/raid1/www/Hosts/bankrupt/TCRLA_Public/211229.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
Wednesday, December 29, 2021, Vol. 22, No. 254
Headlines
B A R B A D O S
CORNERSTONE FINANCIAL: SAGICOR Commences Legal Proceedings
B R A Z I L
BANCO CITIBANK: S&P Affirms 'BB-' ICR, Outlook Stable
BANCO COOPERATIVO SICREDI: S&P Affirms BB- ICR, Outlook Stable
BRAZIL: Central Bank Puts Brakes on Tougher Rules for Fintechs
C A Y M A N I S L A N D S
CAYMAN ISLANDS: Extends Cruise Ship Ban to Dec. 31
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Dominican Diaspora Spent Less During Visits
E L S A L V A D O R
EL SALVADOR: To Modernize Statistical System with $44MM IDB Support
M E X I C O
TAMAULIPAS: Moody's Lowers Issuer Ratings to Ba3; Outlook Stable
S U R I N A M E
SURINAME: IDB Group Approves 2021-2025 Country Strategy
SURINAME: IMF OKs Extended Deal Under $688 Extended Fund Facility
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Suffering From Low Occupancy
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B A R B A D O S
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CORNERSTONE FINANCIAL: SAGICOR Commences Legal Proceedings
----------------------------------------------------------
Trinidad Express reports that SAGICOR Investments Jamaica Ltd
(SIJL) has commenced legal proceedings against Cornerstone
Financial Holdings Ltd, the parent company of Barita Investment
Ltd, for undervaluing shares sold in rights issues and excluding
Sagicor from the share sales.
The lawsuit, which was filed in the Supreme Court of Barbados, is
of interest locally because majority State-owned First Citizens
lent Cornerstone Financial Holdings US$25 million in the year ended
September 2020, according to Trinidad Express. First Citizens
Investment Services, a wholly owned subsidiary of First Citizens,
is also the second largest shareholder of Barita Investments Ltd
with a 7.43 per cent stake. Cornerstone Financial is Barita's
largest shareholder with 74.15 per cent, the report notes.
The lawsuit was filed in Barbados because Cornerstone Financial is
registered there, the report discloses.
In a news release, Sagicor Investments Jamaica said the claim,
which names the directors of Cornerstone as defendents, "relates to
actions taken by the board of the company in connection with the
two recent rights issues by Cornerstone United Holdings Jamaica
Ltd", a company affliated to Cornerstone Financial, the report
relays.
The directors named are founder of Cornerstone Financial Paul
Anthony Simpson, along with Mark Myers, Arnold Aiken, Hugh Coore,
James Godfrey and Nigel Chen See, the report discloses.
Sagicor Investments Jamaica said its lawsuit seeks damages from
Cornerstone Financial Holdings Ltd (CFHL) and its directors in
excess of US$4 million for the issuance of CFHL shares, valued more
than US$6 per share for a subscription price of less than US$0.01
per share, the report relays.
Sagicor Investments Jamaica claims that the shares were only
available to those Cornerstone Financial shareholders who had
participated in a rights issue in July 2020 by Cornerstone United
Holdings Jamaica, a company affiliated to Cornerstone Financial,
the report relays. In its news release, SIJL said it did not
participate in that rights issue, the report discloses.
Sagicor Investments Jamaica is also seeking an order restraining
the board of Cornerstone Financial from again issuing shares at the
same undervalued subscription price of less than US$0.01, only to
the band of shareholders who chose to participate in the rights
issue of CUHJ in August 2021, the report relays.
Sagicor Investments Jamaica is also seeking an order directing
Cornerstone Financial to purchase all of its issued and outstanding
shares registered in the name of Sagicor Investments Jamaica
because the first rights issue in July 2020 "was oppressive,
unfairly prejudicial to, or unfairly disregarded the interest of
Sagicor Investments," the report notes.
Sagicor Investment Jamaica is a subsidiary of Sagicor Financial,
which has been listed on the Toronto Stock Exchange since December
2019, the report relays.
In a commentary published in the September 15, 2021 edition of the
Express Business publication, under the headline "Who owns
Cornerstone Financial?" it was disclosed that Cornerstone Financial
had 50,345,005 shares in issue. Of those shares, Sagicor
Investments Jamaica owns 2,265,520 shares or 4.49 per cent of the
company, the report notes.
The largest single shareholder of Cornerstone Financial is a
company named Productive Active Solutions with 21,604,480 shares,
or 42.91 per cent of Cornerstone Financial, the report says. Paul
Anthony Simpson, the Cornerstone Financial founder and
vice-chairman of Barita Investments, owns 800,000 shares of the
company, which is equal to 1.58 per cent of the company, the report
discloses.
In a Notice of Directors dated February 26, 2020, Simpson is listed
as one of four directors of Productive Active Solutions Ltd. The
other directors are Arnold Aiken, Hugh Coore and James Godfrey, the
report relays.
A February 10, 2020 Certificate of Incumbency document filed by the
St Lucia-registered agent, Financial and Corporate Services Ltd,
indicated Productive Active Solutions Ltd was one of 13
shareholders of Cornerstone Investments Holdings Ltd, the report
adds.
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B R A Z I L
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BANCO CITIBANK: S&P Affirms 'BB-' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings affirmed its issuer credit and issue-level
ratings on the following 10 large Brazilian banks and their
subsidiaries. The affirmations follow a revision to our criteria
for rating banks and nonbank financial institutions and for
determining a Banking Industry Country Risk Assessment (BICRA). The
rating affirmations occurred on the following entities:
Banco do Brasil S.A. (BdB; BB-/Stable/B);
Banco Safra S.A. (Safra; BB-/Stable/B);
Banco Bradesco S.A. (Bradesco; BB-/Stable/B);
Banco Citibank S.A. (BB-/Stable/B);
Itau Unibanco Holding S.A. (Itau; BB-/Stable/B);
Banco Nacional de Desenvolvimento Economico e Social (BNDES;
BB-/Stable/--);
Caixa Economica Federal (Caixa; BB-/Stable/B);
Banco do Nordeste do Brasil S.A. (BNB; BB-/Stable/B);
Banco Santander (Brasil) S.A. (Santander Brasil; BB-/Stable/B);
and
Banco BTG Pactual S.A. (BTG Pactual; BB-/Stable/B).
S&P's outlooks on the 10 banks remain unchanged.
S&P said, "Our assessments of economic risk and industry risk in
Brazil also remain unchanged at '7' and '5', respectively. These
scores determine the BICRA and the anchor, or starting point, for
our ratings on financial institutions that operate primarily in
that country. The trends we see for economic risk and industry risk
remain stable."
BdB
S&P said, "We affirmed our ratings on BdB. The ratings reflect the
bank's diversified business profile. Its diversified business
activities include banking services in the retail, agribusiness,
corporate, wholesale and public sectors, investment banking, fund
management, insurance, custody, and payments (directly and through
its subsidiaries). Moreover, our capital and earnings assessment on
BdB reflects our risk-adjusted capital (RAC) metrics for the next
two years, which we expect to be about 6% in line with those of
domestic peers. We also believe the bank benefits from a large base
of stable deposits obtained through its extensive retail branch
network, which helps the bank operate with low funding costs in
Brazil. BdB also benefits from its status as the largest bank
holding legal deposits and with the largest share of payroll loans
to public employees. Thanks to its widely known brand and
resilience, the bank benefits from flight to quality inflow of
deposits during the times of stress. Our stand-alone credit profile
(SACP) on BdB is 'bbb'; however, its large exposure to sovereign
risk limits its rating."
Outlook
S&P said, "The stable outlook on BdB for the next 12 months
reflects the outlook on our sovereign ratings on Brazil
(BB-/Stable/B), which currently limit the ratings on the bank due
to its high exposure to the domestic market. We expect BdB to
maintain its sound performance and conservative credit growth in
the next 12 months. We also expect the bank to maintain resilient
bottom-line results and return to pre-pandemic levels by about
2022. This is thanks to strong margins and sound business
diversification that will support its capitalization. We predict a
rise in BdB's nonperforming loans (NPLs) once the borrower relief
program ends, in line with the industry average, but this metric
should stay at manageable levels."
Downside scenario. S&P said, "We could lower the ratings on BdB
following a similar action on the sovereign ratings on Brazil.
BdB's SACP is 'bbb', four notches above its issuer credit rating.
As a result, we don't foresee a rating change as a result of a
lower SACP."
Upside scenario. S&P would likely raise the ratings on BdB
following a similar action on the sovereign ratings.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B
SACP: bbb
Anchor: bb+
Business position: Very strong (+2)
Capital and earnings: Moderate (0)
Risk position: Adequate (0)
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: -4
Safra
S&P said, "We affirmed our ratings on Safra. Our ratings on Safra
continue to reflect its strong risk controls on credit origination
and guarantees management, which has resulted in a significantly
lower NPL ratio than the industry average. Safra's business
position is based on its leading market position among the
country's niche banks in the corporate and SME lending sectors,
which bolsters its business and revenue stability. In our view,
Safra has access to stable funding sources that are in line with
that of peers. Moreover, the bank has been gradually diversifying
its funding, lengthening its terms, and enhancing its asset
liability management (ALM) matching. As a result, its stable
funding ratio reached 109% as of December 2020 and 91% as of June
2021. Finally, we believe that Safra's conservative growth during
the pandemic and strong internal capital generation continue to
support its capital position. Our assessment of Safra's capital and
earnings reflects our projected RAC ratio of 5.5%-6.0% for the next
two years."
Outlook
S&P said, "The stable outlook for the next 12 months on Safra
reflects that on Brazil. The ratings on the latter constrain those
on the bank, given its sizable exposure to sovereign risk.
Therefore, we expect the ratings on the bank to move in tandem with
the sovereign ratings. On a stand-alone basis, we expect Safra to
maintain its strong operating performance and better-than-peers
asset quality metrics despite Brazil's economic slump."
Downside scenario. S&P said, "We could lower the ratings on Safra
following a similar action on the sovereign ratings on Brazil.
Safra's SACP is 'bbb-', two notches above its issuer credit rating.
As a result, we don't foresee a rating change as a result of a
lower SACP."
Upside scenario. S&P would likely raise the ratings on Safra
following a similar action on the sovereign ratings, because it
expects Safra's SACP to remain above the ratings on Brazil.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
SACP: bbb-
Anchor: bb+
Business position: Adequate (0)
Capital and earnings: Moderate (0)
Risk position: Strong (+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: -3
Bradesco
S&P said, "We affirmed our ratings on Bradesco. Our rating on
Bradesco continues to reflect its position as one of the largest
financial groups in Brazil with a sound domestic market share and
leading positions in the banking and insurance segments. Our
ratings also incorporate its diversified and stable funding base
due to a large retail deposit base, comfortable liquidity position,
and diversified asset base, resulting in credit quality metrics
similar to those of its peers. We also factor in the bank's capital
position, which we view as weaker than the industry average mainly
due to a large exposure to the insurance business and to
capital-deductible deferred tax assets (DTAs). Our SACP on Bradesco
is 'bbb-'; however, the bank's large exposure to sovereign risk
remains a rating constraint."
Outlook
S&P said, "The stable outlook for the next 12 months on Bradesco
reflects that on Brazil. Therefore, we expect the ratings on the
bank to move in tandem with the sovereign ratings. On a stand-alone
basis, we expect Bradesco's resilient performance to help it cope
with the pandemic-induced economic shock and prevent its credit
fundamentals from eroding. Moreover, Bradesco will continue
shrinking its branch network and investing in digitalization in
order to maintain its dominant market position in Brazil."
Downside scenario. S&P said, "We could lower the ratings on
Bradesco following a similar action on the sovereign ratings on
Brazil. Bradesco's 'bbb-' SACP is three notches above its issuer
credit rating. As a result, we don't foresee a rating change as a
result of a lower SACP."
Upside scenario. S&P would likely raise the ratings on Bradesco
following a similar action on the sovereign ratings. This is
because it expects Bradesco's SACP to remain above the ratings on
Brazil.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
SACP: bbb-
Anchor: bb+
Business position: Very strong (+2)
Capital and earnings: Constrained (4-5) (-1)
Risk position: Adequate (0)
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: -3
Banco Citibank
S&P said, "We affirmed our ratings on Banco Citibank. We base our
ratings on Banco Citibank on the advantage it receives from
belonging to a large international banking group that leverages the
local subsidiary's business by providing a global network to its
clients. We believe the Banco Citibank is line with its parent's
strategy because it's an important hub in Latin America to develop
the group's corporate and investment banking (CIB) segment.
Therefore, we believe that the parent will provide support to Banco
Citibank if necessary, except in an event of sovereign default. The
rating also reflects Banco Citibank's diversification in terms of
products and segments within its CIB business, and the strength
stemming from its strong global network. Although its concentration
increased after it sold its consumer portfolio in 2017, the bank's
asset quality metrics then improved sharply, given its focus on
large corporations with better credit quality."
Outlook
S&P said, "The stable outlook on Banco Citibank reflects the
outlook on our sovereign ratings on Brazil, given the bank's high
exposure to the domestic market. We expect the ratings on the bank
to move in tandem with those on the sovereign in the next 12
months."
Downside scenario. S&P said, "We could lower the ratings on Banco
Citibank following a similar action on the sovereign ratings on
Brazil. A downgrade of Banco Citibank due to worsening credit
factors is unlikely, because we believe the group would provide
support to the bank, which would keep the rating on it at the
sovereign level."
Upside scenario. S&P could upgrade Banco Citibank following a
similar action on Brazil, because we currently limit our ratings on
the bank by those on the sovereign.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
SACP: bb
Anchor: bb+
Business position: Adequate (0)
Capital and earnings: Moderate (0)
Risk position: Adequate (0)
Funding and liquidity: Moderate and adequate (-1)
Comparable rating analysis: 0
Support: 0
ALAC support: 0
GRE support: 0
Group support: 0
Sovereign support: 0
Additional factors: -1
Itau
S&P said, "We affirmed our ratings on Itau. The ratings reflect the
bank's diversified and resilient business activities, stemming from
a market-leading franchise, geographic and business
diversification, which remain the differentiating factors that
underpin the stability of Itau's earnings despite market
volatility. Moreover, our capital and earnings assessment on Itau
reflects our RAC metrics for the next two years, which we expect to
be about 6.0%, in line with those of peers. We also believe Itau
benefits from a large base of stable deposits obtained through its
extensive retail branch network, which helps the bank operate with
low funding costs in Brazil. Thanks to Itau's widely known brand
and resilience, customers view the bank as a safe harbor in times
of stress. Our SACP on Itau is 'bbb'; however, Itau's large
exposure to sovereign risk remains a rating constraint."
Outlook
S&P said, "The stable outlook for the next 12 months on Itau
reflects that on Brazil. The ratings on the latter constrain those
on Itau, given its exposure to sovereign risk. Therefore, we expect
the ratings on the bank to move in tandem with the sovereign
ratings. On a stand-alone basis, we expect Itau to maintain its
strong performance despite the pandemic-induced economic shock."
Downside scenario. S&P could lower the ratings on Itau following a
similar action on the sovereign ratings on Brazil. Itau's SACP is
'bbb', four notches above its issuer credit rating on the bank. As
a result, it doesn't foresee a rating change as a result of a lower
SACP.
Upside scenario. S&P would likely raise the ratings on Itau
following a similar action on the sovereign ratings. This is
because it expects Itau's SACP to remain above the ratings on
Brazil.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
Stand-alone credit profile: bbb
Anchor: bb+
Business position: Very strong (+2)
Capital and earnings: Moderate (0)
Risk position: Adequate (0)
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: -4
BNDES
S&P said, "We affirmed our ratings on BNDES. We believe BNDES
continues to play a critical role for the government as one of the
most important government-related entities (GREs) in the country,
remaining very important to the government's economic strategy.
Therefore, we equalize the ratings on the bank with those on the
sovereign. We also incorporate in our analysis our view that BNDES
is a key long-term financing instrument for investments in all
sectors of the economy with a dominant position in Brazil's
infrastructure financing sector, focusing on the country's
development. BNDES's capital and earnings have been consistently
improving, resulting on a forecasted RAC ratio of 8.0%. This
results from consistent sales of its equity portfolio, low credit
growth, and sound internal capital generation. Moreover, we believe
the bank's strong guarantee policy and flexibility to restructure
loans should mitigate potential losses stemming from Brazil's
economic woes. Finally, we view the bank's funding profile as
broadly stable with long-term support from the government."
Outlook
S&P said, "We base the stable outlook on BNDES and on the national
scale rating on BNDESPar-BNDES Participacoes S.A. (BNDESPar) for
the next 12 months on our outlook on Brazil, and we expect the
ratings on both entities to move in tandem with that on the
sovereign. Given BNDES's prominent economic and public policy
status, we equalize the ratings and default risk on it with those
on the sovereign."
Downside scenario. S&P would lower the ratings on BNDES and
BNDESPar following a similar action on the sovereign ratings on
Brazil.
Upside scenario. Similarly, S&P would raise the global scale
ratings on BNDES following a similar action on the sovereign
ratings on Brazil.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/-- and brAAA/Stable/--
SACP: bbb-
Anchor: bb+
Business position: Adequate (0)
Capital and earnings: Adequate (0)
Risk position: Strong (+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: -3
Caixa
S&P said, "We affirmed our ratings on Caixa Economica Federal. In
our view, Caixa continues to be a key GRE for the sovereign because
of its large role in the country's real estate and infrastructure
financing. Therefore, we equalize the ratings on the bank with
those on the sovereign. We also believe Caixa keeps benefiting from
a low-cost, diversified, and stable funding base, stemming from its
broad customer base and wide geographic diversification in Brazil.
After the lender revised its strategic plan to a more
results-oriented strategy, Caixa's operating performance improved
considerably, which resulted in stronger regulatory capital
metrics. However, the bank's forecasted RAC ratio of 4.0%-4.5% in
the next two years remains weaker than those of peers due to a
large amount of DTAs on its balance sheet."
Outlook
S&P said, "The stable outlook on Caixa for the next 12 months
reflects the outlook on Brazil, and we expect the ratings on the
entity to move in tandem with that on the sovereign. On a
stand-alone basis, we expect Caixa to maintain stable asset quality
metrics and keep its results-oriented strategy. However, despite
its 'bb' SACP, Caixa's prominent economic and public policy status
means that we equalize the ratings and default risk with those on
the sovereign."
Downside scenario. S&P would likely downgrade the ratings on Caixa
following a similar action on the sovereign ratings.
Upside scenario. S&P would likely raise the ratings on Caixa
following a similar action on the sovereign ratings.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
SACP: bb
Anchor: bb+
Business position: Adequate (0)
Capital and earnings: Constrained (4-5) (-1)
Risk position: Moderate (-1)
Funding and liquidity: Strong and strong (+1)
Comparable rating analysis: 0
Support: 0
ALAC support: 0
GRE support: 0
Group support: 0
Sovereign support: 0
Additional factors: -1
BNB
S&P said, "We affirmed our ratings on BNB. We base our ratings on
BNB on its important market position in the country's northeastern
region and our belief that the bank will remain exposed to riskier
segments than the industry on average (such as loans to small- to
mid-size enterprises [SMEs] and microcredit).
"We expect the bank to keep its capitalization levels despite the
gradual repayment of its perpetual hybrid debt instrument to the
Treasury. Our capital and earnings assessment on BNB reflects our
RAC metrics for the next two years, which we expect to be
5.0%-5.5%, in line with those of peers. We also incorporate into
our analysis the bank's long-term and stable funding base, as well
as its sound liquidity metrics. In addition, we believe BNB has a
very high likelihood of receiving extraordinary support from the
government, if necessary."
Outlook
S&P said, "The stable outlook for the next 12 months on BNB
reflects that on Brazil. The ratings on the latter constrain those
on the bank due to its significant exposure to government
securities and very strong link to the government, because the
latter controls BNB. Given its importance as a regional development
bank and its government ownership, we incorporate this support in
our rating, but it doesn't reflect any notches of support because
the bank's SACP is higher than the rating on the sovereign and BNB.
Therefore, we expect ratings on BNB to move in tandem with the
sovereign ratings."
Downside scenario. We could lower the ratings on BNB following the
same rating action on the sovereign. Additionally, we could lower
the national scale rating if the RAC ratio drops below 5% because
of repayment of a hybrid instrument and subordinated debt, and
lower fees from FNE.
Upside scenario. S&P would likely raise the ratings on BNB
following a similar action on the sovereign ratings.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/--
Stand-alone credit profile: bb
Anchor: bb+
Business position: Adequate (0)
Capital and earnings: Moderate (0)
Risk position: Moderate (-1)
Funding and liquidity: Adequate and strong (0)
Comparable rating analysis: 0
Support: 0
ALAC support: 0
GRE support: 0
Group support: 0
Sovereign support: 0
Additional factors: -1
Santander Brasil
S&P said, "We affirmed our ratings on Banco Brasil. The ratings
reflect the bank's diversified and resilient business activities,
stemming from a strong franchise and business diversification,
which remain the differentiating factors that underpin the
stability of its earnings despite market volatility. Moreover, our
capital and earnings assessment on Santander Brasil reflects our
RAC metrics for the next two years, which we expect to be 5.0%-5.3%
in line with those of domestic peers. We also believe the bank
benefits from a large base of stable deposits obtained through its
extensive retail branch network, which helps the bank operate with
low funding costs in Brazil. Thanks to its widely known brand and
resilience, the bank benefits from flight to quality inflow of
deposits during the times of stress. Our SACP on Santander Brasil
is 'bbb-'; however, its large exposure to sovereign risk limits its
rating."
Outlook
S&P said, "The stable outlook on Santander Brasil reflects the
outlook on our sovereign ratings on Brazil and our expectation that
the ratings on the bank will move in tandem with those on the
sovereign in the next 12 months because of its high exposure to the
domestic market. We consider Santander Brasil as a highly strategic
subsidiary of Banco Santander S.A., but we don't expect the entity
would receive extraordinary support from its parent in case of a
Brazil's default. We also expect the bank to maintain resilient
bottom-line results that will return to pre-pandemic levels by
about 2022. This is thanks to strong margins and solid business
diversification that will support capitalization. We forecast a
rise in NPLs once the borrower relief program in Brazil ends, in
line with the industry average, but this metric should stay
manageable and recover by 2022."
Downside scenario. S&P said, "We could lower the ratings on Banco
Brasil following a similar action on our sovereign ratings on
Brazil. In addition, we don't expect a downgrade due to changes in
the bank's credit factors, because its SACP is currently three
notches above its ratings, and we don't foresee any potential
deterioration in the bank's credit factors that could trigger a
downgrade.
Upside scenario. S&P could raise the global scale ratings on the
bank if it took the same rating action on Brazil.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
Stand-alone credit profile: bbb-
Anchor: bb+
Business position: Strong (+1)
Capital and earnings: Moderate (0)
Risk position: Adequate (0)
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: -3
BTG Pactual
S&P said, "We affirmed our ratings on BTG Pactual. The ratings
reflect the bank's diversified and resilient business activities as
the largest investment bank in the region. The bank's strong
management team and flexible cost structure based on a partnership
model will remain a key strength. BTG Pactual has a
well-diversified business profile across investment banking, sales
and trading, digital retail banking, wealth management, corporate
and SME lending, asset management, and insurance. Moreover, our
capital and earnings assessment on Banco BTG reflects our RAC
metrics for the next two years, which we expect to be 6.2%-6.7%,
slightly above those of domestic peers. BTG Pactual has significant
exposure to the volatility of sales and trading, as well as
investment banking. The higher complexity and volatility of some of
the markets in which BTG Pactual operates weigh on its business
stability. We expect BTG Pactual's funding profile to continue
consolidating. The bank's customer deposit base has substantially
increased thanks to its improved franchise and digital banking
strategy, and it's currently less reliant on institutional
investors, while its funding sources have broadened. Our SACP on
BTG Pactual is 'bb'; however, its large exposure to sovereign risk
limits its rating."
Outlook
S&P saidThe outlook on BTG Pactual is stable, reflecting our
expectation that in the next 12 months the bank will maintain a
relatively resilient financial performance despite economic
challenges stemming from COVID-19, thanks to its flexible balance
sheet, cost structure, and sound management capabilities. The
outlook on BTG Pactual also reflects the outlook on our sovereign
ratings on Brazil and our expectation that the ratings on the bank
will move in tandem with those on the sovereign because of its high
exposure to the domestic market."
Downside scenario. S&P said, "We could lower the ratings on BTG
Pactual following a similar action on our sovereign ratings on
Brazil. In addition, we don't expect to lower the global scale
ratings due to changes in the bank's credit factors because its
SACP is currently one notch above its ratings, and we don't foresee
any potential deterioration in the bank's credit factors that could
trigger a downgrade."
Upside scenario. S&P could raise the global scale ratings on the
bank if it took the same rating action on Brazil.
Ratings Score Snapshot
Issuer credit rating: BB-/Stable/B and brAAA/Stable/brA-1+
SACP: bb
Anchor: bb+
Business position: Adequate (0)
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: -1
Ratings List
BANCO BTG PACTUAL S.A.
RATINGS AFFIRMED
BANCO BTG PACTUAL S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
BANCO BTG PACTUAL S.A.
Analytical Factors
Stand-Alone Credit Profile (SACP) bb
BANCO BTG PACTUAL S.A. - CAYMAN BRANCH
Senior Unsecured BB-
BANCO BRADESCO S.A.
RATINGS AFFIRMED
BANCO BRADESCO S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
Analytical Factors
Stand-Alone Credit Profile (SACP) bbb-
BANCO BRADESCO S.A. (CAYMAN)
Senior Unsecured BB-
BRADESCO CAPITALIZACAO S.A.
Issuer Credit Rating
Brazil National Scale brAAA/Stable/--
BANCO NACIONAL DE DESENVOLVIMENTO ECONOMICO E SOCIAL
RATINGS AFFIRMED
BANCO NACIONAL DE DESENVOLVIMENTO ECONOMICO E SOCIAL
Issuer Credit Rating BB-/Stable/--
Brazil National Scale brAAA/Stable/--
Analytical Factors
Stand-Alone Credit Profile (SACP) bbb-
BNDESPAR-BNDES PARTICIPACOES S.A.
Issuer Credit Rating
Brazil National Scale brAAA/Stable/--
BANCO NACIONAL DE DESENVOLVIMENTO ECONOMICO E SOCIAL
Senior Unsecured BB-
BANCO SAFRA S.A.
RATINGS AFFIRMED
BANCO SAFRA S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
BANCO SAFRA S.A. CAYMAN ISLANDS BRANCH
Senior Unsecured BB-
TO FROM
BANCO SAFRA S.A.
Analytical Factors
Stand-Alone Credit Profile (SACP) bbb- bb+
BANCO SANTANDER (BRASIL) S.A.
RATINGS AFFIRMED
BANCO SANTANDER (BRASIL) S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
Analytical Factors
Stand-Alone Credit Profile (SACP) bbb-
BANCO DO BRASIL S.A.
RATINGS AFFIRMED
BANCO DO BRASIL S.A.
Issuer Credit Rating BB-/Stable/B
Analytical Factors
Stand-Alone Credit Profile (SACP) bbb
ATIVOS S.A. SECURITIZADORA DE CREDITOS FINANCEIROS
Issuer Credit Rating
Brazil National Scale brAAA/Stable/--
BANCO DO BRASIL S.A. CAYMAN ISLANDS BRANCH
Senior Unsecured BB-
Subordinated B-
Junior Subordinated CCC+
BANCO DO NORDESTE DO BRASIL S.A.
RATINGS AFFIRMED
BANCO DO NORDESTE DO BRASIL S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/--
Analytical Factors
Stand-Alone Credit Profile (SACP) bb
CAIXA ECONOMICA FEDERAL
RATINGS AFFIRMED
CAIXA ECONOMICA FEDERAL
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
Analytical Factors
Stand-Alone Credit Profile (SACP) bb
BANCO CITIBANK S.A.
RATINGS AFFIRMED
BANCO CITIBANK S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
Analytical Factors
Stand-Alone Credit Profile (SACP) bb
ITAU UNIBANCO HOLDING S.A.
RATINGS AFFIRMED
ITAU UNIBANCO HOLDING S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
ITAU UNIBANCO S.A.
Issuer Credit Rating BB-/Stable/B
Brazil National Scale brAAA/Stable/brA-1+
ITAU UNIBANCO HOLDING S.A.
Analytical Factors
Stand-Alone Credit Profile (SACP) bbb
ITAU UNIBANCO S.A. (CAYMAN)
Senior Unsecured BB-
BANCO COOPERATIVO SICREDI: S&P Affirms BB- ICR, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings affirmed its issuer and issue-level credit
ratings on the following 14 midsize Brazilian banks and their
subsidiaries. The affirmations follow a revision on Dec. 9, 2021,
to our criteria for rating banks and nonbank financial institutions
and for determining our Banking Industry Country Risk Assessment
(BICRA).
The affirmations include:
-- Banco ABC Brasil S.A. (BB-/Stable/B)
-- China Construction Bank (Brasil) Banco Multiplo S.A.
(BB-/Stable/B)
-- Haitong Banco de Investimento do Brasil S.A. (BB-/Stable/B)
-- Banco BV (BB-/Stable/B)
-- Banco Fibra S.A. (B-/Positive/B)
-- Banco Daycoval S.A. (BB-/Stable/B)
-- Banco de Desenvolvimento de Minas Gerais S.A. - BDMG
(B/Stable/--)
-- Parana Banco S.A. (BB-/Stable/B)
-- Banco Original S.A. (B/Negative/--)
-- BRB - Banco de Brasilia S.A. (B+/Stable/B)
-- Banco Pan S.A. (BB-/Stable/B)
-- Banco do Estado do Rio Grande do Sul S.A. (BB-/Stable/--)
-- Banco do Estado do Para S.A. (BB-/Stable/B)
-- Banco Cooperativo Sicredi S.A. (BB-/Stable/--)
S&P's outlooks on the 14 banks remain unchanged.
S&P said, "Our assessments of economic risk and industry risk in
Brazil also remain unchanged at '7' and '5', respectively. These
scores determine the BICRA and the anchor, or starting point, for
our ratings on financial institutions that operate primarily in
that country. The trends we see for economic risk and industry risk
remain stable."
Banco ABC Brasil S.A.
S&P said, "We affirmed our ratings on Banco ABC Brasil (ABC
Brasil). The ratings reflect ABC Brasil's 'bb' stand-alone credit
profile (SACP), but subject to the Brazilian sovereign ratings cap
at 'BB-', because like other banks operating in Brazil, ABC Brasil
has significant exposure to the domestic market and to sovereign
bonds." S&P's stand-alone assessment on the bank reflects:
-- Its narrow business lines, limited product offering, and
relatively small market share in its niche market, but also its
historically stable operating revenues;
-- ABC Brasil's projected risk-adjusted capital (RAC) ratio of
5.5%-6.5% for the next two years, which we view as in line with
peers;
-- The bank's strong asset quality metrics and conservative risk
management; and
-- Comfortable liquidity, but also our view that its funding base
is concentrated in wholesale sources, making it somewhat less
diversified than the industry average.
S&P's ratings on ABC Brasil also incorporate its view of it as a
strategically important subsidiary to its parent, Arab Banking
Corp. However, this doesn't provide any rating uplift for ABC
Brasil due to the Brazil sovereign rating constraint in place.
Outlook
S&P said, "The stable outlook on ABC Brasil reflects that on our
sovereign rating on Brazil (BB-/Stable/B) for the next 12 months.
The sovereign rating currently limits the ratings on the bank,
given its large exposure to sovereign risk. Therefore, we expect
the ratings on the bank to move in tandem with the sovereign."
Downside scenario
S&P would lower the ratings on the bank following a similar rating
action on the sovereign.
Upside scenario
Alternatively, S&P would raise the ratings on ABC Brasil following
a similar action on the sovereign.
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAAA/Stable/brA-1+
Stand-alone credit profile: bb
Anchor: bb+
Business Position: Moderate (-1)
Capital and Earnings: Moderate (0)
Risk Position: Strong (+1)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: 0
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: -1
China Construction Bank (Brasil) Banco Multiplo S.A.
S&P said, "We affirmed our ratings on China Construction Bank
(Brasil) Banco Multiplo S.A. (CCB Brasil). We base our ratings on
the bank on its status as a highly strategic subsidiary of China
Construction Bank Corp.. As a result, we apply one notch of uplift
to CCB Brasil's 'b+' SACP. The parent has provided high-level
support to its Brazilian subsidiary, including several rounds of
capital injections, a large credit facility, and the appointment of
senior management. We also believe that extraordinary support from
the Chinese central government to CCB could benefit CCB Brasil. Our
ratings on the bank also reflect the balance between its
well-established franchise in the middle-market segment in Brazil
against its limited product diversity and small market share; its
weak internal capital, which weighs on our RAC ratio; its improving
asset quality metrics; and its attractive and stable funding
support from its parent."
Outlook
S&P said, "The stable outlook on CCB Brasil reflects that on the
sovereign rating on Brazil for the next 12 months. We believe that
CCB Brasil will remain in line with CCB's strategy and a highly
strategic subsidiary. Therefore, we believe the group will provide
support to the bank under any foreseeable circumstances, except in
an event of sovereign distress. On a stand-alone basis, we expect
CCB Brasil's bottom-line results to improve in 2021, reaching a
breakeven."
Downside scenario
S&P said, "We could lower the ratings on the bank following the
same rating action on Brazil. Although unlikely, we could also take
a negative rating action on CCB Brasil following a change in its
subsidiary status to a lower category."
Upside scenario
S&P could raise the global scale ratings on the bank if it took the
same rating action on Brazil.
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAAA/Stable/--
Stand-alone credit profile: b+
Anchor: bb+
Business Position: Moderate (-1)
Capital and Earnings: Constrained (4-5) (-1)
Risk Position: Moderate (-1)
Funding and Liquidity: Adequate and Adequate (0)
Comparable Rating Analysis: 0
Support: +1
ALAC Support: 0
GRE Support: 0
Group Support: +1
Sovereign Support: 0
Additional Factors: 0
Haitong Banco de Investimento do Brasil S.A.
S&P said, "We affirmed our ratings on Haitong Banco de Investimento
do Brasil S.A. (Haitong Brasil). We base our ratings on Haitong
Brasil on our view of it as a core subsidiary of Haitong Bank S.A.
This is due to Haitong Brasil's significant revenue contribution,
position as the hub for the group's Latin American operations, and
the parent's long-term commitment to the Brazilian operations.
Nonetheless, the sovereign rating on Brazil caps the rating on
Haitong Brasil, given our view that the parent's extraordinary
support is less likely to occur in the event of Brazil's sovereign
distress.
"Haitong Brasil's SACP reflects its narrow business profile. The
latter mostly consists of investment banking activities, which we
believe are more sensitive to market perceptions of
creditworthiness. We also base our ratings on the bank on our
forecasted RAC ratio of 5%-6% for the next two years. Additionally,
we incorporate the potential risks stemming from the bank's
exposures to a narrow range of economic sectors and single
counterparties. The ratings also reflect our view that Haitong
Brasil's funding is less diversified than the industry's average,
and that its liquidity position currently provides adequate cushion
to cope with cash outflows at least for the next 12 months."
Outlook
S&P said, "The stable outlook on our ratings on Haitong Brasil for
the next 12 months reflects the outlook on the foreign currency
sovereign rating on Brazil (BB-/Stable/B), which limits the ratings
on the bank. We also incorporate its importance as a core
subsidiary of Haitong Bank. We expect the Brazilian subsidiary to
remain fully aligned with Haitong Bank's strategy and to continue
representing a significant part of consolidated revenue and balance
sheet in the same period. Therefore, we believe the group will
provide support to the bank under any foreseeable circumstances,
except in the event of sovereign distress."
Downside scenario
S&P said, "We could lower the ratings on Haitong Brasil following a
downgrade of the sovereign. Moreover, we could lower the national
scale ratings following a downgrade of Haitong Bank or if the
subsidiary's strategic importance to its parent decreases. We
believe the latter could occur if Haitong Brasil's revenue
contribution to the group diminishes."
Upside scenario
An upgrade of Haitong Brasil on the global scale would depend on an
upgrade of Brazil. Moreover, an upgrade on the national scale isn't
possible because it is already at the top of the scale.
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAAA/Stable/brA-1+
Stand-alone credit profile: b-
Anchor: bb+
Business Position: Constrained (-2)
Capital and Earnings: Moderate (0)
Risk Position: Constrained (-2)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: 0
Support: +3
ALAC Support: 0
GRE Support: 0
Group Support: +3
Sovereign Support: 0
Additional Factors: 0
Banco BV
S&P affirmed its ratings on Banco BV (BV). The ratings reflect the
following factors:
-- BV's leading market position in used vehicle financing and
diversified portfolio of products for corporate clients, which
bolster business stability.
-- Lower RAC ratio than those of peers because of deferred tax
assets (DTAs), with a projected RAC ratio of 4.5%-5.0%.
-- The bank's material exposure to used vehicle financing, which
is a potentially volatile niche and has intrinsically high
delinquency rates, is a relative weakness. However, this is
partially mitigated by higher interest rates charged on loans.
-- Funding base that benefits from ongoing support from its
shareholder, Banco do Brasil, and adequate liquidity.
Outlook
S&P said, "The stable outlook on BV for the next 12 months reflects
the outlook on the foreign currency sovereign rating on Brazil
(BB-/Stable/B), which limits the ratings on the bank. Therefore, we
expect the ratings on BV to move in tandem with the sovereign
ratings. We expect BV's profitability to improve in 2021 compared
to last year. We believe that the bank's increased provisioning
last year provided an adequate coverage of higher nonperforming
loans (NPLs) in 2021, such that return on equity (ROE) should
improve this year."
Downside scenario
S&P said, "We could lower the ratings on BV following the same
rating action on the sovereign rating on Brazil. On a stand-alone
basis (SACP), we could lower the bank's funding profile if its
stable funding sources deteriorate, which includes interbank credit
lines from Banco do Brasil and the portfolio acquisition
facilities. We believe this could happen if Banco do Brasil divests
its stake in the bank. Nevertheless, a downward revision of BV's
funding score wouldn't lead to a downgrade of the bank on the
global scale, given its status as a moderately strategic subsidiary
of Votorantim S.A. (BBB-/Stable/--), which could give the bank up
to one notch of extraordinary group support."
Upside scenario
S&P could raise the global scale ratings on BV following an upgrade
of Brazil.
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAAA/Stable/brA-1+
Stand-alone credit profile: bb-
Anchor: bb+
Business Position: Adequate (0)
Capital and Earnings: Constrained (4-5) (-1)
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
Banco Fibra
S&P said, "We affirmed our ratings on Banco Fibra (Fibra). We base
our ratings on the bank on its concentrated business profile and
its track record of weak profitability, although this has been
strengthening after years of strategic repositioning. We also
consider Fibra's weaker capitalization than those of peers. In our
view, the entity's high amount of DTAs continues to constrain its
capitalization and weakens capital adequacy. We expect Fibra's RAC
ratio to be 4.0%-4.5% in the next two years. The ratings also
reflect our view of a funding structure that's still narrow in
terms of stable funding sources. Fibra's funding profile is less
diversified than the industry average, given that the bank is
dependent on third-party brokers, which we view as a more volatile
and expensive source than a diversified retail base."
Outlook
S&P said, "The positive outlook reflects our view that the bank's
revamped strategy could lead to an upgrade in the next 12 months.
In our view, Fibra should keep benefiting from the momentum of
financing backed by receivables, while seeking to diversify revenue
and improve further its financial performance without denting its
asset quality. Moreover, we expect the bank's capitalization to
remain weaker than the industry average, with a RAC ratio of 4.0%
on average in the next two years, and Basel III capital at least
100 basis points above the minimum regulatory requirements. We also
expect the bank to continue managing its liquidity in a
conservative manner in the same period."
Downside scenario
S&P said, "We could revise the outlook to stable if Fibra's revenue
stability weakens or if the rapid growth pressures asset quality.
We could lower the ratings if Fibra's liquidity weakens sharply or
if its capacity to meet its financial commitments decreases.
Moreover, we could lower the ratings on the bank if the capital
ratios drop below the minimum regulatory requirements of 10.5% or
if its RAC ratio stays consistently below 3%."
Upside scenario
S&P said, "We can raise the ratings on Fibra if it continues
improving its financial performance without jeopardizing its asset
quality. We believe that consistent credit growth in lower-risk
lending segments could prompt us to further revise our assessment
of its risk profile. We could also increase our ratings if Fibra
maintains a RAC ratio consistently above 5%, but we assume this
scenario is likely only following capital injections."
Ratings score snapshot
Issuer Credit Rating:
Global scale: B-/Positive/B
National scale: brBBB+/Positive/brA-2
Stand-alone credit profile: b-
Anchor: bb+
Business Position: Constrained (-2)
Capital and Earnings: Constrained (4-5) (-1)
Risk Position: Moderate (-1)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: 0
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: 0
Banco Daycoval
S&P said, "We affirmed our ratings on Daycoval. The ratings reflect
the bank's somewhat concentrated business profile compared to
larger banks operating in Brazil, given its focus on middle-market
and payroll lending. This concentration is counterbalanced by the
bank's solid expertise in its core businesses and its good earnings
stability. We also base our analysis on our expectation that the
bank will manage loan growth in the next two years if the political
and economic conditions allow for it, leading to a forecast RAC
ratio of 5.5%-6.0% for that time period. Moreover, the bank has
kept a diversified client base and stable asset quality metrics
despite the challenges in the Brazilian economy. The ratings also
incorporate our view that the bank's funding structure still lacks
broader depositor and funding source diversification relative to
the industry average, and that its liquidity position will continue
to provide a comfortable cushion to cope with cash outflows over
the next 12 months."
Outlook
S&P sad, 'The stable outlook on Daycoval reflects our view that we
don't expect any rating changes in the next 12 months that result
from the bank's SACP. We believe the bank will continue to report
strong financial performance and stable asset quality metrics."
Downside scenario
S&P said, "We could lower the ratings on Daycoval if the bank's RAC
ratio drops to consistently below 5% because of
faster-than-expected loan growth or eroding asset quality. Our base
case considers that Daycoval will keep asset quality metrics
slightly better then the system's average and will have sound
profitability to support credit growth in the next two years."
Upside scenario:
S&P said, "In our view, an upgrade of Daycoval would depend on its
ability to continue to consistently outperform its peers. However,
an upgrade on the global scale would only be possible if we
simultaneously upgrade Brazil. Moreover, we don't expect major
shifts in the bank's credit fundamentals over the next year because
we believe it will maintain its current business and funding
structure, capitalization, and sound asset quality metrics."
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAA+/Stable/brA-1+
Stand-alone credit profile: bb-
Anchor: bb+
Business Position: Moderate (-1)
Capital and Earnings: Moderate (0)
Risk Position: Adequate (0)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: 0
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: 0
BDMG
S&P said, "We affirmed our ratings on BDMG. We base our ratings on
BDMG on its high client concentration and narrow geographic mix of
business activities. We also factor in the large stock of
restructured loans on its balance sheet and its concentrated
funding base. The mitigating factors are the bank's good
capitalization metrics and prudent liquidity management. Moreover,
despite the weak finances of the state of Minas Gerais (SD/--/--),
the bank's controlling shareholder, we believe that Brazil's Fiscal
Responsibility Law, banking regulations, and the State-Owned
Company Act have protected the bank from an extraordinary state
intervention. BDMG's capitalization is stronger than those of
peers, and we expect it to keep supporting its creditworthiness,
with forecasted average RAC ratio for the next two years at
13.0%-13.1%, which we consider strong."
Outlook
S&P said, "The stable outlook on BDMG reflects our view that the
bank's credit factors will remain unchanged over the next 12
months. We expect the bank to maintain a stable financial
performance, sustaining moderate business growth, with ROE of
4.5%-5.5% in the next two years. We also expect the bank to
maintain solid capitalization metrics, with a forecasted RAC ratio
of 13% on average in the next two years."
Downside scenario
S&P said, "We could lower the rating if BDMG's credit portfolio and
revenues drop sharply, making it more vulnerable to adverse
operating conditions. We could also take a negative rating action
if the bank's asset quality deteriorates, causing its RAC ratio to
drop below 10% due to credit losses."
Upside scenario
S&P said, "We could upgrade BDMG if asset quality improves
significantly, with a notable reduction of restructured loans. Due
to the long-term nature of BDMG's loan portfolio, we believe an
upgrade is unlikely in the next few years."
Ratings score snapshot
Issuer Credit Rating:
Global scale: B/Stable/--
National scale: brA-/Stable/--
Stand-alone credit profile: b
Anchor: bb+
Business Position: Constrained (-2)
Capital and Earnings: Strong (+1)
Risk Position: Constrained (-2)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: 0
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: 0
Parana Banco S.A.
S&p said, "We affirmed our ratings on Parana Banco S.A. (Parana
Banco). The ratings reflect the bank's concentrated business in
payroll deductible loans, a segment in which the bank has extensive
expertise. Although we believe the operation in a single business
line narrows revenue diversity, it allows Parana Banco to control
credit losses due to the intrinsically lower risk of payroll loans.
The bank mostly lends to the federal and Parana state government
retirees, which have been less affected than other borrowers during
the pandemic-related crisis. In addition, the ratings also reflect
the bank's strong capitalization based on our RAC framework, its
wholesale-oriented funding base, and its adequate liquidity."
Outlook
S&P said, "The stable outlook on Parana Banco reflects our view
that the credit factors that compose its SACP should remain stable
in the next 12 months. We believe the bank will maintain manageable
asset quality metrics despite the economic crisis caused by the
measures to contain COVID-19. We expect the bank to continue
focusing on payroll loans, especially linked to the Brazilian
Social Security (INSS), which should keep its losses low based on
this lending segment's intrinsically lower risk."
Downside scenario
S&P could downgrade Parana Banco if its RAC is consistently below
10% because of rapid business growth and new digital product
offerings, and not compensated by strong internal capital
generation or capital injections.
Upside scenario
S&P said, "We don't expect to raise the global scale rating on
Parana Banco, given that it's at the same level as the sovereign
rating on Brazil. We could raise the national scale ratings on
Parana Banco if it consistently outperforms its peers in terms of
business generation and profitability, while maintaining a stable
RAC ratio and healthy asset quality metrics."
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAA+/Stable/--
Stand-alone credit profile: bb-
Anchor: bb+
Business Position: Constrained (-2)
Capital and Earnings: Strong (+1)
Risk Position: Adequate (0)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: 0
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: 0
Banco Original
S&P said, "We affirmed our ratings on Banco Original. Our rating
analysis on the bank incorporates our view of the group,
Conglomerado Financeiro Original (not rated). In our view, Banco
Original plays a key role in the conglomerate's strategy and
represents most of the the group's capital and revenue. Therefore,
we view the bank as a core subsidiary of the group. We base our
assessment of the group on its small market share in Brazil and
narrow product range, despite the stability stemming from its
operation of receivables discounting and the efforts to expand the
digital business through its new ecosystem combining banking,
technology, and digital wallet services. We think the bank's weak
profitability in the past few years has been highly influenced by
temporary accounting losses amid high investments in its digital
services and retail business, which have contributed to a dip in
its capital metrics. However, shareholders have supported
regulatory capital requirements and we believe incentives remain in
place. In addition, we think the risk of weak and volatile
bottom-line results are in line with digital peers and are
incorporated in the current rating category. Therefore, we apply a
one-notch upward adjustment under our comparable rating analysis
(CRA) to the issuer's SACP."
Outlook
S&P said, "We base the negative outlook for the next 12 months on
Banco Original's volatile earnings and weak, although improving,
operational performance amid fast credit growth. This could
continue to pressure its capitalization and require additional
shareholder support."
Upside scenario
S&P said, "We could revise the outlook to stable if the bank
continues to improve its financial performance, posting steady and
consistent operational results in the coming years, without
jeopardizing its asset quality. In our view, that could be possible
if it continues to expand credit, with an increasing number of
clients, and results are sufficient to support the business growth
and stronger capitalization without depending on shareholder
support."
Downside scenario
S&P said, "We could downgrade Banco Original if the bank isn't able
to maintain regulatory capital at least 100 basis points (bps)
above minimum requirements consistently, or if an unsuccessful
business strategy results in persistent weak and volatile
performance in the next 12 months. Moreover, we could also lower
the ratings if the RAC ratio drops consistently below 3% due to
deeper financial losses or higher-than-expected business growth,
absent any capital injections."
Ratings score snapshot
Issuer Credit Rating:
Global scale: B/Negative/--
National scale: brA-/Negative/brA-2
Stand-alone credit profile: b
Anchor: bb+
Business Position: Constrained (-2)
Capital and Earnings: Constrained (4-5) (-1)
Risk Position: Moderate (-1)
Funding and Liquidity: Moderate and Adequate (-1)
Comparable Rating Analysis: +1
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: 0
BRB - Banco de Brasilia S.A.
S&P affirmed its ratings on BRB. S&P bases its ratings on BRB on
the following factors:
BRB's significant concentration in Brazil's Federal District (DF),
narrow revenue diversification, and small market share, although
recent business diversification initiatives and ongoing growth
could enhance its business position in the medium to long term.
S&P said, "Our expectation that BRB will maintain its
capitalization levels despite its rapid growth, supported by
internal capital reallocation and hybrids issuance. Our projected
RAC ratio of 5.0%-5.5% supports our opinion."
BRB's asset quality should remain solid thanks to high share of
payroll loans, but shifting loan mix is a risk.
The bank's long-term, stable, and low-cost funding base as the main
financial agent of the DF's government is a relative strength,
while its liquidity metrics remain comfortable.
Outlook
S&P said, "The stable outlook on BRB reflects our view that the
ratings are unlikely to change over the next 12 months. We believe
that BRB's sound profitability, good asset quality indicators
recently, and increasing business diversification should outweigh,
over the next 12 months, the risks arising from BRB's rapid
expansion."
Downside scenario
S&P said, "We could lower the ratings on BRB if its capitalization
metrics, which include our forecasted RAC ratio, consistently
weaken to below 5.0% because of significant growth and/or poorer
profitability, which could stem from higher-than-expected credit
losses."
Upside scenario
S&P could raise the ratings on the bank if strategic initiatives
materially widen geographic and product diversification without
material impacts to asset quality metrics and profitability, and as
long as capitalization levels remain stable.
Ratings score snapshot
Issuer Credit Rating:
Global scale: B+/Stable/B
National scale: brAA/Stable/brA-1+
Stand-alone credit profile: b+
Anchor: bb+
Business Position: Constrained (-2)
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
Banco Pan S.A.
S&P said, "We affirmed our ratings on Banco Pan. The ratings
reflect that we primarily determine the ratings on Banco Pan by the
creditworthiness of the parent, Banco BTG Pactual S.A. In our
opinion, the bank has a well-defined strategy aiming to expand
lending to low-income individuals through its digital platform.
Banco Pan's business position balances the bank's small market
share with its national presence and its somewhat diversified
portfolio, the bulk of which consists of payroll lending and
vehicle financing. Moreover, our capital and earnings assessment on
Pan reflects our RAC ratio for the next two years, which we expect
to be about 6.0%, in line with those of peers. We expect credit
growth to be driven by a consistent and well-defined expansion into
vehicle financing, discounted payroll loans, and loans guaranteed
by Brazil's Severance Indemnity Fund (FGTS). Finally, we believe
Banco Pan's funding benefits from a long-term relationship with
Caixa Economica Federal."
Outlook
S&P said, "The stable outlook reflects that of the parent, BTG
Pactual, due to Banco Pan's status as a core subsidiary for the
group. We expect Banco Pan to maintain healthy internal capital and
profitability, despite the economic challenges stemming from
COVID-19 in Brazil. Nevertheless, we believe the bank's asset
quality will remain under pressure in the next 12 months due to
higher risk in the economy. We also expect shareholders to provide
support in the next 12 months if necessary."
Downside scenario
Although unlikely, S&P could lower the ratings on Banco Pan
following a downgrade of BTG Pactual, because it expects the
ratings on the subsidiary to move in tandem with those on its
parent.
Upside scenario
S&P said, "As noted, we expect the ratings on Banco Pan to move in
tandem with those of its parent. Therefore, an upgrade of Banco Pan
on the national scale could occur following a national scale
upgrade on BTG Pactual. We do not anticipate an upgrade of the bank
on the global scale because the sovereign ratings limit the ratings
on the bank."
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAAA/Stable/brA-1+
Stand-alone credit profile: bb-
Anchor: bb+
Business Position: Moderate (-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
Banco do Estado do Rio Grande do Sul - Banrisul
S&P said, "We affirmed our ratings on Banrisul. The ratings on the
bank are based on its strong brand reputation and a large market
share in the state of Rio Grande do Sul, with operations that have
been resilient despite the state's prolonged weak finances. The
ratings also reflect our view of the bank's diversified and stable
funding structure, with a large branch network that enables funding
through demand, savings, and time deposits. Moreover, our capital
and earnings assessment on Banrisul reflects our RAC ratio for the
next two years, which we expect to be 5.5%-6.0%, in line with those
of peers."
Outlook
S&P said, "The national scale rating outlook on Banrisul for the
next 12 months is positive, reflecting our view that the bank's
efforts to diversify its revenue sources and focus on its secured
retail operations could result in stronger performance than among
peers, despite the pandemic-induced economic woes in Brazil. The
global scale rating outlook remains stable, because the ratings on
Banrisul are at the same level as those on Brazil, and we rarely
rate a financial institution above the sovereign."
Downside scenario
S&P said, "We could revise the national scale rating outlook to
stable if we believe the strength of Banrisul's brand isn't
sufficient to mitigate the indirect effects of the state's weaker
finances or if the bank substantially increases its risk appetite.
We don't expect a global scale downgrade in the next 12 months."
Upside scenario
S&P could raise the national scale rating on Banrisul if it
continues to diversify its revenue base, bolstering its operating
performance due to increasing business stability that could
mitigate the indirect effects of the state's and Brazil's sluggish
economy. Moreover, the government's goal to raise Banrisul's role
as an important financing agent in the state could benefit its
business growth and resilience. S&P doesn't expect a global scale
upgrade because the sovereign ratings limit those on the bank.
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/--
National scale: brAA+/Positive/--
Stand-alone credit profile: bb-
Anchor: bb+
Business Position: Moderate (-1)
Capital and Earnings: Moderate (0)
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
Banco do Estado do Para S.A. – Banpara
S&P affirmed its ratings on Banpara. S&P bases the ratings on the
bank on the following factors:
-- Its narrow business lines--it mainly offers payroll deductible
lending to the state's public employees and retirees--combined with
its geographical concentration in the state of Para. Despite its
plans to expand business lines by offering a greater variety of
products in the state, we expect Banpara to keep focusing on its
traditional areas of expertise for the next few years.
-- Banpara's above-average historical and current capitalization
levels, stemming from a forecast RAC ratio of 9.0%-9.5% for the
next couple of years, which in turn, is supported by strong
profitability and significant profit retention.
-- The bank's solid asset quality metrics, benefiting from a high
share of payroll loans in its portfolio, which is mitigated by
significant counterparty and geographical concentrations. On the
other hand, Banpara's plans to expand its product offerings could
weaken asset quality metrics if exposure to riskier assets rises.
-- Banpara's abundant access to retail funding thanks to its
widespread branch network across the state of Para, its
well-recognized regional brand, and its position as the state's
financial agent.
-- A very comfortable liquidity position, which provides a large
cushion to cover financial obligations for the next 12 months.
Outlook
S&P said, "The stable outlook on Banpara reflects our view that the
ratings are unlikely to change in the next 12 months. We expect
Banpara to continue focusing on payroll-deductible loans, which
should contribute to sound profitability and stable asset quality,
while the bank should continue to slowly expand new lending
businesses, such as mortgages and corporate loans."
Downside scenario
S&P said, "We could lower our global scale ratings on Banpara if we
see a deterioration in the state of Para's fiscal conditions to a
point of dragging down the bank's operations or following a similar
action on the sovereign ratings on Brazil. We could also downgrade
Banpara if its strategy and role to the government impair its
business prospects, financial results, capital levels, funding
availability, or liquidity."
Upside scenario
S&P said, "We view the global scale upgrade as unlikely, given that
it would depend on the upgrade of Brazil, Para's healthy finances,
and a considerable and consistent widening in the bank's business
diversification. We could upgrade Banpara on the national scale if
its business diversification, relative to those of peers, improves
consistently, while liquidity and funding remain stable, and the
state's finances further strengthen."
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/B
National scale: brAA+/Stable/brA-1+
Stand-alone credit profile: bb-
Anchor: bb+
Business Position: Constrained (-2)
Capital and Earnings: Adequate (0)
Risk Position: Moderate (-1)
Funding and Liquidity: Strong and Strong (+1)
Comparable Rating Analysis: 0
Support: 0
ALAC Support: 0
GRE Support: 0
Group Support: 0
Sovereign Support: 0
Additional Factors: 0
Banco Cooperativo Sicredi S.A.
S&P said, "We affirmed our ratings on Sicredi. The rating reflects
the cooperative system's aggregate credit quality because the bank
and the credit unions form an integrated institution that would
provide support in any foreseeable circumstance to any of the
integrated entities. Our rating also considers the competitive
advantage stemming from Sicredi's business model, which promotes
stability of the customer and depositor base, the latter of which
consists of members of the system. Sicredi benefits from a
diversified and stable funding structure due to its large branch
network, with retail deposits making up most of the funding base.
Moreover, our capital and earnings assessment on Sicredi is based
on our projected RAC ratio of 7.5%-8.0% in the next two years, a
result of robust internal capital, supporting the cooperative
system's growth."
Outlook
The stable outlook on Sicredi reflects that on the sovereign rating
on Brazil for the next 12 months. The sovereign rating cap on the
rating on the bank reflects Sicredi's high exposure to the domestic
market. As a result, S&P expects the ratings on the bank to move in
tandem with that on the sovereign. S&P expects Sicredi to continue
strengthening its cooperative business model, expanding both the
number of members and the geographical scope of its cooperatives,
despite the deep economic crisis caused by the measures to contain
the spread of COVID-19.
Downside scenario
S&P said, "We could downgrade Sicredi following the same action on
Brazil because the bank is currently rated at the same level as the
sovereign. In our view, a downgrade due to a deterioration in
Sicredi's credit quality is unlikely, because we don't see pressure
on its credit factors."
Upside scenario
S&P could upgrade Sicredi following the same action on Brazil.
Ratings score snapshot
Issuer Credit Rating:
Global scale: BB-/Stable/--
National scale: brAAA/Stable/--
Stand-alone credit profile: bb
Anchor: bb+
Business Position: Adequate (0)
Capital and Earnings: Adequate (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
Banco ABC Brasil S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAAA/Stable/brA-1+
RATINGS AFFIRMED
CHINA CONSTRUCTION BANK (BRASIL) BANCO MULTIPLO S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAAA/Stable/--
RATINGS AFFIRMED
HAITONG BANCO DE INVESTIMENTO DO BRASIL S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAAA/Stable/brA-1+
RATINGS AFFIRMED
BANCO BV
Issuer credit rating BB-/Stable/B
Brazil national scale brAAA/Stable/brA-1+
Banco BV S.A.
Issuer credit rating
Brazil national scale brAAA/Stable/brA-1+
RATINGS AFFIRMED
BANCO FIBRA S.A.
Issuer credit rating B-/Positive/B
Brazil national scale brBBB+/Positive/brA-2
RATINGS AFFIRMED
BANCO DAYCOVAL S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAA+/Stable/brA-1+
RATINGS AFFIRMED
BANCO DE DESENVOLVIMENTO DE MINAS GERAIS S.A. - BDMG
Issuer credit rating B/Stable/--
Brazil national scale brA-/Stable/--
RATINGS AFFIRMED
PARANA BANCO S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAA+/Stable/--
RATINGS AFFIRMED
BANCO ORIGINAL S.A.
Issuer credit rating B/Negative/--
Brazil national scale brA-/Negative/brA-2
RATINGS AFFIRMED
BRB - BANCO DE BRASILIA S.A.
Issuer credit rating B+/Stable/B
Brazil national scale brAA/Stable/brA-1+
RATINGS AFFIRMED
BANCO PAN S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAAA/Stable/brA-1+
RATINGS AFFIRMED
BANCO DO ESTADO DO RIO GRANDE DO SUL S.A.
Issuer credit rating BB-/Stable/--
Brazil national scale brAA+/Positive/--
RATINGS AFFIRMED
BANCO DO ESTADO DO PARA S.A.
Issuer credit rating BB-/Stable/B
Brazil national scale brAA+/Stable/brA-1+
RATINGS AFFIRMED
BANCO COOPERATIVO SICREDI S.A.
Issuer credit rating BB-/Stable/--
Brazil national scale brAAA/Stable/--
BRAZIL: Central Bank Puts Brakes on Tougher Rules for Fintechs
--------------------------------------------------------------
Reuters reports that Brazil's central bank has put the brakes on
tougher regulations for the burgeoning fintech industry,
withdrawing a draft proposal that had been set to be voted on last
month by the government's top financial policy-making body,
according to four sources familiar with the matter.
On Nov. 18, the central bank proposed that the regulations be
discussed at an extraordinary meeting of the National Monetary
Council (CMN) but the new rules - which look to level the playing
field between fintechs and traditional banks - were never voted on,
the sources say, according to Reuters.
It is unclear why the central bank chose to delay the passing of
the regulatory changes but it has left a multi-billion-dollar
sector on tenterhooks, the report notes.
The proposed changes would raise the minimum capital requirements
for payment institutions according to their size, transaction
volume and risk-weighted assets, the report relays.
They have been expected by the sector in some form since a public
consultation was opened on the subject in late 2020, 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.
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 2021 with stable outlook. 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. Moody's credit rating for Brazil was last set at Ba2
with stable outlook (April 2018). DBRS's credit rating for Brazil
is BB (low) with stable outlook (March 2018).
===========================
C A Y M A N I S L A N D S
===========================
CAYMAN ISLANDS: Extends Cruise Ship Ban to Dec. 31
--------------------------------------------------
Jamaica Observer reports that the Cayman Islands Government
officially approved an extension of its cruise ship ban - in place
since March 2020 - week Dec. 20-26. The ban has been extended to
December 31, 2021 and onlookers say that it might be pushed further
into the new year, according to Jamaica Observer.
Cayman saw cruise revenues of US$224 million during the 2017 and
2018 cruise season, the report notes. However, in July of this
year, the Government indicated that the ships are unlikely to
return before February 2022, the report discloses.
The territory comprises Cayman Brac, Grand Cayman and Little
Cayman. In 2019, there were 1.83 million cruise passengers on the
islands, with 271,000 visitors in January, the report says.
In one report, Premier Wayne Panton said, "We will first assess the
COVID-19 situation on January 27 next year in a local and
international context to determine when and how to proceed with
further relaxation of restrictions and travel," the report relays.
He added, "If the assessment allows, we would begin to welcome all
travellers and start the reintroduction of cruise tourism," the
report notes.
Some analysts have identified the Government's interest in
alternative tourism forms and cutting emissions as influential
factors, the report relays.
In 2019, former Premier Alden McLaughlin had welcomed a promise by
cruise lines, including MSC Cruises, Carnival Cruise Line, Royal
Caribbean, and Disney Cruise Line, to build a cruise dock in
Georgetown, the report adds.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Dominican Diaspora Spent Less During Visits
---------------------------------------------------------------
Dominican Today reports that Dominicans living abroad who have
visited the Dominican Republic in these two years of pandemic have
spent on average less money than before the health crisis.
According to the Central Bank, in 2018 and 2019 the average
spending per stay of a non-resident Dominican was between US$813
and US$877, while in 2020 and 2021 it was between US$632 and
US$783, the report notes.
Although the number of days they remain in their homeland is
similar in all those years, the last two have been affected by
lockdowns and night curfews, measures that impacted on the hours of
commercial and social activities, according to Dominican Today.
In the last quarter of the year - which includes December, the
month in which the arrival of the diaspora increases - they spent
an average of US$825.70 in 2019. Last year it dropped to US$632.88,
the report notes.
The Central Bank also reported that over 70% of tourist spending
goes to accommodation, food and beverages, local transportation,
entertainment, souvenirs and gifts, the report relays.
If the tourists arrive on a cruise, almost half of their spending
has to do with souvenirs and gifts, 40% on tours and the rest on
food and drinks, local transportation and other expenses, 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.
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).
=====================
E L S A L V A D O R
=====================
EL SALVADOR: To Modernize Statistical System with $44MM IDB Support
-------------------------------------------------------------------
El Salvador will modernize its statistical system and increase the
use of statistical information in public and private
decision-making with support from a $44 million loan approved by
the Inter-American Development Bank (IDB).
The operation will finance a program to improve the quality of
official statistical information in terms of relevance, timeliness,
reliability, and accessibility. It will additionally strengthen the
institutional framework of the General Directorate of Statistics
and Censuses (DIGESTYC).
The program will provide technical and financial support for the
country's main census activities, including the National Population
and Housing Census, the National Agricultural Census, the Economic
Census, and the National Survey of Household Income and
Expenditure, guaranteeing their quality by following international
standards and good practices, and generating technical capacities
at DIGESTYC.
Likewise, it will support strengthening DIGESTYC so it produces
quality information through surveys, censuses, and administrative
records by introducing innovations in all phases of the census
process, particularly data collection and interaction with census
respondents.
Beneficiaries of the program include the central government and its
decentralized units, as they will count on reliable, timely, and
relevant primary and strategic information for the development of
policies concerning public order, plans, and socioeconomic
projects. As the coordinating entity of the National Statistical
Service, DIGESTYC will benefit from modern tools and an updated
statistical base.
Other beneficiaries include civil society, by having data that
promote transparency and accountability; and the productive sector,
by counting on quality, updated, and disaggregated census
information that allows it to formulate plans and make projections
on investment and supply of goods and services, among other
activities.
This operation is aligned with the IDB's Vision 2025 - Reinvesting
in the Americas: A Decade of Opportunities, a plan to achieve the
recovery and inclusive growth in Latin America and the Caribbean,
in the areas of digital economy, gender and inclusion, and climate
change.
The IDB loan of $44 million has a 25-year repayment term, a
5.5-year grace period, and an interest rate based on LIBOR.
===========
M E X I C O
===========
TAMAULIPAS: Moody's Lowers Issuer Ratings to Ba3; Outlook Stable
----------------------------------------------------------------
Moody's de Mexico S.A. de C.V. downgraded the issuer ratings of the
state of Tamaulipas to Ba3/A3.mx from Ba2/A2.mx (Global Scale,
local currency/Mexico National Scale), downgraded its baseline
credit assessment (BCA) to ba3 from ba2 and changed the outlook to
stable from negative.
RATINGS RATIONALE
The downgrade of the BCA to ba3 from ba2 and issuer ratings to
Ba3/A3.mx from Ba2/A2.mx reflect increased debt levels, continued
cash financing requirements that have resulted in a weak liquidity
position along a recurrent use of short-term debt as well as low
operating margins.
Tamaulipas net direct to indirect debt has increased at a compound
annual growth rate of 46% from 2016-20 with the expectation that
this ratio will increase further in 2021 given the contracting of
two Public Private Projects (PPPs) for a total amount of MXN 9.9
billion to fund a highway, considered as self-sufficient debt, and
a public security project. Therefore, Moody´s expects that the net
direct to indirect debt to operating revenues will increase to an
average of 68% in 2021-22, figure that contrast with the 52% of
2020.
Additionally, from 2016-20 Tamaulipas registered financial deficits
that averaged -3.2% of total revenues and weak operating balances
amounting to -0.1% of operating revenues. These results were
prompted by operating expenditures outpacing operating revenues and
by a decline of federal non-earmarked transfers ("convenios") in
conjunction with a sustained high capital expenditure. Moody's
expect that the operating and financial balances will average -3.8%
of operating revenues and -3.9% of total revenues in 2021-22.
As the result of the cash financing requirements, Tamaulipas's
liquidity has also deteriorated, registering an average ratio of
cash to current liabilities of 0.47 times (x) from 2018 to 2020,
compared to an average of 0.84 x in 2016-17. Due to the tight
liquidity position, the state has recurred to short-term debt. As
of September 2021, the cash to current liabilities equaled 0.73x
similar to the 0.74x of September 2020. However, the outstanding
amount of short-term debt increased to MXN 709 million from the MXN
508 million registered in the same period of the previous year.
Considering the increase in the short-term debt as well as the
expected cash financing requirements Moody´s expects that
Tamaulipas liquidity will remain tight at an average 0.35x in
2021-22.
RATIONALE FOR THE STABLE OUTLOOK
The recommendation to change the outlook to stable from negative
reflects Moody's view that debt levels will stabilize and that the
operating balances and liquidity will be in line with other Ba3
Mexican rated peers.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
If Tamaulipas's operating and financial balances continue to
deteriorate, triggering a further weakening in the state's
liquidity position, below Moody's expectations, then the ratings
could face negative pressure. Conversely, if the state improves the
operating and financial balances and strengthens its liquidity the
ratings could face upward pressure.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Environmental considerations are not material to the state's
ratings.
Social considerations represent a moderate risk for Tamaulipas's
credit profile. Although Tamaulipas registers a low marginalization
level and provides a good supply of basic services, the state has
been affected by insecurity, which has caused a need to increase
the spending on public safety, exerting negative pressure in the
cash financing balances and in the debt levels. Additionally,
Tamaulipas faces modest unfunded pension liabilities that will
generate financial pressure over the long term.
Governance considerations are material to the credit profile of the
State of Tamaulipas. Tamaulipas complies with the general
institutional framework established for Mexican RLGs, i.e.
financial discipline law and the harmonization council. The state
publish financial statements on a timely quarterly basis and has
good transparency practices. However, governance and management are
somewhat weak given the state's recurring deficits, increasing debt
levels and weak liquidity.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
The period of time covered in the financial information used to
determine State of Tamaulipas' rating is between 01 January 2016
and December 31, 2020 (source: financial statements of the state of
Tamaulipas).
===============
S U R I N A M E
===============
SURINAME: IDB Group Approves 2021-2025 Country Strategy
-------------------------------------------------------
The Board of Executive Directors of the Inter-American Development
Bank (IDB) approved a new Country Strategy with Suriname for the
period 2021-2025, which aims to support the country's efforts to
restore macroeconomic sustainability, promote private sector
competitiveness and improve basic services and social protection.
The five-year strategy is coordinated with other lending partners
and is expected to reach $450 million.
The IDB Group will integrate gender and diversity, climate change,
environmental sustainability, and institutional capacity and the
rule of law as cross-cutting areas while implementing its support
to Suriname.
The new Country Strategy will focus on improving the country's
macro-fiscal performance through a combination of expenditure,
revenue, and institutional strengthening reforms. The strategy will
also support the country's digital transformation efforts.
The IDB Group's private sector support will focus on improving
financial inclusion, enhancing the quality of education and labor
market alignment, supporting local content and innovation policies,
improving infrastructure with a focus on transportation networks,
regional connectivity, urban revitalization, and resilience
enhancement and adaptation.
Recognizing the impact of the pandemic, the IDB Group will support
the country's health care sector, especially its response to
non-communicable diseases.
The Country Strategy will also prioritize interventions to reduce
inequality in access to basic services and to strengthen social
protection programs. Emphasis will be placed on enhancing
infrastructure and governance frameworks to improve reliability,
supply and quality of public utilities and services, particularly
in rural areas.
Antonio Goncalves, the IDB's Representative in Suriname said: "This
Country Strategy reaffirms the IDB Group's firm commitment to
Suriname as the country continues to navigate challenging
socioeconomic conditions."
The new Country Strategy is the result of the close cooperation
with country authorities, wide consultation with civil society,
private sector, academia, and other development partners in
Suriname.
SURINAME: IMF OKs Extended Deal Under $688 Extended Fund Facility
-----------------------------------------------------------------
The IMF Executive Board approved a new 36-month arrangement under
the Extended Fund Facility for Suriname, in an amount equivalent to
SDR472.8 million (about US$688 million or 366.8 percent of quota).
The decision enables an immediate disbursement equivalent to SDR
39.4 million (about US$55.1 million).
The IMF financial arrangement will support Suriname's authorities'
homegrown economic plan aiming to restore fiscal sustainability,
while protecting the vulnerable by expanding social safety net
programs. It will also help bring public debt down to sustainable
levels, upgrade the monetary and exchange rate policy framework,
stabilize the financial system, and strengthen institutional
capacity to tackle corruption and money laundering and improve
governance.
Washington, DC: The Executive Board of the International Monetary
Fund (IMF) approved a 36-month arrangement under the Extended Fund
Facility (EFF) for Suriname in an amount equivalent to SDR 472.8
million (about US$688 million or 366.8 percent of quota). The
Board's decision enables an immediate disbursement equivalent to
SDR 39.4 million (about US$55.1 million).
The IMF financial arrangement will support Suriname's authorities'
homegrown economic plan aiming to restore fiscal sustainability
through a discretionary fiscal consolidation of 10 percent of GDP
during 2021-24, while protecting the vulnerable by expanding social
safety net programs. The IMF-supported program will also help bring
public debt down to sustainable levels, upgrade the monetary and
exchange rate policy framework, stabilize the financial system, and
strengthen institutional capacity to tackle corruption and money
laundering and improve governance.
At the conclusion of the Executive Board's discussion, Ms
Kristalina Georgieva, Managing Director and Chair, issued the
following statement:
"Suriname faces systemic fiscal and external imbalances as a result
of many years of economic mismanagement. These developments,
combined with the COVID-19 pandemic, have caused substantial fiscal
and external current account deficits, unsustainable public debt, a
run-down of reserves, an economic downturn, and high inflation. In
recent months, the authorities have embarked on a comprehensive
economic reform program to address Suriname's challenges, including
by starting to tighten fiscal policy.
"The main objectives of the authorities' program are to restore
macroeconomic stability and confidence, and to pave the way to
economic recovery, while protecting the most vulnerable during the
process of adjustment. Fiscal consolidation is a clear and critical
ingredient of the program in order to restore "fiscal and external
stability. The fiscal reforms designed by the authorities include
eliminating costly and poorly targeted electricity price subsidies
and introducing a value added tax, creating an efficient source of
non-mineral revenue. To help soften the negative impact on the most
vulnerable, the authorities' agenda emphasizes the strengthening of
the social safety net. To achieve debt sustainability, the
authorities are negotiating debt relief from private and official
creditors in line with program parameters.
"The program aims to rebuild Suriname's foreign reserves. The
authorities' decision to move to a market-determined exchange rate
will strengthen the economy's resilience to external shocks. This
step, together with the program's catalytic effect on external
financing, will address external imbalances and contribute to
increasing foreign reserves to prudent levels.
"To reduce inflation, the program includes steps to tighten
liquidity conditions. The adoption of a reserve money targeting
framework and the roll-out of open market operations will support
the goal of returning inflation to single digits. The Central Bank
of Suriname also needs to address rising banking sector risks,
including because of the shift in the exchange rate.
"Implementing the structural reform agenda is essential to ensure a
more prosperous future for Suriname. The reforms will improve the
institutional capacity for macroeconomic policies, maintain
financial sector stability, tackle corruption, and strengthen
AML/CFT and governance. These reforms will be supported by
technical assistance from development partners including the IMF,
the Inter-American Development Bank, and the World Bank Group."
A full text copy of the press release is available free at:
https://bit.ly/32vzU25
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T R I N I D A D A N D T O B A G O
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TRINIDAD & TOBAGO: Suffering From Low Occupancy
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Trinidad Express reports that for a second year the occupancy rate
at hotels in Tobago over the Christmas holiday seems to be low, as
a result of the ongoing battle with the Covid-19 pandemic.
Speaking with the Express, Tobago Hotel and Tourism Association
president Christopher James said, while he does not have the
figures from the various hotels, villas and guest houses as yet,
the reports the association has been receiving are that bookings
are slow, according to Trinidad Express.
"Part of the problem, as well, is that Caribbean Airlines is still
not back up to the full flight capacity, due to the virus, so this
is deterring people from booking. Along with the Omicron virus in
Trinidad, people are sceptical to move around," the report notes.
James noted another fly in the ointment is that international
flights have not resumed on the island and many tourists from cold
countries would usually come from November month, the report
relays.
"British Airways is resuming flights from January 10 and KLM
airlines later that month, so we are hopeful that the occupancy
rate will be a lot better and the Covid numbers decrease, as the
hotel industry is now solely depending on domestic travels," the
report notes
He added the industry is keeping its fingers crossed that more
people might visit to bring in the New Year, the report says.
A Bleak Christmas
Also giving her perspective on the situation was Tobago Hotel and
Tourism Association vice-president and owner of Canoe Bay Beach
Resort Carol-Ann Birchwood-James who said her property has 20
rooms, but only one occupant for Christmas, the report notes.
"Pre-Covid, we would usually be close to fully occupancy but this
virus has placed a damper on the occupancy rate. We are only seeing
one booking. It's yet to be seen if the numbers will increase to
bring in the new year," the report discloses.
Birchwood-James explained that the industry is in dire straits,
because some hotels are not even achieving a 65 per cent occupancy
rate, the report notes.
"The industry needs assistance and we hope that the new Tourism
Secretary, Tashia Grace Burris, will meet with us in January to
chart a way forward," the report discloses.
In September, the World Travel & Tourism Council's annual Economic
Impact Report indicated that the pandemic delivered a blow of $33.9
billion in lost revenue to the Caribbean's travel and tourism
sector, lowering the sector's contribution to GDP by 58 per cent,
higher than the global average. Some 680,000 tourism-related jobs
were lost, representing nearly one-fourth of all jobs in the
sector, the report relays.
According to Caribbean Hotel and Tourism Association's (CHTA) data
partner ForwardKeys, the Caribbean outperformed its global
counterparts in terms of international arrivals in July 2021
relative to July 2019, experiencing an overall decline of 13.2 per
cent compared to other regions, which suffered losses ranging from
21 per cent (Central America) to 85.5 per cent (Asia Pacific), the
report relays.
The US Virgin Islands and Puerto Rico were the top-performing
Caribbean destinations, with arrivals up by 106.3 per cent and 39.7
per cent, respectively, the report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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