/raid1/www/Hosts/bankrupt/TCRLA_Public/220124.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, January 24, 2022, Vol. 23, No. 11
Headlines
A R G E N T I N A
AES ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Still Negative
ARGENTINA: Traders Bail on Devaluation Bets, Buy Inflation Bonds
B E R M U D A
TEEKAY CORP: Moody's Withdraws 'B3' CFR on Notes Repayment
B R A Z I L
INVEPAR: S&P Upgrades ICR to 'CCC+' on New Capital Structure
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Blame Pricier Dollar on the Season, Bank Says
DOMINICAN REPUBLIC: Contracted Debt of US$4.03 Billion in 2021
J A M A I C A
TRANSJAMAICAN HIGHWAY: Fitch Affirms BB- Rating on Sr Secured Notes
P U E R T O R I C O
HOTEL CUPIDO: Court Confirms Liquidating Plan
X X X X X X X X
[*] BOND PRICING: For the Week Jan. 17 to Jan. 21, 2022
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A R G E N T I N A
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AES ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Still Negative
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S&P Global Ratings affirmed its 'CCC+' issuer credit ratings on
Argentine energy generator AES Argentina Generacion S.A. (AAG).
The outlook remains negative, reflecting that the company's credit
quality could worsen in the next 12 months because its $300 million
bond will mature in February 2024, pressuring its capital structure
and liquidity position. The outlook also incorporates difficult
business conditions and the uncertain regulatory framework in which
the company operates.
S&P said, "AAG's credit metrics improved in 2021 compared to our
previous base case, mainly due to the 29% tariff adjustment granted
in May 2021 and, to a lesser extent, higher energy generation. We
only incorporate tariff increases once they're formally approved
because the regulatory framework remains discretional in nature,
uncertain in length and quantity, and, so far, below the actual
inflation level.
"Our updated base case doesn't incorporate further tariff increases
in 2022. Therefore, we expect EBITDA to remain about ARS12 billion
in 2022, similar to 2021, and up from our previous expectation of
ARS9 billion due to the rate increase granted in 2021. As a result,
our debt to EBITDA ratio is about 4x in 2022. We also expect the
company to be free cash flow positive in 2022, because in the next
12 months capital expenditures (capex) are limited to maintenance.
However, we now assess the company's capital structure as weaker
because AAG's $300 million bullet bond (its main debt instrument,
representing 90% of total debt) comes due in two years and we think
there's high uncertainty about Argentine companies' ability to
access the capital markets for a dollar-denominated bond
refinancing.
"Our ratings also incorporate AAG's exposure to Argentina's
economic and regulatory volatility. Despite last year's ad hoc rate
increase for the company's base generation, absent a permanent and
predictable adjustment mechanism, AAG's cash flows will remain
uncertain and likely to lag cost inflation. Therefore, our 'CCC+'
rating on AAG reflects its operations in Argentina (CCC+/Stable/C),
which exposes the company to worsening business conditions and
exchange rates, high interest rates, poor access to the
international capital markets, and restrictions on accessing and/or
transferring funds abroad. The latter forced the company to
restructure its dollar-denominated facilities in 2021."
ARGENTINA: Traders Bail on Devaluation Bets, Buy Inflation Bonds
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Ignacio Olivera Doll at Bloomberg News report that investors have
long been confident about at least one thing in wild and
unpredictable Argentine markets -- a big peso devaluation was
coming, and the best place to take refuge was dollar-linked bonds.
Now, after piling into the trade for two straight years, they are
throwing in the towel, Bloomberg relates. They were so surprised
that the devaluation didn't come in the immediate aftermath of
November congressional elections - politically, the most logical
time to do it - that they have begun to give credence to the
government's pledge that there's no such plan in the works,
according to Bloomberg News. As a result, they're rapidly scaling
back purchases of local dollar bonds and instead are plowing money
into inflation-linked bonds, a better haven as they see it as
consumer prices soar at an annual pace of more than 50 percent,
Bloomberg News notes.
"These CPI-linked funds will continue to be very attractive and
very much in demand," said Nestor de Cesare, the president of
Allaria Fondos in Buenos Aires, Bloomberg News relays.
Argentine mutual funds that invest in inflation-linked debt have
returned 54 percent over the past year, almost double the gains for
dollar-linked debt, according to data compiled by consulting firm
1816 Economia & Estrategia. The outperformance is even more stark
in the past three months - 13.1 percent for inflation debt, 5.6
percent for dollar bonds, Bloomberg News discloses.
The funds linked to consumer-price increases absorbed inflows of
43.7 billion pesos (US$421 million) in the past 40 days, more than
13 times the 3.3 billion pesos that went into dollar-linked mutual
funds, according to 1816 Economia & Estrategia. In the three
months before the elections, the demand for dollar-linked mutual
funds was four times greater than that of CPI-linked mutual funds,
Bloomberg News relates.
Bloomberg News notes that while President Alberto Fernandez's
administration has been consistent in telling investors it wasn't
planning a one-off devaluation, those assurances were taken with a
big dose of scepticism. Investors thought that getting rid of an
overvalued currency would be an obvious step toward setting the
economy on the path to long-term growth, even if it was sure to
upset Argentine savers. Many also thought the International
Monetary Fund would demand it as part of ongoing negotiations over
rescheduling some US$40 billion in loan payments, Bloomberg News
says.
But a devaluation didn't emerge after last year's midterm election,
and the government insisted that none was planned as the peso
continued it's slow but steady daily depreciation, Bloomberg News
notes. So investors have gained confidence in the peso even as
inflation accelerates, Bloomberg News notes.
Of course it's possible that policy makers could decide at any
point that it's time for a big peso devaluation, Bloomberg News
relays. The currency sells for 104 per dollar in the official
market, but at 209 per dollar in parallel markets that Argentines
use to skirt controls that severely restrict dollar purchases,
Bloomberg News relates. It will get harder for Argentina to
preserve the peso's strength in the official market as its
foreign-currency reserves dwindle. Net reserves, which exclude the
bank's foreign-currency liabilities, have fallen to just US$1.8
billion, according to consulting firm Anker Latinoamerica,
Bloomberg News notes.
But for now, investors are betting that inflation-linked debt will
offer higher returns, Bloomberg News relays. Nominal rates have
fallen into negative territory amid the surge in demand, with
yields on government bonds due next year down to minus 1.8 percent
from 6.35 percent in September, Bloomberg News discloses.
Bloomberg News notes that the government has announced that the
prices of public services will rise in the first quarter, and
monetary expansion has quickened to an annual pace of 40 percent in
December from 30 percent in October, putting further pressure on
inflation.
The nation saw its fastest monthly inflation rate in eight months,
leaving the annual rate for 2021 at 50.9 percent. Runaway price
increases are making it harder for Argentina to present a credible
plan to stabilise the economy amid its talks with the IMF to
reschedule payments on about US$40 billion due to the lender,
Bloomberg News relays.
"There will be expectations of even higher inflation," said de
Cesare of Allaria Fondos, Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. It's capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8, 2020.
Moody's credit rating for Argentina was last set at Ca on Sept.
28, 2020. Fitch's credit rating for Argentina was last reported on
Sept. 11, 2020 at CCC, which was a rating upgrade from CC. DBRS'
credit rating for Argentina is CCC, given on Sept. 11, 2020.
As reported by The Troubled Company Reporter - Latin American, DBRS
noted that the recent upgrade in Argentina's ratings (September
2020) follows the closing of two debt restructuring agreements
between the Argentine government and private creditors. The first
restructuring involved $65 billion in foreign-law bonds. The deal
achieved the requisite participation necessary to trigger the
collective action clauses and finalize the restructuring on 99% on
the aggregate principal outstanding of eligible bonds. DBRS added
that the debt restructurings conclude a prolonged default and
provide the government with substantial principal and interest
payment relief over the next four years.
DBRS further relayed that Argentina is also seeking a new agreement
with the International Monetary Fund (IMF) to replace the canceled
2018 Stand-by Agreement. Formal negotiations on the new financing
began in November 2020. Obligations to the IMF amount to $44
billion, with major repayments coming due in 2022 and 2023.
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B E R M U D A
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TEEKAY CORP: Moody's Withdraws 'B3' CFR on Notes Repayment
----------------------------------------------------------
Moody's Investors Service withdrew its ratings for Teekay
Corporation, including the B3 corporate family rating and B2 rating
on the senior secured bonds. Prior to the withdrawal, the outlook
was stable.
Withdrawals:
Issuer: Teekay Corporation
Corporate Family Rating, Withdrawn, previously rated B3
Speculative Grade Liquidity Rating, Withdrawn, previously SGL-3
Senior Secured Regular Bond/Debenture, Withdrawn, previously B2
Outlook Actions:
Issuer: Teekay Corporation
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's withdrew the ratings because Teekay has fully repaid its
9.25% $250 million senior secured notes.
Teekay Corporation, a Marshall Islands Corporation is headquartered
in Hamilton, Bermuda with executive offices in Vancouver, Canada.
Teekay is a leading provider of international crude oil and other
marine transportation services. It does this directly and through
its controlling ownership of Teekay Tankers Ltd. (NYSE: TNK,
unrated). Consolidated revenues approximated $1.4 billion
(excluding equity-accounted joint ventures) for the LTM period
ended September 30, 2021. Teekay Corporation is publicly traded and
the founder's charitable organization, Resolute Investments, Ltd.,
owns approximately 31% of the company.
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B R A Z I L
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INVEPAR: S&P Upgrades ICR to 'CCC+' on New Capital Structure
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S&P Global Ratings raised its global scale rating on Brazil-based
transportation infrastructure group Investimentos e Participacoes
em Infraestrutura S.A. – Invepar (Invepar) to 'CCC+' from 'D' and
national scale rating to 'brBB' from 'D'. At the same time, S&P
raised its issue-level ratings on its third and fifth debentures to
'brB+' from 'D'. S&P also affirmed the recovery rating of '6'.
The stable outlook reflects Invepar's improved short-term liquidity
position following the partial debt restructuring and the
refinancing of the outstanding balance of the holding level debt.
Following the partial debt restructuring, on Nov. 8, 2021, Invepar
was able to pay about 68.3% of its third and fifth debentures'
principal amount at the holding level. At the same time, it
renegotiated the terms of the outstanding amount of its debt,
pushing the amortization and interest payments to August 2024 from
October 2021. As a result, short-term liquidity pressures have
receded.
Pro forma the partial debt restructuring, as of September 2021,
Invepar's consolidated debt totals about R$4.0 billion, R$3.2
billion of which is held by GRU Airport and R$854 million relates
to the outstanding amount of the third and fifth debentures, which
are now due in August 2024. The group's consolidated cash position
is R$1.2 billion, R$400 million of which is at the holding level.
Nevertheless, S&P believes Invepar still depends on favorable
conditions outside its control in order to conclude the debt
exchange agreed to with its creditors, which entails transferring
Invepar's ownership in Linha Amarela S.A. (Lamsa, not rated) to
them. Lamsa, a toll road, is under a judicial dispute and its
tariffs have been frozen since Sept. 17, 2020. Once this litigation
concludes, and upon the definition of Lamsa's valuation, the latter
would be valued against the outstanding amount of the third and
fifth debentures issuance in order to conclude the debt
restructuring process.
On Nov. 8, 2021, the company transferred 100% of its stake in
Concessao Metroviaria do Rio de Janeiro S.A. (MetroRio,
brAA/Stable/--) and Metrobarra S.A. (brCC/Watch Dev/--) to HMOBI
Participacoes S.A. (HMOBI; not rated) in exchange for part of its
debt. As a result, Invepar's asset base has diminished and its main
asset is now Concessionaria do Aeroporto Internacional de Guarulhos
S.A. (GRU Airport, not rated), a concession that operates Brazil's
largest airport, in the city of Sao Paulo.
In addition, the company controls Lamsa, Concessionaria Litoral
Norte S.A. – CLN (CLN, not rated), and Concessionaria BR-040 S.A.
(VIA 040, not rated), although the first two assets are reported as
held for sale and Via 040 is reported as a discontinued operation.
Invepar also has a minority 24.9% stake in Concessionaria Rio
Teresopolis S.A. – CRT (CRT, not rated), which it accounts for
through the equity method. Because of the fragile financial
condition of these assets, we expect the GRU Airport to be the
group's main cash generator, although Invepar could benefit from
small dividends from CLN and CRT, which we estimate to be about
R$20 million annually.
Because of the pandemic, the number of passengers at the GRU
Airport was 24.7 million in 2021; about 57% of 2019 levels. S&P
said, "We forecast traffic to gradually recover, mainly driven by
domestic passengers, which in 2022 we expect to reach close to 90%
of 2019 levels, with a full recovery in 2023. On the other hand, we
assume the international segment will recover more slowly, at
40%-45% and 60%-65% of 2019 levels in 2022 and 2023, respectively.
In 2021, the international segment had 3.8 million passengers
(around 26% of 2019 levels). We expect full recovery of the
international segment by 2025."
Despite the traffic drop, in the last few years Brazil's National
Civil Aviation Agency (ANAC), the regulatory body for civil
aviation activities and airport infrastructure, twice approved the
rebalancing of GRU Airport's concession contracts due to the
adverse effects caused by the pandemic. ANAC approved the latest
rebalancing on Nov. 30, 2021, for R$799.7 million, which was used
to compensate for the airport's payment of grant fees. S&P said,
"If ANAC doesn't grant an additional rebalancing, we expect the GRU
Airport to pay between R$1.1 billion and R$1.3 billion in grant
fees in the next couple of years, which is our base-case
considering the ongoing recovery in domestic traffic. Nevertheless,
we believe the airport might face intra-year working capital needs
because the fixed grant fees are officially charged in July. As we
don't assume additional rebalancing in 2022, we expect capex at
minimum levels in order to maintain operations; R$30 million-R$50
million."
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Blame Pricier Dollar on the Season, Bank Says
-----------------------------------------------------------------
Dominican Today reports that in recent days, the exchange rate has
shown a slight upward movement, a situation that according to the
Central Bank responds to a seasonal effect, typical of the first
weeks of the year to restock inventory.
It reiterated that it maintains a strengthened international
reserve position to face this type of shock and guarantee
availability of the currency to the productive sectors and the
general public, according to Dominican Today.
The institution "continues to participate in the foreign exchange
market whenever necessary, in order to contribute to the stability
of the currency and maintain the climate of certainty," the report
notes.
It indicates that external factors have strengthened the dollar in
global markets, the report relays.
Meanwhile, in the Dominican market, exchange rate pressures are
much more moderate than in other emerging countries, "thanks to the
significant flow of foreign exchange from remittances, the
continuous recovery of tourism and the dynamism of the external
sector (exports and foreign direct investment), the report
discloses. The average value in the BCRD today is US$57.6 and
US$57.9, 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.
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, in December 2021, 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-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months
that will likely stabilize the government's debt burden,
despite lack of progress with broader tax reforms, S&P said. A
rapid economic recovery from the downturn because of the pandemic
should mitigate external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
DOMINICAN REPUBLIC: Contracted Debt of US$4.03 Billion in 2021
--------------------------------------------------------------
Dominican Today reports that the Dominican State contracted debts
of RD$221.7 billion (US$4.03 billion) during the past year, of
which 83.6% corresponded to external commitments (RD$185.4 billion)
and the rest (RD$36.3 billion) internal.
This was announced by the Minister of Finance, Jose Manuel - Jochi
- Vicente, who reported that 87.4% of the financing plan for 2021
was executed and that the decrease in the need for loans was
possible thanks to a timely spending plan, according to Dominican
Today.
Likewise, Vicente reported that the fiscal deficit ended last year
at 2.7% of the gross domestic product (GDP), equivalent to RD$144.8
b billion, the report notes.
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.
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, in December 2021, 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-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months
that will likely stabilize the government's debt burden,
despite lack of progress with broader tax reforms, S&P said. A
rapid economic recovery from the downturn because of the pandemic
should mitigate external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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J A M A I C A
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TRANSJAMAICAN HIGHWAY: Fitch Affirms BB- Rating on Sr Secured Notes
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Fitch Ratings has affirmed the 'BB-' rating of TransJamaican
Highway Limited's (TJH) senior secured notes. The Rating Outlook is
Stable.
RATING RATIONALE
The rating reflects the stability and resiliency of a commuting
asset strategically located in the outskirts of Kingston, Jamaica's
capital city. The rating is also supported by a satisfactory
rate-setting mechanism, which allows tariffs to be adjusted
annually by U.S. inflation and the variations in foreign-currency
(FX) rate between the Jamaican dollar (JMD) and the U.S. dollar
(USD). Debt is senior secured, with typical project finance
features that include limitations on additional indebtedness.
Rating case minimum and average debt service coverage ratio (DSCR)
are at 1.7x in 2035 and 2.1x, respectively, which are viewed as
strong for the rating category according to applicable criteria.
The transaction presents robust break-even values for its most
important variables and no dependency on traffic growth in order to
repay the rated debt. Furthermore, it withstands domestic economic
shocks beyond those observed between 2008-2014 when the Jamaican
economy deeply deteriorated, supporting a rating above that of the
Jamaican sovereign (B+/ROS), but constrained by Jamaica's Country
Ceiling of 'BB-'.
KEY RATING DRIVERS
Strategically Located Essential Asset [Revenue Risk - Volume:
Midrange]:
The toll road is the main link between the capital city of Jamaica,
Kingston, and other populated urban and industrial centers
including the cities of Portmore and May Pen. The asset is
currently the only high-speed roadway serving the western part of
Kingston's metropolitan area, with an estimated population of 1.4
million people along the corridor. Growth prospects in the long
term are underpinned by its position as a strategic asset for the
country, along with the fact that motorization rates in Jamaica are
still low, so there is potential to increase.
Adequate Rate Adjustment Mechanism [Revenue Risk - Price:
Midrange]:
Toll rates are adjusted annually using an escalation formula based
on the U.S. CPI and the FX rate (USD/JMD) evolution, plus an
additional 1% until the foreign debt is repaid in full, in
accordance with the maximum capped toll level of that period, with
additional increases if USD/JMD exchange rate depreciates by more
than 10% intra-period. TJH is allowed to annually increase toll
rates, but any change needs to be authorized by the roll regulator.
If the toll regulator does not authorize such toll rates, the
concessionaire would need to be compensated for the lost revenue.
Fitch believes it is unlikely that the regulator would choose to
cut prices given the toll rates' updated track record since 2009.
Fully Operational Asset [Infrastructure Development & Renewal:
Midrange]:
The toll road has been fully operational, with its four toll
plazas, since 2012. It benefits from oversight from an independent
engineer who provides financial annual reviews of the budget and
the O&M plan and a commentary of the six succeeding semesters. The
structure holds a three-month operations and maintenance reserve
account, as well as a major maintenance reserve account funded with
100% of the costs to be carried out in the next 12 months, 50% in
the next 13 to 24 months and 25% in the next 25 to 36 months. The
assessment on this attribute is somewhat limited by the hand back
requirements as included in the concession, which oblige the
concessionaire to return the project to the grantor in a good and
operable condition.
TJH has executed an amendment to the concession agreement in which
the tenor could be renewed, at any time during 2034, at TJH's
request for an additional 35 years. With this updated agreement,
the hand back requirements will fall after the maturity of the
notes. Nonetheless, Fitch's financial projections assume such
expenses will be made in 2035-2036, given the concession currently
ends in 2036.
Typical Debt Structure [Debt Structure: Midrange]:
The notes are senior, fully amortizing, fixed-rate and with typical
project finance covenants. There is a six-month debt service
reserve account and a lock-up trigger at a 1.25x backward- and
forward-looking DSCR. No FX risk is anticipated given the formula
for toll rates increase captures movements in the JMD/USD exchange
rate.
PEER GROUP
The closest project in the region is Autopistas del Sol, S.A. (AdS;
B/RON) in Costa Rica. AdS and TJH are similar, as both are strong
commuting assets within their respective country's capital cities.
They also share all attributes at the Midrange level, but the
difference in ratings comes from AdS's lower metrics (average DSCR
of 1.1x versus 2.1x of TJH under Fitch's rating case).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Negative rating action on Jamaica's Country Ceiling;
-- Nil or negative traffic growth rate for a sustained period.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating action on Jamaica's Country Ceiling.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
TRANSACTION SUMMARY
TJH's concession stretches for 49.9km, connecting Kingston with May
Pen, and is divided in two fully operational corridors. The first
corridor stretches between Kingston and May Pen, with three toll
plazas: Spanish Town, Vineyards and May Pen. The other corridor,
also called the Portmore Causeway, begins on Marcus Garvey Drive in
Kingston and end on Dyke Road in Portmore. The toll road is the
largest infrastructure project in Jamaica. In 2020, TJH issued
senior secured debt for USD225 million through a fully amortizing
bond maturing in 2036 with a fixed 5.75% coupon rate.
CREDIT UPDATE
From January to September 2021, annual average daily traffic (AADT)
was 60,509 vehicles, representing a 7.6% compared with the same
period of the previous year. The latter was in line with Fitch's
rating case projection. Out of the four toll plazas along the road,
Portmore, which is the one that is mostly used by commuters, has
had the slowest recovery, while the rest of the sections with
greater participation of commercial vehicles and lesser traffic
restrictions have had greater resilience and a faster recovery.
Tariff increases were dully applied in June of 2021 resulting in a
weighted average annual increase of 11.3%. In terms of revenue, the
project collected USD37.5 million as of the third quarter of 2021,
15.2% more than in the same period of the previous year, and above
Fitch's rating case expectations. As the traffic mix has remained
practically unchanged since the beginning of the pandemic, the
strong performance is explained by the traffic and tariff growth.
As of September 2021, operating expenses were USD15.9 million,
below Fitch rating case projections. In terms of capex, according
to the concessionaire, the implementation of multimodal toll booths
across all corridors will continue along 2022.
Overall, the higher-than-expected toll revenue collection coupled
with expenses in line with the budget resulted in a DSCR of 1.9x,
from October 2020 to September 2021, and comparably above Fitch's
projections of 1.7x for 2021.
FINANCIAL ANALYSIS
Fitch's base case assumes a full traffic recovery of 2019 levels in
2022 based on the following quarterly average activity assumptions:
97% through the first quarter, 100% in the second and third
quarters, and 102% in the fourth quarter, and then a 4.2% growth
for 2023. Afterwards, it assumes a compounded annual growth rate
(CAGR) between 2024 and 2036 of 2.3%. The cost profile assumed is
in line with the sponsor's original assumptions plus a 5% increase.
Inflation was assumed at 3.8% in 2022, 3.8% in 2023 and 3.5% from
2024 and onwards. Under this scenario, the minimum and average DSCR
are 2.0x and 2.4x, respectively.
Fitch's assumes a traffic recovery of 97% of 2019 levels in 2022
based on the following quarterly average activity assumptions: 94%
through the first quarter, 96% in the second, 97% in the third
quarter, and 99% in the fourth quarter, and then a 5.3% growth for
2023. Then, it assumes a compounded annual growth rate (CAGR)
between 2024 and 2036 of 1.3%. Operating, general and
administrative, and maintenance budgeted expenses are increased by
7.5% throughout the tenor of the debt. Inflation assumptions are as
in the base case. Rating case metrics are slightly weaker than that
of the base case, with minimum and average DSCR of 1.7x and 2.1x,
respectively.
The transaction presents robust break-even values for its most
important variables and no dependency on traffic growth in order to
repay the rated debt, supporting the project rating above the
sovereign rating.
SECURITY
An onshore all assets debenture providing for (subject to certain
exceptions and limitations) a first priority security interest in
all present and after-acquired personal property of the Issuer
including all Project documents to which it is party, including the
Concession Agreement, and the local accounts, and further providing
for an assignment of the benefit of the Concession Agreement and
the other project documents; an assignment of the concession
agreement providing for a collateral assignment of the Issuer's
interest in the Concession Agreement; an onshore security trust
deed providing for the appointment of the local trustee and for the
transaction security to be held on trust for the Secured Parties;
the offshore accounts under the Indenture Trustee.
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.
=====================
P U E R T O R I C O
=====================
HOTEL CUPIDO: Court Confirms Liquidating Plan
---------------------------------------------
Judge Edward A. Godoy has entered an order that the Plan filed by
Hotel Cupido Inc., et al., dated October 15, 2021 is confirmed.
Hotel Cupido Inc. filed with the U.S. Bankruptcy Court for the
District of Puerto Rico a Plan of Liquidation and a Disclosure
Statement referring to a Plan. On Dec. 6, 2021, Judge Edward A.
Godoy approved the Disclosure Statement.
On Aug. 6, 2021, REMLIW and Monte Idilio executed an option to
purchase agreement with IPVI and with the consent of OSP for the
short sale of the real properties that comprise Destiny Motel in
the aggregate amount of $830,000. The proposed sale will be
conducted within the Plan of Reorganization to be funded with the
liquidation of the assets of the respective estates. The net
proceeds of the sale will be distributed according to the terms of
the proposed Plan of Reorganization.
A copy of the Disclosure Statement dated Oct. 15, 2021, is
available at https://bit.ly/3AtaGOI
About Hotel Cupido
Wilmer Tacoronte Ortiz owns a motel in Aguadilla at Road 101, KM
1.1 and sole shareholder of REMLIW Inc. and Hotel Cupido Inc.
REMLIW Inc. owns Destiny Motel, a motel at the State Road 639, Km.
2.1, Arecibo, Puerto Rico. Hotel Cupido operates the Cupido HOtel,
a 52-bedroom motel, at State Road 110, Km. 24.3, Arenales Ward, in
Aguadilla, Puerto Rico.
Wilmer Tacoronte Ortiz sought Chapter 11 protection (Bankr. D.P.R.
Case No. 19-01178) on March 2, 2019. REMLIW, Inc. (Monte Idilio
Inc.) also sought Chapter 11 protection (Bankr. D.P.R. Case No.
19-01178) on March 2, 2019. Hotel Cupido Inc. sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No.
19-03799) on June 30, 2019.
The cases are jointly administered under Hotel Cupido, Inc.'s.
At the time of the filing, Hotel Cupido disclosed $488,176 in
assets and $3,213,031 in liabilities.
The cases are assigned to Judge Edward A. Godoy.
The Debtors are represented by Bufete Quinones Vargas & Asoc.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week Jan. 17 to Jan. 21, 2022
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Esval SA 3.5 49.9 2/15/2026 CL CLP
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
*********
S U B S C R I P T I O N I N F O R M A T I O N
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