/raid1/www/Hosts/bankrupt/TCRLA_Public/211109.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
Tuesday, November 9, 2021, Vol. 22, No. 218
Headlines
A R G E N T I N A
ARGENTINA: Offers Its Creditors Climate Action Instead of Money
B R A Z I L
BRAZIL: Industrial Production Declines by 0.4% in September
BRAZIL: Santander Worsens Economic Scenario, Sees Selic at 11.5%
BRAZIL: Water Crisis Will Shrink GDP by 0.11 % This Year
C A Y M A N I S L A N D S
INCOME COLLECTING: Sets First Creditors Meeting on Dec. 1
C O L O M B I A
EL DORADO AIRPORT: Fitch Keeps 'BB+' on USD415MM Notes on Watch Neg
J A M A I C A
SEPROD GROUP: Reports Drop in Net Profit for Third Quarter
M E X I C O
GRUPO POSADAS: Seeks to Tap Creel as Mexican Restructuring Counsel
GRUPO POSADAS: Taps Cleary Gottlieb Steen & Hamilton as Counsel
P A N A M A
[*] Fitch Reviews La Hipotecaria Panamanian and Salvadorian Notes
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Offers Its Creditors Climate Action Instead of Money
---------------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that
Argentina, one of the world's most prominent defaulters, is pushing
for a new way to service debt: Instead of paying creditors with
cash that's on short supply in Buenos Aires, it wants them to
recognize the country's efforts to tackle climate change.
"We need more flexibility to honor that debt," President Alberto
Fernandez said, at a United Nations climate summit, of about $46
billion that Argentina owes to the International Monetary Fund,
according to globalinsolvency.com.
"We're willing to link part of the payment to essential investments
in green infrastructure," the report notes.
The climate talks in Glasgow are set to include a discussion on how
rich countries can help poorer ones like Argentina to make the
expensive transition to cleaner energy, 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.
===========
B R A Z I L
===========
BRAZIL: Industrial Production Declines by 0.4% in September
-----------------------------------------------------------
Rio Times Online reports that Brazilian industrial production
shrank 0.4% in September, compared to August, according to the
Monthly Industrial Survey - Physical Production (PIM-PF), released
by the Brazilian Institute of Geography and Statistics (IBGE).
In August, the indicator had a drop of 0.7% in the seasonally
adjusted series, according to Rio Times Online.
With the September result, the industry was 3.2% below the
pre-pandemic level in February 2020. Moreover, it is also 19.4%
below the record level of the survey, recorded in May 2011, the
report notes.
This is the fourth consecutive negative monthly result,
accumulating a loss of 2.6% in the period, 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).
BRAZIL: Santander Worsens Economic Scenario, Sees Selic at 11.5%
----------------------------------------------------------------
Rio Times Online reports that Santander Brasil's macroeconomic team
has revised projections for the Brazilian economy and now expects
Gross Domestic Product (GDP) to expand 1% in 2022, from 1.5% growth
previously expected, while Selic benchmark interest rate should end
next year at 11.5%, from a previous estimate of 9%.
Ana Paula Vescovi and her team highlighted vital signs of changes
in fiscal policy, especially in the legal framework of the spending
cap, which has been the main fiscal anchor in recent years and drew
attention to the high degree of uncertainty about the direction of
economic policy, according to Rio Times Online.
For 2021, Santander maintained its projection of a 4.9% increase in
GDP, but for 2023, it cut its growth forecast from 0.8% to
stability, the report notes. In the case of SELIC, it changed the
expected rate for the end of this year from 8.25% to 9.25% and from
7% to 9% by the end of 2023, 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).
BRAZIL: Water Crisis Will Shrink GDP by 0.11 % This Year
--------------------------------------------------------
Rio Times Online reports that the water crisis in Brazil, the worst
in almost a century, will cause losses of R$8.2 billion (US$1.464
billion) in the country's Gross Domestic Product (GDP) this year,
which means a drop of 0.11%, weighed down by the price of
electricity, triggered by the lack of rainfall.
The estimate is from the National Confederation of Industry (CNI),
which points out that the high cost of electricity will also cause
household consumption to fall this year by R$7 billion (US$1.25
billion), according to Rio Times Online.
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).
===========================
C A Y M A N I S L A N D S
===========================
INCOME COLLECTING: Sets First Creditors Meeting on Dec. 1
---------------------------------------------------------
Income Collecting 1-3 Months T-Bill Mutual Fund, in liquidation,
will have its first meeting of creditors on Dec. 1, 2021.
Keiiran Hutchinson of EY Cayman Limited and Igal Wizman of EY
Bahamas Limited are appointed as liquidators.
Creditors should submit notice of intention not later than 5:00 pm,
Nov. 28, 2021 in order to join the meeting.
The company's liquidators are:
Keiiran Hutchinson
EY Cayman Limited
62 Forum Lane, Camana Bay
PO Box 510, Grand Cayman
Cayman Islands, KY1106
Igal Wizman
EY Bahamas Limited
Caves Corporate Center
West Bay Street & Blade Road
PO Box N-3231, New Providence
The Bahamas
===============
C O L O M B I A
===============
EL DORADO AIRPORT: Fitch Keeps 'BB+' on USD415MM Notes on Watch Neg
-------------------------------------------------------------------
Fitch Ratings has maintained the 'BB+' rating of Sociedad
Concesionaria Operadora Aeroportuaria Internacional, S.A.'s (OPAIN)
USD415 million senior secured notes (the notes) on Rating Watch
Negative (RWN). OPAIN is the concessionaire of El Dorado
International Airport in Bogota, Colombia.
The rated notes coexist on a pari-passu basis with two Colombian
peso denominated loans, for amounts of COP315 billion and COP100
billion and maturities in December 2026 and October 2025,
respectively.
RATING RATIONALE
The maintenance of the RWN reflects the traffic recovery during the
third quarter of 2021 below Fitch's rating case projections and the
airport's continued dependence on additional liquidity to meet debt
service payments in 2022. If traffic recovers as expected in
Fitch's rating case, which assumes 85% recovery in 2022 relative to
the 2019 passenger level, shortfalls should be manageable;
otherwise, external funds will be needed to meet operational and
financial commitments.
Under Fitch's rating case, debt service coverage ratio (DSCR) in
2022 is 0.4x, mostly driven by the issuer's obligation to pay
concession fee of COP200 billion that were due in 2020 but deferred
to 2022. Fitch's severe downside case, which assumes a slower
traffic recovery to 65% of 2019 levels by 2022, results in a need
of around USD13 million of additional liquidity.
The RWN will be resolved once Fitch observes actual traffic
performance in the next months and is able to assess the effects of
OPAIN's management actions to address liquidity needs in 2022. The
Rating Watch's resolution may extend longer than six months, given
the uncertainties of OPAIN's management actions.
The rating reflects El Dorado airport as a strategic asset for
Colombia, being the main gateway to the country and the
third-largest airport in Latin America in terms of traffic volume.
The airport has a robust traffic base, comprising mainly origin and
destination (O&D) passengers and has a demonstrated history of
strong traffic performance with relatively low volatility. The
rating also reflects a dual-till rate-setting framework, with an
adjustment mechanism for regulated revenues that tracks local and
U.S. consumer prices indices. The debt is fixed-interest rate and
fully-amortizing with a six-month debt service reserve account
(DSRA) and standard provisions for dividend distributions and the
incurrence of additional leverage, among others.
The airport's operations were severely affected by the coronavirus
pandemic and related government mobility restrictions, resulting in
sharp declines of traffic and revenues, and greater pressures on
its ability to meet debt service. Minimum and average DSCR under
Fitch's rating case are 0.4x (in 2022) and 1.1x (2021-2026),
respectively. After 2023, the average improves to 1.3x and would be
consistent with the assigned rating, according to applicable
criteria for airports with a mix of stronger and midrange
characteristics. The approximately USD44 million shortfall in 2022
is expected to be covered with additional liquidity from
unrestricted cash and DSRAs.
KEY RATING DRIVERS
Essential Infrastructure Asset in Colombia [Revenue Risk: Volume -
Stronger]: Located in Bogota's metropolitan area, El Dorado airport
is a critical facility that serves as the country's largest
commercial airport and its international gateway. The airport
benefits from a large O&D base, with traffic volume showing strong
positive growth for the last decade and no meaningful competition
from other airports or forms of transportation. Although Avianca
Holdings S.A. constitutes over 60% of total traffic (pre-pandemic
levels), counterparty risk is relatively mitigated by the airport's
strategic and competitive position within the country and the
region.
Dual-Till Rate Setting [Revenue Risk: Price - Midrange]: The
concession contract establishes that regulated revenues, which
comprise the majority of OPAIN's revenues, are adjusted yearly to
track 95% of Colombian or the U.S. CPI, depending on the currency
denomination of the tariff. Extraordinary increases in tariffs may
occur in case either CPI varies by more than 10%, since the last
tariff update. Commercial revenues are not subject to a tariff
adjustment mechanism and are negotiated in private agreements with
each tenant.
Construction Phase Recently Completed [Infrastructure
Development/Renewal - Stronger]: El Dorado is a modern and
well-maintained airport with well-defined maintenance needs, as the
concession expires in six years. The airport ended the construction
phase in January 2019, and no major works are pending, aside from
potential complementary and voluntary works. According to the
independent engineer, capex related to refitting the airport
(replacement capex, or repex) is adequate to cope with the expected
expenses associated to the concession's expiration.
Midrange Structural Features [Debt Structure - Midrange]: Debt
structure comprises the U.S. dollar-denominated senior secured
notes issuance and two non-rated Colombian peso-denominated loans.
The notes are fully amortizing and with a 4.09% fixed-interest
rate. The structure benefits from six-month DSRAs with one offshore
account for the rated debt and one onshore account for the
non-rated facilities. The offshore account shall increase over the
debt term to 12-months debt service if the historical DSCR ended on
or after June 30, 2024 is less than 1.20x.
Other structure features include adequate debt incurrence and a
dividend distribution test at 1.20x, which provides adequate
mitigation for the absence of a cash waterfall. Exposure to foreign
exchange risk is seen as limited as approximately 75% of revenues
are U.S. dollar-denominated, providing a natural hedge against
Colombian peso/U.S. dollar exchange rate variations.
Financial Summary: DSCR is viewed as the relevant metric for the
transaction, given its short maturity and absence of a concession
tail, on top of its fully-amortizing nature. Minimum and average
DSCRs under Fitch's rating case are 0.4x (2022) and 1.1x
(2022-2026), respectively. After 2022, the average improves to 1.3x
and would be consistent with the assigned rating, according to
applicable criteria for airports with a mix of stronger and
midrange characteristics.
PEER GROUP
El Dorado's closest peer is Mexico City's airport (Grupo
Aeroportuario de la Ciudad de Mexico, GACM), rated 'BBB-' with
Negative Rating Outlook. GACM and El Dorado are international
gateways for their countries with a sizable O&D market. They share
a mix of 'Stronger' and 'Midrange' risk assessments on volume and
price, but GACM's average quarterly DSCRs in 2021 is 1.1x and
around 1.8x in the long term, while El Dorado shows DSCR below 1.0x
in 2022 due to current liquidity constraints. Although GACM's
current leverage at 14.7x is high for the rating category, it is
expected to return to within the indicative criteria range for the
rating category by 2023.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Traffic recovery below 75% in the fourth quarter of 2021
and/or 85% in the first quarter of 2022 relative to 2019
levels, and/or significant disruptions in operations from
Avianca, its anchor carrier;
-- OPAIN's failure to take actions to offset liquidity shortfalls
in 2022.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action is unlikely in the short term, given
that the transaction is on RWN.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT UPDATE
As of September 2021, departing passengers have reached 56% of the
levels of the same period in 2019. Domestic traffic has shown a
greater resilience than international traffic, with an average
recovery of 66% versus 37%, respectively. During 3Q21, traffic
recovery was 70%, in line with Fitch rating case's expectations of
70% and above the severe downside case of 60%.
According to the concessionaire, the slow recovery is due to a
combination of several factors, such as the restriction of the
daily airport's operations by the Civil Aviation Authority of
Colombia following the reopening of the airport in September 2020,
as the restrictions have prevented airlines to schedule and sell
more flights, and the confidence of travelers to fly.
Total revenues were USD145.7 million (COP526 billion), representing
63% of the same period in 2019. Regulated revenues reached USD96.6
million (COP349 billion), a recovery of 61%, while non-regulated
revenues had a greater recovery of 67%, reaching USD49.1 million
(COP177 billion).
The U.S. dollar-denominated and the Colombian peso-denominated
DSRAs currently maintain a balance of USD33 million and COP31
billion, respectively.
OPAIN has actively managed potential solutions to address the
liquidity gaps, including the substitution of the close to USD30
million DSRA by a stand-by letter of credit to release the funds
available in such reserve. The airport is also able to incur
subordinate debt of up to USD50 million. These mitigants combined
would offer sufficient liquidity to make 2022 debt service payments
even if traffic performs in line with the severe downside case.
As compensation for the effects of the pandemic in the concession,
in October 2021 the National Infrastructure Agency, or Agencia
Nacional de Infraestructura (ANI) granted a second contract
extension that considers the lost revenues covering the period of
October 2020 through August 2021. The concession now ends in August
2030 instead of January 2027. Considering the concession's new
maturity, the issuer has indicated that it is in the process of
restructuring the COP315 billion bank loan. This restructuring is
expected to conclude by the beginning of December 2021 and to
reduce the pressure in the cash flow available to serve the rated
debt.
FINANCIAL ANALYSIS
At present, Fitch is not differentiating between its base and
rating case assumptions, given the level of uncertainty about
traffic recovery to previously projected levels.
Fitch's rating case reflects actual traffic performance as of
September 2021, and an average assumption of quarterly traffic for
the last quarter of the year at 75%. It also reflects a
differentiated view on recovery for domestic and international
traffic. Domestic traffic is expected to reach full recovery in
2023, and international traffic in 2024. As a result, for 2022 and
2023, Fitch assumes average recoveries of 85% and 95%, relative to
2019 levels. In 2024, traffic is expected to recover to 2019
levels, followed by traffic growth of 3.5% and 3.2% in 2025 and
2026, respectively.
The budgets of administrative, operating and capital expenses were
stressed by 5%. U.S. CPI reflects Fitch's forecast of 4.4% in 2021,
2.7% in 2022, 2.5% in 2023 and 2.0% from 2023 onward, while
Colombia's CPI forecast is 2.8% in 2021, 3.1% in 2022 and 3.0% from
2023 onward. The Colombian peso to U.S. dollar exchange rate was
assumed at COP3,522.00/USD1.00 in 2021, COP3,623.00/USD1.00 in
2022, COP3,695.00/USD1.00 in 2023 and an average depreciation of
1.5% starting in 2024.
Fitch has also examined the new tentative debt profile of the
COP315 billion loan as indicated by the issuer, still under
negotiation with Bancolombia. Under this scenario, minimum DSCR is
0.4x in 2022 and average (2021-2026) is 1.1x. Fitch expects debt
service in 2022 to be met with held cash balances and DSRAs.
Fitch also ran a severe downside case that assumes a slower traffic
recovery to 2019 levels at 55% in 2021, 65% in 2022, 80% in 2023,
97% in 2024 and 100% in 2025. Under this scenario, minimum and
average DSCR are 0.4x and 1.0x, respectively. The issuer will have
liquidity needs in 2021 and 2022 at approximately COP7 billion and
COP203 billion, respectively, and a rating downgrade would be
likely should the issuer fail to address these shortfalls in a
timely manner.
SECURITY
The ANI granted OPAIN a 20-year concession to operate and expand El
Dorado International Airport on Sept. 12, 2006. Located in Bogota,
the capital city of Colombia, El Dorado is the third-busiest
airport in Latin America in terms of traffic and the most active in
the region in terms of cargo. It has an estimated catchment area of
10.7 million people and serves all major Colombian cities at 41
domestic routes and major international destinations at 50
international routes across the Americas and Europe.
The concession agreement excludes the runways and air traffic
control, taxiways, administrative buildings, and designated
military, police, and government facilities. The airport airfield
consists of two parallel independent runways. In January 2019,
OPAIN ended the construction phase. All the mandatory works have
been carried out including the construction of a new passenger
terminal, new cargo facilities, new office buildings and new
apron.
In accordance with Fitch's policies, the issuer appealed and
provided additional information to Fitch that resulted in a rating
action that is different than the original rating committee
outcome.
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.
=============
J A M A I C A
=============
SEPROD GROUP: Reports Drop in Net Profit for Third Quarter
----------------------------------------------------------
RJR News reports that Seprod Group is reporting a decline in net
profit for the third quarter, which ended in September.
Net profit was $495 million down from $687 million in 2020,
according to RJR News.
Seprod says the decline was in the context of a one-off profit gain
of $762 million, achieved in the same quarter last year from the
sale of a property, the report notes.
Seprod says, with the exception of this one-off gain in the prior
period, the net profit for the third quarter this year represents
an increase of $75 million, the report adds.
===========
M E X I C O
===========
GRUPO POSADAS: Seeks to Tap Creel as Mexican Restructuring Counsel
------------------------------------------------------------------
Grupo Posadas SAB de CV and Operadora del Golfo de Mexico, SA de CV
seek approval from the U.S. Bankruptcy Court for the Southern
District of New York to employ Creel, Garcia-Cuellar, Alza y
Enriquez, SC as special Mexican restructuring counsel.
The firm's services include:
(a) providing legal advice for the design of the Debtors' debt
restructuring;
(b) providing legal advice for the employment of the necessary
credit facilities; and
(c) assisting in the implementation of Chapter 11 process in
Mexico.
Creel will be paid at a monthly rate of $13,000 for its services.
Prior to the petition date, the Debtors paid Creel in the aggregate
amount of $116,000 for pre-bankruptcy services.
Creel provided the following information in response to the request
for additional information set forth in Paragraph D.1 of the U.S.
Trustee Guidelines:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Answer: Although Creel typically charges an hourly rate, Thomas
Heather, Esq., the firm's attorney, has negotiated similar fixed
rates to those in this engagement in other restructurings since
joining the firm, including the restructurings of Grupo Cinemex SA
and Aeroenlaces Nacionales, S.A. de C.V.
Question: Do any of the professionals included in this
engagement
vary their rate based on the geographic location of the bankruptcy
case?
Answer: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Answer: Creel represented the Debtors during the 12-month period
prior to the petition date. Creel has not adjusted its billing
rates or material financial terms for the post-petition
representation of the Debtors. The rates and material financial
terms of this engagement were otherwise in effect in the 12 months
prior to the petition date with respect to Creel's representation
of the Debtors.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Answer: Yes, for the period from the petition date through Dec.
31, 2021. The Debtors recognize, however, that it is possible that
in the Chapter 11 cases there may be unforeseen fees and expenses
that need to be addressed by the Debtors and Creel.
Mr. Heather disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Thomas S. Heather, Esq.
Creel, Garciz-Cuellar, Alza y Enriquez, SC
Torre Virreyes Pedregal No. 24
Piso 24 Col.
Molino del Rey, Ciudad de Mexico 11040
Telephone: + 52 (55) 4748-0600
Email: info@creel.mx
About Grupo Posadas
Grupo Posadas S.A.B. de C.V. is the leading hotel operator in
Mexico and owns, leases, franchises and manages 185 hotels and
28,690 rooms in the most important and visited urban and coastal
destinations in Mexico. Urban hotels represent 87% of total rooms
and coastal hotels represent 13%. Posadas operates the following
brands: Live Aqua Beach Resort, Live Aqua Urban Resort, Live Aqua
Boutique Resort, Grand Fiesta Americana, Curamoria Collection,
Fiesta Americana, The Explorean, Fiesta Americana Vacation Villas,
Live Aqua Residence Club, Fiesta Inn, Fiesta Inn LOFT, Fiesta Inn
Express, Gamma, IOH Hotels, and One Hotels. Posadas has traded on
the Mexican Stock Exchange since 1992.
Grupo Posadas S.A.B. de C.V. and affiliate Operadora del Golfo de
Mexico, S.A. de C.V. sought Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21-11831) on Oct. 26, 2021, listing up to $1 billion in
both assets and liabilities.
Judge Sean H. Lane oversees the cases.
The Debtors tapped Cleary Gottlieb Steen & Hamilton, LLP as
international legal counsel; Ritch, Mueller y Nicolau, S.C. and
Creel, Garcia-Cuellar, Aiza y Enriquez SC, as Mexican legal
counsel; and DD3 Capital Partners as financial advisor. Prime Clerk
LLC is the claims agent and administrative advisor.
GRUPO POSADAS: Taps Cleary Gottlieb Steen & Hamilton as Counsel
---------------------------------------------------------------
Grupo Posadas SAB de CV and Operadora del Golfo de Mexico, SA de CV
seek approval from the U.S. Bankruptcy Court for the Southern
District of New York to employ Cleary Gottlieb Steen & Hamilton,
LLP as legal counsel.
The firm's services include:
(a) advising the Debtors regarding their powers and duties in
the continued operation of their businesses and the
management of their properties;
(b) taking all necessary actions to protect and preserve the
Debtors' estates;
(c) preparing legal papers;
(d) representing the Debtors in negotiations with creditors,
equity holders and parties-in-interest; and
(e) performing all other necessary legal services in
connection with the Debtors' Chapter 11 cases.
The hourly rates of the firm's attorneys and staff are as follows:
Partners $1,115 - $1,650 per hour
Counsel $1,040 - $1,270 per hour
Senior Attorneys $1,015 - $1,185 per hour
Associates $595 - $1,005 per hour
Paralegals $325 - $435 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
The Debtors provided Cleary Gottlieb with an initial retainer in
the amount of $500,000, of which $349,378 was applied to
outstanding balances on account of pre-bankruptcy fees and
expenses.
Cleary Gottlieb also provided the following information in response
to the request for additional information set forth in Paragraph
D.1 of the U.S. Trustee Guidelines:
Question: Did Cleary Gottlieb agree to any variations from, or
alternatives to, your standard or customary billing arrangements
for this engagement?
Response: No.
Question: Do any of Cleary Gottlieb's professionals included in
this engagement vary their rate based on the geographic location of
the bankruptcy case?
Response: No.
Question: If Cleary Gottlieb represented the Debtors in the 12
months prepetition, disclose Cleary Gottlieb's billing rates and
material financial terms for the prepetition engagement, including
any adjustments during the 12 months prepetition. If Cleary
Gottlieb's billing rates and material financial terms have changed
post-petition, explain the difference and the reasons for the
difference.
Response: Cleary Gottlieb represented the Debtors during the
12-month period prior to the petition date. The firm's billing
rates in effect prior to Jan. 1, 2021 for U.S. employees who
provided services to the Debtors ranged from $1,065 to $1,525 for
partners, $995 to $1,215 for counsel, $970 to $1,130 for senior
attorneys, $565 to $955 for associates, $305 to $575 for staff
attorneys, and $310 to $415 for paralegals. International lawyers
charged $505 per hour while law clerks and summer associates
charged $460 per hour and $455 per hour, respectively.
Cleary Gottlieb's billing rates as of Jan. 1, 2021 are as
follows: $1,115 to $1,650 per hour for partners, $1,040 to $1,270
per hour for counsel, $1,015 to $1,185 per hour for senior
attorneys, $595 to $1,005 per hour for associates, and $325 to $435
per hour for paralegals.
Question: Have the Debtors approved Cleary Gottlieb's
prospective
budget and staffing plan, and, if so, for what budget period?
Response: Yes, for the period from the petition date through 60
days after the petition date. The Debtors recognize, however, that
it is possible that in the Chapter 11 cases there may be unforeseen
fees and expenses that need to be addressed by the Debtors and
Cleary Gottlieb.
Jane VanLare, Esq., a member of Cleary Gottlieb Steen & Hamilton,
disclosed in a court filing that her firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jane VanLare, Esq.
Richard J. Cooper, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
Email: jvanlare@cgsh.com
rcooper@cgsh.com
About Grupo Posadas
Grupo Posadas S.A.B. de C.V. is the leading hotel operator in
Mexico and owns, leases, franchises and manages 185 hotels and
28,690 rooms in the most important and visited urban and coastal
destinations in Mexico. Urban hotels represent 87% of total rooms
and coastal hotels represent 13%. Posadas operates the following
brands: Live Aqua Beach Resort, Live Aqua Urban Resort, Live Aqua
Boutique Resort, Grand Fiesta Americana, Curamoria Collection,
Fiesta Americana, The Explorean, Fiesta Americana Vacation Villas,
Live Aqua Residence Club, Fiesta Inn, Fiesta Inn LOFT, Fiesta Inn
Express, Gamma, IOH Hotels, and One Hotels. Posadas has traded on
the Mexican Stock Exchange since 1992.
Grupo Posadas S.A.B. de C.V. and affiliate Operadora del Golfo de
Mexico, S.A. de C.V. sought Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21-11831) on Oct. 26, 2021, listing up to $1 billion in
both assets and liabilities.
Judge Sean H. Lane oversees the cases.
The Debtors tapped Cleary Gottlieb Steen & Hamilton, LLP as
international legal counsel; Ritch, Mueller y Nicolau, S.C. and
Creel, Garcia-Cuellar, Aiza y Enriquez SC, as Mexican legal
counsel; and DD3 Capital Partners as financial advisor. Prime Clerk
LLC is the claims agent and administrative advisor.
===========
P A N A M A
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[*] Fitch Reviews La Hipotecaria Panamanian and Salvadorian Notes
-----------------------------------------------------------------
Fitch Ratings has reviewed La Hipotecaria's Panamanian and
Salvadorian RMBS and underlying U.S. transactions.
Fitch has affirmed all notes issued by La Hipotecaria Panamanian
Mortgage Trust 2010-1, La Hipotecaria El Salvadorian Mortgage Trust
2013-1, La Hipotecaria Panamanian Mortgage Trust 2007-1, La
Hipotecaria El Salvadorian Mortgage Trust 2016-1, La Hipotecaria
Mortgage Trust 2019-1, La Hipotecaria Panamanian Mortgage Trust
2014-1, La Hipotecaria Mortgage Trust 2019-2, La Hipotecaria Tenth
Mortgage-Backed Notes Trust, La Hipotecaria Eight Mortgage-Backed
Notes Trust 2007-1, La Hipotecaria Twelfth Mortgage-Backed Notes
Trust, La Hipotecaria Eleventh Mortgage-Backed Notes Trust, and La
Hipotecaria Thirteenth Mortgage-Backed Notes Trust.
Fitch has also affirmed the Series A and B notes issued by La
Hipotecaria Fourteenth Mortgage-Backed Notes Trust and downgraded
the Series C notes from 'Bsf' to 'CCCsf'.
Additionally, Fitch has affirmed the Series A and C notes issued by
La Hipotecaria Fifteenth Mortgage-Backed Notes Trust and upgraded
the Class B notes to 'B-sf' with a Stable Outlook from 'CCCsf'.
DEBT RATING PRIOR
---- ------ -----
La Hipotecaria Thirteenth Mortgage-Backed Notes Trust
A PAL3008861A4 LT Bsf Affirmed Bsf
La Hipotecaria El Salvadorian Mortgage Trust 2013-1
Series 2013-1 Certificates LT AAAsf Affirmed AAAsf
501716AA2
La Hipotecaria El Salvadorian Mortgage Trust 2016-1
2016-1 50346VAA7 LT AAAsf Affirmed AAAsf
La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1
Series A LT A-sf Affirmed A-sf
La Hipotecaria Eleventh Mortgage-Backed Notes Trust
Series A Notes LT Bsf Affirmed Bsf
PAL3005461A6
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust
A LT BBB-sf Affirmed BBB-sf
B LT B+sf Affirmed B+sf
C LT CCCsf Downgrade Bsf
La Hipotecaria Trust 2019-1
Series 2019-1 Certificates LT AAAsf Affirmed AAAsf
La Hipotecaria Fifteenth Mortgage-Backed Notes Trust
A LT Bsf Affirmed Bsf
B LT B-sf Upgrade CCCsf
C LT CCCsf Affirmed CCCsf
La Hipotecaria Twelfth Mortgage-Backed Notes Trust
Series A PAL3006961A4 LT BBB-sf Affirmed BBB-sf
La Hipotecaria Trust 2019-2
Series 2019-2 Certificates LT BBB-sf Affirmed BBB-sf
La Hipotecaria Tenth Mortgage Trust Series A Notes
Interest Only LT A-sf Affirmed A-sf
Series A LT A-sf Affirmed A-sf
La Hipotecaria Panamanian Mortgage Trust 2010-1
2010-1 Certificates LT AAAsf Affirmed AAAsf
2010-1 Certificates ULT A-sf Affirmed A-sf
La Hipotecaria Panamanian Mortgage Trust 2007-1 2007-1
2007-1 Certificates 50346AAA3 LT A-sf Affirmed A-sf
2007-1 Certificates 50346AAA3 ULT A-sf Affirmed A-sf
La Hipotecaria Panamanian Mortgage Trust 2014-1
Class A-1 50346EAA5 LT AAAsf Affirmed AAAsf
Class A-2 50346EAB3 LT BBB-sf Affirmed BBB-sf
KEY RATING DRIVERS
Higher Stresses Applied Due to Coronavirus Pandemic:
Fitch expects Panama's real GDP growth will reach 9.2% in 2021
after contracting 17.7% in 2020 while El Salvador's real GDP should
rebound 5.5% in 2021 after contracting 7.9% in 2020. Measures to
limit the spread of the coronavirus are less restrictive than in
2020, but Fitch continues to apply higher stress scenarios as
described in "La Hipotecaria RMBS: Criteria Assumptions Updated Due
to Pandemic Impacts" for loans originated by La Hipotecaria in
Panama and El Salvador.
In the additional stress scenario analysis, the 'Bsf'
representative pool weighted average foreclosure frequency (WAFF)
for Banco La Hipotecaria (BLH) in Panama increased to 4.11% from
3.67% in the current assumptions and for La Hipotecaria S.A. de
C.V. (LHES) in El Salvador increased to 4.91% from 4.2% in the
current assumptions. However, the additional stress scenario
analysis does not envisage significant changes to the Structured
Finance Rating Cap (level defined at 'Asf' for Panama and 'BB-' for
El Salvador) foreclosure frequency (FF) assumptions as they are
sufficiently remote to withstand significant deterioration relative
to historical performance and Fitch's expectations. Therefore Fitch
lowered the rating multiples.
Country of Assets Determines Maximum Achievable Ratings:
Panama Transactions: As of Feb. 3, 2021, Panama's Issuer Default
Ratings (IDRs) are 'BBB-'/Negative and its Country Ceiling (CC) is
'A-'. The ratings related to the series A notes under La
Hipotecaria Twelfth Mortgage-Backed Notes Trust and La Hipotecaria
Fourteenth Mortgage-Backed Notes Trust programs are constrained by
Panama's sovereign rating due to the portfolio's exposure to the
sovereign as well as to these transactions' exposure to the Letter
of Credit provider (Banco General, BBB-/Negative).
For La Hipotecaria Twelfth Mortgage-Backed Notes Trust about
one-third of the residential mortgages are granted to public sector
employees and about two-thirds rely on preferential interest rates.
For La Hipotecaria Fourteenth Mortgage-Backed Notes Trust, about
one-third of the residential mortgages are granted to public sector
employees. For La Hipotecaria Tenth Mortgage-Backed Notes Trust and
La Hipotecaria Eight Mortgage Backed Notes Trust programs, while
the series A notes (including the Interest Only note) have
sufficient credit enhancement to be rated above the country's IDR,
the transfer and convertibility (T&C) risk is not mitigated, so the
ratings remain constrained by the CC and ultimately linked to the
ratings of Panama.
El Salvador Transactions: On April 27, 2021 Fitch affirmed El
Salvador's IDR at 'B-'/Negative and its CC at 'B'. According to
Fitch's 'Structured Finance and Covered Bonds Country Risk Rating
Criteria' the ratings of Structured Finance notes cannot exceed the
CC of the country of the assets, unless the T&C risk is mitigated.
While the series A notes of La Hipotecaria Eleventh Mortgage-Backed
Notes Trust, La Hipotecaria Thirteenth Mortgage-Backed Notes Trust
and La Hipotecaria Fifteenth Mortgage-Backed Notes Trust have
sufficient credit enhancement to be rated above the country's IDR,
the T&C risk is not mitigated, so the ratings remain constrained by
the CC and ultimately linked to the rating of El Salvador.
Frequency of Foreclosure Assumptions Affected by the Coronavirus
Pandemic:
La Hipotecaria Eight Mortgage Backed Notes Trust: To gauge the
impact of the pandemic Fitch reviewed its FF parameter. Under
Fitch's updated assumptions in an 'A-sf' scenario, the A note would
need to support a WAFF of 35.3% and a weighted average recovery
rate (WARR) of 98.5%. These assumptions consider the main
characteristics of the assets, where OLTV is 92.9%, the seasoning
average 190 months and remaining term 178 months, WA current
loan-to-value is 55.6% and the majority of performing borrowers
(49.6%) pay through payroll deduction mechanism. The assumptions
also consider a Performance Adjustment Factor (PAF) of 0.7x
considering the historical performance of the portfolio.
La Hipotecaria Tenth Mortgage-Backed Notes Trust: To gauge the
impact of the pandemic Fitch reviewed its FF parameter. Under
Fitch's updated assumptions in an 'A-sf' scenario, the A note and
the Interest Only note would need to support a WAFF of 33.5% and a
WARR of 90.8%. These assumptions consider the main characteristics
of the assets, where OLTV is 94.2%, the seasoning average 166
months and remaining term 204 months, WA current loan-to-value is
60.3% and the majority of performing borrowers (53.4%) pay through
payroll deduction mechanism. The assumptions also consider a PAF of
0.7x considering the historical performance of the portfolio.
La Hipotecaria Twelfth Mortgage-Backed Notes Trust: To gauge the
impact of the pandemic Fitch reviewed its FF parameter. Under
Fitch's updated assumptions in an 'BBB-sf' scenario, the A note
would need to support a WAFF of 19.5% and a WARR of 89.8%. These
assumptions consider the main characteristics of the assets, where
OLTV is 91.3%, the seasoning average 125 months and remaining term
243 months, WA current loan-to-value is 65% and the majority of
performing borrowers (64.1%) pay through payroll deduction
mechanism. The assumptions also consider a PAF of 0.7x considering
the historical performance of the portfolio.
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust: To gauge the
impact of the pandemic Fitch reviewed its FF parameter. Under
Fitch's updated assumptions in an 'BBB-sf' scenario, the A note
would need to support a WAFF of 17.7% and a WARR of 88.0%. Under a
'B+sf' scenario, the Series B notes would need to support a WAFF of
10.4% and a WARR of 89.6% and in the expected scenario, the Series
C notes would need to support a WAFF of 7.4% and a WARR of 92.8%.
These assumptions consider the main characteristics of the assets,
where OLTV is 83.4%, the seasoning average 113 months and remaining
term 243 months, WA current loan-to-value is 66.5% and the majority
of performing borrowers (69.0%) pay through payroll deduction
mechanism. The assumptions also consider a PAF of 0.7x considering
the historical performance of the portfolio.
La Hipotecaria Fifteenth Mortgage-Backed Notes Trust: To gauge the
impact of the pandemic Fitch reviewed its FF parameter. Under
Fitch's updated assumptions in a 'Bsf' scenario, the A note would
need to support a WAFF of 14.0% and a WARR of 65.5%. Under a 'B-sf'
scenario, the Series B notes would need to support a WAFF of 11.0%
and a WARR of 70.1% and in the expected scenario for the Series C
notes would need to support a WAFF of 5.3% and a WARR of 78.9%.
These assumptions consider the main characteristics of the assets,
where OLTV is 87.0%, the seasoning average 75 months and remaining
term 275 months, WA current loan-to-value is 78.3% and the majority
of performing borrowers (67.8%) pay through payroll deduction
mechanism. The assumptions also consider a PAF of 0.7x considering
the historical performance of the portfolio.
Transaction Performance Supports Assigned Ratings:
La Hipotecaria Eight Mortgage Backed Notes Trust: Credit
Enhancement (CE) has increased during the last year due to the
sequential nature of the structure. As of Sept. 30, 2021, CE has
increased to approximately 61.2% up from 55.3% observed in
September 2020. A few factors including stability in the excess
spread, good asset performance, and servicer advances made by BLH
on the amounts due from debtors on payment holidays has also helped
to improve this metric. The transaction also benefits from a
reserve account equivalent to three times the series A notes next
interest payment.
La Hipotecaria Tenth Mortgage-Backed Notes Trust: CE has increased
during the last year due to the sequential nature of the structure.
As of Sept. 30, 2021, CE has increased to approximately 52.9% up
from 47% observed in September 2020. A few factors including
stability in the excess spread, good asset performance, and
servicer advances made by BLH on the amounts due from debtors on
payment holidays has also helped to improve this metric. The
transaction also benefits from a reserve account of 1% of the
outstanding balance of the series A notes, which is sufficient to
cover almost three months of senior expenses and interest payment
on series A and Interest Only notes.
La Hipotecaria Twelfth Mortgage-Backed Notes Trust: CE has
increased during the last year due to the sequential nature of the
structure. As of Sept. 30, 2021, CE has increased to approximately
21.3% up from 18.5% observed in September 2020. A few factors
including stability in the excess spread, good asset performance,
and servicer advances made by BLH on the amounts due from debtors
on payment holidays has also helped to improve this metric. The
transaction also benefits from a reserve account of 1% of the
outstanding balance of the series A notes in the form of a letter
of credit, which is sufficient to cover almost three months of
senior expenses and interest payment on the Series A notes.
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust: CE has
increased during the last year due to the sequential nature of the
structure. As of Sept. 30, 2021, CE has increased to approximately
10.4% up from 9.5% observed in September 2020 for the Series A
notes, to 3.1% from 2.7% for the Series B notes, and to 0.7%from
0.4% for the Series C notes. A few factors including stability in
the excess spread, good asset performance, and servicer advances
made by BLH on the amounts due from debtors on payment holidays has
also improved this metric. Nonetheless, the downgrade of the series
C notes to 'CCC' is explained by the loan modifications performed
by BLH as a consequence of the Pandemic.
Mortgage loans related to 604 debtors (31.1% of the portfolio in
terms of outstanding balance) were modified and as a consequence
their remaining term were extended. The effect of this modification
produces a slower amortization speed, affecting as a consequence
the payment of the most junior tranche. The series A notes also
benefits from a reserve account equivalent to three times its next
interest payment in the form of a letter of credit.
La Hipotecaria Eleventh Mortgage-Backed Notes Trust: CE has
increased during the last year due to the sequential nature of the
structure. As of Sept. 30, 2021, CE has increased to approximately
45.1% up from 38.6% observed in September 2020 for the Series A
notes. A few factors including stability in the excess spread, good
asset performance, and servicer advances made by LHES on the
amounts due from debtors on payment holidays has also helped to
improve this metric. The Series A notes also benefit from reserve
accounts equivalent to six times its next interest payment.
Considering the improvements explained above, the stability of
delinquencies and the transaction structure, and the fact the
series A notes are in their maximum achievable rating, Fitch did
not run its ResiGlobal Model: LATAM nor its LATAM RMBS CF Model.
La Hipotecaria Thirteenth Mortgage-Backed Notes Trust: CE has
increased during the last year due to the sequential nature of the
structure. As of Sept. 30, 2021, CE has increased to approximately
17.9% up from 16.4% observed in September 2020 for the Series A
notes. A few factors including stability in the excess spread, good
asset performance, and servicer advances made by LHES on the
amounts due from debtors on payment holidays has also helped to
improve this metric. The Series A notes also benefit from reserve
accounts equivalent to 1.0625% the outstanding balance of the
series A notes, covering almost three times its next interest
payment. Considering the improvements explained above, the
stability of delinquencies and the transaction structure, and the
fact the series A notes are in their maximum achievable rating,
Fitch did not run its ResiGlobal Model: LATAM nor its LATAM RMBS CF
Model.
La Hipotecaria Fifteenth Mortgage-Backed Notes Trust: CE has
increased during the last year due to the sequential nature of the
structure. As of Sept. 30, 2021, CE has increased to approximately
15.3% up from 13.8% observed in September 2020 for the Series A
notes, 4.9% up from 3.5% observed in September 2020 for the Series
B notes, and 2.3% up from 1.2% observed in September 2020 for the
Series C notes. A few factors including stability in the excess
spread, good asset performance, and servicer advances made by LHES
on the amounts due from debtors on payment holidays has also helped
to improve this metric. The series A notes and the series B notes
also benefit from reserve accounts equivalent to three times their
next interest payment in the form of a letter of credit.
Banco La Hipotecaria and La Hipotecaria S.A. de C.V. Experience
Mitigate Operational Risk:
Pursuant to the servicer agreement, Grupo ASSA, S.A. (the primary
servicer), which is rated 'BBB-'/Outlook Negative by Fitch, has
hired BLH and LHES (the sub-servicers) to be the servicers for the
mortgages. Fitch has reviewed BLH and LHES's systems and procedures
and is satisfied with its servicing capabilities. Additionally,
Banco General S.A., which is rated 'BBB-'/ Negative by Fitch, has
been designated as back-up servicer in order to mitigate the
exposure to operational risk, and will replace the defaulting
servicer within five days of a servicer disruption event.
Credit Quality of the DFC and Underlying Notes Support Ratings:
La Hipotecaria Panamanian Mortgage Trust 2007-1 Certificates: The
rating assigned to the 2007-1 certificates relies on the timely
payment of interest and ultimate payment of principal on the series
A notes of La Hipotecaria Eight Mortgage-Backed Notes Trust.
La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2 Certificates:
The rating assigned to the 2014-1 A-2 certificates relies on the
timely payment of interest and ultimate payment of principal on the
series A notes of La Hipotecaria's Twelfth Mortgage-Backed Notes
Trust.
La Hipotecaria Trust 2019-2 Certificates: The 2019-2 certificates
rely on the timely payment of interest and ultimate payment of
principal on the Series A Notes of La Hipotecaria's Fourteenth
Mortgage-Backed Notes Trust.
Guarantor Credit Quality Supports Ratings: The ratings assigned to
the La Hipotecaria Panamanian Mortgage Trust 2010-1, La Hipotecaria
El Salvadorian Mortgage Trust 2013-1, La Hipotecaria Panamanian
Mortgage Trust 2014-1 A-1, La Hipotecaria El Salvadorian Mortgage
Trust 2016-1 and La Hipotecaria Trust 2019-1 certificates are
commensurate with the credit quality of the guarantee provider. The
credit quality of DFC is directly linked to the U.S. sovereign
rating (AAA/F1+/Negative), as guarantees issued by, and obligations
of, DFC are backed by the full faith and credit of the U.S.
government, pursuant to the Foreign Assistance Act of 1969.
The unenhanced rating assigned to the 2010-1 certificates is
commensurate with the credit quality of the series A notes of La
Hipotecaria's Tenth Mortgage-Backed Notes Trust.
Reliance on DFC Guaranty: Fitch assumes the payment on the La
Hipotecaria Panamanian Mortgage Trust 2010-1, La Hipotecaria El
Salvadorian Mortgage Trust 2013-1, La Hipotecaria Panamanian
Mortgage Trust 2014-1 A-1, La Hipotecaria El Salvadorian Mortgage
Trust 2016-1 and La Hipotecaria Trust 2019-1 certificates will rely
on the DFC guaranty. Through this guaranty, DFC will
unconditionally and irrevocably guarantee the receipt of proceeds
from the underlying notes in an amount sufficient to cover timely
scheduled monthly interest amounts and the ultimate principal
amount on the certificates.
Ample Liquidity in Place: The La Hipotecaria Panamanian Mortgage
Trust 2010-1, La Hipotecaria El Salvadorian Mortgage Trust 2013-1,
La Hipotecaria Panamanian Mortgage Trust 2014-1 A-1, La Hipotecaria
El Salvadorian Mortgage Trust 2016-1 and La Hipotecaria Trust
2019-1 certificates benefit from liquidity in the form of a
five-day buffer between payment dates on the underlying notes and
payment dates on the certificates. Additionally, the certificates
benefit from liquidity in the form of an interest reserve account
or a letter of credit at the underlying note level. Fitch considers
this sufficient to keep debt service current on the guaranteed
certificates until funds under a claim of DFC are received.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- El Salvador: The ratings of La Hipotecaria Eleventh Mortgage-
Backed Notes Trust Series A Notes, La Hipotecaria Thirteenth
Mortgage-Backed Trust Series A Notes and La Hipotecaria
Fifteenth Mortgage-Backed Notes Trust Series A Notes could be
downgraded in case of a downgrade of El Salvador's CC. In
addition, severe increases in foreclosure frequency as well as
reductions in recovery rates could lead to a downgrade of the
notes.
The ratings of La Hipotecaria Fifteenth Mortgage-Backed Notes Trust
Series B and C Notes could be downgraded in case of a decrease of
CE to a level, caused by a more than expected deterioration in
asset quality.
-- Panama: The ratings of the La Hipotecaria Eight Mortgage
Backed Notes Trust 2007-1 Series A Notes, La Hipotecaria Tenth
Mortgage Trust Series A Notes and Interest Only Notes, La
Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes
and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust
Series A Notes are sensitive to changes in the credit quality
of Panama. A downgrade of Panama's ratings and its CC, could
lead to a downgrade on the notes. In addition, the ratings of
the La Hipotecaria Twelfth Mortgage-Backed Notes Trust Series
A Notes and La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series A Notes are sensitive to changes in the credit
quality of Banco General as the Letter of Credit provider.
Finally, severe increases in foreclosure frequency as well as
reductions in recovery rates could lead to a downgrade of the
notes.
-- DFC Guaranteed: In the case of La Hipotecaria El Salvadorian
Mortgage Trust 2013-1 certificates, La Hipotecaria El
Salvadorian Mortgage Trust 2016-1 certificates, La Hipotecaria
Panamanian Mortgage Trust 2010-1, La Hipotecaria Panamanian
Mortgage Trust 2014-1 - A-1 Tranche and the La Hipotecaria
Mortgage Trust 2019-1 notes, the rating assigned could be
downgraded in the case of a downgrade on the U.S. sovereign
rating.
The unenhanced rating of the La Hipotecaria Panamanian Mortgage
Trust 2010-1 is sensitive to changes in the credit quality of the
series A notes, hence, a negative rating action of the series A
notes would trigger a negative rating action of the unenhanced
rating on the notes in the same proportion.
-- The La Hipotecaria Panamanian Mortgage Trust 2007-1
certificates' ratings are sensitive to changes in the credit
quality of the La Hipotecaria Eight Mortgage Backed Notes
Trust 2007-1 series A notes. If La Hipotecaria Eight Mortgage-
Backed Notes Trust Series A notes are downgraded, that could
lead to a downgrade of the certificates.
-- The La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2
certificates' ratings are sensitive to changes in the credit
quality of the La Hipotecaria Twelfth Mortgage-Backed Notes
Trust Series A notes. If La Hipotecaria Twelfth Mortgage
Backed Notes Trust Series A notes are downgraded, that could
lead to a downgrade of the certificates.
-- The La Hipotecaria Mortgage Trust 2019-2 certificates' ratings
are sensitive to changes in the credit quality of the La
Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A
notes. If La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series A notes are downgraded, that could lead to a
downgrade on the certificates.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- El Salvador: The ratings of La Hipotecaria Eleventh Mortgage
Backed Notes Trust Series A Notes, La Hipotecaria Thirteenth
Mortgage-Backed Notes Trust Series A Notes and La Hipotecaria
Fifteenth Mortgage Backed Notes Trust Series A Notes are
currently capped at El Salvador's CC level. These ratings
could only be upgraded in case of an upgrade of El Salvador's
CC.
The ratings of La Hipotecaria Fifteenth Mortgage-Backed Notes Trust
Series B and C Notes could be upgraded in case of a future
improvement of CE.
-- Panama: The ratings of the La Hipotecaria Eight Mortgage
Backed Notes Trust 2007-1 Series A Notes, La Hipotecaria Tenth
Mortgage-Backed Notes Trust Series A Notes & IO Notes, La
Hipotecaria Twelfth Mortgage-Backed Notes Trust Series A Notes
and La Hipotecaria Fourteenth Mortgage-Backed Notes Trust
Series A Notes are sensitive to changes in the credit quality
of Panama. An upgrade of Panama's ratings, and its CC, could
lead to an upgrade on the notes.
The ratings of La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series B and C Notes could be upgraded in case of a future
improvement of CE.
-- DFC Guaranteed: In the case of La Hipotecaria El Salvadorian
Mortgage Trust 2013-1 certificates, La Hipotecaria El
Salvadorian Mortgage Trust 2016-1 certificates, La Hipotecaria
Panamanian Mortgage Trust 2010-1, La Hipotecaria Panamanian
Mortgage Trust 2014-1 - A-1 Tranche and the La Hipotecaria
Mortgage Trust 2019-1 notes, the Rating Outlook could be
revised to Stable if the U.S. sovereign ratings Outlook is
revised to Stable from Negative.
The unenhanced rating of the La Hipotecaria Panamanian Mortgage
Trust 2010-1 is sensitive to changes in the credit quality of La
Hipotecaria Tenth Mortgage-Backed Notes Trust Series A notes,
hence, a positive rating action of the series A notes would trigger
a positive rating action of the unenhanced rating on the notes in
the same proportion.
-- The La Hipotecaria Panamanian Mortgage Trust 2007-1
certificates' ratings are sensitive to changes in the credit
quality of the La Hipotecaria Eight Mortgage Backed Notes
Trust 2007-1 series A notes. If La Hipotecaria Eight Mortgage-
Backed Notes Trust Series A notes are upgraded, that could
lead to an upgrade of the certificates.
-- The La Hipotecaria Panamanian Mortgage Trust 2014-1 A-2
certificates' ratings are sensitive to changes in the credit
quality of the La Hipotecaria Twelfth Mortgage-Backed Notes
Trust Series A notes. If La Hipotecaria Twelfth Mortgage
Backed Notes Trust Series A Notes are upgraded, that could
lead to an upgrade of the certificates.
-- The Hipotecaria Mortgage Trust 2019-2 certificates' ratings
are sensitive to changes in the credit quality of the La
Hipotecaria Fourteenth Mortgage-Backed Notes Trust Series A
notes. If La Hipotecaria Fourteenth Mortgage-Backed Notes
Trust Series A notes are upgraded, that could lead to an
upgrade on the certificates.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven 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 seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
-- The rating of the 2007-1 certificates issued by La Hipotecaria
Panamanian Mortgage Trust 2007-1 is directly linked to the
rating of the Series A notes issued by La Hipotecaria Eight
Mortgage Backed Notes Trust 2007-1.
-- The LT rating of the 2010- certificates issued by La
Hipotecaria Panamanian Mortgage Trust 2010-1 is directly
linked to the credit quality of the U.S. International
Development Finance Corporation and the ULT rating of the
2010-1 certificates issued by La Hipotecaria Panamanian
Mortgage Trust 2010-1 is directly linked to the rating of the
Series A notes issued by La Hipotecaria Tenth Mortgage Trust.
-- The rating of the 2013-1 certificates issued by La Hipotecaria
El Salvadorian Mortgage Trust 2013-1 is directly linked to the
credit quality of the U.S. International Development Finance
Corporation.
-- The rating of the A-1 certificates issued by La Hipotecaria
Panamanian Mortgage Trust 2014-1 is directly linked to the
credit quality of the U.S. International Development Finance
Corporation and the rating of the A-2 certificates issued by
La Hipotecaria Panamanian Mortgage Trust 2014-1 is directly
linked to the rating of the Series A notes issued by La
Hipotecaria Twelfth Mortgage-Backed Notes Trust.
-- The rating of the 2016-1 certificates issued by La Hipotecaria
El Salvadorian Mortgage Trust 2016-1 is directly linked to the
credit quality of the U.S. International Development Finance
Corporation.
-- The rating of the 2019-1 certificates issued by La Hipotecaria
Trust 2019-1 is directly linked to the credit quality of the
U.S. International Development Finance Corporation.
-- The rating of the 2019-2 certificates issued by La Hipotecaria
Trust 2019-2 is directly linked to the rating of the Series A
notes issued by La Hipotecaria Fourteenth Mortgage-Backed
Notes Trust.
ESG CONSIDERATIONS
La Hipotecaria Eight Mortgage Backed Notes Trust 2007-1 has a Human
Rights, Community Relations, Access & Affordability score of '4'
for its exposure to accessibility to affordable housing, which in
combination with other factors, impacts the rating.
La Hipotecaria Fourteenth Mortgage-Backed Notes Trust has a Human
Rights, Community Relations, Access & Affordability score of '4'
for its exposure to accessibility to affordable housing, which in
combination with other factors, impacts the rating.
La Hipotecaria Tenth Mortgage-Backed Notes Trust Series A Notes has
a Human Rights, Community Relations, Access & Affordability of '4'
for its exposure to accessibility to affordable housing, which in
combination with other factors, impacts the rating.
La Hipotecaria Twelfth Mortgage-Backed Notes Trust has a Human
Rights, Community Relations, Access & Affordability score of '4'
for its exposure to accessibility to affordable housing, which in
combination with other factors, impacts the rating.
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.
*********
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
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Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2021. All rights reserved. ISSN 1529-2746.
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