/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210519.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 Wednesday, May 19, 2021, Vol. 22, No. 94 Headlines B E R M U D A SAGICOR FINANCIAL: Fitch Rates New US$400MM Unsec. Debt 'BB-' B R A Z I L COMPANHIA ENERGETICA: S&P Affirms BB- Global Scale Credit Rating CONCESSIONARIA MOVE: Acciona Takes Over Tunnel Job ELDORADO BRASIL: Moody's Hikes CFR to B1 & Alters Outlook to Stable C H I L E CHILE: Locals Drain $10B++ From Pension Funds Due to Pandemic C O L O M B I A CREDIVALORES CREDISERVICIOS: Fitch Affirms B+ Foreign Currency IDR D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Retailers Will Assume Price Up of Basic Needs DOMINICAN REPUBLIC: Scrambles to Avert Tax Hikes H O N D U R A S INVERSIONES ATLANTIDA: Fitch Rates New Secured Notes 'B(EXP)' J A M A I C A EVERYTHING FRESH: Incurs 27.6 Million Net Loss for Q1 SUGAR COMPANY: To Divest More Land Under Bernard Lodge Development P U E R T O R I C O ASCENA RETAIL: US Trustee Asks Court to Put Part of Plan on Hold SEARS HOLDINGS: Vendors Ask Court to Reject Professional Fees Hike - - - - - ============= B E R M U D A ============= SAGICOR FINANCIAL: Fitch Rates New US$400MM Unsec. Debt 'BB-' ------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to the new $400 million senior unsecured debt issued by Sagicor Financial Company Limited (SFCL). SFCL's existing ratings are not affected by today's rating action. The assignment of final ratings, which are aligned with the expected ratings assigned on May 3, 2021, follows the receipt of documents conforming to details of the issuance already received. KEY RATING DRIVERS The ratings assigned to the new senior unsecured notes reflect standard notching based on Fitch's rating criteria and are equivalent to SFCL's existing senior unsecured notes. The senior unsecured notes are rated one notch below SFCL's Issuer Default Rating (IDR) of 'BB'. Proceeds from the issuance of the new notes are expected to be used to retire the existing senior debt and general corporate purposes. SFCL is a Bermuda-based financial holding company and leading provider of insurance products and financial services in the Caribbean. It also provides insurance products in the U.S. as well as banking and investment management services in Jamaica. Primary insurance subsidiaries and the corresponding regions for SFCL include Sagicor Group Jamaica Ltd. (Jamaica and Cayman Islands), Sagicor Life Inc. (Barbados and Trinidad and Tobago) and Sagicor Life USA (U.S.). Aside from these main subsidiaries and regions, the company also has insurance operations in many of the Eastern and Dutch Caribbean islands and select Latin American countries. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- No material deterioration in economic and operating environments and sovereigns of Jamaica, Trinidad, and Barbados resulting from the Coronavirus situation; -- Deployment of capital proceeds from the AQY transaction to grow operations in investment-grade jurisdictions; -- Decline in financial leverage ratio below 25% (adjusted to exclude non-controlling interests from capital). Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Significant deterioration in the economic and operating environments and sovereigns of Jamaica, Trinidad and Barbados, which would lead to a material decline in operating performance and/or credit profile of SFCL's investment portfolio; -- Deterioration in key financial metrics, including consolidated MCCSR falling below 180% and financial leverage exceeding 50% and ROE below 5% on a sustained basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond 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. 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. =========== B R A Z I L =========== COMPANHIA ENERGETICA: S&P Affirms BB- Global Scale Credit Rating ---------------------------------------------------------------- S&P Global Ratings affirmed its 'BB-' global scale and 'brAAA' national scale credit ratings on Brazil-based hydropower generator CESP-Companhia Energetica de Sao Paulo. S&P also revised its stand-alone credit profile (SACP) of CESP to 'bb+' from 'bbb-', incorporating a wider pension plan deficit in the first quarter of 2021 because of high inflation measured by IGP-M and historically low interest rates in Brazil. CESP has been posting sound cash flows and comfortable liquidity, despite drier conditions, thanks to solid power contracts' allocation strategy and cost-control initiatives. The stable outlook on CESP reflects that on Brazil, given the sovereign rating cap on the company's credit quality. The company has been resilient to the pandemic-related downturn. Despite lower demand for energy, CESP's operations remained solid because it sells energy through long-tenor, take-or-pay contracts with creditworthy counterparties in the regulated and free markets. In the 12 months ended March 31, 2021, the company reported a 20% increase in revenue despite drier conditions, thanks to the start of its trading division operations, higher sales volume in the free market, and contractual readjustments linked to inflation. S&P believes CESP will continue generating strong funds from operations (FFO) of R$700 million - R$750 million in the next couple of years to service its debt and cover limited maintenance capital expenditures (capex), while it maintains high dividend payouts. The SACP revision reflects higher adjusted debt because of the widening pension plan deficit. Historically low interest rates in Brazil over the past few years dented the present value of the company's pension plan and the expected return on plan assets. Moreover, high inflation measured by IGP-M, which increased over 23% in 2020, remunerates part of the liabilities of CESP's defined benefit category plan, which S&P adjusts the net amount as debt. The company reported a R$2.45 billion deficit in the first quarter of 2021, following IFRS standards, up from R$837 million in the fiscal 2019. CESP is working on mitigating actions in order to narrow the deficit by offering beneficiaries the option of migrating from defined benefit to defined contribution category, given that in the latter plan, the company doesn't have legal obligations in case of actuarial deficits. The migration depends on approval from Brazil's National Complementary Welfare Superintendence (PREVIC) and the beneficiaries' acceptance. S&P's base-case scenario assumes a 15% adoption by the end of 2021. As a result, it now expects debt to EBITDA in the high 3x area and FFO to debt of about 20% this year. Commercial strategy to reduce hydrological risk. Throughout 2020 and in the first quarter of 2021, CESP purchased close to 95% of its energy requirements in 2021. S&P said, "We believe this is positive given the lower generation scaling factor (GSF) of 78% for this year, according to Câmara de Comercializaçao de Energia Eletrica (CCEE). In our view, this strategy limits exposure to potentially volatile spot prices, increasing predictability of the company's cash flows. Therefore, we expect CESP to maintain EBITDA margins at 50%-55%, compared with 52.9% in 2020, also thanks to cost-control initiatives, including the voluntary dismissal program completed in 2019." Judicial disputes are still ongoing. CESP is involved in litigations related to environmental and land disputes where its hydro plants are located, totaling approximately R$10.2 billion in contingent liabilities in April 2021, R$1.6 billion of which the company reports as likely. The company is focusing on reaching agreements to reduce the amount of such liabilities by creating a task force and hiring external counsel. Despite the sizable number of disputes, S&P doesn't expect a hit to the company's leverage or liquidity. This is because CESP not only has provisions for these claims, but also benefits from funds in escrow accounts to back such claims. In addition, CESP is suing the federal government over the indemnity of non-amortized investments in the company's previous concession, Tres Irmaos, which wasn't renewed under the Law 12,783/2013, in which the company claims the uncontested amount of at least R$1.7 billion. The litigation is still open following the April 27, 2021, rejection of CESP's appeal for the immediate receipt of the amount. S&P said, "The stable outlook on CESP reflects that on the sovereign, given our view that ratings on the latter limit those on the company. This is because of CESP's sensitivity to the domestic economy and because all of its assets and counterparties are located in the country. Consequently, the 'bb+' SACP, two notches above the issuer credit rating, provides a protection. "Given that we cap the ratings on CESP at the sovereign level, if we were to downgrade Brazil in the next 12 months, we could take a similar rating action on the company. We don't envision a scenario in the near term that could lead us to revise downward again the SACP. However, we could downgrade CESP if it pursues a more aggressive financial policy, leading to net debt to EBITDA consistently above 4.5x. "We don't expect an upgrade in the next 12 months, because the sovereign rating cap. Although we currently view an upward SACP revision as unlikely, we could do so if the company's adjusted debt drops, leading to debt to EBITDA below 2.0x on a consistent basis. That could happen as a result of much narrower-than-expected pension fund deficits." CESP is a Brazil-based electric power generation company that holds the concession of two hydroelectric power plants that operate under concession agreements, Porto Primavera with 1,540 megawatts (MW) of capacity until April 2049, and Paraibuna with 48 MW of installed capacity until September 2021. -- Inflation, which S&P links to power contract readjustments and general and administrative expenses, of 5.1% in 2021 and 3.9% in 2022. -- A GSF, which determines the company's level of energy delivery, of 78% in 2021 and improving to 82% in 2022, assuming more favorable hydrology conditions. -- Power acquired from third parties (the bulk of which are under short-term contracts made in advance) totaling 300 MW -350 MW in 2021, the majority of which is already set, and 150 MW - 200 MW in 2022. -- Annual maintenance capex of about R$20 million. -- Working capital requirements of about R$350 million in 2021 and R$250 million in 2022, half of which we assume will be used for covering contingent liabilities. -- No acquisitions or major investments. Dividends distribution of R$850 million, including interest on equity, in 2021, according to the company. Afterwards, S&P assumes at least a 50% dividend payout of previous year's net income. Starting in 2021, S&P adjusts 85% of the pension plan's deficit position, assuming the company will be able to migrate part of the current defined benefit plan beneficiaries to the defined contribution type. Based on these assumptions, S&P expects CESP to post the following credit metrics in 2021 and 2022: -- Adjusted EBITDA margins of 50%-55% in 2021 and improving to 55%-60% in 2022; -- Net debt to EBITDA in the high 3x area in 2021 and in the low 3x area in 2022; -- FFO to debt of about 20% in 2021 and in the mid-20% range in 2022; and -- EBITDA cash interest around 6.0x. S&P said, "In our view, CESP's liquidity remains adequate. We expect cash sources to exceed uses by more than 20% in the upcoming 12 months, and the difference between sources and uses to remain positive in the same period, even if EBITDA were to be 15% lower than in our base-case scenario. We believe CESP will continue generating sound cash flows to service its debt, and cover maintenance capex and working capital requirements, while remunerating shareholders with dividends." Principal Liquidity Sources -- position of R$870 million as of March 31, 2021; and -- Expected operating cash flows after interest and taxes of about R$680 million in the next 12 months. Principal Liquidity Uses -- Short-term debt of R$5.4 million as of March 31, 2021; -- Working capital outflows of up to R$300 million in the next 12 months; -- Annual maintenance investments of about R$20 million in the next 24 months; and -- Dividend and interest on equity payment of R$850 million in 2021, as CESP recently announced. CESP is not subject to financial covenants. S&P said, "Environmental and social aspects are relevant to our analysis on CESP. Porto Primavera is a hydroelectric plant with a large reservoir, which is surrounded by the riparian forest, which requires preservation efforts in order to avoid erosion and other impacts to the company's operations, and to meet the safety standards as required by the regulator. Also, CESP is a party to legal proceedings related to environmental and land disputes of the hydro dams in its portfolio. While management is focusing on reaching agreements to reduce the amount of contingent liabilities, we don't expect its leverage or liquidity to suffer because CESP has set aside provisions for these claims and benefits from funds held in escrow accounts to back such claims." CONCESSIONARIA MOVE: Acciona Takes Over Tunnel Job -------------------------------------------------- Peter Reina at enr.com reports that Madrid-based Acciona S.A. is picking up the pieces of a failed Brazilian contract to build the Sao Paulo metro's sixth line, "Orange," under the region's largest public-private partnership. The company inherited the 15.3-kilometer tunnel project, which had been mothballed since 2016, along with Chinese-built tunnel-boring machines (TBMs) from a maker that is now out of business, according to enr.com. Acciona S.A., is mobilizing work along the Orange line's 9.4-meter-dia. twin-track, single-bore tunnel that will connect 15 new underground stations from Vila Brasilandia in the north, to Sao Joaquim in the south, the report notes. With stations as deep as 69 m, depth of construction and the need to fast-track work on multiple fronts are major challenges, says project director Lucio Matteucci, the report relays. Acciona must deliver the working system under a five-year design-build contract with a special-purpose company, which it created and controls, the report notes. The company, Concessionaria Linha Universidade (CLU), took over the project's P3 agreement from the troubled original consortium last October, the report recalls. CLU's deal with the Sao Paulo state government includes procuring rolling stock and maintaining the infrastructure for 19 years, the report says. Acciona is picking up from the original project company, Concessionaria Move Sao Paulo S.A. (Move), which halted work in September 2016, the report recalls. It had completed about 10% of the total construction after 19 months' work, according to a Sao Paulo state government spokesman, the report notes. Move was controlled by three contractors, with Odebrecht Transport S.A. and Grupo Queiroz Galvao S.A. holding around 20% each and UTC Engenharia S.A. with just over 13%. Financial investors controlled the balance, the report notes. As sole bidder for the contract, Move signed its 25-year P3 agreement in December 2013, which went into effect the following May, the report relays. The project was then valued at $1.9 billion, which was to be financed equally by the state and Move, the report notes. Within a year of starting excavation in March 2015, Move had built the tunnel lining precasting facility and made enough segments for 1.5 km of tunnel, the report notes. The then state governor Geraldo Alckmin announced the planned launch of the first TBM that September, followed by the second machine in early 2017, the repotr saus. But after completing the TBMs' 32-m-deep launch shaft by the River Tiete south of Freguesia do O station, in September 2016 "Move. . . . reported the complete stoppage of civil works, alleging difficulties in obtaining long-term financing from the National Bank for Economic and Social Development," says the state spokesman, the report says. In a statement, Odebrecht's auditor Grant Thornton blamed Move's financing difficulties partly on government delays in land expropriations, the report notes. However, Move's financing woes have been connected with charges of widescale corruption in public contracts against Odebrecht and others at the time, the report discloses. The official investigation, called "Car Wash" (Operacao Lava Jato in Portuguese) resulted in the arrest of the company's CEO Marcelo Odebrecht in June 2015 and his imprisonment the following March, the report relays. In 2018, the process of terminating the concession agreement started, with an August 2019 deadline. But rather than rebidding the deal, the government looked for another company to buy the concession agreement from Move, the report notes. "This meant that there was no expense. . . . or the need to have other resources to take over the paralyzed enterprise," explains the state spokesman. Postponing the termination until February 2020, the state negotiated with various interested groups, including an unsuccessful one led by China Railway Engineering Corporation Ltd, the report notes. Meeting all the requirements, Acciona won the right to take over the concession and outlined terms with Move, to whom the state had paid $131 million for completed civil construction, says the spokesman, the report relates. Move paid the state a penalty of $9.6 million and, received reportedly around $40 million from Acciona. Until CLU took over, Move was caretaker of the idle sites, the report discloses. Under CLU's concession agreement signed last October, Sao Paulo state will pay for about one-third of the project's $2.8 billion total cost, including rolling stock, according to Acciona. CLU will finance the balance with equity invested by its shareholders and non-recourse commercial loans, the report says. Acciona was CLU's sole shareholder until this January, when the France-based investment fund STOA S.A. took a 12.3% holding, committing $60 million for construction, the report notes. STOA also helped shape the contract "to international project finance standards and suited to welcome a non-recourse long-term financing," noted the fund's CEO Charles-Henri Malecotm the report says. While CLU looks for co-investors to complete its equity and debt, it is relying on short term loans to finance Acciona as the contractor builds up activity at 10 sites, says Matteucci, the report notes. Acciona will excavate 10 stations with sprayed concrete lining method while five stations in hard rock will also require drill and blast, the report says. Shallower areas will be in cut-and-cover. Of the 18 large shafts, the contractor will begin sinking the deepest one, the 62 m x 13 m dia. Mato Grosso, next April. All this "highly synchronized advance" depends on getting the two mothballed TBMs into action, according to Acciona. But not even this task is simple, the report notes. Since supplying the 10.55-m-dia earth pressure balance (EPB) machines to Move, France-based NFM Technologies quit the business of TBM manufacture, the report recalls. The company was acquired in 2018 while in court protection after its owner Northern Heavy Industries Group Co., Ltd. hit financial difficulties, the report says. NFM's German buyer itself then fell on hard times, ultimately leaving the company in the hands of the French BMS Group last September, the report notes. Now named NFM Engineering, the company offers tunneling advice, site support and machine spares for its few TBMs still in operation, including the Sao Paulo pair, says design manager Julien Bouilloux, the report relays. While NFM will be a source of spares for Acciona's machines, the contractor has hired the German TBM maker Herrenknecht A.G., to upgrade the Sao Paulo units and get them working, says Matteucci. He expects the southern TBM to set off late this year, followed by the northern machine early in 2022, five years after originally planned, the report discloses. While reviving the metro sites, Acciona has assembled a workforce of about 1,000, says Matteucci, the report relays. And as it winds down work on its tunnel contract on Ecuador's Quito metro, the company is transferring employees to Sao Paulo, the report says. By this year's end, Matteucci expects the Orange line's workforce to reach 4,000, when more than 30 sites will have swung into operation, the report adds. ELDORADO BRASIL: Moody's Hikes CFR to B1 & Alters Outlook to Stable ------------------------------------------------------------------- Moody's Investors Service upgraded to B1 from B2 the Corporate Family Rating of Eldorado Brasil Celulose S.A. The outlook was changed to stable. This action concludes the review of the rating that was initiated on February 11, 2021. Moody's had placed Eldorado's ratings on review for downgrade because of the high refinancing risk - as of December 2020, Eldorado had about BRL5.6 billion, or over 70% of its total debt, due until the end of 2021, including its $350 million senior unsecured notes due in June 2021. On May 11, 2021, Eldorado announced that the Board has approved the contracting of debt instruments which will improve the company's liquidity and allow the company to amortize the upcoming bond maturity. Upgrades: Issuer: Eldorado Brasil Celulose S.A. Corporate Family Rating, Upgraded to B1 from B2 Outlook Actions: Issuer: Eldorado Brasil Celulose S.A. Outlook, Changed To Stable From Rating Under Review RATINGS RATIONALE The upgrade of Eldorado's CFR to B1 reflects the substantial decrease in refinancing risk as the company will be able to amortize the $350 million senior unsecured notes due in June 16, 2021 with new bank debt raised in May 2021. The debt refinancing will remove immediate liquidity pressures. The stable outlook reflects the expectation that, once the shareholders dispute is resolved, the company will be able to extend debt maturities. Eldorado's credit profile continues to incorporate the company's strong operating performance and low-cost profile, which better positions the company to withstand the volatility in pulp prices. Eldorado has the lowest-cost operation in the global pulp industry and has been able to maintain average EBITDA margins of around 55% since 2015. Governance factors are important elements of Eldorado's credit quality and rating, as the dispute between the company's shareholders (J&F and Paper Excellence) weighed on the company's financial strategy and has led to an unbalanced capital structure with a high concentration of debt in the short-term, since Eldorado was not able to fully implement its liability management strategies as a result of disagreements between shareholders on these initiatives. The rating is also constrained by Eldorado's susceptibility to event risk driven by its single-plant nature and limited operational diversity. Moody's believes that Eldorado's ability to control input costs through its vertically integrated production process partially compensates for the risk of operating primarily in a single commodity product and in a single location. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING An upward rating movement would require Eldorado to further improve its liquidity profile and capital structure by reducing short term debt and extending maturities, while maintaining its competitive cost position and further reducing leverage. A resolution of the dispute between the company's shareholders is an additional consideration for an upgrade. Moreover, an improvement in its interest coverage, with adjusted EBITDA/interest expense above 4x and positive free cash flows on a sustained basis are required for a positive rating action, together with cash flows diversification by source (different segments) and/or geography (asset location). Inability to refinance 2021-2022 debt maturities, with further deterioration of its liquidity profile, could result in a multiple-notch downgrade. The rating could suffer negative pressure if Eldorado is not able to improve its liquidity profile and debt maturities remain concentrated in the short-term, or debt levels increase, with leverage, measured as total adjusted debt/EBITDA, trending towards 4.5x or above, and interest coverage, measured as adjusted EBITDA/interest expense, stays below 3.5x for a prolonged period. A significant deterioration in the company's operating performance, with negative free cash flow generation would exert negative pressure on the rating or outlook. The principal methodology used in this rating was Paper and Forest Products Industry published in October 2018. Headquartered in São Paulo, Brazil and with operations in Tres Lagoas, Mato Grosso do Sul, Eldorado Brasil is a key player in the global pulp markets, with a nominal capacity of 1.5 million tons of hardwood pulp and very competitive cash cost, supported by an extensive forest base of more than 230,000 hectares in the state of Mato Grosso do Sul. Eldorado started operations in December 2012 and reported revenues of BRL4.4 billion in 2020. ========= C H I L E ========= CHILE: Locals Drain $10B++ From Pension Funds Due to Pandemic ------------------------------------------------------------- Dave Sherwood at Reuters reports that Chileans flocked for a third time to withdraw money from their retirement funds last week, draining nearly $10 billion from the country's privatized pension system in a move some billed as a lifeline amid a fierce second wave of the coronavirus pandemic. Chile's Congress in late April approved a bill allowing citizens a third opportunity to withdraw 10% of savings held in privately held pension funds, according to Reuters. Many Chileans have already twice tapped their funds since the pandemic struck in March last year, hobbling a system once hailed by free-market economists worldwide, the report notes. The report relays that more than 5.5 million Chileans -- more than one-quarter of the population -- had sought a third payout, averaging around $2,000 per person, according to Chile's Pension Superintendency. Ives Ghetto, a 61-year-old unemployed baker from Santiago told Reuters his funds had gone directly to feeding his family. "Straight into the cooking pot," he said as he waited in line on a cool fall afternoon for an additional unemployment payment. "We have no choice," the report discloses. The center-right government of Sebastian Pinera has opposed raids on Chile's privately held funds, the cornerstone of its capital markets, arguing they diminish already paltry payouts in the long-term, the report notes. He has instead rolled out more than $12 billion worth of subsidies in stimulus, the report says. But critics say government aid has been mired in bureaucracy and is difficult to access. The pension withdrawals "are like selling your refrigerator to buy food, that is, you are not improving your situation, you are actually making it worse," said Vicente Espinoza, a Chilean sociologist and researcher, who called the withdrawals "bad public policy" in the long-term, the report relates. "But to the extent that government policies have obstacles or struggle to reach the people who really need it, it is the only alternative available," the report relays. More than 22 million people across Latin America fell into poverty in 2020, according Economic Commission for Latin America and the Caribbean, and the hard-hit region continues to see soaring cases and deaths from the coronavirus, the report adds. =============== C O L O M B I A =============== CREDIVALORES CREDISERVICIOS: Fitch Affirms B+ Foreign Currency IDR ------------------------------------------------------------------ Fitch Ratings has affirmed Credivalores Crediservicios S.A.'s Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The rating has been removed from Rating Watch Negative, and a Negative Outlook assigned to the Long-Term IDR. In addition, Fitch has affirmed Credivalores' Short-Term IDR at 'B'. The Negative Watch on Credivalores' 'B+'/'RR4' senior unsecured debt rating was also removed and the rating affirmed. Credivalores' ratings were placed on Negative Watch in May 2020, reflecting the short-term risks mainly arising from the credit card business. The removal of the Negative Watch from the Long-Term IDR reflects Fitch's assessment of the company's asset quality, which has stabilized and is expected to remain commensurate with the rating category due to the action taken by Credivalores to control credit card portfolio deterioration. The Negative Outlook signals downside potential over the medium term due to sustained pressures on the operating environment and the high tangible leverage impacted by the weak profitability and higher appetite for growth. KEY RATING DRIVERS Credivalores' IDRs are highly influenced by the company's profile and concentrated nature within the Colombian financial system. Despite its small size, the company benefits from its role as one of the largest non-bank financial institutions in Colombia engaged in consumer lending to the low- to mid-income population. The ratings also consider, as high influence factors, the company's modest profitability and high leverage. At the same time, the ratings also incorporate the company's good funding flexibility and adequate liquidity to confront current challenges from the operating environment. During the past two years, Credivalores imposed a series of measures including tighter underwriting and collection policies, along with technological and system improvements that helped its asset quality metrics show a lower-than-anticipated impact despite the effects the coronavirus pandemic. At June 30, 2020, nearly 64% of the company's managed credit card portfolio was under forbearance programs, as encouraged by the government to mitigate the economic crisis. The company announced the end of the forbearance program in September, with the latest loans under relief expiring in October. By December, this percentage fell to only 1.4% for all types of credit. Although some additional deterioration may be seen in the coming months from delayed effects from forbearance, Fitch believes asset quality will remain commensurate to the rating category. Asset quality remains a challenge, as the impaired loans over 60 days to total loans ratio at YE 2020 was at 13.5% (higher than the 11.8% at YE 2019, although lower than the ratios seen at YE 2018). The overall loan loss coverage ratio remains satisfactory at nearly 120%. The company has focused on increasing its credit card origination in lower-risk super prime and prime segments to benefit its asset quality and profitability metrics. Credivalores' profitability is the weakest link for the rating. Pre-tax income to average assets stood at a very low 0.3% as of YE 2020. For the remainder of 2021, Fitch expects profitability to remain slightly above break even by the end of the year, due to the challenging operating environment, and as the company works to improve its asset quality metrics through a more conservative risk appetite. However, the company's growth plans and efforts to rebuild its profitability remain subject to any resurgence of the pandemic. Over the medium term, Fitch believes profitability will continue to be weak. Fitch's ratings also consider Credivalores' relatively higher leverage ratios for its concentrated and higher-risk business model. Fitch believes leverage could be pressured if profitability fails to improve, or if projected loan growth is not accompanied by capital injections. Tangible leverage stood at a 7.9x as of YE2020, which was worse than the 7.2x at YE 2019. Although the funding profile is wholesale and confidence sensitive, Credivalores' current funding and liquidity metrics remain a strength for the rating with average maturity tenors of close to 2.7 years, and comfortable 85% ratio of unsecured debt to total debt. The company has been able to maintain diverse sources of funding from both domestic and foreign lenders, which supported recent credit portfolio growth of 22%. As recently as April 28, Credivalores placed a USD50 million Euro commercial paper note through October 2022 to partially support further loan portfolio growth and for general corporate purposes, including refinancing of outstanding financial obligations. Sources of funding appear quite adequate to cover upcoming 2021 and 2022 debt amortizations. A Recovery Rating of 'RR4' indicates an 'Average' recovery prospect in the unlikely event of a default. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Credivalores' IDRs could be downgraded if there is an increase in tangible leverage, measured as debt/tangible equity adjusted by the temporary effects from assets and derivatives valuation delivering further pressure to levels sustainably above 8.5x, or if profitability metrics deteriorate, measured as negative pre-tax income to average assets, that reduces the company's ability to absorb unexpected losses. Ratings continue to be sensitive to significant changes in Credivalores' company profile. -- The company's senior unsecured debt rating is expected to move in line with the Long-Term IDR. Factors that could, individually or collectively, lead to a positive rating action/upgrade: -- The Rating Outlook for Credivalores' Long-Term IDR is currently Negative. This could be revised to Stable if the company is able to show an improvement in its profitability and asset quality metrics while reducing the pressures on its tangible leverage metrics. -- Ratings could be upgraded by the confluence of a relevant improvement in asset quality, earnings and tangible leverage, together with an improvement of the operating environment. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond 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. 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. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Retailers Will Assume Price Up of Basic Needs ----------------------------------------------------------------- Dominican Today reports that Dominican merchants, representatives of supermarkets and grocery stores, committed with the National Institute for the Protection of Consumer Rights (Pro Consumidor) to assume the price increases registered in the last few weeks in the articles of the family grocery basket. According to a press release, the agreement was made with the executive director of Pro Consumidor, Eddy Alcantara. "The commitment of the sector, represented by the president of FCD, Ivan Garcia, will be until the productive parties address the issue with the President of the Republic, Luis Abinader, on the situation occurring in the international market with the increase of raw materials of some products manufactured in the country. "The commercial sector is going to assume any increase that occurs in the coming weeks in the articles of the family grocery basket until the government can address that issue and seek a solution or a way out if they exist to try to produce some effect on the national market that does not affect the country's consumers," Alcantara said at the end of the meeting held at the headquarters of the entity. Meanwhile, the Dominican Federation of Merchants president explained: "We reached this agreement with the director of Pro Consumidor to benefit the almost 11 million consumers of the Dominican Republic." The report notes that Garcia took the opportunity to call on all merchants to respect this agreement and assume these price increases. "Demonstrating that we as a sector are committed to increase every day the purchasing power of the Dominican people and not to diminish it by the increases that have occurred in this month of May," he added. The meeting was also attended by Dionisio Quinones, from the National Union of Economic Supermarkets (Unase); Williams Lantigua, from the Association of United Merchants of the municipality of Santo Domingo Norte, as well as Teodoro Adon, Benito Martínez, Milcíades Tejeda, Rafael Solano, Raquel Minier, among others. 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, 2021, 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: Scrambles to Avert Tax Hikes ------------------------------------------------ Dominican Today reports that the Dominican government is making efforts to achieve income levels to surmount the crisis without taking measures that force it to go through Congress. The Administrative Minister of the Presidency, Ignacio Paliza, points out that government technicians are analyzing whether it is advisable to carry out a tax reform, an mandate that is contained in the National Development Strategy and that was reactivated by President Luis Abinader in October, but of which so far there are no signs of progress, according to Dominican Today. "(The tax reform) is an issue that government technicians, when the time comes, if it actually comes, will have to establish a position and make known the vision on this issue," 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, 2021, 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). =============== H O N D U R A S =============== INVERSIONES ATLANTIDA: Fitch Rates New Secured Notes 'B(EXP)' ------------------------------------------------------------- Fitch Ratings has assigned an expected Long-Term rating of 'B(EXP)/RR4' to Inversiones Atlantida, S.A. y Subsidiarias' (Invatlan) proposed senior secured notes. The assignment of a final rating is contingent upon the receipt of final documents conforming to information already received by Fitch. The proposed senior notes would be for an amount up to USD300 million due 2026, with semi-annual interest payments and the principal will be paid on the maturity day. The proceeds of this issuance will be used to redeem the USD150,000,000 aggregate principal amount plus accrued interest of the outstanding senior secured notes on July 28 2021, and for general corporate purposes, including selected investments and expansion of the financial services and related businesses. Invatlan may redeem the proposed notes, in whole or in part, at any time, on or after May 2023 at certain pre-defined redemption prices. KEY RATING DRIVERS The expected rating of 'B(EXP)' reflects that these notes are senior obligations of Invatlan that rank pari passu with all of the existing and future indebtedness of the issuer that is not subordinated to the notes. Therefore, this rating is aligned with the company's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'B'. The recovery rating of 'RR4' assigned to Invatlan's senior debt issuance reflects the average expected recovery in case of company liquidation. The notes are secured by a pledge by Invatlan of non-traded shares of common capital stock of an insurance company subsidiary in Honduras and a reserve for interest rate payments. Despite being senior secured, in Fitch's view, the shares pledged would not have a significant impact on recovery rates. Based on the agency's assessment of the default risk/recovery prospects, the issuance has average recovery prospects. On Jan. 22, 2021, Fitch affirmed Invatlan's ratings. The outlook of the Long-Term IDRs is Negative. Invatlan's IDRs reflect the creditworthiness of its main subsidiary, the Honduran Banco Atlantida (Atlantida), rated 'B+'/Negative. The ratings also consider Invatlan's high operational integration with its subsidiaries, mostly with those considered as the most representative in the group (whether in terms of assets or profitability) and extensive track record as part of Invatlan, such as Atlantida. As of December 2020, the double-leverage ratio remained above 120% and could increase according to the use made of the proceeds of the issuance. However, Fitch estimates that would be commensurate at its current ratings levels. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- The rating of the senior notes would be upgraded if Invatlan's IDR is upgraded. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- The rating of the senior notes would be downgraded if Invatlan's IDR is downgraded. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond 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. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS Invatlan's proposed senior secured notes rating is linked to Invatlan's IDR. ESG CONSIDERATIONS Invatlan has an ESG Relevance Score of '4' for Financial Transparency due to an improvement in the clarity and timing in delivering the most updated financial information and qualitative attributes, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ============= J A M A I C A ============= EVERYTHING FRESH: Incurs 27.6 Million Net Loss for Q1 ----------------------------------------------------- Radio Jamaica News reports that Everything Fresh has recorded a recorded a net loss of $27.6 million for the first quarter of 2021. The company said it took a strategic decision to reduce its reliance on the hotel sector due to the pandemic, according to RJR News. This shift saw its sales to restaurants and supermarkets increasing by 71 per cent, the report notes. Sales to the hotel sector represented 35 per cent of its sales down from 80 per cent the prior year, the report relays. SUGAR COMPANY: To Divest More Land Under Bernard Lodge Development ------------------------------------------------------------------ RJR News reports that Sugar Company of Jamaica (SCJ) Holdings Limited will, this year, collaborate with the Development Bank of Jamaica (DBJ) to divest an additional eight parcels of land under the Greater Bernard Lodge Development Master Plan. According to the 2021/22 Public Bodies Estimates of Revenue and Expenditure, SCJ Holdings will continue to manage the relocation of farmers/investors and provide assistance to those who have been displaced, the report notes. SCJ Holdings will also seek to manage and facilitate access to lands to support productive activities, including agro-processing; new industries, such as cannabis, bamboo and castor beans; and youth and women in agriculture, according to RJR News. The company projects a net profit of $355.6 million from the engagements, some $228.74 million more than the out-turn for 2019/2020, the report adds. The Sugar Company of Jamaica Holdings Limited, a.k.a. SCJ, was formed in November 1993 by a consortium made up of J. Wray & Nephew Limited, Manufacturers Investments Limited and Booker Tate Limited. The three companies each held 17% equity in SCJ, with the remaining 49% being held by the government of Jamaica. In 1998, the government became the sole shareholder of SCJ by acquiring the interests of the members of the consortium. Its stated goal was to maximize efficiency, productivity and profitability of the three sugar factories, within three years. The principal activities of the company are the cultivation of cane and the manufacture and sale of sugar and molasses. * * * As reported in the Troubled Company Reporter-Latin America in August 2010, RadioJamaica said that the Jamaican government and Complant International Sugar Company has closed the deal on the sale of SCJ's three remaining state-run sugar factories -- Bernard Lodge, Monymusk and Frome Sugar -- to the Chinese firms. According to the report, the government will collect US$774 million from the sale of SCJ's assets. The report noted Dr. Christopher Tufton, Minister of Agriculture, said that Complant International will immediately begin taking control of some of the sugar assets. TCRLA reported in June 2009, that the Jamaica Gleaner said that Agriculture and Fisheries Minister Christopher Tufton said that if a new deal is not inked soon for the divestment of SCJ's factories, the public will be called on again to plug a projected US$4.2 billion hole -- representing a US$2 billion operational loss, and bank penalties -- apparently from continuous hefty overdrafts. The loss was incurred by the SCJ's four factories during the 2008/2009 season. The Gleaner related the enterprise has a US$21-billion debt and losses totaling more than US$14 billion since 2005. ===================== P U E R T O R I C O ===================== ASCENA RETAIL: US Trustee Asks Court to Put Part of Plan on Hold ---------------------------------------------------------------- Law360 reports that the U.S. Trustee's Office asked a Virginia bankruptcy judge on May 13, 2021, to put a portion of the already-approved Chapter 11 plan of former Ann Taylor owner Ascena Retail Group on hold while it appeals the plan's litigation releases. Counsel for the trustee argued at a hearing conducted virtually that there is a reasonable chance another court will overturn U.S. Bankruptcy Judge Kevin Huennekens' finding that the releases are permissible. But Judge Huennekens questioned the argument that a stay on the releases could be done without disrupting payments to Ascena's creditors. "How do we just redline something out without affecting everybody else? " he asked. About Ascena Retail Group Inc. Ascena Retail Group, Inc. (Nasdaq: ASNA) is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion (Dressbarn) segments, and for tween girls under the Kids Fashion segment (Justice). Ascena, through its retail brands, operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico. Visit http://www.ascenaretail.com/for more information. Ascena Retail reported a net loss of $661.4 million for the fiscal year ended Aug. 3, 2019, a net loss of $39.7 million for the year ended Aug. 4, 2018, and a net loss of $1.06 billion for the year ended July 29, 2017. On July 23, 2020, Ascena Retail Group and its affiliates sought Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of Feb. 1, 2020, Ascena Retail had $13,690,710,379 in assets and $12,516,261,149 in total liabilities. The Hon. Kevin R. Huennekens is the case judge. The Debtors tapped Kirkland & Ellis LLP and Cooley LLP as bankruptcy counsel, Guggenheim Securities, LLC, as financial Advisor, and Alvarez and Marsal North America, LLC as restructuring advisor. Prime Clerk, LLC, is the claims agent. * * * In September 2020, FullBeauty Brands Operations, LLC, won an auction to acquire Ascena's Catherines intellectual property assets for a base purchase price of $40.8 million and potential upward adjustment for certain inventory. In November 2020, Ascena won approval to sell the intellectual property of its Justice Brand and other Justice brand assets to Justice Brand Holdings LLC, an entity formed by Bluestar Alliance LLC (a leading brand management company), for $90 million. The Company continues to operate its Ann Taylor, LOFT, Lane Bryant, and Lou & Grey brands as normal through a reduced number of retail stores and online. SEARS HOLDINGS: Vendors Ask Court to Reject Professional Fees Hike ------------------------------------------------------------------ Law360 reports that a group of Sears Holdings' post-Chapter 11 vendors is asking a New York bankruptcy court to reject the company's request to increase the fees it's paying the firms working on its clawback claims, saying payments to vendors should come first. In a pair of motions filed May 13, 2021, the vendors argued Sears should not be increasing professional fees while vendors -- some of which accepted a cram down of their claims in hopes of being paid earlier -- wait for their payments. Sears declared bankruptcy in October 2018. ESL Holdings, a firm owned by former Sears CEO Edward Lampert, bought 425 Sears. About Sears Holdings Corp. Sears Holdings Corporation (OTCMKTS: SHLDQ) -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be is a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings has left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. At that time, the Company employed 68,000 individuals, of whom 32,000 were full-time employees. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets, $11.33 billion in total liabilities and a total deficit of $4.40 billion. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as investment banker; DLA Piper LLP as real estate advisor; and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors, including the Pension Benefit Guaranty Corp., and landlord Simon Property Group, L.P., to serve on the official committee of unsecured creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP as legal counsel; FTI Consulting as financial advisor; and Houlihan Lokey Capital, Inc. as investment banker. The U.S. Trustee for Region 2 on July 9, 2019, appointed five retirees to serve on the committee representing retirees with life insurance benefits in the Chapter 11 cases. * * * In February 2019, Bankruptcy Judge Robert Drain authorized Sears Holdings approval to sell the business to majority shareholder and CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL Investments, Inc., won an auction to acquire substantially all of Sears' assets, including the "Go Forward Stores" on a going-concern basis. The proposal would allow 425 stores to remain open and provide ongoing employment to 45,000 employees. ********* 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 * * *