/raid1/www/Hosts/bankrupt/TCRLA_Public/210726.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, July 26, 2021, Vol. 22, No. 142
Headlines
B R A Z I L
LOJAS AMERICANAS: Moody's Affirms 'Ba1' CFR, Outlook Stable
XP INC: Discloses Second Quarter 2021 KPIs
C O L O M B I A
SOCIEDAD CONCESIONARIA: Fitch Keeps BB+ USD415M Notes Rating on RWN
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Government Resumes Exports to Haiti
DOMINICAN REPUBLIC: Raises Minimum Wage by 24%
H A I T I
HAITI: Economy to Worsen as Political Turmoil Intensifies
H O N D U R A S
BANCO ATLANTIDA: Fitch Affirms 'B+' LT IDRs, Outlook Negative
J A M A I C A
JAMAICA: BOJ Urged to Intervene in Forex Market as J$ Slides
M E X I C O
ALPHA HOLDING: Fitch Lowers IDRs to 'RD' on Payment Default
P U E R T O R I C O
ABAB CORP: Seeks to Hire Charles A. Cuprill as Bankruptcy Counsel
ABAB CORP: Taps Luis R. Carrasquillo & Co. as Financial Consultant
PUERTO RICO AQUEDUCT: To Refinance $1.8 Billion Debt
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Economic Outlook Linked to Global Recovery
X X X X X X X X
LATAM: Suffered 7 Billion Cyberattacks From January to March
[*] BOND PRICING: For the Week July 19 to July 23, 2021
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B R A Z I L
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LOJAS AMERICANAS: Moody's Affirms 'Ba1' CFR, Outlook Stable
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Moody's Investors Service has affirmed the Ba1 Corporate Family
Rating to Lojas Americanas S.A. and the Ba1 ratings of senior
unsecured notes issued by JSM Global S.a r.l. and B2W Digital Lux
S.a r.l., both guaranteed by americanas S.A. (formerly known as B2W
Companhia Digital). At the same time Moody's has withdrawn B2W
Companhia Digital Corporate Family Rating. The outlook for the
ratings is stable.
The rating action follows the reorganization of Lojas Americanas
and B2W Companhia Digital. The group has combined operations of
both companies by carving-out operating assets and liabilities from
Lojas Americanas and contributing them to B2W Companhia Digital
which changed its name to americanas S.A.. The ultimate group of
controlling shareholders will maintain their 60.8% stake in Lojas
Americanas voting capital and 53.37% of americanas S.A. voting
capital, directly and indirectly via Lojas Americanas. Moody's
believes the combination of assets under one company will benefit
the group by simplifying the operating structure, allowing for
synergies in data management and analytics, inventory management,
and logistics.
Ratings affirmed:
Lojas Americanas S.A.
Corporate Family Rating: Ba1
JSM Global S.à r.l.
Gtd Senior Unsecured Notes: Ba1
B2W Digital Lux S.a r.l.
Gtd Senior Unsecured Notes: Ba1
The outlook for the ratings is stable.
Ratings withdrawn:
B2W Companhia Digital
Corporate Family Rating: Ba1
Outlook, changed to ratings withdrawn, previously Stable
RATINGS RATIONALE
Lojas Americanas Ba1 corporate family rating incorporates the
group's competitive position as one of the largest retailers in
Brazil with relevant integration of online and physical stores via
americanas S.A. The company's strong liquidity, improving credit
metrics and stronger capital structure also support the rating. The
rating also reflects the company's omni-channel capabilities with a
diverse retail portfolio of flexible small ticket items in
brick-and-mortar outlets, convenience stores, e-commerce and
marketplace, as well as its large proprietary logistics footprint
in Brazil that together result in very stable sales through
economic downturns. The track record of shareholders supporting the
business is also credit positive.
Constraining the ratings is americanas S.A.'s still-aggressive
growth strategy that requires large capital spending for organic
growth as well as M&A activity. Moody's expects some execution risk
resulting from the company's M&A strategy depending on how fast it
decides to grow its platform. Additionally, americanas S.A. has
been growing in the very competitive online market where Moody's
expects competition to continue to increase in the coming years,
which could result in tighter margins. Moody's believes that the
company's strong physical presence in its ecosystem is a key
competitive strength for its online business given its dominance in
the small-ticket items variety store format. The integration leads
customers from each platform to end up using both physical and
online channels and stores also act as logistical hubs for quick
deliveries nationwide.
americanas S.A. has a strong liquidity profile which is a key
rating consideration. In July 2020 the company received a capital
injection of BRL7.9 billion and another BRL700 million from B2W's
minority shareholders in September 2020. Accordingly, the company
has reached a net leverage of 0.6x in March 2021 and will trend
down to 0.0x. Gross leverage remains high at 6.0x in March 2021,
last twelve months, but will continue to reduce as the company
amortizes more of the upcoming debt maturities in 2021. This, in
combination with an EBITDA of BRL3.6 billion, will drive gross
leverage to 4.8x year-end 2021 and 3.9x in 2022 with EBITDA
surpassing BRL4 billion. Moody's believes that in 2021 americanas
S.A. will remain aggressive with higher than usual selling
expenses. An update in the commission fee model and cost structure
for the sellers, combined with a new free shipping strategy, has
helped boosting growth, although it also increased costs. The free
shipping strategy with "Americanas Mais" loyalty program offers
higher subsidies for higher Net Promoter Score sellers in the
Americanas Marketplace platform therefore it should attract sellers
while helping to maintain the level of service of the platform.
This growth in sellers and gross merchandise value (GMV) will help
diluting the higher costs.
The stable outlook incorporates Moody's expectation that Lojas
Americanas will maintain a very robust liquidity profile while its
cash generation ability as measured by EBITDA-Capex/Interest
expenses continues to improve. Moody's believes Lojas Americanas
will maintain a strong capex program, but that eventual
acquisitions undertaken by the company would not be material enough
to deteriorate credit metrics and liquidity.
Moody's has decided to withdraw the rating for its own business
reasons.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if Lojas Americanas fails to maintain
its strong liquidity profile or if the company engages in
acquisitions that lead to a deterioration of credit metrics.
Negative pressure on the rating could also emerge from a perception
of diminishing shareholder support. Quantitatively, a downgrade
could happen if EBIT to interest expense remains below 1.5x,
leverage as expressed by total adjusted gross debt to EBITDA above
4.5x and retained cash flow to net debt below 35%. A downgrade of
Brazil's sovereign rating (Ba2 stable) could also lead to a
downgrade of Lojas Americanas.
A positive rating action would require a sustained strong liquidity
profile and continued improvement in free cash generation.
Quantitatively, a positive action would also require gross leverage
below 3.0x, EBIT to interest expense above 3.0x and retained cash
flow to net debt sustained above 25%, or at a net cash position.
The principal methodology used in rating Lojas Americanas S.A. and
JSM Global S.a r.l. was Retail Industry published in May 2018.
Headquartered in Rio de Janeiro, Lojas Americanas S.A. is a holding
company which holds the control of the operating company americanas
S.A. one of the largest retailers in Brazil, with a nationwide
presence and largest own logistics. Within its ecosystem the
company has more than 1,700 physical stores in different formats
that are integrated with its digital platform. The digital platform
comprises both e-commerce operations and marketplace, which have
reached more than BRL39.6 billion in GMV. In the 12 months that
ended March 2021, the combined assets generated reported net
revenue of BRL22.6 billion ($4.3 billion, converted using the
average exchange rate for the period), with an adjusted EBITDA
margin of 14.2%.
XP INC: Discloses Second Quarter 2021 KPIs
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XP Inc. (Nasdaq: XP), a leading, technology-driven platform and a
trusted provider of low-fee financial products and services in
Brazil, announced its 2Q21 KPIs.
Credit Portfolio (in R$ billion)
Our Credit portfolio reached R$6.8 billion as of June 30, 2021, a
43% Increase quarter-over-quarter. The duration of our credit book
was 3.5 years, with a 90-day Non-Performing Loan (NPL) ratio of
0.0%.
This portfolio does not include Credit Card related loans and
receivables
Credit Card TPV (in R$ billion)
2Q21 was the first full quarter since officially launching our
credit card. For the quarter, we generated R$2.1 billion of TPV
(Total Purchased Value), a growth of 316% quarter-over-quarter,
reinforcing the power of XP's comprehensive platform.
Assets Under Custody (in R$ billion)
Total AUC reached R$817 billion at June 30, up 88% year-over-year
and 14% quarter-over-quarter. Year-over-year growth was driven by
R$298 billion of net inflows and R$83 billion of market
appreciation. Our growth reinforces the strength and resiliency of
our business model, distribution capabilities, product offerings,
innovation and culture.
Net Inflow (in R$ billion)
Net Inflows were up 9% quarter-over-quarter, and 159%
year-over-year. Flows were strong across all channels and brands,
with over R$30 billion in inflows led by XP Private, awarded by
Euromoney as Latin America's best bank for wealth management 2021.
Active Clients (in ‘000)
Active clients grew 33% and 5% in 2Q21 vs 2Q20 and 1Q21,
respectively. Average monthly client additions decreased to 49,000
in 2Q21 from 72,000 in 1Q21, primarily reflecting slower activation
at Clear, following lower market trading volumes, specifically
futures.
IFA Network Gross Additions
IFA Network gross additions totaled 1,198 in 2Q21, up 165%
year-over-year and 31% quarter-over-quarter.
Retail Daily Average Trades (million trades)
Daily Average Trades, including Stocks, REITs, Options and Futures
Retail DATs totaled 2.7 million in 2Q21, a decline of 18% on a
sequential basis following a decline in B3 traded volume versus a
strong 1Q21, when futures volumes reached record highs. Despite the
intense volatility and activity during 2Q20, attributable to the
Covid-19 outbreak, total DATs were stable on a year-over-year
basis.
NPS (Net Promoter Score)
Our NPS, a widely known survey methodology used to measure customer
satisfaction, was 76 in June 2021, reflecting our ongoing efforts
to provide superior customer service at a lower cost. Maintaining a
high NPS score remains a priority for XP since our business model
is built around client experience. The NPS calculation as of a
given date reflects the average scores in the prior six months.
Second Quarter Results Conference Call
The Company expects to release its complete second quarter of 2021
financial results on August 03, 2021 after market-close. More
details will be provided at a later date.
As reported in the Troubled Company Reporter-Latin America on
July 7, 2021, Fitch Ratings has affirmed XP Inc.'s Long-Term Local
and Foreign Currency Issuer Default Ratings (IDRs) at 'BB-' with a
Negative Rating Outlook. At the same time, Fitch has affirmed XP
lnvestimentos SA (XPI) and Banco XP SA's (Banco XP) national
ratings at 'AA (bra)' with a Stable Outlook.
Fitch also assigned a 'BB-' final rating to XP Inc.'s USD750
million senior unsecured notes due 2026. The final rating is in
line with the expected rating that Fitch assigned to the proposed
debt on June 21, 2021.
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C O L O M B I A
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SOCIEDAD CONCESIONARIA: Fitch Keeps BB+ USD415M Notes Rating on RWN
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Fitch Ratings has maintained the 'BB+' rating of Sociedad
Concesionaria Operadora Aeroportuaria Internacional, S.A.'s (OPAIN)
USD415 million senior secured notes (the notes) on Rating Watch
Negative (RWN). OPAIN is the concessionaire of El Dorado
International Airport in Bogota, Colombia.
The rated notes coexist on a pari-passu basis with two Colombian
peso denominated loans, for amounts of COP315 billion and COP100
billion and maturities in December 2026 and October 2025,
respectively.
RATING RATIONALE
The maintenance of the RWN reflects Fitch's expectation the airport
will be dependent on additional liquidity to meet debt service
payments in 2022, though shortfalls should be manageable. Under
Fitch's rating case, debt service coverage ratio (DSCR) in 2021 is
close to 1.0x and in 2022 it is 0.4x, driven by the issuer's
obligation to pay deferred concession fee payments of COP200
billion. Fitch's rating case assumes a traffic recovery to 85% of
2019 levels by 2022 and results in a liquidity shortfall of COP65
billion, approximately USD19 million. Under Fitch's severe downside
case, which assumes a slower traffic recovery to 65% of 2019 levels
by 2022, this shortfall increases to USD59 million.
Fitch understands that potential solutions to the aforementioned
liquidity gaps include the substitution of the U.S. dollar debt
service reserve account (DSRA) by a stand-by LOC to release the
funds available in such reserve, approximately USD25 million, or
incurring subordinate debt of up to USD50 million. These mitigants
combined would offer sufficient liquidity to make 2022 debt service
payments even if traffic performs in line with the severe downside
case but entail a level of execution risk as neither option has
been executed yet and shortfalls could begin as early as June
2022.
Additionally, the propensity to make 2022 debt service payments is
very sensitive to traffic performance, meaning that traffic
underperformance relative to Fitch's expectations could result in
these liquidity sources ultimately being insufficient. Should the
issuer fail to secure additional liquidity in the short-term to
absorb expected shortfalls, and/or traffic recovery in July and
August is below 70% of their 2019 levels in these months, without a
traffic mix that compensates in terms of revenues, the rating will
likely be downgraded, as the risk of payment default starting June
2022 will have increased. The RWN will be resolved once Fitch
observes actual traffic performance in the next two months and
assess the effects of OPAIN's management actions to address
liquidity needs in 2022.
The rating reflects El Dorado airport as a strategic asset for
Colombia, being the main gateway to the country and the
third-largest airport in Latin America in terms of traffic volume.
The airport has a robust traffic base, comprising mainly origin and
destination (O&D) passengers and has a demonstrated history of
strong traffic performance with relatively low volatility. The
rating also reflects a dual-till rate-setting framework, with an
adjustment mechanism for regulated revenues that tracks local and
U.S. consumer prices indices. The debt is fixed-interest rate and
fully-amortizing with a six-month DSRA and standard provisions for
dividend distributions and the incurrence of additional leverage,
among others.
The airport's operations were severely affected by the coronavirus
pandemic and related government mobility restrictions, resulting in
sharp declines of traffic and revenues, and greater pressures on
its ability to meet debt service. Minimum and average DSCR under
Fitch's rating case are 0.4x (in 2022) and 1.1x (2021-2026),
respectively. After 2023, the average improves to 1.3x and would be
consistent with the assigned rating, according to applicable
criteria for airports with a mix of stronger and midrange
characteristics. The cash flow available for a debt service
shortfall in 2022 is expected to be covered with additional
liquidity.
Metrics are higher than in the prior review, given Fitch has
considered a reprofiling of the COP loan to mature in 2027, an
updated view on macroeconomic variables for Colombia and the U.S.,
and lower capex in the long term as projected by management.
KEY RATING DRIVERS
Essential Infrastructure Asset in Colombia [Revenue Risk: Volume -
Stronger]: Located in Bogota's metropolitan area, El Dorado airport
is a critical facility that serves as the country's largest
commercial airport and its international gateway. The airport
benefits from a large O&D base, with traffic volume showing strong
positive growth for the last decade and no meaningful competition
from other airports or forms of transportation. Although Avianca
Holdings S.A. constitutes over 60% of total traffic (pre-pandemic
levels), counterparty risk is relatively mitigated by the airport's
strategic and competitive position within the country and the
region.
Dual-Till Rate Setting [Revenue Risk: Price - Midrange]: The
concession contract establishes that regulated revenues, which
comprise the majority of OPAIN's revenues, are adjusted yearly to
track 95% of Colombian or the U.S. CPI, depending on the currency
denomination of the tariff. Extraordinary increases in tariffs may
occur in case either CPI varies by more than 10%, since the last
tariff update. Commercial revenues are not subject to a tariff
adjustment mechanism and are negotiated in private agreements with
each tenant.
Construction Phase Recently Completed [Infrastructure
Development/Renewal - Stronger]: El Dorado is a modern and
well-maintained airport with well-defined maintenance needs, as the
concession expires in six years. The airport ended the construction
phase in January 2019, and no major works are pending, aside from
potential complementary and voluntary works. According to the
independent engineer, capex related to refitting the airport
(replacement capex, or repex) is adequate to cope with the expected
expenses associated to the concession's expiration.
Midrange Structural Features [Debt Structure - Midrange]: Debt
structure comprises the U.S. dollar-denominated senior secured
notes issuance and two non-rated Colombian peso-denominated loans.
The notes are fully amortizing and with a 4.09% fixed-interest
rate. The structure benefits from six-months DSRAs with one
offshore account for the rated debt and one onshore account for the
non-rated facilities. The offshore account shall increase over the
debt term to 12-months debt service if the historical DSCR ended on
or after June 30, 2024 is less than 1.20x.
Other structure features include adequate debt incurrence and a
dividend distribution test at 1.20x, which provides adequate
mitigation for the absence of a cash waterfall. Exposure to foreign
exchange risk is seen as limited as approximately 75% of revenues
are U.S. dollar-denominated, providing a natural hedge against
Colombian peso/U.S. dollar exchange rate variations.
Financial Summary: DSCR is viewed as the relevant metric for the
transaction, given its short maturity and absence of a concession
tail, on top of its fully-amortizing nature. Minimum and average
DSCRs under Fitch's rating case are 0.4x (2022) and 1.1x
(2022-2026), respectively. After 2022, the average improves to 1.3x
and would be consistent with the assigned rating, according to
applicable criteria for airports with a mix of stronger and
midrange characteristics.
PEER GROUP
El Dorado's closest peers are Aeropuerto Internacional de Tocumen,
S.A. (BB+/Negative) and Mexico City's Grupo Aeroportuario de la
Ciudad de Mexico (GACM; BBB-/Negative). Tocumen and El Dorado are
essential assets for their respective countries, have growing
traffic bases that show strong historical performance and have an
important carrier concentration.
El Dorado airport benefits from a higher enplanement base with a
higher proportion of O&D traffic than Tocumen, which leads to a
'Stronger' assessment in Volume Risk. Still, Tocumen has greater
flexibility to set tariffs. El Dorado has an average DSCR of 1.1x,
higher than Tocumen. However, Tocumen's notes are rated according
to Fitch's "Government-Related Entities Rating Criteria". The 'BB+'
rating is one notch below that of Panama (BBB-/Negative) with a
Standalone Credit Profile (SCP) at 'bb+'. The low minimums are
mitigated to a certain extent by the airport's rate-setting ability
and its flexibility to adjust its capex program schedule.
GACM and El Dorado are international gateways with a sizable O&D
market. They share a mix of 'Stronger' and 'Midrange' risk
assessments on volume and price but GACM's average quarterly DSCRs
in 2021 is 1.1x and around 1.8x in the long term, while El Dorado
shows DSCR below 1.0x in 2022 due to current liquidity constraints.
Although GACM's current leverage at 14.7x is high for the rating
category, it is expected to return to within the indicative
criteria range for the rating category by 2023.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action is unlikely in the short term, given
that the transaction has a RWN.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Traffic recovery below 70% in July and August 2021 relative to
2019 levels, and/or significant disruptions in operations from
Avianca, its anchor carrier.
-- OPAIN's failure to proactively secure enough liquidity to
offset liquidity shortfalls in 2022.
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.
CREDIT UPDATE
In 2020, traffic showed a sharp decline and reached 31% of its
level in 2019, reflecting the strict travel restrictions imposed by
the Colombian government to contain the coronavirus pandemic from
March to September 2020, which included a national lockdown and the
suspension of inter-municipal and aeronautical transportation
across the country. Following the resumption of the airport's
operations, traffic has shown a positive trend of recovery, mostly
in domestic traffic.
As of June 2021, departing passengers have reached 51% of the
levels of the same period in 2019, below Fitch's ratings
expectations of 58%. The recovery of domestic traffic, at around
61%, was offset by the recovery of international traffic, at only
31%. At the close of June 2021, total departing passengers reached
a recovery of 64%, closer to Fitch's rating case expectations of
65% for that period.
As of May 2021, total revenues were USD65.1 million (COP235
billion), representing 53% of the same period in 2019. Regulated
revenues reached USD41.2 million (COP148.9 billion), a recovery of
49%, while non-regulated revenues had a greater recovery of 60%,
reaching USD23.9 million (COP86.1 billion).
Operating expenditures in the first three months of 2021, excluding
the concession fee, were approximately COP48 billion, slightly
below Fitch's expectation of COP53 billion, driven by lower
maintenance and repair expenses. Also, capex reached COP1 billion,
below Fitch's expectation of COP7 billion.
In June 2021, the issuer complied with the debt service obligation
for the USD415 million notes, and also paid the deferred payment
originally due in June 2020, of COP27 billion. The issuer was
granted a waiver to defer the amount originally due in June 2021,
to December 2021. The U.S. dollar-denominated and the Colombian
peso-denominated DSRAs currently maintain a balance of USD32
million and COP31 billion, respectively.
As compensation for the effects of the pandemic in the concession,
the National Infrastructure Agency, or Agencia Nacional de
Infraestructura (ANI) granted a contract extension that considers
the lost revenues covering the period of March through September
2020. Considering this extension, the issuer has indicated that it
is in the process of a reprofiling of the COP315 billion loan,
which considers the debt maturity extension to December 2027, from
December 2026. OPAIN also reached an agreement with the ANI for a
deferral of the concession fee payments due in 2020, for an amount
of around COP200 billion, through four installments between January
and July 2022.
FINANCIAL ANALYSIS
At present, Fitch is not differentiating between its base and
rating case assumptions, given the level of uncertainty about
traffic recovery to previously projected levels.
Fitch has revised its rating case assumptions to reflect the actual
traffic performance as of June 2021, and the following average
assumptions of quarterly traffic for the remaining of the year:
3Q21 (70%) and 4Q21 (75%). Fitch also adjusted its assumptions to
reflect a differentiated view on recovery for domestic and
international traffic. Domestic traffic is expected to reach full
recovery in 2023, and international traffic in 2024. As a result,
for 2022 and 2023, Fitch assumes average recoveries of 85% and 95%,
relative to 2019 levels. In 2024, Fitch assumes traffic recovers to
2019 levels, followed by traffic growth of 3.5% and 3.2% in 2025
and 2026.
The budgets of administrative and operating expenses were stressed
by 5%. Fitch has also adjusted downward Fitch's long-term
projections for capex, according to the most updated management
view, which includes significant savings in 2025 and 2026 of
voluntary works, and a flatter curve of replacement expenditures.
U.S. CPI reflects Fitch's forecast of 4.1% in 2021, 2.2% in 2022,
2.5% in 2023 and 2.0% from 2023 onward, while Colombia's CPI
forecast is 3.0% in 2021, 3.1% in 2022 and 3.0% from 2023 onward.
The Colombian peso to U.S. dollar exchange rate was assumed at
COP3,522.00/USD1.00 in 2021, COP3,623.00/USD1.00 in 2022,
COP3,695.00/USD1.00 in 2023 and an average depreciation of 1.5%
starting in 2024.
Fitch has also reflected the new debt profile of the COP315 billion
loan, which includes the potential deferral of 30% of principal
payments to 2027, still under negotiation with Bancolombia. Under
this scenario, minimum DSCR is 0.4x in 2022 and average (2021-2026)
is 1.1x. Fitch expects debt service in 2022 to be met with held
cash balances, debt service reserve accounts and additional
liquidity resources at approximately COP65 billion.
Fitch also ran a severe downside case that assumes a slower traffic
recovery to 2019 levels at 55% in 2021, 65% in 2022, 80% in 2023,
97% in 2024 and 100% in 2025. Under this scenario, minimum and
average DSCR is 0.4x and 1.0x. The issuer will have liquidity needs
in 2021 and 2022 at approximately COP6 billion and COP204 billion,
and a rating downgrade would be likely should the issuer fail to
obtain liquidity to offset these shortfalls in a timely manner.
SECURITY
The ANI granted OPAIN a 20-year concession to operate and expand El
Dorado International Airport on Sept. 12, 2006. Located in Bogota,
the capital city of Colombia, El Dorado is the third-busiest
airport in Latin America in terms of traffic and the most active in
the region in terms of cargo. It has an estimated catchment area of
10.7 million people and serves all major Colombian cities at 41
domestic routes and major international destinations at 50
international routes across the Americas and Europe.
The concession agreement excludes the runways and air traffic
control, taxiways, administrative buildings, and designated
military, police, and government facilities. The airport airfield
consists of two parallel independent runways. In January 2019,
OPAIN ended the construction phase. All the mandatory works have
been carried out including the construction of a new passenger
terminal, new cargo facilities, new office buildings and new
apron.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
Environmental, Social and Corporate Governance (ESG) Credit
Relevance is a Score of '3'. ESG issuers are credit-neutral of have
only a minimal credit impact on the entity, either due to their
nature or to the way they are being managed by the entity.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Government Resumes Exports to Haiti
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Dominican Today reports that the Dominican Government, through the
National Security and National Defense Council, decided to allow
for humanitarian reasons the restart of exports to Haiti.
"The decision seeks to maintain the supply of the Haitian
commercial system at the levels required to reduce the possibility
of a general shortage that produces social instability and
migratory flows," the Presidency of the Republic said in a press
release, according to Dominican Today.
Previously, the Dominican Government, by decision of the National
Security and Defense Council, ordered the immediate closure of the
border with Haiti, 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: Raises Minimum Wage by 24%
----------------------------------------------
Dominican Today reports that employees of the private sector that
do not belong to the construction, tourism and free trade zones
will begin to receive an increase in their income as of July 16,
depending on the size of the companies where they work, after the
National Salary Committee (CNS) approved an average salary increase
of 24%.
President Luis Abinader had an unusual participation in the
Committee meetings, where representatives of employers, employees
and the Government also agreed on a reclassification of the
companies, according to Dominican Today.
Employees who earn the minimum salary in companies that fall into
the "large" category will begin to earn RD$21,000, for an increase
of 19%; Those who belong to businesses classified as "medium" will
earn RD$19,250, for an increase of 59%, and those who work in
"small" companies will receive RD$12,900, for an additional 20%,
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).
=========
H A I T I
=========
HAITI: Economy to Worsen as Political Turmoil Intensifies
---------------------------------------------------------
Andrew Laidley at Jamaica Observer reports that a World Bank report
published in April indicated that Haiti's gross domestic product
(GDP) is expected to contract for a third-consecutive year by 0.7
per cent in 2021 as the country remains engulfed in political
turmoil. By all indications that projection could worsen following
the assasination of Haiti's President Jovenel Moise on July 7,
according to Jamaica Observer.
The report notes that though no official data are available to
indicate the extent of the economic fallout, the World Bank said
that a return to pre-pandemic GDP levels in Haiti is not envisioned
until after 2023, under the proviso of a return to some political
stability.
This on the back of an already challenging 2020 where both the
novel coronavirus pandemic and Haiti's protracted political crisis
took a toll on economic activity, the report relays. Haiti's GDP
is estimated to have contracted by 3.4 per cent in the 2020/21
financial year, the report discloses.
While the country struggles to get its political house in order,
its citizens are sinking deeper into poverty, the report says.
The poverty rate in Haiti is estimated to have risen to 25.1 per
cent in 2020, from 23.6 per cent in 2019, in line with the economic
slump, the report relays. The World Bank has painted a grim
outlook this year with the poverty rate projected to increase
further to 25.6 per cent in 2021 as economic opportunities remain
limited, the report notes.
According to the World Bank, the political crisis started
intensifying in the first quarter of this year, keeping economic
activity subdued, the report discloses. That's why the World Bank
has posited that Haiti's most critical challenge is solving its
protracted political crisis. That's aside from the country's
lingering social and economic challenges, the report says.
Also high on the reform agenda are improving governance and the
justice system, upgrading basic infrastructure to eliminate spatial
frictions that impede movement of goods and disconnect rural
communities from urban markets and creating a more enabling
business environment, the report notes.
Haiti's Post COVID-19 Economic Recovery Plan 2020-2023 (PREPOC)
intends to tackle these challenges by relaxing the structural
constraints that hinder growth through, inter alia, boosting human
capital, strengthening governance, and improving resilience to
natural hazard shocks, the report relays. However, the World Bank
highlighted that the 2021 budget is not clearly aligned with
PREPOC's stated intentions, the report says. The budget
prioritises security and electricity generation over the PREPOC's
pillars, the report discloses.
With all this in mind, the World Bank noted that the path ahead
remains fraught and exposed to ongoing political instability that
could continue to hinder economic recovery, the report adds.
===============
H O N D U R A S
===============
BANCO ATLANTIDA: Fitch Affirms 'B+' LT IDRs, Outlook Negative
-------------------------------------------------------------
Fitch Ratings has affirmed Banco Atlantida, S.A.'s Long-Term (LT)
Issuer Default Ratings (IDRs) at 'B+' and the Short-Term (ST) IDRs
at 'B'. Fitch also affirmed Atlantida's Viability Rating (VR) at
'b+' and its National LT and ST Ratings at 'A+(hnd)' and 'F1(hnd)',
respectively. The Rating Outlook on the LT IDRs and National LT
Rating is Negative. Fitch also affirmed the National LT Ratings on
Atlantida's Bonos Bancatlan 2016 and Bonos Bancatlan 2018 senior
unsecured notes.
Fitch has also affirmed Inversiones Atlantida, S.A. y
Subsidiarias's (Invatlan) LT and ST IDRs at 'B' and 'B'
respectively. The Rating Outlook on the LT IDRs is Negative. Fitch
also affirmed the USD150 million and the USD300 million senior
secured notes at 'B'/'RR4'. The National LT and ST Ratings of
Invatlan's subsidiary, Leasing Atlantida, S.A., were affirmed at
'A(hnd)' and 'F1(hnd)'. The National LT Rating has a Negative
Outlook. Invatlan's LT IDR has a Negative Outlook, which reflects
the Negative Outlook for Atlantida, which is Invatlan's main
subsidiary.
KEY RATING DRIVERS
ATLANTIDA
IDRS, VR AND SENIOR DEBT
The bank's IDRs and National Ratings are driven by its intrinsic
creditworthiness as reflected in its VR of 'b+'. Atlantida's
ratings continue to be highly influenced by Fitch's assessment of
the Honduran operating environment at 'b'/Negative, reflecting that
downside risks are prevailing despite a mild economic recovery that
began to gain traction in the 2Q21. The Negative Outlooks on
Atlantida's LT IDRs and National Rating reflect the slow pace of
the economic recovery and the socio-political uncertainties which
may affect the banks' financial performance and the increasing
pressures on the bank's weak capitalization, which is a high
importance factor for the rating.
Ratings are also highly influenced by Atlantida's company profile
with a leading local franchise and a consolidated business model,
which allows it to manage some financial flexibility in volatile
periods. As of March 2021 (1Q21), Atlantida was the largest bank in
Honduras in terms of both loan portfolio and deposits, with a
participation of around 20% in each one.
The bank's capitalization is the weakest factor in the assessment
of its financial profile. The core metric, Fitch Core Capital
(FCC)/risk-weighted assets (RWA), declined to 9.1% as of March
2021, reflecting an increase in the potential exposure to
unexpected asset quality shock. While the regulatory solvency ratio
is close to 12.8% (minimum: 11%).
Atlantida's asset quality continued under pressure as the operating
environment presented an unfavorable dynamic derived from the
pandemic. As of March 2021, Atlantida's non-performing loan (NPL)
ratio increased to 2.8%, comparing above its last four fiscal years
average (2.4%) and below some regional peers. Credit relief
measures in the loan portfolio remained significant, although
falling, and concentrated in the corporate sector with a good
repayment capacity.
Fitch expects a slow business cycle recovery, which may also be
influenced by the volatile political environment. In this regard,
further clarity is needed to expect a trend reversal of the bank's
credit quality. The reserve coverage of the NPLs, although falling,
is still well above 100% (134% as of 1Q21 from an average of 143%
in the last four fiscal years). Debtors' concentration remains high
by international standards. The top 20 borrowers represented 3.2x
Atlantida's FCC, which is a material risk exposure in case of
unexpected impairments on its largest debtors.
The bank's profitability declined notably during 2020; however, it
recovered some ground in 1Q21. As of March 2021, operating
profit/RWAs reached 1.76% (December 2020: 1.41%). The main drivers
affecting the profitability are an increasing credit costs, a
declining net interest margin and control on operational
efficiency. Although Atlantida projects two-digit credit growth for
2021, a low interest-rate environment and a slower than expected
recovery along with uncertainties from the political environment
may present challenges to boost profitability to pre-crisis level.
Atlantida's funding structure reflects its leading franchise in
deposits. After historically high growth in FY 2020 of its key
funding source (21%), deposits continued increasing during 1Q21
(3.7%, non-annualized). Atlantida's loan/deposits ratio continued
falling (1Q21: 78%) due to the accelerated deposits compared with
gross loans. Historical deposit stability, wide access to
alternative funding sources and material liquid assets mitigate the
bank's exposure to the liquidity risk.
Atlantida's outstanding senior unsecured notes issued in the local
capital market Bonos Bancatlan 2016 and Bonos Bancatlan 2018 are
rated at the same level as the bank's National Rating of 'A+(hnd)'
due to its senior unsecured features.
SUPPORT RATING AND SUPPORT RATING FLOOR
Atlantida's Support Rating (SR) of '5' and Support Rating Floor
(SRF) of 'NF' reflect Fitch's belief that despite the bank's large
market share in deposits, it cannot rely on external support due to
Honduras' limited ability to provide such support.
INVATLAN
IDRS AND SENIOR DEBT
Invatlan's IDRs reflect the creditworthiness of its main
subsidiary, Atlantida, rated 'B+'. The ratings also consider
Invatlan's high operational integration with its subsidiaries,
mostly with those considered as the most representative along with
an extensive track record being part of the group, such as
Atlantida.
As of March 2021, the double leverage ratio remained above 120%
(130%). Invatlan expanded its operations in Honduras, El Salvador
and Nicaragua, and plans to continue business expansion in the
Latin American region, partly financed with funds collected from
the last senior secured debt issuance. The Negative Outlook on
Invatlan's LT IDR reflects the Negative Outlook for Atlantida,
which is Invatlan's main subsidiary.
Fitch affirmed the USD150 million senior secured notes and the
USD300 million senior secured notes ratings at 'B'/'RR4' as these
follow Invatlan's IDR. The USD150 million senior secured notes will
be fully pre-paid on July 28, 2021 with funds from the most recent
issuance. According to management, funds needed to fulfill this
obligation are already in a separate account managed by an external
third-party.
In the case of the most recent issuance, USD300 million senior
secured notes, despite being senior secured obligations, Fitch
believes the collateral mechanism would not have a significant
impact on recovery rates. In accordance with Fitch's rating
criteria, recovery prospects for the notes are average and are
reflected in their Recovery Rating of 'RR4'.
LEASING ATLANTIDA
Leasing Atlantida's ratings reflect Invatlan's propensity and
ability to support the subsidiary if needed. In Fitch's view, the
issuer is a key and integral part of Invatlan's diversified
financial business model. Moreover, clear branding identification
of this entity with Invatlan and the rest of subsidiaries, and the
reputational risk at which they would be exposed in the case of
potential financial difficulties in Leasing Atlantida ultimately
result in a high probability of direct or indirect support by
Invatlan, should it be required. Leasing Atlantida's Negative
Outlook mirrors the Outlook from its parent company.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
ATLANTIDA
IDRs, VR, National Ratings and Senior Debt
-- Atlantida's IDRs are sensitive to changes in Honduras'
operating environment. A fragile economic recovery could lead
to a lower operating environment score for Honduran banks if
an unexpected disruption takes place, which ultimately would
pressure Atlantida's VR.
-- Downgrades of Atlantida's IDRs, VR and National Ratings could
also come from a financial profile such that, due to a slower
than expected economic recovery, does not allow the bank to
generate sustained internal capital enough to mitigate the
pressures on its capitalization. In this regard, a sustained
fall of FCC/RWAs to below 8.5% could trigger this downgrade.
-- The bank's National LT senior unsecured debt is sensitive to
changes in Atlantida's National LT Rating.
SR AND SRF
-- As these are the lowest levels in the respective scale, there
is no downside potential for these ratings.
INVATLAN
IDRs AND SENIOR DEBT
-- Invatlan's ratings will likely move in line with those of its
main subsidiary, Atlantida;
-- A significant reduction in dividends transfers from Invatlan's
main subsidiaries that ultimately affect its liquidity to
service debt or an sustained increase of double leverage to
above 225%;
-- The global senior secured debt ratings would mirror any change
to Invatlan's IDRs.
LEASING ATLANTIDA
National Ratings
-- A negative change in Invatlan's ability or propensity to
provide support could put pressure on Leasing Atlantida's
National Ratings.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
ATLANTIDA
IDRs, VR, National Ratings and Senior Debt
-- Given the current limitations of the operating environment, an
upgrade is unlikely in the short term. However, a positive
change in Fitch's operating environment assessment could lead
to positive rating action;
-- The Negative Outlook on Atlantida's ratings would be revised
to Stable if the operating environment assessment is
maintained in the 'b' range and its Outlook revised to Stable,
while its core capital metric stabilizes at a level above
9.5%;
-- Atlantida's IDRs have limited upside potential as they are not
expected to be rated two notches above the operating
environment. National Ratings could be upgraded if the bank
shows a sustained improvement in capital and profitability
metrics, which would be materialized in an FCC/RWA standing
above 12% and operating profitability/RWA consistently above
2%, respectively;
-- The bank's National LT senior unsecured debt rating is
sensitive to changes in Atlantida's National LT Rating.
SR AND SRF
-- Honduras's propensity or ability to provide timely support to
Atlantida is not likely to change given the operating
environment's structural weaknesses. As such, the SR and SRF
have limited upside potential.
INVATLAN
IDRS AND SENIOR DEBT
-- Invatlan's IDRs could be upgraded by one notch if the
company's double-leverage ratio decreases at a level
consistently below 120% resulting from a continued expansion
financed by capital injections.
-- The Negative Outlook on Invatlan's LT IDRs would be revised to
Stable if the Negative Outlook on Atlantida's ratings is
revised to Stable.
-- The global senior secured debt ratings would mirror any change
to Invatlan's IDRs.
LEASING ATLANTIDA
National Ratings
There is limited upside potential for Leasing Atlantida's National
Ratings. However, Leasing Atlantida's National Ratings would
increase if Invatlan's IDR improves and/or if there is a perception
by Fitch of a greater strategic importance of Leasing Atlantida for
its parent company.
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.
SUMMARY OF FINANCIAL ADJUSTMENTS
Pre-paid expenses were reclassified as intangible and deducted from
total equity to reflect its low absorption capacity.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Invatlan's IDRs are linked to Banco Atlantida's IDRs. Leasing
Atlantida's ratings are linked to Invatlan's ratings.
ESG CONSIDERATIONS
Inversiones Atlantida S.A. has an Environmental, Social and
Governance (ESG) Relevance Score (RS) of '4' for Financial
Transparency due to an improvement in the clarity and timing in
delivering the most updated financial information and qualitative
attributes, which has a negative impact on the credit profile, and
is relevant to the 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.
=============
J A M A I C A
=============
JAMAICA: BOJ Urged to Intervene in Forex Market as J$ Slides
------------------------------------------------------------
RJR News reports that the Jamaica Manufacturers and Exporters
Association (JMEA) has commented on the slide in the value of the
Jamaican dollar against the US dollar, urging the Bank of Jamaica
to intervene.
President Richard Pandohie said he is hopeful that the BOJ will
continue to use the strength of the Net International Reserves to
ensure orderly behavior in the foreign exchange market, according
to RJR News.
However, Economist Chris Stokes says while calls for the BOJ to
intervene in the market intensify, it must be cautious in doing so,
the report notes.
On the foreign exchange market, the Jamaican dollar is trading at a
new high of $154.74 to one US dollar, the report relays.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
Fitch Ratings affirmed in March 2021 Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+', with a stable
outlook. Standard & Poor's credit rating for Jamaica stands at B+
with negative outlook (April 2020). Moody's credit rating for
Jamaica was last set at B2 with stable outlook (December 2019).
According to Fitch, Jamaica 'B+' rating is supported by World Bank
Governance Indicators that are substantially stronger than the 'B'
and 'BB' medians, a favorable business climate according to the
World Bank Doing Business Survey, moderate inflation and moderate
commodity dependence. These strengths are balanced by vulnerability
to external shocks, a high public debt level and a debt composition
that makes the sovereign vulnerable to exchange rate fluctuations.
The Stable Outlook is supported by Fitch's expectation that the
public debt level will return to a firm downward path
post-pandemic, which is underpinned by political consensus to
maintain a high primary surplus, the resilience of external
finances, and stronger economic policy institutions.
===========
M E X I C O
===========
ALPHA HOLDING: Fitch Lowers IDRs to 'RD' on Payment Default
-----------------------------------------------------------
Fitch Ratings has downgraded Alpha Holding, S.A. de C.V.'s (Alpha
Holding) Long-Term (LT) Local and Foreign Currency Issuer Default
Ratings (IDRs) and its Short-Term (ST) Local and Foreign Currency
IDRs to 'RD' from 'C'. Fitch has affirmed the senior unsecured 2022
and 2025 global notes at 'C'. Fitch does not maintain a Recovery
Rating for the notes, reflecting that the potential recovery
outcome is highly variable. Per Fitch's rating definitions, the
assigned rating of 'C' is consistent with average to poor recovery
prospects following default.
The downgrade of the ratings follows the expiry of the 30-day cure
period after the non-payment of the USD15 million coupon due on
June 19, 2020 on the entity's USD300 million global notes due 2022.
The 'RD' rating indicates an issuer that in Fitch's opinion has
experienced an uncured payment default but has not entered into
bankruptcy filings or ceased operating.
Fitch will re-assess Alpha Holding's ratings based on Fitch's
forward-looking assessment of the company's credit profile once
Fitch has clarity on the company's plans and financial information
is provided.
KEY RATING DRIVERS
On June 17, 2021 the company announced that it would exercise a
30-day grace period with respect to the USD15 million cash interest
payment due on June 19, 2021 with respect to its USD300 million
10.0% senior notes due in 2022. Alpha Holding's failure to make the
payment after the grace period expired is consistent with Fitch's
definition of an 'RD' rating.
In April 2021 the company announced the finding of relevant
accounting errors and withdrew its financial statements and other
relevant information available for investors from its website.
Alpha Holding's global notes have covenants related with the
disclosure of the annual audited financial statements, the cure
period for which ended in May 2021. Restated financials have not
been published yet and the company hasn't disclosed an expected
publication date.
Alpha Holding has an ESG Relevance Score of '5' for Financial
Transparency given the accounting error announcement, lack of
market disclosure after the event and uncertainties on the
financial impact and resolution timeframe. Alpha Holding also has
an ESG Relevance Score of '5' for Governance Structure, reflecting
Fitch's concerns over intrinsic governance practices and the
effectiveness of the board in protecting creditors' rights. Fitch
changed Alpha Holding's ESG Relevance Score for Management Strategy
to '5' from '3' as management's ability to handle risks and
controls, to service debt obligations and to disclose pertinent
information has relevantly deteriorated. This has a negative impact
on the credit profile and is highly relevant to the rating.
RATING SENSITIVITIES
Fitch will monitor the sufficiency of information for the ongoing
evaluation of the entity's creditworthiness, which could result in
a rating withdrawal at the current level if the entity does not
disclose sufficient information to Fitch and the market.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- The IDRs would be downgraded to 'D' if the entity enters into
bankruptcy proceedings, administration, receivership,
liquidation or other formal winding-up procedures or if it
ceases operations.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch would re-rate Alpha Holding and the notes if a debt
restructuring process is initiated and sufficient disclosure
of the company's plans and financial information is provided.
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
Fitch has revised Alpha Holding's ESG Relevance Score for
Management Strategy to '5' from '3' due to the relevant
deterioration of management's ability to manage risks and controls,
to service debt obligations and to disclose pertinent information.
This has a negative impact on the credit profile, is highly
relevant to the rating and, in conjunction with other factors,
resulted in a downgrade of the company's IDRs.
Alpha Holding has an ESG Relevance Score of '5' for Financial
Transparency due to the lack of available financial information
after the April 2021 announcement of accounting errors and
weaknesses in the company's third-party disclosure and internal
controls, given the lack of market disclosure after the event and
uncertainties on the financial impact and resolution timeframe for
the issue. This has a negative impact on the credit profile and is
highly relevant to the rating, resulting in a one-notch downgrade.
Alpha Holding has an ESG Relevance Score of '5' for Governance
Structure due to Fitch's concerns about the company's intrinsic
governance practices and perceived weakness in the board's
effectiveness to protect creditors' rights. This has a negative
impact on the credit profile and is highly relevant to the rating,
resulting in a downgrade of the company's IDRs.
Alpha Holding has an ESG Relevance Score of '4' for Customer
Welfare -- Fair Messaging, Privacy & Data Security given its
exposure to reputational and operational risks as its main business
targets government employees and dependencies at relatively high
rates. This 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.
=====================
P U E R T O R I C O
=====================
ABAB CORP: Seeks to Hire Charles A. Cuprill as Bankruptcy Counsel
-----------------------------------------------------------------
ABAB Corporation seeks approval from the U.S. Bankruptcy Court for
the District of Puerto Rico to hire Charles A. Cuprill, P.S.C., Law
Office to serve as legal counsel in its Chapter 11 case.
The firm's hourly rates are as follows:
Charles A. Cuprill-Hernandez, Esq. $350 per hour
Paralegals $85 per hour
The Debtor paid $15,000 to the law firm as a retainer fee.
Charles Curpill-Hernandez, Esq., the firm's attorney who will be
providing the services, disclosed in a court filing that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Charles A. Curpill-Hernandez, Esq.
Charles A. Cuprill, P.S.C., Law Office
356 Fortaleza St., Second Florr
San Juan, PR 00901
Tel.: 787-977-0515
Fax: 787-977-0518
Email: ccuprill@cuprill.com
About ABAB Corporation
ABAB Corporation, doing business as Payless Car Rental, filed a
Chapter 11 petition (Bankr. D. P.R. Case No. 21-02140) on July 15,
2021. At the time of the filing, the Debtor had between $1 million
and $10 million in both assets and liabilities. Alberic Colon
Solis, president, signed the petition.
Judge Enrique S. Lamouttee Inclan oversees the case.
Charles A. Cuprill P.S.C. Law Offices serves as the bankruptcy
counsel while Saldana, Carvajal & Velez-Rive, P.S.C. serves as the
special counsel. The Debtor's financial consultant is Luis R.
Carrasquillo & CO., P.S.C.
ABAB CORP: Taps Luis R. Carrasquillo & Co. as Financial Consultant
------------------------------------------------------------------
ABAB Corporation seeks approval from the U.S. Bankruptcy Court for
the District of Puerto Rico to hire Luis R. Carrasquillo & Co.,
P.S.C. as its financial consultant.
The Debtor needs a financial consultant to assist in the financial
restructuring of its affairs, advise on strategic planning, assist
in the preparation of a plan for reorganization, and participate
in
the negotiation with creditors.
The firm's hourly rates are as follows:
Luis R. Carrasquillo, Partner $175 per hour
Marcelo Gutiurrez, Senior CPA $125 per hour
Arnaldo Morales, Senior Accountant $100 per hour
Carmen Callejas Echevarria, Senior Accountant $90 per hour
Zoraida Delgado Diaz, Junior Accountant $65 per hour
Enid Olmeda, Junior Accountant $45 per hour
Rosalie Hernandez Burgos, Administrative
and Support $35 per hour
Kelsei Lopez, Administrative and Support $35 per hour
The Debtor paid $12,000 to the firm as a retainer fee.
Luis Carrasquillo Ruiz, a principal at the firm, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Luis R. Carrasquillo Ruiz, CPA
Luis R. Carrasquillo & Co., P.S.C.
28th St., Turabo Gardens Ave.
Caguas, PR 00725
Tel: 787-746-4555
Fax: 787-746-4564
Email: luis@cpacarrasquillo.com
About ABAB Corporation
ABAB Corporation, doing business as Payless Car Rental, filed a
Chapter 11 petition (Bankr. D. P.R. Case No. 21-02140) on July 15,
2021. At the time of the filing, the Debtor had between $1 million
and $10 million in both assets and liabilities. Alberic Colon
Solis, president, signed the petition.
Judge Enrique S. Lamouttee Inclan oversees the case.
Charles A. Cuprill P.S.C. Law Offices serves as the bankruptcy
counsel while Saldana, Carvajal & Velez-Rive, P.S.C. serves as the
special counsel. The Debtor's financial consultant is Luis R.
Carrasquillo & CO., P.S.C.
PUERTO RICO AQUEDUCT: To Refinance $1.8 Billion Debt
----------------------------------------------------
Michelle Kaske of Bloomberg News reports that the Puerto Rico water
utility, the Puerto Rico Aqueduct and Sewer Authority, will
refinance its $1.8 billion of debt.
Puerto Rico's financial oversight board gave approval to the
island's government-owned water utility to refinance $1.8 billion
of debt sold in 2012 to seize on the drop in interest rates.
The transaction will provide the Puerto Rico Aqueduct and Sewer
Authority with an estimated $275 million of present-value-savings
through fiscal year 2047,'according to a letter of approval dated
Tuesday from the board to the commonwealth's Fiscal Agency and
Financial Advisory Authority.
Prasa, as the utility is known, had been planning to refund the
2012 A and B senior-lien bonds.
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
may
be 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 to chair a committee to review professionals' fees.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Economic Outlook Linked to Global Recovery
-------------------------------------------------------------
Geisha Kowlessar-Alonzo at Trinidad and Tobago Guardian reports
that according to the Central Bank's latest Monetary Policy Report,
the domestic economic outlook for 2021 will be linked to the pace
of the global recovery.
Energy commodity prices are expected to improve in the short to
medium term, driven by rising global demand, according to the
report.
"Additional impetus will come from supply-side factors such as
production limits from OPEC and partner countries.
"Local energy production should receive support from rising
commodity prices and increased demand for energy-related products
as some economies gradually re-open," the bank explained, the
report relays.
Moreover, it said, the extent of local COVID-19 containment
measures alongside the planned acceleration of vaccinations will
affect how fast domestic output recovers in the second half of this
year, the report notes.
According to the bank, headline inflation is expected to remain
contained in the short to medium term, the report discloses.
The bank added that core inflation should remain low and stable
given minimal upward pressure on aggregate demand owing to
continued limits on economic activity and ample spare production
capacity, the report says.
"Global supply chain challenges following the disruptive effect of
the pandemic can provide some upward impetus to international food
prices which may pass through to domestic food inflation. In
addition, rising inflation in the US, if more intractable than
initially envisaged, may influence domestic prices in the periods
ahead," the bank noted, the report relays.
Further, it said the country's external current account is expected
to record a larger surplus in 2021 when compared to the previous
year due to a pick-up in export earnings, the report notes.
This performance is anticipated to stem from the significant
rebound in energy prices compared to the previous year, leading to
a shoring up in the value of energy exports, the bank added, the
report discloses.
"Further complementing this outturn is the anticipated increase in
non-energy exports due to an improvement in external demand from
export destination markets, as these economies resume economic
activity," the bank said, the report says.
Financial sector conditions are expected to remain favorable for
the rest of 2021, the report relays.
Policy support will keep liquidity levels in the financial sector
high enough to facilitate public and private sector activity, the
report notes.
And while the rates on short term Treasury instruments increased
over the first half of 2021, generally high liquidity may limit
this movement going forward to the end of 2021, the bank said, the
report says.
It added that the short-term TT-US differential is thus expected to
remain positive and stable for the remainder of 2021, the report
notes.
However, longer-term domestic rates are expected to respond to the
pace of Central Government borrowing activity, the report relates.
In its overview, the bank said the pandemic continues to weigh on
the domestic economy, the report notes.
Economic activity contracted sharply in the final quarter of 2020,
it noted, adding that energy sector performance over the first four
months of 2021 was mixed, the report discloses.
The bank also noted while the output of several products dipped,
particularly natural gas and its related downstream products,
prices of some key energy exports improved significantly over the
period, the report says.
Improvements were recorded in a few non-energy sectors, including
construction, finance and insurance, real estate and electricity
and water going into 2021, the report relays.
However, the bank said the resurgence in construction and
manufacturing observed at the start of 2021 was cut short by the
imposition of a period of stringent lockdown measures in the second
quarter, the report notes.
Preliminary data on economic activity for the first four months of
2021 suggest that a contraction in the non-energy sector is likely
during the second quarter of 2021, given the renewed restrictions,
the bank added, the report says.
In this environment of restrained economic activity, inflation
remained contained, the report relays. Headline inflation averaged
0.9 per cent over October 2020 to April 2021, the report notes.
"On a year-on-year basis to April 2021, both core and headline
inflation measured 1.1 per cent. Food inflation slowed over the
period, decelerating from 4.4 per cent in October 2020 to 1.5 per
cent in April 2021," the bank said, the report relays.
It also noted that T&T's external accounts recorded an overall
deficit of US$352.7 million in the fourth quarter of 2020, the
report discloses.
"Over the period, the current account recorded a deficit—the
second consecutive quarterly deficit for 2020—mainly reflecting a
deterioration in export earnings," the bank explained, the report
relays.
It said the financial account recorded a net outflow, primarily
owing to transactions in the other investment and portfolio
investment categories, the report says.
At the end of May 2021, gross official reserves stood at US$6,672.1
million, which represented 8.1 months of prospective imports of
goods and services, the report relates.
However, the bank said while fallout from the COVID-19 pandemic
continues to affect credit conditions, the financial sector
remained stable thus far in 2021, the report relays.
Liquidity declined in the first half of 2021, partly owing to
financing activity by the Central Government, the report notes.
The bank also noted that although it has held net open market
operations (OMO) activity at zero since November 2020, daily
average excess liquidity levels, as measured by commercial bank no
remunerated deposits at the Central Bank in excess of the reserve
requirements, continue to be elevated at just under $8 billion, but
down from $11.5 billion at the start of the year, the report
relays.
The bank also added that treasury securities gradually increased by
mid-2021, resulting in generally stable and positive TT-US short
term differentials, the report notes.
"However, growth in consolidated financial system credit to the
private sector turned negative in early 2021 and has remained that
way since, led by continued declines in business lending along with
a recent falloff in consumer lending and a deceleration in real
estate lending," it said, the report says.
The bank also noted that ongoing vaccination programs coupled with
the gradual relaxation of restrictions on movement are expected to
support a significant pickup in global growth in the second half of
2021 and into 2022, the report discloses.
However, it said, the IMF noted that the strength of the recovery
would vary across countries depending on the impact of the pandemic
on health care systems and economic activity, exposure to
cross-border spillovers of the virus variants and the effectiveness
of policy support to limit economic damage, the report relays.
"In EMDEs and low-income countries, delayed access to vaccines
could result in further lockdowns and restrictions, thus
undermining growth prospects," the bank said, the report notes.
It added that in the Caribbean, commodity producers are expected to
benefit from the uptick in energy prices, but subdued growth is
anticipated for tourism-dependent economies given continued soft
demand for travel and tourism-related services, the report adds.
===============
X X X X X X X X
===============
LATAM: Suffered 7 Billion Cyberattacks From January to March
------------------------------------------------------------
RJR News reports that a global leader in comprehensive, integrated,
and automated cybersecurity solutions has revealed that Latin
America and the Caribbean suffered more than seven billion
cyberattack attempts in the first quarter of 2021.
According to the threat intelligence lab FortiGuard Labs, which
collects and analyzes cybersecurity incidents around the world
daily, January, February, and March saw an increase in the
distribution of web-based malware, according to RJR News.
During the first quarter of the year, a notable increase was
reported regarding the use of social media to spread advertising
and deceptive websites, where compromised users are sharing
messages with malicious content to their contacts from their social
media profiles, without being aware, the report notes.
[*] BOND PRICING: For the Week July 19 to July 23, 2021
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Esval SA 3.5 49.9 2/15/2026 CL CLP
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
YPF SA 16.5 67.3 5/9/2022 AR ARS
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2021. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
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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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