/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210730.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 30, 2021, Vol. 22, No. 146 Headlines B O L I V I A BANCO FASSIL: Fitch Affirms and Withdraws 'CCC+' LT IDRs B R A Z I L BRAZIL: China's Soybean Imports Down as Crush Margins Narrow MOVIDA PARTICIPACOES: S&P Raises ICR to 'BB-', Outlook Stable PETROLEO BRASILEIRO: S&P Affirms 'BB-' Rating, Outlook Stable SAMARCO MINERACAO: State Prosecutors Contest Vale-BRP Loan to Firm C O L O M B I A GRAN COLOMBIA: Fitch Affirms 'B+' LT IDRs, Outlook Stable D O M I N I C A N R E P U B L I C CEMEX SAB: Discloses US$20 Million Production Boost J A M A I C A JAMAICA: Fewer People Employed in April 2021 Compared to April 2019 M E X I C O PETROLEOS MEXICANOS: Moody's Lowers CFR to Ba3, Outlook Negative PETROLEOS MEXICANOS: Moody's Lowers Sr. Unsec. Bond Ratings to Ba3 P A N A M A TOCUMEN SA: S&P Keeps 'BB+' Sr. Sec. Notes Rating on Watch Neg. P U E R T O R I C O ALEX AND ANI: Wins Cash Collateral Access T R I N I D A D A N D T O B A G O CL FINANCIAL: CL Marine Sale Secures Future of Trading Business TRINIDAD & TOBAGO: Bakeries Struggle to Keep Prices Down - - - - - ============= B O L I V I A ============= BANCO FASSIL: Fitch Affirms and Withdraws 'CCC+' LT IDRs -------------------------------------------------------- Fitch Ratings has affirmed and withdrawn Banco Fassil SA's (Banco Fassil) 'CCC+' Long-Term Issuer Default Ratings. Fitch is withdrawing the ratings as Banco Fassil has chosen to stop participating in the rating process for commercial reasons. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide analytical coverage. KEY RATING DRIVERS The affirmation of Fassil's ratings reflects limited change in its credit profile since last review. RATING SENSITIVITIES Rating Sensitivities do not apply as the ratings have been withdrawn. 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 Prepaid Expenses and Deferred Payments were included as other intangibles and deducted from the FCC. ESG CONSIDERATIONS Banco Fassil SA has an ESG Relevance Score of '4' for Management Strategy due to the track record of high government intervention in the Bolivian banking sector, 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. =========== B R A Z I L =========== BRAZIL: China's Soybean Imports Down as Crush Margins Narrow ------------------------------------------------------------ Rio Times Online reports that China's imports of soybeans from Brazil retreated in June compared with the same period a year earlier, the Asian country's customs data showed, as weak crush margins weighed on demand. China, the world's largest buyer of soybeans, imported 10.48 million tons of the oilseed from Brazil - the top global exporter - last month, down slightly from a record 10.51 million tons in the same month of 2020, according to the customs data, according to Rio Times Online. The figures still represent a 14% increase from the 9.23 million tons in May, the report notes. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Jair Bolsonaro is the current president, having been sworn in on Jan. 1, 2019. Fitch Ratings' credit rating for Brazil stands at 'BB-' with a negative outlook (November 2020). Fitch's 'BB-' Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) has been affirmed in May 2021. Standard & Poor's credit rating for Brazil stands at BB- with stable outlook (April 2020). S&P's 'BB-/B' long-and short-term foreign and local currency sovereign credit ratings for Brazil were affirmed in December 2020. Moody's credit rating for Brazil was last set at Ba2 with stable outlook (April 2018). DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). MOVIDA PARTICIPACOES: S&P Raises ICR to 'BB-', Outlook Stable ------------------------------------------------------------- On July 28, 2021, S&P Global Ratings raised its global scale issuer credit and issue-level ratings on Brazilian car rental company Movida Participacoes S.A. (Movida) to 'BB-' from 'B+' and national scale ratings to 'brAA+' from 'brAA'. S&P also kept the recovery rating at '3' (65%) unchanged. The outlook is stable because S&P expects the company to maintain solid fleet growth in the coming years, increasing the share of the fleet management segment, but also accompanied by higher debt. CS Brasil Frotas (a subsidiary of CS) owns close to 18,000 operational vehicles through its fleet management and light vehicles outsourcing for public-sector and public-private companies. S&P said, "We expect it will reach close to R$700 million in revenue and R$300 million in EBITDA in 2021. As a result, Movida's revenue from fleet management will rise to about R$1.2 billion in 2021 from R$517 million in 2020, representing more than 50% of revenue coming from services and more than 20% of total revenue in 2021. We expect this shift to bring more predictability to Movida's cash flows, given that fleet management is less volatile than the RaC segment, which used to be Movida's main revenue and EBITDA contributor." Moreover, Movida will start operating in the public sector, a market with high growth prospects, providing a broader diversification in terms of clients and regions served, although it also brings risks of higher delinquency rates. Movida was directing its expansion capex towards the fleet management even before CS's incorporation. The segment has been very resilient in the past year even amid the pandemic, which coupled with booming demand--and strong prices--for used car allowed Movida to expand its business. The high demand for used car resulted from the delays in new vehicle supply from the automakers. This has led to the postponement of part of the company's fleet renewal, denting the company's used-car sales and slowing its growth pace this year. Even though Movida advanced in most of its vehicle purchases, most of the growth should occur in 2022, along with the resumption of higher volumes of cars sold. For its fleet expansion, Movida has an aggressive net capex of R$3.0 billion - R$3.3 billion in place for the next two years, which we expect to be mostly debt funded. As a result, we expect the company's gross debt of R$6.5 billion - R$7 billion by year-end and to increase to close to R$8.5 billion by the end of 2022. Greater debt, combined with higher base interest rates in Brazil, will increase the company's interest burden considerably in the next few years. This will likely weaken Movida's EBIT interest coverage closer to 2.0x in 2021 from 2.6x in 2020, but the ration will still be in line with the current rating level. In the first half of the year, Movida issued more than R$3.7 billion in long-term local and international markets, and prepaid more than R$1.8 billion of debt due 2021 and 2022. Therefore, the company's weighted average maturity rose to more than 5 years from 2.8 years at the end of 2020. S&P expects Movida to continue issuing long-term debt while maintaining a robust cash position, and consequently, high cushion in its liquidity, to cover its expansion capex. PETROLEO BRASILEIRO: S&P Affirms 'BB-' Rating, Outlook Stable ------------------------------------------------------------- On July 28, 2021, S&P Global Ratings affirmed its 'BB-' global scale and its 'brAAA' Brazilian national scale ratings on Brazil-based integrated oil and gas company Petroleo Brasileiro S.A. At the same time, S&P revised upwards the stand-alone credit profile (SACP) on the company to 'bb+' from 'bb'. The stable outlook mirrors that on Brazil, because the sovereign rating continues to cap its ratings on Petrobras. Petrobras has been reducing debt substantially over the past quarters, amid solid operating cash flows and progress in its asset divestment plan. The company will benefit from higher oil prices this year, likely above $65 per barrel (bbl) compared with $41.7 in 2020, which will boost revenue and cash flows, allowing it to cut gross debt below $60 billion ahead of the target of the end of 2022. S&P said, "Even with higher capex going forward--after the reduction in 2020 amid the pandemic uncertainties--we expect Petrobras to maintain solid free operating cash flows that would allow to control its leverage while the company increases dividend payments after debt reduction. We expect Petrobras to post debt to EBITDA of 2.0x-2.5x and FFO to debt of 35%-40% in the next two years, compared with 3.1x and 27.1%, respectively, in 2020. As a result, we revised our assessment of the company's financial risk profile to significant from aggressive." S&P also expects Petrobras to continue refinancing its debt, as seen over the past quarters, consistently extending its debt maturity profile, which is already above 10 years. The company has been delivering solid cost reductions over the past years with structural improvements, stemming from increasing the share of low-cost pre-salt production (70% of total production in second quarter of 2021) and divestment of higher-cost producing assets. In addition, the depreciation of Brazilian real last year benefited the company's profitability because about 70% of the lifting cost is denominated in that currency. S&P said, "We expect the real to remain weak over the medium term. This is combined with our assumption that Petrobras will maintain its fuel pricing policy aligned with international parity, as well as efficiency initiatives and technology investments across all of its segments. The latter includes a sizable reduction of the company's workforce and office space, and increased digitalization, among others. Given these operating efficiency improvements, we now view Petrobras' competitive position as strong." On the other hand, the company's future production growth will depend on its ability to maintain adequate levels of reserves replacement close to 100% over the next few years, despite the asset sales. The changes that included the CEO and subsequently four executive directors occurred following a request by Brazil's Ministry of Mines and Energy to replace Petrobras' CEO after Brazil's president publicly criticized the former CEO over fuel price hikes in early 2021. The CEO change also triggered a new election of eight out of 11 board members, most of which indicated by the government. S&P said, "While the current CEO has limited experience, both in the industry and in managing a company with the size and scale of Petrobras, the four elected executive directors have considerable experience in the company, which we view as a mitigating risk factor. Still, we are negatively factoring into our 'bb+' SACP some concerns over board's effectiveness to provide sufficient oversight of management actions and protect interests of all the company's stakeholders." This includes risks of potential government interference in Petrobras' fuel pricing policy, which could harm its profitability and cash flows, as was the case in the past. SAMARCO MINERACAO: State Prosecutors Contest Vale-BRP Loan to Firm ------------------------------------------------------------------ Mariana Durao of Bloomberg News reports that Brazilian prosecutors said Samarco should not take a 1.18 billion reais ($228 million) debtor-in-possession loan from its owners Vale and BHP to pay costs related to social and environmental repairs from a dam disaster in 2015. Both companies as shareholders have responsibility to pay for the costs from Samarco's dam damages, the prosecutor's office in Minas Gerais, where the unit is based, said in a statement to court. The costs to pay for damages should be left out of the bankruptcy estate, they said. Samarco filed for bankruptcy protection against creditor in April 2021. About Samarco Mineracao SA Samarco Mineracao SA is a Brazilian mining joint venture between BHP Group and Vale SA. erves as an iron ore processing company. The company provides blast furnace, direct reduction, sinter feed, as well as low and normal silica content pellets. On April 9, 2021, the Debtor filed a voluntary petition for judicial reorganization in the 2nd Business State Court for the Belo Horizonte District of Minas Gerais in Brazil pursuant to Brazilian Federal Law No. 11,101 of February 9, 2005. Samarco Mineracao filed for Chapter 15 bankruptcy recognition (Bankr. S.D.N.Y. Case No. 21-10754) on April 19, 2021, in New York, to seek U.S. recognition of its Brazilian proceedings. The Debtor's U.S. counsel: Thomas S. Kessler Cleary Gottlieb Steen & Hamilton LLP Tel: 212-225-2000 E-mail: tkessler@cgsh.com =============== C O L O M B I A =============== GRAN COLOMBIA: Fitch Affirms 'B+' LT IDRs, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Gran Colombia Gold Corp.'s (Gran Colombia) Long-Term Foreign and Local Currency Issuer Default Ratings at 'B+'. In conjunction with this rating action, Fitch has also rated Gran Colombia's new benchmark senior unsecured notes 'B+'/'RR4' and affirmed Gran Colombia's secured gold notes at 'B+'/'RR4'. The Rating Outlook remains Stable. Gran Colombia's 'B+' ratings are supported by its strong free cash flow FCF generation that has bolstered its capital structure through debt repayment. The spin-off of its Marmato Lower Zone mine and assets to Caldas Gold Corp, now Aris Gold, has also lowered the company's operating risk. Gran Colombia's ratings are constrained by the sustainability of its low cash costs in the face of expected lower grades over the coming years, its small scale of operations, short mine life, and the dependence of its cash flow upon its Segovia operations. The company is about to embark on its Toroparu gold project in Guyana that will improve Gran Colombia's operating scale, mine diversification and mine life upon completion in 2025. KEY RATING DRIVERS Risk Reduction: Gran Colombia has significantly lowered risk during the past two years in preparation for the development of its Toroparu project in Guyana. The company raised equity and used its cash flow to lower debt. In addition, the company spun-off its Marmato Lower Zone project to Aris Gold Corp, in which Gran Colombia has a 44.3% interest. This transaction moved the USD270 million construction risk for the Lower Zone project to non-recourse financing. Gran Colombia also spun-off Zancudo to Denarius Silver Corp, formerly ESV Resources, where it holds a 27% equity interest. Positive Free Cash Flow: Fitch projects that Gran Colombia will generate about USD175 million of EBITDA and USD30 million of FCF after capex and dividends during 2021. This is a slight improvement from USD171 million of EBITDA in 2020 but is lower than the USD68 million of FCF generated last year due to the introduction of a dividend policy in late 2020 that is now yielding nearly 3% of Gran Colombia's market capitalization. Low Net Leverage: Gran Colombia had a net cash position as of March 31, 2021 with USD73 million of cash and marketable securities and USD57 million of total debt. The debt consisted of USD35 million of amortizing gold notes, which will be repaid with the notes issuance, and USD22 million of optionally convertible subordinated debentures. Net leverage will climb due to the issuance of USD300 million of unsecured notes for the construction of Toroparu but is projected by Fitch to remain below 2.0x between 2021 and 2023. Single-Asset Risk: The ratings of Gran Colombia are constrained by its single-asset risk. The Segovia operation account for more than 90% of Gran Colombia's mining production and EBITDA. Proven and probable reserves are extremely low at this site, being equivalent to a three-year mine life. Short-term to medium-term risk is viewed to be manageable given exploration activity on 24 veins at this site that has increased measured and indicated resources at Segovia. The company's dependence upon cash flow from one key operating site, however, make it vulnerable to production stoppages due to labor unrest or weather events. The Segovia operations consist of three mines, one processing plant and additional artisanal miners that operate on Gran Colombia's approximately 9,000-hectare concessions. Competitive Cost Structure: Gran Colombia had an all-in sustaining cost (AISC) of production of USD1,101/oz Au in 2020 and a cash cost per ounce of production of USD768. These figures placed the company in the third quartile of the gold production cost curve and are due to Covid related production disruptions and higher prevention costs. The company's AISC is expected to increase over the next years as head grades at Segovia decline and the company increases capex on drilling. During 1Q20, Gran Colombia's Segovia operations had an average head grade of 12.8 grams/tonne (g/t). This compares with average reserve grades of 8.9 g/t at Segovia. Toroparu Project: Most of the benchmark bond proceeds will be used to fund an estimated USD378 million of pre-production capex for the Toroparu gold project in Guyana. This project is expected to bring Gran Colombia's output to 380,000 oz of gold equivalent in 2025 from the current 200,000 oz of gold equivalent it mines from Segovia. The expected 24 years of life of this open pit mine will also strengthen Gran Colombia's profile. Toroparu's development is also being financed by gold and silver streaming deals with Wheaton. DERIVATION SUMMARY Gran Colombia's 'B+' rating results from its small scale of operations, relatively low reserve mine life and lack of commodity diversification, partially offset by the company's low leverage and manageable debt on balance sheet, its high-grade Segovia asset, competitive AISC position relative to peers and its large, low cost high mine life project Toroparu. Gran Colombia's production of about 200,000 ounces of gold in 2020 is considerably less than the sales of gold by Kinross Gold Corp (BBB/Stable) of 2.3 million oz, AngloGold Ashanti Limited (BBB-/Stable) at 3.1 million oz, PJSC Polyus (BB+/Stable) at 2.8 mm, Agnico Eagle Mines Limited (BBB/Stable) at 1.3 million oz. Gran Colombia's mine life of three years pales in comparison to Kinross at about ten years, Agnico Eagle at about 12 years, AngloGold Ashanti at nine years, and Polyus at about 20 years. Compania de Minas Buenaventura's (BB/Stable) main gold operations have a similar output and mine life. However, Buenaventura has more silver and base metals contribution and significant stakes in world class assets, such as Cerro Verde or Yanacocha. Gran Colombia's AISC of USD1,101/oz place it in the third quartile of the production cost curve. The company has a stronger balance sheet versus these larger peers. These factors are largely offset by the high risk of operating at one dominant mining site. s KEY ASSUMPTIONS -- Gold prices of USD1,700/oz in 2021, USD1,500/oz in 2022 and USD1,200/oz in 2022; -- Gold sales rise 8% in 2021 to 212,000 ounces before dropping to 200,000 ounces in 2022, and thereafter; -- Capex is USD53 million in 2021, USD80 million in 2022 and USD218 million in 2023. The latter figures include the Toroparu expansion capex. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Increasing size and diversification over the medium term; -- A successful reduction of the company's single mine site risk; -- An increase in the reserve life of Segovia would also be a positive consideration for a positive rating action. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Deterioration in liquidity position resulting in cash and equivalents below USD35 million on a prolonged basis; -- Prolonged strikes or mine closures that would halt or significantly lower gold production; -- Large debt-funded acquisitions. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Strong Liquidity Position: Gran Colombia reported Fitch-adjusted cash and equivalents of USD73 million as of March 31, 2021. The company also had USD4 million of cash in its gold-linked notes trust account. This amount of liquidity comfortably covers USD4 million of short-term debt related to the gold-linked notes. Gran Colombia's debt consists of USD35 million of gold notes and USD22 million of convertible unsecured subordinated 2024 debentures as of March 31, 2021. The company's amortization schedule is manageable with about USD6 million per year of gold-linked notes amortizing in 2021, 2022 and 2023. In July, Gran Colombia announced the details of its quarterly payment. The resulting gold-linked notes outstanding is of USD18 million, which is intended to be repaid along with a 4.13% premium with the proceeds from Gran Colombia's proposed bond offering. The debentures can be exercised into shares at CAD4.75 per share. Hence, the principal, which currently stands at CAD18 million may not require cash to be settled. Aris Gold Corp, formerly Caldas Gold Corp, a 44.3% owned subsidiary of Gran Colombia, has USD73 million of gold linked notes, which are non-recourse to Gran Colombia. This debt, along with funds from an equity issuance, will be used to fund a USD270 million expansion project in Marmato Low Zone. The Toroparu project, from wholly acquired Gold X, will be financed in its previously estimated USD280 million by streaming contracts with Wheaton. The gold stream will be paid with 10% of life of mine gold output at USD400/oz, whereas the silver stream will be paid with 50% of life of mine gold output at USD3.90/oz. ISSUER PROFILE Gran Colombia is a Canadian-based gold and silver exploration, development and production company. The company is currently the largest underground gold and silver producer in Colombia with several underground mines and one processing plant in operation at its Segovia business unit. Gran Colombia spun off its Marmato operations and Lower Zone underground project to Aris Gold, a company in which it has a 44% stake. Gran Colombia is about to embark upon a greenfield project in Guyana named Toroparu. ESG CONSIDERATIONS Gran Colombia Gold Corp. has an ESG Relevance Score of '4' for Labor Relations & Practices due to exposure to labor relation practice risks, as Gran Colombia partially relies on third-party artisanal miners for its gold production, which has a negative impact on the credit profile, and is relevant to the rating(s) in conjunction with other factors. Gran Colombia Gold Corp. has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability related to land rights/conflicts risk, as the company is exposed to local unrest in the communities surrounding its Marmato and Segovia mining operations, 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. =================================== D O M I N I C A N R E P U B L I C =================================== CEMEX SAB: Discloses US$20 Million Production Boost --------------------------------------------------- Dominican Today reports that Cemex Dominicana will spend more than 20 million dollars to modernize one of its production lines at the San Pedro de Macoris (east) plant, which had been out of operation since 2015. The director of operations of the cement company, Juan Jose Rijo, said that the growth registered by the Dominican economy led them to readjust the line to increase production capacity. He anticipated that the plant will be ready by the end of 2021 or the beginning of next year, according to Dominican Today. The executive told Diario Libre, accompanied by Dania Heredia, Cemex's legal director for the Caribbean, presented the Vertua distinctive, which is included within Cemex's sustainability strategies to reduce its CO2 emissions, the report notes. As reported in the Troubled Company Reporter-Latin America on June 4, 2021, Fitch Ratings has assigned a 'B' rating to the benchmark sized perpetual subordinated notes of CEMEX, S.A.B. de C.V. (BB-/Stable). The proposed notes qualify for 50% equity credit. Proceeds from the issuance will be used to pay USD441 million of perpetual securities, which currently do not receive equity credit, and the remainder for general corporate purposes including other debt repayment. ============= J A M A I C A ============= JAMAICA: Fewer People Employed in April 2021 Compared to April 2019 ------------------------------------------------------------------- RJR News reports that the Statistical Institute of Jamaica (STATIN) says fewer people were employed in Jamaica as at April 2021 compared to April 2019. The agency released the findings of the April 2021 Labour Force survey at its quarterly news briefing, according to RJR News. Jamaica's labour force saw an overall decline of 3.2 per cent, compared to April 2019, the report notes. Director General of STATIN Carol Coy said there was no April 2020 data to compare the figures as the Labour Force survey was not conducted due to COVID-19 restrictions, the report says. Ms. Coy said the categories wholesale and retail trade; repair of motor vehicles and motorcycles; agriculture and fisheries; and construction had the most employees, the report relays. However, the arts and entertainment and accommodation and food service categories saw the sharpest decline in employees due to the effects of COVID-19 restrictions, the report notes. The survey found that more than 40 per cent of people in the employed labour force experienced either a complete or partial loss of income due to the impact of the COVID-19 pandemic, the report adds. 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 =========== PETROLEOS MEXICANOS: Moody's Lowers CFR to Ba3, Outlook Negative ---------------------------------------------------------------- Moody's Investors Service downgraded Petroleos Mexicanos' (PEMEX) corporate family rating and the senior unsecured ratings on the company's existing notes, as well as the ratings based on PEMEX's guarantee, to Ba3 from Ba2. Moody's also lowered PEMEX's Baseline Credit Assessment, which reflects its standalone credit strength, to caa3 from caa2. These rating actions were based on PEMEX'S high liquidity risk and increasing business risk as the company faces high debt maturities while it expands its refining capacity and production. Moody's believes that such strategy will generate higher refining operating losses in the short and medium term. The outlook on Pemex's ratings remains negative primarily given the negative outlook on the Mexico government's Baa1 rating. Ratings downgraded as follows: Downgrades: Issuer: Pemex Project Funding Master Trust Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba3 from (P)Ba2 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 from Ba2 Issuer: Petroleos Mexicanos Corporate Family Rating, Downgraded to Ba3 from Ba2 Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba3 from (P)Ba2 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 from Ba2 Outlook Actions: Issuer: Pemex Project Funding Master Trust Outlook, Remains Negative Issuer: Petroleos Mexicanos Outlook, Remains Negative RATINGS RATIONALE PEMEX's Ba3 corporate family rating and caa3 BCA reflect Moody's view that the company's liquidity needs and negative free cash flow will rise in the next three years due to high debt maturities and lower operating cash flow derived from the expansion of its refining business, which has generated operating losses in the last several years (close to $17 billion in 2018-20, as reported). Although oil and gas production growth has been below management targets, Moody's acknowledges that PEMEX has been successful in reverting production and reserves declines in the last two years and believes that this trend will continue in 2021. However, Moody's expects that PEMEX's cash flow generation and credit metrics will deteriorate further in the next three years as the company increases fuel production, while grappling with limited capital investment ability, high debt maturities, and volatile oil and fuel prices. PEMEX's Ba3 rating takes into consideration Moody's joint default analysis, which includes the rating agency's assumptions of very high government support in case of need and very high default correlation between PEMEX and the Government of Mexico, resulting in six notches of uplift from the company's caa3 BCA. Since 2016, the government has supported PEMEX in various ways, including capital injections, tax reductions and early redemption of notes receivable from the government. For 2021, the government announced a $3.5 billion reduction in PEMEX's taxes and cash transfers to help the company repay debt maturities of $6.5 billion in the year. Moody's assumes that the government will continue to fund PEMEX's cash needs and help the company comply with its debt amortization obligations of $5.8 billion in 2022 and $6.4 billion in 2023. PEMEX has weak liquidity and is highly dependent on government support. On March 31, 2021, PEMEX had $2 billion in cash and currently has less than $175 million in available committed revolving credit facilities to address over $10.8 billion in debt maturities from April 2021 to the end of 2022, besides substantial negative free cash flow in the period, driven by insufficient operating cash generation to pay taxes and invest in capital. The negative rating outlook on PEMEX's Ba3 ratings is primarily based on the negative outlook on Mexico's Baa1 rating given the importance of the sovereign's credit strength and ongoing support to PEMEX's ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A downgrade of Mexico's Baa1 rating would likely result in a downgrade of PEMEX's rating. For Moody's to consider an affirmation of PEMEX's Ba3 rating following a sovereign downgrade, the company's BCA would have to substantially improve. Factors that could drive a higher BCA would be the ability of the company to (i) strengthen its liquidity position (ii) internally fund enough capital investment to fully replace reserves and deliver modest production growth and (iii) generate free cash flow for debt reduction. Because PEMEX's ratings are highly dependent on the support from the government of Mexico, a change in assumptions about government support and its timeliness could lead to a downgrade of PEMEX's ratings. Further downgrades in the company's BCA could also lead to further downgrades of PEMEX's ratings. Factors that could lead to a lower BCA include material increase in net debt, an operating performance worse than forecasted, reserves decline and decreases in reserves life. An upgrade is unlikely in the near term given the negative outlook for Mexico's Baa1 rating and Moody's expectations for continued negative free cash flow at PEMEX. The methodologies used in these ratings were Integrated Oil and Gas Methodology published in September 2019. Founded in 1938, PEMEX is Mexico's national oil company, with fully integrated operations in oil and gas exploration and production, refining, distribution and retail marketing, as well as petrochemicals. PEMEX is also a leading crude oil exporter, around 60% of its crude is exported to various countries, mainly to the US and Asia. In the twelve months ended December 31, 2020 the company produced an average of 1,706 thousand barrels of per day of crude oil (excluding partners). PETROLEOS MEXICANOS: Moody's Lowers Sr. Unsec. Bond Ratings to Ba3 ------------------------------------------------------------------ Moody's de Mexico, S.A. de C.V. downgraded Petroleos Mexicanos' (PEMEX) senior unsecured ratings on the company's existing notes, as well as the ratings based on PEMEX's guarantee, to A3.mx/Ba3 from A2.mx/Ba2. Moody's also affirmed PEMEX's MX-2 short term national scale. These rating actions follow Moody's Investors Service (MIS) rating action of downgrading PEMEX's corporate family rating to Ba3 from Ba2. MIS also lowered PEMEX's Baseline Credit Assessment (BCA), which reflects its standalone credit strength, to caa3 from caa2. These rating actions were based on PEMEX'S high liquidity risk and increasing business risk as the company faces high debt maturities while it expands its refining capacity and production. Moody's believes that such strategy will generate higher refining operating losses in the short and medium term. The outlook on Pemex's ratings remains negative primarily given the negative outlook on the Mexico government's Baa1 rating. Ratings actions as follows: Downgrades: Issuer: Petroleos Mexicanos Senior Unsecured Regular Bond/Debenture, Downgraded to A3.mx/Ba3 from A2.mx/Ba2 (PEMEX 14, PEMEX 11U, PEMEX 11-3, PEMEX 13-2, PEMEX 14U, PEMEX 14-2, PEMEX 12U, PEMEX 15U, PEMEX19) Affirmations: Issuer: Petroleos Mexicanos Commercial Paper, Affirmed NP Commercial Paper, Affirmed MX-2 RATINGS RATIONALE PEMEX's Ba3 corporate family rating reflects Moody's view that the company's liquidity needs and negative free cash flow will rise in the next three years due to high debt maturities and lower operating cash flow derived from the expansion of its refining business, which has generated operating losses in the last several years (close to $17 billion in 2018-20 alone, as reported). Although oil and gas production growth has been below management targets, Moody's acknowledges that PEMEX has been successful in reverting production and reserves declines in the last two years and believes that this trend will continue in 2021. However, Moody's expects that that PEMEX's cash flow generation and credit metrics will deteriorate further in the next three years as the company increases fuel production, while grappling with limited capital investment ability, high debt maturities, and volatile oil and fuel prices. PEMEX's A3.mx/Ba3 ratings take into consideration Moody's joint default analysis, which includes the rating agency's assumptions of very high government support in case of need and very high default correlation between PEMEX and the Government of Mexico, resulting in six notches of uplift from the company's caa3 BCA. Since 2016, the government has supported PEMEX in various ways, including capital injections, tax reductions and early redemption of notes receivable from the government. For 2021, the government announced a $3.5 billion reduction in PEMEX's taxes and cash transfers to help the company repay debt maturities of $6.5 billion in the year. Moody's assumes that the government will continue to fund PEMEX's cash needs and help the company comply with its debt amortization obligations of $5.8 billion in 2022 and $6.4 billion in 2023. PEMEX has weak liquidity and is highly dependent on government support. On March 31, 2021, PEMEX had $2 billion in cash and currently has less than $175 million in available committed revolving credit facilities to address over $10.8 billion in debt maturities from April 2021 to the end of 2022, besides substantial negative free cash flow in the period, driven by insufficient operating cash generation to pay taxes and invest in capital. The negative outlook on PEMEX's A3.mx/Ba3 ratings is primarily based on the negative outlook on Mexico's Baa1 rating given the importance of the sovereign's credit strength and ongoing support to PEMEX's ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A downgrade of Mexico's Baa1 rating would likely result in a downgrade of PEMEX's rating. For Moody's to consider an affirmation of PEMEX's ratings following a sovereign downgrade, the company's BCA would have to substantially improve. Factors that could drive a higher BCA would be the ability of the company to (i) strengthen its liquidity position (ii) internally fund enough capital investment to fully replace reserves and deliver modest production growth and (iii) generate free cash flow for debt reduction. Because PEMEX's ratings are highly dependent on the support from the government of Mexico, a change in assumptions about government support and its timeliness could lead to a downgrade of PEMEX's ratings. Further downgrades in the company's BCA could also lead to further downgrades of PEMEX's ratings. Factors that could lead to a lower BCA include material increase in net debt, an operating performance worse than forecasted, reserves decline and decreases in reserves life. An upgrade is unlikely in the near term given the negative outlook for Mexico's Baa1 rating and Moody's expectations for continued negative free cash flow at PEMEX. The methodologies used in these ratings were Integrated Oil and Gas Methodology published in September 2019. Founded in 1938, PEMEX is Mexico's national oil company, with fully integrated operations in oil and gas exploration and production, refining, distribution and retail marketing, as well as petrochemicals. PEMEX is also a leading crude oil exporter, around 60% of its crude is exported to various countries, mainly to the US and Asia. In the twelve months ended December 31, 2020 the company produced an average of 1,706 thousand barrels of per day of crude oil (excluding partners). =========== P A N A M A =========== TOCUMEN SA: S&P Keeps 'BB+' Sr. Sec. Notes Rating on Watch Neg. --------------------------------------------------------------- On July 28, 2021, S&P Global Ratings kept the 'BB+' rating on Aeropuerto Internacional de Tocumen S.A.'s (Tocumen or the project) existing senior secured notes on CreditWatch with negative implications. The negative CreditWatch listing reflects a 50% chance of a multiple-notch downgrade in the next three months if Tocumen's cash flows continue deteriorating amid a slower-than-expected traffic recovery, resulting in a shortfall of more than $70 million in time for the next interest payment. S&P could also lower the rating on Tocumen's existing notes if it was to cut its ratings on Panama. The Tocumen international airport, inaugurated in 1947, is located about 25 kilometers from Panama City (home of more than half of the country's population of approximately 4 million). It is Panama's primary commercial airport and its main international gateway, having handled more than 16 million passengers in 2019. Tocumen also operates as the regional hub for Copa Airlines (not rated). Tocumen completed a major expansion that will double its existing capacity to about 25 million passengers per year, through the construction of a second terminal of 85,000 square meters and 20 new boarding gates. S&P said, "Given the unique characteristics of the issuance, which defined that not all revenue stream will be used to repay the financial obligations, we rate the debt based on our "Principles Of Credit Ratings" methodology. In particular, we rate Tocumen´s notes according to our Principles of Credit Ratings criteria that combines our project finance and GRE methodologies. We believe that the project finance criteria still provides the best framework to analyze the credit risk of the limited purpose entity (LPE), although some characteristics of project finance transaction are not fully met; specifically certain revenue streams (averaging about 7% of forecast total revenue over the life of the transaction that mainly comprise fuel surcharges and regional airport income) have not been pledged to the repayment of the notes. However, the common characteristic of limited-recourse transactions--such as project financings--is that debtholders can only use a project's dedicated cash flows for the servicing and repayment of the project's debt. Furthermore, a project financing is generally characterized by a group of agreements and contracts among lenders, project sponsors, and other interested parties that creates a form of business organization that will issue a finite amount of debt, operate in a focused line of business, and ask that lenders look only to a specific asset to generate cash flow as the sole source of principal and interest payments and collateral. We believe that project finance criteria best captures the risks associated with the project." Satisfactory competitive position: Tocumen is the main gateway to Panama, handling almost all international traffic, gaining most of traffic upside. Government's key asset: S&P said, "We consider Tocumen as an economically and strategically important asset for the country, mainly given the government's broader economic development plan, which is intended to facilitate the expansion of Panama's logistics and tourism sectors. Moreover, the government participates actively in Tocumen's daily decisions and annual budget, including providing expansionary capex, new debt, contracts with third parties, and tariff adjustments. We believe that under a stress scenario such as the one the project experienced in 2020, there's a very high likelihood that the government will provide extraordinary liquidity support, which we also tend to view as positive from a financial perspective." Market risk exposure: S&P said, "Tocumen is exposed to air traffic variability, similar to majority of the global airports that we rate. Any downturn in the economy, a terrorist attack, unfavorable climatic conditions, or pandemic-related restrictions could dent traffic levels and reduce the project's cash flows. Therefore, we apply a stress scenario every 10 years, which is the typical economic cycle among airports globally. Such a stress scenario consists of traffic levels 15% below the base-case scenario and a recovery in three years. Under such a scenario, we expect cash flows available for debt service (CFADS) to drop 20%-25% from our base-case assumptions." The CreditWatch negative listing reflects a 50% chance of a downgrade in the next three months if Tocumen's cash flows further deteriorate, leading to shortfalls above $70 million amid a slower-than-expected traffic recovery (15%-20% below the base-case scenario). S&P said, "We could also lower the rating on Tocumen if we were to downgrade Panama to 'BBB-', while the SACP and very high likelihood of support remains unchanged. This could occur if the pace of economic recovery after the downturn in 2020 is slower than we expect. We could also lower the rating on Panama if the impact of the current economic downturn and the government's policy response to it lead to large fiscal deficits that are prolonged and weaken public finances, resulting in a rising net debt burden and increasing the government's interest payments as a share of fiscal revenues." S&P could assign a stable outlook in the next three months if traffic starts to recover faster than it expects by the second quarter of the year (reaching 75% of the 2019 figure), resulting in an annual debt service coverage ratio (DSCR) above 1.00x, and if we continue to expect a very high likelihood of government support. ===================== P U E R T O R I C O ===================== ALEX AND ANI: Wins Cash Collateral Access ----------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has authorized Alex and Ani, LLC and its debtor-affiliates to use cash collateral on a final basis in accordance with the budget, and provide adequate protection. The Debtors are permitted to use cash collateral from the Petition Date through the date which is the earliest to occur of (i) the expiration of the Default Notice Period and (ii) the date that is four months after the Petition Date, in each case subject to extension with the consent of the Required First Lien Lenders. The Debtors require immediate access to liquidity to ensure that they are able to continue operating during these Chapter 11 cases, preserve the value of their estates for the benefit of all parties in interest, and pursue value-maximizing restructuring transactions as contemplated by the Restructuring Support Agreement and Plan. As of the Petition Date, the Debtors have approximately $127.4 million in the aggregate principal amount of outstanding funded debt obligations, including capitalized interest, arising under (a) the First Lien Credit Facility, (b) the Second Lien Credit Facility, and (c) the Third Lien Credit Facility. The Debtors entered into a Credit Agreement, dated as of January 29, 2016, by and among Alex and Ani, LLC, as borrower, A and A Shareholding Co., LLC, as holdings, the Debtor guarantors party thereto, Bank of America, N.A., as predecessor to Wilmington Trust, National Association, as administrative agent, and the other lenders party thereto. At the time of its issuance, the First Lien Credit Agreement provided for a $175 million senior secured first lien term loan facility and a $30 million senior secured first lien revolving credit facility, each secured by a first priority lien on substantially all of the assets of the Borrower and Guarantors, subject to certain exclusions. As of the Petition Date, there is $20.43 million of principal outstanding under the First Lien Credit Facility and $81.80 million of principal outstanding under the Third Lien Credit Facility, each including capitalized interest. Both the First Lien Credit Facility and the Third Lien Credit Facility mature on January 31, 2022. On September 13, 2019, the Debtors entered into a Second Lien Credit Agreement, dated as of September 13, 2019, by and among Borrower, as borrower, A and A Shareholding Co., LLC, as holdings, the Guarantors, as guarantors, Wilmington Trust, National Association, as administrative agent, and the other lenders party thereto. The Second Lien Credit Agreement provides for a $20 million term loan facility and is secured by a second priority lien on all of the Collateral. As of the Petition Date, there is $25.20 million of principal outstanding, including capitalized interest, under the Second Lien Credit Facility. The Second Lien Credit Facility matures on January 31, 2022. The cash collateral may continue to be used during the Specified Period by the Debtors to: (i) finance their working capital needs and for any other general corporate purposes; (ii) pay related transaction costs, fees, liabilities, and expenses (including all professional fees and expenses) and other administration costs incurred in connection with and for the benefit of the Chapter 11 Cases (including the Adequate Protection Payments); and (iii) pay any prepetition obligations authorized to be paid pursuant to any "First Day Order" entered by the Court, in each case solely to the extent consistent with the Budget and the Final Order. The Debtors are directed to fund $450,000 into a segregated account, which funds will be held by the Debtors and used solely to satisfy obligations arising under the Debtors' real property leases for the period of June 9, 2021 through June 30, 2021. The Stub Rent will be paid no later than the week ending September 19 unless otherwise agreed to prior to that date by the lease counterparties. Upon the final reconciliation and payment of Stub Rent, any remaining funds in the Stub Rent Account will be returned to the Debtors. As adequate protection for the Debtor's use of cash collateral, each Prepetition Agent are granted additional and replacement continuing valid, binding, enforceable, non-avoidable, and automatically perfected postpetition security interests in and liens on all of each the Debtor's presently owned or hereafter acquired property and assets. The Adequate Protection Liens will be enforceable against the Debtors, their estates, and any successors thereto, including, without limitation, any trustee or other estate representative appointed in the Chapter 11 Cases, or any case under Chapter 7 of the Bankruptcy Code upon the conversion of any of the Chapter 11 Cases, or in any other proceedings superseding or related to any of the foregoing. The Adequate Protection Liens will be deemed to be effective and perfected automatically as of the Petition Date and without the necessity of the execution by the Debtors, or the filing of, as applicable, mortgages, security agreements, pledge agreements, financing statements, state or federal notices, recordings (including, without limitation, any recordings with the US Patent and Trademark or Copyright Office), or other agreements and without the necessity of taking possession or control of any Collateral. Each Prepetition Agent, on behalf of itself and the applicable Prepetition Lenders, will also be granted an allowed superpriority administrative expense claim pursuant to sections 503(b), 507(a), and 507(b) of the Bankruptcy Code. A copy of the order is available at https://bit.ly/2UY5ZLW from PacerMonitor.com. About Alex and Ani LLC Founded in 2004 by Carolyn Rafaelian, Alex and Ani -- http://www.alexandani.com/-- has become a premier jewelry brand, quickly gaining popularity because of the novel and customizable nature of its signature expandable wire bracelet. Alex and Ani has been headquartered in East Greenwich, Rhode Island since 2014. Since opening its first retail store in Newport, Rhode Island in 2009, Alex and Ani has expanded to over 100 retail store locations across the United States, Canada, and Puerto Rico. Alex and Ani LLC and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-10918) on June 9, 2021. In its petition, Alex and Ani listed assets and liabilities of $100 million to $500 million each. The Debtors tapped Kirkland & Ellis LLP as general bankruptcy counsel; Klehr Harrison Harvey Branzburg LLP as local bankruptcy counsel; and Portage Point Partners, LLC, as financial advisors and investment bankers. Kurtzman Carson Consultants LLC is the notice and claims agent. ===================================== T R I N I D A D A N D T O B A G O ===================================== CL FINANCIAL: CL Marine Sale Secures Future of Trading Business --------------------------------------------------------------- Asha Javeed at Trinidad Express reports that the joint liquidators (JLs) in charge of CL Financial (CLF)--High Dickson and David Holukoff of the international accounting firm Grant Thornton--say the sale of CL Marine (CLM) to the Government secured the future of the company's trading business. In September 2020, the Ministry of Finance said it had acquired CL Marine, the dry-docking facility owned by CL Financial, according to Trinidad Express. "The Minister of Finance wishes to advise that the Government . . . has completed the acquisition of CL Marine Ltd and its subsidiaries, a commercial dry-docking facility located in the Western coast of Chaguaramas, from CL Financial-in liquidation," according to the ministry's statement, the report notes. Finance Minister Colm Imbert in October 2020 had placed the debt reduction at $119 million, the report relays. "It is part of the debt recovery from CLICO and through the acquisition of CL Marine we have been able to get an asset valued at $119 million, Madame Speaker. So we have in effect recovered $119 million of taxpayers' money through the acquisition of CL Marine," Imbert had said, the report discloses. The seventh report of the joint liquidators to the High Court and Parliament, dated December 18, 2020, and signed by Holukoff, stated that up to October 2020, the liquidators had worked throughout the pandemic to negotiate and agree to a multifaceted share and debt agreement in relation to the company's interest in CL Marine and its five subsidiaries, Trinidad Express says. "The JLs worked closely with GORTT and CLICO to structure a sale in a manner that ensured CLICO and CLF were paid debts owed to them by CL Marine, GORTT was able to finance the purchase through a reduction in the debt owed to it from CLICO, and by which the CLF estate obtained a price for the sale which was in accordance with an independent valuation," according to the joint liquidators report, the report notes. "The development of this transaction and achieving the sale to the satisfaction of all parties took considerable time and effort. The JLs began the process in February 2019, taking the lead in devising the necessary sales structure, drafting the sales documents and coordinating the transaction between the parties, the report relates. "This was not a straightforward process. On more than one occasion the terms of the deal were changed at the request of one of the counterparties, in some cases after terms had been agreed and contracts drafted. The process was correspondingly prolonged causing an increase in both time and legal costs, the report notes. "Ultimately, the sale released substantial value directly to CLF, achieved a sale at the independent valuation and allowed it to recover substantial intra-company loans from CL Marine, whilst safeguarding the operations of the dockyard for the benefit of its staff, customers and the wider community of Trinidad and Tobago," the report said, the report says. In the Ministry's statement on its acquisition of CL Marine, it noted that a part of the Government's diversification thrust for Trinidad and Tobago was the targeted area of ship building and ship repairs, the report discloses. To this end, it said it pursued the acquisition of CL Marine Limited and its subsidiaries with the liquidators, the report relays. On June 17, 2020, it registered the National Marine and Maintenance Services Company, a new wholly-owned State enterprise for its diversification purpose, the report notes. The board of directors are permanent secretary, Michelle Durham-Kissoon, deputy permanent secretary, Jennifer Lutchman, deputy permanent secretary, Savitree Seepersad, project implementation advisor, Nadira Lyder, auditor Rachael Bissondial and attorney Jonathan Soo Hon, the report relays. "The Minister of Finance wishes to further inform the public that given the economic impact of Covid-19 and with the focus on building resilience towards economic recovery in the next five years, citizens can look forward to the benefits of this diversification initiative in due course," the statement said, the report discloses. The Ministry said it is expected that in addition to private sector customers the shipyard will be utilised to maintain, service and repair the Government's fleet of vessels including two new fast ferries, the APT James and the Buccoo Reef, along with two new Cape-Class military vessels which were under construction in Australia, the Galleon's Passage and the existing Trinidad and Tobago Coast Guard fleet, among others, the report says. The Cape-Class vessels were delivered to T&T recently, the report notes. CL Marine is as a major port facility, ideally located on the Western Coast of Trinidad and Tobago in the Western Hemisphere. 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: Bakeries Struggle to Keep Prices Down -------------------------------------------------------- Ria Chaitram at Trinidad and Tobago Newsday reports that as the prices of various food items increase, bakeries are also being challenged with their pricing structure, but this is not just related to raw materials for the baking process. Two bakeries - Puff n Stuff in San Fernando and Chee Mooke bakery in Port of Spain - said they will try to absorb price shocks for as long as possible, according to Trinidad and Tobago Newsday. Both said they understood the economic challenges their customers faced and realise they cannot be greedy with their prices at this time, the report notes. Already Linda's bakery has increased its prices on some items by 50 cents-$1, owing to the impacts of the covid19 pandemic such as increased costs in imports, freight, production, maintenance of machinery and other labour outputs, the report relays. Puff n Stuff owner Gregory Laing said he too has been experiencing price rises in other materials: most items rose between ten and 20 per cent, the report notes. "Over the past year not only have raw materials gone up in food items, but office supplies, packaging, security, gloves, maintenance, through chemical usage and extra staff needed to control customers, and additional maintenance staff needed to continually sanitise the production areas incurred heavy increases," the report quoted Mr. Laing as saying. But, Laing told Business Day, "We are committed to holding our prices unchanged till September 30. After which we may increase certain items that have been affected." He said the profit margin on all the company's products has been in constant decline, and it was starting to see a strain on the business, the report relays. And while the latest covid19 health regulations worked in his favor, where customer volumes increased, Laing said it still was not enough to meet the demands for increasing raw materials daily, the report notes. "We do have greater flow of clients presently, and that has allowed us to hold our prices for the time being," he said, the report discloses. But, he added, "The number of customers that we presently have would return to normal in about three months, but I do not think the prices on our raw materials would. "While some of our suppliers have not increased prices yet, they have indicated that increases were forthcoming in the last quarter of the year," the report relays. Staff were not laid off at Puff n Stuff: instead, Laing said, the company implemented a shift system to reduce the number of people at the various workstations, the report relates. He said this was done to ensure covid19 health regulations were observed and the workers were able to earn a salary during the pandemic, the report notes. "The staff now work longer hours for about three or four days per week per group, so everyone gets a chance to earn a living in the middle of this crisis," the report notes. The bakery employs about 100 workers at its only location on Circular Road, San Fernando, the report relates. Its products are supplied to other bakery depots but without its brand name attached, the report says. In Port of Spain, where Chee Mooke bakery is based, price increases were also being absorbed because of similar circumstances, but it was uncertain for how long, the report discloses. Human resource manager Nathalie Phillips said the bakery has been withholding price increases their baked goods despite the higher costs of raw materials since March 2020, but by holding the current prices it has incurred significant losses of about 20-25 per cent over the period, the report says. "We are holding our prices for the next three months, given the situation, and we will monitor it as it progresses, but there were no plans to raise prices soon because the economic situation was bad all round. "We have less revenue, like a lot of other businesses and individuals, so we have been fighting up to pay our bills too," she added. Phillips added that the state of emergency and in particular the curfew hours strained operations, but the bakery strategise in order to maximise workers and the workload, the report notes. She said this included implementing a shift system of its 70 workers and outsourcing delivery vehicles rather than using its own, the report says. "We had to adjust workers' incentives and people were now working for their flat hourly or daily rates. Workers' schedules have been adjusted and instead of working six days per week, they work five days per week. "We do not have a normal eight-hour day, because of the 9 pm-5 am curfew: we have six and half hour-work days. "We did not have any layoff pertaining to the covid19 pandemic, but we did have layoffs on other HR-related matters," Phillips said, the report relays. The report notes that Phillips said the curfew has also added expenses because Chee Mooke has organised transport to and from the bakery for its workers to ensure they were not caught up in the public transport hustle and bustle. Suppliers' Conundrum One of Chee Mooke's middlemen, who did not want to be named, said she lost most of her clients during the pandemic, the report notes. She sells packaging materials to bakeries, groceries, clothing stores, and salons, among other business enterprises, but the lack of products from distributors has forced her also to reconsider her pricing structure, the report discloses. Since March 2020, she explained, her clientele slowly declined and by May 2021, the business was able to retain only a few stores, among them five small bakeries, the report relays. "We have seen a steady decline in the imports of finished products, and local manufacturers have indicated that prices in their raw materials, such as resins, have increased. So the impact is multi-layered. "In August last year we were hit by an eight per cent increase and by February this year it went to 15 per cent. With the shocks in imports, forex and international pricing, we anticipate a 50 per cent increase in most of our purchases by September. which will have to be passed on to our customers. "It may feel like blackmail but this is our reality," she added. The report notes that Puff n Stuff purchasing manager Shastri Neemah said it had been experiencing a shortage of packaging materials which has led to increased prices in some instances. He suspected this was because of covid19 policies on the ports, which have delayed the timely clearance of the goods, the report relays. "We have a shortage of packaging goods because the distributors from whom we take our goods have indicated that their containers have been on the port for months without being cleared. "Bag prices have increased between ten and 20 per cent because of a shortage of resin to make it. Other increases included pie bags by six per cent, forks by ten per cent, biodegradable items by 19 per cent." Business Day also spoke to local manufacturer Resin Converters Ltd managing director Christian Quesnel, who said his company was hit hard by foreign-exchange shortages, resin shortages and price increases from their suppliers in the US. As an effect of this, he said, it has increased the prices of its finished products, the report notes. "Resin prices went from 50 cents per pound to nearly $1.45 at one point in time during the height of the pandemic. It has decreased, but not by much. "We had to increase our prices to our customers based on other operational costs as well. The manufacturing and packaging sector in my opinion continues to struggle." Business Day also tried to get feedback from Caribbean Packaging Industries Ltd and R&C Distributors, but was told they were unable to discuss the matter at this time. AP Scott could not be reached for comment. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *