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/raid1/www/Hosts/bankrupt/TCRLA_Public/210830.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, August 30, 2021, Vol. 22, No. 167 Headlines B E L I Z E BELIZE: Policy Differences Led to Central Bank Governor's Dismissal B R A Z I L BRAZIL: Top Court to Rule on Central Bank Autonomy Law CIELO SA: Moody's Downgrades CFR & Senior Unsecured Notes to Ba2 TRANSPORTADORA ASSOCIADA: Moody's Assigns First Time 'Ba1' CFR E C U A D O R ECUADOR: S&P Affirms B-/B Sovereign Credit Ratings, Outlook Stable J A M A I C A JAMAICA: Mining and Quarrying Sector Sees Decline in 3rd Quarter M E X I C O ALPHA LATAM: Proposes Oct. 28 Auction of Assets P U E R T O R I C O EVERTEC INC: Reports Second Quarter 2021 Results HOSPEDERIA VILLA: Wins Cash Collateral Access Thru Aug 31 X X X X X X X X [*] BOND PRICING: For the Week Aug. 23 to Aug. 27, 2021 - - - - - =========== B E L I Z E =========== BELIZE: Policy Differences Led to Central Bank Governor's Dismissal ------------------------------------------------------------------- RJR News reports that Belize gov't says policy differences led to dismissal of central bank governor. The Belize government has broken its silence regarding the dismissal of the governor of the country's central bank, Gustavo Manuel Vasquez, saying policy differences had made it untenable for the parties to continue working together, according to RJR News. Earlier this month, the main opposition United Democratic Party questioned what it termed the abrupt and unceremonious departure of the central bank governor, who had been in the post for less than six months, the report notes. The Belize government says a new central bank governor will be named soon, the report relays. As reported in the Troubled Company Reporter-Latin America on May 26, 2021, S&P Global Ratings lowered its long- and short-term foreign currency sovereign credit ratings on Belize to 'SD/SD' (selective default) from 'CC/C'. S&P also lowered its rating on the foreign currency bond due in 2034 to 'D' from 'CC'. =========== B R A Z I L =========== BRAZIL: Top Court to Rule on Central Bank Autonomy Law ------------------------------------------------------ globalinsolvency.com, citing Reuters, reports that Brazil's Supreme Court will debate whether a law to establish the autonomy of the central bank, insulating it from political interference, is constitutional or not. The law does not change the way the bank sets interest rates but distances it from politics by setting fixed four-year terms for its governor and directors that will no longer coincide with the presidential election cycle, according to globalinsolvency.com. Far-right President Jair Bolsonaro signed the measure into law in February, but two left-wing parties have questioned whether it violates the country's constitution, the report notes. The court is expected to uphold the law's constitutionality, the report says. Bolsonaro has reportedly regretted enacting the law as aggressive interest rate hikes to fight inflation threaten to hurt the economy next year, when he runs for re-election, the report relates. The bank's policymakers have also offered indirect criticism of his efforts to raise public spending to win votes, the report adds. 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). CIELO SA: Moody's Downgrades CFR & Senior Unsecured Notes to Ba2 ---------------------------------------------------------------- Moody's Investors Service downgraded Cielo S.A.'s corporate family rating to Ba2 from Ba1. At the same time Cielo's senior unsecured notes and the backed senior unsecured notes issued by Cielo USA Inc. were also downgraded to Ba2 from Ba1. The outlook is stable. RATINGS RATIONALE The downgrade to Ba2 reflects Cielo's ongoing deterioration in its market share, profitability, and credit metrics. Although the Brazilian cards and electronic payments market presents favorable long-term growth fundamentals, Moody's believes competition will continue to increase not only from other merchant acquirers driving pricing down, but from alternative payment means, technological and regulatory developments all leading to reduced barriers of entry. Cielo's EBITDA has reduced yearly from BRL8.2 billion in 2016 to BRL4.2 billion in 2019 and BRL2.7 billion in 2020 with a negative impact on sales from the COVID crisis. In Moody's base case scenario, Cielo's EBITDA will be an average BRL3 billion per year in the next two years. EBITDA margin has reduced to 22.8% in 2020 from 57.4% in 2016 and will average 25% in the next two years. Cielo maintains a conservative financial policy and liquidity profile and has taken several important steps to improve profitability during the last couple of years that could lead to more stable margins going forward, but still at lower levels than those observed in the past. Cielo's Ba2 rating reflects its leading position in the Brazilian payment cards industry and widespread footprint in the large Brazilian territory and the favorable long-term growth fundamentals for the payment sector in Brazil. The ratings also incorporate Cielo's strong liquidity profile and conservative financial policies. Moody's also takes into consideration the ownership by Banco do Brasil S.A. (BB, Ba2 stable) and Banco Bradesco S.A. (Bradesco, Ba2 stable), second and third largest Brazilian multiple banks as supportive to the ratings. On the other hand, Cielo operates in a highly competitive industry and has seen its market share deteriorate significantly over the last the last 3 years. Although the company has implemented new strategies to counter the changes and remain profitable, Moody's believes that competition will continue to increase, resulting in further pressure in Cielo's metrics. Cielo has implemented KPIs (key performance indicators) and actions to improve client satisfaction and it has strengthened its commercial team to gain clients, with special focus in small-and-mid sized businesses (SMBs). The company has also been focusing in the anticipation of receivables as a tool to increase profitability as these SMB merchants become more relevant in its portfolio -- in detriment of larger corporate merchants. SMB merchants had a participation of 39% Cielo's total processed values in Q2 2021 up from 34% in Q2 2020. Cielo's liquidity remains adequate with an estimated BRL6.1 billion in cash (pro-forma to liability management executed in July and August) and no relevant short-term maturities. In November 2022, $502 million in bonds are due. Cielo has been focusing on increasing the penetration of the anticipation of receivables for SMBs, although profitable, Moody's expects Cielo to increase the use of third-party resources to fund these operations. The preferred funding structure has been via securitization funds (FIDC). Moody's believes the balance of senior third-party shares of such structures will reach BRL7.6 considering FIDC Plus, FIDC Emissor I, FIDC Emissor II, and the full subscription of quotas of FIDC Receba Mais during 2021. At the same time Cielo has fully amortized BRL3 billion in debentures ahead of schedule in July 2021. Moody's adjusted gross leverage, that includes third-party FIDC shares, will reach 4.6x by year-end 2021, and it will remain between 4.6x -- 3.6x, higher than average historical levels of 1.4x between 2016 and 2019, as Cielo maintains appropriate funding for the anticipation of receivables and credit products. Interest coverage (5.4x LTM June 2021) and retained cash flow to net debt (27.4% LTM June 2021) will remain adequate at 4.0x to 4.5x, and around 25% to 30% respectively. OUTLOOK The stable outlook incorporates that Cielo's metrics will remain stable and outside of downgrade triggers in the next 12 to 18 months. It also incorporates a solid liquidity with net receivables and cash in hand covering its short-term debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Negative pressure on Cielo's rating could develop if liquidity deteriorates, or if free cash flow generation were to remain negative. Quantitatively, a downgrade in Cielo's ratings could be triggered if margins continue to reduce (EBITA reaching 18% compared 22% LTM June 2021) and there is a perception of reduction in cash generation capacity (retained cash flow/net debt remains reaching 17% compared to 27.4% LTM June 2021), in combination with a gross leverage, measured by total debt to EBITDA, consistently above 4.5x. A negative action on Brazil's government bond rating could lead to a downgrade for Cielo. An upgrade would require Cielo to show its ability to maintain solid organic growth, increase operating margins, while it maintains a low gross leverage and strong liquidity profile. It would also require an upgrade of Brazil's government bond rating. METHODOLOGY The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. ISSUER PROFILE Headquartered in the city of Barueri, Brazil, Cielo S.A. (Cielo) is the leading corporation in the merchant acquiring and payment processing industry in Brazil, with presence in almost all Brazilian municipalities. With shares listed on B3 S.A. - Brasil, Bolsa, Balcao (B3, Ba1 stable), formerly BM&F Bovespa, Cielo is controlled by BB and Bradesco, which together hold 58.7% of the company's voting stocks and are the second and fourth-largest commercial banks in Brazil, respectively, in terms of total assets. In the last twelve months ended in June 2021, Cielo's revenue was BRL11.6 billion ($2.2 billion at the average exchange rate) and its Moody's adjusted EBITDA margin was 24.7%. TRANSPORTADORA ASSOCIADA: Moody's Assigns First Time 'Ba1' CFR -------------------------------------------------------------- Moody's Investors Service assigned Ba1 Corporate Family Rating to Transportadora Associada de Gas S.A. ("TAG"). The outlook on the rating is stable. This is the first time that Moody's assigns a public rating to TAG. RATINGS RATIONALE The Ba1 rating assigned to TAG reflects the relevance of its natural gas infrastructure systems in Brazil (Government of Brazil, Ba2 stable), corresponding to 47% of the country's gas pipelines. Stable and predictable cash flows underpinned by long-term contracts with no volume risk support the rating. The high margins and Moody's view of a relative low risk of the gas transportation sector in Brazil, further support the rating. The rating also considers TAG's credit linkages to Petroleo Brasileiro S.A. - PETROBRAS (Ba2 stable). TAG operates through five long-term contracts (GTAs -- Gas Transportation Agreements) with Petrobras, regulated by the Brazilian National Agency for Petroleum (ANP), with pre-determined availability-based tariffs that are annually adjusted by inflation until at least 2025. In spite the strong linkage to Petrobras, the credit quality of TAG benefits from diversification and strength of the guarantees embedded in the contractual framework, which includes (i) a diversified pool of receivables comprising 13 to 16 Gas Supply Agreements (GSAs); (ii) the assignment of receivables covering at least 120% of TAG's monthly revenues; (iii) the separate cash collection mechanism for the receivables that is concentrated in an escrow account at Banco Santander (Brasil) S.A., independent of Petrobras' other revenues; (iv) the ultimate provision of a bank guarantee equivalent of 5x the monthly GSA receivables in case of a default payment towards TAG. TAG's shareholder structure is composed by ENGIE SA (32.5%; Baa1 stable), Engie Brasil Energia (32.5%) and Caisse de depot et placement du Quebec ("CDPQ", 35%; Aaa stable). Moody's understand the shareholders have the ability to support TAG if needed, mainly through dividend retention, given the strategic importance of the BRZ asset and their experienced track record of operations which is also taken into consideration. TAG was acquired from Petrobras in 2019 with BRL10 billion equity and BRL24 billion debt (BRL14.0 billion local debentures and USD2.45 billion notes - fully hedged). The expected high dividend payout is a constrain to the rating. The rating is also constrained by the sovereign credit quality given that the asset operates in Brazil and its exposed to the local market. The Ba1 also considers the still developing gas regulatory framework in Brazil and various direct and indirect linkages to Petrobras. While the gas offer is still concentrated in Petrobras; the recently approved gas law will likely add more competition to the market in the medium-term, contributing to lower gas prices and higher demand. Moody's see this as a credit positive, potentially adding more diversification to TAG's supply and offtake bases. The relative low leverage is reflected in the FFO/Debt of about 18%-20% which is expected to further improve as Moody's do not project additional debt issuance up to 2025, combined with the debentures and USD notes continued amortization. The USD facility has a balloon of 45% of the total debt in June 2027, which represent some refinancing risk/concentration that Moody's expect will be prudently managed by the company. Also, cash flows derived from USD, deposited and held in an escrow account, substantially mitigate foreign exchange risks with USD-revenues sized to cover the debt service. OUTLOOK The stable outlook reflects Moody's expectation that TAG will maintain overall predictable cash flows with a base of firm capacity revenue of about 95% of the total. Furthermore, the stable outlook takes into consideration Moody's expectation that the company's FFO/debt and interest coverage ratio will be sustained above 18% and 3.5x, respectively, in the next 12 to 18 months. The outlook does not take into consideration any additional debt-funded capacity expansion. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Upward pressure on the ratings could develop over time if Petrobras or Brazil are upgraded. Negative rating pressure would arise if there is a significant deterioration in Moody's view of the off-takers' credit quality or contractual guarantees or with an unfavorable shift in Brazil's regulatory environment. Also, perception of weaker support from the shareholders, such as higher than anticipated dividend distributions, or sustainable deterioration in the liquidity profile, could all exert downward pressure on TAG's rating. Furthermore, the rating could be downgraded if there are operational problems or if the company engages in significant debt-funded expansion, leading to materially lower credit metrics. Quantitatively, Moody's could downgrade the rating if: FFO/debt remains below 15% on a sustained basis The interest coverage ratio remains below 3.0x on a sustained basis ISSUER PROFILE Headquartered in Rio de Janeiro, Brazil, TAG operates in the natural gas transportation through gas pipelines. It owns and manages the most extensive network of gas pipelines in Brazil, with 4,500 km of extension (47% of Brazil's total). Its pipelines are located in the North, Northeast and Southeast regions, crossing 200 municipalities in 10 states. 3,700 km of its pipelines are located in Brazil's coast, crossing the states of Ceara, Rio Grande do Norte, Paraiba, Pernambuco, Alagoas, Sergipe, Bahia, Espirito Santo and Rio de Janeiro, and the remaining 800 km are located in the state of Amazonia, connecting Urucu to Manaus. In these regions, gas distributors rely on TAG's infrastructure to receive the gas. TAG has a contracted natural gas transportation capacity of 73.58 million m3/day. In 2020, the average transported volume was 42.2 million m3/day (utilization rate = 58%), with a peak of 67 million m3/day. In 2020, TAG reported BRL6.0 billion in net sales and BRL5.2 billion in EBITDA. TAG started operations in 2002 under Petrobras, Brazil's state-owned oil company. In 2019, ENGIE SA (Baa1 stable) and CDPQ (Aaa stable) acquired 90% of the company for BRL32.7 billion. In July 2020, ENGIE and CDPQ acquired the remaining 10% stake for BRL1.0 billion. TAG was the first gas transportation company to be 100% privately owned in Brazil. The acquisition was financed with BRL10 billion equity and BRL24 billion debt (BRL14.0 billion local debentures and USD2.45 billion notes), and the USD loan is fully hedged. METHODOLOGY The principal methodology used in this rating was Natural Gas Pipelines published in July 2018. ============= E C U A D O R ============= ECUADOR: S&P Affirms B-/B Sovereign Credit Ratings, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings affirmed its 'B-/B' long- and short-term foreign and local currency sovereign credit ratings on Ecuador. The outlook remains stable. In addition, S&P's transfer and convertibility assessment remains 'B-'. Outlook The stable outlook incorporates the ongoing progress in negotiations for a revised IMF Extended Fund Facility (EFF) arrangement, which should help strengthen Ecuador's weak economic fundamentals as well as secure sufficient financing and support international reserves for the next 12 months. Implementation of the program should also help gradually reduce Ecuador's large financing gap, stabilize its debt burden, anchor investor confidence, and bolster growth. That said, the outlook incorporates policy execution risks that stem from uneven implementation of the fiscal adjustment program, given weak support in the National Assembly and fragile socioeconomic conditions. Downside scenario S&P could lower the ratings over the next 12 months if policy reversals elevate fiscal and external imbalances beyond its expectations or hamper access to official lending. Access to international debt markets is still uncertain following the recent debt restructuring, and therefore access to planned official borrowing--including IMF disbursements--will be key to containing liquidity pressures. Upside scenario Conversely, S&P could raise the ratings over the next 12 months if the execution of fiscal and other policies translates into a faster-than-expected pace of fiscal adjustment and lower net general government debt burden. Over time, successful IMF program implementation should also result in Ecuador regaining access to international debt markets. Rationale S&P said, "The ratings are supported by our expectation that the new administration will continue to promote policies to correct Ecuador's structural imbalances. The former Moreno administration initiated a corrective path; nonetheless, the severe shock from the COVID-19 pandemic set back progress, and amid severe liquidity stress, Ecuador completed a distressed debt exchange last year. The country's record of defaults weighs on our institutional assessment, indicating that amid severe economic stress, the sovereign may not prioritize debt over other spending obligations. That said, we expect the Lasso administration to capitalize on the space gained from the recent debt restructuring and advance policies that support growth, strengthen fiscal sustainability, and reduce external vulnerabilities. Despite recent improvement in investor confidence, access to international debt markets is still uncertain and sources of domestic financing are scarce. The Lasso administration has engaged in a constructive relationship with official creditors, which is key to financing Ecuador's gradual adjustment program. At the same time, monetary flexibility is limited in a dollarized economy, and economic policy execution will remain difficult given the complex political dynamics. More favorable commodity prices and a successful vaccination campaign have allowed a rebound in the economy, but S&P expects income per capita to return to the pre-pandemic level only by 2023. Institutional and economic profile: President Lasso's agenda aims to tackle long-standing macroeconomic imbalances, but complex politics will challenge its implementation -- The new president has outlined a plan to strengthen Ecuador's economic fundamentals. -- The government's representation in the polarized National Assembly is small, which could result in blocked or delayed implementation of the president's agenda. -- S&P expects economic growth to rebound to 3% in 2021 and medium-term economic performance to remain weak absent structural reforms to increase competitiveness. President Guillermo Lasso (Creando Oportunidades, or CREO party) took office May 24, 2021, and his government faces the difficult task of reducing Ecuador's long-standing imbalances, which include limited growth prospects, weak investor confidence, and a weak fiscal profile. The broad policy agenda aims to reduce the fiscal deficit, increase oil and mining production, and tackle labor informality while increasing trade competitiveness. Yet the new administration is likely to face significant political and social challenges in implementing its ambitious plans. President Lasso won the second-round ballot with just over 52% of the votes (after securing only 19% of votes in the first round), and the government coalition holds only 25 seats in the assembly, far below the 70 votes required to reach a single majority. Moreover, part of the executive agenda conflicts with the largest parties' interests, especially those related to mining. Given the broad policy agenda and the fragmented assembly, the government will likely pursue mobile coalitions to reach consensus on different projects. Recurrent governability challenges and a weak record of meeting sovereign obligations weigh on S&P's institutional assessment. But in the context of the current EFF program, Ecuador has made progress on its policy-strengthening agenda: The Organic Code of Planning and Public Finance was adopted in May 2020 and should help improve data provisions while a long-term public debt target is set. Meanwhile, new regulation is gradually reducing gasoline subsidies so they converge with international prices. More recently, Ecuador passed a new monetary code, which provides a foundation for dollarization in the country, aims to strengthen the central bank's balance sheet, and implicitly forbids monetary financing to the treasury. The new government has had significant success in securing COVID-19 vaccines, and the immunization program has bolstered President Lasso's popularity (reported to exceed 70%). Still, it remains to be seen whether this popularity can help pass needed reforms to continue with the IMF program. The most important upcoming benchmark is the enactment of a tax reform to permanently raise the tax burden in the country, which is currently among the lowest in the region, but in a context of damaged socioeconomic conditions due to the pandemic. S&P said, "We expect the economy to rebound only 3% this year, after a 7.8% contraction in 2020. The partial recovery is boosted by higher domestic demand, which is supported by the advanced vaccination program and higher commodity prices that benefit exports. GDP per capita is expected at $5,750 in 2021, still 8% below the pre-pandemic level. Moreover, while unemployment has improved, very high subemployment persists. We expect growth to stabilize at 2.5% in the medium term." Flexibility and performance profile: Gradual fiscal correction will keep debt and financing needs elevated -- The fiscal consolidation in 2021 reflects stronger revenue, lower debt service, and reduced subsidies, but further consolidation hinges on tax reform and economic recovery. -- In S&P's base case, official lending will mostly cover financing needs. -- High commodity prices and a lagging recovery in imports are supporting a current account surplus. The pandemic and the collapse in oil prices set back fiscal consolidation in 2020. Last year, the general government deficit reached 6.2% of GDP, well above 2019 results but still below the record deficits posted in 2013-2016. Net general government debt increased to 60% of GDP in 2020 from 49% in 2019, despite the relief obtained in the debt restructuring. The ongoing economic recovery and efforts to resume consolidation will likely result in general government deficit falling to 4% of GDP in 2021 and hovering around 2.5% in 2022-2024. Supportive oil prices are leading a fast recovery in royalties, whose contribution to central government revenue averages 30%. The reform to oil subsidies passed last year has also helped alleviate pressure from the pickup in international prices. That said, higher energy prices are translating into social pressures. The current administration is designing target subsidies to ease tension but keep the fiscal cost below that of the former framework. Meanwhile, the rebound in economic activity has pushed tax collection just below pre-pandemic levels. At the same time, the debt restructuring significantly reduced interest payments, which should remain below 6.5% of total revenue in 2021-2024, compared with an 8.6% average in 2018-2020. Fiscal correction beyond 2021 will likely depend on the scope of the tax reform finally approved by the assembly. The Lasso administration is working on a draft that should be presented in the coming month. S&P thinks that under current political and economic conditions, a progressive reform has higher chances of being approved by the assembly. However, such a reform's permanent gains would be lower than the IMF's initial benchmark of 2.5% of GDP permanent gains. Approval of a structural reform is necessary to obtain the total agreed financing with the IMF ($1.5 billion for 2021), which, in addition to support from other multilateral institutions and some domestic issuances, should cover this year's financing needs. Net general government debt is expected to stabilize just above 60%. S&P said, "We include in our debt calculation the sovereign debt held by the Ecuadorian Social Security Institute and the central bank because it represents a material amount of Ecuador's domestic debt and reflects the lack of market buyers of domestic debt. We also include in our general government calculations the outstanding amount of treasury short-term paper (CETES)." High reliance on external lending will keep Ecuador's narrow net external debt slightly below 150% of current account receipts (CARs) on average in 2021-2024. At the same time, Ecuador's recent debt restructuring reduced gross external financing needs, which are projected to average 130% of CARs and usable reserves in the same period, from 142% in 2019. Fiscal consolidation and efforts to increase trade competitiveness are key to improving external vulnerabilities. President Lasso has outlined plans to change the structure of the oil sector and allow higher private participation, and the administration is negotiating various trade agreements. Dollarization has supported low inflation and financial system stability; however, it limits monetary and exchange rate flexibility. Moreover, deterioration of Ecuador's fiscal profile and central bank financing has considerably weakened the central bank's balance sheet. The monetary code approved in April 2021 establishes a framework that aims to strengthen the dollarization regime over the medium term. The financial system showed stability amid the economic downturn, according to reported indicators of solvency, liquidity, asset quality, and profitability. Deposits in the system have increased over the past few months to above pre-pandemic levels (about 49% of GDP). In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List RATINGS AFFIRMED ECUADOR Sovereign Credit Rating B-/Stable/B ECUADOR Senior Unsecured B- ============= J A M A I C A ============= JAMAICA: Mining and Quarrying Sector Sees Decline in 3rd Quarter ---------------------------------------------------------------- RJR News reports that Jamaica's mining and quarrying sector suffered a decline during the April to June quarter. This followed growth in the previous three months, according to RJR News. According to the Bank of Jamaica's quarterly monetary policy report, the decline reflected reduced capacity utilization at a plant due to a fall in the quality of bauxite mined, the report notes. 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 LATAM: Proposes Oct. 28 Auction of Assets ----------------------------------------------- Law360 reports that Latin American payday lender Alpha Latam Management LLC filed a bidding procedures proposal, August 24, 2021, in Delaware bankruptcy court that calls for an Oct. 28, 2021 auction as it pursues a Chapter 11 sale of its assets. In the motion, the debtor said it has been exploring a sale of its assets for several months after determining that such a transaction would maximize their value for the benefit of creditors, and told the court that a bankruptcy sale was the best way to accomplish that goal. "Even before the commencement of these Chapter 11 Cases, the proposed sale of the Assets was identified as the best path for maximizing the value of the Debtors' estates. To test this thesis, the Debtors initiated a thoughtful process in May to solicit indications of interest for the Assets. During their prepetition negotiations and restructuring analysis, it became evident that the best way to maximize value for the Assets was to pursue an in-court sale via section 363 of the Bankruptcy Code, which was one of the reasons the Debtors commenced these Chapter 11 Cases. Buyers will receive comfort from this Court's approval of the Sale and the Section 363 sale process, including the Bidding Procedures proposed herein, will allow for a robust marketing process to achieve the highest and best price for the Assets," the Company said in the court filing. About Alpha Latam Management Alpha Latam Management LLC, et al., operate a specialty finance business that offers consumer and small business lending services to underserved communities in Mexico and Colombia. Alpha Latam Management LLC and certain of its affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 21-11109) on August 1, 2021. In the petition signed, Alpha Latam Management estimated assets of between $100 million and $500 million and estimated liabilities of between $500 million and $1 billion. RICHARDS, LAYTON & FINGER, P.A., led by Mark D. Collins, is the Debtors' counsel. ROTHSCHILD & CO. is the investment banker and ALIXPARTNERS LLP is the financial advisor. PRIME CLERK LLC is the claims agent. Alpha Holding, S.A. de C.V. and AlphaCredit Capital, S.A. de C.V. SOFOM, ENR ("AlphaCredit", together with Alpha Holding, the "Mexican Debtors")) on August 11, 2021, commenced in Mexico City a jointly administered voluntarily filed proceeding pursuant to the Ley de Concursos Mercantiles. Through this proceeding, the Mexican Debtors intend to pursue a controlled restructuring and possible sale of their assets in order to maximize value of the Mexican Debtors for the benefit of their creditors and other stakeholders. ===================== P U E R T O R I C O ===================== EVERTEC INC: Reports Second Quarter 2021 Results ------------------------------------------------ EVERTEC, Inc. (NYSE: EVTC) ("Evertec" or the "Company") announced results for the second quarter ended June 30, 2021. Second Quarter 2021 Highlights * Revenue increased 26% to $149.1 million * GAAP Net Income attributable to common shareholders was $49.2 million or $0.68 per diluted share * Adjusted EBITDA increased 60% to $80.3 million * Adjusted earnings per common share was $0.78, an increase of 105% * Share repurchases totaled $10.1 million * Six-Month Year-to-Date 2021 Highlights Six-Month Year-to-Date 2021 Highlights * Revenue increased 20% to $288.7 million * GAAP Net Income attributable to common shareholders was $84.7 million or $1.16 per diluted share * Adjusted EBITDA increased 40% to $149.2 million * Adjusted earnings per common share was $1.40, an increase of 67% * Share repurchases totaled $24.4 million Mac Schuessler, President and Chief Executive Officer stated, "We delivered strong second quarter results as we continue to benefit from improving consumer demand in Puerto Rico and our recent new business implementations in Latin America. Looking to the second half of 2021, we are raising our full year guidance." Second Quarter 2021 Results Revenue Total revenue for the quarter ended June 30, 2021 was $149.1 million, an increase of 26% compared with $117.9 million in the prior year quarter. The revenue increase in the second quarter was primarily driven by transactional revenue growth in Puerto Rico reflecting increased consumer demand, coupled with increased revenue from the Company's digital solutions, such as ATH Movil and ATH Movil Business. Latin America reflected double-digit growth driven mainly by recent new business implementations. Prior year revenue was negatively impacted by COVID-19 related stay-at-home orders across all the regions in which the Company operates. Net Income attributable to common shareholders For the quarter ended June 30, 2021, GAAP Net Income attributable to common shareholders was $49.2 million, or $0.68 per diluted share, an increase of $33.7 million or $0.47 per diluted share as compared to the prior year. Adjusted EBITDA For the quarter ended June 30, 2021, Adjusted EBITDA was $80.3 million, an increase of 60% compared to the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) was 53.8%, an increase of approximately 1,120 basis points from the prior year. The year over year increase in margin primarily reflects the benefit of higher payment revenues in both Puerto Rico and Latin America. Adjusted Net Income For the quarter ended June 30, 2021, Adjusted Net Income was $57.1 million, an increase of 106% compared with $27.8 million in the prior year. Adjusted earnings per common share was $0.78, increase of 105% compared to $0.38 in the prior year. Share Repurchase During the three months ended June 30, 2021, the Company repurchased a total of 231 thousand shares of its common stock at an average price of $43.75 per share for a total of $10.1 million. Year-to-date the Company repurchased 614 thousand shares of its common stock at an average price of $39.70 for a total of $24.4 million. As of June 30, 2021, a total of approximately $76 million remained available for future use under the Company's share repurchase program. 2021 Outlook The Company is increasing its financial outlook for 2021 as follows: * Total consolidated revenue is now anticipated between $570 million and $579 million representing growth of 12% to 13%, compared with $543 million to $552 million previously estimated * Adjusted earnings per common share between $2.56 to $2.66 representing a growth range of 24% to 28% from $2.07 in 2020, compared with $2.25 to $2.32 previously estimated * Capital expenditures are now anticipated to be approximately $60 million * Effective tax rate of approximately 13% to 14%. Earnings Conference Call and Audio Webcast The Company hosted a conference call last August 3, 2021, to discuss its second quarter 2021 financial results. Mac Schuessler, President and Chief Executive Officer, and Joaquin Castrillo, Chief Financial Officer hosted the call. A supplemental slide presentation that accompanies the call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call. About Evertec EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing business in Puerto Rico, the Caribbean and Latin America, providing a broad range of merchant acquiring, payment services and business process management services. Evertec owns and operates the ATH(R) network, one of the leading personal identification number ("PIN") debit networks in Latin America. In addition, the Company manages a system of electronic payment networks and offers a comprehensive suite of services for core banking, cash processing and fulfillment in Puerto Rico, that process approximately three billion transactions annually. The Company also offers technology outsourcing in all the regions it serves. Based in Puerto Rico, the Company operates in 26 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with "mission-critical" technology solutions. For more information, visit www.evertecinc.com. As reported in the Troubled Company Reporter - Latin America on Aug. 9, 2021, Moody's Investors Service upgraded EVERTEC Group, LLC's Corporate Family Rating to B1 from B2 and Probability of Default Rating to B2-PD from B3-PD. Moody's also upgraded the ratings on Evertec's senior secured bank credit facilities to B1 from B2. The SGL-1 speculative grade liquidity rating is unchanged, and the outlook remains stable. HOSPEDERIA VILLA: Wins Cash Collateral Access Thru Aug 31 --------------------------------------------------------- Judge Michael Caban Flores of the U.S. Bankruptcy Court for the District of Puerto Rico approved the joint motion filed between Hospederia Villa Verde Inc. and secured creditor Yajad 77, LLC which extends their Stipulation for the Interim Use of Cash Collateral, Adequate Protection and Reservation of Rights. The Debtor and YAJAD continue to negotiate the treatment of YAJAD's claim under the reorganization plan. The parties negotiated and agreed to a further extension of the Stipulation until August 31 pursuant to the same terms and conditions of the approved Stipulation. As previously reported by the Troubled Company Reporter, the Court approved the Stipulation for Interim Use of Cash Collateral, Adequate Protection and Reservation of Rights filed by the Debtor and YAJAD 77. Pursuant to the terms and conditions of the Stipulation, the Secured Creditor consented to the use of its Cash Collateral commencing on the Petition Date until July 31, 2021. The Stipulation provides that the Parties may extend the use of the Cash Collateral if they are able to reach a written agreement. A copy of the order is available at https://bit.ly/3yigLKU from PacerMonitor.com. About Hospederia Villa Verde Hospederia Villa Verde, Inc., owner and operator of the Villa Verde Inn, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 21-01015) on March 31, 2021, listing $500,001 to $1 million in both assets and liabilities. Harold A. Frye Maldonado, Esq., at Frye Maldonado Law Office, serves as the Debtor's legal counsel. YAJAD 77, LLC, as secured creditor, is represented by Hermann D. Bauer, Esq. and Gabriel A. Miranda Rivera, Esq. at O'Neill and Borges LLC. =============== X X X X X X X X =============== [*] BOND PRICING: For the Week Aug. 23 to Aug. 27, 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 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 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 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 Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Cia Latinoamericana de 9.5 73.9 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 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 Noble Holding Internat 6.2 62.2 8/1/2040 KY USD 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 Province of Santa Fe 6.9 74.7 11/1/2027 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 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 Esval SA 3.5 49.9 2/15/2026 CL CLP 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 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 Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR Fospar S/A 6.5 1.2 5/15/2026 BR BRL YPF SA 16.5 67.3 5/9/2022 AR ARS Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *