/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210622.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, June 22, 2021, Vol. 22, No. 118 Headlines B R A Z I L COMPANHIA BRASILEIRA DE ALUMINIO: Moody's Ups Unsec. Debt From Ba1 PETROBRAS SA: Plans to Sell US$2.3BB Stake in BR Distribuidora STATE OF ALAGOAS: S&P Alters Outlook to Stable, Affirms 'BB-' I VOTORANTIM CIMENTOS: Moody's Withdraws Ba1 CFR C H I L E INVERSIONES LATIN AMERICA: S&P Rates New $403MM Sec. Notes 'BB' VTR FINANCE: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Consumers to Pay Refinery's US$53-Mil Debt J A M A I C A SAGICOR GROUP: Is Structuring US$285MM Sale of Clarendon Plant P U E R T O R I C O PUERTO RICO: Cordova, Sheppard 4th Update on FGIC Noteholders PUERTO RICO: Plan Patently Unconfirmable, Ambac Assurance Says T R I N I D A D A N D T O B A G O TRINIDAD GENERATION: Fitch Lowers 2027 Unsec. Notes to 'BB' X X X X X X X X LATAM: CDB Urges Increased Competitiveness to Induce Growth - - - - - =========== B R A Z I L =========== COMPANHIA BRASILEIRA DE ALUMINIO: Moody's Ups Unsec. Debt From Ba1 ------------------------------------------------------------------ Moody's Investors Service has upgraded to Baa3 from Ba1 the senior unsecured rating of the notes due 2024 issued by Companhia Brasileira de Aluminio (CBA), a Votorantim S.A. ("Votorantim" or "VSA") investee, and unconditionally guaranteed by Votorantim. At the same time, Moody's has assigned a Baa3 issuer rating to Votorantim and withdrawn the company's Ba1 corporate family rating. The company's Aaa.br national scale rating previously assigned by Moody's America Latina Ltda. remains unchanged. The outlook for the ratings is stable. Rating Upgraded: Issuer: Companhia Brasileira de Alumínio $400 million senior unsecured notes due 2024 unconditionally guaranteed by VSA: upgraded to Baa3 from Ba1 Rating Assigned: Issuer: Votorantim S.A. Issuer Rating: Baa3 (global scale) Rating Withdrawn: Corporate Family Rating: withdrawn, previously rated Ba1 (global scale) Outlook Actions: Issuer: Votorantim S.A. Outlook remains stable Issuer: Companhia Brasileira de Aluminio Outlook remains stable RATINGS RATIONALE The upgrade of Votorantim's ratings to Baa3 from Ba1 reflects the group's strengthened consolidated capital structure following several deleveraging initiatives carried-out over the past few years, which will allow the company to maintain lower than historical leverage ratios through commodity cycles. Votorantim has paid down $3.7 billion in consolidated total debt since 2015, using its strong internal cash generation and part of the proceeds from the IPO of Nexa Resources S.A. (Ba2 stable) and the sale of Fibria's shares, while maintaining a disciplined approach to liquidity, investments, growth and dividend distributions. Such track record of conservative capital allocation, combined with Moody's expectations of strong operating performance throughout 2021, will contribute to further deleveraging, balance sheet strengthening and increased flexibility to withstand future volatility in the operations of its investees. Votorantim's consolidated adjusted leverage declined to 3.0x at the end of March 2021 from the 4.5x peak in 2015 and will decline further to around 2.0x-2.5x in 2021 on the back of current positive dynamics in the metals and mining and cement industries. Over time, Moody's expects Votorantim to maintain adjusted leverage within 2.5x-3.5x based on a range of price scenarios for zinc between $0.80-$1.10/lb, aluminum between $0.65-$0.80/lb and normalized cement and steel operations. Moody's also expects the company to maintain a robust liquidity profile with around BRL10 billion in consolidated cash on a recurring basis, which would translate into reported net leverage within the 1.0x-2.0x range. Moody's expects Votorantim's investees to post robust results in 2021, with the group's consolidated EBITDA margin reaching around 25%-30% in 2021 before gradually returning to normalized levels of about 20% in the next years. The cement business will benefit from better sales volumes and prices at Votorantim Cimentos Brazil (VCBR) due to favorable dynamics for the housing and self-construction sectors, and stable demand combined with better pricing at Votorantim Cimentos North America (VCNA). VCNA will also benefit from the weaker Brazilian real and the additional sales volumes coming from the business combination with McInnis Holding Limited Partnership (McInnis) concluded on May 2021. Other businesses such as Nexa, Companhia Brasileira de Alumínio (CBA), Long Steel, Votorantim Energia, CPP JV, Citrosuco and Banco BV (BV, Ba2 stable) will also perform well based on the current positive price scenario for zinc, aluminum and steel, and the stability of the energy and banking segments. Votorantim's Baa3 rating is supported by the company's large size at the consolidated level, its status as the holding company of one of the largest conglomerates in Brazil, and its diversified business portfolio which mitigates the effect of cyclicality in any specific industry. The rating is also backed by the investees' cost-competitive operations, resulting from high vertical integration, as well as by its strong liquidity profile, conservative financial management and extended debt maturity. Votorantim's increased geographic diversification is an additional credit positive and, while it still generates a substantial portion of its consolidated EBITDA in Brazil, the company benefits from leading market positions in virtually all its operating segments. Constraining the rating are the commodity nature of a substantial portion of Votorantim's business portfolio (namely zinc and byproducts, and aluminum) and the volatility of the company's cement business in Brazil. Still, Moody's expects Votorantim to maintain adequate leverage and liquidity for its rating category even as it follows additional investments in its business portfolio following the recent deleveraging initiatives and asset sales. LIQUIDITY Historically, Votorantim has reported strong liquidity based on the maintenance of large cash balances compared with short-term debt. The company's consolidated cash balance of BRL16.7 billion at the end of March 2021 comfortably covers all short-term debt and all debt maturities until the end of 2026. The company also had $700 million availability under a revolving credit facility, of which $500 million is available for Votorantim Cimentos and $200 million for VSA. After the payment of its notes due 2021, Votorantim has no debt outstanding at the holding level, but the parent provides guarantees to one of Votorantim Cimentos' and CBA's outstanding notes. The holding company has a cash position of about BRL5 billion, and received annual dividends of about BRL500 million-1.6 billion in the past few years, which is more than sufficient to cover corporate expenses and non-discretionary cash outflows, while complying with targeted dividend payments of around BRL1.0 billion per year. Going forward, the amount of dividends received will increase based on the investees' improved operations and capital structure. The company has a track record of executing successful liability management programs that resulted in a strengthened capital structure through substantial debt reduction and stronger liquidity. Votorantim also has a track record of conservative financial management that allowed the group and its investees to maintain strong liquidity during stress tests, including the pandemic. Some investees drew down committed credit facilities, which have already been paid, while also raising new credit lines in 2020. Flexibility was also apparent with cost reduction and capex postponement strategies to preserve liquidity, all of which reaffirmed the group's financial discipline. RATING OUTLOOK The stable outlook reflects Moody's expectation that Votorantim will prudently manage its capital spending and dividend distributions to maintain adequate liquidity and credit metrics. The stable outlook also takes into consideration that the company will make the necessary adjustments in its cash outflows during downcycles to maintain its financial profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Votorantim's ratings could be upgraded if the company's credit metrics and capital structure strengthen further to mitigate future volatility in results, with gross adjusted leverage sustainably below 2.5x and RCF/Net Debt sustainably above 30%. The maintenance of conservative financial policies and strong liquidity during the execution of expansion plans would also be required for an upgrade. Finally, an upgrade of Votorantim's ratings would require an upgrade of Brazil's sovereign ratings and long-term visibility of Brazil's economic strength, or reduced exposure to the country's domestic fundamentals. Moody's could downgrade Votorantim's rating if there are expectations of declines in volumes and profitability that result in a significant reduction in the company's sources of liquidity, if liquidity concerns arise due to cost inflexibility, or if there are evidences of more aggressive financial policies, such as debt-funded expansion or more aggressive dividend payments. A downgrade could also result from clear expectations that the company will not be able to maintain financial metrics compatible with a Baa3 rating, with gross adjusted leverage sustainably above 3.5x and EBIT margin sustainably below 10%. A downgrade of Brazil's (Ba2 stable) sovereign rating could also lead to a downgrade of Votorantim's ratings. The principal methodology used in these ratings was Mining published in September 2018. COMPANY PROFILE VSA is the holding company of one of Brazil's largest conglomerates, with a diverse business portfolio that includes cement operations in South and North America, Europe, Africa and Asia through the fully-owned subsidiary Votorantim Cimentos S.A. (Baa3 stable), the seventh-largest cement producer in the world, excluding Chinese producers; zinc and byproducts in Brazil and Peru (A3 negative) through a 64% stake in Nexa Resources S.A.; aluminum in Brazil through the fully-onwed subsidiary Companhia Brasileira de Aluminio (CBA); energy in Brazil through Votorantim Energia and joint-ventures; long steel through subsidiaries in Colombia (Baa2 negative) and Argentina (Ca stable) and a 15% stake in ArcelorMittal Brasil; orange juice through Citrosuco; and banking and financial services in Brazil through a joint-venture with Banco do Brasil S.A. (BB, Ba2 stable) in Banco BV. For the LTM ended March 2021, Votorantim reported consolidated net revenue of BRL40 billion with an adjusted EBITDA margin of 23.4%. PETROBRAS SA: Plans to Sell US$2.3BB Stake in BR Distribuidora -------------------------------------------------------------- Rio Times Online reports that Brazilian fuel retailer BR Distribuidora launched a share offering June 17, in which state-controlled oil company Petrobras SA will sell an R$11.5 billion (US$2.3 billion) stake in the company, according to a securities filing. The offering will be priced on June 30, and managed by Bank of America Corp, Citigroup Global Markets, Goldman Sachs Group Inc, Itau BBA and JP Morgan Chase & Co, along with Morgan Stanley and XP Investimentos, it said, according to Rio Times Online. Petrobras is selling the assets to raise money and reduce its debt burden, 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. STATE OF ALAGOAS: S&P Alters Outlook to Stable, Affirms 'BB-' I --------------------------------------------------------------- S&P Global Ratings revised its outlook on the state of Alagoas to stable from negative. S&P also affirmed its global scale 'BB-' long-term foreign and local currency issuer credit ratings on the state. S&P also affirmed its long-term national scale rating of 'brAA+'. Outlook S&P said, "The stable outlook reflects our view that Alagoas' budgetary performance will remain adequate in the next 12-18 months, with operating surpluses and only moderate deficits after capex as it ramps up investment. We expect debt burden to gradually diminish and cash levels to continue to comfortably cover the state's debt service." Downside scenario S&P said, "We could lower the ratings on Alagoas in the next 12 months if its budgetary performance deteriorates, with large deficits after capex eroding liquidity, signaling impaired fiscal management. In our opinion, the ratings on Alagoas are capped by the ratings on Brazil; therefore, the downgrade of the latter would result in a downgrade of Alagoas." Upside scenario S&P said, "Given that we don't believe Alagoas meets the conditions to have higher ratings than those on Brazil, we would only raise the global scale ratings on the state in the next 12 months if we were to raise our local and foreign currency ratings on Brazil. That would also have to be accompanied by the state's track record of stable and strong budgetary performance and declining debt levels." Rationale S&P said, "In our opinion, the recent accumulation of cash reserves will enable Alagoas to face pressures that are likely to emerge as the sovereign support is phased out and from the public-sector wage increases starting in 2022, while the pandemic still hasn't receded. During 2021-2023, we expect strong operating results and moderate deficits after capex, fully financed by the state's robust cash reserves." Proactive financial management has propped up financial performance, although the state remains somewhat reliant on the federal government's transfers. On the other hand, moderately high debt levels, a weak economic profile, and a volatile and unbalanced institutional framework constrain ratings on Alagoas. Extraordinary revenue will outweigh emerging pressures in the short term S&P said, "We expect operating surpluses to moderate in 2021 but remain at a high level of about 15% of operating revenues, compared with 20% in 2020, and average 11% in 2021-2023. Revenue from the recent water and sewage concession with private company, BRK Ambiental, estimated at 12.8% of the state's operating revenue in 2021, would compensate for the scaling back of extraordinary support from the central government and the state's resumption of servicing debt owed to the federal government. Our base-case scenario also assumes higher expenditures starting in 2022, from likely increases in public servant wages. "We expect capital expenditures (capex) to reach about 15% of total spending in 2021-2023, given the state's infrastructure plan that includes roadways, among others. Deficits after capex are likely to be 4% of total revenues on average, and we expect Alagoas to finance them with recently accumulated cash, and loans from public banks and multilateral lending institutions." Significant extraordinary events continue to benefit Alagoas' fiscal results. On Sept. 30, 2020, BRK won the concession to operate the water and sewage services in 13 cities in the metropolitan area of Maceio. BRK will be paying a total of R$2 billion for the concession. The company already paid R$613 million (5.8% of operating revenues) to the state in 2020 and will pay R$1.4 billion (12.8% of estimated operating revenues) in July 2021. The concession will bolster Alagoas' liquidity in the short term, as well as improve the population's access to basic services. Moreover, in 2020, Alagoas significantly benefited from the sovereign's fiscal support package for local governments. The state received the same nominal amount of ordinary transfers as in 2019 (versus a likely drop without the support), plus additional earmarked and non-earmarked funds totaling R$1 billion (9.4% of operating revenues). The central government also allowed Alagoas' servicing of debt owed to the central government treasury to be deferred, totaling R$312.8 million. As a condition to receiving federal support, Alagoas was obligated to freeze public-sector wage increases until 2022, which provided additional fiscal relief. Overall, the sovereign's support mitigated the pandemic's harsh impact on local consumption, and the state's tax revenue was resilient, bolstering fiscal results. Aside from the Covid-related support in 2020, the state depends on transfers from the federal government that account for about half of Alagoas' total revenue, which in the past generated some volatility in fiscal results. Extraordinarily strong fiscal results in 2020 and significant cash inflows from the BRK concession boosted Alagoas' liquidity. S&P said, "We estimate current free cash levels at more than 2.0x debt service for the next 12 months. We expect coverage to remain at high levels but to decline, as the state implements its infrastructure plan and as spending surges. Debt service payments will be smooth for the next three years at about R$700 million annually." S&P said, "We consider Alagoas' access to external liquidity as limited because in order to issue debt under Brazil's intergovernmental framework, the states must receive authorization from the federal government under specific rules and in compliance with fiscal targets. In addition, the states can't maintain open contingent credit lines from banks. "We expect Alagoas' debt to remain at high levels but decline to 85% of operating revenue by 2023 from almost 90% in 2020." The state's main creditor is the federal government (70% of total debt), but Alagoas also has loans from multilateral lending institutions and domestic banks. Eighteen percent of the debt is in foreign currency. One longstanding key source of fiscal pressure for Alagoas is its burdensome pension system. The state passed a pension reform in December 2019, which in addition to adhering to the national-level pension reforms, increased the individual contribution rate from 11% to 14% and expanded the tax base by 20,000 new contributors. Estimated annual savings from the reform are R$300 million annually, according to the state. How much relief the reform provides in the short and medium term will depend on its implementation, although structural issues in the long term are likely to persist. The pension deficit totaled R$1.2 billion in 2020 (11% of operating revenue). Proactive financial management somewhat mitigates strains stemming from a rigid institutional framework and weak socio-economic profile Measures to contain the spread of the COVID-19 pandemic had sizeable impact on Alagoas' economic performance. The state has now mostly reopened its economy and recovery is underway, along with slow--but steady--vaccination progress. Alagoas is among Brazil's poorest states, which weighs on its creditworthiness. S&P said, "Its estimated GDP per capita was $3,350 in 2020, which is roughly half of our estimate for the national level during the same period. Therefore, the state's socio-economic conditions are weaker than those of other Brazilian states such as those in the southeast, constraining the ratings. Alagoas' main economic activities are public administration, tourism, and agriculture (mainly producing sugar and alcohol--industries that are the second-largest employer in the state after the public sector). Like Brazil, we expect Alagoas' recovery and subsequent growth to be sluggish. We currently forecast national real GDP to expand 4.0% in 2021 and about 2.0% afterwards." Governor Renan Filho from the PMDB party will be in office until the end of his second term in 2022. The governor has broad support in the state legislature, given that his political coalition continues to hold a majority. S&P believes this will be pivotal to pass key pieces of legislation, such as the ongoing downsizing in the state payroll, as well as efforts to raise local tax revenue. Financial management has been proactive in efforts to strengthen the state's fiscal accounts and increase transparency and accountability, which it considers a rating strength. S&P said, "We assess Brazilian local and regional governments' (LRGs) institutional framework as volatile and unbalanced. Structural rigidities of Brazil's intergovernmental system have prevented LRGs from reaching balanced fiscal accounts. Nonetheless, we believe the system continues to have an adequate level of predictability and transparency, with enhanced oversight over LRGs' finances and adherence to fiscal discipline." The recent fiscal package to support Brazilian LRGs under COVID-19 severe stress was set to alleviate short-term fiscal pressures, although it does not provide fiscal sustainability in the longer term. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List RATINGS AFFIRMED; CREDITWATCH/OUTLOOK ACTION TO FROM ALAGOAS (STATE OF) Issuer Credit Rating BB-/Stable/-- BB-/Negative/-- Brazil National Scale brAA+/Stable/-- brAA+/Negative/-- VOTORANTIM CIMENTOS: Moody's Withdraws Ba1 CFR ---------------------------------------------- Moody's Investors Service has upgraded to Baa3 from Ba1 the ratings of the senior unsecured notes issued by St. Marys Cement Inc. and Votorantim Cimentos International S.A. and unconditionally guaranteed by Votorantim Cimentos S.A. (VC). At the same time, Moody's has assigned a Baa3 issuer rating to VC and withdrawn its Ba1 corporate family rating. The outlook for the ratings is stable. Ratings Upgraded: Issuer: St. Marys Cement Inc. $500 million senior unsecured notes due 2027 unconditionally guaranteed by VC: to Baa3 from Ba1 Issuer: Votorantim Cimentos International S.A. $1.250 million senior unsecured notes due 2041 unconditionally guaranteed by VC: to Baa3 from Ba1 Rating Assigned: Issuer: Votorantim Cimentos S.A. Issuer Rating: Baa3 Rating Withdrawn: Issuer: Votorantim Cimentos S.A. Corporate Family Rating: withdrawn, previously rated Ba1 Outlook Actions: Issuer: Votorantim Cimentos S.A. Outlook, Stable Issuer: St. Marys Cement Inc. Outlook, Stable Issuer: Votorantim Cimentos International S.A. Outlook, Stable RATINGS RATIONALE The upgrade of Votorantim Cimentos' ratings to Baa3 from Ba1 follows the upgrade of its parent company Votorantim S.A.'s (Votorantim or VSA Baa3 stable) to Baa3 and reflects the strong links between the two companies, along with improvements in VC's standalone credit metrics and capital structure. Since 2016, VSA capitalized VC with BRL4.7 billion, demonstrating VSA's willingness and ability to support its main subsidiary. VC used the proceeds from the capitalization and its own strong internal cash generated during the pandemic to pay down $3 billion in total debt since 2015, while maintaining a disciplined approach to liquidity, investments and dividend distributions. Accordingly, VC has built a cushion in credit metrics to withstand future volatility in operations, with gross adjusted leverage declining to 3.2x at the end of March 2021 from the 6.5x peak in 2017. Moody's expects VC's gross leverage to decline further to 2.0x-2.5x in 2021 on the back of current positive dynamics in the cement industry in Brazil and the US, and to remain within the 2.5x-3.5x overtime based on normalized operations. Moody's also expects the company to maintain a conservative capital allocation and robust liquidity profile with around BRL3 billion in cash on a recurring basis, which would translate into reported net leverage within the 2.0-2.5x range. VC benefited from stronger than expected cash generation from better demand and pricing environment during the coronavirus outbreak, as well as by the efficiencies implemented at the beginning of the pandemic that allowed for a significant reduction in cash consumption and an even stronger than historical liquidity profile. Accordingly, VC's revenues increased to BRL18 billion in the twelve months ended March 2021 from BRL13 billion in 2019, while adjusted EBITDA margin rose to 24% from 22.7%. In 2021, Votorantim Cimentos Brazil (VCBR) will benefit from continued strong sales volumes and prices due to favorable dynamics for the housing and self-construction sectors, while Votorantim Cimentos North America (VCNA) will post strong results on the back of stable demand and better pricing. VCNA will also benefit from the weaker Brazilian real and the additional sales volumes coming from the business combination with McInnis Holding Limited Partnership (McInnis) concluded on April 2021. McInnis has a 2.2 million ton annual capacity plant in Port-Daniel--Gascons, Canada serving Eastern Canada, the northeastern US and the Great Lakes region, complementing VC's subsidiary St. Mary's Cement presence in the region with its 5.6 million ton annual capacity. VC's Baa3 ratings reflect its size and scale as the seventh-largest company in the global cement market in terms of installed capacity, excluding Chinese companies, its leading position in Brazil and extensive geographic diversification in the Americas, Europe and Africa. The company's solid liquidity, integrated operations, as well as the close links with and strong support from its parent VSA also support the ratings. VC and VSA have cross-acceleration provisions and guarantees in part of their outstanding debt, and VSA includes VC as a material subsidiary in its financial statements. VC's ratings are constrained by the volatility in the company's cement operations in Brazil (Ba2 stable) and other emerging markets, and its exposure to Brazil's economic fundamentals, where the company generates around 40% of its EBITDA. Other residual credit concerns include potential overhangs coming from ongoing judicial disputes in Brazil and the company's stated intention to potentially pursue M&A activity, which could entail execution and integration risks. Still, Moody's expects VC to maintain its conservative financial management overtime to mitigate any potential leverage and liquidity risk. LIQUIDITY VC has strong liquidity, based on the maintenance of a large cash balance relative to short-term debt. VC had around BRL4 billion cash on hand in the end of March 2021, in addition to $500 million availability under a revolving credit facility. VC's liquidity position including the revolving credit facilities comfortably covers all short-term debt and all debt maturities until the end of 2026. The company has a track record of executing successful liability management programs that resulted in a strengthened capital structure through substantial debt reduction and stronger liquidity. During the pandemic, VC drew down on its committed credit facilities and raised new credit lines, while cutting costs and capex to preserve liquidity, all of which reaffirmed the company's financial discipline. RATING OUTLOOK The stable outlook reflects Moody's expectation that VC will prudently manage its capital spending and dividend distributions to maintain adequate liquidity and credit metrics. The stable outlook also takes into consideration that the company will make the necessary adjustments in its cash outflows during downcycles to maintain its financial profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS VC's ratings could be upgraded if the company's credit metrics and capital structure strengthen further to mitigate future volatility in results, with gross adjusted leverage sustainably below 2.5x and RCF/Net Debt sustainably above 30%. The maintenance of conservative financial policies and strong liquidity would also be required for an upgrade. An upgrade of VC's ratings would require an upgrade of Brazil's sovereign ratings and long-term visibility of Brazil's economic strength, or reduced exposure to the country's domestic fundamentals. Finally, an upgrade of VSA's ratings could lead to an upgrade of VC's ratings. Moody's could downgrade VC's rating if there are expectations of declines in volumes and profitability that result in a significant reduction in the company's sources of liquidity, or if liquidity concerns arise, for instance due to cost inflexibility. A downgrade could also result from clear expectations that the company will not be able to maintain financial metrics compatible with a Baa3 rating, with gross adjusted leverage sustainably above 3.5x and EBIT margin sustainably below 10%. A downgrade of Brazil's (Ba2 stable) sovereign rating or of VSA's ratings could also lead to a downgrade of VC's ratings. The principal methodology used in these ratings was Building Materials published in May 2019. COMPANY PROFILE Headquartered in São Paulo and one of the main subsidiaries of VSA, VC is the seventh-largest cement company worldwide in terms of installed capacity excluding Chinese companies. For the LTM ended March 2021, VC reported consolidated revenue of BRL18 billion and adjusted EBITDA margin of 24%. The company has operations in North and South America (representing 32% and 53% of total revenues, respectively), Europe, Africa and Asia (15%). ========= C H I L E ========= INVERSIONES LATIN AMERICA: S&P Rates New $403MM Sec. Notes 'BB' --------------------------------------------------------------- S&P Global Ratings assigned its 'BB' issue-level rating to Chile-based power generation company Inversiones Latin America Power Limitada's (ILAP) new 5.13% $403.9 million senior secured amortizing notes due in June 15, 2033, following the receipt and satisfactory review of all transaction documents. The amount issued is in line with our expectations, while interest rate is slightly below our previous discussion. The stable outlook reflects S&P's expectation that ILAP will deliver about 620 gigawatt hours (GWh) under regulated and fixed-price bilateral contracts out of a total generation of close to 610 GWh in 2021 and 2022. As a result, it expects an average debt service coverage ratio (DSCR) in the 1.2x area for the next two years. S&P assesses ILAP's operational phase in two stages: the first stage that commences at financial closing and ends in June 2033, when the notes are due. The second stage incorporates a balloon payment of approximately 20% of the original bond amount and goes from 2033 to 2036, when the project will fully amortize the bond, under a 100% cash flow sweep mechanism and considering the assumptions outlined in our base case. The full repayment occurs four years before the potential end of the asset' useful life in 2042 according to S&P's typical view for wind farms. The key elements that underpin S&P's assessment in both stages are: -- The relatively low operational risk because of the low-complexity tasks associated with the operation of onshore wind farms, when compared to the risk of other power plants such as the thermal based combined cycles or more complex assets, such as nuclear energy plants. -- Moderate exposure to resource risk due to expected volatility of wind availability levels, in line with other rated wind parks. -- The resiliency of the project under a downside-case scenario that includes stresses to the turbine availability, wind probability, spot prices, operating costs, and energy demand in the Chilean market. Under such a scenario, ILAP will continue to fulfil its financial obligations for more than five years without depleting its debt service reserves. -- S&P said, "Although the project's cash flows will be exposed to some volatility due to a variation in energy demand from contracted capacity (given that PPA are take-and-pay) and spot prices (because 10%-15% of the project's output is sold in the spot market), we don't believe it's material until June 2033. This is because under a downside scenario, in which prices would drop to $35-$40 per megawatt hour (MWh) and energy demand would drop 5%-10% from the base-case scenario, we expect cash flows to decrease less than 5% on average. Moreover, we assume that in the long term, the project will focus on maintaining a minimum contracted capacity, as part of its commercial strategy, which will also reduce the volatility in future cash flows, particularly starting in 2028, because we expect the project to sign new long-term PPAs by that time." S&P said, "Our base-case scenario incorporates minimum and average annual DSCR during the first stage of 1.23x (in 2029) and close to 1.35x, respectively, during the notes' term, which combined with our view of the operational risk of the project and the resiliency under a downside scenario results in an adjusted operations phase stand-alone credit profile (SACP) at stage I of 'bb'. "By June 30, 2033 (the notes' maturity date) and according to our base-case assumptions, the issuance would have a balloon amount close to $85 million. Given that neither the DSRA or the expected cash flows by 2033 would be sufficient to pay the balloon amount at maturity, we assume it will be refinanced. "In the refinancing period, the project will be fully exposed to spot prices (given that PPA contracts expire in 2032 and 2033). As a result, we expect the CFADS may vary 20%-25%, assuming a 20% drop in spot prices from our base-case assumptions. For this reason, we see the overall operational risk as higher in the refinancing period than in the first period. "Our base-case scenario for the refinancing period incorporates minimum and average annual DSCR of 4.5x (in 2033) and 7x, respectively, which combined with our view of the operational risk of the project and the resiliency under a downside scenario results in a preliminary SACP of 'bbb'. Finally, during the refinancing period, we assume that the project will pay the outstanding debt only through the cash sweep mechanism. Given that DSCRs are more robust relative to fully amortizing structures and reliance on the sweep to pay down the debt, we adjust the preliminary SACP, leading to an adjusted operations phase SACP at Stage II of 'bb'." VTR FINANCE: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed the Long Term (LT) Local-Currency (LC) and Foreign-Currency (FC) Issuer Default Ratings (IDR) of VTR Finance N.V. at 'BB-' with a Stable Rating Outlook. Also, Fitch has upgraded VTR Finance N.V.'s Senior secured notes of USD550 million due in 2028 to 'BB'/'RR3' from 'BB-'/'RR4'. In addition, Fitch affirmed the VTR Comunicaciones SpA revolving credit facility (RCF), Senior Secured Notes of USD540 million (2028) and Senior Secured Notes for USD410 million (2029) at 'BB+'/'RR2'. Fitch has removed the Under Criteria Observation (UCO) designation from the instrument ratings and IDR. The rating actions reflect Fitch's expectation that VTR will delever organically and that acquisitions will not compromise the company's capital structure. The instrument ratings reflect Fitch's revised approach under its Recovery Ratings Criteria published April 9, 2021. KEY RATING DRIVERS Secured Bond Enhances Recovery Prospects: VTR Comunicaciones SpA's 'BB+' secured debt ratings positively incorporate the collateral support, i.e. the pledges over the equity shares of the issuer and guarantor, included in the transaction structure. VTR's debt qualifies as Category 2 first lien, which results in a 'RR2' rating, considering the Recovery Rating's cap defined for Chile in Country-Specific Treatment of Recovery Ratings Rating Criteria. The 'RR3' on the parent company notes reflects its structural subordination and security relative to the secured VTR Comunicaciones instruments resulting in an a one-notch uplift from the IDR. Fitch's Corporates Recovery Ratings and Instrument Ratings Criteria (published April 9th, 2021) applies a generic approach to rate and assign RRs to instruments for issuers rated 'BB-' or above. The process of establishing ratings for the obligations of issuers rated between 'AAA' and 'BB-' refers, for the most part, to aggregate recoveries in the market as a whole, and not to issuer-specific recovery analysis. Coronavirus Impact in Operational Performance: During the lockdowns in 2020, customers significantly increased network usage. The increased data consumption caused network issues that led to a reduction in subscribers and average revenues per user (ARPU) of 3.9% and 3% between 1Q20 and 1Q21, respectively. In addition, higher costs related to improve service quality and impact of FX reduced the EBITDA margin from 40% in 2019 to 36.7% in 2020 and 35.6% in LTM March 2021. The company initiated corrective measures to improve service quality and expand network capacity through fiber. Fitch expects VTR to pass 400 thousand new homes with fiber in 2021. Considering these factors and the strong competitive environment, Fitch expects a conservative revenue growth and EBITDA recovery in the medium term. Gradual Deleverage Expected: Gross and net leverage of VTR increased to 5.8x and 5.3x respectively, LTM March-2021 from 4.2x and 3.9x in 2019, high for the rating level. In 1Q21 VTR issued a refinancing Senior note for USD410 million, used to pay CLP174 billion of term loans, CLP43 billion of notes and strengthen its cash position. Fitch expects total debt/EBITDA of around 4.5x in the medium term, partially due to the lower leverage involved with the expected acquisition and consolidation of Telefónica Costa Rica (TFCR), as well the gradual recovery of its operational performance after the pandemic. The company's financial structure is supported by its strong operating performance in the Chilean broadband and Pay-TV sector, which is generally less volatile and competitive than mobile. Investments Pressures FCF: Fitch expects pressured FCF in 2021 due to higher capital intensity for VTR of around 23%-25% of the revenues. The higher investments should strengthen the quality of service and network competitiveness. The pressured FCF is compensated by the strong liquidity and extended schedule of maturities. Business Expansion in Costa Rica: The acquisition of TFCR will improve diversification, without putting significant pressure on leverage. The mobile operator will be acquired for USD500 million, on a cash- and debt-free basis, financed through a combination of equity (80% from LLA and 20% from the minority shareholders) and debt (USD300 million) raised in Costa Rica. Fitch expects net leverage of around 4.0x for the TFCR transaction. Fitch expects that LLA will allocate its 80% stake in Cabletica into the VTR credit pool by 2022, at which point VTR will begin consolidating the TFCR and Cabletica financials. TFCR is the second largest mobile service provider, with a customer base of 2.3 million as of June 30, 2020. Cabletica is one of the leading fixed line providers in Costa Rica, with the number two broadband, number one pay TV, and number two telephone positions by subscriber bases. LLA Linkages: VTR is a wholly owned subsidiary of LLA. LLA's financial management involves moderately high amounts of leverage across its operating subsidiaries, each ring-fenced from one another. While the credit pools are legally separate, LLA has a history of moving cash around the group for investments and acquisitions. This approach improves financial flexibility, but it also limits deleveraging prospects.. Weak performance in the other credit pools or in the broader group could place more financial burdens on VTR, given LLA's acquisitive nature. Strong Market Position: VTR is the leading provider of broadband and Pay TV services in Chile, with subscriber market shares of 34% and 32%, respectively, as of December 2020, followed closely by its main incumbent competitor, Telefonica Chile S.A. (BBB+/Stable). VTR is also the second largest fixed-line telephony provider, with 20% of subscriber market share. Despite the subscriber reductions in 2020, VTR should maintain it solid market position based on effective bundling product strategy and improving network quality. In mobile, the company operates as a virtual network operator with a low market share of 1%. Fitch does not expect any material cash flow contribution from this segment in the short to medium term. DERIVATION SUMMARY VTR's competitive position and financial profile compare favorably with other speculative-grade telecoms in the region, although the company's relative lack of diversification and LLA's financial management will likely limit it to the 'BB' category. VTR has the most conservative financial profile of the LLA companies. Compared with sister company Cable & Wireless, VTR benefits from the Chilean operating environment and its status as the largest broadband and pay TV operator by subscriber share. Cable & Wireless has larger scale, better service and geographical diversification than VTR. Following the AT&T acquisition, LCPR's scale is comparable with VTR's, but with greater product diversification. VTR has a similar fixed-line operating profile to Telefonica Chile (BBB+/Stable), although Telefonica Chile benefits from leverage metrics around 2.0x-2.5x lower than VTR's, and the scale and diversification provided by its parent Telefonica Moviles Chile S.A. (BBB+). Compared with WOM Mobile S.A. (WOM, BB-/Stable), VTR has better financial diversification and scale, as well as more stable cash flow generation and a stronger EBITDA margin. WOM's ratings reflect the company's short but impressive track record in Chile, taking on much larger competitors and demonstrating a clear path to deleveraging. WOM's ratings, like VTR's, incorporate Fitch's expectations that the company will be managed to moderate levels of net leverage. LLA has a similar business profile to Millicom international Cellular (MIC; BB+/Stable) but higher leverage. Millicom has embarked on an acquisitive spree over the last two years, buying Cable Onda (BBB-/Stable) and Telefonica S.A.'s (BBB/Stable) operations in Panama. KEY ASSUMPTIONS -- Conservative recovery of RGU and ARPU in 2021 and 2022, supported by a strengthened network and lower impact from the coronavirus pandemic. Revenue increase in the mid-single digits; -- EBITDA margin recovery to levels of 37%-38% in the medium term, due to higher cost control, and an increase in ARPU; -- Acquisition of TFCR for USD500 million, financing approximately USD300 million of new debt allocated at Cabletica and USD200 of capital increase. -- EBITDA margin of TFCR of around 27% and revenues of USD270 million. Consolidation starting in 2022, with Cabletica Operation; -- Capex-to-sales ratio to remains around 25%, reducing to 2022 in the medium term, with a focus in Fiber Optic network expansion; -- Positive but non-meaningful FCF generation in 2021-2023. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch does not anticipate an upgrade in the near term given the company's and LLA's leverage profiles; -- Longer-term positive rating actions are possible to the extent that debt to EBITDA and net debt to EBITDA sustained below 4.50x and 4.25x, respectively, at both VTR and LLA. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Total debt/EBITDA and net debt/EBITDA at VTR sustained above 5.25x and 5.00x, respectively, due to a combination of organic cash flow deterioration or M&A; -- While the three credit pools are legally separate, LLA net debt/EBITDA sustained above 5.0x could result in negative rating actions for one or more rated entities in the group. 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 Sound Liquidity Profile - Pressured Leverage: VTR's liquidity profile is sound as the company does not face any debt maturity until 2028 (senior secured notes of USD550 and USD540 million). After the issuance of USD410 million used to refinance CLP174 million (USD240 million) of term loan and prepay 10% (USD60 million or CLP43 billion) of VTR Comunicaciones SpA's outstanding 2028 notes. The company's cash balance amounted to CLP99.6 billion by end-March 2021, and its operational cash flow generation is relatively stable. Liquidity is further supported by VTR's access to committed credit facilities. The increase of the cash seen in March 2021 compared with December 2020 (CLP92 billion) is mainly due to a new senior secured bond for USD410 million issuance. ISSUER PROFILE VTR Finance N.V. is a Spain-domiciled telecom operator whose operations are based in Chile. The company offers fixed and mobile services to consumers and businesses throughout the country. SUMMARY OF FINANCIAL ADJUSTMENTS Standard adjustments made; debt amount adjusted by FX hedge; reclassified certain operating expenses and working capital items; added interest payable to total debt. ESG CONSIDERATIONS VTR Finance N.V. has an ESG Relevance Score of '4' for Financial Transparency due to the company's relatively opaque financial disclosure and management strategy, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Consumers to Pay Refinery's US$53-Mil Debt -------------------------------------------------------------- Dominican Today reports that the debt that the Dominican Republic government has accumulated with the Dominican Petroleum Refinery PDV (Refidomsa) for not passing on the real cost of fuels to users amounts to about RD$3.0 billion (US$53 million). Refidomsa president Leonardo Aguilera revealed that he was in talks with the Ministry of Finance and the Ministry of Industry, Commerce and MSMEs to seek solutions to the debt, according to Dominican Today. Aguilera stated that if Refidomsa demanded the payment of fuel at the price due, this would be reflected in the final cost of hydrocarbons and "we would have an increase in fuels every week," 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 ============= SAGICOR GROUP: Is Structuring US$285MM Sale of Clarendon Plant -------------------------------------------------------------- RJR News reports that Sagicor Group Jamaica is structuring a US$285 million sale and leaseback of the combined heat and power plant in Clarendon owned by the US-based New Fortress Energy Inc. The transaction is subject to regulatory approval. Sagicor Group Jamaica said as anchor investors, its entities will invest US$100 million in the transaction. It added that Sagicor Investments Jamaica will act as the lead arranger for the balance of US$185 million from local, regional, and international investors, according to RJR News. The transaction is being conducted in partnership with NFE South Power Holdings Limited, a subsidiary of New Fortress Energy Inc, the report notes. About Sagicor Headquartered in St. Michael, Barbados, Sagicor Financial Corporation -- http://www.sagicorlife.com/-- is a financial services company, and through its subsidiaries, offers life and health insurance, annuities, pensions, property and casualty insurance, and banking services in the Caribbean, Latin America, the United Kingdom, and the United States. Its Sagicor Life Inc segment offers life and health insurance, annuities, and pension investment administration services in Barbados, Eastern Caribbean, Dutch Caribbean, Bahamas, Central America, and Trinidad and Tobago. In September 2020, A.M. Best affirmed the Financial Strength Rating of B++ (Good) and the Long-Term ICR of "bbb+" of Sagicor Life Jamaica Limited. ===================== P U E R T O R I C O ===================== PUERTO RICO: Cordova, Sheppard 4th Update on FGIC Noteholders ------------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, the law firms of Cordova & Dick, LLC and Sheppard Mullin Richter & Hampton LLP submitted a fourth supplemental verified statement to disclose an updated list of Ad Hoc Group of FGIC Noteholders they are representing in the Chapter 11 cases of The Financial Oversight and Management Board for Puerto Rico, as representative of The Commonwealth of Puerto Rico, et al. The Ad Hoc Group of FGIC Noteholders, of certain series of notes issued by the Commonwealth of Puerto Rico and/or its various instrumentalities, agencies and authorities, including those series of insured Notes guaranteed by the Financial Guaranty Insurance Company and issued pursuant to Resolution 98-06 by the HTA, those series of insured Notes guaranteed by FGIC and issued in accordance with the terms of the Trust Agreement, dated as of March 24, 2006, between the Puerto Rico Convention Center Authority and JPMorgan Chase Bank, NA, as trustee, as amended, and those series of Notes guaranteed by FGIC and issued in accordance with the terms of the Trust Agreement, dated as of October 1, 1988, between the Puerto Rico Infrastructure Financing Authority and U. S. Bank Trust National Association, as successor Trustee. In January 2018, the Ad Hoc Group of FGIC Noteholders retained Stroock & Stroock & Lavan LLP as counsel in connection with the restructuring of the HTA Notes and the HTA's Title III cases pending before this Court. In February 2018, the Ad Hoc Group of FGIC Noteholders also retained Cordova & Dick, LLC as local counsel, in connection with the restructuring of the HTA Notes and the HTA Title III Case. On February 13, 2018, Stroock and Cordova & Dick filed a Verified Statement of the Ad Hoc Group of Noteholders Of FGIC-Insured Notes Pursuant to Bankruptcy Rule 2019 in the HTA Title III Case. In July 2019, the Ad Hoc Group of FGIC Noteholders retained Sheppard Mullin Richter & Hampton LLP and on July 26, 2019, Sheppard filed a notice of appearance with the Court in connection with the restructuring of the HTA Notes and the HTA Title III Case. On June 15, 2021, Sheppard filed a Notice of Appearance with the Court in connection with the restructuring of the HTA Notes, the CCDA Notes and the PRIFA Notes in the Commonwealth Title III Case. On July 30, 2019, the Court entered into an order granting Stroock's motion to withdraw as counsel of record for the Ad Hoc Group of FGIC Noteholders in connection with the HTA Notes and the HTA Title III Case. On February 20, 2020, Sheppard filed a First Supplemental Verified Statement of the Ad Hoc Group of Noteholders Of FGIC-Insured Notes Pursuant to Bankruptcy Rule 2019 in the HTA Title III Case. On February 25, 2020, Sheppard filed a Second Supplemental Verified Statement of the Ad Hoc Group of Noteholders Of FGIC-Insured Notes Pursuant to Bankruptcy Rule 2019 in the HTA Title III Case. On June 8, 2020, the Court entered into an Order Further Amending Case Management Procedures in the Commonwealth Title III Case, which among other things, revises certain disclosure requirements. On July 3, 2020, Sheppard filed a Third Supplemental Verified Statement of the Ad Hoc Group of Noteholders Of FGIC-Insured Notes Pursuant to Bankruptcy Rule 2019 in the HTA Title III Case. In January 2018, Taconic Capital Advisors LP and Monarch Alternative Capital LP established the Ad Hoc Group of FGIC Noteholders. As of April 30, 2021, Monarch Alternative Capital LP notified Sheppard that it had withdrawn as a member of the Ad Hoc Group of FGIC Noteholders. As of June 1, 2021, Aurelius Capital Management, LP, Canyon Capital Advisors LLC, First Ballantyne LLC, and Moore Capital Management, LP each notified Sheppard that they agreed to be a member of the Ad Hoc Group of FGIC Noteholders. Sheppard and Cordova & Dick represent only the members of the Ad Hoc Group of FGIC Noteholders and do not represent or purport to represent any persons or entities other than the Ad Hoc Group of FGIC Noteholders in connection with the HTA Title III Case and the Commonwealth Title III Case. In addition, as of the date of this Verified Statement, the Ad Hoc Group of FGIC Noteholders, both collectively and through its individual members, does not represent or purport to represent any other entities in connection with the HTA Title III Case or the Commonwealth Title III Case. Likewise, members of the Ad Hoc Group of FGIC Noteholders are filing this Verified Statement exclusively on their own behalves, and do not assume any fiduciary or other duties to any other creditor or person. Sheppard and Cordova & Dick have been advised by the members of the Ad Hoc Group of FGIC Noteholders that attached hereto as Exhibit A is a list setting forth the name, address and the nature and amount of all applicable disclosable economic interests held or managed by each member of the Ad Hoc Group of FGIC Noteholders, as required by the Order. The information set forth in Exhibit A and herein is intended only to comply with Bankruptcy Rule 2019 and the Order, and is not intended for any other purpose. Nothing contained in this Verified Statement should be construed as a limitation upon, or waiver of the right of any individual member of the Ad Hoc Group of FGIC Noteholders, including, without limitation, the right to assert, file and/or amend its or their claims in accordance with applicable law and any orders entered in the HTA Title III Case or the Commonwealth Title III Case. The information contained in Exhibit A is based upon information provided by the applicable members of the Ad Hoc Group of FGIC Noteholders to Sheppard and Cordova & Dick. Sheppard and Cordova & Dick do not make any representation regarding the validity, amount, allowance, or priority of such claims, and reserve all rights with respect thereto. Sheppard and Cordova & Dick do not own, nor has Sheppard and Cordova & Dick ever owned, any claims against or interests in the HTA or the Commonwealth. The Ad Hoc Group of FGIC Noteholders, through its undersigned counsel, reserves the right to amend and/or supplement this Verified Statement in accordance with the requirements set forth in Bankruptcy Rule 2019 and the Order at any time in the future. Local Counsel to the Ad Hoc Group of FGIC Noteholders can be reached at: CORDOVA & DICK, LLC Brian M. Dick Biascoechea #403 Calle 12 de Octubre Urb. El Vedado San Juan, PR 00918 P.O. Box 194021 San Juan, PR 00919-4021 Telephone: (787) 452-6425 USDC No.: 230,903 E-mail: bmd@bmdcounselors.com Counsel to the Ad Hoc Group of FGIC Noteholders can be reached at: SHEPPARD MULLIN RICHTER & HAMPTON LLP Lawrence A. Larose, Esq. 30 Rockefeller Plaza New York, NY 10112 Telephone: (212) 896-0627 Facsimile: (917) 438-6197 A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/3cQjMdo About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that maybe referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and chair of a committee to review professionals' fees. PUERTO RICO: Plan Patently Unconfirmable, Ambac Assurance Says -------------------------------------------------------------- Ambac Assurance Corporation objects to the Disclosure Statement for the Third Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, et al. The Disclosure Statement fails to provide creditors adequate information on numerous key issues that is needed to enable creditors to make an informed judgment on whether to support the Plan. The Court should not approve the Disclosure Statement. At a minimum, it should require significant revisions before it commits untold resources in using this document to solicit creditor votes. * First, the preemption provision of the Plan relies on the theory that PROMESA, upon its enactment, preempted obligations under any Commonwealth law that appropriates funds to Commonwealth instrumentalities the same theory the Board has advanced on this gating issue in the ongoing Revenue Bond Adversary Proceedings. Yet the Plan offers no credible explanation as to why these statutes are inconsistent with PROMESA, nor can the Board demonstrate that Congress intended this sweeping preemptive effect. * Second, if the Court accepts the Board's positions on preemption, this would render the Plan's classification of claims impermissible as a matter of law under Granada Wines, Inc. v. New England Teamsters & Trucking Industry Pension Fund, 748 F.2d 42 (1st Cir. 1984), which requires that all creditors of equal rank be placed in the same class. * Third, under the Board's own economic and financial projections, the Plan is not feasible. Indeed, the Fiscal Plan upon which the Plan is based assumes that the Commonwealth will default on its obligations by fiscal year 2036 a remarkable feature that likewise renders the Plan unconfirmable on its face. * Fourth, the Plan contains improper third-party releases, which would prevent creditors from enforcing claims against numerous non-Debtor entities, including HTA, CCDA, and PRIFA. These releases are mandatory under the Plan's creditors are unable to opt out. * Fifth, the Disclosure Statement's belatedly-filed best interests report does not offer a realistic assessment of what creditor recoveries would be under Commonwealth law in the absence of Title III. Instead, it advances a compromised analysis based on the Board's litigation driven pessimism regarding the Commonwealth's economic future. * Sixth, in two of its plan support agreements, the Board has pledged cash fees to certain creditors in exchange only for their affirmative vote in support of the Plan, and no other consideration. This is vote buying. * Finally, even if the Plan were not patently unconfirmable for the foregoing reasons, the Disclosure Statement does not contain information necessary for creditors to reach an informed judgment on numerous key issues that are highly relevant to creditors' voting decisions. Attorneys for Ambac Assurance: FERRAIUOLI LLC Roberto Camara-Fuertes Sonia Colon 221 Ponce de Leon Avenue, 5th Floor San Juan, PR 00917 Telephone: (787) 766-7000 Facsimile: (787) 766-7001 E-mail: rcamara@ferraiuoli.com scolon@ferraiuoli.com MILBANK LLP Dennis F. Dunne Atara Miller John J. Hughes, III Jonathan Ohring 55 Hudson Yards New York, NY 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219 E-mail: ddunne@milbank.com amiller@milbank.com gmainland@milbank.com jhughes2@milbank.com johring@milbank.com About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that maybe referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and chair of a committee to review professionals' fees. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD GENERATION: Fitch Lowers 2027 Unsec. Notes to 'BB' ----------------------------------------------------------- Fitch Ratings has downgraded Trinidad Generation Unlimited's (TGU) senior unsecured notes due 2027 to 'BB' from 'BB+'. The downgrade reflects ongoing macroeconomic deterioration in Trinidad and Tobago. A recent surge in coronavirus cases combined with a long-term decline in natural gas production has worsened the country's short- and medium-term economic growth outlook, even as the government's fiscal deficit remains high, thus putting increased pressure on the country's public finances. The rating reflects TGU's importance to Trinidad and Tobago's energy matrix and operational integration with its ultimate parent, the country's government. TGU's generation capacity is fully contracted under a long-term power purchase agreement (PPA) with state-owned Trinidad and Tobago Electricity Commission (T&TEC), with payments under the PPA in turn guaranteed by the government. KEY RATING DRIVERS Strong Linkage with Government: Fitch considers TGU's credit quality as being materially linked to that of Trinidad and Tobago, given that the PPA between TGU and T&TEC, as off-taker, is fully backed by a government guarantee. The asset is aligned with the sovereign's overall strategy to maintain low energy prices as a competitive edge for private investment. TGU is indirectly controlled by the government through the National Investment Fund Holding Company Limited (NIFHCL), a company created by the government to hold its investment in TGU together with holdings of other, publicly traded assets. Stable Cash Flows: TGU's stable and predictable cash flows result from the U.S.-dollar-denominated PPA signed with T&TEC in September 2009 for 30 years, surpassing the 2027 maturity of the company's outstanding notes. Approximately 99% of TGU revenues are generated from the capacity payments, with energy sales making up the balance. Its capacity payments assume plant availability of 93%, allowing the company a cushion of approximately 5% planned maintenance and 2% unplanned shutdowns. For availability below 93%, the company still receives a pro-rated capacity payment. In recent years, TGU has achieved availability factors of around 92% or above. Adequate Capital Structure: The company's leverage, given its very low business risk and stable cash flows, is consistent with investment-grade peers that operate under toll-based revenue structures with little or no market-based risks, such as electric transmission and pipeline companies. As of December 31, 2020, TGU had total debt/EBITDA of approximately 7.4x. Under Fitch's forecast assumptions, it should remain at that level through 2024. The company's cash flow predictability will provide more than adequate debt service coverage, measured as EBITDA to interest paid, of around 2.5x-2.6x until the bond begins amortizing in 2025. Robust Profitability: Under the PPA, the government guarantees fuel and water supplies, and supply interruption of either has no effect on TGU's receipt of capacity revenues. Moreover, as fuel is supplied and guaranteed by T&TEC, payment and delivery of the fuel is entirely T&TEC's obligation, limiting operational risk. Fuel purchases are not recorded as costs in TGU's financial statements, explaining the company's high EBITDA margins of 75%-80%. Strategically Important Asset: TGU owns and operates a 720MW net capacity combined-cycle gas-fired plant, representing 34% of the country's installed capacity and covering approximately 55% of the country's average demand. The thermal power plant's operations are supported by the country's large natural gas reserves. Under the sovereign's natural gas policies, the power sector receives priority for delivery of natural gas in the event of curtailments in gas supply. DERIVATION SUMMARY The rating on TGU's notes is lower than that for other utility companies in Latin America that operate under a tolling structure, such as Chile's GNL Quintero S.A. (GNLQ; BBB+/Stable) and Transelec S.A. (BBB/Stable), both of which benefit from Chile's stronger macroeconomic conditions. TGU's counterparty risk with the Trinidad and Tobago government effectively anchors its rating at a level below that of toll-based peers. The company's notes are rated four notches below GNLQ's Issuer Default Rating, as GNLQ benefits from Chile's strong operating environment and regulatory framework. Furthermore, GNLQ's gross leverage is expected to fall below 6.0x this year, in the absence of additional investments. TGU's leverage, by contrast, is expected to remain above 7.0x until its notes begin amortizing in 2025. TGU's notes are rated three notches below those of Transelec, which also benefits from Chile's relatively strong operating environment. Fitch expects Transelec's leverage to remain at around 6.0x-6.5x as the company expands operations in the country. KEY ASSUMPTIONS -- Plant's effective availability at 92% during forecast period except 91% in 2023 due to scheduled maintenance; -- PPA prices linked to inflation; -- Annual capex in the range of USD10 million-USD11 million; -- Dividends of USD11 million in 2021 and USD10.5 million thereafter. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Material improvement in the country's overall economic condition. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Continued deterioration of macroeconomic conditions, leading to weaker sovereign indicators; -- Material delinkage from the government; -- A debt service coverage ratio below 1.5x on a sustained basis. 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 Healthy Liquidity: TGU's liquidity is strong, with the company holding some USD147 million in cash and short-term investments as of Dec. 31, 2020. The high liquidity levels reflect the company policy of maintaining cash reserves to meet its two annual bond interest payments and to prepare for the amortization of the principal of its 2027 bond. ISSUER PROFILE Trinidad Generation Unlimited (TGU) owns and operates a 720MW net capacity combined-cycle gas-fired plant located in the Republic of Trinidad & Tobago. TGU is controlled by the government of the Republic of Trinidad & Tobago (GRTT) through a holding company, National Investment Fund Holding Company Limited (NIFHCL). ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of Environmental, Social and Governance (ESG) credit relevance is a score of '3', indicating 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. =============== X X X X X X X X =============== LATAM: CDB Urges Increased Competitiveness to Induce Growth ----------------------------------------------------------- RJR News reports that the Caribbean Development Bank (CDB) says increasing competitiveness has to be the top priority for inducing strong and inclusive growth and overcome the impact of the COVID-19 pandemic. Addressing a seminar, Ian Durant, Director of Economics at the CDB, explained that the region's economies were small with no reserve currencies and were heavily reliant on imports to maintain standards of living, according to RJR News. Mr. Durrant said 13 of CDB's 19 Borrowing Member Countries recorded double-digit declines in gross domestic product (GDP), with an average of downturn of 7.2% in 2020, the report notes. CDB projects a moderate, average growth of 3.4% in Borrowing Member Countries this year, and a slow return to debt sustainability in the region, the report adds. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *