/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/211227.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, December 27, 2021, Vol. 22, No. 252 Headlines A R G E N T I N A AEROPUERTOS ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Stable B R A Z I L ANDRE MAGGI: Fitch Affirms 'BB' LT IDRs, Outlook Stable BANCO SOFISA: S&P Assigns 'BB-' ICR, Outlook Stable REDE D'OR: Fitch Affirms 'BB' LT FC IDR, Outlook Negative VALE SA: Sells Coal Assets After Exiting Mozambique for US$240M C H I L E LATAM AIRLINES: Seeks to Increase PJT's Fee Cap to $37-Mil. D O M I N I C A N R E P U B L I C [] DOMINICAN REPUBLIC: All Fuel Prizes Frozen for 3rd Week in a Row J A M A I C A JAMAICA: CAC Secures Mil. in Compensation For Aggrieved Consumers NATIONAL COMMERCIAL BANK JAMAICA: S&P Affirms 'B+/B' ICRs P A R A G U A Y BANCO REGIONAL: S&P Affirms 'BB' ICR, Outlook Negative X X X X X X X X [] BOND PRICING: For the Week Dec. 20 to Dec. 24, 2021 - - - - - ================= A R G E N T I N A ================= AEROPUERTOS ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Stable ------------------------------------------------------------- On Dec. 17, 2021, S&P Global Ratings revised the outlook on Argentina-based airport operator, Aeropuertos Argentina 2000 S.A. (AA2000) to stable from negative and affirmed its 'CCC+' ratings. The company's stand-alone credit profile (SACP) remains at 'ccc+'. AA2000 implemented the exchange of international bonds, together with other liability management initiatives such as the extension of the syndicated facility and new issuance. Even if the acceptance level of the exchange was lower than targeted (63% versus 75%), these initiatives involved AA2000's two largest debt instruments and slashed principal amortizations in 2022 and 2023, while air traffic has only started to recover after the unprecedented business disruption stemming from the pandemic. Overall, the company still depends on variables that are out of its control: the timing and speed of the air-traffic recovery. However, about $75 million are due in 2022 (down from about $190 million before the exchange). This amount consists of $23 million owed to holdout creditors, the $40 million dollar-linked note in the domestic market, and a $10 million bilateral loan from Banco Macro, payable in three installments. S&P said, "Therefore, we don't expect AA2000 to face constraints in honoring its financial obligations in the next 12 months, thanks to a stronger liquidity and flexible capex. We view this restructuring as a proof of support from investors and banks." In tandem with the exchange, the company raised $126 million in new funds including $64 million (as part of the bonds issued for the exchange offer) and $62 million in new seven-year secured notes due 2028 with a three-year grace period, along with a $5 million amortizable loan from Banco Ciudad. As a result, S&P expects AA2000's cash position to rise to about $175 million by the end of 2022 from $52 million as of Sept. 30, 2021. In addition, S&P Global Ratings understands that there are other ongoing initiatives in the domestic market for new funding which could materialize in the short term and could enhance liquidity further and accelerate capex execution, if and when necessary. For the capex commitments related to the 10-year concession extension granted in December 2020, AA2000 has negotiated a flexible plan with the regulator, contingent on recovery in international traffic to 80% of the 2019 level by December 2022. S&P said, "Therefore, capex can become a significant liquidity cushion if such recovery doesn't materialize, which is our base-case scenario. Given these developments, we now expect AA2000's liquidity sources over uses to be comfortably above 1.2x for the next 12 months." Airports in Argentina were closed to domestic and international commercial flights--with only a handful of sanitary and cargo flights allowed--until October 2020. Recovery has gained steam in the third and fourth quarters, fueled by the vaccination campaign, the upturn in domestic tourism industry, and the resumption of international routes in October 2021. Nevertheless, the accumulated air traffic this year is still about 70% below that in 2019. The resurgence of new strains, such as Omicron, and the government's recent decision to restrict domestic travelers from purchasing tickets for international flights with credit cards can result, in our view, in a bumpy recovery in 2022, once the summer (high) season in the southern hemisphere ends. Also, Argentina's economy remains depressed, not only as a result of the pandemic-induced recession, but also due to a widening fiscal deficit, sustained depreciation of the peso, high unemployment, and uncertainty around macroeconomic perspectives, partly as a result of the country's ongoing negotiations with the International Monetary Fund (IMF). S&P believes AA2000's ability to navigate the coming quarters is now stronger, prompting the outlook revision to stable. However, it believes the recovery remains choppy and could cause the company's leverage to spike if the traffic recovery stumbles in 2022. =========== B R A Z I L =========== ANDRE MAGGI: Fitch Affirms 'BB' LT IDRs, Outlook Stable ------------------------------------------------------- Fitch Ratings has affirmed Andre Maggi Participacoes S.A (Amaggi)'s Long-Term (LT) Foreign Currency (FC) and Local Currency Issuer Default Ratings (IDRs) at 'BB' and national LT rating of 'AA+(bra)'. Fitch has also affirmed the senior debt rating issued by Amaggi Luxembourg International S.a r.l. at 'BB'. The Rating Outlook is Stable. KEY RATING DRIVERS Integrated Business Profile: Amaggi has a regionally-integrated agribusiness footprint with a leading position in the production, origination and commercialization of grains such as soybeans, corn and cotton from the Mato Grosso state in Brazil. The company is self-sufficient in terms of energy and benefits from its logistic segment, which includes the management of its own hydro-transportation system (Hermasa) and access to other navigation routes, warehouses and terminals through joint ventures or companies where the group has a minority interest. The group's competitive advantages include its location, vertical-integration and export-driven business model. Approximately 84% of revenues are generated outside Brazil. Amaggi owns 306 thousand hectares of agricultural land, of which 174,000 hectares are farmable. Increased Leverage: Amaggi's RMI net-adjusted leverage is projected to increase to 3.5x in 2021 from 2.8x in 2020, before declining below 3.0x in 2022. The increase in leverage is due to negative FCF resulting from higher capex and working capital needs following the company's acquisitions of O'Telhar Agropecuaria Ltda; this acquisition increased Amaggi's production capacity of grains and fibers by approximately 34%. The company's EBITDA is projected to decline to USD425 million in 2021 from USD463 million in 2020, as increasing profit from its Agro division due to increased hectares farmed and rising commodity prices was not able to offset the weak performance of its commodity division. That latter division suffered from increased transportation cost. High Working Capital Needs: Amaggi needs to maintain high liquidity levels to offset risks related to foreign exchange and commodity price movements. The company, as well as other agricultural processors, are subject to margin calls on grain they have hedged. Prices for most agricultural commodities can swing upward quickly due to a wide range of unpredictable macro-environmental conditions, and supply and demand imbalances. The timing of the outflow from these transactions may not perfectly match the inflow of cash that results from selling grain at the higher prices. Margin calls amounted to about USD318 million in 2020 due to higher grains prices and grain origination and are expected to be above USD250 million in 2021. Origination and Counterparty risks: Amaggi faces intense competition from large multinational grain companies such as Archer Daniels Midland Company (ADM), LDC, Cargill and Bunge in the acquisition of grains in Mato Grosso, which is the key state for soy and corn production in Brazil. This risk is mitigated by the group's capacity to process large volumes thanks to its logistics which enable the company to compete with its peers in terms of market share. Advances in financing to farmers are provided under strict criteria with the use of rural credit notes for collateral. No single producer represents more than 1.6% of Amaggi annual origination. Working capital is seasonal, and part of its grain origination requires some advances to suppliers. Supply Chain Scrutiny: The agricultural sector in Brazil is under increased scrutiny of its supply chain due to deforestation issues. Amaggi attempts to mitigate this risk through several ESG initiatives related to the tracing of the sourcing of the grain it buys. Nevertheless, the sector is expected to remain under scrutiny and decreased lending to the sector, or bans on grain originating in Brazil, could impact the sector's capacity to access to capital or financial results. DERIVATION SUMMARY Fitch views Amaggi's business risk profile as higher than international peers Bunge Limited (BBB/ Stable), Cargill Incorporated (A/Stable), and ADM (A/Stable), due to its smaller operational scale, lower diversification and substantial concentration in one region. Risks related to the agribusiness industry is similar for most grain processors. It includes exposure to supply and demand imbalances, unpredictable weather patterns, trade-related wars, government policies and intense competition. In comparison to its global peers, Amaggi mitigates some of this risk by owning a lot of land and having an Agro division in which it grows various crops. A weakness of Amaggi relative to global peers is the concentration of its assets in Brazil. This exposes the company to risk related to deforestation within the agribusiness industry, which can include bans on products from certain countries at times. The company's operations are concentrated in Matto Grosso, Brazil, which subjects the company to the Brazilian country ceiling of 'BB'. As most revenues are derived from export markets, Fitch believes that the rating could be maintained should the Brazilian country ceiling be downgraded by no more than one notch. When combined with higher average leverage, these factors result in lower ratings than its peers (Bunge, ADM, Cargill). KEY ASSUMPTIONS Fitch's key assumptions within the Agency's rating case for the issuer include: -- EBITDA of about USD425 million; -- Relatively stable yoy RMI levels at about USD455 million; -- RMI adjusted net leverage of about 3.5x by YE 2021. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Improved scale and geographical diversification; -- RMI-adjusted net leverage (RMI-adjusted total net debt to operating EBITDA) below 2.5x range on a sustained basis; -- Liquidity ratio (cash and marketable securities + RMI + account receivables/Total short-term liability) above 1.5x on a sustainable basis; -- Secured debt/EBITDA below 1.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Loss of business diversification; -- RMI-adjusted net leverage (RMI-adjusted total net debt to operating EBITDA) sustained above 3.5x range on a sustainable basis; -- Liquidity ratio (cash and marketable securities + RMI + account receivables/Total short liabilities) below 0.8x at YE; -- Secured debt/EBITDA above 2.5x. 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: The diversified sources of external liquidity used for short-term working capital financing -- combined with cash, short-term marketable securities and high levels of liquid RMI -- provide Amaggi with enough financial flexibility. As of Sept. 31, 2021, Amaggi reported consolidated cash and marketable securities of USD855 million, covering by 1.2x times the USD734 million of short-term debt. Fitch expects the RMI-liquidity ratio to be about 1x at YE 2021. The company also has access to several uncommitted bank lines and maintains a minimum cash policy of USD400 million. ISSUER PROFILE Amaggi operates in an integrated and synergistic way throughout the agribusiness chain: agricultural production, river and road transport, port operations, origination, processing and commercialization of grains and inputs, generation and commercialization of electricity. ESG CONSIDERATIONS Amaggi has a score of '4' to Governance Structure and Group Structure due to lack of board independence as the company is privately-controlled and related-party transactions exist. The family's strong influence upon management and the existence of related-party transactions could result in decisions being made to the detriment of the company's creditors, which would have a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. The company has also a score of '4' to Waste & Hazardous Material Management due to the ecological impact related to land use, as a large part of the volume of grain coming from the commodity business come from Amazon and Cerrado Biomes, which has a negative impact on the credit profile and is relevant to the ratings 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. BANCO SOFISA: S&P Assigns 'BB-' ICR, Outlook Stable --------------------------------------------------- S&P Global Ratings assigned a 'BB-' global scale issuer credit rating on Brazil-based Banco Sofisa S.A. The outlook is stable. S&P said, "We attribute such stability to the expertise of operating as a niche bank, consistent expansion of operations, and sound asset quality standards. We expect the bank to continue strengthening its finances and reporting sound bottom-line results in the next few years, thanks to its competence in secured corporate lending. However, we understand greater competition in Sofisa's business niche could depress its margins and weaken its revenue stability. Sofisa operates few business lines and has narrower range of revenue sources than those of peers. Finally, we believe that the bank has a stable and diversified funding base, and adequate liquidity." The bank has a narrower customer orientation and mix of business activities than the industry average, with revenues coming mainly from secured working capital corporate loans and receivables discounting, representing about 80% of the bank's loans. Nevertheless, Sofisa's competitive advantage comes from its expertise as a niche bank, with extensive track record in providing services to the middle-market segment. S&P expects Sofisa to maintain a risk-adjusted capital (RAC) ratio of 6.5%-7.0% in the coming years, and to keep historically adequate regulatory capital metrics, as seen in its Basel ratio of 15.33% in June 2021. S&P's base-case scenario assumptions include the following factors: -- Brazil's GDP increase of 4.8% in 2021 and 0.8% in 2022. -- Loan portfolio growth of 17% in 2021 and 10% in 2022. -- Stable margins in the coming years. -- Better asset quality than those of other medium-size banks operating in Brazil. S&P expects nonperforming loans (NPLs) and charge-offs to remain below 2% and coverage to be 1.5x-2.0x. -- A small drop in profitability, with ROE at 14.5%-15.5% in the coming years. -- Dividend distribution of 30% of previous-year net income in the next years. The bank lends mostly to SMEs, which we consider as riskier borrowers. However, its expertise and guarantee policies mitigate this risk. In addition, the small tickets in this segment result in a fragmented client base. As a result, Sofisa's conservative lending practices has led to historically better-than-peers' asset quality indicators. As of June 2021, NPLs were 0.58%, and charge-offs at only 0.1% of the loan portfolio. However, the bank's renegotiating of many souring loans during the pandemic, combined with the recently strong portfolio growth, generated a statistical effect of lower NPLs. S&P expects asset quality indicators to return to historical levels over the next few years, given that the economic risk of the country remains high. Over the past years, the share of funding coming from the digital bank, Banco Sofisa Direto, has been increasing. The platform has a large presence in Brazil's digital banking segment, given that it's one of the initial players in this rapidly growing sector. Sofisa Direto targets all levels of individuals and investors, and over the years, became an important source of funding to the bank, as it helped expand the retail client base. In July 2021, IDB Invest, Proparco, and FinDev Canada have provided financing for $200 million to Sofisa. The bank will use the proceeds to expand its SME portfolio and contribute to Sustainable Development Goals. Furthermore, as of September 2021, the U.S. International Development Finance Corp. provided a $45 million loan to Sofisa. The bank will use these funds to extend loans to SMEs that manufacture goods, which are sourced legally from the Amazon. Additionally, the bank has kept adequate liquidity over the past few years, including during the coronavirus crisis, taking advantage of instruments such as Time Deposits with Special Guarantee and Guaranteed Financial Bills, which helped boost liquidity to well above historical levels. Moreover, Sofisa's stable funding ratio (SFR) was 105.7% as of June 2021, while its broad liquid assets to short-term wholesale funding ratio was 2.2x. REDE D'OR: Fitch Affirms 'BB' LT FC IDR, Outlook Negative --------------------------------------------------------- Fitch Ratings has affirmed Rede D'Or Sao Luiz S.A.'s Long-Term Foreign Currency Issuer Default Rating (LT FC IDR) at 'BB', Long-Term Local Currency IDR (LT LC IDR) at 'BBB-' and National Long-Term Rating at 'AAA(bra)'. The Rating Outlook for the LT FC IDR is Negative, while the Outlooks for the LT LC IDR and the National LT Rating are Stable. Rede D'Or's ratings reflect the defensive nature of its business, a solid competitive position in the fragmented hospital industry in Brazil, prominent business scale, adequate capital structure, strong liquidity and a track record of robust FCF before capex. The ratings also take into consideration the imbalance between supply and demand for hospital services in Brazil, the company's solid portfolio of counterparties and strong bargaining power. KEY RATING DRIVERS Leading Business Position: Rede D'Or is the largest private hospital network in Brazil's fragmented and underserved hospital industry. The company owns 63 hospitals (10,098 beds - 8,761 operating beds) and is the administrator for another hospital as of Sept. 30, 2021. Rede D'Or has a solid business position and large scale of operations in its key markets, which serves as a key competitive advantage, allowing for lower fixed-costs and significant bargaining power with counterparties and the medical community. This scale, in addition to a strong brand, act as strong barriers to entry over the medium term. Country Ceiling Constrain: Rede D'Or's LT FC IDR is constrained by Brazil's 'BB' Country Ceiling since its operations are domiciled in Brazil. The Negative Outlook for the FC IDR is linked to the Outlook for Brazil's sovereign rating (BB-/Negative). The investment-grade LT LC IDR reflects the resilience of Rede D'Or's business to economic downturns, and the positive prospects over the longer term. Industry Consolidation: The recent consolidation and the increasing level of vertical integration among competitors in Brazil's hospital and clinical diagnosis industry could add to competition over the medium to long term. Business scale, strong brand and medical recognition are essential competitive advantages that help to mitigate the increasing pressure from healthcare plan providers in terms of contracts pricing. Fitch believes Rede D'Or is well positioned to face the ongoing developments in industry dynamics, but it could face more volatility to operating margins or cash flow over the medium to long term. Strong Growth Strategy: Fitch expects Rede D'Or to continue to pursue both organic and inorganic growth opportunities with the target to add more than 5,000 beds by 2025. Fitch expects this growth to be mostly financed with equity inflow from 2020/2021. The company has an aggressive track record of acquisitions, acquiring 28 hospitals, adding 3.5k operating beds, from 2017 to September 2021. Since 2017, Rede D'Or has invested BRL6.8 billion in capex, BRL7.6 billion in acquisitions and has distributed BRL5.1 billion in dividends. The company seeks to diversify its service portfolio by expanding its ambulatory, oncology, and advisor/consultor activities, as well as seeks opportunities to increase verticalization, i.e. the diagnostics market segment. Adequate Margins: The company has been efficient in increasing profitability through economies of scale and in achieving synergies from acquisitions. The company has a strong track record of turning around acquired assets. Rede D'Or's net revenue grew 106% between 2017 and LTM ended Sept. 30, 2021, achieving BRL19.4 billion of revenues, while expanding operating beds by 68% to 8,800. During this period, occupancy rate ranged from 76% to 80%, while EBITDA margin fluctuated from 23%-26%. In the next three years, Fitch forecasts EBITDA margins in the 24%-26% range. Rede D'Or's operating margin is among the highest of hospital peers globally. Manageable Pandemic Impact: Rede D'Or's operations have been temporarily affected by the coronavirus pandemic, due to the postponement of elective surgeries and lower hospital visits because of strict social-distancing requirements. Nevertheless, recovery has been solid as seen during 3Q21, when the amount of Covid-19 cases fell in the country, driven by vaccine availability. Fitch's base case incorporates that the impact of new outbreaks and variants on Rede D'Or's profitability will be manageable. Strong Credit Metrics: Fitch projects Rede D'Or's net leverage to range from 2.1x-2.2x in 2021-2023, considering ongoing capex and/or acquisition disbursements of up to BRL5 billion per year. During 2017-2019, the average net leverage was 2.7x. Current ratings headroom incorporates that in the long term, Rede D'Or's net leverage could rise to 2.5x. Legal Contingencies: Rede D'Or is exposed to tax litigation that could result in loss, as no provisions have been recorded. The most significant, in the amount of BRL1.1 billion, refers to allegations by the Brazilian Internal Revenue Service that certain doctors who render services in Rede D'Or's hospitals through legal entities should be considered company employees, which would require additional tax payments. Negative outcomes from this litigation could change the company's business model and affect its cost dynamics. However, Fitch has not incorporated this into its base case scenario at this time. DERIVATION SUMMARY Rede D'Or's ratings reflect Brazil's private hospital industry's low business risk and its positive business fundamentals, adequate capital structure and strong financial flexibility. Compared to Auna S.A.A.'s (BB-/Stable), Rede D'Or has stronger business scale and capital structure. Rede D'Or compares well in terms of business scale and operating margins with the Brazilian non-for-profit hospital Sociedade Beneficente Israelita Brasileira Hospital Albert Einstein (Einstein; AAA(bra)/Stable), but Einstein has a track record of lower leverage. Compared to the Brazilian diagnostic and hospital competitor Diagnostico da America S.A (Dasa; AAA(bra)/Stable), Rede D'Or has lower business risk, due to much lower competitive pressures. Both companies have aggressive growth strategies. From a financial risk perspective, currently Rede D'Or has lower leverage and greater financial flexibility following the IPO. Rede D'Or, Auna, Einstein and Dasa all benefit from strong brands and reputation in the industry, which offer important competitive advantages and translate to strong relationships with counterparties. On a global scale, the dynamics of the Brazilian hospital industry and regulation are not directly comparable to other countries. Rede D'Or's operating margins and financial metrics are quite sound compared with other rated hospitals within Fitch's global universe. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Revenue growth reflecting ongoing acquisitions and greenfield/brownfields projects; -- EBITDA margins of around 24%-26%; -- Working capital needs to remain on historical levels; -- Average Capex of BRL2 billion annually; -- BRL3 billion in acquisitions disbursements per year; -- A 25% minimum dividend payout. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Positive rating action for the LT FC IDR is limited by Brazil's 'BB' Country ceiling; -- Upward rating potential for Rede D'Or's 'BBB-' LT LC IDR is limited by its ongoing aggressive growth strategy, through both organic and M&A movements, and its lack of geographic diversification, which leads to large exposure to the local economy in Brazil. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A change in management's strategy with regard to its conservative capital structure could also lead to a downgrade, as could a deterioration in the company's reputation and market position; -- EBITDA margins declining to below 20%; -- Net leverage consistently above 2.5x; -- Deterioration of a sound liquidity position leading to refinancing risk exposure; -- Major legal contingencies that represent a disruption in the company's operations or a significant impact to its credit profile. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Rede D'Or has a track record of maintaining strong cash balances, with an average coverage of cash/short-term debt ratio of 6.4x during the last four years, and coverage of 7.1x as of Sept. 30, 2021. The company's financial flexibility is solid, and the company has shown good access to the local and cross- border capital markets. The company had BRL24.8 billion of debt (net of derivatives and obligations with acquisitions), as of Sept. 30, 2021, of which BRL1,8 billion is due in the short term. Rede D'Or's BRL13.2 billion of cash on hand is sufficient to support debt amortization up to mid-2025. Fitch expects Rede D'Or will maintain a strong liquidity position and its proactive approach in liability management to avoid exposure to refinancing risks. Around 33% of Rede D'Or debt, as of Sept. 30, 2021, was linked to the U.S. dollar, including USD1.7 billion senior unsecured notes due 2028/2030. The company utilizes hedging instruments to moderate currency mismatch risks, since revenues are nearly 100% originated in Brazil. Rede D'Or does not have committed credit facilities. ISSUER PROFILE Rede D'Or is the largest private hospital player in Brazil, with 63 hospitals totalling 8.8 thousand operational beds as of September 30, 2021. The company has solid business positions, with ample scale differential in the states where it operates: Rio de Janeiro, São Paulo, Minas Gerais, Brasilia, Mato Grosso do Sul, Pernambuco, Paraíba, Bahia, Sergipe, Ceará, Maranhão, Federal District, Paraná and Rio Grande do Sul. ESG CONSIDERATIONS Rede D'Or Sao Luiz S.A. has an ESG Relevance Score of '4' for Labor Relations & Practices due to labor/tax litigation. The company registers their employees (mostly physicians) as service providers, not as Rede D'Or's employees. This has a negative impact on the credit profile, and is relevant to the ratings 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. VALE SA: Sells Coal Assets After Exiting Mozambique for US$240M --------------------------------------------------------------- Rio Times Online reports that Brazil's Vale has sold all its coal-related assets after agreeing to sell its coal mine and a logistics corridor in Mozambique to Vulcan Minerals for US$270 million (EUR240 million), it said in a statement. The transaction also includes a 10-year royalty agreement subject to certain production conditions at the mines and the price of coal. The completion of the sale is also subject to the fulfillment of specific regulatory requirements, according to Rio Times Online. The divestment of these assets is in line with the group's strategy of focusing on its core businesses and becoming a leader in low-emission mining, the report notes. About Vale SA Vale S.A. is a Brazilian multinational corporation engaged in metals and mining and one of the largest logistics operators in Brazil. As reported in the Troubled Company Reporter-Latin America in September 2019, Moody's Investors Service affirmed Vale S.A.'s Ba1 senior unsecured ratings and the ratings on the debt issues of Vale Overseas Limited, fully and unconditionally guaranteed by Vale S.A. Moody's also affirmed the Ba2 senior unsecured ratings of Vale Canada Ltd. The outlook changed to stable from negative. At the same time, Moody's America Latina Ltda. affirmed Vale's Ba1/Aaa.br corporate family rating and the Ba1/Aaa.br ratings on its senior unsecured notes. The outlook changed to stable from negative. ========= C H I L E ========= LATAM AIRLINES: Seeks to Increase PJT's Fee Cap to $37-Mil. ----------------------------------------------------------- LATAM Airlines Group S.A. and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of New York to modify the terms of retention of PJT Partners LP. In their supplemental application, the Debtors propose to increase the investment banker's fee cap to $37 million from $25 million. To date, PJT's fees have already exceeded the existing $25 million cap. The firm, however, is not seeking to be paid anything above the $25 million cap until a restructuring actually occurs. Thus, the difference between the current $25 million cap and the increased $37 million cap (or $12 million) would only be payable to PJT upon the consummation of a restructuring, according to the court filing. PJT Partners can be reached through: Timothy R. Coleman PJT Partners LP 280 Park Avenue New York, NY 10017 Phone: +1 212-364-7800 About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc. and The Boston Consulting Group UK LLP are the Debtors' strategic advisors while PJT Partners LP serve as their investment banker. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is the committee's Brazilian counsel. The ad hoc group of LATAM bondholders tapped White & Case LLP as counsel. Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew Glenn and partner Shai Schmidt, has been retained as counsel for the ad hoc committee of shareholders. =================================== D O M I N I C A N R E P U B L I C =================================== [] DOMINICAN REPUBLIC: All Fuel Prizes Frozen for 3rd Week in a Row ------------------------------------------------------------------- The Ministry of Industry and Commerce and Mipymes (MICM) once again froze the prices of all fuels for the week of 25 to 31 December. Premium gasoline will continue to be sold at RD$270.10 a gallon and regular at RD$255.50 a gallon. According to the report, optimum diesel will be sold at RD$219.10. At the same time, regular diesel will be sold at RD$201.10 and Liquefied Petroleum Gas at RD$141.10. Likewise, natural gas is sold at (RD$28.97), avtur at (RD$180.68), kerosene at (RD$209.80), fuel oil at (RD$153.64), and fuel oil at 1% (RD$172.01). 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. As reported in the Troubled Company Reporter-Latin America on Dec. 10, 2021, Fitch Ratings has revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-' TCRLA 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). ============= J A M A I C A ============= JAMAICA: CAC Secures Mil. in Compensation For Aggrieved Consumers ----------------------------------------------------------------- RJR News reports that the Consumer Affairs Commission (CAC) secured more than $14 .7 million in compensation on behalf of aggrieved consumers from April to November 2021. At a recent JIS Think Tank, Chief Executive Officer of the CAC Dolsie Allen, said $4.7 million was recovered for electrical equipment and appliances, according to RJR News. Another $4.1 million was in relation to automotive disputes and $1.3 million for furniture related complaints, the report notes. There were 1,352 complaints filed during the period, of which 7,034 were resolved during the period under review, the report says. The CAC's resolution rate was 54 per cent, the report adds. As reported in the Troubled Company Reporter-Latin America on Nov. 25, 2021, Moody's Investors Service has affirmed the Government of Jamaica's long-term issuer and senior unsecured ratings at B2. The senior unsecured shelf rating has also been affirmed at (P)B2. The outlook on the ratings remains stable. NATIONAL COMMERCIAL BANK JAMAICA: S&P Affirms 'B+/B' ICRs --------------------------------------------------------- S&P Global Ratings has affirmed its issuer credit ratings on National Commercial Bank Jamaica Ltd. (NCBJ). The affirmation follow a revision to its criteria for rating banks and nonbank financial institutions and for determining a Banking Industry Country Risk Assessment (BICRA). S&P affirmed the 'B+' long-term and 'B' short-term issuer credit ratings on NCBJ. The outlook on the long-term rating remain unchanged. S&P said, "Our assessments of economic risk and industry risk in Jamaica (B+/Stable/B) also remain unchanged at '8' and '8', respectively. These scores determine the BICRA and the anchor, or starting point, for our ratings on financial institutions that operate in that country. The trend we see for economic risk remain negative and the industry risk trend is still stable. "We affirmed our issuer credit ratings on NCBJ, because our credit analysis on the lender remained the same under the revised criteria. Our ratings on NCBJ reflects its strong business position in the domestic financial system, diversified revenue, and effective management direction, which have resulted in stable income generation in past years. Moderate capitalization levels, according to our risk-based capital model, along with diversified funding sources and adequate liquidity levels, also support the bank's creditworthiness. On the other hand, NCBJ's loan portfolio is somewhat concentrated in sensitive economic groups such as tourism; however, we believe the bank has demonstrated the ability to contain credit losses. Finally, the ratings on NCBJ also incorporate our BICRA on Jamaica, which evaluates the economic and operating conditions where the bank bases its operations. NCBJ's stand-alone credit profile (SACP) is 'bb-', above the rating on Jamaica (B+/Stable/B). However, the sovereign ratings constrain those on NCBJ because we don't believe it could withstand a sovereign default scenario, given its large exposure to the country in the form of loans and investments." Outlook S&P said, "The stable outlook on NCBJ reflects that on Jamaica, which in turn reflects our view that the economic and fiscal risks of the pandemic have receded and there's less than a one-in-three chance we will change the rating in the next 12 months. The outlook also reflects our expectation that the economic recovery will strengthen, government finances will return to fiscal surplus in the next 12 months, and the impact of the pandemic will gradually recede. Downside scenario. S&P said, "We could lower our ratings on the bank if we were to take the same action on Jamaica. This could occur in the next two years if the economy fails to improve as we expect, pressuring external balances and weakening the country's external position. We would also downgrade NCBJ if its SACP worsens to below 'b+', which is not part of our base-case scenario at this point." Upside scenario. S&P said, "We could upgrade the bank if we take the same action on the sovereign. This could happen in the next two years if the nascent economic recovery is stronger than we expect, boosting government revenues, sustaining fiscal surpluses, and shrinking the country's debt and interest burden beyond our expectations. Upgrading NCBJ would also require its SACP to remain at or above 'bb-'." Ratings Score Snapshot Issuer Credit Rating: B+/Stable/B SACP: bb- Anchor: bb- Business position: Strong (+1) Capital and earnings: Moderate (0) Risk position: Moderate (-1) Funding and liquidity: Adequate and adequate (0) Comparable rating analysis: 0 Support: 0 ALAC support: 0 GRE support: 0 Group support: 0 Sovereign support: 0 Additional factors: 0 Ratings List RATINGS AFFIRMED NATIONAL COMMERCIAL BANK JAMAICA LTD. Issuer Credit Rating B+/Stable/B =============== P A R A G U A Y =============== BANCO REGIONAL: S&P Affirms 'BB' ICR, Outlook Negative ------------------------------------------------------ S&P Global Ratings affirmed its issuer credit ratings on the three Paraguay banks. The affirmations follow a revision to its criteria for rating banks and nonbank financial institutions and for determining a Banking Industry Country Risk Assessment (BICRA). The rating affirmations are on the following entities: Agencia Financiera De Desarrollo (AFD; BB/Stable/--); Banco Regional S.A.E.C.A. (BB/Negative/--); and Vision Banco S.A.E.C.A. (Vision; B/Stable/--). S&P's outlooks on the three banks remain unchanged. S&P's assessments of economic risk and industry risk in Paraguay also remain unchanged, both of which are at '8'. These scores determine the BICRA and the anchor, or starting point, for its ratings on financial institutions that operate primarily in that country. In its view, the trends for economic risk and industry risk remain stable. AFD S&P sid, "We affirmed our ratings on AFD. The ratings on AFD reflect its solid business position that results from its important role as the only second-floor, state-owned bank in Paraguay. In addition, the recent approval of AFD's new charter will allow it to continue expanding its role in the country and to improve its governance. We expect AFD to maintain sound capital levels. Our risk-adjusted capital (RAC) ratio on the bank will remain above 15% in upcoming years, although it will decline as AFD continues to post asset growth that's above its internal capital generation. Furthermore, we believe AFD has a satisfactory risk profile despite loan portfolio concentration. This is because AFD operates with low credit risk financial institutions, its lines to financial institutions are privileged liabilities, and AFD's resources don't go into the pool of liquidation of the financial institutions. The rating also takes into account AFD's stable funding structure, despite its wholesale profile, because we believe that the bank benefits from the government's ongoing support. Finally, we consider that AFD's liquidity position (mainly consisting of cash at the central bank) provides a comfortable cushion to meet short-term obligations in the next 12 months." AFD has no extraordinary government support at this point despite its important role and very strong link to the government because the long-term sovereign rating is 'BB'; the same level as the bank's SACP and the issuer credit rating. Outlook S&P said, "The stable outlook on AFD for the next 12 months balances our expectation that the implementation of the new charter will be completed this year, which could improve our view of AFD's corporate governance and business position and our expectation that its capitalization metrics, although still sound, could decline amid aggressive asset growth." Downside scenario. S&P said, "We could lower our rating on AFD in the next 12 months if its capitalization declines below 15% and the new charter's implementation is delayed without new capitalization. We could also lower the ratings on the bank following a similar action on the sovereign or if we revise the BICRA of Paraguay to a weaker category, with both stable outlook and trends." Upside scenario. In the next 12 months, the likelihood of an upgrade is limited and would depend on the sovereign's upgrade as well as an upward revision of Paraguay's BICRA, while all the bank's credit factors remain stable. Ratings Score Snapshot Issuer credit rating: BB/Stable/-- SACP: bb Anchor: bb- Business position: Moderate (-1) Capital and earnings: Very strong (+2) Risk position: Adequate (0) Funding and liquidity: Average and adequate (0) Comparable rating analysis: 0 Support: 0 ALAC support: 0 GRE support: 0 Group support: 0 Sovereign support: 0 Additional factors: 0 Banco Regional S&P siad, "We affirmed our ratings on Banco Regional. The ratings Banco Regional reflects its well-established brand and significant footprint in the Paraguayan financial system, with a leading position in the agribusiness lending sector. Nonetheless, Banco Regional's business stability has weakened over the past quarters, with slow credit origination and weak profitability amid an ongoing credit risk enhancement process. More recently, Banco Regional announced a new business strategy that should allow the bank to revamp its performance. To execute this strategy, Banco Regional has been working to incorporate a new strategic partner that would provide funds, which will allow the bank to grow, given that its ability to expand currently is limited by its weak internal capital generation. In addition, Banco Regional's focus on enhancing credit risk management weakened its asset quality metrics below the industry average. We expect them to remain weaker than those of peers but to strengthen gradually as the bank's credit portfolio resumes growth under its improved credit risk management and as the share of foreclosed assets declines amid the loan portfolio cleanup. The ratings also incorporate Banco Regional's funding structure that remains stable and benefits from a healthy deposit base, in line with that of the banking system. We also factor in its liquidity position that provides adequate cushion to meet short-term obligations." Outlook The negative outlook on Banco Regional for the next 12-18 months reflects the one-in-three chance of a downgrade if the bank fails to execute its new business strategy, which includes incorporating a new strategic partner to help strengthen its business profile, diversify its loan portfolio, and expand presence in the retail segment, all of which should boost profitability. Downside scenario. S&P said, "We could downgrade Banco Regional in the next 12-18 months if the bank isn't able to diversify its loan portfolio to decrease its exposure to agricultureal cycles and to generate more sustainable revenue and capital, and/or if its asset quality metrics remain worsen than the industry average. We could also downgrade the bank following a similar action on the sovereign, or if we revise our BICRA of Paraguay to a weaker category." Upside scenario. S&P could revise the outlook to stable if the bank implements its business strategy and refocuses on profitable business lines, strengthening its risk profile and capitalization. Ratings Score Snapshot Issuer credit rating: BB/Negative/-- Stand-alone credit profile: bb Anchor: bb- Business position: Strong (+1) Capital and earnings: Moderate (0) Risk position: Adequate (0) Funding and liquidity: Average and adequate (0) Comparable rating analysis: 0 Support: 0 ALAC support: 0 GRE Support: 0 Group Support: 0 Sovereign Support: 0 Additional factors: 0 Vision S&P said, "We affirmed our ratings on Vision. The ratings reflect Vision's leading market position and vast expertise in Paraguya's microfinance segment, both of which help the bank maintain business volumes. In addition, the bank's latest digital strategy, which it has been implementing in the past couple of years (and accelerated in 2020 during the pandemic) will allow it to handle the new and competitive digital landscape and clients' needs, and further supports our view of its competitive position in the Paraguayan banking system. The significant support that Vision provided to its clients in terms of grace periods, extending maturities, and reducing interest rates (in line with the measures allowed by the regulator), helped restrain damage to asset quality. In addition, in recent years, the bank has tightened its loan origination standards, although its metrics are still weaker than the banking system average. We will closely monitor Vision's asset quality metrics, because we expect them to somewhat worsen as borrowers support measures are withdrawn. "We believe Vision has a diversified and stable deposit base, thanks to a nationwide branch network--with more than 70% of participation in terms of nonbank correspondents (corresponsales). In addition, Vision is enhancing its digital platforms to complement its extensive physical network. The bank also has adequate liquidity and a shorter credit portfolio duration than its liabilities, which provides extra liquidity cushion." Outlook S&P said, "The stable outlook on Vision for the next 12 months reflects our expectation that it will continue to execute its digital strategy, focusing on serving its clients while keeping asset quality and credit losses under control, despite the pandemic's effects. We forecast capitalization to improve in coming years but to remain below 5%." Downside scenario. S&P could lower the ratings on the bank if the asset quality deterioration and credit losses are much more severe than we expect and much higher than the industry average. Upside scenario. S&P could upgrade Vision if it improves capitalization levels consistently due to higher profitability (owing to stronger efficiency) and finalize its capitalization plan while maintaining manageable credit losses once the impact from COVID-19 on the economy abates. This scenario may materialize in the next several years. Ratings Score Snapshot Issuer credit rating: B/Stable/-- Stand-alone credit profile: b Anchor: bb- Business position: Adequate (0) Capital and earnings: Constrained (-1) Risk position: Moderate (-1) Funding and liquidity: Strong and adequate (0) Comparable rating analysis: 0 Support: 0 ALAC support: 0 GRE support: 0 Group support: 0 Sovereign support: 0 Additional factors: 0 Ratings List RATINGS AFFIRMED BANCO REGIONAL S.A.E.C.A. Issuer Credit Rating BB/Negative/-- RATINGS AFFIRMED AGENCIA FINANCIERA DE DESARROLLO Issuer Credit Rating BB/Stable/-- RATINGS AFFIRMED VISION BANCO S.A.E.C.A. Issuer Credit Rating B/Stable/-- =============== X X X X X X X X =============== [] BOND PRICING: For the Week Dec. 20 to Dec. 24, 2021 ------------------------------------------------------ Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD YPF SA 16.5 67.3 5/9/2022 AR ARS YPF SA 16.5 67.3 5/9/2022 AR ARS Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL Polarcus Ltd 5.6 71.8 7/1/2022 AE USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Noble Holding Internat 6.2 62.2 8/1/2040 KY USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY Noble Holding Internat 6.1 62.0 3/1/2041 KY USD Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD YPF SA 16.5 67.3 5/9/2022 AR ARS Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL Enel Americas SA 5.8 32.7 6/15/2022 CL CLP Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Fospar S/A 6.5 1.2 5/15/2026 BR BRL Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD Noble Holding Internat 5.3 60.5 3/15/2042 KY USD Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD Sylph Ltd 2.4 65.1 9/25/2036 KY USD Banco Macro SA 17.5 65.2 5/8/2022 AR ARS Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Esval SA 3.5 49.9 2/15/2026 CL CLP Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Provincia del Chubut A 4.5 2208 3/30/2021 AR USD Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR ********* 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 * * *