/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220112.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, January 12, 2022, Vol. 23, No. 3 Headlines B R A Z I L BANCO BRADESCO: Fitch Rates Proposed Sr. Unsec. Notes 'BB(EXP)' BANCO BRADESCO: Moody's Rates New Sr. Unsecured Notes 'Ba2' BRAZIL: Families Slammed by Debt, Inflation BRAZIL: Producer Inflation Slows Down to 1.31% in November C H I L E LATAM AIRLINES: Stroock Represents TLA Claimholders MERCURY CHILE: Fitch Assigns FirstTime 'BB+' LT FC IDR MERCURY CHILE: Moody's Rates New Sr. Secured Guaranteed Notes 'Ba1' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Debt Soars in 2021 DOMINICAN REPUBLIC: Government Increases Fuel Prices E L S A L V A D O R EL SALVADOR: Bitcoin Bonds to be Launched Next Month J A M A I C A JAMAICA: BOJ Intervenes in Foreign Currency Market M E X I C O GRUPO AEROMEXICO: Dec. Passenger Traffic, Highest Post-Pandemic - - - - - =========== B R A Z I L =========== BANCO BRADESCO: Fitch Rates Proposed Sr. Unsec. Notes 'BB(EXP)' --------------------------------------------------------------- Fitch Ratings has assigned an expected Long-Term rating of 'BB(EXP)' to Banco Bradesco S.A.'s (Bradesco) proposed senior unsecured notes acting through its Grand Cayman branch. The size and the maturity of the issuance is yet to be determined upon book building. The bonds' proceeds shall be used for the financing and/or refinancing of existing or future social and sustainable projects. The final rating is contingent upon the receipt of final documents conforming to the information already received. KEY RATING DRIVERS The expected rating on the notes corresponds to Bradesco's Long-Term (LT) Foreign Currency Issuer Default Rating (IDR; BB/Negative), as the likelihood of these senior obligations' default is the same as for the issuer and ranks equal to its other senior unsecured debt. Banco Bradesco S.A.'s IDRs are driven by its Viability Rating (VR). The LT IDR is one notch above Brazil's (BB-/Negative) rating. The Negative Outlook on the IDRs mirrors the Outlook on Brazil's rating. Bradesco's VR is highly influenced by its strong franchise and diversified business model. The VR reflects the bank's consistent performance throughout economic cycles and in times of crisis, conservative risk management, diversified funding and revenue bases, strong liquidity, adequate asset quality, and stable capitalization. Fitch expects earnings to remain challenged by subdued credit demand and above historic average loan impairment charges. RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Debt rating downgrades will depend on downgrades of Bradesco's IDRs, given that its serves as an anchor rating for issuances. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Upgrades on debt ratings depend on upgrades of Bradesco's IDRs, given it serves as an anchor rating for issuances. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. BANCO BRADESCO: Moody's Rates New Sr. Unsecured Notes 'Ba2' ----------------------------------------------------------- Moody's Investors Service has assigned a Ba2 long-term foreign currency senior debt rating to the proposed senior unsecured notes to be issued by Banco Bradesco S.A. (Bradesco), acting through its Grand Cayman branch. The proposed notes, which will be issued under its existing USD10 billion Global MTN Program, rated (P)Ba2, will be denominated and settled in USD, and will be issued in a five-year tranche. The net proceeds will be used to finance or refinance new or existing eligible sustainability projects. The outlook on the debt rating is stable. The following rating was assigned: Issuer: Banco Bradesco S.A., Grand Cayman Branch Senior Unsecured Regular Bond, Assigned Ba2, stable RATINGS RATIONALE The Ba2 senior unsecured debt rating assigned to the notes to be issued by the Cayman Branch incorporates Bradesco's fundamental credit strength, as evidenced by the bank's ba2 baseline credit assessment (BCA). Bradesco's BCA reflects the bank's strong and steady recurring earnings generation, combined with a disciplined risk management and revenue diversification, which stems from its solid franchise in retail banking and insurance. These credit strengths support the bank's robust capital replenishment capacity. In September 2021, Bradesco reported consolidated net income of BRL18.8 billion for the first nine months of the year, a 69.4% increase compared to the same period one year prior. This performance resulted from a robust growth in income from health insurance operations and a healthy 16.4% growth of Bradesco's expanded credit portfolio, which includes corporate securities, in the 12 months ended September 2021. The credit expansion resulted from strong origination in credit cards and residential mortgage, also supported by good performance in payroll loans, while loans to small- and mid-sized companies (SMEs) showed solid expansion in the same period. In September 2021, Bradesco reported a slight increase to 2.9% in problem loans to total loans, from 2.6% on year prior, although the ratio remained well below pre-pandemic levels. The rise in problem loan volume stemmed from the steady growth in credit origination, particularly in segments such as individuals and SMEs. Despite that, the bank maintains ample reserve buffers that will help shield its capital position from any future asset deterioration. Bradesco's core capital improved in September 2021 relative to one year prior, with Moody's preferred ratio of tangible common equity to risk weighted assets increasing to 7.23%, from 6.13% in September 2020. Despite the recent improvement, Moody's expects mild negative pressure on regulatory capital in the coming quarters as the bank continues to focus on expanding lending operations. Bradesco's rating is at the same level as the Government of Brazil's Ba2 sovereign rating and the stable outlook on the bank's ratings is in line with the stable outlook on the sovereign rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING At the moment, there is limited upward pressure on Bradesco's ratings owing to the stable outlook on its ratings. Because of the strong credit links between the sovereign and the bank, Bradesco's ba2 BCA is constrained by the Government of Brazil's Ba2 rating. Downward pressure on Bradesco's BCA could develop if there is a significant deterioration in its asset quality, with a significant increase in nonperforming loans (NPLs) or other problematic exposures; a weakening in the bank's internal capital generation and risk absorption capacity as a result of subdued profitability levels; or a deterioration in the bank's liquidity. In addition, a downgrade of the sovereign rating could affect Bradesco's standalone BCA, as well as its deposit and debt ratings. BRAZIL: Families Slammed by Debt, Inflation ------------------------------------------- Buenos Aires Times reports that many workers in Brazil have found themselves trapped in a vicious circle of soaring prices and soaring debt as Latin America's biggest economy is hit by high inflation, high interest rates and recession. Brazilians are reeling again from an old problem: inflation, currently at 10.47 percent per year, according to Buenos Aires Times. Price increases are much higher than that for a wide range of products, including fuel (up 50 percent from January to November 2021) and poultry (up 22.9 percent), the report notes. Supply chain havoc and pandemic stimulus spending have fueled inflation worldwide. But Brazil, which is haunted by the memory of hyperinflation in the 1980s and 90s, is suffering a particularly traumatic adjustment, the report relays. Trying to rein in prices, the central bank has gone on one of the most aggressive monetary policy tightening drives in the world, raising the benchmark interest rate from two percent to 9.25 percent in less than a year, the report notes. But while inflation now appears to be slowing, the rate increases have made credit all the more expensive in Brazil and slammed the brakes on an already slow economy, the report discloses. Cascade Effect "Many families are already spending most of their income on interest payments," says Rachel de Sa, chief economist at investment brokerage Rico Investimentos, the report relays. Eroding purchasing power has meanwhile undercut household consumption, the main engine of the economy, the report discloses. High inflation and interest rates "are having an impact above all on the consumption of durable goods, such as appliances and vehicles," says Fernanda Mansano, chief economist for financial education site TC, the report notes. The pandemic-fuelled recession is also eating away at Brazilians' incomes and job security, the report says. Brazil's average real income, controlling for inflation, is at its lowest since records began in 2012: BRL2,449 (US$445) a month, the report relates. Unemployment has fallen from a high of 14.9 percent early last year to 12.1 percent, but more than 40 percent of Brazilian workers have jobs in the informal sector, generally with no contract or social protections, the report says. Home Loans Inaccessible Banks are still digesting the rapid rise of the benchmark interest rate, but already "real-estate lending rates have gone from 6.3 percent in early 2021 to around 10 percent today," says Rafael Scoledario, a real-estate market specialist, the report discloses. Forecasts for Brazil's economy are gloomy for 2022, weighing down far-right President Jair Bolsonaro's already low popularity heading into elections in October, the report relays. Analysts polled by the Central Bank are predicting economic growth of 0.42 percent this year, down from a comparatively rosy forecast of 2.5 percent a year ago, the report relays. 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). he Brazilian State of Amapa, bordering French Guyana and Suriname, announced that it fined the mining company Mina Tucano, a subsidiary of the Canadian company Great Panther, R$50 (US$8.7) million for having caused unprecedented fish mortality in the extreme north of the Amazon as a result of contamination by mercury cyanide used for gold extraction. This was announced by the Secretariat of the Environment of the State of Amapa, in the extreme north of Brazil, which indicated that the fine was applied on December 21 for the contamination of two streams Mina Tucano, which specializes in gold, is a Great Panther Mining Limited subsidiary headquartered in Vancouver, Canada, with operations in Brazil, Mexico, and Peru. BRAZIL: Producer Inflation Slows Down to 1.31% in November ---------------------------------------------------------- Rio Times Online reports that Brazil's production prices slowed the high to 1.31% in November, from 2.26% in October. The rate accumulated in 12 months reached the lowest level in almost a year, data released by the Brazilian Institute of Geography and Statistics (IBGE) show, according to Rio Times Online. The result led the Producer Price Index (IPP) to accumulate in the 12 months to November an increase of 28.86%, the fifth consecutive month in deceleration, and the lowest value since February 2021 (28.50%), the report discloses. The result led the Producer Price Index (IPP) to accumulate in the 12 months to November an increase of 28.86%, the fifth consecutive month in deceleration, and the lowest value since February 2021 (28.50%), the report notes. 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). he Brazilian State of Amapa, bordering French Guyana and Suriname, announced that it fined the mining company Mina Tucano, a subsidiary of the Canadian company Great Panther, R$50 (US$8.7) million for having caused unprecedented fish mortality in the extreme north of the Amazon as a result of contamination by mercury cyanide used for gold extraction. This was announced by the Secretariat of the Environment of the State of Amapa, in the extreme north of Brazil, which indicated that the fine was applied on December 21 for the contamination of two streams Mina Tucano, which specializes in gold, is a Great Panther Mining Limited subsidiary headquartered in Vancouver, Canada, with operations in Brazil, Mexico, and Peru. ========= C H I L E ========= LATAM AIRLINES: Stroock Represents TLA Claimholders --------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, the law firm of Stroock & Stroock & Lavan LLP submitted a verified statement that it is representing the TLA Claimholders Group in the Chapter 11 cases of LATAM Airlines Group S.A., et al. As of Jan. 7, 2022, members of the TLA Claimholders Group and their disclosable economic interests are: Merrill Lynch Credit Products, LLC Bank of America Tower - 3rd Floor One Bryant Park New York, NY 10036 * $100,029,912 against TLA * $64,748,343.33 against LATAM Airlines Group S.A. * Unliquidated against Aerolinhas Brasileiras S.A. Centerbridge Partners, L.P. 375 Park Avenue, 11th Floor New York, NY 10152 * $113,751,855 against TLA * $9,346,186 against Other Subsidiary Debtors * $65,024,728.33 against LATAM Airlines Group S.A. * $10,966,000 of 6.875% Senior Notes due 2024 * $400,000 of 7.00% Senior Notes due 2026 * $30,000,000 of Tranche A DIP Commitments * $16,000,000 of Tranche C DIP Commitments Stroock represents the TLA Claimholders Group, solely with respect to the claims against TLA directly or beneficially owned by such members. Stroock does not represent or purport to represent any persons or entities other than the TLA Claimholders Group in connection with the Debtors' chapter 11 cases. The TLA Claimholders Group and each member thereof (a) does not assume any fiduciary or other duties to any other creditor or person and (b) does not purport to act, represent or speak on behalf of any other entities in connection with the Debtors' chapter 11 cases. Stroock does not own, nor has Stroock ever owned, any claims against or interests in the Debtors except for claims for services rendered to the TLA Claimholders Group, nor does Stroock own any equity securities of the Debtors. The TLA Claimholders Group, through its undersigned counsel, reserves the right to amend and/or supplement this Verified Statement in accordance with the requirements set forth in Bankruptcy Rule 2019 at any time in the future. Counsel for the TLA Claimholders Group can be reached at: STROOCK & STROOCK & LAVAN LLP Daniel A. Fliman, Esq. Christopher M. Guhin, Esq. Emily L. Kuznick, Esq. 180 Maiden Lane New York, NY 10038 Telephone: 212-806-5400 Facsimile: 212-806-6006 E-mail: dfliman@stroock.com cguhin@stroock.com ekuznick@stroock.com A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/331OVZJ About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc., and The Boston Consulting Group UK LLP are the Debtors' strategic advisors while PJT Partners LP serve as their investment banker. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is the committee's Brazilian counsel. The ad hoc group of LATAM bondholders tapped White & Case LLP as counsel. Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew Glenn and partner Shai Schmidt, has been retained as counsel for the ad hoc committee of shareholders. MERCURY CHILE: Fitch Assigns FirstTime 'BB+' LT FC IDR ------------------------------------------------------ Fitch Ratings has assigned Mercury Chile HoldCo LLC (Mercury Chile) a first-time Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'BB+'. The Rating Outlook is Stable. Fitch has also assigned a 'BB+' rating to the company's senior secured proposed new issuance for up to USD425 million, guaranteed by Inversiones Cachagua SpA, Mercury Chile Co II Ltd., Inversiones LK SpA and Omega SpA. Mercury Chile's ratings are linked to AES Andes S.A.'s (BBB-/Stable) credit profile, and the guarantor, Inversiones Cachagua is the intermediary company registered in Chile owning 67% of AES Andes, and thus Mercury Chile indirectly owns approximately 67% of AES Andes. Per Fitch's Parent Subsidiary Linkage, Fitch views Mercury Chile, Inversiones Cachagua, and AES Andes on a consolidated basis. Notes will have first lien security interest on the shares purchased pursuant to the tender offer of minority shareholders of AES Andes, as well as negative pledge over the AES Andes shares already owned by the offeror, Inversiones Cachagua SpA, prior to the tender offer. KEY RATING DRIVERS Consolidated Credit Profile: Fitch views AES Andes and Mercury Chile as a consolidated entity, per Fitch's Parent and Subsidiary linkage criteria. Fitch estimates total leverage, with an equity credit of $550 million, at 2.7x in 2022, which assumes a $425 million bond issued by Mercury Chile, guaranteed by the guarantors. Fitch estimates Mercury Chile's leverage profile at 1.4x in 2022, which assumes a 100% equity ownership by Inversiones Cachagua and dividends received/interest expenses are estimated at 11.7x, also assuming a 100% equity ownership of AES Andes. Stable Dividend Stream: Mercury Chile's ratings benefit from a healthy stream of dividends paid by AES Andes to its ultimate parent AES Corp (BBB-/Stable). Fitch recognizes that all dividends paid by AES Andes must flow through Inversiones Cachagua and Mercury Chile. AES Andes is a material contributor of cash flow to AES Corp. Fitch estimates this cash flow will represent 20% of total cash distribution received at the AES Corporation level in 2022. The rating case assumes that dividends from AES Andes will average $280 million per annum between 2022 through 2024. Structural Subordination: Mercury Chile's ratings reflect Fitch's view that Mercury Chile and AES Andes are consolidated. AES Andes' hybrid and senior secured notes issued by Mercury Chile have equal probability of recovery, and a majority of AES Andes debt is junior subordinated. Fitch's rating case assumes that under AES Andes's existing hybrid bonds covenants, the right to pay up to 30% of its net income for dividends is in compliance with Chilean securities law and bylaws, which will comfortably cover debt service at the Mercury Chile level. In the event AES Andes is privatized and its bylaws, which are in line with the securities law, are amended, AES Andes is expected to pledge to vote to maintain its minimum dividend payment of at least 30% of net income. Mercury Chile's expected issuance could still be served, since AES Andes' hybrids allow interest deferral. Consequently, this implies AES Andes will not defer interest payments on its hybrid notes, since it would not be allowed to pay dividends. The notes issue at Mercury Chile have a first lien security interest on the shares purchased pursuant to the tender offer of minority shareholders of AES Andes, as well as negative pledge over the AES Andes shares already owned by the offeror, Inversiones Cachagua SpA, prior to the tender offer. Moderate Leverage: Fitch estimates AES Andes' pro forma gross leverage, defined as total debt-to-EBITDA, when deconsolidating Alto Maipo debt will improve to 1.7x from the previous estimate of 2.7x in 2021. Gross leverage could improve to an average of 2.2x compared to previous expectation of 3.5x from 2022-2024. Furthermore, EBITDA-to-interest paid will average 5.9x compared to the previous estimate of 4.2x from 2021 through 2024. On a consolidated basis, when including Mercury Chile's $425 million senior secured note issuance, Fitch estimates gross leverage at 2.7x in 2022, and EBITDA to interest expense at 5.5x in 2022. Low Business Risk: The ratings reflect AES Andes' low business risk resulting from a balanced contractual position and a diverse portfolio of generation assets that support cash flow generation stability and predictability. The ratings also reflect the company's major plants operating under constructive regulatory environments in Chile and Colombia with investment-grade counterparties. DERIVATION SUMMARY Mercury Chile ratings compare well to other utility holding companies (HoldCo) in the region such as A.I. Candelaria (Spain), S.A. (BB/Stable) and Electricidad Firme de Mexico Holdings, S.A. de C.V. (EFM) (BB/Stable). These HoldCo's depend on the cash distribution of their main subsidiaries, OCENSA (BB+/Stable) and Cometa Energia (BBB-/Stable), respectively to service financial obligations. Mercury Chile is rated one notch below AES Andes and one notch above A.I. Candelaria and EFM, given moderate leverage profile compared to peers and higher structural subordination to both A.I. Fitch expects Candelaria total debt-to-EBITDA to reach 4.2x in 2022, while EFM should reach 4.9x in 2024, and Mercury Chile should be around 1.5x-2.0x in 2022. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Average total contracted volume of 24,000GWh in Chile in 2021- 2024; -- Average energy sales of 6,100GWh in Colombia in 2021-2024; -- Total capex of USD2.6 billion in 2021-2024; -- Alto Maipo deconsolidated and eliminating $1.4 billion of debt from consolidate balance sheet; -- Annual dividend payments equal 100% of recurrent net income; -- 50% of equity credit assigned to two hybrid bonds totaling $1.1 billion; -- Expansion projects to be financed with cash flow, new contracts and partnerships; -- $150 million in proceeds from PEC Decreto account receivables sale in 2021-2023. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Under the current structure an upgrade of Mercury Chile is unlikely given the capital structure of the consolidated entity; however, an upgrade of AES Andes IDR will likely result in an upgrade of Mercury Chile if the parent subsidiary linkage relationship remains intact. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of AES Andes ratings; -- Leverage measured as Holdco (Mercury Chile HoldCo and/or Inversiones Cachagua SpA) debt/cash distribution above 3.0x over the rating horizon while consolidated leverage measured as total debt/EBITDA is above 3.5x on a sustained basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Mercury Chile holds approximately $29 million in cash. AES Andes' reported $140 million in cash and cash equivalents in 3Q21. The company is expected to maintain at least $200 million cash balance over the rated horizon. Its liquidity is supported by stable and predictable cash flows coupled with the $300 million equity injection realized in early 2021, to finance the expansion and proceeds from renewable partnerships. The company has reported $250 million of undrawn committed facilities. ISSUER PROFILE Mercury Chile is a holding company registered in Delaware, that owns 100% of the shares of Inversiones Cachagua Spa in Chile, an entity that holds approximately 67% of the shares of AES Andes. AES Andes is one of the largest electricity generation companies in Chile, as it operates approximately 22% of the country's total generating capacity as of 3Q21 with 2.8GW. The company also has ownership interests in electric generation in Colombia and Argentina. ESG Considerations: Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. MERCURY CHILE: Moody's Rates New Sr. Secured Guaranteed Notes 'Ba1' ------------------------------------------------------------------- Moody's Investors Service assigned a first-time Ba1 rating to Mercury Chile Holdco LLC's proposed senior secured guaranteed notes issuance of up to $425 million. The rating outlook is stable. The assigned ratings are based on preliminary documentation. Moody's does not anticipate changes in the main conditions that the notes will carry. Should issuance conditions and/or final documentation deviate from the original ones submitted and reviewed by the rating agency, Moody's will assess the impact that these differences may have on the rating and act accordingly. Mercury, the indirect parent company of Inversiones Cachagua SpA ("Cachagua") and AES Andes S.A. (AES Andes, Baa3 stable), plans to use the proceeds raised in connection with the notes issuance to prepay a same-sized bridge loan. The group used this bridge loan along with an equity contribution received from the ultimate parent company, AES Corporation (The) (AES; Ba1 positive) to pay the tender offer consideration of approximately $517 million and related transaction costs. As a result of the tender offer, the indirect and direct interests in AES Andes held by AES, Mercury and Cachagua, the offerer, increased to 98.13% from around 67%. The notes will be unconditionally guaranteed by four intermediate companies in-between AES and AES Andes, including Cachagua, Mercury Chile Co II Ltd, Invesiones LK SpA, and Omega SpA. Moody's understands that these intermediate holding parent companies between Mercury and AES Andes will remain unencumbered. The notes will be secured by a first-priority security interest in the around 31.2% shares acquired in the tender offer. Concurrently, the negative covenants clause embedded in the proposed notes includes a negative pledge over all shares of AES Andes held by Mercury other than the shares representing the around 31.2% new interest in the power generation company. RATINGS RATIONALE Mercury's Ba1 senior secured rating reflects the structurally subordinated position of Mercury's proposed notes issuance vis-a-vis the senior unsecured debt outstanding at the power generation company AES Andes. In the absence of material ring-fencing provisions, AES Andes' cash distributions are the only source of cash flow to service the intermediate holding companies' debt. The proposed notes (i) limit both the financial flexibility of AES Andes and its intermediate parent companies, and (ii) constrain this operational subsidiary's credit quality, while it also (iii) drives the notch differential between AES Andes' senior unsecured rating (Baa3) and Mercury's senior secured notes (Ba1). The differential in the notching between the proposed notes and AES Andes' senior unsecured rating considers Moody's expectation that the ratio of debt outstanding at the intermediate companies (including Mercury and the intermediary holding companies) to total consolidated debt will remain below 20%. The structural subordination considerations also factor in the Minimum Legally Required Dividends that applies in Chile. Moody's understands that this requirement will continue to apply to AES Andes should it be fully privatized. Unless unanimously agreed otherwise by AES, and any remaining minority shareholders, AES Andes must distribute a cash dividend on a yearly basis of at least 30% of the net consolidated profits from the previous year, except for when accumulated losses from prior years must still be absorbed. It also considers that the interest payments due under AES Andes' 2079 junior subordinated notes (Ba2 stable) may be deferred in order for AES Andes to meet this legal dividend requirement, which underpins Moody's expectations that the Obligors will be able to comfortably meet the annual interest payments of around $18 million due under the proposed notes. AES Andes' exposure to decarbonization risk amid the legal uncertainty around the final retirement date of its coal-fired facilities temper the rating. However, the Ba1 rating assumes further progress in the group's Greentegra strategy to grow the long-term contracted renewables footprint, reduce its carbon transition risk and strengthen the group's business risk profile. AES Andes' aggressive dividend policy that targets to distribute 100% of its recurrent net income tempers Moody's credit view of the financial policies. However, Moody's assumes that AES Andes will fund its dividend distributions to the ultimate parent company AES with available free cash flows after the subsidiaries' scheduled debt repayments and that it will not incur incremental debt to fund its dividend distributions. The Ba1 rating and stable outlook are premised on the expectation that Moody's-adjusted ratio of Mercury consolidated credit metrics will remain supportive of the group's credit quality, including a Moody's adjusted ratio of CFO pre-W/C to debt of at least 22% and debt/EBITDA of 3.5x in 2022 and 2023. These credit metrics include Mercury's obligations of up to $425 million and AES Andes' reported leverage adjusted with the application of proportional consolidation of certain not-wholly owned subsidiaries. Also, the adjusted consolidated debt currently reflects a hybrid equity credit that results related to the basket "C" treatment applied to AES Andes' $1 billion junior subordinated notes. Moody's acknowledges the secured nature of Mercury's obligations. However, the collateral consists only of the around 33% interest in shares of AES Andes, which in Moody's view limits the expected recovery value for the Obligor's noteholders under a material financial distress of AES Andes. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING FACTORS THAT COULD LEAD TO AN UPGRADE Upward pressure on Mercury's rating is likely following an upgrade of AES Andes' senior unsecured rating. Assuming AES Andes makes progress in the implementation of its Greentegra strategy, and more certainty is gained regarding an orderly retirement of its coal-fired fleet in Chile, including securing replacement power for Alto Maipo. An upgrade of the ratings of Mercury and AES Andes would also depend on the Moody's-adjusted ratio of Mercury consolidated CFO pre-W/C to debt remaining in excess of 25%, on a sustained basis. FACTORS THAT COULD LEAD TO A DOWNGRADE Downward pressure on Mercury's rating is likely following a downgrade of AES Andes' senior unsecured rating. In the absence of a deterioration in AES Andes' business risk profile, Moody's could downgrade the rating of Mercury and AES Andes if Moody's-adjusted ratio of CFO pre-W/C to debt, calculated for Mercury on a consolidated basis, falls below 20% or if the retained cash flow to debt remains less than 15%, both on a sustained basis. A negative rating action could also occur if management is not able to address the residual impact of the Alto Maipo bankruptcy in a credit-neutral manner. Mercury and the guarantors are intermediate holding companies that do not have any material assets or liabilities other than their indirect and direct interests in the Chilean power generation company AES Andes. The guarantors of note are Mercury Chile Co II Ltd. (Cayman Islands) as well as the Chilean companies Inversiones LK SpA, Omega SpA and Cachagua. Assignments: Issuer: Mercury Chile HoldCo LLC Gtd Senior Secured Regular Bond/Debenture, Assigned Ba1 Outlook Actions: Outlook, Assigned Stable Headquartered in Santiago, AES Andes is the largest thermal generation company in the Chilean Sistema Energetico Nacional (SEN). The capacity of AES Andes' directly and indirectly owned plants in this system currently aggregate around 2,690 MW. AES Andes' key Chilean subsidiaries include Empresa Electrica Cochrane SpA (Cochrane; Ba1 negative), Empresa Electrica Angamos SpA and Norgener that own plants that operate in the most northern part of the SEN (former SING). In the Colombian interconnection system, the installed capacity of AES Andes' wholly-owned subsidiary. AES Colombia, aggregates 1,102 MW and consists of 1,021 MW of hydro-electric facility, including the 20 MW Tunjita run-of-the river mini-plant and two solar facilities. Located in Salta, Argentina, the 643MW combined cycle gas turbine (CCGT) plant at Termoandes currently sells its output exclusively in the Argentinean electricity system SADI. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Debt Soars in 2021 -------------------------------------- Dominican Today reports that the non-financial public sector debt of the Dominican Republic would culminate in 2021, exceeding by more than US$3.0 billion the total indebtedness that it registered during the entire previous year. The statistics of the General Directorate of Public Credit show that, between January and November last year, the Dominican State accumulated new debts for US$2.9 billion, in relation to the amount owed in 2020, according to Dominican Today. The figure establishes that the government borrowed, on average, US$272.4 billion per month from January to November last year, the report notes. Until last November, the commitments of the non-financial public sector totaled US$47.6 billion, an increase of 6.7% compared to the US$44.6 billion that Dominicans owed in 2020, 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). DOMINICAN REPUBLIC: Government Increases Fuel Prices ---------------------------------------------------- Dominican Today reports that the Ministry of Industry and Commerce and Mipymes ordered an increase of between 1.50 and 4 pesos to the price of fuels, which will apply for the week of the 8th to the 14th of this month. Therefore, premium gasoline will cost RD$273.60, for an increase of RD$3.50, and regular gasoline at RD$258.50, up RD$3.00. Optimum diesel will cost RD$ 223.10, for an increase of 4, according to Dominican Today. 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: Bitcoin Bonds to be Launched Next Month ---------------------------------------------------- CVBJ.biz reports that the bonds backed in bitcoin (BTC) that the Government of El Salvador will launch will be available in February and March 2022. This was confirmed on January 4, by the Minister of Finance, Alejandro Zelaya. The Salvadoran official hopes that the strategy will be successful, according to globalinsolvency.com. Recall that, as reported by CriptoNoticias in November, the Central American country seeks to raise USD $1 billion through these bonds, the report notes. The money will be used both to build the Bitcoin City and to acquire more BTC (to date, the nation has 1,391 bitcoins according to publicly available information), the report discloses. "Let's see how the issuance of Bitcoin Bonds comes out [Bonos Bitcoin] to then draw up the whole strategy," explained Zelaya, the report says. In dialogue with the agency, Ricardo Castaneda, an economist at the Central American Institute for Fiscal Studies, spoke on the matter, the report discloses. According to this professional, Bitcoin Bonds are "a desperate measure," the report says. In any case, Castaneda does not deny that the measure may be successful and bases: "If this works out well, President Bukele will be an example and will be able to say to multilateral organizations and the international community," he said. "We do not need them. But if this goes wrong, the one who is going to lose is the entire population," he adds, the report notes. ============= J A M A I C A ============= JAMAICA: BOJ Intervenes in Foreign Currency Market -------------------------------------------------- RJR News reports that the Bank of Jamaica (BOJ) intervened in the foreign currency market by offering up US$40-million in a flash sale. Five banks and four cambios were successful in the sale resulting in US$35.7 million being allocated, according to RJR News. JMMB Bank, National Commercial Bank and JMMB Securities received the largest allocations of the currency sold, the report notes. As reported in the Troubled Company Reporter-Latin America on Nov. 25, 2021, Moody's Investors Service has affirmed the Government of Jamaica's long-term issuer and senior unsecured ratings at B2. The senior unsecured shelf rating has also been affirmed at (P)B2. The outlook on the ratings remains stable. =========== M E X I C O =========== GRUPO AEROMEXICO: Dec. Passenger Traffic, Highest Post-Pandemic --------------------------------------------------------------- Reuters reports that passenger traffic at Grupo Aeromexico in December reached its highest level since the start of the COVID-19 pandemic, the Mexican airline said. Aeromexico transported 1.74 million passengers last month, or 98.9% of the 1.76 million people it moved in December 2019, the company said in a statement obtained by the news agency. Aeromexico's total offer, measured in available seat-kilometers (ASKs), was equivalent to 82.6% of the capacity of December 2019, the company said, according to the report. Domestic capacity was up 13.6% from December 2019, while international capacity was 70.7% of that month, the report relays. Aeromexico filed for chapter 11 protection in the U.S. in 2020 as demand cratered amid the pandemic. In December it unveiled details of a tender offer valuing its outstanding shares near zero as part of its reorganization plan, sparking a sell-off in the stock, the report discloses. The positive traffic figures did nothing to help the airline's long-suffering stock price, as the shares slumped 6.5% to 2.31 pesos in their seventh straight daily drop, the report adds. About Grupo Aeromexico Grupo Aeromexico, S.A.B. de C.V. (BMV: AEROMEX) -- https://www.aeromexico.com/ -- is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico's global airline, has its main hub at Terminal 2 at the Mexico City International Airport. Its destinations network features the United States, Canada, Central America, South America, Asia and Europe. Grupo Aeromexico and three of its subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11563) on June 30, 2020. In the petitions signed by CFO Ricardo Javier Sanchez Baker, the Debtors reported consolidated assets and liabilities of $1 billion to $10 billion. The Debtors tapped Davis Polk and Wardell LLP as their bankruptcy counsel, KPMG Cardenas Dosal S.C. as auditor, and Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as financial advisor and investment banker. White & Case LLP, Cervantes Sainz S.C. and De la Vega & Martinez Rojas, S.C., serve as the Debtors' special counsel. Epiq Corporate Restructuring, LLC, is the claims and administrative agent. The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors on July 13, 2020. The committee is represented by Willkie Farr & Gallagher, LLP and Morrison & Foerster, LLP. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *