/raid1/www/Hosts/bankrupt/TCRLA_Public/211028.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
Thursday, October 28, 2021, Vol. 22, No. 210
Headlines
A R G E N T I N A
ARGENTINA: 'Absolutely' Committed to New IMF Deal, Fernandez Says
GENERACION MEDITERRANEA: Fitch Lowers LongTerm IDRs to 'C'
B R A Z I L
BRAZIL: Truckers Threaten Nationwide Strike If Demands Are Not Met
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Hoteliers Demand Government Action to Compete
EGE HAINA: Fitch Assigns 'BB-' IDRs, Outlook Negative
EGE HAINA: Moody's Rates Up to $300MM in New Unsecured Notes 'Ba3'
J A M A I C A
JAMAICA: Launches Initiative to Up Private Investment Projects
P U E R T O R I C O
CB REAL ESTATE: Dec. 15 Plan Confirmation Hearing Set
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A R G E N T I N A
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ARGENTINA: 'Absolutely' Committed to New IMF Deal, Fernandez Says
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globalinsolvency.com, citing Bloomberg News, reports that
Argentina's President Alberto Fernandez said the country is
"absolutely" committed to reaching a deal with the International
Monetary Fund.
Fernandez at the same time made clear that his government won't
risk rushing into an agreement if it's a poor one for Argentines,
in comments delivered at the closing of an event with top business
leaders, according to globalinsolvency.com.
"We'll keep discussing until we're sure we'll have the resources to
make Argentina stand on its own two feet again," he said, the
report notes. "Only then, will we start paying the debts we've
inherited." The country needs a reduction on the existing interest
rates on its debt with the IMF as well as more time to pay back the
loan, Fernandez added, the report relays.
Argentina had previously asked the IMF to consider temporary relief
on commissions charged to countries that use the lender's credit
lines extensively, as well as to conduct a comprehensive review of
these policies, the report discloses.
The president's remarks come just after Economy Minister Martin
Guzman spent the week in Washington D.C. holding technical and
high-level meetings with Fund officials to rework a plan worth over
$40 billion, including a meeting with IMF chief Kristalina
Georgieva, the report notes.
Talks have so far been slow, in part due to Argentina's upcoming
congressional elections to be held in November, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. It's capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8,
2020.
Moody's credit rating for Argentina was last set at Ca on Sept. 28,
2020. Fitch's credit rating for Argentina was last reported on
Sept. 11, 2020 at CCC, which was a rating upgrade from CC. DBRS'
credit rating for Argentina is CCC, given on Sept. 11, 2020.
As reported by The Troubled Company Reporter - Latin American, DBRS
noted that the recent upgrade in Argentina's ratings (September
2020) follows the closing of two debt restructuring agreements
between the Argentine government and private creditors. The first
restructuring involved $65 billion in foreign-law bonds. The deal
achieved the requisite participation necessary to trigger the
collective action clauses and finalize the restructuring on 99% on
the aggregate principal outstanding of eligible bonds. DBRS added
that the debt restructurings conclude a prolonged default and
provide the government with substantial principal and interest
payment relief over the next four years.
DBRS further relayed that Argentina is also seeking a new agreement
with the International Monetary Fund (IMF) to replace the canceled
2018 Stand-by Agreement. Formal negotiations on the new financing
began in November 2020. Obligations to the IMF amount to $44
billion, with major repayments coming due in 2022 and 2023.
GENERACION MEDITERRANEA: Fitch Lowers LongTerm IDRs to 'C'
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Fitch Ratings has downgraded Generacion Mediterranea S.A.'s (GEMSA)
Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs)
to 'C' from 'CCC'. Fitch has also downgraded GEMSA's and Central
Termica Roca S.A.'s (CTR) co-issued senior unsecured notes due 2023
to 'C'/'RR4' from 'CCC'/'RR4'.
These downgrades follow GEMSA's announcement that it is launching a
tender offer to exchange its co-issued 9.625% USD336 million notes
due 2023 and Generacion Centro S.A.'s (GECE) USD51 million loan due
2023 with amortizing senior unsecured notes due 2027. Per its
criteria, Fitch considers the tender offer a distressed debt
exchange (DDE) given that, in Fitch's view, the offer represents a
material reduction in terms in the extension of the maturity date
and since acceptance of exchange offers requires tendering
bondholders to consent to amendments that would impair
non-tendering bondholders. Fitch also rates the proposed senior
unsecured notes due 2027 of up to USD393 million co-issued by GEMSA
and CTR 'CCC(EXP)'/'RR4'.
If the proposed tender offer is successfully completed, Fitch will
downgrade the IDRs to Restricted Default ('RD'). Subsequently,
Fitch will re-rate GEMSA's IDRs to a level is consistent with its
post-exchange risk profile, which is expected to be within the
'CCC' category. This level reflects the company's exposure to
offtaker Compania Administradora del Mercado Mayorista Electrico
(CAMMESA), which acts as a market agent on behalf of companies in
the electricity sector and is largely dependent on the Argentine
sovereign ('CCC').
GEMSA is capped at an average Recovery Rating of 'RR4' since
Argentina is categorized within Group D with a soft cap of 'RR4',
per Fitch's Country-Specific Treatment of Recovery Ratings
Criteria. This assumes a recovery in the range of 31% to 50%.
KEY RATING DRIVERS
Exchange Offer Qualifies as DDE: Fitch believes the company's
refinancing proposal qualifies as a DDE under its criteria due to
the extension of the maturity date and because exchange offers are
only accepted if the tendering bondholder also consents to
indenture amendments that materially impair the position of holders
that do not tender. The exchange would be necessary should central
bank capital controls restricting companies' ability to convert
Argentine pesos into dollars be extended into 2023. The current
capital controls are set to last through the end of 2021 and only
allow issuers access to the FX market for payment of up to 40% of a
maturing dollar-based debt.
Ezeiza Expansion Moving Forward: Fitch expects GEMSA to proceed
with its planned combined cycle expansion at its Ezeiza plant, for
which the company added USD130 million of debt in July 2021 and
will generate USD47 million of additional EBITDA once completed.
CAMMESA had awarded GEMSA power purchase agreements (PPAs) for two
projects under Resolution 287/2017. The company will incur an
approximately USD20 million penalty, payable in 48 monthly
installments once operations begin, which is expected in late 2023.
The second expansion project, Rio Cuarto, remains on hold pending
an improvement in market conditions.
Base Energy Pesification: Fitch expects GEMSA's EBITDA to fall from
USD175 million in 2020 to USD128 million in 2023 as 300MW of
capacity under Resolution 220/2007 is set to expire and move to
Base Energy between 2020 and 2022. Issues from contract expirations
are compounded by Base Energy's pesification in February 2020,
which exposes companies to further depreciation of the Argentine
peso. This follows a reduction in Base Energy capacity remuneration
from Resolution 1/2019, enacted in February 2019 to lower deficits
following peso depreciation. Payments to legacy generation units
without a PPA in Argentina are determined by a regulatory framework
called Energia Base, or Base Energy.
Tight Debt Service Coverage: GEMSA's cash flow is relatively stable
and predictable provided that CAMMESA continues to pay within its
current time of 79 days. As of 2Q21, 99% of the company's revenue
was denominated in U.S. dollars, and over 96% of EBITDA was derived
from long-term take-or-pay contracts under Resolutions 220/2007 and
21/2016. Fitch estimates GEMSA's 2021 leverage at 3.6x in dollar
terms, which is expected to decline to 2.4x over the rating horizon
as the company pays off maturing obligations with cash flow. In
2020, FFO interest coverage was tight at 2.2x and ease to 2.1x in
2021 as short-term debt is paid off with cash flow.
High Counterparty Exposure: GEMSA depends on payments from CAMMESA,
which acts as an agent for an association representing electricity
generators, transmission and distribution companies, large
consumers and wholesale market participants. GEMSA is exposed to
potential delays in payment from CAMMESA. Recent delays from
CAMMESA have been approximately 79 days, above the agreed upon 42
days. Fitch estimates that due to the company's financial and
commercial obligations, it cannot afford prolonged delays in
payments.
Uncertain Regulatory Environment: Fitch believes Argentina's
current economic and political environment increases the
uncertainty that the Fernandez administration will be able to
effectively implement the required electricity regulatory tariff
adjustments in order for the system to be self-sustainable. The
company operates in a highly strategic sector where the government
has a role as both the price/tariff regulator and also controls
subsidies for industry players. Fitch assumes the Fernandez
administration remains committed to and prioritizes developing a
long-term sustainable regulatory environment, moving toward a more
unregulated market and reducing the deficit.
DERIVATION SUMMARY
GEMSA's (C) rated Argentine utility peers are Capex S.A. (CCC+),
Pampa Energia S.A. (B-/Stable), Genneia S.A. (CCC), AES Argentina
Generacion S.A. (CCC) and MSU Energy (CCC). GEMSA's ratings reflect
its recently announced transaction, which Fitch considers to be a
DDE under its criteria. Post-transaction, Fitch expects GEMSA to be
rated in line with its peers, whose ratings reflect Argentina's
sovereign rating since they all receive payments from the market
coordinator, CAMMESA, which is dependent on the government. Fitch
estimates the median gross leverage for GEMSA's Argentina utility
peers to be 2.3x.
GEMSA's expected 2021 gross leverage, measured as total
debt/EBITDA, is 3.0x in dollar terms, weaker than Capex's 2.3x for
2022 and Pampa Energia's 2.4x, but lower than AES Argentina's 3.7x,
Genneia's 3.4x and MSU Energy's 5.7x. Similar to the one GEMSA is
considering, MSU Energy recently executed a combined cycle
expansion in 2020 under the same resolutions. Thus, leverage rose
to finance the expansion. Genneia's expansion is concentrated on
renewable projects, under the RenovAR program where select projects
ultimately have a guarantee from the World Bank. Both MSU Energy's
and GEMSA's working capital levels are vulnerable to delays in
payments from CAMMESA.
RATING SENSITIVITIES
The completion of the proposed exchange offer will lead to a
downgrade of the Long-Term IDRs to 'RD'. The IDR would subsequently
be upgraded to a rating level reflecting the post-DDE credit
profile.
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
Issuance to Improve Liquidity: Fitch expects the company's 2027
amortizing bond to improve liquidity. Following the issuance, the
company will have USD326 million in debt maturities due between
2H21 and 2023 versus USD590 million. Following its debt exchange
completed in 2020 of USD43.9 million, the company has limited
dollar-based debt maturities remaining in 2021, which will allow
the company to comply with central bank restrictions on
dollar-based refinancing.
Fitch expects the company to exhibit tight FFO interest coverage of
2.6x in 2021 and 2.5x in 2022. The . As of June 30, 2021, the
company had a cash balance of ARS831 million (USD8.4 million),
roughly 10% of which was held in US dollars.
ISSUER PROFILE
Generacion Mediterranea S.A. (GEMSA) is a holding company for most
of Grupo Albanesi's electricity generation assets. GEMSA began
operations in 2004 and owns or participates in four generation
companies: Generacion Mediterranea S.A. (GEMSA; 900MW), Central
Termica Roca S.A. (190MW), Generacion Rosario S.A. (140MW), and
Solalban Energia S.A. (42%; 120MW).
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.
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B R A Z I L
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BRAZIL: Truckers Threaten Nationwide Strike If Demands Are Not Met
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Lachlan Williams at Rio Times Online reports that once again, truck
drivers are considering paralyzing Brazil.
The teamsters have been said to be in a "state of strike" leaders
of the sector's entities have criticized President Jair Bolsonaro,
according to Rio Times Online.
The associations promise to deliver a list of demands to the
government, the report relays.
According to the entities, positive signals are necessary to avoid
a nationwide strike on November 1, the report says. The
government, however, minimizes the mobilization, 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).
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Hoteliers Demand Government Action to Compete
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Dominican Today reports that the Association Hotels and Tourism of
the Dominican Republic (Asonahores) highlighted the importance of
maintaining policies to promote the tourism industry as tools to
guarantee the regional competitiveness of the tourism sector.
It said that maintains growth rates experienced in recent years,
both in investment through the development of new hotel rooms and
complementary offer infrastructure, as well as the arrival of
tourists to our territory, according to Dominican Today.
In a statement, Asonahores pointed out that for the association,
"it is important to remember that tourism is a globalized sector,
which requires a fiscal and legal framework in accordance with the
competitive and long-term environment, which generates trust and
maximizes the flow of capitals to the country," the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
The Troubled Company Reporter-Latin America reported in April 2019
that the Dominican Today related that Juan Del Rosario of the UASD
Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings on Jan. 18, 2021, assigned a 'BB-' rating to
Dominican Republic's USD1.5 billion 5.3% notes due Jan. 21, 2041.
Concurrently, the Dominican Republic reopened its 2030 4.5% notes
for an additional USD1.0 billion, which Fitch rates 'BB-', raising
the total outstanding amount of the 2030 notes to USD2.0 billion.
Standard & Poor's, on December 4, 2020, affirmed its 'BB-'
long-term foreign and local currency sovereign credit ratings on
the Dominican Republic. The outlook remains negative. S&P also
affirmed its 'B' short-term sovereign credit ratings. The negative
outlook reflects S&P's view that it could lower the ratings on the
Dominican Republic over the next six to 18 months, given the
severe impact of the COVID-19 pandemic on the sovereign's already
vulnerable fiscal and external profiles, as well as the potential
for a weaker-than-expected economic recovery.
Moody's credit rating for Dominican Republic was last set at Ba3
with stable outlook (July 2017). Fitch's credit rating for
Dominican Republic was last reported at BB- with negative outlook
(May 8, 2020).
EGE HAINA: Fitch Assigns 'BB-' IDRs, Outlook Negative
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Fitch Ratings has assigned Foreign and Local Currency Issuer
Default Ratings (IDRs) of 'BB-' to Empresa Generadora de
Electricidad Haina, S.A. (EGE Haina) with a Negative Rating
Outlook. Fitch has also assigned a 'BB-' rating to EGE Haina's 2031
senior unsecured USD300 million notes. The company expects to use
the proceeds from the issuance to refinance existing debt and for
general corporate purposes.
EGE Haina's ratings reflect the high risk of the Dominican Republic
electricity sector, which is characterized by high energy losses,
low level of collections and important subsidies. The ratings also
reflect the greater visibility of its revenue and lower exposure to
the spot market, the size and diversification of its generation
asset base, and the appropriate leverage.
The Negative Outlook reflects the link of the credit quality of the
Dominican Republic electric sector to the Sovereign Rating given
the dependency of state-owned distribution companies from
government transfers.
KEY RATING DRIVERS
High Sector Risk Pressures Working Capital: The Dominican electric
sector is characterized by high energy distribution losses (33% in
2020), low collection and high end-users' subsidies, which weaken
distribution companies' financial position. This increases the
industry's dependence on government transfer in order to be able to
fulfil their obligations with the power generators. This situation
increases sector risk, especially at a time of rising
vulnerabilities affecting the government's finances.
Upward pressure on fossil fuel prices could further stress the
management of working capital. The regular delays in government
transfers pressure working capital needs and add volatility to
power generators' cash flows.
Diversified Asset Base: EGE Haina's credit profile benefits from a
diversified asset portfolio of power generation using different
sources of energy (natural gas, fuel oil, wind, coal and solar),
which secures its dispatch position across the merit list and,
ultimately, backs its operational results. In 2020, the company
converted the Quisqueya II plant to gas power with a 225 MW
capacity, and in 2021 started operating Solar Park Girasol with 120
MW capacity. EGE Haina has a long-term strategy to build a power
generation asset base of 1000 Mw with nonconventional renewable
energies.
Long-Term Contract Reduces Cash Flow Volatility: In August 2020,
EGE Haina signed a 10-year PPA with Corporación Dominicana de
Empresas Eléctricas Estatales (CDEEE) based on natural gas that is
indexed to its fuel costs, resulting in more revenue visibility and
stability in earnings.
The company has also entered into long-term contracts with
nonregulated clients and a regulated state owned distribution
company to be supplied from the new Solar Park Girasol. Fitch
expects that between 2021 and 2023 more than 80% of revenues will
come from long-term agreements. Fitch projects an EBITDA of USD122
million in 2021 and USD128 million in 2022, supported by revenues
from the long-term contracts.
Continued Negative FCF: EGE Haina's ratings assume the company will
manage its capital structure to total leverage, as measured by
total debt to EBITDA, comfortably below 4.5x going forward despite
the recent negative FCF and expected investments.
For 2021, the agency expects a negative FCF near USD 5 million due
to a USD105 million dividend payment and an investment plan of
USD54 million related to the new Solar Park Girasol. In 2020, EGE
Haina had a negative FCF of USD110 million as a result of lower
operating earnings, higher capex and lower levels of payment
collection. Fitch expects negative FCF for the coming years given
EGE Haina's plan to expand its asset base with nonconventional
renewable energies.
Adequate Credit Metrics: EGE Haina presents strong credit metrics
for the rating category. The latest 12 months (LTM) leverage as of
2Q21 stood at 2.9x. Fitch believes that EGE Haina will have a gross
leverage close to 3.3x in 2021 given the expected issuance of a
USD300 million bond, with proceeds to be used mainly to prepay the
outstanding USD260 local bonds, plus the issuance of a separate
USD100 million green bond.
Fitch expects EGE Haina will maintain gross leverage levels close
to 3.3x over the rating horizon as expectations of higher operating
earnings are incorporated and additional debt is needed to finance
its investment plans. The company's capital structure is adequately
supported by the extended terms of its debt maturities considering
the expected issuances.
DERIVATION SUMMARY
EGE Haina's rating, as with other Dominican power generators like
AES Andres (BB-/Negative), is linked to and constrained by the
rating of the Dominican Republic, from which it indirectly receives
most of its revenues. The two companies are exposed to working
capital volatility due to operating difficulties tied to
state-owned Dominican electric distribution companies, which are
characterized by high dependency on government transfers due to
their and high energy loss rand lower collection rates.
AES Andres has a thermal generation asset with competitive cost
generation. In addition, AES Andres has an integrated operation
with a natural gas port, regasification, storage and gas pipeline
facilities. Meanwhile, EGE Haina benefits from a diversified energy
matrix which includes thermal and nonconventional renewable energy
assets. EGE Haina's expected leverage for 2021 is 3.3x, similar to
AES Andres, which is expected to be close to 3x.
KEY ASSUMPTIONS
-- Energy Generation has an average year over year 5% growth
between 2020-2023;
-- Account receivables days of 108 with no material delays in
government payments;
-- Annual average capex of USD71 million in 2021-2023;
-- Dividend payment of USD105 million in 2021 and USD50 million
in 2022 and 2023.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action for EGE Haina could occur if the
Dominican Republic's sovereign ratings are upgraded or if the
electricity sector achieves financial sustainability through
proper policy implementation.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action for EGE Haina would occur if the
Dominican Republic's sovereign ratings are downgraded; if
there is sustained deterioration in the reliability of
government transfers; or financial performance deteriorates to
the point of increasing the debt-to-EBITDA to 4.5x for a
sustained period.
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
EGE Haina maintains adequate liquidity, supported by its available
cash balance and its debt maturity terms. The next bond maturity is
scheduled for 2025, but this will be refinanced through the
expected USD300 million bond issuance. As of June of 2021, EGE
Haina had USD33 million in cash and an expected USD65 million cash
from operation for 2021, which compares favorably with its
short-term obligations of USD75 million.
After the last debt amortization payment of 2020, EGE Haina has
bond amortization for USD260 million between 2025 and 2027. The new
issuances will strengthen Haina's liquidity as it will extend most
of the payments after 2030. Additionally, EGE Haina has
approximately USD114 million in available credit lines with
liquidity support in order to face volatility in the collection
profile of its accounts receivable or if in need of extra
liquidity.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
Environmental, Social and Corporate Governance (ESG) Credit
Relevance is a Score of '3'. 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.
EGE HAINA: Moody's Rates Up to $300MM in New Unsecured Notes 'Ba3'
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Moody's Investors Service assigned a first-time Ba3 rating to the
up to $300 million Senior Unsecured Notes due 2031 to be issued by
Empresa Generadora de Electricidad Haina, S.A. ("EGE Haina" or
"Issuer") and ba3 Baseline Credit Assessment (BCA). The outlook is
stable.
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.
RATINGS RATIONALE
The Ba3 rating reflects EGE Haina's strategic and competitive
nature of its portfolio of generation assets in Dominican Republic
(Government of Dominican Republic, Ba3 stable) that contribute to
around 14% of the country's generation capacity. The rating also
considers the adequate cash flow visibility given 84% of its energy
output is contracted, on average for the next 10 years. At least
60% of EGE Haina's energy and capacity is contracted with regulated
counterparties, mainly government-owned distribution companies
("DISCOs") that effectively operate as regional monopolies and are
exposed to demand risk in the country.
The credit quality of EGE Haina is constrained by the sovereign
rating given its various linkages with the Dominican Republic.
These include revenues derived from the same economic base as the
government, reliance on local financing, and exposure to common
risks such as interest rates and economic performance. The
company's credit strengths are also tempered by EGE Haina's modest
scale relative to global peers, its concentration on a single
electricity market that continues to evolve, refinancing risk, and
its growth prospects that could lead to higher leverage in the near
to medium term.
Given that EGE Haina is 49.9% owned by the Government of Dominican
Republic, it falls under the scope of Moody's Government-Related
Issuers Methodology (GRIs). The assigned rating considers a
Baseline Credit Assessment (BCA), which is a representation of the
group's intrinsic creditworthiness before taking into account
possible extraordinary support from the sovereign, of ba3. Moody's
assessment also reflects a "low" likelihood of government
extraordinary support in the case of financial distress given the
little involvement of the government on the company's day-to-day
operations and management. Furthermore, Moody's views that the
government of Dominican Republic and EGE Haina are exposed to
common risk factors as captured by the "very high" default
dependence assumption under the GRI framework.
Moody's Base Case scenario assumes a 16% increase in revenues in
2021, supported by the demand recovery post pandemics and energy
contracts, followed by revenues in the range of $340 to $390
million per year, with an average 52.4% gross margin for the
projection period through 2025, which is more conservative than the
Management Case assumptions that consider some cost efficiencies.
Total gross debt amounts to approximately $415 million (proforma
year-end 2021), considering the Notes. Approximately $270 million
of the Notes proceeds will be used to refinance debt and close to
$30 million will be distributed as dividends.
Both Moody's Base Case and Management Case consider around $261
million investment in growth related capital expenditures, that are
funded with cash flow from operations and additional debt. Under
the Moody's Base Case scenario for the period 2021-2023, Cash from
Operations Pre-Working Capital (CFO Pre-W/C) + Interest / Interest
(Cash interest coverage) is expected to average 4.1x and CFO
Pre-W/C / Debt ratio projected to average 19.1%, consistent with Ba
and Baa scores, respectively, under Moody's Unregulated Utilities
and Power Companies methodology scorecard.
The stable outlook reflects Moody's expectation that EGE Haina's
financial performance will be in line with Moody's expectations and
that the operating environment will remain supportive with no
material negative interference that would affect the company's
financial standing over the next 12-18 months. The stable outlook
is also in line with the Dominican Republic's rating outlook.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the strong linkages with the Dominican Republic, a rating
upgrade would require an upgrade of the rating of the Dominican
Republic and the EGE Haina records a sustained and consistent
financial performance in line with Moody's expectations.
EGE Haina's rating could face downward pressure if the company
underperforms or indebtedness increases significantly above
anticipated levels such that the credit metrics deteriorate and
cash flow interest coverage falls below 2.0x or the CFO to debt
declines below 6% for an extended period, it also could generate
negative pressures on the ratings. A downgrade of the Government of
the Dominican Republic could lead to a negative rating action for
EGE Haina.
EGE Haina benefits from a geographically and technologically
diversified portfolio of 11 generation plants that add up to close
to 1,090 MW, which include natural gas (41%), fuel oil (26%), wind
(17%), solar (11%) and coal (5%) assets. EGE Haina is the largest
energy renewable platform in the country with 302 MW and aims to
add around 1,000 MW renewable in the next 10 years.
The methodologies used in this rating were Unregulated Utilities
and Unregulated Power Companies published in May 2017.
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J A M A I C A
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JAMAICA: Launches Initiative to Up Private Investment Projects
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RJR News reports that the Jamaican Government has launched a
Priority Investment Project initiative aimed at increasing
facilitation of private investment projects.
The projects are expected to have great economic impact, encourage
innovation, engage the local business community, and boost the
country's development, according to RJR News.
Jamaica Promotions Corporation (JAMPRO) says the projects will be
assessed by Cabinet, and if approved, will be selected and noted as
being of national interest, the report relays.
The investor will then receive non-fiscal benefits, including the
expediting of Government services and support with addressing
challenges that potential investors may face during the project
cycle, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
Fitch Ratings affirmed in March 2021 Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+', with a stable
outlook. Standard & Poor's credit rating for Jamaica stands at B+
with negative outlook (April 2020). Moody's credit rating for
Jamaica was last set at B2 with stable outlook (December 2019).
According to Fitch, Jamaica 'B+' rating is supported by World Bank
Governance Indicators that are substantially stronger than the 'B'
and 'BB' medians, a favorable business climate according to the
World Bank Doing Business Survey, moderate inflation and moderate
commodity dependence. These strengths are balanced by vulnerability
to external shocks, a high public debt level and a debt composition
that makes the sovereign vulnerable to exchange rate fluctuations.
The Stable Outlook is supported by Fitch's expectation that the
public debt level will return to a firm downward path
post-pandemic, which is underpinned by political consensus to
maintain a high primary surplus, the resilience of external
finances, and stronger economic policy institutions.
=====================
P U E R T O R I C O
=====================
CB REAL ESTATE: Dec. 15 Plan Confirmation Hearing Set
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Debtor CB Real Estate, LLC filed with the U.S. Bankruptcy Court for
the District of Puerto Rico a Disclosure Statement referring to
Chapter 11 Plan on Sept. 15, 2021.
On Oct. 21, 2021, Judge Mildred Caban Flores approved the
Disclosure Statement and ordered:
* That acceptances or rejections of the Plan may be filed in
writing by the holders of all claims on/or before 14 days prior to
the date of the hearing on confirmation of the Plan.
* That any objection to confirmation of the plan shall be
filed on/or before 14 days prior to the date of the hearing on
confirmation of the Plan.
* That the debtor shall file with the Court a statement
setting forth compliance with each requirement in 11 U.S.C. §
1129, the list of acceptances and rejections and the computation
of
the same, within 7 working days before the hearing on
confirmation.
* That objections to claims must be filed prior to the
hearing
on confirmation. Debtor will include in its objection to claim a
notice that if no response to the objection is filed within 30
days, the motion will be considered and decided without the actual
hearing.
* Dec. 15, 2021, at 9:00 AM, via Microsoft Teams is the
hearing for the consideration of confirmation of the Plan.
A copy of the order dated Oct. 21, 2021, is available at
https://bit.ly/3pGoxxA from PacerMonitor.com at no charge.
Attorney for the Debtor:
CHARLES A. CUPRILL
P.S.C. LAW OFFICES
356 Fortaleza Street
Second Floor
San Juan, PR 00901
Tel.: 787-977-0515
Fax: 787-977-0518
E-mail: ccuprill@cuprill.com
About CB Real Estate
San Juan, P.R.-based CB Real Estate, LLC is a fee simple owner of
two commercial buildings located in Puerto Rico and a residential
property in New York, valued at $8.9 million in the aggregate.
CB Real Estate sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D.P.R. Case No. 21-01849) on June 16, 2021, listing
total assets of $10,147,500 and total liabilities of $3,407,130.
Horacio Campolieto Bielicki, president of CB Real Estate, signed
the petition.
Judge Mildred Caban Flores oversees the case.
The Debtor tapped Charles A. Cuprill, PSC Law Offices as bankruptcy
counsel and Correa Acevedo & Abesada Law Offices, P.S.C. as special
counsel. Luis R. Carrasquillo & Co. P.S.C. and Vicente Garcia CPA
& Co., P.S.C., serve as the Debtor's financial consultant and
accountant, respectively.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Chapman, Editors.
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