/raid1/www/Hosts/bankrupt/TCRLA_Public/210716.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
Friday, July 16, 2021, Vol. 22, No. 136
Headlines
B A H A M A S
MERIDIEN INTERNATIONAL: Creditors' Proofs of Debt Due July 23
B R A Z I L
BANCO BTG PACTUAL: Fitch Puts Final BB- Rating to USD500MM Notes
OI SA: Gets Court Okay to Sell Fiber Unit to BTG Funds
C H I L E
LATAM AIRLINES: Creditors' Committee Members Disclose Holdings
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Central Bank Reviews US$3.8B Liquidity Program
DOMINICAN REPUBLIC: Haiti Crisis Will Hurt Trade With Country
DOMINICAN REPUBLIC: Inflation From January to June Stands at 4.01%
M E X I C O
TULUM MUNICIPALITY: Fitch Affirms 'BB' LT IDR, Outlook Stable
P A R A G U A Y
BANCO CONTINENTAL: Fitch Affirms 'BB+' LT IDR, Outlook Stable
T R I N I D A D A N D T O B A G O
CL FIN'L: CLICO Cuts Debt to Taxpayers to $1.6 Billion
[*] TRINIDAD & TOBAGO: Construction Work Resumes Across Country
- - - - -
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B A H A M A S
=============
MERIDIEN INTERNATIONAL: Creditors' Proofs of Debt Due July 23
-------------------------------------------------------------
The creditors of Meridien International Bank Limited are required
to file their proofs of debt by July 23, 2021, to be included in
the company's first and final dividend distribution.
The company has commenced liquidation proceedings.
The company's liquidator is:
Juan Manual Lopez
P.O. Box N-123
Nassau, New Providence
The Bahamas
E-mail: mibi@kpmg.com.bs
===========
B R A Z I L
===========
BANCO BTG PACTUAL: Fitch Puts Final BB- Rating to USD500MM Notes
----------------------------------------------------------------
Fitch Ratings has assigned Banco BTG Pactual S.A.'s USD500 million
senior unsecured notes due 2025 a 'BB-' final rating.
The notes are part of BTG Pactual's proposed reopening of senior
unsecured notes, originally issued in November 2019 and issued
through BTG Pactual's Cayman Islands Branch under the parent bank's
existing USD5 billion medium-term note program.
The final rating is in line with the expected rating that Fitch
assigned to the proposed debt on Jun. 30, 2021.
KEY RATING DRIVERS
The senior unsecured notes are rated at the same level as the
bank's 'BB-' Long-Term Issuer Default Ratings (IDRs), which
reflects the unsecured nature of the instruments. The notes will
also rank pari passu with other senior unsecured obligations. The
probability of default of any senior obligation is tied to that of
the bank (reflected in the Long-Term IDR), as a default of senior
obligations would be treated by Fitch as default by the entity.
BTG Pactual's IDRs are aligned with its 'bb-' Viability Rating
(VR), indicating that its creditworthiness is driven by the bank's
intrinsic credit profile.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Upgrades of the debt ratings would depend on upgrades of BTG
Pactual's IDRs, given it serves as an anchor rating for
issuances.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Debt rating downgrades would depend on downgrades of BTG
Pactual's IDRs, given that its serves as an anchor rating for
issuances.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
OI SA: Gets Court Okay to Sell Fiber Unit to BTG Funds
------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Brazilian
telecom Oi SA said it had received the go-ahead from a court to
sell a majority stake in its fiber optic business to funds managed
by Banco BTG Pactual.
Oi, which filed for bankruptcy protection in 2016 and has since
been selling assets to pay creditors, said the court had determined
there were no other bids on the table, according to
globalinsolvency.com.
Oi in April accepted a 12.9 billion reais ($2.5 billion) offer for
a 57.9% stake in its fiber optic business from BTG's funds, the
report notes. Other parties, however, still had the right to make
bids although BTG's funds had the right to match any offer, the
report relays.
About Oi SA
Headquartered in Rio de Janeiro, and operating almost exclusively
within Brazil, the Oi Group provides services like fixed-line data
transmission and network usage for phones, internet, and cable,
Wi-Fi hot-spots in public areas, and mobile phone and data
services, and employs approximately 142,000 direct and indirect
employees.
On June 20, 2016, pursuant to Brazilian Law No. 11.101/05 (the
'Brazilian Bankruptcy Law'), Oi S.A. and certain of its
subsidiaries filed for recuperao judicial (judicial reorganization)
in Brazil.
On June 21, 2016, OI SA and its affiliates Telemar Norte Leste S.A.
and Oi Brasil Holdings Cooperatief U.A. commenced Chapter 15
proceedings (Bankr. S.D.N.Y. Lead Case No. 16-11791). Ojas N.
Shah, as foreign representative, signed the petitions.
Coop and PTIF are also subject to proceedings in the Netherlands.
The Chapter 15 cases are assigned to Judge Sean H. Lane.
In the Chapter 15 cases, the Debtors are represented by John K.
Cunningham, Esq., and Mark P. Franke, Esq., at White & Case LLP, in
New York; and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq., and
Laura L. Femino, Esq., at White & Case LLP, in Miami, Florida.
On July 22, 2016, the New York Court recognized the Brazilian
Proceedings as foreign main proceedings with respect to the Chapter
15 Debtors, and granted certain additional related relief.
As reported in the Troubled Company Reporter-Latin America in May
2020, Fitch Ratings has downgraded Oi S.A's ratings, including the
Long-Term Foreign Currency Issuer Default Rating to 'CCC+' from
'B-', the LT Local Currency IDR to 'CCC+' from 'B-',
the National LT Rating to 'B(bra)'/Stable' from 'BB-(bra')/Stable,
and the 2025 notes to 'CCC+'/'RR4' from 'B-'/'RR4'. The Rating
Outlook on the international ratings has been removed.
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C H I L E
=========
LATAM AIRLINES: Creditors' Committee Members Disclose Holdings
--------------------------------------------------------------
In the Chapter 11 cases of LATAM Airlines Group S.A., et al., the
law firm of Kramer Levin Naftalis & Frankel LLP submitted a
verified statement under Rule 2019 of the Federal Rules of
Bankruptcy Procedure, to disclose that it is representing the
Parent Ad Hoc Claimant Group.
As of July 9, 2021, members of the Parent Ad Hoc Claimant Group and
their disclosable economic interests are:
Aurelius Capital Management, LP
535 Madison Avenue, 31st Floor
New York, NY 10022
* Holder of approximately $137,806,712.21 of Claims against
LATAM, $1,000,000 of 2026 Notes, and 881,783 of local shares of
common stock.
Citigroup Financial Products, Inc.
388 Greenwich Street
Tower Building
New York, NY 10013
* Holder of approximately $60,764,029.39 of Claims against LATAM,
$25,900,000 of 2026 Notes, $24,750,000 of the Revolving Credit
Facility, $53,600,000 in other Claims against subsidiary
Debtors, and $335,000 in administrative expense claims.
Monarch Alternative Capital LP
535 Madison Avenue
New York, NY 10022
* Holder of approximately $178,082,985.95 of Claims against LATAM
and certain related claims filed against Debtor subsidiaries,
$78,127,000 of 2026 Notes, and $30,438,000 of 2024 Notes.
On or about June 9, 2021, the Parent Ad Hoc Claimant Group retained
Kramer Levin to represent it in connection with the above-captioned
Chapter 11 Cases.
Each member of the Parent Ad Hoc Claimant Group has consented to
Kramer Levin's representation.
Kramer Levin reserves the right to amend or supplement this
Statement.
Counsel to the Parent Ad Hoc Claimant Group can be reached at:
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Kenneth H. Eckstein, Esq.
Douglas H. Mannal, Esq.
Rachael L. Ringer, Esq.
Douglas Buckley, Esq.
1177 Avenue of the Americas
New York, NY 10036
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
Email: keckstein@kramerlevin.com
dmannal@kramerlevin.com
rringer@kramerlevin.com
dbuckley@kramerlevin.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3wzUyqN
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados,
is the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
Ad Hoc Committee of Shareholders.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Central Bank Reviews US$3.8B Liquidity Program
------------------------------------------------------------------
Dominican Today reports that Central Banker, Hector Valdez Albizu,
met with the members of Dominican Republic's Association of
Multiple Banks (ABA) to review the results of the measure to
provide over RD$215 billion (US$3.8 billion) in liquidity, from
which nearly 90,000 credit subjects have benefited through new
loans, refinancing and debt restructuring at low interest rates.
Likewise, measures were established for the renewal of credit lines
at maturity, in order to guarantee that the different economic
sectors have the resources to continue developing their productive
activities normally and thus continue to contribute to the
reactivation of the Dominican economy, according to Dominican
Today.
"We have made every possible effort so that these stimulus measures
have been a decisive step in the economic recovery of the country,
making resources of more than RD$215 billion available to sectors
as relevant as mipymes (micro, small and medium-sized companies),
commerce, households, manufacturing, construction, agriculture,
tourism and export," Valdez said, 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).
DOMINICAN REPUBLIC: Haiti Crisis Will Hurt Trade With Country
-------------------------------------------------------------
Dominican Today reports that Haiti is Dominican Republic's second
largest trade partner with a binational exchange of US$745 million
in 2020, an amount that had already been affected by COVID-19 and
insecurity in the neighbor country.
The instability generated by the assassination of the president of
that country, Jovenel Moise, will now be added, according to
Dominican Today.
Business sectors agree that the situation will lead to a decline in
trade between the two countries, and they hope that the uncertainty
will not extend over time, the report notes.
"This will have repercussions for a while, which we hope will not
be much," said the executive vice president of the Association of
Industries of the Dominican Republic (AIRD), Circe Almanzar, the
report relays.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings on Jan. 18, 2021, assigned a 'BB-' rating to
Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041.
Concurrently, the Dominican Republic reopened its 2030 4.5% notes
for an additional USD1.0 billion, which Fitch rates 'BB-', raising
the total outstanding amount of the 2030 notes to USD2.0 billion.
Standard & Poor's, on December 4, 2020, affirmed its 'BB-'
long-term foreign and local currency sovereign credit ratings on
the Dominican Republic. The outlook remains negative. S&P also
affirmed its 'B' short-term sovereign credit ratings. The negative
outlook reflects S&P's view that it could lower the ratings on the
Dominican Republic over the next six to 18 months, given the
severe impact of the COVID-19 pandemic on the sovereign's already
vulnerable fiscal and external profiles, as well as the potential
for a weaker-than-expected economic recovery.
Moody's credit rating for Dominican Republic was last set at Ba3
with stable outlook (July 2017). Fitch's credit rating for
Dominican Republic was last reported at BB- with negative outlook
(May 8, 2020).
DOMINICAN REPUBLIC: Inflation From January to June Stands at 4.01%
------------------------------------------------------------------
Dominican Today reports that the Central Bank of the Dominican
Republic (BCRD) reported that the monthly variation of the consumer
price index (CPI) was 0.63% in June 2021, placing the accumulated
inflation of the first half of the year (January-June) at 4.01%.
"The BCRD report highlights that, as the Central Bank governor
pointed out on various occasions and in publications, the general
inflation of the last 12 months would begin in June a process of
convergence towards the target range established in the monetary
program of 4% ± 1% on the policy horizon, as it actually
occurred," says the Central Bank in a statement, according to
Dominican Today.
Accumulated inflation in the last twelve months stood at 9.32% at
the end of June, the report notes. "This result constitutes a
turning point downward and is consistent with what the forecasting
system of this institution had been indicating," says the press
release, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings on Jan. 18, 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).
===========
M E X I C O
===========
TULUM MUNICIPALITY: Fitch Affirms 'BB' LT IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed Tulum's Long-Term Local Currency Issuer
Default Rating (IDR) at 'BB' and its National Long-Term Rating at
'A+(mex)'. The Rating Outlook is Stable. The Standalone Credit
Profile (SCP) is assessed at 'bb'.
The rating action considers Fitch's expectations that Tulum will
maintain low debt metrics, with a payback ratio expected of less
than 5x and debt service coverage ratios above 1.3x. The
municipality's rating reflects its 'Weaker' risk profile and 'aa'
debt sustainability under Fitch's rating case scenario.
KEY RATING DRIVERS
Risk Profile: 'Weaker'
Fitch assesses Tulum's risk profile as 'Weaker' based on a
combination of three 'Midrange' factors and three 'Weaker' factors.
All six carry equal weight in the overall assessment. Relative to
international peers, the risk is high that Tulum's ability to cover
debt service with its operating balance may weaken over the
forecast horizon (2021-2025). This could occur either because of
lower-than-expected revenue, expenditure above expectations or an
unanticipated rise in liabilities or debt-service requirements.
Revenue Robustness: 'Midrange'
Fitch considers Tulum's institutional framework for national
transfers predictable and stable. They also come from a
counterparty rated 'BBB-'. Tulum's total revenues demonstrate
superior performance when compared to the national real GDP growth
with deflated total revenues average annual growth rate of 5.0% vs.
an annual decrease of 8.3% in GDP. The municipality's operating
revenue structure is composed of 70% taxes and fees and 30%
transfers. National transfers are a stable source of revenue. In
the last five years the compound annual growth rate (CAGR) was
4.5%, supported in 2020 by the stabilization fund and extraordinary
state support to face the coronavirus pandemic's effects on Tulum.
Taxes collected locally represent an important share of the
municipality's revenue structure, a common feature in Mexican
tourist destinations. At YE 2020, taxes represented 37.3% of total
revenue with a 12.7% CAGR for the last five years (2016-2020).
Transfers received have shown a positive trend, growing 16% at YE
2020 (yoy). Fitch will monitor the flow of federal transfers
considering the municipality's conservative budget for 2021.
Revenue Adjustability: 'Weaker'
Tulum stands out for its tax collection efficiency, with much lower
dependence on federal transfers than other Mexican municipalities.
At YE 2020, own-revenue collection represented 63.8% of total
revenue (62% on average in 2016-2020); however, its concentrated
economy in tertiary activities, mainly linked to tourism, poses a
risk relative to peers during an economic recession. Tulum has
limited independent ability to increase taxes or fees given
political approval through the state congress and local council,
limiting its position with international peers.
Expenditure Sustainability: 'Midrange
Tulum is responsible for moderately countercyclical expenditures
(maintenance and public services) matched by adequate local taxes
and central government transfers to finance these expenses. During
2016-2020, operating expenditure slightly outpaced operating
revenue (CAGR of 13.5% vs 10% respectively); operating balances are
adequate, representing 7.9% of operating revenue on average in the
last three years. The municipality presented a containment in
operating expenditure of 13.7% at YE2020 after an important
increase in 2019 explained by non-recurring items. Fitch will
monitor the performance and management in opex considering levels
are still above historical patterns and administrative changes are
ahead.
Expenditure Adjustability: 'Weaker
The Financial Discipline Law mandates every local and regional
government (LRG) in Mexico must generate sustainable budgetary
balances. The budget balance rule is relatively weak, as LRGs can
report operating balances equal to zero permanently or negative
(under certain assumptions) and still comply with the rule. In
addition, the budget balance rule was put in place in 2018 for
municipalities, with a low track record of application.
Tulum has a weaker expenditure adjustability with no track record
of fiscal rules in place. The current level of capex is at around
15.7% of total expenditure (2018-2020) and could be discretionarily
adjusted or subject to reductions. Staff expenditure represents on
average 41.1% of total expenditure for the same period highly
linked to administrative outlines. Operating expenditure averaged
84.3% of total expenditure (2018-2020), a level assessed as weaker
considering that in only one year it was below the established
benchmark of 82.5% for Mexican municipalities. Tulum presents
important social needs, with a 'Low' marginality index, low levels
of education (low trained workforce) and a growth in population and
floating population that could pose a risk to the expenditure
structure (growth in touristic activities, hotels, among others).
Liabilities and Liquidity Robustness: 'Midrange'
Fitch views the national framework for debt and liquidity
management as moderate. The federal financial discipline law in
force (since 2016) has a very recent track record of application
and allows sub-nationals to acquire short-term bank lines for a
limit of up to 6% of their annual revenues and 15% of its
own-revenue for long-term debt.
Tulum does not register long-term debt, and the municipality shows
low appetite for risk. The only debts registered are short-term,
and the most recent in May 2020 for MXN40 million was with Bansi.
Proceeds were used to address the coronavirus pandemic and have
been fully paid. The municipality does not register off
balance-sheet risks.
In terms of pension liabilities, Tulum covers its retirees through
operating expenditure partly explained by its recent creation as a
Municipality, with a current total workforce of 1,599 employees as
per the most recent figures. No actions are currently considered in
terms of adhering to a state or federal regime.
Liabilities and Liquidity Flexibility: 'Weaker'
Mexican framework provides no emergency liquidity support from
upper tiers. Tulum has a limited liquidity position in terms of
cash to liabilities. At year-end 2020, total cash reached MXN90
million and in the last three years it has averaged MXN87 million.
When compared to its current liabilities, the indicator is below
1x. Counterparty risk on committed liquidity lines are rated below
BBB (Banco Bansi granted the short-term bank loan during 2020, its
current rating is 'A(mex)'); considered a weaker attribute by
Fitch. Moreover, access to market is relatively constrained.
Debt sustainability: 'aa' category
Tulum's debt sustainability score of 'aa' is the result of a low
payback ratio (net adjusted debt /operating balance under Fitch's
rating case) that is expected to remain below 5x until 2025. The
secondary metrics are the debt service coverage ratio (ADSCR),
which reaches a minimum of 1.3x in 2024, and a very low fiscal debt
burden (4.2% in 2025).
Our rating case expects new long-term debt to increase MXN91
million in 2022 and MXN40 million of short-term debt in the same
year. Operating balances are expected to recover to historical
levels assuming a slow economic recovery in the following years.
Payback ratios remain below 5.0x and fiscal debt burden still very
low. Coverage ratios will reach a one-time minimum of 1.3x in
2024.
Fitch classifies Tulum (as with all Mexican LRGs) as type B, as it
covers debt service from its cash flow on an annual basis. Tulum is
one of the 11 municipalities of the state of Quintana Roo created
on May 19, 2008. It has a population of 32,714 inhabitants
according to the 2015 census (2.2% / state population), and its
main economic activities are concentrated in local commercial
activities and tourist services.
DERIVATION SUMMARY
Tulum's 'bb' SCP is derived from a combination of a 'Weaker' risk
profile assessment and debt metrics, which resulted in 'aa' debt
sustainability assessment. The SCP also factors in appropriate
rated peers' positioning. Fitch does not consider any asymmetric
risks that could negatively impact the final IDR of 'BB' of Tulum.
Also, it does not apply extraordinary support from upper-tier
government, non-existent in the Mexican subnational framework.
KEY ASSUMPTIONS
Fitch's rating case scenario is a through-the-cycle scenario that
incorporates revenue, cost and financial risk stresses. It is based
on 2016-2020 figures and 2021-2025 projected ratios. The key
assumptions for the scenario include:
-- Operating Revenue CAGR of 13.0% 2021-2025;
-- Operating Expenditure increases CAGR of 13.7% 2021-2025;
-- Additional short and long-term debt is considered, as per
Fiscal Discipline Law in 2022;
-- Variable Interest rate (TIIE 28) of 4.8% in 2021 and 7% in
2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- If ADSCR are consistently above 2x in the rating case scenario
for the whole forecast period;
-- Improvement relative to position with peers in higher rating
levels;
-- An improvement on any of its KRF, which is currently not
expected by Fitch.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A payback ratio above 5x, which could result from an important
deterioration in the operating balance and long-term debt
disposal, and a DSCR below 1.5x under Fitch's rating case
scenario.
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.
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 Tulum,
either due to their nature or the way in which they are being
managed by Tulum.
===============
P A R A G U A Y
===============
BANCO CONTINENTAL: Fitch Affirms 'BB+' LT IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' Long-Term Foreign and Local
Currency Issuer Default Ratings (IDR) of Banco Continental
S.A.E.C.A. (Continental). The Rating Outlook is Stable. Fitch also
affirmed the Short-Term Foreign and Local Currency IDRs at 'B'.
KEY RATING DRIVERS
Continental's IDRs are driven by its Viability Rating (VR) of
'bb+', which is highly influenced by its company profile, due to
its strong local franchise as the largest Paraguayan bank with
15.3% of loans of the banking system, albeit moderate on a global
basis and its less diversified business model due to its low retail
portfolio. Its strong capitalization metrics relative to its local
and similarly rated international peers also highly influence the
bank's ratings. Additionally, the VR considers Fitch expectations
on a more stable operating environment (OE) over the rating
horizon, the bank's good liquidity ratios, still reasonable
profitability and asset quality, and its stable but concentrated
funding.
In Fitch's opinion, Continental's capitalization is its main
financial strength. The bank's Fitch Core Capital-to-risk-weighted
assets (RWA) ratio continued its increasing trend, reaching 23.1%
at March 31, 2021. Continuous capital injections and earnings
retention have underpinned this trend. Continental's capital base
remains well above the minimum regulatory limit of 12% of risk
weighted assets. In Fitch's view, the bank continues to be well
prepared to face the Central Bank's higher capital requirements for
domestic systemically important banks if necessary (maximum of 200
bps according to the law Nº5587/16).
In Fitch´s opinion, the coronavirus crisis will have less impact
on the overall operating environment in 2H21 and 2022 as the
vaccination program further progress, which has been slow compared
with the region. While some challenges on the OE are still present
in the short term, Fitch the Outlook for the OE score is currently
Stable and any impact on the banks' financial profile, specially on
asset quality and earnings, both returned to stable, should be
manageable and that despite any potential deterioration this year,
core metrics will remain at levels commensurate with the bank's
current ratings.
Continental's business model focuses on corporate (72%) and SMEs
(24%) lending, which has allowed the bank to maintain stable and
low non-performing loan (NPL) ratios over the past few years (NPLs
2016-2021 1.8% on average), but has also resulted in some
concentration in the top 20 borrowers accounting for 27% of the
total loans and 1.2x of the Fitch Core Capital (FCC).
Continental's NPL's deteriorated modestly to 2.2% at March 2021
(from the 1.9% average over the past four years), but reached a
high peak of 4.1% in August 2020, which was reduced through an
active collection and RRRs. Continental asset quality is further
mitigated by a good reserve coverage (1.5x) and good collateral
levels (50%). As of May 2021, Continental had 8.7% of the total
portfolio adhered to deferral programs compared with 15.8% of total
system. The bank have a ratio of renewed, refinanced and
restructured loans (RRR) of about 13%, which is below the bank
system (15%), but still high compared with international peers.
Fitch estimates the bank's NPLs will remain relatively commensurate
to its rating levels once the deferral program expires.
Continental's operating profit to RWA ratio declined to 2.2% a
March 2021 (from 2.4% in 2020 and 3.5% in 2019). Although Fitch
expects this ratio to remain under pressure in respect to
pre-pandemic levels and relatively similar than 2020, this will
still be according to the rating category. Profitability in 2020
was heavily influenced by reduced non-operating income from border
restrictions and increasing operating expenses, nevertheless,
higher expected income fees from FX, as the border of Paraguay with
Brazil is now open, and efficiency program efforts could sustain
the bank's profitability.
Continental relies heavily on wholesale deposits, which are highly
concentrated (the top 20 depositors accounted for 26.1% of total as
of December 2020), a risk that is partially offset by its good
asset and liability management and comfortable liquidity levels. At
March 30, 2021, liquid assets covered 28.2% total short-term,
interest-bearing liabilities. Continental's loan to customer
deposits ratio reached 95%, which is commensurate with its rating
level. Continental has further diversified its funding base, and
completed an issuance of a five-year USD300 million Sustainable
Bond in the international markets. The bank's funding is
complemented by approved credit lines with a number of foreign
financial institutions.
Low board independence compared with regional peers, and key person
risk due to the owner of the bank's high influence on Continental's
strategic decisions are incorporated as a weakness for the
corporate governance evaluation.
KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR
Continental's SR of '3' and SRF of 'BB' reflect Paraguay's
(Long-Term Foreign Currency IDR BB+/Stable) relatively modest
capacity to provide support should it be required, also the
liability structure of the banking system and the bank´s systemic
importance are higher importance factors in this assessment. In
Fitch's view, this results in a moderate probability of sovereign
support.
Continental has an ESG Relevance Score of '4' for Governance
Structure, in contrast to a relevance score of '3' for most private
peers, due to the low board independence compared with regional
peers, and the fact the main owner of the bank has a high influence
on Continental's strategic decisions, which Fitch considered a key
person risk. This has a negative impact on the credit profile and
is relevant to the ratings in conjunction with other factors.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade is unlikely over the foreseeable future, but could
result from potential improvements in Fitch´s assessment of
the Paraguayan operating environment faced by local banks
together with an upgrade of the sovereign ratings.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Continental's VR and IDRs could be affected by material
weakening of the bank´s currently strong capital metrics (FCC
below 18%), which could arise from a deterioration of the
operating environment which materially impact the bank´s
asset
quality or profitability metrics or from a change on its
strong competitive position in the local market.
RATING SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR
Changes in the bank's SR and SRF are unlikely. Continental is
considered by Fitch as a domestic systemically important financial
institution (D-SIFI) of the Paraguay financial system.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
ESG CONSIDERATIONS
Banco Continental S.A.E.C.A. has an ESG Relevance Score of '4' for
Governance Structure due to low board independence compared with
regional peers, and the fact the main owner of the bank has a high
influence on Continental's strategic decisions, which Fitch
considered a key person risk , which has a negative impact on the
credit profile, and is relevant to the rating[s] 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.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
CL FIN'L: CLICO Cuts Debt to Taxpayers to $1.6 Billion
------------------------------------------------------
Trinidad Express reports that the Colonial Life Insurance Company
(Trinidad) Ltd's (CLICO) debt to the Government is now about $1.6
billion.
Express Business understands that the Minister of Finance issued a
directive to the Central Bank to get CLICO to release $400 million
to the State, according to Trinidad Express.
In response to questions from Express Business, Central Bank
communications manager Nicole Crooks responded: "At May 31, 2021,
CLICO's outstanding debt to the Government of Trinidad and Tobago
is approximately $1.6 billion," the report notes.
The report discloses that CLICO has been under the control of the
Central Bank since February 13, 2009, when section 44(D) of the
Central Bank Act was triggered to allow the Bank to exercise its
special emergency powers to step in and manage financial
institutions.
Section 44(F) 5 of the Central Bank Act states: "In the performance
of its functions and in the exercise of its powers under section
44D the Bank shall comply with any general or special directions of
the Minister and shall act only after due consultation with the
Minister," the report relays.
In a 2011 amendment, 44E(7) of the Act also requires the Central
Bank to report quarterly to the Parliament and the High Court on
the progress of the proposals to restructure financial institutions
that have come under the Bank's 44(D) control, the report notes.
By March 2021, in its report to the High Court and Parliament on
its management of CLICO, the Central Bank said CLICO was now
solvent and that it still owed the Government $2.09 billion as part
of its 2009 bailout arrangement, the report says.
"In summary, of the approximately $18 billion (inclusive of
preference interest due) provided by the Government in respect of
CLICO, approximately $16.6 billion has been repaid by CLICO,
leaving a balance of approximately $2.09 billion as at February 28,
2021," the court report noted, Trinidad Express discloses.
The report had noted that since 2017, there were several
ministerial directives issued to the insurance company for assets
or cash which were used to offset its debt to the Government,
Trinidad Express says.
Trinidad Express discloses that the report noted that by January
24, 2019, CLICO made approximately $5 billion in cash payments to
the Government "in consideration for an appropriate reduction in
CLICO's liabilities to GORTT."
"A further cash payment of approximately $300 million (paid in
tranches) was made to GORTT by CLICO between March 20 and 27,
2020.
"An additional $125 million was paid to GORTT on July 8, 2020.
On September 17, 2020, pursuant to another ministerial direction,
CLICO was directed to pay GORTT $600 million, in cash, in two
tranches in exchange for an appropriate reduction in liabilities
owed to GORTT. The first tranche of approximately $300 million was
paid to GORTT on September 30, 2020 and the second tranche of
approximately $300.1 million was paid in two parts on October 24,
2020 and October 30, 2020, respectively," it said.
The report notes that CLICO's 2019 audited report showed that
CLICO's after tax profits plunged by 95 per cent for the year
ending December 31, 2019.
CLICO recorded $119.23 million in after-tax profit in 2020,
compared with $123.69 million in 2019, as its net results from
investing activities totalled $118.05 million in 2020, down from
$223.45 million in 2019, Trinidad Express discloses.
Its net results from insurance activities, declined to a loss of
$145.41 million in 2020 from a loss of $178.73 million in 2019, the
report relays.
Despite the decline in profitability, CLICO's positive net worth
climbed to $3.23 billion in 2020, from $3.22 billion in 2019, the
report notes.
It's total assets amounted to $13.55 billion at the end of 2020,
while its total liabilities were $10.31 billion, the report says.
It's been over 12 years that CLICO has been under the control of
the Central Bank, the report relays.
In an interview earlier this year, Central Bank Governor Dr Alvin
Hilaire said the Bank is anxious for T&T's regulator of financial
institutions to close the book on this country's largest bailout,
the report notes.
"As I told you before, we want to get out of this thing yesterday.
Right? We are not in the business of running insurance companies.
Most of the conditions are no longer there in terms of the systemic
issue. And in terms of the health of the financial system, so we
don't have a systemic problem," he had added.
Trinidad Express relays that the sale of the traditional portfolios
of CLICO and British American (Trinidad) to Sagicor remains stalled
following an injunction granted to Maritime Life (Caribbean) Ltd in
July 2020.
Section 44G of the Central Bank Act sets out the requirements under
which the Central Bank can end its control of a financial
institution under section 44(D), the report notes.
Section 44(G) says the Central Bank (1) Where the Bank has under
section 44D assumed control of an institution, the Bank shall,
subject to subsection (2), remain in control of, and "may continue
to carry on the business of that institution until such time as the
Bank . . . as it thinks appropriate (to issue) a notification that
it has ceased to be in control of the institution," the report
discloses.
The report relates that the section states: "The Bank shall
relinquish control and shall not continue to carry on the business
of an institution where:
(a) the circumstances on the basis of which the Bank assumed
control of the institution under section 44D have ceased to exist;
(b) the Bank is of opinion that it is no longer necessary for it to
remain in control of the business of the institution; or
(c) the Bank has sold or otherwise disposed of the property, assets
and undertakings of the institution."
Section 44(G)4 of the Central Bank Act states: "Where the Bank has,
in pursuance of section 44D, assumed control of an institution, the
High Court may, upon the application of the directors of the
institution acting independently of the Bank, if it is satisfied
that it is no longer necessary for the protection of the depositors
or creditors of the institution that the Bank should remain in
control of the business of that institution, order that the Bank
cease to control the business of that institution as from a date
specified in the Order," the report adds.
About CL Financial/CLICO
CL Financial was one of the largest privately held conglomerate in
Trinidad and Tobago. It was originally founded as an insurance
company and has since expanded to be the holding company for a
diverse group of companies and subsidiaries.
CL Financial is the parent company of Colonial Life Insurance
Company (Trinidad) Limited (Clico). CLICO is now the Company's
insurance division.
CL Financial however experienced a liquidity crisis in 2009 that
resulted in a "bail out" agreement by which the government of
Trinidad and Tobago loaned the company funds ($7.3 billion as of
December 2010) to maintain its ability to operate, and obtained a
majority of seats on the company's board of directors.
The companies to be bailed out were: CL Financial Ltd (CLF);
Colonial Life Insurance Company Ltd (CLICO); Caribbean Money Market
Brokers Ltd (CMMB); Clico Investment Bank (CIB) and British
American Insurance Company (Trinidad) Ltd (BAICO).
As reported in the Troubled Company Reporter-Latin America in July
2017, CL Financial Limited shareholders vowed to pay back a TT$15
billion (US$2.2 billion) debt to the Trinidad Government.
[*] TRINIDAD & TOBAGO: Construction Work Resumes Across Country
---------------------------------------------------------------
Trinidad Express reports that the construction sector re-opened
without any hiccups with many workers happy to be back to work.
Prime Minister Dr Keith Rowley announced the reopening of all
construction after announcing that only Government construction
would be opened on July 5, according to Trinidad Express.
Trinidad and Tobago Contractors Association (TTCA) president Glen
Mahabirsingh said from all accounts everything went smoothly and
some workers reported for work, the report discloses.
"Workers are happy to restart the projects they were working on at
various sites across the country as these past months of the
lockdown was extremely difficult for them. All safety briefings
were given by the relevant supervisors and a lot of restocking of
materials were being done to restart the works," he added.
Trinidad Express relays that Mahabirsingh said with the vaccination
drive that has been going on over the past five weeks, some 10,000
construction workers received their first jabs, while 5,000 are
fully vaccinated.
He added that the construction industry has plans, in conjunction
with the Ministry of Health, to continue vaccination of
construction workers at three sites in the coming weeks, the report
notes.
Projects Impacted
Hardwares, businesses that rent equipment and food vendors were
impacted when construction remains closed, the report notes.
So said project quality control inspector Richard Calloo for the
Morvant Junction to Maritime Roundabout Upgrade Project, the report
relays. Calloo also said they were delayed by two months as a
result of the most recent Covid 19 lockdown, the report notes.
They are also expected to work on reconstruction and road
rehabilitation between the Priority Bus Route (PBR) and Eastern
Main Road, the report discloses. Prime Minister Dr Keith Rowley
had said construction would resume, the report relays.
The report notes that Calloo also said he agreed that the economic
life of a country could be measured by the buoyancy of the
construction sector, the report discloses. He said: "I agree that
construction indicates if the country is doing well or not. Other
sectors depend upon the construction sector like the hardware,
people who rent equipment and the people who sell food."
In a brief telephone interview, Works Minister Rohan Sinanan said:
"Most of the larger projects would have to come onstream much later
on. They would come in on a phased basis. We would have to ensure
the protocols are in place and the contractor would have to
remobilise. They would have to submit and abide by the health and
safety protocols over a phased basis," 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
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Information contained herein is obtained from sources believed to
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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.
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* * * End of Transmission * * *