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/raid1/www/Hosts/bankrupt/TCRLA_Public/211116.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 16, 2021, Vol. 22, No. 223 Headlines B A H A M A S BAHAMAS: S&P Lowers Long Term Sovereign Credit Ratings to 'B+' B R A Z I L BRAZIL: Lower House Approves Bill That Eases Austerity Law INPASA AGROINDUSTRIAL: Fitch Publishes 'BB-' IDRs, Outlook Stable C H I L E WOM SA: Fitch Affirms 'BB-' LT IDRs, Outlook Stable C O L O M B I A BANCOLOMBIA SA: Posts Q3 2021 Earnings Call Transcript D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Government Readies National Taxpayer Census E C U A D O R CUENCA DPR: Fitch Rates Series 2021-1 Loan 'B-(EXP)' J A M A I C A NCB FINANCIAL: Net Profit Dips 25% in FY Ended Sept. 30 M E X I C O MEXICO: Economy Shrank 0.2% in July-Sept. Period P U E R T O R I C O PUERTO RICO: Morgan, Correa 11th Update on QTCB Noteholder Group T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: $1.536BB Injected Into Forex Market, Imbert Says TRINIDAD AND TOBAGO FA: Turns to Insolvency Laws to Save Itself X X X X X X X X [*] LATAM: Join Forces With EU Against Organized Crime Finances - - - - - ============= B A H A M A S ============= BAHAMAS: S&P Lowers Long Term Sovereign Credit Ratings to 'B+' -------------------------------------------------------------- S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on the Commonwealth of The Bahamas to 'B+' from 'BB-'. At the same time, S&P Global Ratings revised its transfer and convertibility assessment to 'BB-' from 'BB'. The outlook is stable. Outlook S&P said, "The stable outlook reflects our view that the economic recovery presently underway will support government revenues and reduce pressure on government expenditures, supporting a gradual decline in fiscal deficits over the next 12 months. We expect continued, but decelerating, growth in the national debt." Downside scenario S&P said, "We could lower the ratings over the next 12 months if the government's inability to close budget deficits leads to fiscal deficits remaining elevated for a prolonged period, or if it weakens the sovereign's ability to obtain funding. Furthermore, we could also lower the ratings should the economic recovery lag our expectations." Upside scenario Although this is not S&P's base case, it could raise the ratings over the next 12 months if the government establishes a track record of enacting meaningful financial reform, demonstrating an ability to raise revenues and leading to sustained near-balanced financial results and improved economic prospects. Rationale The Bahamas entered the pandemic with little financial flexibility owing to its sustained budgetary imbalances, high debt burden, and vulnerability to external shocks. Although successive administrations have identified the need to reform public finances and ensure debt sustainability as a top priority, the failure to implement timely reforms has limited the country's financial flexibility to address future shocks. The debt burden has climbed almost $2.4 billion in the past two fiscal years, and interest costs now represent about 21% of budgetary expenses. Furthermore, The Bahamas is exposed to financing risks as it seeks to fund large deficits and refinance existing debt. The country's important tourism sector is recovering following a complete shutdown in 2020. Stayover arrivals increased steadily during 2021, and are expected to reach close to 2019 levels around the end of the year. S&P said, "We believe the nascent economic recovery will support government revenues, and absent meaningful reform, an only gradual decline in fiscal deficits to historical levels, slowing the growth in debt. Nevertheless, we expect net general government debt to reach 86.6% of GDP in 2021, up from 47.6% in 2019. Without meaningful and sustained revenue or expenditure reform, the sovereign will continue to add to its gross debt stock and interest costs, limiting the government's ability to respond to future shocks." Institutional and economic profile: Meaningful public sector reform is not expected in the next one-two years; increased tourism will lead economic growth in 2021 -- S&P does not expect financial reforms will reverse the recent deterioration in public finances in the next one-two years. -- Instead, the economic recovery is expected to be the main cause for smaller fiscal deficits. -- The Bahamas' economy is expected to increase by 3.7% in 2021, with a stronger recovery expected in 2022. The Bahamas is a stable parliamentary democracy with regular changes in government. Political leadership has alternated between the Free National Movement and the Progressive Liberal Party (PLP) over several decades. The current government, led by Philip Davis of the PLP, was elected in September 2021 and enjoys a majority in parliament. The Bahamas has faced two large negative shocks in three years, placing significant pressure on government finances and testing the government's resolve to put the nation's finances on a sustainable path. The rapid increase in debt over the past few years means The Bahamas' previous fiscal consolidation plans will likely be insufficient to meet the country's debt targets without material new revenues, significant cost cutting, or economic growth well above historical averages. Furthermore, the country remains vulnerable to environmental risks that elevate The Bahamas' need for fiscal resiliency. The government suspended its fiscal and debt targets under the Fiscal Responsibility Act following Hurricane Dorian in September 2019. Although successive governments have continued to work on policies and legislation to support their fiscal responsibility mandate, they have not enacted material revenue measures or sustained expenditure cuts. S&P believes the new administration will take time to assess the country's fiscal and debt situation, which may further delay the implementation of new fiscal measures. S&P believes the country's track record of slow progress in reforming public finances and key sectors of the economy has contributed to the weakening of its financial profile over many years and hurt its economic performance. Most notably, failure to advance public financial reform has led to a marked increase in the sovereign's debt burden. An economic recovery is underway in The Bahamas, led by the resumption of tourism. The economy remains concentrated in the tourism sector, which typically contributes at least 40% of GDP. The most recent figures show that up to August 2021, stayover arrivals were about 70% of pre-pandemic levels and are expected to continue building as the sector enters the important holiday season. We believe The Bahamas will benefit from its strong marketing presence and easy access for visitors from its main source market, the U.S. S&P said, "Despite fairly strong real GDP growth expected in 2021 and 2022 (3.7% and 8.6%, respectively), we believe it will take several years for nominal GDP to reach pre-pandemic levels. We expect GDP per capita will be $27,300 in 2021. The pandemic, low historical growth, and repeated natural disasters have weighed on the country's economy. Despite strong growth over the next two-three years, our assessment of the sovereign's creditworthiness reflects its below-average historical growth performance compared with that of others at a similar level of development. Flexibility and performance profile: Large deficits continue to drive up debt burden. -- The Bahamas is expected to post another significant budget deficit this year, the third in a row. -- The country has significant financing and refinancing needs. -- Large external borrowing and high current account deficits will continue to put pressure on The Bahamas' external position. S&P said, "We expect the pandemic and related health and social measures will continue to pressure government finances in the current fiscal year before the recovering economy helps reduce deficits toward historical levels. The contraction in 2020 lowered government revenues by more than 10%, while health care spending and social transfers drove an increase in expenditures of 11%. "We expect the fiscal deficit this year (ending June 30, 2022) will be 8.7% of GDP, down from 15.4% in the previous year. We also expect that the change in general government net debt will average 4.2% of GDP during 2021-2024. In the short term, we do not anticipate meaningful new revenue measures. We believe a recovering, but still weak, economy could limit the government's ability to raise meaningful revenues in the short term. The government's immediate plans include a reduction in the value added tax (VAT) in tandem with a broadening of the base, which we understand is intended to be revenue neutral. The government plans to pursue additional revenue via a dedicated revenue enhancement unit to improve tax collections. "The government has not announced any new revenue streams, and we do not expect new taxes will be implemented imminently. Instead, the government has announced two new committees to review revenue policies and public debt strategy. We expect any recommendations and new policies arising from these committees will take several years before they have a meaningful impact on public finances." On the expenditure side, the government has announced it will increase social transfers to vulnerable residents and pension payments, as well as investments in local businesses. The deficits will continue to spur the government's net debt burden higher to about 86.6% of GDP by the end of 2021, while interest payments will remain above 15% of government revenues for the next three or more years. The government's interest payments, at 21% of revenues, reduce its flexibility to meet economic and social spending goals. We net some of the country's social security investment assets from our measure of net debt. These assets had been declining over the past five years, which S&P expects will continue absent reform. Efforts going back many years have failed to reform the country's state-owned enterprises (SOEs), which remain a source of pressure on government finances. The government typically spends about 15% of its total expenditures on ongoing subventions, while it has also been called on to support guaranteed debt of SOEs. S&P expects The Bahamas will refinance existing domestic debt internally, but will need to rely on external borrowing to meet its incremental borrowing needs. Domestic commercial banks' exposure to the public sector accounts for almost 20% of their assets, which may lessen their ability or appetite to absorb additional exposure. The country's external debt has risen in recent years, and foreign currency-denominated debt is 44% of total debt, underscoring the importance of generating sufficient foreign exchange to meet debt service needs. Although external financing helped support The Bahamas' foreign exchange reserves, it raised the country's external indebtedness. S&P expects the external debt of the public and financial sectors, net of usable reserves and financial sector external assets, will be about 118.8% of current account receipts in 2021. These figures include the government's $2.475 billion in external bonds, but do not include external debt and foreign direct investment in the islands' substantial tourism sector. Based on the gross external liabilities of the country's large banking sector, we expect the gross external financial needs of the public and financial sectors will average 303% of current account receipts in 2021-2024, trending down from about 554% in 2020. This also reflects our forecast of an improving current account deficit as tourism receipts increase, and the financial sector's high rollover needs. However, we consider the financial sector's external assets highly liquid, which somewhat diminishes liquidity risk. Errors and omissions have historically been high and tend to fluctuate, and contribute to a weak external profile. The Bahamas' limited monetary and exchange rate flexibility constrains the country's ability to respond to external shocks. The Bahamian dollar is fixed at par with the U.S. dollar. Lower demand for foreign exchange and the government's external borrowing bolstered foreign exchange reserves, which remain above $2.7 billion. S&P expects that the central bank will continue to rely primarily on a combination of interest rates, moral suasion, and macroprudential tools to influence domestic credit growth. S&P considers the banking sector's contingent liabilities limited, given the size of the sector, with assets estimated to be about 197% of GDP. The financial sector is dominated by foreign subsidiaries of Canadian banks, which comprise about two-thirds of domestic assets. At the onset of the pandemic, the commercial banking sector as a whole had strong capital and liquidity ratios. Nevertheless, the severe external shock has eroded asset quality and profitability somewhat, with nonperforming loans trending up and provisions for credit losses affecting banks' profitability. Environmental, social, and governance (ESG) factors relevant to the rating action: -- Other governance factors In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. =========== B R A Z I L =========== BRAZIL: Lower House Approves Bill That Eases Austerity Law ---------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that Brazil's lower house of congress passed a controversial proposal that bends the country's fiscal rules to finance a new social program President Jair Bolsonaro is launching ahead of his 2022 re-election campaign. The so-called precatorios bill was approved late by 323-172 votes, a wider margin of support than it had received just a week ago, according to globalinsolvency.com. It now needs the backing of three-fifths of senators, also in two rounds of voting, the report notes. Senate President Rodrigo Pacheco still has to decide whether the proposal will be analyzed by the constitution and justice committee before the floor vote, the report relays. Bolsonaro is running against the clock to approve the constitutional amendment by the second week of November in order to boost, still this year, handouts paid by his flagship Auxilio Brasil program, the report discloses. The president, whose popularity had dropped to all-time lows, has promised to pay 400 reais ($72) per month to about 17 million poor families through the end of next year, 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). INPASA AGROINDUSTRIAL: Fitch Publishes 'BB-' IDRs, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has published Inpasa Agroindustrial S.A's (Inpasa's) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) of 'BB-' and Long-Term National Scale rating of 'A+(bra)'. The Rating Outlook is Stable. The ratings reflect Inpasa's large-scale operations and low production cash cost in the volatile Brazilian ethanol industry. The high volatility of Brazil's corn and ethanol prices and the lack of meaningful short-term price correlation between these two commodities remain as key considerations. This risk is mitigated by a business model that benefits from sale of high value-added animal nutrition products, hefty corn storage capacity and well-established commercial agreements with corn producers. Inpasa's cash flow generation capacity should improve as the company increases its crushing capacity and the ratings incorporate the expectation of negative FCF in 2021 and 2022 due to expansionary investments. The Stable Outlook considers an expected net leverage below 1x with satisfactory liquidity during the investment cycle. KEY RATING DRIVERS High Price Volatility: Inpasa is exposed to raw material and product price volatility. Spot corn prices adjust rapidly to supply and demand imbalances and follow parity with Chicago Board of Trade (CBOT) corn prices over the long run. The short-term correlation between corn and ethanol prices in Brazil is weak, as Brazilian ethanol prices depend largely on local gasoline price levels, which move in tandem with international oil prices and the Brazilian FX rate. Ethanol prices are also indirectly influenced by sugar prices, as near 90% of all Brazilian ethanol produced comes from sugar cane processors, which typically shift a portion of production between ethanol and sugar depending on prevailing price parity with sugar. Positive Price Backdrop: The ethanol market in 2021 will remain tight, as the expected drop in sugar cane crushed volumes and high sugar prices reduce ethanol supply. The combination of high oil prices and a depreciated local currency in a tight market will keep ethanol prices at elevated levels in 2021. Hydrous ethanol prices at the mill are currently trading at BRL3.89/litre at the mill in Sao Paulo, which is 90% higher than early 2021 and the same period of 2020. Corn prices in Brazil are at historical highs but should decline in 2022 following an expected reduction in international levels and a recovery in Brazilian output. Large Scale Corn-Based Ethanol Producer: Inpasa's business model benefits from its sizable ethanol production capacity. The company's cash flow generation should improve over the rating period, as the company increases its crushing capacity to 5.3 million tons and annual ethanol production capacity to 2.5 billion liters by the end of 2022, making Inpasa Brazil's largest corn-based ethanol producer. The new plant in Dourados, State of Mato Grosso do Sul will become operational in March 2022 and will add 2 million tons of crushing capacity and 900 million litres of ethanol volumes annually. The recently completed investment in Sinop added 1 million tons and 470 million litres of corn crushing and ethanol production capacities, respectively. Competitive Cost Structure: Inpasa is the most efficient corn-based ethanol producer in the country and its cash cost structure is in line with some of the most efficient sugar cane producers. The company produces and sells DDGS and corn oil whose prices tend to correlate with corn prices, providing a natural hedge against corn price volatility. The expected 64% coverage of corn costs provided by animal nutrition products is high by industry standards. The State of Mato Grosso is Brazil's largest corn producing state with the lowest cash cost in the world and the new plant in Mato Grosso do Sul will reduce logistics costs and facilitate the company's access to Southern Brazil. Inpasa has Brazil's largest corn storing capacity, which enables it to purchase corn up to two years ahead of the beginning of the crop season, avoiding short-term volatilities of spot corn prices as agreements with corn suppliers are fixed on a BRL per bag price basis and referenced to CBOT corn prices in BRL. Inpasa already hedged 100% of its expected corn needs for 2021/2022 at average price of BRL50/bag and 52% for the corn needed for the 2022/2023 season at BRL54/bag, which mitigates the impact of a 90% increase in average spot corn prices in Mato Grosso observed in 2021 compared to 2020. Improving Operating Cash Flows: Inpasa is expected to generate EBITDA and CFFO of BRL2.2 billion and BRL1.0 billion, respectively, in 2021, comparing favorably with EBITDA of BRL767 million and CFFO of BRL377 million in 2020. In 2022, EBITDA of BRL2.9 billion and CFFO of BRL1.6 billion are expected as higher sales volume offset most of the expected decline in ethanol prices. Fitch expects negative FCF of BRL262 million in 2021 and BRL288 million in 2022 as Inpasa advances with its expansionary investments. Base case projection incorporates investments of BRL1.3 billion in 2021 and BRL1.5 billion in 2022, with dividends payout of 25% from 2022 on. Meaningful FCF of nearly BRL1 billion as from 2023 is expected once the new plant is concluded. Low Leverage: Fitch expects Inpasa to preserve net leverage at low levels during its new investment cycle. Inpasa's net debt/EBITDA should reduce to 0.7x in 2021 and 2022, and to 0.3x in 2023, as volume from the new plant kicks in. This compares well with 1.7x in 2020. The company's growth in Brazil has been largely financed by the group, which reduces the refinancing risks of Inpasa's debt. Inpasa reported total debt of BRL2.2 billion as of Sept. 30, 2021, of which bank debt and related party loans amounted to BRL1.3 billion and BRL904 million respectively. The former includes a BRL600 million 4.5-year syndicated debenture and short-term borrowings secured by corn inventories. DERIVATION SUMMARY Inpasa operates in a volatile industry and is more exposed to commodity price risk compared with sugar cane processors, which rely on a market pricing mechanism that links sugar cane costs to commodity prices. However, this is partly mitigated by Inpasa's large storage capacity and well-established commercial policies with corn grain producers, which enhance corn price stability. The natural hedge provided by animal nutrition products and typically small investments necessary to run the business place Inpasa's cash flow generating capacity in an advantaged position compared to sugar cane processors. While the absence of sugar sales makes the company more exposed to ethanol prices in Brazil, the use of corn as the main raw production material translates into a much less capital-intensive production process in comparison with sugar cane processors. Inpasa's business model is similar to FS (BB-; AA-(bra)/Sta) and both companies are low-cost producers, with capacity to produce ethanol with cash cost comparable with Jalles Machado (A+[bra]/Pos) and Adecoagro (unrated), a cost benchmark in the industry. Both Inpasa and FS are investing to build their third plant, and Inpasa plans to consolidate itself as the largest producer of corn-based ethanol and hold the largest corn storage capacity in the industry once investments in Dourados/ Mato Grosso do Sul are concluded. Fitch expects leverage for both companies to remain low during the investment phase, but FS's National Scale rating benefits from its stronger liquidity and more diversified access to financing compared to Inpasa, while Inpasa is still challenged to increase its access to both the banking and capital markets in Brazil. The presence of largely liquid corn inventories places their liquidities at higher levels compared to most sugar cane processors. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Ethanol sales volumes of 1.2 billion liters in 2021 and 1.9 billion litres in 2022. Ethanol sales will increase to over 2.4 billion liters in 2023 following investments in capacity expansion. Hydrous ethanol will make up 75% of total ethanol volumes going forward; -- Sales of animal nutrition products of 740,000 tons in 2021, 1.2 million tons in 2022 and over 1.4 million tons in 2023; -- Ethanol prices to vary in tandem with a combination of oil prices and the FX rate. Brent crude prices have been forecast to average USD63/bbl in 2021 and USD55/bbl in 2022; -- International corn prices are expected at USD500 cents/bushell in 2022 and USD470 cents/bushell in 2023, from USD548 cents/bushell in 2021; -- Average FX rate at BRL5.20/USD in fiscal 2022 and 2023; -- Corn prices at BRL48/bag in the current crop season and BRL51/bag in 2022/2023; -- Animal nutrition products providing 62% coverage for total corn costs; -- Total investments of BRL1.3 billion in 2021 and BRL1.5 billion in 2022; -- Dividends equivalent of 25% of net profit as from 2022. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Longer track record in different cycles of ethanol and corn prices; -- FCF consistently positive, with the maintenance of conservative capital structure; -- Improved liquidity and positive track record in accessing the banking and capital markets. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Deterioration in liquidity and/or difficulties refinancing short-term debt; -- EBITDA margins below 20% on a sustainable basis; -- Net leverage above 3.0x on a sustainable basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Improving Liquidity: Inpasa's liquidity has improved, but the company will need to increase bankability and access to the capital markets with long-term credit facilities to finance working capital and investments on a sustainable basis. As of Sept. 30 2021, Inpasa reported cash and marketable securities of BRL281 million and total debt of BRL2.2 billion, of which BRL574 million is due in the short-term. Fitch forecasts Inpasa to report cash of BRL840 million and short-term debt of BRL1.3 billion, including related party loans, as of Dec. 31 2021. Readily marketable inventories and offtake contracts with large fuel distributors reduce refinancing risks and improve financial flexibility; inventories can be easily monetized and accounts receivables can be used as collateral under new credit facilities, if required. Fitch estimates corn inventories of BRL600 million at market value as of the 3Q21, bringing the coverage ratio to about 1.5x. ISSUER PROFILE Inpasa produces corn-based hydrous and anhydrous ethanol, dried distillers' grains with Solubles (DDGS) for animal nutrition, corn oil and energy from cogeneration. It runs two plants with total capacity to crush 3.4 million tons of corn and produce 1.5 billion liters of ethanol annually. ESG CONSIDERATIONS Inpasa has an ESG Relevance Score of '4' for Governance Structure due to lack of board independence and effectiveness. Inpasa has no independent members in the board and one-man risk is present, as decision making is highly concentrated in the hands of the founder and main shareholder. The ESG Relevance Score of '4' has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ========= C H I L E ========= WOM SA: Fitch Affirms 'BB-' LT IDRs, Outlook Stable --------------------------------------------------- Fitch Ratings has affirmed WOM S.A.'s (WOM) ratings, including the Long-Term Foreign Currency Issuer Default Rating (IDR), the Local Currency IDR, and the 2024 and 2028 unsecured USD notes issued by Kenbourne Invest SA at 'BB-'. The Rating Outlook is Stable. WOM's ratings reflect the company's growing market shares, and Fitch's expectation that the company will continue to grow following the Chilean spectrum auction, as it invests heavily in its network. The ratings are tempered by the group's negative cash flow generation and the competitive pressures of the Chilean market. KEY RATING DRIVERS Increased Leverage to Support Investments: In February, the company purchased spectrum in 26GHz, 3.5GHz, the Advanced Wireless Services band and the 700MHz band for ~USD150m. Fitch expects the company to invest an additional CLP100 million- CLP200 million, net of government subsidies, over the next three years, which will contribute to negative FCF over the rating horizon. The new spectrum and associated network build-out should contribute to growing cash flows, which should enable the company to delever over the medium term. Steady Growth Prospects: Fitch forecasts WOM to grow revenues from CLP590 billion in 2020 to CLP690 billion in 2024, While this represents a sharp deceleration from WOM's double digit annual growth over the last few years, Fitch expects the company's network investments to aid post-paid migration and support stable ARPUs in a competitive Chilean market. Fitch also forecasts EBITDA margins rising from 21% (CLP120 billion) to 26% (CLP180 billion) over the rating horizon, due to improvements in scale, as well as margin expansion as the company reduces network rentals. Some Deleveraging Expected: WOM ended 2020 with lower leverage than Fitch had expected with Net Debt/EBITDA of 3.1x (close to the positive rating sensitivity of 3.0x). Fitch expects net leverage of around 4.0x over the rating horizon due to the size of the network investments and the high level of competition in Chile. This is around .5x higher than the previous forecast, which anticipated net leverage of around 3.5x over the rating horizon. EBITDA generation of CLP175-CLP200 billion over the longer term should be sufficient to cover interest payments (~CLP40 billion); minimal taxes (~0 cash), and capex of around 12%-14% of revenues. Short But Strong Track: Since WOM launched in mid-2015, the company scaled rapidly, achieving approximately 6.7 million customers, half of which are post-paid. The company took market share from larger incumbents through its disruptive marketing campaign, based on brand recognition, gigabyte-per-CLP value and retail experience. Fitch expects the company's longer-term market share to grow to approximately 25% from 21%. Fitch expects slower but more profitable growth as the company nears its market share targets. WOM has a credible deleveraging trajectory, backed by its strong growth, and experienced management team and shareholder. Novator has experience running telecommunications ventures in both developed and developing markets, and executed its growth strategy while demonstrating a path to profitability. Competitive Telecom Market: The Chilean telecom market remains very competitive, as incumbent operators had to cut prices and improve service to defend market share, pressuring margins and cash flows. Fitch expects industry-wide mobile ARPUs to remain pressured, although WOM's value proposition and lower blended ARPUs should mitigate these concerns to a degree. The market is relatively mature, although the ongoing migration from prepaid to post-paid, and the attendant growth in data consumption, present opportunities. The company's expansion into fiber optic is largely neutral for the ratings as that initiative is still in its infancy. DERIVATION SUMMARY WOM's ratings reflect the company's short but impressive track record in Chile and Fitch's expectation that the company will maintain moderately high amounts of leverage. WOM has much higher leverage than Chilean rival Telefonica Moviles Chile (BBB+/Stable), and less scale and service diversification. WOM is expected to carry higher net leverage over the medium term than mobile leader Entel (BBB-/Negative) as a result of the 5G auction. Like WOM, Entel entered a new market causing subscriber attrition and price competition. However, WOM was quicker to generate positive EBITDA and deleverage organically. Chilean fixed-line provider VTR (BB-/Stable) is similar to WOM in scale, but VTR has a stronger market position in the more stable fixed-line segment. Both companies are owned by experienced international operators, and are expected to maintain moderately high amounts of leverage and upstream excess FCF. Fitch expects lower leverage at WOM than VTR in the long term, but WOM lacks VTR's leading market position and history of positive FCF generation KEY ASSUMPTIONS -- Subscribers grow the 7.2 million by FY 2023, with >50% being postpaid consumers; ARPUs relatively flat over the rating horizon; some minor contribution (5%-10% of revenues) from the fiber optic network; -- Revenues growing from CLP590 billion to CLP690 billion from 2020 to 2024, EBITDA margins increasing from 21% to 26%; -- Capex (including fiber subsidies and 2021 spectrum acquisition) of 30%-35% of revenue in 2021 and 2022. Around 13%-15% thereafter; -- Net leverage around 4.0. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Deleveraging toward 3.0x net debt/EBITDA on a sustained basis, with consistent growth in EBITDA and predividend FCF, supported by improved competitive position and scale. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Substantial deterioration in ARPUs and/or stagnation in competitive position, resulting in net debt/EBITDA above4.0x on a sustained basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: WOM has adequate liquidity, with its manageable amortization schedule balanced by its high investment needs. As of September 30, WOM had CLP140 billion of cash, with no maturities until the 2024 USD510 million notes. In Early 2021, the company refinanced its term loan and obtained funding for its spectrum purchases through a USD450 million note due 2028. On the other hand, Fitch expects strongly negative FCF in 2021 and 2022 (including spectrum purchases as part of capex), which constrains financial flexibility to a degree. ISSUER PROFILE WOM is a Chilean telecommunications provider whose primary business is the provision of mobile services. The company was formed in 2015 after Novator Partners LLP purchased Nextel Chile S.A.'s assets out of bankruptcy. SUMMARY OF FINANCIAL ADJUSTMENTS Standard lease adjustments made; certain working capital and operating expenses reclassified; debt adjusted for foreign exchange hedge. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. =============== C O L O M B I A =============== BANCOLOMBIA SA: Posts Q3 2021 Earnings Call Transcript ------------------------------------------------------ Bancolombia SA posted its third quarter 2021 earnings call transcript that was held last Nov 3, 2021, 9:00 a.m. ET. In the earnings call, Bancolombia President & Chief Executive Officer said, "The Colombian economy continues recovering at the pace better than expected . . . This positive trend of the economy is reflected in the bank's results, which we consider positive for the first quarter. Given that -- the trend of a better-than-expected economic recovery not only applies for Colombia, but in all the geographies where we have presence. Before getting to the details, I want to highlight some key topics." "The loan book grew 3.3% compared with the previous quarter. Net fees grew 9% during the quarter. Core equity Tier one on the full Basel III was 11.8%, and the net income for the quarter was COP943 billion. Provision charges for the quarter were COP514 billion, down 18% compared -- when we compare with the second quarter 2021, mainly driven by a better economic forecast and the end of relief program in Colombia and Panama. Our digital platforms, Nequi and Bancolombia A La Mano continued to grow at a solid pace, adding both 14 million clients and COP1.4 trillion in deposits. Digital transactions represents 85% of the total transactions and digital sales were 4% of total sales, continue to grow in our ecosystem side after the first year of successful operations." Jose Humberto Acosta Martin, the Company's Chief Finance Officer & Vice President of Finance added that, "During the three first quarter of this year, we have delivered material year-on-year earnings growth, maintaining the pace of investments in digital transformation. Net income for the quarter was COP943 billion, and return on equity stood at a level of 12.7%." A full text copy of company's press release is available free at: https://bit.ly/3k9sx6f As reported in the Troubled Company Reporter-Latin America on Dec 17, 2019, Fitch Ratings assigned 'BB+' final long-term ratings to Bancolombia S.A.'s U.S. dollar subordinated notes. The net proceeds of these subordinated notes will be used to replace a portion of the existing old notes and for general corporate purposes. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Government Readies National Taxpayer Census --------------------------------------------------------------- Dominican Today reports that Director of Internal Taxes, Luis Valdez, revealed that they are working, for next year, on a project to carry out a national taxpayer census. Valdez offered the information when asked about the work carried out by the institution to prosecute tax evasion, according to Dominican Today. He added that last April some 6,000 companies declared that they had not done so for years, the report notes. "Only in the month of April of this year we have around six thousand companies that did not declare in 2019 and declared in the month of April of this year spontaneously after being detected through information crossings. It is necessary to carry out a national census of taxpayers," the report relays. Valdez described the collection rate as "very good," while adding that for the month of October there is a surplus of approximately seven to eight billion pesos "within what is the reformulated budget," the report notes. With regard to tax reform and the removal of possible exemptions to some sectors, Valdez limited himself to saying that President Luis Abinader said that this year "there will be no tax reform" and that he will follow this position set by the president, the report adds. 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). ============= E C U A D O R ============= CUENCA DPR: Fitch Rates Series 2021-1 Loan 'B-(EXP)' ---------------------------------------------------- Fitch Ratings expects to rate the Series 2021-1 Loan, to be issued by Cuenca DPR, 'B-(EXP)' with a Stable Rating Outlook. DEBT RATING ---- ------ Cuenca DPR 2021-1 LT B-(EXP) Expected Rating TRANSACTION SUMMARY Cuenca DPR will enter into a loan agreement to receive a disbursement up to $150 million as part of a new future flow program backed by U.S. dollar-denominated existing and future diversified payment rights (DPRs) originated by Banco del Austro S.A. (Austro) of Ecuador. 100% of DPR flows are processed in the U.S. by Citibank N.A. (Citibank), the sole designated depository bank (DDB) in this transaction, that will execute an account agreement (AA) irrevocably obligating the bank to make payments to an account controlled by the transaction trustee. Fitch's rating addresses timely payment of interest and principal on a quarterly basis. KEY RATING DRIVERS Future Flow Rating Driven by Originator's Credit Quality: On Aug. 12, 2021, Fitch assigned Austro a Long-Term Issuer Default Rating (IDR) of 'CCC+' and a Viability Rating (VR) of 'ccc+'. Austro's VR or standalone creditworthiness drives the IDR. Ecuador's sovereign rating (B-/Stable) and broader operating environment considerations highly influence Austro's VR, as Fitch expects the economic challenges on the banking system's financial performance to result in lower profitability and rising non-performing loans (NPL), due to lower payment capacity of some debtors amid the pandemic. Going Concern Assessment (GCA): Fitch uses a going concern assessment (GCA) score to gauge the likelihood that the originator of a future flow transaction will stay in operation through the transaction's life. Fitch's Financial Institutions (FI) group assigns a GCA score of 'GC3' to Austro, which reflects the bank's position as the seventh largest bank in Ecuador by total assets with a market share of 4.53% as of June 2021. Although Austro's business model is adequately diversified, it does not have any relevant product leadership position within Ecuador, which is also reflected in the GCA score. Limits to Notching Differential: The 'GC3' score allows for a maximum uplift of two notches from the bank's IDR, pursuant to Fitch's future flow methodology. However, uplift is tempered to one notch from Austro's IDR due to factors mentioned below, including high future flow debt to non-deposit funding and DDB concentration risk, among others. High Future Flow Debt Relative to Balance Sheet: Fitch estimates that the proposed future flow issuance will represent 7.0% of Austro's total funding and 65.4% of non-deposit funding, based on September 2021 financials. Fitch does not allow the maximum uplift for originators that have future flow debt greater than 30% of the overall non-deposit funding. Nevertheless, given the benefits of the proposed structure and quality of flows, the agency allows for some differentiation (one-notch) from Austro's LT IDR. Pandemic Pressures Transaction Flows: Global events including the coronavirus pandemic negatively affected the originator's DPR flows. Austro processed approximately $754.4 million in DPR flows in 2020, down 11% yoy, marking the program's lowest annual volume total since 2016 ($716.6 million). However, transaction flows have since recovered to pre-pandemic levels with Austro processing $704.3 million in DPR flows for YTD September 2021, which reflects a yoy increase of 33% and 9% versus YTD September 2020 ($528.9 million) and YTD September 2019 ($646.8 million), respectively. The resilience of Austro's DPR business line is supported in large part by the stability of remittance-related flows and Ecuador's growing family remittance sector. Coverage Levels Commensurate with Assigned Rating: When considering average rolling quarterly DDB flows over the last five years (September 2016 - September 2021) and the proposed maximum periodic debt service over the life of the program, including Fitch's interest rate stress, the projected quarterly debt service coverage ratio (DSCR) is 16.1x. Fitch considers this coverage level sufficient for the assigned rating level. The transaction can withstand a decrease in flows of approximately 93.8% and still cover the proposed maximum quarterly debt service obligation. Nevertheless, Fitch will monitor the performance of the flows as a sustained decrease could negatively impact the assigned rating. No Lender of Last Resort: Ecuador is a dollarized economy without a true lender of last resort. While certain mechanisms are in place to help fend off a banking system crisis, this limits the notching differential of the transaction. Potential Redirection/Diversion Risk: The structure mitigates certain sovereign risks by collecting cash flows offshore until collection of the periodic debt service amount. In Fitch's view, diversion risk is partially mitigated by the AA signed by the sole DDB (Citibank) in the transaction. However, as Citibank processes 100% of DPR flows, the agency believes this exposes the transaction to a higher degree of diversion risk relative to other Fitch-rated DPR programs in the region, limiting the overall notching differential. The KRDs listed in the applicable sector criteria, but not mentioned above, are not material to this rating action. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The transaction's ratings are sensitive to changes in the credit quality of Austro. A deterioration in the credit quality of Austro is likely to pose a constraint to the current rating of the transaction. -- The transaction's ratings are also sensitive to the ability of the DPR business line to continue operating, as reflected by the GCA score, and a change in Fitch's view on the bank's GCA score could lead to a change in the transaction's rating. -- Additionally, the transaction's rating is sensitive to the performance of the securitized business line. The expected quarterly DSCR is approximately 16.1x, which includes Fitch's interest rate stress, and should therefore be able to withstand a significant decline in cash flows in the absence of other issues. However, significant further declines in flows could lead to a negative rating action. Fitch will analyze any changes in these variables in a rating committee to assess the possible impact on the transaction ratings. -- No company is immune to the economic and political conditions of its home country. Political risks and the potential for sovereign interference may increase as a sovereign's rating is downgraded. However, the underlying structure and transaction enhancements mitigate these risks to a level consistent with the assigned rating. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- The main constraint to the program rating is the originator's rating and Austro's operating environment. If upgraded, Fitch will consider whether the same uplift could be maintained or if it should be further tempered in accordance with criteria. 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 future flow rating is driven by the credit risk of Austro as measured by its LT IDR. 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 ============= NCB FINANCIAL: Net Profit Dips 25% in FY Ended Sept. 30 ------------------------------------------------------- Jamaica Observer reports that ravaged by lockdowns induced by the novel coronavirus pandemic, the NCB Financial Group (NCBFG) reported its net profit dipped 25 per cent during its just-concluded financial year. The conglomerate's financial year ended on September 30. The financial conglomerate reported profit of $20.1 billion. Dragging on its performamce was an underperforming insurance segment, according to Jamaica Observer. The NCBFG, in notes accompanying its financials released to the stock exchange, said "reduced activities due to COVID-19 restrictions and lockdowns in Trinidad and Tobago during the financial year saw that segment's contribution falling 29 per cent," the report notes. Another factor dragging on NCBFG was the lockdowns in Jamaica which impacted spending and by extension its banking and investment segment, the report relays. The segment showed improvement, but was not as robust as the company had forecast, especially on the banking side, the report discloses. Its investment business benefited from improvements in the prices of securities and investment activities compared to last year when prices declined due mainly to the onset of the pandemic in the Caribbean, the report notes. The favorable price movements resulted in increased gains from the sale of debt securities and mark to market valuations, the report relays. This helped to push the investment business' contribution up by $14 billion, the report discloses. Overall, the net result from the company's banking and investments segment was a $22-billion improvement to $98 billion, the report adds. That was however not enough to move the board, at its meeting to declare a dividend for the second consecutive quarter. NCBFG declared a $0.50 share dividend at its board meeting held in April this year, the report relays. The impact is however not only being felt in the company's performance. Since the start of the year, the NCBFG has lost 16 per cent or $57 billion of its value, more than half of the decline weighs on the net worth of its chairman, Michael Lee Chin, the report notes. At the close of trading, the group - by market capitalization - was valued at $296 billion. That is down from the $353 billion the company was valued at the start of the year, the report adds. =========== M E X I C O =========== MEXICO: Economy Shrank 0.2% in July-Sept. Period ------------------------------------------------ Anthony Esposito and Dave Graham at Reuters report that Mexico's first economic contraction since a recovery began from the coronavirus pandemic poses a challenge to the central bank's monetary policy tightening cycle, but stubbornly high inflation appears likely to take precedence, analysts said. The Mexican economy shrank 0.2% in the July-September period compared with the previous quarter after a resurgence in the coronavirus pandemic dragged down service sector activity and disrupted global supply chains, preliminary data showed, according to Reuters. The setback to growth provides ammunition to keep monetary policy looser to doves on the board of the Bank of Mexico (Banxico), which has been divided as it has carried out 25-basis point rate increases at each of its past three meetings, the report notes. However, headline inflation is at 6.1%, double the bank's 3% target rate, and analysts on Friday reasoned that concerns over price stability would probably prove decisive in keeping rates ticking up given that growth is expected to fire up again, the report relays. Grupo Financiero Base forecast annual inflation would close 2021 at 6.6% and remain above 4% for the duration of 2022, the report discloses. "That makes another interest rate hike of 25 basis point by the Bank of Mexico very probable and the possibility of two 25 basis point increases before the end of the year is not ruled out," said Base economist Gabriela Siller, the report says. Banxico Deputy Governor Jonathan Heath told Reuters that the bank's tightening cycle is not yet over and one or two more increases are likely amid concerns about inflation. However, he emphasized that any monetary policy moves would depend on incoming data, the report notes. Heath posted on Twitter that it was too early to revise Mexico's GDP forecast for 2021, saying revisions to the growth figures for earlier quarters had yet to be finalized, the report discloses. "We just have to wait for the traditional calculation," he added. Nikhil Sanghani, an analyst at Capital Economics, said the latest growth figures showed that "the weakness of the economy will probably ensure that Banxico's tightening cycle remains gradual, and we expect another 25 basis point rate hike, to 5.00%, at its meeting in mid-November," the report notes. Sanghani forecast growth of 6.0% in 2021 and 2.8% in 2022, slightly below the consensus view of private analysts surveyed in the Bank of Mexico's latest monthly poll, the report relays. The Mexican central bank was due to convene for its next monetary policy setting meeting last Nov. 11, addsthe report. Egan-Jones Ratings Company, on March 30, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Mexico to B from BB-. EJR also downgraded the rating on commercial paper issued by Mexico to B from A3. ===================== P U E R T O R I C O ===================== PUERTO RICO: Morgan, Correa 11th Update on QTCB Noteholder Group ---------------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, the law firms of Morgan, Lewis & Bockius LLP and Correa-Acevedo & Abesada Law Offices, PSC submitted an 11th supplemental verified statement to disclose an updated list of QTCB Noteholder Group in the Chapter 11 cases of The Commonwealth of Puerto Rico, et al. As of Nov. 9, 2021, members of the QTCB Noteholder Group and their disclosable economic interests are: Commonwealth Bonds: Public Improvement Ref. Bonds, Series 1998: $905,000 Public Improvement Bonds of 1999: 1,565,000 Public Improvement Bonds of 2002, Series A: 8,590,000 Public Improvement Ref. Bonds, Series 2002 A: 44,339,000 Public Improvement Bonds of 2003, Series A: 6,311,000 Public Improvement Ref. Bonds, Series 2003 A: 5,330,000 Public Improvement Bonds of 2004, Series A: 22,908,000 Public Improvement Bonds of 2005, Series A: 24,401,000 Public Improvement Ref. Bonds, Series 2006 A: 4,985,000 Public Improvement Bonds of 2006, Series A: 24,502,000 Public Improvement Ref. Bonds, Series 2006 B: 13,219,000 Public Improvement Bonds of 2006, Series B: 8,365,000 Co-Counsel for the QTCB Noteholder Group can be reached at: Morgan, Lewis & Bockius LLP Kurt A. Mayr, Esq. David L. Lawton, Esq. David K. Shim, Esq. One State Street Hartford, CT 06103-3178 Tel: (860) 240-2700 Fax: (860) 240-2701 E-mail: kurt.mayr@morganlewis.com david.lawton@morganlewis.com david.shim@morganlewis.com Sabin Willett, Esq. One Federal Street Boston, MA 02110-1726 Tel: (617) 951-8775 E-mail: sabin.willett@morganlewis.com - and - Correa-Acevedo & Abesada Law Offices, PSC Sergio Criado, Esq. Roberto Abesada-Aguet, Esq. Centro Internacional de Mercadeo, Torre II # 90 Carr. 165, Suite 407 Guaynabo, P.R. 00968 Tel: (787) 273-8300 Fax: (787) 273-8379 E-mail: ra@calopsc.com scriado@calopsc.com A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/3Fu353J and https://bit.ly/3oxoBOa About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and chair of a committee to review professionals' fees. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: $1.536BB Injected Into Forex Market, Imbert Says ------------------------------------------------------------------- Trinidad Express reports that the Central Bank injected US$1.012 billion into the foreign exchange market between January and October 2021, Finance Minister Colm Imbert said. Furthermore, the Government, through the Exim Bank, has provided access to a further US$524 million, which "led to a total intervention of US$1.536 billion in the forex market for the first ten months of this year", he said, according to Trinidad Express. Imbert was responding to a question from Mayaro MP Rushton Paray in the House of Representatives on the measures taken to rectify the foreign exchange shortage in time for the upcoming peak commercial periods, the report notes. Imbert said the Government monitors the market for foreign exchange on a regular basis, and takes appropriate action as and when required, the report relays. In this context, three new special-purpose windows for foreign exchange have been established by the Government in recent years, the report discloses. In the first instance, a window has been made available at the Central Bank for State enterprises to meet some of their forex demands to ensure the supply of essential goods and services to the population is not interrupted, the report discloses. This provides forex for entities such as WASA, T&TEC, TSTT, Paria Fuel Trading and so on, the report notes. In addition, two other special purpose forex windows have been established at the Exim Bank for the importation of essential goods, such as basic foods and pharmaceuticals and the other for the importation by export manufacturers of raw materials and equipment, the minister said, the report relates. These three facilities provided forex on a targeted and structured basis, and are outside of and in addition to regular injections of forex by the Central Bank into the commercial banking system, the report relays. Imbert said it should be noted that in accordance with Sections 5 and 6 of the Exchange Control Act, the Central Bank has adopted the role of maintaining orderly conduct in, and stability of, the domestic market, the report discloses. To achieve this goal, the bank routinely sells foreign exchange to authorised dealers in the market to meet excess demand by covering the net sales gap, the report relays. Over the period January to October 2021, the net sales gap was US$843.1 million, representing an 11.9 per cent decline from the previous period, the minister said, the report relates. As such, the Central Bank sales of US$1.012 billion to authorised dealers supported the market over the reference period, the report discloses. "This intervention enabled authorised dealers to meet demand as foreign currency sales by authorised dealers to the public rose by 6.5 per cent to $3,992.9 million over the January-to-October period relative to the same period in the prior year. "Further, the Central Bank engages in frequent dialogue with authorised dealers with a view to gaining a better understanding of emerging developments in the forex market and improving the effectiveness of its intervention programme," Imbert added. He said access to forex through the three US dollar facilities set up at the Exim Bank where State enterprises, importers and exporters of essential goods can access forex, grew from US$209 million in 2017 to US$575 million in 2020, the report notes. He said during January to October 2021, access to these facilities totalled US$524 million, which led to the total intervention of US$1.536 billion in the forex market for the first ten months of this year, the report relays. Asked why small and medium-sized businesses and the non-business sector have difficulty getting forex from the banks, Imbert said the Government continues to monitor the market and to make forex available on a regular basis, the report adds. TRINIDAD AND TOBAGO FA: Turns to Insolvency Laws to Save Itself --------------------------------------------------------------- insideworldfootball.com reports that the crippling debt crisis that has plagued the Trinidad and Tobago FA (TTFA) took another turn with the TTFA seeking protection from outstanding litigation via the islands' bankruptcy and insolvency laws. A number of claims against the TTFA had now progressed through the courts to the point where the TTFA was getting dangerously close to being wound up. The court filing November 8 automatically stops further progression of those cases, according to insideworldfootball.com. The TTFA in a statement said it had "notified the Supervisor of Insolvency of its intent to make a Proposal under the Bankruptcy and Insolvency Act of Trinidad and Tobago which will enable a structured approach to the restructuring of the TTFA and the preparation of a fair, transparent and acceptable payment proposal to address the TTFA's debt," the report relays. Already under the control of a FIFA-appointed Normalisation Committee (NC), a trustee has now been appointed - Maria Daniel - in a bid to negotiate a debt repayment proposal, the report notes. The court filing stays any legal action for up to six months and will secure the TTFA's assets while the trustee works with the NC to find a debt repayment proposal that can be put before the creditors, the report relates. The biggest issue facing the TTFA and now Daniel, will be working out how much debt the TTFA is liable for, the report notes. An Ernst & Young report, dated April 9, 2021, pegged the debt at about TT$98.5 million ($14.5 million). However, that amount is disputed by former presidents of the TTFA who argue that a more realistic figure is about TT$58 million and perhaps even less, the report discloses. The independent trustee's work will include verifying the claims against the TTFA, meeting with creditors and the development of a debt repayment proposal, the report relays. The process will be frustrating for many creditors who have legitimate claims filed and who have been waiting for more than two years for settlement, the report notes. The size of the settlement will ultimately depend on the assets that the TTFA has, the report says. The TTFA said an independent third-party valuation will determine that figure and that "the sale of the Home of Football is definitely an option," the report relates. The TTFA said that its day-to-day management would be unaffected by the process and emphasized that it is "not being dissolved; the organization will continue to operate normally under the supervision of the NC while the Trustee meets with creditors to validate their claims and develops a payment proposal to settle the TTFA's outstanding debt, the report notes. This process will allow the NC to build the foundation for the rehabilitation of the TTFA," the report relays. Part of the mandate of the NC and its chairman Robert Hadad when appointed in March 2020 was to "establish a debt repayment plan that is implementable by the TTFA," the report discloses. Having failed to achieve that - or even come close - the near-nuclear action of turning to the country's insolvency laws has been taken, the report says. Hadad said: "The TTFA is currently hamstrung with debt, and we can't allow past mismanagement and poor governance to cripple the future of football or indeed its daily operations. This option, under the supervision of the Supervisor of Insolvency, the Trustee and the courts, ensures transparency, equity and independence in the process while, at the same time, ensuring that our current subventions are used for the day-to-day running of the TTFA and its present and future needs. The intent is to rehabilitate as opposed to dissolve the TTFA with a view to preserving continuity and the development of football in Trinidad and Tobago for future generations," the report adds. =============== X X X X X X X X =============== [*] LATAM: Join Forces With EU Against Organized Crime Finances --------------------------------------------------------------- Rio Times Online reports that more than 150 representatives of institutions from Latin America and the Caribbean and the European Union (EU) will meet in Panama to "strengthen" the fight against the finances of organized crime, which have worsened as a result of the Covid-19 pandemic. In the framework of the EU program "EL PAcCTO", the event "The finances of organized crime: how they affect us, how to fight them" will allow the design of "concrete actions to develop (. . .) operations against organized crime and have greater effective cooperation between Latin America and the EU," according to Rio Times Online. During the event, held on the outskirts of Panama City, workshops are being held to learn how to identify the ultimate beneficiary of these illicit finances, streamline international cooperation, seize assets and specialize in the fight against financial crime, the report notes. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *