/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210621.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, June 21, 2021, Vol. 22, No. 117 Headlines A R G E N T I N A GENERACION MEDITERRANEA: Moody's Assigns Caa3 CFR, Outlook Neg. B R A Z I L ELETROBRAS: Senate Approves Privatization Bill GOL LINHAS: S&P Alters Outlook to Stable & Affirms 'CCC+' ICR HIDROVIAS DO BRASIL: Fitch Affirms 'BB' LongTerm IDRs C O L O M B I A BARRANQUILLA: Fitch Cuts LongTerm IDRs to BB+, Outlook Negative D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Labor Unions Want a 40% Wage Hike J A M A I C A MAIN EVENT: Incurs $27.6 Million in Losses P U E R T O R I C O CB REAL ESTATE: Case Summary & 3 Unsecured Creditors X X X X X X X X [*] BOND PRICING: For the Week June 14 to June 18, 2021 - - - - - ================= A R G E N T I N A ================= GENERACION MEDITERRANEA: Moody's Assigns Caa3 CFR, Outlook Neg. --------------------------------------------------------------- Moody's Investors Service has assigned a Caa3 corporate family rating to Generacion Mediterranea S.A (Gemsa) and affirmed Gemsa's senior unsecured ratings. At the same time Moody's withdraws Albanesi S.A. (Albanesi)'s Caa3 corporate family rating. The outlook for all ratings is negative. Approximately $336 million of debt instruments affected. The rating action reflects the group's ongoing corporate structure reorganization by which Gemsa will incorporate the group's holding company Albanesi, which in turn will cease to exist. With the completion of this transaction Gemsa will become an operating-holding company, consolidating the all the group's investments that were previously held under Albanesi. Assignments: Issuer: Generacion Mediterranea S.A Corporate Family Rating, Assigned Caa3 Affirmations: Issuer: Generacion Mediterranea S.A Senior Unsecured Regular Bond/Debenture, Affirmed Caa3 Withdrawals: Issuer: Albanesi S.A. Corporate Family Rating, Withdrawn, previously rated Caa3 Outlook Actions: Issuer: Generacion Mediterranea S.A Outlook, Remains Negative Issuer: Albanesi S.A. Outlook, Changed To Rating Withdrawn From Negative RATINGS RATIONALE The Caa3 ratings and negative outlook incorporates Moody's view of Gemsa's relatively weaker asset's position relative to peers, given that most of its power fleet operates open cycle thermal plants that have an average contractual life of 4.5 years, also shorter than peers. Importantly, 30% of its contracted capacity expires in the next 12 months, which diminishes its long-term cash flow predictability. This is relevant because in 2023 the company will need to refinance approximately $400 million of debt, including the $336 million notes while it faces a potential significant reduction in revenues if expiring contracts are not renewed or are renewed at lower prices. Additional revenues from its planned expansion are also uncertain, given the significant delay of its investment plan due to the lack of adequate financing. The consent solicitation launched by the company seeking for bondholders' consent to enter additional debt to finance the pending expansion is a positive move in order to improve the company's competitive position and future cash generation but the terms of the financing are still unclear. Execution risks and incremental leverage are also incorporated in the negative rating outlook. The credit profile also incorporates the company's tight liquidity, considering concentration of debt in the short term. Although the company improved its debt profile thanks to the debt exchange performed at the end of last year and liability management transactions earlier this year, short term debt remains high. Moody's anticipates that the company will need to roll over about 40% of its debt maturities due in 2021 and 2022 that amount to approximately $170 million. The company has historically been able to manage well debt maturities and has good access to the local debt markets but under current market conditions, Gemsa refinancing needs could be more challenging. The ratings continue to be constrained by the exposure of the company to Cammesa, the agency controlled by the Argentine government (Government of Argentina, Ca, Stable) that manages the wholesale electricity market and Gemsa's main off-taker. Given the recent history of government intervention in the electricity market and Cammesa's increased reliance on government transfers Moody's believe other downside risks persist, including the potential risk of unilateral change to the PPA contract's terms and conditions and additional delays in cash settlements. In addition, Albanesi's debt is mostly dollar denominated and while contractual revenues are also dollar-denominated providing a natural hedge, Cammesa payments are made in pesos at the official exchange rate, which exposes bondholders to convertibility risks RATING OUTLOOK The negative outlook mainly reflects the company's tight liquidity and Moody's view of uncertain long-term cash flow prospects. The negative outlook also reflects the uncertainties related to the company's expansion plan that will lead to incremental debt and associated execution risks. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook and the company's exposure to Cammesa, an upgrade of the ratings is unlikely. The outlook could be revised to stable if the company is able to secure additional revenues while it improves its liquidity and debt profile. Effective progress in completing the planned capacity expansion financed on a long term basis could contribute to an outlook stabilization. The rating can be downgraded if Gemsa is not able to improve its liquidity such its debt structure is more aligned with its cash flow generation. Quantitively, a ratio of interest coverage (FFO+Interest to Interest) below 1.5 times and cash from operations (CFO pre-WC) to Debt below 8% could lead to a rating downgrade. PROFILE Generacion Mediterranea S.A is an operating-holding company that owns and operates 1350MW of power capacity, 950MW on its own and 450MW through its subsidiaries, Central Termica Roca S.A., Solalban Energia SA and Generacion Rosario SA. Generacion Mediterranea become the holding company for the Albanesi's group after the corporate reorganization by which it absorbed Albanesi S.A. With the completion of this transaction Albanesi S.A. will no longer exist and Generacion Mediterranea S.A (Gemsa) will become an operating-holding company. As an operating company Gemsa owns and operates 950 MW of power capacity divided among 6 different; as a holding company Gemsa operates additional 450MW of power capacity of its controlled subsidiaries. The principal methodology used in these ratings was Unregulated Utilities and Unregulated Power Companies published in May 2017. =========== B R A Z I L =========== ELETROBRAS: Senate Approves Privatization Bill ---------------------------------------------- Ricardo Brito at Reuters reports that Brazil's Senate voted to approve the basic text of a bill allowing the privatization of state-controlled energy giant Eletrobras, but the measure must return to the lower house for final passage due to changes made by senators. The legislation would privatize Latin America's biggest power utility, known formally as Centrais Eletricas Brasileiras SA, by floating shares on the stock market, with the state relinquishing control by diluting its current 61% stake, according to Reuters. Brazil's government expects to raise roughly 25 billion reais (US$4.95 billion) from the share sale, the report notes. The proceeds will go to the Treasury to pay for the renewal of concessions for Eletrobras hydroelectric plants and transmission lines, the report relays. The government will retain a golden share to veto hostile takeovers and other strategic threats, the report discloses. Lower house Speaker Arthur Lira has called an extra session on June 14 to vote on the bill, the report says. The privatization of Eletrobras, proposed by President Jair Bolsonaro, has met with opposition from politicians, mainly on the left, the report notes. To win support, Congress added provisions including the mandatory commission of gas-fired thermoelectric plants in key regions that critics said would push up electricity prices, the report relays. The Senate version passed on June 17 increased the thermal gas plant requirement to 8,000 MW from 6,000 MW to include regions closer to where gas is produced, reducing imports, the report discloses. The plants would be built under 30-year private concessions, the report relays. Senator Marcos Rogerio, who presented the changes, said the thermal plants would not increase the cost of energy, the report relays. He rejected an amendment extending subsidies for coal-fired power generation, the report notes. Mines and Energy Minister Bento Albuquerque said the privatization was vital for Brazil at a time when it is facing the threat of electricity rationing due to the worst drought in nearly a century, the report says. "The capitalization of Eletrobras will mean rates will not rise in 2022 and consumers will have better services due to more investments," Albuquerque said in an interview on GloboNews, the report adds. About Eletrobras Eletrobras (NYSE: EBR) or Centrais Eletricas Brasileiras S.A. -- eletrobras.com -- is a major Brazilian electric utilities company. It is Latin America's biggest power utility company, having a generating capacity of about 43,000 MW. The company holds stakes in a number of Brazilian electric companies and employs more than 25,000 people. The Brazilian federal government owns 52% stake in Eletrobras. The company was founded in 1962 and is based in Rio de Janeiro, Brazil. Its subsidiaries include Eletrobras Distribuicao Acre; Eletronorte (Centrais Eletricas do Norte do Brasil SA); Eletrobras Electropar; CHESF (Companhia Hidro-Eletrica do Sao Francisco; Sao Francisco's Hydroelectric Company); and Eletrobras CGTEE. Moody's upgraded Eletrobras' ratings to Ba2 from Ba3, including the company's senior unsecured debt and corporate family rating (CFR), in September 2020. S&P Global Ratings affirmed its 'BB-' global scale issuer credit and issue-level ratings on Eletrobras in March 2021. As for Fitch Ratings, it recently affirmed (in early June 2021) Eletrobras' Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and outstanding senior unsecured bond ratings at 'BB-'. Fitch's National Scale ratings of Eletrobras, its rated subsidiaries and their outstanding local debentures ratings were also affirmed at 'AA(bra)'. The Outlook is Negative for the IDRs and Stable for the National Scale ratings. GOL LINHAS: S&P Alters Outlook to Stable & Affirms 'CCC+' ICR ------------------------------------------------------------- S&P Global Ratings revised the outlook on Brazilian airline Gol Linhas Aereas Inteligentes S.A. (Gol) to stable from developing and affirmed its global scale 'CCC+' and national scale 'brBB' issuer credit ratings on Gol. At the same time, S&P affirmed its 'CCC+' issue-level rating on the senior unsecured notes but revised the recovery rating to '4' from '3', indicating its expectation of average (30%-50%; rounded estimate: 35%) recovery in the event of a payment default. The stable outlook reflects lower liquidity pressure until 2022 when leasing obligations and capex needs increase, but uncertainty remains about the industry's recovery path and Gol's high leverage. Following Gol's issuance of senior secured notes for $500 million ($200 million in December 2020 and $300 million re-tap in May), other debt refinancing, capital increase for R$423 million, and further negotiations with lessors and other suppliers, the company now has a more comfortable liquidity position and S&P believes risks of default in the next 12 months are low. Short-term maturities have consistently fallen in the past three quarters, although they remained relevant: R$2.3 billion as of March 2021. However, about R$1 billion of that relates to working capital that has been consistently refinanced, and the company has already repaid about R$430 million from the Delta secured financing with the proceeds from the senior secured re-tap. Furthermore, the completion of the Smiles reincorporation brings additional asset value that Gol could use as collateral to raise additional liquidity if needed. Domestic travel in Brazil had a strong recovery in the last quarter of 2020 and the beginning of 2021. Gol had maintained consistent recovery in its domestic capacity, reaching available seat kilometers (ASK)in both December 2020 and January 2021 of about 26% lower than a year before. Amid a resurgence in COVID-19 cases since early 2021, the company rapidly reacted to reduce capacity in an attempt to match demand and contain cash burn. S&P said, "In our base case, we still assume a significant recovery of domestic air traffic in 2021, but predict domestic ASK to be about 30%-35% lower than in 2019. We assume the company will fully recover domestic capacity to pre-pandemic levels in 2022, which should boost revenue and EBITDA compared to 2020 and 2021. On the other hand, international air traffic will remain subdued, about 80% lower than 2019 in 2021 and between 30%-35% lower in 2022. We also assume considerably higher fuel costs in the next two years amid higher crude oil prices and a weaker Brazilian real. Overall, we expect EBITDA of R$1.2 billion-R$1.3 billion in 2021 and R$3.4 billion-R$3.7 billion in 2022, compared to the pre-pandemic level of R$4.0 billion in 2019." Despite the improved liquidity and lower default risk, conditions remain uncertain for the sector. Depending on the number of COVID-19 cases, pace of the vaccination campaign, the government's measures to contain the pandemic, and the economic recovery in Brazil, Gol's revenue, EBITDA, and liquidity could vary widely in the next few quarters. The new pandemic wave in Brazil and the quarantine measures implemented across the country caused some reversal in traffic recovery, and S&P thinks there's still risk of an additional wave even while the country progresses with its vaccination campaign, which could lead to additional lockdowns and travel restrictions and diminish consumer confidence. Meanwhile, Gol's balance sheet remains exposed to these setbacks, with sizable leasing liabilities and increasing related cash flow disbursement mainly starting in 2022, along with increased financial debt to revamp its operations. S&P said, "We expect it to maintain free operating cash flow (FOCF) deficits in 2021 and 2022 and high leverage through 2022. We forecast its debt-to-EBITDA ratio to exceed 6.0x until 2022." HIDROVIAS DO BRASIL: Fitch Affirms 'BB' LongTerm IDRs ----------------------------------------------------- Fitch Ratings has affirmed Hidrovias do Brasil S.A.'s (Hidrovias) Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) at 'BB' and National Scale long-term rating at 'AA(bra)'. Fitch has also affirmed Hidrovias International Finance S.a.r.l.'s unsecured notes at 'BB'. The Rating Outlook on LC IDR and National Scale Rating has been revised to Stable from Negative. The Outlook revision to Stable reflects Hidrovias' expected deleveraging trend during the next 18 to 24 months. The company has been investing to increase its business scale and improve client diversification via a mix of organic and inorganic growth. Fitch forecasts the company to exhibit a net adjusted debt/EBITDA ratio of 4.2x and 3.7x during 2021 (pro forma including acquired asset) and 2022, respectively. Hidrovias' current rating headroom is limited. The affirmation of the 'BB' rating is linked to net leverage moving to around 3.5x in the medium to long term, in line with its main peers. The Rating Outlook for the FC IDR is Negative, reflecting Brazil's (BB-) Negative Outlook. Hidrovias' FC IDR is capped by Brazil's 'BB' Country Ceiling, as the majority of the company's growth opportunities should continue to originate from its operations in the country. KEY RATING DRIVERS Take-or-Pay Contracts Protect Cash Flow: Hidrovias' ratings incorporate its stable cash flows, which reflect that the majority of its EBITDA is generated under long-term, take-or-pay contracts. These provide cash flow visibility, as they contain features that allow inflation-adjusted price increases and the pass-through of fuel and/or labor charges. Considering the ramp-up of projects and contracts through 2021, Hidrovias has roughly 72% of total capacity contracted under long-term take-or-pay agreements. Its largest contract duration is 25 years. Challenge to Increase Client Diversification: Hidrovias exhibits portfolio concentration risk, as its main clients are Vale S.A. (BBB/Stable), COFCO Group and Alumina do Norte do Brasil S.A. (Alunorte), which Fitch estimates that together it fluctuates around 48%-62% of the company's total EBITDA. Over the last year, Hidrovias has added new clients and sectors to its portfolio, including projects for Salt operations in Brazil's Rio Grande do Norte state and new service activities in Santos Port. The company has also recently announced the acquisition of the south American assets of Imperial Logistics International B.V. & Co. KG (Imperial) for USD85 million. This company operates in the Parana-Paraguay river system, and should help to improve the company's competitive position in this corridor. Route and Production Concentration: Grains and fertilizer, iron ore and bauxite represent 47%, 32% and 20%, respectively, of Hidrovias' 2020 EBITDA. In terms of routes, the North Corridor represents 41% of EBITDA, South 38%, Coastal Navigation 20% and salt/Santos the remaining 1%. Approximately 58% and 42% of total EBITDA is generated in Brazil and Uruguay/Paraguay, respectively. Fitch expects Hidrovias' annual EBITDA to average BRL890 million in2021-2022. Manageable FX Risk Exposure: Hidrovias faces exposure to FX risk, as the majority of its debt is U.S. dollar-denominated. This is mitigated by strong EBITDA generation (around 60%) in hard currency, as well as its high cash balances (around 90%) denominated in U.S. dollars. This has been key to mitigate currency mismatch risk effects in short-term cash outflows as it relates to the company's semi-annual bond coupon payments. Good Performance Despite Drought: Hidrovias has shown solid operational performance with increasing volumes, improved competitiveness and market share gains. In the short term, the company faces challenges on its south corridor operations with a significant drought in the Parana-Paraguay waterway, which has driven volumes down. This has been partly offset by the take-or-pay contracts framework. Nevertheless, this limits the company's growth opportunities to operate spot contracts, and Fitch expects some decline in operating margins for the corridor during 2021. During 1Q21, the company experienced lower grain volumes due to a delay in the soybean harvest but it was offset by an increase in tariffs earlier in the year. Growing CFFO, Capex to Pressure FCF: The ongoing business expansion is leading to negative FCF, which was negative BRL76 million in 2020. During 2021, capex will increase to support the development of Salt and Santos operations, as well as other ongoing projects/expansions, which should lead to negative FCF of around BRL132 million. A likely increase in 2022 capex to expand operations in the north corridor should lead to negative FCF of around BRL21 million. Fitch estimates around BRL525 million in capex and no dividend payments during 2021 and 2022. Limited Leverage Headroom: The impact of FX volatility and higher capex plans have postponed Hidrovias' most significant deleveraging to beyond 2021 under Fitch's forecasts. Management's strategy on business diversification/growth, its discretionary associated capex, and return to shareholders will be key to define leverage trends going forward. Fitch expects net leverage ratios to be 4.2x and 3.7x in 2021 and 2022, respectively, and to decline to around 3.5x by 2023. This compares with 4.9x in 2019 and 4.7x in 2020, per Fitch's calculations. Solid Financial Flexibility: Together with its resilient business profile, Hidrovias' strong financial flexibility is a key rating consideration amid its growth strategy and corresponding elevated leverage ratios. The company has operated with solid cash balances and no short to medium term refinancing risks, alongside demonstrating good access to the local and international capital markets. DERIVATION SUMMARY Hidrovias is well positioned in the 'BB' rating category relative to transportation/logistics peers across the region, which are generally rated in the 'BB' to 'BBB' categories. Hidrovias' main rating constraint derives from its medium-size business scale and weakest capital structure versus Brazilian peers, such as MRS Logistica S.A. (BB/Negative), Rumo S.A. (BB/Negative), and VLI S.A. (National Long-Term Rating AAA[bra]/Stable). Offsetting those factors, are Hidrovias' resilient business profile due to the majority of operations being based on take-or-pay contracts and strong financial flexibility supported by high liquidity and long-term debt amortization profile with no refinancing risks in the next five years. Hidrovias' expected 2021 net leverage metrics are higher than net leverage expected for other rated Brazilian peers in the transportation/logistics sector with more mature operations and with higher credit ratings. Rumo, VLI and MRS Logistica are forecast to reach 2021 net leverage ratios of 3.3x, 3.2x and 2.1x, respectively. Hidrovias' ratings factor in the expectation of the company's net adjusted leverage ratio trending to down to 3.5x-4.0x by 2022. KEY ASSUMPTIONS -- Revenue growth in 2021, reflecting ramping up of operations, with 20% growth in 2021 reflecting new operations in Santos and Salt and ongoing growth volumes on the north corridor segment; -- EBITDA margin around 46% in 2021 and 47% in 2022; -- Total capex of around BRL525 million in 2021 and in 2022; -- Dividend distributions at 1% of net income, per company's bylaws, from 2023 onwards. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Hidrovias' Foreign Currency IDR is capped at Brazil's Country Ceiling considering the majority of the company's growth opportunities continue to originate within the country. For the National Long-Term Ratings and Local Currency ratings, factors that could lead to a positive rating action include: -- Broader client diversification; -- Net debt/EBITDA consistently below 3.0x and total debt/EBITDA below 4.5x; -- Interest coverage consistently above 4.0x; -- Maintenance of strong liquidity to avoid refinancing risks, with cash/short-term debt ratio at a minimum of 1.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Large debt-funded M&A acquisition or entering into a new business in the logistics sector that adversely impacts its capital structure on a sustained basis or increases its business risk exposure; -- Net leverage consistently above 4.0x from 2022 onwards; -- Deterioration of liquidity position, with increasing short to medium term refinancing risks. 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 Strong Liquidity Position: Fitch expects Hidrovias to maintain a solid cash position while conservatively managing its FCF with a strong growth strategy. The company's cash position as of 1Q21 was very strong at BRL1.15 billion, while short-term debt was BRL113 million, excluding lease obligations. The company has a comfortable debt amortization schedule in the medium term, with an average of BRL66 million due in 2022-2024, BRL875 million in 2025 and BRL2.7 billion in 2031. Hidrovias does not have a committed standby credit facility. Almost of all of its debt is U.S. dollar-denominated, while around 90% of the company's cash position is held in U.S. dollars. This strong hard currency cash balance helps to mitigate FX risk mismatch related to its short-term debt obligations and bond coupon payment. Hidrovias' total adjusted debt, per Fitch's calculation, was BRL4.7 billion at 1Q21, mainly composed of BRL2.7 billion of cross-border bonds due 2031, BRL867 million of cross-border bonds due 2025, and BRL 714 million of Banco Nacional de Desenvolvimento Economico e Social (BNDES) financing. Fitch includes in the debt calculation BRL120 million (USD21 million) of guarantees related to one of its 50% joint ventures, Obrinel S.A., domiciled in Uruguay. ISSUER PROFILE Hidrovias is an integrated logistics provider focused on waterways logistics services. It has an end-to-end infrastructure, including transshipment, port terminals and a fleet of barges, pusher tugs and cabotage vessels. The company operates in logistics corridors in the northern region of Brazil and in the Paraguay-Parana river system. Its business model is based on long-term take or pay contracts with strong counterparties (72% of its EBITDA). 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. =============== C O L O M B I A =============== BARRANQUILLA: Fitch Cuts LongTerm IDRs to BB+, Outlook Negative --------------------------------------------------------------- Fitch Ratings has taken the following actions on Barranquilla, District of Colombia (the district): -- Long-Term Foreign Currency Issuer Default Rating (IDR) downgraded to 'BB+' from 'BBB-', Outlook revised to Stable from Negative; -- Long-Term Local Currency IDR downgraded to 'BB+' from 'BBB-', Outlook revised to Stable from Negative; -- National Long-Term Rating downgraded to 'AA(col)' from 'AAA(col)', Outlook Stable; -- National Short-Term Rating affirmed at 'F1+(col)'; -- Local bond notes of up to COP650.000 million, of which COP394.366 were actually placed, downgraded to 'AA(col)' from 'AAA(col)'; -- Stand-alone credit profile (SCP) lowered to 'bb+' from 'bbb'. The deterioration of the SCP is due to a deterioration of the district's Risk Profile (RP), reflecting a mix of five factors assessed as 'Midrange' and one reassessed to 'Weaker' from 'Midrange'. Barranquilla presents a deterioration in its year-end liquidity position and access to committed credit lines and an unexpected disposal of short-term debt of COP211,000 million. The latter is reflected in Fitch's reassessment of the key risk factor of liability and liquidity flexibility. A 'bb+' SCP also considers a debt sustainability score of 'a', which resulted from stressed payback ratios ranging between 5x-9x and low secondary metrics of debt service coverage ratios below 1x and fiscal debt burden ranging from 100%-150%. KEY RATING DRIVERS Risk Profile: 'Low Midrange' Fitch has reassessed Barranquilla's RP to 'Low Midrange' from 'Midrange', reflecting a mix of five factors assessed as 'Midrange' and one 'Weaker'. This reflects a moderately higher risk relative to international peers that the issuer's ability to cover debt servicing with its operating balance may weaken unexpectedly over the rating horizon. This may be due to lower than expected revenue, expenditures overshooting Fitch's forecasts, or from an unanticipated rise in liabilities or debt-service requirements. Revenue (Robustness) Assessed as Midrange Barranquilla's operating revenue is mostly made up of predictable and growing tax items and stable transfers from the national government. The district's operating revenue structure presents a low dependence on transfers (50.6% of transfers to operating revenue on average in 2016-2020), so Fitch believes that exposure to this risk is lower for Barranquilla than for municipalities with lower fiscal autonomy. Fitch considers the institutional framework of national transfers and its evolution as stable and predictable. However, Fitch will monitor the district's future performance as it could be affected by the current drop in economic activity and fiscal pressures faced by the national government. Revenue (Adjustability) Assessed as Midrange Barranquilla holds legal discretion to adjust its tax rates under the limits established by the national government. Nonetheless, the affordability of taxpayers is modest, which could restrain rate adjustments. The district's tax collection presents a positive trend and represents 40.1% of operating revenue at YE 2020. Management's efforts to keep cadastral values updated support revenue generation performance, and the actual capital investments made in the city enhance tax-payers reliability. Expenditure (Sustainability) Assessed as Midrange Barranquilla's main responsibilities are the provision of basic services such as education, healthcare, water supply, sanitation and transportation. These responsibilities, are mainly funded with SGP transfers. Fitch views them as moderately countercyclical and expects stable growth in the midterm. During 2016-2020, operating expenditure growth has been in line with operating revenue (CAGR 3.0% and 3.6%, respectively) and operating margins have been 16.5% on average during the same period. According to the district's administration, efforts to maintain a stable tax collection were applied, allowing a less pronounced fall in revenue collection. Moreover, expenditure was reoriented to prioritize responsibilities, and capex was the main variable of adjustment. Expenditure (Adjustability) Assessed as Midrange Barranquilla's level of capex has been increasing constantly as a result of its economic dynamism and revenue generation, representing 27.8% of total expenditure on average during 2016-2020. As per the district's plans, levels in 2021 could revamp after a fall in 2020, as a result of additional long-term debt disposals, in order to continue with its development plan and promote economic activity. In Fitch's view, the high capex ratio denotes a moderate margin to cut expenditure considering capex is partly financed through operating balance. Liabilities and Liquidity (Robustness) Assessed as Midrange The district operates under a moderate regulatory framework. At YE 2020, Barranquilla held COP1.58 billion of long-term direct debt, most of it with variable interest rate and in local currency. There is currently no foreign exchange risk in debt portfolio. During the last quarter of 2020, Barranquilla went to the local capital markets and made an initial offering of COP650.000 million, but, based on market appetite and demand, COP394.366 million were ultimately placed. Proceeds were used to repay the district's long-term debt and improve interest rates. The district maintains additional long-term debt plans of COP2.1 billion expected for 2020-2023, which are already assessed in Fitch's scenarios. The agency will follow up on the financing and the final conditions assessed, considering any increase or exposure to exchange risk could impact the risk factor assessment. Fitch will monitor the district's compliance with local regulation indicators, considering the actual national decree 678, which aimed to support LRGs' liquidity and economic activity midst the coronavirus pandemic and allow flexibility in the compliance of these indicators. Apart from Fitch's expectations for 2020, the district disposed COP211,000 million of short-term debt expected to be fulfilled in December 2021. As of February 2021, the entity hired an additional of COP2,950 million. The current administration does not expect to continue the use of this financial instrument, as it anticipates a recovery in revenues and the use of proceeds of long-term debt for capex projects. Fitch considers in its payback ratios the long-term debt acquired through its Government Related Entities (GREs), Agencia Distrital de Infraestructura (ADI), Empresa de Desarrollo Urbano de Barranquilla y la Region Caribe (Edubar) and Transmetro. At YE 2020, these entities held COP1.3 billion of long-term debt, being ADI and Edubar the most representative. Liabilities and Liquidity (Flexibility) Assessed as Weaker Fitch has reassessed this key risk factor to Weaker from Midrange considering the weakening in the district's YE cash position and the availability in committed credit lines. The latter resulted from an increase in the district's long-term debt in recent years. Most available cash presented in its financial statements at YE 2020 are earmarked resources. The limited liquidity resulted in the disposal of new short-term debt (COP211,000 million), different from Fitch scenarios. Colombian institutional framework does not establish a direct liquidity support in the case of need to LRGs from higher government entities. Barranquilla does not have immediate access to institutional lenders nor commercial or capital markets for committed credit lines that may support them under a stressful scenario. Debt Sustainability: 'a' Rating Category Barranquilla's 'a' assessment is derived from a combination of a payback ratio (net adjusted debt/operating balance), which under Fitch's rating case would range between 5.0x-9.0x during 2021-2025, in line with a 'aa' assessment. Secondary metrics of actual debt service coverage ratio (ADSCR: operating balance-to-debt service, including short-term debt maturities) at 1.0x in 2025, 'b' category, and a fiscal debt burden of 132.5% in the same reference year. DERIVATION SUMMARY Barranquilla's SCP of 'bb+' reflects a combination of a 'Low Midrange' risk profile assessment with payback ratios that score at an 'aa' and secondary metrics, such as a DSCR with a score of 'bb'. Fiscal debt burden in 2025 is at 132.5%. The SCP also factors Barranquilla's relative position with peers. The district's IDR is not affected by asymmetric risks nor government support. Pension liabilities will be closely monitored by Fitch, considering its coverage and relative position with national peers. Fitch classifies Colombian local and regional governments as Type B, as they cover debt service through their own cash flow. KEY ASSUMPTIONS Fitch's rating case scenario is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on the 2016-2020 figures and 2021-2025 projected ratios. The key assumptions for the scenario include: -- Taxes and other operating revenues (fees, fines and others) partly recover during 2021 and reach pre-pandemic levels until 2023, growing in line with inflation or national GDP growth, depending on its nature; -- Nominal growth of transfers is in line with the moving average of GDP's four-year growth; -- Operating expenditure growth is in line with revenue growth, with a minimum of inflation; -- Capex growth in line with historical average; -- Debt level considers Barranquilla´s projections and additional potential long-term debt as per regulatory limits; -- Apparent cost of debt is equivalent to a short-term rate estimated by Fitch plus a credit differential of 2% (spread). RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Payback ratios consistently below 5.00x on the scenario horizon, result of an improvement in operating balance and decreasing tendency in long-term debt; and DSCR above 2.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Payback ratios consistently exceeding 9.0x under Fitch's rating case; -- Coverage ratios consistently below 1.0x; -- A further deterioration in the RP; Fitch will continue monitoring the entity's compliance with local regulation indicators considering a legal implication could negatively impact the assessment of the corresponding key risk factor. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. ISSUER PROFILE Barranquilla, District of Colombia is the capital of the Atlantic Department, and its economic dynamism is relevant for the department as it contributes with 66.4% of GDP. With 1.2 million habitants, the main economic activities are manufacturing and services. The district is responsible for main public services, education and healthcare. 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: Labor Unions Want a 40% Wage Hike ----------------------------------------------------- Dominican Today reports that representatives of Dominican Republic's labor unions was suppose to deliver on June 16 a proposal for a salary increase of 40% that will be discussed with the Government and the business community in the National Salary Committee (CNS). CASC Union secretary Gabriel del Rios Done, explained that he will bring the proposal to convene the CNS and begin the discussion in order to have a new minimum wage between now and July, when the date for its review expires, according to Dominican Today. He justified the need for the increase in the price of household products, although he recognized that not all companies are in a position to accept it, 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). ============= J A M A I C A ============= MAIN EVENT: Incurs $27.6 Million in Losses ------------------------------------------ RJR News reports that Main Event Entertainment group, Jamaica's premier events management, promotions and digital signage outfit, reported losses of $27.6 million, almost doubling the losses of $15.8 million in the comparative period. The report notes that the entertainment sector in Jamaica continues to face steep losses amid continued COVID-19 restrictions. However, the company is remaining optimistic and is exploring new opportunities to grow income, the report notes. ===================== P U E R T O R I C O ===================== CB REAL ESTATE: Case Summary & 3 Unsecured Creditors ---------------------------------------------------- Debtor: CB Real Estate, LLC 1015 RH Todd PDA 18 San Juan, PR 00908 Business Description: CB Real Estate, LLC is a fee simple owner of two commercial buildings located in Puerto Rico and a residential property in New York valued at $8.9 million in the aggregate. Chapter 11 Petition Date: June 16, 2021 Court: United States Bankruptcy Court District of Puerto Rico Case No.: 21-01849 Debtor's Counsel: Charles A. Cuprill Hernandez, Esq. CHARLES A. CUPRILL, PSC LAW OFFICES 356 Fortaleza Street Second Floor San Juan, PR 00901 Tel: 787-977-0515 Email: ccuprill@cuprill.com Debtor's Financial Consultant: LUIS R. CARRASQUILLO & CO., P.S.C Total Assets: $10,147,500 Total Liabilities: $3,407,130 The petition was signed by Horacio Campolieto Bielicki, president. A full-text copy of the petition is available for free at PacerMonitor.com at https://tinyurl.com/4czdzweh List of Debtor's Three Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Lilly Del Caribe Inc. Legal Case $2,019,874 c/o McConnell Valdes LLC PO Box 364225 San Juan, PR 00936-4225 Tel: 787-250-5665 2. Planterra Landscape, Inc. Landscaping $1,003 360 Sabalo Street Services URB. Paseo Las Olas Dorado, PR 00646 Tel: 787-579-1141 3. Triple S Propiedad Insurance $4,995 PO Box 70313 Financing San Juan, PR 00936-0313 Tel: 787-749-4600 =============== X X X X X X X X =============== [*] BOND PRICING: For the Week June 14 to June 18, 2021 ------------------------------------------------------- Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- Noble Holding Internat 5.3 60.5 3/15/2042 KY USD Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Polarcus Ltd 5.6 71.8 7/1/2022 AE USD AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Esval SA 3.5 49.9 2/15/2026 CL CLP Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Enel Americas SA 5.8 32.7 6/15/2022 CL CLP Noble Holding Internat 6.1 62.0 3/1/2041 KY USD Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD Noble Holding Internat 6.2 62.2 8/1/2040 KY USD Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD YPF SA 16.5 67.3 5/9/2022 AR ARS Provincia del Chubut A 4.5 2208 3/30/2021 AR USD Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Sylph Ltd 2.4 65.1 9/25/2036 KY USD Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD YPF SA 16.5 67.3 5/9/2022 AR ARS Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR Fospar S/A 6.5 1.2 5/15/2026 BR BRL YPF SA 16.5 67.3 5/9/2022 AR ARS Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or 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 * * *