosmeticos would unconditionally and irrevocably guarantee the notes even under an event of issuer substitution, which preserves the privileged position of these bondholders. Avon's ratings stand at the same level as Natura's reflecting the close ties between the two companies following several pieces of evidence over the past year of stronger support from the parent Natura to Avon. As an example, Natura has provided intercompany loans to Avon including a $960 million to pay Avon's outstanding notes due 2022. The consent solicitation to include Natura as a guarantor of Avon's outstanding notes due 2023 granted in January 2021 that will become valid in the future, and a more centralized debt and cash management within the group are also practical examples of Natura supporting Avon. LIQUIDITY Natura's liquidity is currently strong, backed by BRL8.3 billion ($1.6 billion) in available cash at the end of 2020, enough to cover debt amortizations through 2027 pro forma to the proposed issuance and investments required to integrate Avon's business. Moody's believes refinancing risks are low for Natura given the company's longstanding relationship with Brazilian and international banks and access to both the international and local capital markets. Moody's expects Natura to proactively pursue liability management initiatives to lengthen its debt amortization schedule and equalize the group's capital structure. Moody's also expects Natura to reduce cash needs during the execution of the turnaround process of Avon while the company provides financial support to the latter. Avon posted a cash burn of $325 million in 2020, mainly related to the integration and acquisition costs, while Natura Cosmeticos generated positive BRL1.8 billion ($357 million) free cash flow, reflecting the strength of its businesses even during the pandemic. Going forward Moody's expects Natura to adjust capex and dividends to its internal cash generation to generate positive free cash flows even during the integration and turnaround of Avon. RATING OUTLOOK The stable outlook reflects Moody's view that despite the high execution risks on Avon's turnaround process, Natura will benefit from Natura Cosmeticos' performance and maintain adequate leverage and liquidity to preserve its credit quality in the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Natura's ratings could be upgraded in case there is a successful execution of Avon's turnaround initiatives leading to material improvement in Natura's operating performance, with EBITA margin approaching 10% (6.9% in 2020), Moody's-adjusted gross Debt/EBITDA below 4.0x (4.3x in 2020), and materially positive free cash flow, all on a sustained basis. A sustained improvement in Natura Cosmeticos' metrics or credit profile could also translate into positive rating actions for Natura. The ratings could be downgraded in case Natura fails to restore Avon's operating performance, such that Natura's credit metrics or credit worthiness deteriorate, with leverage above 4.5x and interest coverage (measured by EBITA to interest expense) below 2.5x (1.4x in 2020) without prospects for improvement. A deterioration in Natura Cosmeticos' credit quality could also lead to negative rating actions for Natura. The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020. COMPANY PROFILE Natura &Co is the fourth largest pure cosmetics group globally, with presence across 100 countries and in the skincare, haircare, body care, men care, fragrancies, color, fashion and home segments. The company has a leading market position in several markets, with a particular focus on emerging markets such as Brazil, other Latin American countries and Russia, and operates through a multi-channel strategy through its four brands Avon, Natura, The Body Shop and Aesop. In 2020, Natura &Co reported $7.2 billion in revenues and adjusted EBITDA margin of 11.6%. Fully owned by Natura &Co, Natura Cosmeticos is a leading beauty product company with a particularly strong position in Latin America, and one of the largest direct sellers with around 1.6 million active representatives. Natura Cosmeticos's product mix is composed mostly of fragrancies, skin care, bath and body products, make up, among others. In 2020, Natura Cosmeticos generated about BRL18.3 billion ($3.6 billion) in revenue and BRL3.6 billion ($695 million) in EBITDA (Moody's-adjusted). Avon Products, Inc. (Avon) is a global beauty product company and one of the largest direct sellers with around five million active representatives. Avon's products are available in more than 70 countries and are categorized as color cosmetics, skin care, fragrance, fashion and home. Following the completion of its acquisition in January 2020, Avon is now a fully owned subsidiary of Natura. Avon generated about $3.6 billion in revenue and $110 million in EBITDA (Moody's-adjusted) in 2020. ========= C H I L E ========= EMPRESA ELECTRICA: Moody's Alters Outlook on Ba1 Rating to Neg. --------------------------------------------------------------- Moody's Investors Service changed the outlook of Empresa Electrica Cochrane SpA to negative from stable and affirmed its's Ba1 senior secured rating. This rating was prompted by the release of the corporate guarantee and bank letter of credit supporting the obligations under power purchase agreement (PPAs) of the mining company Sierra Gorda SCM (Sierra Gorda), as the largest project offtaker, accounting for approximately 45% of Cochrane' expected revenues in 2021. The guarantees were provided by Sierra Gorda's shareholders, which include KGHM International Ltd (a wholly owned subsidiary of the Polish state-owned company KGHM Polska Miedz SA [KGHM]) that provided a bank letter of credit, Sumitomo Metal Mining Co., Ltd (SMM) and its parent company Sumitomo Corporation (Sumitomo; Baa1 stable) that provided corporate guarantees. These disclosures were made public in Cochrane's year-end 2020 earnings report released April 15, 2021. RATINGS RATIONALE "The negative outlook on Cochrane is driven by the weakening of the company's offtaker risk profile following the recent release of the Sierra Gorda shareholder's financial support" said Natividad Martel, Moody's Vice President - Senior Analyst. "The negative outlook also considers Moody's changed view that Sierra Gorda is no longer a strategic asset for its Japanese shareholders, SMM and Sumitomo, following the announcement in October 2020 that it plans to sell its 45% minority interest in Sierra Gorda" added Martel. The release of the letter of credit and guarantees resulted from some improvement in Sierra Gorda's standalone operational and financial performance, which contributed to the ratings affirmation at this time. The affirmation of Cochrane's Ba1 senior secured rating further reflects the project's cash flows visibility that is underpinned by the robust terms of its availability based PPAs and the capacity payments. This cash flows predictability underpins the project's ability to report a debt service coverage ratio (DSCR) of around 1.5x at year-end 2020 despite the economic and power demand contraction amid the pandemic. That said, the project's aggressive cash distributions that included a capital reduction of $93 million during 2020 also tempers Moody's view of Cochrane's credit quality. The rating action also incorporates the credit quality of the other project's offtakers, including Sociedad Quimica y Minera de Chile S.A. (SQM; Baa1 negative) providing for about 19% of the project anticipated revenues in 2021, Quebrada Blanca Expansion (QB2) with approximately 23%, and capacity payments received from the electricity system in Government of Chile (A1, negative) representing about 13% of the total. The weighted average of the offtakers' credit quality serves as a cap on Cochrane's rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING A downgrade of Cochrane is likely if Moody's sees deterioration in the offtakers' credit quality, leading to a weighted average counterparty risk that is weakly positioned for the Ba1 rating. For example, if Sierra Gorda's financial performance does not sustain significant improvement or if the possible change in its shareholder structure has negative implications for the mine. A downgrade will likely result if the project's DSCR (Moody's-calculated) falls below 1.4x on a sustained basis. Negative pressure on the rating will also be considered if Moody's see a higher than anticipated risk for Cochrane's exposure to carbon transition, a more aggressive cash distribution policy or additional changes to its ownership and capital structure that translate into unexpected negative consequences on the issuer's ability to service debt on time. Factors that could lead to an upgrade An upgrade of the rating is unlikely given the deterioration in Cochrane's weighted average offtaker risk. A stabilization of the outlook is possible if Moody's perceive that Cochrane's weighted average counterparty risk remains commensurate with the Ba1 rating. For example, if Moody's view of Sierra Gorda's credit quality improves significantly over the next twelve months and if Moody's find that the release of the shareholders' guarantees of QB2 does not result in a material deterioration in the mine long-term credit quality. The principal methodology used in this rating was Power Generation Projects Methodology published in July 2020. Profile Cochrane, is a privately held joint-stock special purpose vehicle organized under the laws of the Republic of Chile. Its indirect shareholders are AES Gener S.A. (57%; Baa3 stable), the Investment Fund TIF Inversiones SpA (3%), owned by Toesca Infraestructura II Fondo de Inversión, as well as DE Cochrane SpA, subsidiary of Daelin Energy Co. Cochrane owns and operates a 550 MW (gross) coal-fired generation facility in Chile (A1 negative). Cochrane's three offtakers are: (i) SQM (Baa1, negative; 110MW); (ii) Sierra Gorda (unrated; 251MW) and (iii) QB2 (unrated: 122 MW). QB2's obligations remain guaranteed by its main shareholders, that is by Teck Resources Limited (Baa3 stable; two-thirds) along with Sumitomo and SMM (total: one-third). LATAM AIRLINES: Judge Says too Early to Know if Co. is Solvent -------------------------------------------------------------- Jeremy Hill of Bloomberg News reports that a bankruptcy judge says that it is too early to know if Latam Airlines is solvent. It's still too early to tell whether Latam Airlines Group shareholders may be entitled to a recovery in the company's bankruptcy, Judge James L. Garrity Jr. said in a hearing, April 22, 2021. "It's premature, in my view, to make a determination that the estate is solvent," Garrity said to a stockholder vying for the formation of an equity committee in the bankruptcy. A rally in Latam bond prices and a stock market capitalization of more than $1 billion don't necessarily mean the airline is solvent, Garrity said. About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc. and The Boston Consulting Group UK LLP serve as the Debtors' strategic advisors. Prime Clerk LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados, is the committee's Brazilian counsel. The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as counsel. =================== C O S T A R I C A =================== REVENTAZON FINANCE: Fitch Affirms B+sf Rating on USD135MM Notes --------------------------------------------------------------- Fitch Ratings has affirmed Reventazon Finance Trust's USD135 million fixed-rate notes at 'B+sf' with a Negative Rating Outlook. Fitch's rating addresses timely payment of interest and ultimate principal at legal maturity. Reventazon Finance Trust DEBT RATING PRIOR ---- ------ ----- Notes 76138QAA5 LT B+sf Affirmed B+sf Notes REGS G75463AA0 LT B+sf Affirmed B+sf KEY RATING DRIVERS Repayment of Notes Reliant on ICE Lease Payments: The notes are backed by 100% participation interest on the Inter-American Development Bank's (IDB) B-loan acquired through a participation agreement, which gives the right to receive payments under IDB's B-loan. Instituto Costarricense de Electricidad's (ICE) lease payments from a non-cancellable financial lease agreement for the operation and maintenance of the hydropower plant will cover all payments on the loan. Transaction Rating Linked to ICE's IDR: Given the unconditional and irrevocable nature of the lease payments, Fitch views the credit risk of these payments as linked to ICE's credit quality. On May 14, 2020, Fitch downgraded ICE's Long-Term Foreign Issuer Default Rating (IDR) to 'B' with a Negative Outlook following a similar rating action on Costa Rica's IDR. Grupo ICE's ratings are supported by its linkage to the sovereign rating of Costa Rica (Foreign and Local Currency IDRs of 'B'/Outlook Negative, affirmed on March 16, 2021), which stems from the company's government ownership and the implicit and explicit expectation of government support. Lease Payment Obligation Supported by IDB as Lender of Record: To determine the strength of the lease payment obligation, Fitch considered the role of IDB as lender of record of the obligation being covered by ICE's payments, tied to ICE's ownership structure. As the IDB will continue to be the lender of record and administer IDB's B-loan, Fitch believes the holders of the rated notes will benefit from the B-loan preferential, de facto, status provided by IDB. Because of this benefit, the credit quality of the payment obligation is considered to be in line with other obligations of Costa Rica with the IDB and therefore was notched upward (one notch) from ICE's IDR. Noteholders Benefit from IDB's Preferred Creditor Status: Historically, sovereigns have prioritized certain obligations, such as obligations from multilateral development banks (MDBs), when the government cannot service all of the country's external debt. While the B-loan is not a direct obligation of the sovereign, Fitch believes treatment of the IDB as a preferred creditor extends to ICE as the debtor, since ICE is a strategic government-owned entity that receives underlying sovereign support. Although Costa Rica has defaulted in the past (1981), neither the sovereign nor ICE have ever defaulted on debt issued by a preferred creditor. Currently, IDB's share of Costa Rica's external debt is approximately 13%, in line with historical figures, which makes it an essential preferred creditor for the country. Adequate Liquidity Present: The rated notes benefit from a debt service reserve account equivalent to the next principal and interest payment due amount. This liquidity provides certainty in case the transaction is exposed to temporary liquidity shock. As of November 2020, the external account had sufficient liquidity to cover debt service on the issued notes payment due in May 2021. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- As the transaction is on Outlook Negative, Fitch does not currently anticipate developments with a high likelihood of triggering an upgrade. Nevertheless, the notes' ratings are linked to the LT FC IDR of ICE; hence, an upgrade of ICEs IDR would trigger an upgrade of the rated notes in the same proportion; Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The notes' ratings are linked to the LT FC IDR of ICE; hence, a downgrade of ICE's IDR would trigger a downgrade of the rated notes in the same proportion. -- A rating action of ICE not tied to a rating downgrade of the sovereign may not trigger a rating action on the notes if Fitch's view on the strength of the payment obligation is not affected by such rating action. Additionally, changes in Fitch's view of the treatment of the IDB as a preferred creditor may trigger a rating action on the notes. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven 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 seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. CRITERIA VARIATION Fitch's "Single- and Multi-Name Credit Linked Notes Rating Criteria," dated February 12,2021, establishes that the credit quality of the primary risk contributors in a credit linked notes (CLNs) transaction is typically determined by an IDR assigned by Fitch. However, in some situations, a committee would consider using the actual bond rating (e.g. senior unsecured rating, subordinate rating) of an asset in place of the IDR. For this transaction, it has been determined that the credit quality of the primary risk contributor is not commensurate with the IDR or any particular bond rating of the obligor, as sovereign ratings do not directly address all forms of obligations. To determine the credit quality of the sovereign obligation and its notching from the sovereign IDR, Fitch incorporated perspectives from its sovereign group. During the analysis, it was determined that the appropriate notching uplift from the primary risk contributor would be one notch. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: To Stop Mining Ops if Mine is Not Extended -------------------------------------------------------------- Dominican Today reports that President of Pueblo Viejo Juana Barcelo warned that he would have to stop the mining operation this year if the mine is not extended. So far this year, Barrick Gold Corporation has paid around RD$13 billion, an average of US$228 million in direct taxes and royalties for the operation of the Pueblo Viejo mine, according to Dominican Today. In 2020, it paid RD$23.5 billion in direct and indirect taxes, equal to US$419 million, the report notes. Pueblo Viejo's exports in 2020 were US$1.6 billion, which represented 37% of the country's total exports of national goods, the report notes. The mine also contributed to employment and the Dominican economy by purchasing more than RD$19.5 billion (approximately US$346 million) from domestic suppliers and contractors, representing 22% of its total exports, the report relays. These domestic purchases have generated additional jobs and indirect taxes for the country, the report notes. However, President Juana Barcelo warned that if the mine is not extended, she will have to stop the mining operation this year and only work with what has already been extracted, which would imply a significant decrease in the labor force and the social and economic contributions to the Dominican State, the report discloses. She said that they are still in the study stage and have not yet requested the expansion because there have been delays in the studies and reviews by the State, the report relays. She detailed that they will invest US$1.3 billion, mainly to expand the processing plant, which would be ready in 2022, and for other processes or facilities within the existing plant, the report notes. "If we do not expand the plant, production would drop to 550,000 ounces per day on average, but if we expand we can process more ore and have a production of over 800,000 ounces per day", Barcelo pointed out during a meeting with journalists, the report discloses. At the event, she detailed that in the first quarter of 2021, payments to the State include income taxes, net profit interest, and royalties on gold and silver sales, as well as the final settlement for the fiscal year 2020, the report discloses. Pueblo Viejo also paid around RD$500 million (US$9 million) in indirect taxes (withholding on salaries, interest, and suppliers), the report relays. Barcelo noted that taxes for 2020 and 2021 have been significantly higher than previous years due to the positive impact of the increase in the price of gold which benefits the State's tax collection despite the decrease in production driven by a lower processed grade, the report discloses. The Figures US$41.9 Millions are the social investment of the Pueblo Viejo mine, which operates in Cotui, from 2008-2020, the report relays. 2,344 Direct and indirect jobs are generated by the mine on average, according to its president, Juana Barcelo, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. The Troubled Company Reporter-Latin America reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Fitch Ratings on Jan. 18, assigned a 'BB-' rating to Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041. Concurrently, the Dominican Republic reopened its 2030 4.5% notes for an additional USD1.0 billion, which Fitch rates 'BB-', raising the total outstanding amount of the 2030 notes to USD2.0 billion. Standard & Poor's, on December 4, 2020, affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings on the Dominican Republic. The outlook remains negative. S&P also affirmed its 'B' short-term sovereign credit ratings. The negative outlook reflects S&P's view that it could lower the ratings on the Dominican Republic over the next six to 18 months, given the severe impact of the COVID-19 pandemic on the sovereign's already vulnerable fiscal and external profiles, as well as the potential for a weaker-than-expected economic recovery. Moody's credit rating for Dominican Republic was last set at Ba3 with stable outlook (July 2017). Fitch's credit rating for Dominican Republic was last reported at BB- with negative outlook (May 8, 2020). =========== M E X I C O =========== ALPHA HOLDING: Moody's Cuts CFR to Caa2, On Review for Downgrade ---------------------------------------------------------------- Moody's Investors Service has downgraded Alpha Holding, S.A. de C.V.'s (AlphaCredit) long-term global local and foreign currency issuer ratings, its Corporate Family Rating and long-term foreign currency senior unsecured debt rating to Caa2, from B3. In addition, all the long-term ratings assigned to the entity have been placed on review for further downgrade. At the same time, Moody's affirmed AlphaCredit's short-term global local and foreign currency issuer ratings at Not Prime. The following Alpha Holding, S.A. de C.V. ratings were downgraded: Corporate Family Rating to Caa2, from B3, placed on review for downgrade Long-term global local currency issuer rating to Caa2, from B3, placed on review for downgrade Long-term global foreign currency issuer rating to Caa2, from B3, placed on review for downgrade Long-term global foreign currency senior unsecured debt rating to Caa2, from B3, placed on review for downgrade The following Alpha Holding, S.A. de C.V. ratings were affirmed: Short-term global local currency issuer rating of Not Prime Short-term global foreign currency issuer rating of Not Prime Outlook, Changed To Rating Under Review From Negative RATINGS RATIONALE The downgrade of AlphaCredit's ratings to Caa2, from B3, and the review for further downgrade of its ratings incorporates the company's announcement on 20 April that, following an internal review and discussions with external auditors, it will be restating prior year s financial statements related to errors in the company's accounting of its derivative positions. In addition, the company announced that it will be restating previously reported balances of allowances for loan losses, reserves for account receivables and the amortization of capital expenses. The ultimate size of the adjustments are still unknown, but AlphaCredit said that it anticipates most of the balances reported in other assets and other account receivables, which were MXN 4.1 billion as of September 2020, will become impaired. Such an adjustment would bring the company's Moody's adjusted capitalization ratio, measured as tangible common equity (TCE) relative to tangible managed assets (TMA) as of September 2020, to a negative 17.7% (-17.7%), substantially lower than Moody's prior estimates of a positive 3.4%. This calculation does not incorporate income tax credits that may arise from the impairment. The downgrade captures the expectation that AlphaCredit's capitalization will remain weak, limiting its ability to fund future loan growth and earnings generation. Return on average assets is low even when excluding non-recurring losses, averaging just 0.8% between 2017 and Q3 2020. Therefore, baring a capital injection, Moody's expect the company to find it difficult to recover its capital buffers. The review will assess the final impact of the aforementioned restatements on the company's credit profile - particularly on its capital - while evaluating the extent to which the company's growth, earnings generation, liquidity and access to funding could pose further risks given the capital pressures. In February 2020, AlphaCredit issued a $400 million cross-border senior unsecured bond, which helped the company repay most of its secured debt and extended debt maturities. As a result, as of September 2020, the company's coverage of remaining maturities in 2020-21 with cash and equivalents stood at an adequate 120%, and its secured debt represented just 9% of gross tangible assets. The company has one of its cross border bonds maturing in December 2022, and any impairment on its capitalization will increase refinancing risks. AlphaCredit's governance concerns stem from inadequate risk management and reporting that resulted in the need for subsequent restating of its financial statements. The recently announced reinstatement comes in the heels of various others accounting adjustments performed recently. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if the final impact of the restatements prove to be higher than what has been disclosed so far or if the current weak capital position puts the company's growth and earnings generation at further risk, making it more difficult for it to internally replenish its capital in the short term. This could in turn affect its access to funding. Any evidence of the company's inability to refinance its $300 million debt issuance that matures in December 2022 could also lead to a downgrade. An upgrade is unlikely for AlphaCredit at this time because the ratings are on review for downgrade. However, the outlook could be stabilized following an improvement in the company's capitalization, which could arise from a capital injection, and if the company continues to have access to funding. The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. GRUPO KUO: Fitch Affirms 'BB' LT IDRs, Alters Outlook to Stable --------------------------------------------------------------- Fitch Ratings has affirmed Grupo KUO, S.A.B. de C.V.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and unsecured senior notes at 'BB'. Fitch has also affirmed KUO's National Scale Long-Term rating at 'A(mex)'. The Rating Outlook is revised to Stable from Negative. The Stable Outlook reflects KUO's stronger than expected operating results and net leverage when compared with Fitch's previous projections after the disruptions created by the COVID-19 pandemic and the fire that affected its pork facility in May 2020. The affirmation reflects KUO's diversified business portfolio, leading market positions across the industries where it participates, and its joint ventures (JVs) with recognized companies as Repsol Quimica S.A. and Grupo Herdez, S.A.B. de C.V. For analytical purposes, Fitch incorporates financial information for KUO under the proportional consolidation of its JVs in Herdez Del Fuerte and Dynasol (pro forma). Fitch considers reported consolidated figures, which account for the JVs under the equity method (consolidated). KEY RATING DRIVERS Higher EBITDA and Profitability: Fitch forecasts a moderate increase in KUO's EBITDA and profitability in 2021 due to improved performance from its pork meat and transmission businesses and, to a lesser extent, from its chemical businesses. KUO's pork meat operations should gradually recover in the domestic market despite pressures on raw materials, whereas the Herdez Del Fuerte JV is projected to have a more normalized demand after strong volume sales during the coronavirus pandemic. Dual clutch transmissions (DCT) sales volume will increase as Ford and GM facilities are not expected to face major production interruptions as in 2020, resulting in better operating leverage. KUO's chemical operations should benefit from positive tailwinds of prices and margins in the petrochemical industry. Fitch projects KUO's EBITDA margin on a pro forma basis at around 11%, which will lead to EBITDA growth of close to 14% in 2021, while revenues will grow 9%. Stable Net Leverage: Fitch's base case projections incorporates that KUO's pro forma total debt to EBITDA and net debt to EBITDA, including non-recourse factoring and debt from its JVs, will be around 3.4x and 2.4x, respectively, at YE 2021. These metrics, as calculated by Fitch, compare with 3.8x and 2.4x at 1Q20. The company's total debt as of March 31, 2021, was around MXN18 billion, while its net debt was about MXN11 billion. KUO's net debt position has benefited from higher internal FCF generation in 2020, dividends inflows from the divestiture of the tuna business in its Herdez del Fuerte JV and a partial insurance payment from the fire in its pork plant. A gradual reduction of gross leverage should come mainly from higher EBITDA. On a consolidated basis, Fitch projects KUO's gross and net leverage at around 4.5x and 3.3x, respectively, at YE 2021. Negative FCF: KUO's FCF was positive in 2020 but is projected by Fitch to be negative in 2021. As part of measures to preserve cash during the coronavirus pandemic the company reduced in 2020 its capex to around MXN1.4 billion (USD75 million). Combined with better management of net working capital this resulted in positive pro forma FCF of approximately MXN1.4 billion (USD67 million). On a consolidated basis, FCF calculated by Fitch was also positive for MXN1.6 billion (USD80 million). For 2021, KUO's forecasted cash flow from operations (CFO, before capex and dividends) on a pro forma basis will be around USD107 million that combined with a capex of approximately USD185 million will result in negative FCF. On a consolidated basis, Fitch projects KUO's FCF to be negative around MXN1 billion. Diversified Business Portfolio: KUO has a diversified business portfolio in the consumer, automotive and chemical industries, which allows the company to mitigate the volatility from economic and industry cycles. The company's most significant businesses, pork meat and the Herdez Del Fuerte JV, are oriented to the more stable consumer segment and represented around 50% of revenues and 55% of EBITDA in 2020. The chemical and automotive businesses are more volatile, with higher exposure to demand cycles. The chemical businesses (synthetic rubber JV and polystyrene) and the automotive businesses (transmission and aftermarket) contributed around 33% and 12%, respectively, of KUO's EBITDA in 2020. Fitch believes KUO's investment strategy in the pork meat and transmission businesses and its focus on value-added products in the chemical sector should continue to improve its portfolio and reduce volatility in revenues and cash flows. Leading Positions in Key Markets: KUO's businesses maintain significant market positions in their industries. The company's pork meat operations rank as the largest producer in Mexico, with vertically integrated operations serving the domestic market. Also, in 2020, around 55% of the company's pork products were exported mainly to China and Japan, and the rest was sold by KUO-owned Maxicarne stores and in the commodity market. Under the Herdez Del Fuerte JV, KUO has highly recognized brands, with a leading share in Mexico of various products, such as tomato paste and mole, among others. In addition, the Herdez del Fuerte JV provides the company with operations in the U.S., including a JV with Hormel Foods Corp. This positions KUO as a producer and distributor of Hispanic brands in the U.S., with a leading position as a distributor of guacamole. The transmissions business is a leading producer of rear wheel transmissions in North America for the high-performance original equipment manufacturer segment. In the aftermarket business, KUO is a leader in engine components, with recognized proprietary brands and third-party products in Mexico. The company is Mexico's largest producer of synthetic rubber through a JV with Dynasol and is the country's main producer of polystyrene. DERIVATION SUMMARY KUO's ratings are supported by its diversified business portfolio, solid business position of its main brands and products in different industries, geographic diversification, and stable financial position. Its credit profile is comparable with other diversified groups as Alfa, S.A.B. de C.V. (BBB-/Stable) and Votorantim, S.A. (BBB-/Negative). KUO has lower size and scale and geographic diversification and a relatively weaker competitive position in its main businesses when compared with peers such as Alfa and Votorantim. While KUO's leverage metrics are slightly stronger than Alfa and Votorantim, these companies have higher profitability levels and more consistent positive FCF generation that provide more flexibility to deleverage. Other comparable company in the 'BB' category is Cydsa, S.A.B. de C.V. (BB+/Stable). KEY ASSUMPTIONS Fitch's key assumptions on a pro forma basis, including proportional consolidation of JVs, include: -- Revenue growth of 9% 2021 and 4% in 2022; -- EBITDA margin of around 11% in 2021-2022; -- Capex around MXN3.7 billion in 2021 and MXN2 billion in 2022; -- No dividends in 2021 and MXN400 million in 2022; -- Total debt/EBITDA and net debt/EBITDA close to 3.4x and 2.4x, respectively, by YE 2021. Fitch's key assumptions on a consolidated basis, excluding proportional consolidation of JVs, include: -- Revenue growth of around 12% in 2021 and 4% in 2022; -- EBITDA margin of around 10% in 2021-2022; -- Capex around MXN2.6 billion in 2021 and MXN1.8 billion in 2022; -- No dividends in 2021 and MXN400 million in 2022; -- Total debt/EBITDA and net debt/EBITDA of around 4.3x and 3.3x, respectively, by YE 2021. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Neutral to positive FCF through the economic cycle; -- Maintaining a strong liquidity position; -- Sustaining lower leverage ratios for pro forma total debt to EBITDA and net debt to EBITDA of around 2.5x and 2.0x, respectively. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Higher than expected negative FCF over the next two years; -- A weak liquidity position; -- Sustained deterioration in operating performance across the company's businesses, leading to pro forma total debt to EBITDA and net debt to EBITDA consistently above 3.0x and 2.5x, respectively. 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: KUO's readily available cash of MXN6.5 billion on a pro forma basis, at 1Q21, is sufficient to cover its debt amortization in the short term of MXN1.3 billion, which includes around MXN519 million of nonrecourse factoring and MXN323 billion of debt in its JVs. The company's liquidity is also supported by available committed credit lines of USD278 million that expire between 2023 and 2024. On a consolidated basis, KUO's cash balance was MXN4.5 billion and a short term debt including nonrecourse factoring of MXN1 billion. Fitch considers KUO's debt maturity profile is manageable with MXN556 million (USD27 million) due in 2022, MXN1.2 billion (USD57 million) due in 2023, MXN5.2 billion (USD254 million) due in 2024, and MXN9.8 billion (USD478 million) due afterwards. Fitch believes KUO has good access to capital markets and banks loans and will refinance a portion of these maturities before they are due. 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. ======= P E R U ======= PERU: Bonds Fall as Leftist Takes Big Lead Ahead of Runoff ---------------------------------------------------------- Maria Elena Vizcaino at Bloomberg News reports that Peru's currency and bonds tumbled April 19 after an opinion poll showed leftist presidential candidate Pedro Castillo as the clear favorite ahead of June's presidential runoff. The Peruvian sol turned in the worst-performance in the developing world. Castillo, whose party has praised Fidel Castro and Venezuela's Hugo Chavez, is leading Keiko Fujimori by 11 percentage points, according to the survey by Ipsos Peru carried out between April 15 and 16, according to Bloomberg News. Fujimori is the polarizing right-wing daughter of a jailed former president. The sol slid 1.14% to close April 19 at 3.6730 per dollar, the biggest daily loss since November, while the nation's dollar-denominated bond due in 2051 declined as much as 2.24%, the biggest drop since it was issued a month ago, Bloomberg News relays. Meantime, the cost of insuring the country's debt against default over the next five years briefly jumped to the highest since June, Bloomberg News discloses. The S&P/BVL Peru General Return Index, which measures Peruvian stocks, tumbled the most since November. "Whoever wasn't sure that this second round was going to be difficult, now it's made clear," said Mario Castro, a strategist at BBVA in New York, Bloomberg News relays. "It's negative on the margin as there's a long way to go. Some people will buy the dips." The nation's bonds had already taken a hit this year, posting losses of 8.5% before April 19. That's the worst performance after Belize, Argentina and Lebanon, which all trade at distressed levels, according to a Bloomberg Barclays index. Since winning the first-round vote, Castillo's party has said that if elected, he wouldn't seize mining assets, preferring instead to renegotiate mining contracts, Bloomberg News discloses. He said he won't change the constitution until the nation asks him to through a referendum, Bloomberg News discloses. The moves are the first signs of moderation during his campaign. Citigroup Inc. cut its recommendation on Peruvian local currency debt to neutral from a "small overweight" as the risk profile has worsened with a "very possible outcome where Castillo becomes the next president," strategists Alvaro Mollica and Dirk Willer wrote, Bloomberg News notes. Still, the poll "is a market negative signal," Alberto Ramos, chief Latin America economist at Goldman Sachs, wrote in a note. It "defies the conventional wisdom and view of pundits and political analysts that Castillo's radical and extreme policy/political platform would not appeal to most voters, Bloomberg News adds. ===================== P U E R T O R I C O ===================== LIMENOS CORPORATION: Seeks to Hire Nelson Robles-Diaz as Counsel ---------------------------------------------------------------- Limenos Corporation seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Nelson Robles-Diaz Law Offices, PSC as its legal counsel. The firm's services include; a. prosecuting the motions and applications filed; b. advising the Debtor with respect to its duties, rights and powers under the Bankruptcy Code; c. representing the Debtor in negotiations with creditors; d. assisting the Debtor in analyzing claims; e. assisting the Debtor in the investigation of claims, causes of action and other matters; and f. representing the Debtor in negotiations, litigation, hearings and other proceedings. The firm's attorneys will be paid at the rate of $300 per hour. The rates for paralegals and law clerks range from $40 to $50 per hour. The retainer fee is $6,000. As disclosed in court filings, Nelson Robles-Diaz is a "disinterested person" within the meaning of Sections 101(14) and 327 of the Bankruptcy Code. The firm can be reached through: Nelson Diaz Robles, Esq. Nelson Robles-Diaz Law Offices PSC P.O. Box 192302 San Juan, Puerto Rico 00912 Tel: (787) 294-9518 Fax: (787) 294-9519 Email: nroblesdiaz@gmail.com About Limenos Corporation Limenos Corporation sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-02169) on June 5, 2020, listing under $1 million in both assets and liabilities. Judge Mildred Caban Flores oversees the case. Francisco J. Ramos Gonzalez, Esq., at Francisco J Ramos & Asociados, CSP and Nelson Robles-Diaz, P.S.C. serve as the Debtor's legal counsel. Monge Robertin Advisors, LLC is the Debtor's restructuring advisor. ================= V E N E Z U E L A ================= VENEZUELA: Revenue Stream Up Thanks to Oil Price Hike, Output ------------------------------------------------------------- The Latin American Herald reports that the revenue stream of the Venezuelan State has considerably improved from six months ago since this year the regime of leftist leader Nicolas Maduro may be reaping nearly $9 billion, or $1 billion more than in 2020, Venezuelan economist Asdrubal Oliveros, head of the Caracas-based Ecoanalitica consulting firm, told local energy blog. Oliveros said that $6 billion of that amount, or two-thirds, will come from crude oil sales while the remainder corresponds to gold and metals, according to The Latin American Herald. "And from the additional $1 billion we are foreseeing, nearly 80% will come from a hike in oil prices over the last six months," he added. This means that Venezuela's state-run oil company Petroleos de Venezuela (PDVSA) may be receiving an additional $800 million, provided that the current output and sales level are maintained, the report notes. Most crude oil shipments by PDVSA are sent to the Asian continent, mainly China, and Ecoanalitica forecasts an exports average that will generate cash in the neighborhood of 600,000 barrels per day (bpd), the report relays. Venezuelan crude oil experienced a jump in prices of 77.1% during the first quarter of 2021, a hike that occurred simultaneously with a jump in production and exports of 31% and 32%, respectively, from the same period a year ago, a scenario that allows an increase in PDVSA revenues and part of that money is transferred to fiscal accounts, the report relays. Prices of Merey 16, a blend of extra-heavy crude from the Orinoco oil belt and lighter grades which is taken as a reference by the Organization of the Petroleum Exporting Countries (OPEC), have spiked during the first three months of 2021 to $46.47 per barrel from $26.23 per barrel, while exports are above 655,000 bpd in the period between January and March, the report adds. Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and a large number of small islands and islets in the Caribbean sea. The capital is the city of Caracas. Hugo Chavez was president to Venezuela from 1999 to 2013. The Chavez presidency was plagued with challenges, which included a 2002 coup d'etat, a 2002 national strike and a 2004 recall referendum. Nicolas Maduro was elected president in 2013 after the death of Chavez. Maduro won a second term at the May 2018 Venezuela elections, but this result has been challenged by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the United States who deemed it fraudulent and moved to recognize Juan Guaido as president. The presidencies of Chavez and Maduro have challenged Venezuela with a socioeconomic and political crisis. It is marked by hyperinflation, climbing hunger, poverty, disease, crime and death rates, social unrest, corruption and emigration from the country. S&P Global Ratings, in May 2019, removed its long- and short-term local currency sovereign credit ratings on Venezuela from CreditWatch with negative implications and affirmed them at 'CCC-/C'. The outlook on the long-term local currency rating is negative. At the same time, S&P affirmed its 'SD/D' long- and short-term foreign currency sovereign credit ratings on Venezuela. Moody's credit rating (long term foreign and domestic issuer ratings) for Venezuela was last set at C with stable outlook in March 2018. Meanwhile, Fitch's long term issuer default rating for Venezuela was last in 2017 at RD and country ceiling was CC. Fitch, on June 27, 2019, affirmed then withdrew the ratings due to the imposition of U.S. sanctions on Venezuela. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *