/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/210910.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, September 10, 2021, Vol. 22, No. 176 Headlines B R A Z I L BANCO DO BRASIL: Decides Not to Leave Brazil Banking Federation BRAZIL: Will Lose US$5B in 2022 with Tax Reform, Says Secretary ENTREVIAS: Fitch Rates BRL1 Billion Debentures Issuance 'BB-' C O L O M B I A AVIANCA HOLDINGS: Stock Sinks as Airline Plans to Exit Bankruptcy J A M A I C A BLUE POWER: Revenues Hit by Suspension of Exports to CARICOM M E X I C O ALPHA LATAM: Seeks to Hire AlixPartners LLP as Financial Advisor ALPHA LATAM: Seeks to Hire Prime Clerk as Administrative Advisor CENTRO MUNICIPALITY: Moody's Affirms 'B1' Issuer Rating ELECTRICIDAD FIRME: Fitch Assigns FirstTime 'BB' LT IDRs ELECTRICIDAD FIRME: Moody's Rates $350MM Sr. Secured Bonds 'Ba2' TOTAL PLAY: Fitch Assigns BB- Rating to USD500MM Sr. Unsec. Notes TOTAL PLAY: Moody's Affirms 'B1' CFR & Rates New $500MM Notes 'B2' T R I N I D A D A N D T O B A G O [*] CARIBBEAN AIRLINES: Partners w/ JMEA to Boost Local Exports - - - - - =========== B R A Z I L =========== BANCO DO BRASIL: Decides Not to Leave Brazil Banking Federation --------------------------------------------------------------- Richard Mann at Rio Times Online reports that Banco do Brasil (BB) advised that it has desisted from disassociating itself from the entity that represents the large banks in the country, Febraban, in the wake of a disagreement over the content of a manifesto calling for harmony between the branches of the Republic. The announcement comes after Febraban had reaffirmed its support to the manifesto respecting contrary positions of Banco do Brasil and Caixa Econômica Federal, according to Rio Times Online. As reported in the Troubled Company Reporter-Latin America on June 11, 2021, Fitch Ratings has affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of Banco do Brasil S.A. (BdB) at 'BB-', Outlook Negative and its long-term National rating at 'AA(bra)', Outlook Stable. In addition, Fitch has affirmed BdB's Viability Rating (VR) at 'bb-', Support Rating (SR) at '3' and Support Rating Floor at 'BB-'. BRAZIL: Will Lose US$5B in 2022 with Tax Reform, Says Secretary ---------------------------------------------------------------- Richard Mann at Rio Times Online reports that the special secretary of Treasury and Budget of the Ministry of Economy, Bruno Funchal, said that the reform of the Income Tax (IR) approved by the Chamber of Deputies will reduce the federal government's tax collection by R$20 (US$5) billion per year. This number does not take into account possible losses by states and municipalities, notes Rio Times Online. According to Mr. Funchal, this represents a reduction in tax burden equivalent to 0.2 percentage points of GDP, the report notes. According to calculations made by the National Committee of State Secretaries, income tax reform shrinks the country's overall tax collection (federal, state, and municipal) by around US$10 billion, 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). ENTREVIAS: Fitch Rates BRL1 Billion Debentures Issuance 'BB-' ------------------------------------------------------------- Fitch Ratings has affirmed Entrevias Concessionaria de Rodovias S.A.'s BRL1.0 billion second debentures issuance due in 2030 at 'BB-'/'AA-(bra)' and has revised the Outlook for the National Scale Rating to Stable from Negative. The Outlook for the Long-Term (LT) Rating remains Negative. The revision of the National Scale Outlook to Stable from Negative reflects the concession amendment, which granted a tariff increase and the exemption of the variable concession fee to compensate for the prohibition to charge lifted axles of heavy vehicles since May 2018. The Outlook revision also reflects the strong traffic recovery to pre-pandemic levels. The Negative Outlook for the LT Rating reflects the Negative Outlook on Brazil's 'BB-' sovereign rating, because Entrevias is a toll road and its performance correlates to the domestic economic environment. RATING RATIONALE The ratings reflect the operational profile of the concessionaire, with heavy vehicles representing approximately 60% of the paying axles. The North Section of the toll road, which crosses Ribeirao Preto, has a proven traffic base, present moderate volatility and corresponds to approximately 70% of total traffic. The South Section, a more recently built section, is crucial for the region's agricultural production flow. The concession agreement provides for annual tariff increases that track inflation, and it has an extensive capex plan. The senior debt structure is also indexed to inflation and includes a six months reserve account. Until 2024, the obligation to perform a large amount of investments causes debt service coverage ratios (DSCRs) to be below one. Nonetheless, the existent restrictions on cash distribution up to 2024 provide adequate liquidity leading to a minimum loan life coverage ratio (LLCR) of 1.3x in Fitch's rating case. After that period, minimum DSCR is 1.1x and average DSCR is 1.2x, which is in line with the assigned rating, according to the applicable criteria. Fitch does not view the minimum DSCR as a constraint and believes the concessionaire has flexibility to accommodate the capex plan and preserve the project's liquidity, if needed. KEY RATING DRIVERS Volume Strongly Linked to Economy [Volume Risk - Midrange] Entrevias' concession is divided into the North and South sections. The North Section, which crosses Ribeirao Preto, has a long traffic track record of operations. The right to collect tolls was granted to Entrevias in May 2018, after the maturity of the prior concession. The South Section, which crosses Marilia, connects the states of Sao Paulo and Parana, and is crucial for agricultural production flow. This stretch started collecting tolls for the first time in October 2018. The Brazilian logistics network narrows competition between toll roads and so price elasticity is moderate. Tariffs Adjusted by Inflation [Price Risk - Midrange] The concession falls under the state of Sao Paulo jurisdiction and is regulated by Agencia de Transporte do Estado de Sao Paulo (ARTESP). The concession contract stipulates annual tariffs readjustments based on accumulated inflation. Historically, the grantor has either granted the tariffs adjustments or compensated for the lack of full pass-through in accordance with the financial rebalancing mechanisms defined in the concession contract. Despite the tariff readjustment postponement during the first five months of 2021, the framework is robust, and Fitch's projections reflect an annual tariff increase. Extensive Capex Plan [Infrastructure Development/Renewal - Midrange] Entrevias is expected to undertake a heavy capex plan in order to comply with the concession agreement and to accommodate medium-term traffic forecasts in the South Section of the road in the region of Marilia. Although the company has an adequate infrastructure and renewal plan, it does not have an Engineering, Procurement and Construction (EPC) agreement with a major construction company. However, its construction works are standard, making it easier to replace the contractor if necessary. Entrevias forecasts that expansion capex should be concluded by 2025 and that no additional funding will be required. Cash Trap Mechanism up to 2024 [Debt Structure - Midrange] The debentures are senior and indexed to inflation, which is also used to readjust tariffs, providing a natural hedge to the debt. The amortization profile is fully amortizing, back-loaded and the debt structure benefits from a six-month debt service reserve account. The debt includes limitation related to additional indebtedness, restrictions on cash distribution up to 2024 and divided lock-up triggers after 2025. Financial Profile Entrevias' average DSCR is below 1.0x until 2024. However, the deficit in cash generation is mitigated by the existence of significant retained cash balances in the concessionaire to fund for the high investment plan. The minimum LLCR under the rating case is 1.3x, which is commensurate with the current rating level. From 2025 onwards, the minimum and average DSCR are 1.1x and 1.2x, respectively and reflects the maintenance schedule expected by Entrevias. Fitch does not consider he lower DSCR metrics a constraint, since the project has some flexibility to manage the maintenance capex plan to preserve its liquidity, if needed. PEER GROUP The closest peer in the region is the Panamanian project ENA Norte Trust's (ENA Norte) notes in Panama (BB-/RON) and Autopistas del Sol, S.A.'s (AdS) (B/RON). ENA Norte has a lower minimum rating case LLCR (1.0x), resulting in a standalone credit profile (SCP) of 'b+'. The higher rating on ENA Norte's notes is based on Fitch's Government-Related Entity criteria (GRE), which factors in the likelihood of government support by assessing the strength of the linkage between the issuer and the Panamanian government. When compared to Ads, the higher rating is explained by stronger credit metrics. Under the rating case AdS presents minimum and average DSCR of 0.9x and 1.1x, respectively. In Brazil, Entrevias' closest peer is ViaRondon Concessionaria de Rodovia S.A. (ViaRondon; proposed second debentures issuance's LT rating AA-(bra)/Positive Outlook). Both assets are located in the state of Sao Paulo and sometimes demonstrate annual DSCR below 1.0x in Fitch's Rating Case, which is mitigated by retained cash balances. Although both concessionaires present minimum LLCR of 1.3x, ViaRondon's Positive Outlook reflects an expectation of stronger traffic performance, which would result in higher DSCR metrics after the cash trap mechanism is no longer in place (average DSCR of 1.3x under rating case). RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Unexpected completion difficulties leading to delays and cost overruns beyond those already contemplated in Fitch's scenarios. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Sustained traffic growth above 5% for two consecutive years. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. TRANSACTION SUMMARY Entrevias Concessionaria de Rodovias S.A. is an SPV that owns the concession rights to explore, to invest and maintain 570km of roads in the State of Sao Paulo, divided in seven highways and two stretches that connect the north of the state of Parana and the southeast of the state of Minas Gerais. The concession was granted by the State Government of Sao Paulo, intermediated by ARTESP, in 2017 for a period of 30 years (maturity in June 2047). CREDIT UPDATE Traffic increased 1.5% in the first half of 2021 when compared to the same period of 2019. Heavy vehicle traffic presented strong growth and increased traffic in 16.8% from 2019 while light vehicle traffic decreased by 17.3%. The strong growth of heavy vehicles is mainly explained by the strong performance of agribusiness in Brazil. In February 2021 Entrevias's concession agreement was amended to compensate for the prohibition to charge the suspended axles. The amendment granted an extraordinary tariff increase of 2.91% and exemption of the variable concession fee. In June 2021 Entrevias presented an EBITDA of BRL130 million and a total cash balance BRL316 million. FINANCIAL ANALYSIS The main assumptions of Fitch's Base Case include: -- Brazilian Inflation: 5.5% in 2021, 3.7% in 2022 and 3.3% from 2023 onward; -- Brazilian GDP growth: 5.0% in 2021, 2.0% in 2022, 2.4% in 2023 and 1.7% from 2024 onwards; -- 2021 traffic would be 1.2% above 2019 and increase of 1.2x the GDP from 2022 onward; -- Investments of BRL1.6 billion between 2021 and 2025. The same assumptions were used in the rating scenario, except for the following: -- 2021 traffic would be 0.8% above 2019 and increase of 1.0x the GDP from 2022 onward; -- Investments of BRL1.7 billion between 2021 and 2025. In Fitch's base case and rating cases, minimum LLCR is 1.4x and 1.3x, respectively. The average DSCR under base and rating cases is 1.2x in both scenarios. DSCRs mentioned on this rating action commentary are calculated according to Fitch's criteria and, therefore, don't include cash balance. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. =============== C O L O M B I A =============== AVIANCA HOLDINGS: Stock Sinks as Airline Plans to Exit Bankruptcy ----------------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that shares of Avianca Holdings SA have tumbled 45% over the past week as the Colombian airline prepares a bankruptcy exit plan that will likely make the stock worthless. The air carrier, which was driven into chapter 11 during last year's pandemic and travel bans, fell 6% in Bogota trading Sept. 6, extending losses for a fifth day, according to data compiled by Bloomberg, according to globalinsolvency.com. Shares were trading around 119 pesos (about 3 cents) on Sept. 6. A U.S. judge will consider the airline's Chapter 11 exit proposal, which includes potentially converting some of its bankruptcy loans into equity in a reorganized holding company, according to a regulatory filing, the report relates. "Under the Chapter 11 plan, the value of the shares of the company would be reduced to zero, due to the decrease in equity of the company attributable to the debtors' liabilities to third parties and creditors, as well as the injection of capital by new investors pursuant to the Chapter 11 plan," the filing said, the report notes. The hearing is scheduled for Sept. 14, the report adds. About Avianca Holdings SA Avianca -- https://aviancaholdings.com/ -- is the commercial brand for the collection of passenger airlines and cargo airlines under the umbrella company Avianca Holdings S.A. Bogota, Colombia-based Avianca has been flying uninterrupted for 100 years. With a fleet of 158 aircraft, Avianca serves 76 destinations in 27 countries within the Americas and Europe. Avianca Holdings S.A. and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-11133) on May 10, 2020. At the time of the filing, the Debtors disclosed $7,273,900,000 in assets and $7,268,700,000 in liabilities. Judge Martin Glenn oversees the cases. The Debtors tapped Milbank LLP as general bankruptcy counsel; Urdaneta, Velez, Pearl & Abdallah Abogados and Gomez-Pinzon Abogados S.A.S. as restructuring counsel; Smith Gambrell and Russell, LLP as aviation counsel; Seabury Securities LLC as financial restructuring advisor and investment banker; FTI Consulting, Inc. as financial restructuring advisor; and Kurtzman Carson Consultants LLC as claims and noticing agent. The U.S. Trustee for Region 2 appointed a committee of unsecured creditors in Debtors' bankruptcy cases on May 22, 2020. The committee is represented by Willkie Farr & Gallagher, LLP. ============= J A M A I C A ============= BLUE POWER: Revenues Hit by Suspension of Exports to CARICOM ------------------------------------------------------------ RJR News reports that Jamaican manufacturer Blue Power's financials have taken a hit following the suspension of its exports to CARICOM. For the three-month period, total revenue amounted to $116 million, a decrease of 23% from the $150 million realised in the previous year, according to RJR News. The main contributor to this decline was the suspension of our exports to the CARICOM region, the report notes. The Government of Jamaica has elected to discontinue the issuance of Certificates of Origin for soap manufactured in Jamaica with imported soap noodles, the report relays. As a result of this change, profits from operations for the first quarter amounted to $8 million compared to $21 million in the previous year, a decline of 62%, the report adds. =========== M E X I C O =========== ALPHA LATAM: Seeks to Hire AlixPartners LLP as Financial Advisor ---------------------------------------------------------------- Alpha Latam Management, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ AlixPartners, LLP as financial advisor. The firm will provide these services: a. assist with managing the Debtors' rolling 13-week cash flow forecast, including evaluating liquidity projections, actual results on a week-to-week basis, and disbursements in order to optimize liquidity; b. support the Debtors in navigating the Chapter 11 process and any other process under a foreign law, including Ley de Concursos Mercantiles, and evaluating strategic alternatives; c. assist with the Chapter 11 process and any other process under a foreign law, including Ley de Concursos Mercantiles, providing testimony, preparing and filing operating reports, schedules, statements, claims reconciliation and other typical Chapter 11 administrative tasks; d. assist with diligence-related matters and discussions with key constituents and their advisors regarding restructuring options and alternatives; e. provide reports as requested to the Debtors; f. provide reports to and meet with the debtor-in-possession lender; and g. assist the Debtors with such other matters as may be requested that fall within the firm's expertise and that are mutually agreeable. The firm's hourly rates are as follows: Managing Director $1,030 to $1,295 per hour Director $825 to $980 per hour Senior Vice President $665 to $755 per hour Vice President $485 to $650 per hour Consultant $180 to $480 per hour Paraprofessional $305 to $325 per hour AlixPartners will also be reimbursed for out-of-pocket expenses incurred. During the 90-day period prior to the petition date, non-Debtor Alpha Holding S.A. de C.V. paid the firm $4,244,778.85 in aggregate for professional services performed and expenses incurred, including a retainer of $350,000. Lawrence Young, a managing director at AlixPartners, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Lawrence Young AlixPartners, LLP 909 Third Avenue, Floor 30 New York, NY 10022 Tel: (212) 490-2500 Fax: (212) 490-1344 Email: lyoung@alixpartners.com About Alpha Latam Management Wilmington, Del.-based Alpha Latam Management, LLC and its affiliates operate a specialty finance business that offers consumer and small business lending services to underserved communities in Mexico and Colombia. Alpha Latam Management and certain of its affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 21-11109) on August 1, 2021, disclosing assets of between $100 million and $500 million and liabilities of between $500 million and $1 billion. Judge J. Kate Stickles oversees the cases. The Debtors tapped Richards, Layton & Finger, P.A. and White & Case, LLP as legal counsel; Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as investment bankers; and AlixPartners, LLP as financial advisor. Prime Clerk, LLC is the claims and noticing agent and administrative advisor. On Aug. 11, 2021, Alpha Holding, S.A. de C.V. and AlphaCredit Capital, S.A. de C.V. SOFOM, ENR 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. ALPHA LATAM: Seeks to Hire Prime Clerk as Administrative Advisor ---------------------------------------------------------------- Alpha Latam Management, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ Prime Clerk, LLC as administrative advisor. The firm's services include: (a) assisting in the solicitation, balloting and tabulation of votes, preparing any related reports in support of confirmation of a Chapter 11 plan, and processing requests for documents; (b) preparing an official ballot certification and, if necessary, testifying in support of the ballot tabulation results; (c) managing and coordinating any distributions pursuant to a Chapter 11 plan; and (d) other bankruptcy administrative services The firm's hourly rates are as follows: Director of Solicitation $210 per hour Solicitation Consultant $190 per hour Director $170 to $190 per hour Senior Consultants $65 to $170 per hour Technology Consultants $35 $95 per hour Analyst $30 to $55 per hour Prime Clerk received from the Debtor a retainer of $50,000. Benjamin Steele, a partner at Prime Clerk, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Benjamin J. Steele Prime Clerk LLC 60 East 42nd Street, Suite 1440 New York, NY 10165 Tel: +1 212 257 5490 About Alpha Latam Management Wilmington, Del.-based Alpha Latam Management, LLC and its affiliates operate a specialty finance business that offers consumer and small business lending services to underserved communities in Mexico and Colombia. Alpha Latam Management and certain of its affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 21-11109) on August 1, 2021, disclosing assets of between $100 million and $500 million and liabilities of between $500 million and $1 billion. Judge J. Kate Stickles oversees the cases. The Debtors tapped Richards, Layton & Finger, P.A. and White & Case, LLP as legal counsel; Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as investment bankers; and AlixPartners, LLP as financial advisor. Prime Clerk, LLC is the claims and noticing agent and administrative advisor. On Aug. 11, 2021, Alpha Holding, S.A. de C.V. and AlphaCredit Capital, S.A. de C.V. SOFOM, ENR 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. CENTRO MUNICIPALITY: Moody's Affirms 'B1' Issuer Rating ------------------------------------------------------- Moody's de Mexico S.A. de C.V. affirmed the b1 baseline credit assessment and the B1/Baa2.mx issuer ratings (Global Scale, local currency/Mexico National Scale) of the municipality of Centro (Villahermosa) and changed the outlook to stable from negative. RATINGS RATIONALE RATIONALE FOR THE STABLE OUTLOOK The recommendation to change the outlook to stable from negative reflects the improvement in municipality's own source revenues collection which in turn have derived in an improvement of the operating and financial balances, as well as declining debt levels and an adequate liquidity position. As of June 2021, Centro's own source revenues collection increased by 46.1%, as the result of diverse measures implemented by the entity in order to rise their collection, supporting a higher growth in the operating and total revenues compared with the operating and total expenditures, the ones that registered annual variations of 6.4%, 4.9% and 4.2% and 4.7%. This trend significantly contrast with the decrease in the own source revenues collection registered as of December 2020 of 28.1% caused by the coronavirus pandemic. Based on the trends observed as of June 2021, and assuming a growth on the operating expenditures of 4% (in line with the cagr of 4% from 2016-20) Moody's expect that Centro's operating and financial balances will be balanced, averaging 0.3% of operating revenues and 0.3% of total revenues, figures that contrast with the averages from 2016-20 of -4.1% of operating revenues and 0% of total revenues. RATIONALE FOR THE AFFIRMATION OF THE ISSUER RATINGS The affirmation of Centro's B1/Baa2.mx ratings reflects the low and declining debt levels as well as a stable liquidity position. At the same time Centro's rating considers its highly concentrated local economy in the oil industry and some uncertainties associated to the change of administration that will take place in October of 2021. As of December 2020, net direct and indirect debt was equivalent to 17.3% of operating revenues below the median of other B1 Mexican peers (19%), and Moody's expect that this ratio will continue to decrease to an average of 12% of operating revenues, even assuming that the entity will acquire short-term debt, similar to the historical amounts observed, in 2021-22. In terms of the liquidity, Centro registered a cash to current liabilities ratio of 0.48 times (x) the cash to current liabilities and given the balanced operating and financial balances projected for 2021-22 Moody's expects that this ratio will remain stable at an average of 0.49x. Centro's economy is highly concentrated in the oil industry, which makes it vulnerable to shocks in this industry, and impacts tax revenues' stream. In addition, a new administration will begin its government period in October 2021 which could lead to a shift from the conservative revenues and expenditures policies observed so far. ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS Environmental considerations are material to Centro's ratings. The municipality is exposed to heavy rains and floods that can significantly affect the infrastructure, what can cause pressures in the capital expenditures to maintain and rebuilt the hydraulic infrastructure. Social considerations are material to Centro's ratings. Albeit the entity has a very low marginalization index and provides o good supply of basic services to its inhabitants, the coronavirus pandemic, that Moody's considers a social risk, caused a significant reduction in the own source revenues collection. Governance considerations are material to Centro's ratings. The institutional framework is in line with other Mexican RLGs (Mexican Financial Discipline Law and the National Accounting Harmonization Council). The municipality publishes quarterly financial statement in a timely manner, complying with the financial discipline law stipulations. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS If Centro's operating and financing balances continue to improve leading to sustained strengthening of the municipality's liquidity position, ratings could face upward pressure. On the contrary, a weakening of the liquidity, below the current levels or ab abrupt increase of debt could lead to downward pressure. The principal methodology used in these ratings was Regional and Local Governments published in January 2018. ELECTRICIDAD FIRME: Fitch Assigns FirstTime 'BB' LT IDRs -------------------------------------------------------- Fitch Ratings has assigned first-time 'BB' Long-term Local and Foreign Currency Issuer Default Ratings (IDRs) to Electricidad Firme de Mexico Holdings, S.A. de C.V. (EFM). The Rating Outlook is Stable. The ratings also apply to the proposed new issuance of up to USD350 million senior secured notes due in 2026. The notes will be secured by the first-priority lien on EFM and Electricidad Cometa de Mexico, S.A. de C.V. shares. EFM's ratings are linked to Cometa Energia 's (Cometa, BBB-/Stable) credit profile. EFM indirectly owns 100% of Cometa and is EFM's only source of dividends to service debt. The ratings are constrained by EFM's moderately high leverage and structural subordination to Cometa's creditors. KEY RATING DRIVERS Stable Dividend Stream: EFM's ratings are supported by the quality of the dividends received from its 100% ownership of Cometa. The company's cash flow is supported by strong and stable cash flows in the generation business and predictable dividend streams. Fitch forecasts dividends received from Cometa to average USD75 million in the next four years. EFM benefits from Cometa's strong market position as an efficient independent power producer in Mexico and its adequate capital structure. Structural Subordination: EFM's outstanding notes will be structurally subordinated to Cometa 's senior secured USD786 million outstanding notes due in 2035. EFM is a holding company that depends on dividends received from Cometa to service its own financial obligations. Therefore, a substantial increase in leverage at Cometa could increase the structural subordination of EFM's creditors. This risk is mitigated by Cometa's track record of stable dividend distributions. The projected dividend stream should be more than sufficient to cover interest expense resulting from the issuance. Moderately High Leverage: EFM's capital structure after the proposed issuance is moderately high. Fitch expects leverage at the holding company level, measured by holdco debt/cash distribution to range from 4.5x-5.0x in the next four years compared to 4.3x in 2020. On a consolidated basis, leverage is expected to reach 5.1x in 2021 and range from 4.7x-5.3x in the medium term. The amortized structure of Cometa's notes reduces the group's exposure to refinancing risk. Stronger Subsidiary Supports Ratings: EFM's ratings are supported by those of Cometa, as the single operational company, and therefore, its only cash flow contributor. EFM's ratings are two notches below those of Cometa, given the structural subordination of its financial obligations. Legal ties are weak as Cometa has a covenant restricting dividend distribution to a minimum of 1.2x DSCR after distribution. Operational ties are moderate as management is shared, but each entity has its own treasury and funding strategies. EFM will provide a letter of credit in the total amount of USD60 million until the amortization of Cometa's notes in 2035 in order to comply with the fulfilment of the subsidiary's debt service reserve account. Off-Taker Risk Limits Cometa's Ratings: Cometa's ratings are constrained by the credit profile of its main off-takers under long-term Power Purchase Agreements (PPAs) and compression service agreements and by the Mexican operating environment. Comissions Federal de Electricidad (BBB-/Stable) and CENAGAS will represent around 30% of EBITDA, while Mercado Mayorista will represent around 20% of EBITDA in 2021, exposing the company to off-taker risk or the Mexican market despite its deleveraging trajectory. Fitch views positively the company's off-taker diversification and energy exports to the CAISO system in California, which is expected to represent around 15% of its EBITDA in 2021. DERIVATION SUMMARY EFM's ratings compare well to those of other holdco utility companies in the region, such as A.I. Candelaria (BB/Stable) and Nautilus Inkia Holdings SCS (BB/Stable). These holdcos depend on the cash distribution of its main subsidiary, Cometa (BBB-/Stable), OCENSA (BB+/Stable) and Kallpa Generacion (BBB-/Stable), respectively, to service its financial obligations. EFM is rated at the same level as A.I. Candelaria. A.I. Candelaria's amortizing notes will contribute to leverage at the holdco level, which Fitch estimates at 4.2x in 2022 and below thereafter, while EFM's leverage should be in the 4.5x-5.0x range throughout the life of the transaction. Partially offsetting this positive factor is the credit quality of its main subsidiary. EFM is rated at the same level as Inkia. Fitch expects both companies to operate with similar consolidated leverage of 4.5x-5.0x in the medium term, although Inkia's holdco leverage is much stronger at around 2.5x. While Inkia is more geographically diversified, this benefit is offset by its subsidiaries' locations in lower-rated countries. KEY ASSUMPTIONS -- EFM's Average annual EBITDA after associates at around USD 212 million; -- Average Annual Capex of USD4.2 million; -- Average Annual Cash distribution of USD75 million; -- Dividends distribution contingent on meeting the required debt service reserve account and 1.2x DSCR; -- Holdco debt of around USD275 million is paid in full with new USD350 million senior secured raised at Holdco Level. Excess cash is used for capex, acquisition or distribution to shareholders. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade of Cometa's ratings; -- Leverage measured as holdco debt/cash distribution below 4.5x over the rating horizon while consolidated leverage measured as total debt/EBITDA is below 4.5x on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Cometa's ratings; -- Significant additional debt at Cometa's level, which increases the structural subordination of EFM; -- Leverage measured as holdco debt/cash distribution above 5.0x over the rating horizon while consolidated leverage measured as total debt/EBITDA is above 5.0x on a sustained basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: EFM's liquidity is adequate and supported by readily available cash and consistent cash distribution from its single subsidiary, Cometa. Debt service will be limited to interest payments through the medium term. The notes mature in five years from the issuance. As of Dec. 31, 2020, the group reported USD39 million of cash and cash equivalents of which USD27.2 million were at Cometa's level. ISSUER PROFILE EFM is the indirect owner of 100% of the equity interest in Cometa, which has USD786 million debt outstanding under its senior secured notes and is its sole cash flow contributor. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS EFM's ratings are directly linked to those of Cometa, as its main subsidiary. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ELECTRICIDAD FIRME: Moody's Rates $350MM Sr. Secured Bonds 'Ba2' ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the up to $350 million Senior Secured Bonds Due 2026 to be issued by Electricidad Firme de Mexico Holdings, S.A. de C.V. ("EF" or "Issuer"). The outlook is stable. The Issuer is the holding company (indirect owner of 100%) of Cometa Energia, S.A. de C.V. ("Cometa"; Baa3 stable). Cometa owns and operates a portfolio of six combined cycle gas-fired power plants, one gas turbine power plant (together 2.2 GW), three gas compression stations and 65km of associated natural gas pipelines. The assigned ratings are based on preliminary documentation. Moody's does not anticipate changes in the main conditions that the Notes will carry. Should issuance conditions and/or final documentation deviate from the original ones submitted and reviewed by the rating agency, Moody's will assess the impact that these differences may have on the ratings and act accordingly. Assignments: Issuer: Electricidad Firme de Mexico Holdings, S.A. de C.V. Senior Secured Regular Bond/Debenture, Assigned Ba2 Outlook Actions: Issuer: Electricidad Firme de Mexico Holdings, S.A. de C.V. Outlook, Assigned Stable RATINGS RATIONALE EF is seeking to issue up to $350 million non-amortizing Senior Secured Bonds due 2026 to refinance an existing bridge loan and other general corporate purposes. Concomitantly, EF will contract a $60 million Letter of Credit ("LC") Facility, for the benefit of Cometa, in order to cover its Debt Service and O&M reserve fund needs. The $60 million LC Facility is expected to have a 1% annual cost when undrawn and a 2.3% of the drawn amount, and will rank pari passu with the Bonds. As a pure holding company, EF's credit quality reflects its consolidated financial and operating profile. As such, the Ba2 rating takes into consideration Cometa's strong market position in the Mexican energy market as the third largest independent power producer ("IPP") with a track-record of more than 20-years. Cometa's portfolio provides significant cash flow diversification across different regional markets, business segments and off takers. Currently, more than 90% of Cometa's revenues are contracted under US-dollar denominated Power Purchase Agreements (PPAs) with pass-through costs, and with creditworthy counterparties, including Comision Federal de Elecricidad (Baa1 negative), Newmont Goldcorp, subsidiary of Newmont Corporation (Baa1 stable), Centro Nacional de Control del Gas Natural, and Minera Mexico, S.A. de C.V. (Baa2 stable), among other commercial and industrial clients. Over the life of the Bonds, current contracted revenue amounts to approximately 60% of total revenue, although the company plans to re-contract its projects, reducing its exposure to merchant risk. The expected cash flow stability is also underpinned by long-term service agreements and relatively modest capital expenditure projected over the next five years. Moody's assessment of EF's credit quality also incorporates the non-amortizing profile of the Bonds that introduce refinancing risk. Importantly, a number of PPAs expire in 2027 and 2028, just after the maturity of the Bonds in 2026. This risk is partially offset by the characteristics of the Mexican energy market, where demand for electricity is expected to grow 2.8% on average for the period 2021-2035 (Mexico's Ministry of Energy). While renewable installed capacity grew over the last few years, it currently represents around 30% of total installed capacity and there are no new large private developments in the pipeline. Combined-cycle installed capacity currently amounts to 38% of total installed capacity and it is projected to increase to 42% by 2035; more than 50% of generation will come from combined-cycle plants and natural gas price is projected to continue to be the key determinant for electricity prices in the wholesale market. As such, EF's portfolio of assets is projected to remain competitive in Mexico's energy market over the next 10 years. The Ba2 rating also incorporates Global Infrastructure Partners ("GIP") ownership of EF as a credit strength. Moody's expects a prudent financial policy that balances creditors and shareholders interests going forward. GIP is a leading global infrastructure agreement with approximately $75 billion assets under management, a long-track record and ample experience in the infrastructure and energy industries. The Bonds are structurally subordinated to Cometa's project finance debt, a key credit negative. In 2018, Cometa issued $860 million ($787 million outstanding) Senior Secured Notes due 2035 that benefit from a project finance structure, including a cash waterfall, limitations to indebtedness and distributions, a collateral package and debt service and O&M reserves, among other credit enhancements. Given that EF does not own and operate other assets in addition to Cometa's assets, the Bonds issuance will be structurally subordinated to Cometa's bonds. Repayment of EF's bonds relies on the dividend distributions made from Cometa after covering all of its costs, expenses and debt service under the project finance debt. Moody's recognizes that Cometa has recorded solid Debt Service Coverage Ratios (DSCRs) of 2.3x LTM March 2021, and thus generating ample cash flow for distributions. Notwithstanding, Cometa's debt restricts distributions if DSCR is 1.2x or lower, which would limit EF's capacity to meet debt service payments. EF's assigned rating also considers its relatively high leverage on a consolidated basis. Under Moody's Base Case, which considers a 10% haircut in revenue against the Management Case, Cash Interest Coverage (CFO pre-W/C + Interest / Interest) averages 2.31x for the period 2021-2023 and CFO pre-working capital / Debt averages 8.83% over the same period, which map to B scores under Moody's Unregulated Utilities and Unregulated Power Companies methodology scorecard. The stable outlook reflects Moody's expectations that EF will benefit from stable, visible dividend distributions supported by Cometa's long-term PPA contracts with creditworthy counterparties. It also considers that Cometa will not need to drawn resources on the new committed facility to support its debt service payments over the next 12-18 months FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The rating could face upward pressure if the company records cash interest coverage ratios above 4.0x, CFO pre-WC to Debt of 20% and RCF to Debt of 5% on a sustained basis, supported, for example, by an improvement in operating and financial performance of Cometa or higher cash retention at the holding company level. Downgrade pressure would increase if EF records cash interest coverages below 2.0x on a sustained basis or CFO pre-WC to Debt below 7% or RCF to Debt below 3% on a sustained basis. Moody's perception of Cometa's lower ability to sustain dividend payments to EF, could trigger a rating downgrade. The principal methodology used in this rating was Unregulated Utilities and Unregulated Power Companies published in May 2017. TOTAL PLAY: Fitch Assigns BB- Rating to USD500MM Sr. Unsec. Notes ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to Total Play Telecomunicaciones, S.A. de C.V.'s proposed senior unsecured notes issuance of up to USD500 million. Proceeds from the issuance will be used to finance the company's growing expansion needs, for working capital and to prepay debt. Total Play benefits from the stable and recurrent revenue of the Pay-TV and broadband business. Its intensive network investment positions it as an important player in the industry. The ratings are tempered by its high leverage and lower scale, market share and diversification relative to its investment grade peers. Fitch forecasts Total Play's negative FCF generation will remain uncurbed at least during 2021 and 2022 as the company completes its expansion plan. The new issuance is aligned with the company's strategy to increase the percentage of unsecured debt vs. secured debt by accounts receivables, and it extends the company's debt maturity profile. After the notes are issued approximately 60% of total debt will be unsecured. KEY RATING DRIVERS Improving Profitability: Increased network penetration is key to growing revenues and expanding margins. The company continues to make extensive network investments that have increased its homes passed, business scale and profitability. Fitch expects network penetration to increase to 21.5% (Adjusted per Inegi 2020 Census) as of YE2021 vs. 13.9 in 2018 and EBITDA margins to be around 38% as of YE2021 vs. 27.7% in 2018. The company's strategy to cross-sell telecom services and offer differentiated services should lead to improved margins over the medium term. Bundling offers helps increase margins through efficiencies and reduced churn. The company's network is 100% fiber optic; this allows it to offer a better experience with faster star-up times and superior image quality. Improving Scale: Total Play is an important player in the industry in terms of network coverage and should improve its market share in the near term. The company has maintained strong growth despite operating in a competitive industry. During the last four years, it tripled Revenue Generating Units (RGU) while maintaining a higher ARPU (Average Revenue Per User) than its competitors due to its higher value service offering. During 2021 and 2022 the company plans to increase the number of homes passed to around 17.2 million (Adjusted per Inegi 2020 Census). Competitive Industry: Subscriber growth potential remains high for Total Play given the low penetration of broadband in Mexico. According to IFT (Insituto Federal de Telecomunicaciones) as of YE 2019 in Mexico just around 21% of the total homes have a triple-play service, while nearly 55% of households have access to fixed broadband services. The integrated nature of the cable packages of video, voice and broadband services in conjunction with the low level of broadband access in Mexico could contain churn levels during the pandemic and onwards. However, going forward, the growing list of alternatives and low-cost streaming content options in conjunction with the weakening in the economic environment could accelerate churn. Service and Customer Diversification: Total Play has a balanced revenue mix and customer and service diversification. As of June 2021, 76% of the company's revenue comes from the residential segment and 24% from the Enterprise segment. Around 64% of the residential revenue comes from triple play packages while in the enterprise segment 58% of the revenue comes from corporate customers while 42% comes from government entities. The company has rapidly grown its RGU of its residential segment from 2.8 million RGU at YE2018 to 7.7 million as of June 2021. Growing Stage Pressures FCF: Total Play's expected addition of subscribers will result in a negative FCF generation over the next two years. This is expected to be funded with additional debt and with internally generated funds. Fitch expects the company will reach its targeted network coverage of 17.2 million homes passed in 2022. Fitch projects the company's capital intensity measured by capex/sales to remain at around 50% in 2021 and to start lowering to 35% in 2022. Capex will largely consume the projected cash flow from operations (CFFO). The capital intensity ratio should continue to decline in 2023 at around 26% and to around 24% in 2024. Going forward, capex also should be more aligned to the number of subscriber additions to its network. Fitch does not expect any dividend payments in the short to medium term. Gradual Deleveraging: Following the senior notes issuance, Fitch expects that Total Play's leverage ratio calculated as total debt/EBITDA (Pre-IFRS16) will be around 4.3x by YE2021. As the operating margins continue to improve mainly backed by an increase in subscribers, Fitch expects the company's leverage ratio to continue trending down to around 3.3x as of YE2022. Total Play's ratings incorporate the expectation that the company would reduce leverage as the company improves it scale. The senior notes issuance also is in line with the company's strategy to migrate from secured debt to unsecured debt in the medium term. DERIVATION SUMMARY Total Play's 'BB-' ratings reflect the company's weak market position and small scale of operations vs. its peers in the rating category. This is somewhat offset by its improving operating performance and capital structure, its network quality and the low broadband penetration in Mexico. Compared with the consolidated Mexican rival Televisa, which has lower leverage levels and a more diversified business, Total Play has higher leverage levels, smaller market share and lower network penetration. Televisa has expanded its broadband subscribers over the last few years, gaining market share from America Movil, who has not been granted a pay-TV licence due to its market position in the Mexican telecom industry. Total Play's financial structure is deemed broadly in line with VTR Finance N.V. (BB-/Stable), which is a leading Chilean cable operator. VTR benefits from the Chilean operating environment and its status as the largest broadband provider and pay-TV services with a subscriber market share of 33% and 32%, respectively. VTR has a long track record of stable cash flow generation. Total Play's business profile is similar to Axtel S.A.B. de C.V. (BB/Stable) in that both are small scale and undiversified fixed-line providers. Axtel sold off its B2C network and its spectrum to focus on its core enterprise segment. Cable and Wireless (C&W; BB-/Stable) has a weaker financial structure than Total Play but better service and geographical diversification. C&W benefits from its operations in a series of mostly duopoly markets (excluding Panama mobile). The company's revenue mix per service is well balanced, with mobile accounting for approximately 25% of total sales, fixed-line with 28% and business to business with 48% of revenues in 2020. C&W's strengths are tempered by Limited Latin America Ltd.'s (LLA) financial management, which limits any material deleveraging. Total Play's leverage levels, scale and products are similar to Talk Talk Telecom Group PLC (Talk Talk; BB-/Stable), which has over 4.0 million broadband subscribers in the U.K. and a Fitch-estimated market share of about 11%. The company offers a value-for-money product proposition that appeals to a cross-section of the U.K. telecoms market. Talk Talk has a different cost structure because the company does not own its network. Fitch expects growth in total U.K. broadband market will slow, making growing its subscriber base harder. KEY ASSUMPTIONS -- Revenue growth to continue near 38% in 2021 and 21% in 2022 due to the company's expansion plan strategy; -- EBITDA margins of 38% in 2021 slightly improving to 38.5% in 2022; -- Capex to sales ratio at around 50% during 2021 and 35% in 2022; -- Negative FCF generation in 2021-2022; -- No dividend payments. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Larger scale and market share; -- Leverage level calculated as total debt/EBITDA (Pre- IFRS16) below 3.5x; -- Positive FCF generation thought the cycle; -- Liquidity ratio (available cash + undrawn portion of committed facilities+ FCF)/ 12-month debt maturities consistently above 1.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Weak Operating Performance; -- Loss of market share; -- Debt-funded acquisitions that change the company's capital structure; -- Leverage level above 5.0x on a sustained basis; -- Unfavorable regulatory changes; -- Weaker liquidity position. 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 Liquidity to Improve: Fitch expects Total Play will improve its liquidity position following the issuance of the senior unsecured notes of up to USD500 million. Fitch views the issuance positively as it significantly reduces near-term maturities and simplifies the company's capital structure. Total Play will hedge the principal and coupon payments of the U.S. dollar issuance to maintain aligned the company's cashflow generation with its debt amortizations. Fitch assumes that the company will use part of the proceeds to repay its current secured by accounts receivables bank loans. Fitch includes nonrecourse factoring of accounts payable of approximately MXN1,503 million in its debt calculations. The factoring adjustment allows Fitch to compare issuers that may use different sources of funding, as immediate replacement funding is required if the payables financing shuts down. ISSUER PROFILE Total Play is a Mexican provider of fixed-telecommunications services to residential and enterprise customers including government entities. The company offers pay-television, fixed-broadband and fixed-voice services through its competitive fiber-to-the-home (FTTH) via a gigabit passive-optical network (GPON) network. ESG CONSIDERATIONS Total Play has an Environmental, Social and Governance (ESG) Relevance Score of '4' for Governance Structure, resulting from its ownership concentration and Grupo Salinas' aggressive treatment toward different stakeholders and arrangements with related companies that benefit shareholders but affect creditors' interests. This has a negative impact on the credit profile and is relevant to the rating 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. TOTAL PLAY: Moody's Affirms 'B1' CFR & Rates New $500MM Notes 'B2' ------------------------------------------------------------------ Moody's Investors Service assigned a B2 rating to Total Play Telecomunicaciones, S.A. de C.V.'s proposed $500 million senior unsecured notes due 2027. At the same time, Moody's affirmed Total Play's B1 corporate family rating and the B2 rating on the existing $575 million 7.5% senior unsecured notes due 2025; the outlook is stable. Proceeds from the bond issuance will be used to repay existing secured debt, fund the company's expansion plan and general corporate purposes. The notes will rank pari passu with all other unsecured and unsubordinated debt obligations of Total Play. The B2 rating incorporates the guarantee of Total Play's subsidiaries generating at least 90% of cash flows. The rating of the notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and that these agreements are legally valid, binding and enforceable. RATINGS RATIONALE The affirmation of Total Play's B1 CFR ratings reflects the adequate credit metrics with steady improvements in EBITDA margin and leverage -that reached 40.4% and 3.8 times respectively (as adjusted by Moody's), in the last 12 months ended June 2021. Proforma for the proposed issuance Moody's expects leverage to be at 4.2x at year-end 2021 to gradually decrease to 3.5x by 2023 on the back of EBITDA growth, as per Moody's estimates. Total Play's B1 CFR also incorporates the company's high quality network, being the only 100% FTTH infrastructure in Mexico, its organic track record of growth and a low churn rate at 1.1% as of June 2021. Conversely, the rating considers Total Play's small size when compared to other global rated peers; with 12% market share in broadband and 8% in Pay TV, Total Play is behind larger operators including America Movil S.A.B. de C.V. (A3 negative) and Grupo Televisa S.A.B. (Baa2 stable). The rating also considers the company's geographic concentration in only one market and Moody's expectation of negative free cash flow (FCF) through 2023 in connection to the company's expansion plan. Total Play's expansion plan entails execution risks, partly mitigated by the company´s track record of growth and experienced management team. The B2 rating on the senior unsecured notes incorporates the effective subordination to Total Play's secured debt. Proforma for the proposed transaction, 40% of Total Play's debt will be secured by about 23% of the company's total revenues, with a trust formally assigned to manage the debt service with different financial institutions as well as the MXN2,500 million local notes issued in February 2020. The senior unsecured notes will represent the bulk of total unsecured debt and 60% of total debt -excluding leases- and will benefit from the residual cash flows in the waterfall after the repayment of the secured debt. With the issuance of the new notes and the planned repayment of existing debt, Total Play's liquidity profile will be adequate. Still, the company's FCF has remained negative in recent years, with very tight liquidity as per the company´s cash to short term debt ratio at only 14% on average, for the last five years. Besides the flexibility on its growth capex, additional levers to protect liquidity include a MXN6,000 million facility with a non-regulated entity, and MXN1,081 million in restricted cash as part of the structure related to the secured debt under the master trust. Post-transaction, the company's debt maturity profile will be more comfortable as approximately 88% of its debt will mature in 2025 or later. The company does not have a formal dividends policy, and does not expect any dividend distribution in the medium term. The stable outlook reflects Moody's expectation that Total Play will be able to execute its growth plan, while maintaining its EBITDA margin to the high-30s in percentage terms and improving liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Total Play's rating could be upgraded if the company reduces leverage below 3x on a sustained basis and improves its interest coverage (Moody's-adjusted EBITDA - capital spending/interest) to above 2.0x. A positive rating action would be conditional on the successful execution of its growth plan and maintenance of adequate or better liquidity. Total Play's ratings could be downgraded if the company is unable to improve its profitability with adjusted EBITDA margin falling below 35%. Any deterioration in its liquidity profile or leverage maintained above 4.5x could also trigger a downgrade. The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017. Headquartered in Mexico, Total Play offers fixed telephony, Pay TV and broadband internet services to residential customers, and managed IT services for business customers, as well as government entities, over its fully-owned fiber optic network that covers more than 95,000 kilometers with 13.2 million homes passed and 2.9 million subscribers as of June 2021. Total Play started operations in 2008 as Grupo Iusacell, the second largest mobile company in Mexico, and became standalone through the sale of its mobile business to AT&T Inc. (Baa2 stable) in 2015, remaining part of Grupo Salinas. Total Play is currently controlled by the Salinas Pliego family and for the last twelve months ended June 2021, the company generated revenue of MXN23,875 million (about $1.2 billion). ===================================== T R I N I D A D A N D T O B A G O ===================================== [*] CARIBBEAN AIRLINES: Partners w/ JMEA to Boost Local Exports --------------------------------------------------------------- RJR News reports that Caribbean Airlines Cargo and the Jamaica Manufacturers' and Exporters' Association (JMEA) have entered into a partnership to support and boost local exports. The exploration of air freight routes currently under-served by the regional cargo industry will be one of the key areas of focus under the partnership, according to RJR News. It is expected that access to new global markets will open opportunities for exporters and importers in Jamaica to economic benefits, the report notes. Caribbean Airlines Cargo provides connectivity to the Caribbean, North America and several destinations worldwide, the report adds. About Caribbean Airlines Caribbean Airlines Limited - http://www.caribbean-airlines.com/- provides passenger airline services in the Caribbean, South America, and North America. The company also offers freighter services for perishables, fish and seafood, live animals, human remains, and dangerous goods. In addition, it operates a duty free store in Trinidad. Caribbean Airlines Limited was founded in 2006 and is based in Piarco, Trinidad and Tobago. Caribbean Airlines is among many airlines whose business has been greatly affected in 2020 by the slowdown of international travel caused by the COVID-19 pandemic. The government of Trinidad & Tobago guaranteed a US$65 million loan for the airline, and that funding has helped with the airlines' cash flow shortfall since May 2020. In September 2020, the airline related it will be taking cost-cutting measures to help keep it afloat. The measures, which was to affect some 1,700 employees, included salary deductions, no-pay leaves and lay-offs. ********* 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 * * *