/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220127.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 Thursday, January 27, 2022, Vol. 23, No. 14 Headlines A R G E N T I N A ARGENTINA: Mexico President Calls on IMF to Offer 'Fair' Deal B A H A M A S BRITISH COLONIAL: Announces Closure; 120 Staff to Lose Jobs B R A Z I L COMPANHIA ENERGETICA: Board OKs Terms of Votorantim and CPPIB Deal EMBRAER SA: Fitch Alters Outlook on 'BB+' LongTerm IDRs to Stable C A Y M A N I S L A N D S THEVELIA HOLDINGS: Fitch Assigns 'B(EXP)' LT Foreign Currency IDR C H I L E LATAM AIRLINES: Judge to Quickly Rule on Key Aircraft Settlements D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Fuels Go Up Again G U A T E M A L A CT TRUST: Fitch Assigns First Time 'BB+' LT IDRs, Outlook Stable J A M A I C A NAT'L COMMERCIAL BANK: Fitch Alters Outlook on 'B+' IDRs to Stable M E X I C O CREDITO REAL: S&P Lowers ICR to 'B-' on Higher Refinancing Risk GRUPO AEROMEXICO: Faces Drama With Unsecured Creditors S U R I N A M E SURINAME: Fitch Withdraws 'RD' LongTerm Foreign Currency IDR - - - - - ================= A R G E N T I N A ================= ARGENTINA: Mexico President Calls on IMF to Offer 'Fair' Deal ------------------------------------------------------------- Buenos Aires Times reports that Mexican President Andres Manuel Lopez Obrador asked the International Monetary Fund (IMF) for a "fair" deal for Argentina as the troubled nation seeks to restructure its multi-billion-dollar debt with the multilateral lender. The government of Alberto Fernandez, which took office in December 2019, is negotiating for a new financing program that will allow it to restructure the payment of some US$44 billion over the next three years, according to Buenos Aires Times. "I take this opportunity to call on the IMF to give Argentina a fair deal, to make the IMF assume its responsibility for the debt," Lopez Obrador said, the report notes. The leftist leader, an ally of President Fernandez, said that the Fund should recognise "honestly, ethically" that they made a "mistake" in granting the government of Mauricio Macri (2015-2019) a record credit-line "beyond what is reasonable," the report relays. The report discloses that echoing the rhetoric of Argentina's Peronist government, the Mexican leader commonly known as 'AMLO' said the lender had to take responsibility for its role in agreeing the US$57-billion stand-by loan in 2018. "For political reasons they wanted the incumbent president to win again and so they gave them money and what they did was aggravate Argentina's economic and financial crisis," the report notes. Lopez Obrador said, without directly naming Macri, the centre-right leader who preceded Fernondez in office, the report says. "There is co-responsibility, they have to assume that," said the Mexican leader, the report relays. Lopez Obrador has strengthened ties with Fernandez since taking office. In February 2021, the Frente de Todos leader made an official state visit to Mexico and in 2019, as president-elect, he was also received by his Mexican counterpart, the report discloses. After their meeting in 2019, the Mexican president expressed his support for Argentina and its negotiations with the IMF. This latest intervention comes just days after Fernandez's Foreign Minister Santiago Cafiero met with US Secretary of State Antony Blinken in Washington, the report 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. ============= B A H A M A S ============= BRITISH COLONIAL: Announces Closure; 120 Staff to Lose Jobs ----------------------------------------------------------- RJR News reports that come next month, 120 employees of the historic British Colonial Hilton in the Bahamas will be out of jobs after the owners announced a plan to close the 300-plus room hotel in downtown Nassau. Strategic Property Holdings, which manages the property, said the decision to cease operations came after carefully analyzing business performance over an extensive period of time and the dismal business forecast for the foreseeable future, according to RJR News. =========== B R A Z I L =========== COMPANHIA ENERGETICA: Board OKs Terms of Votorantim and CPPIB Deal ------------------------------------------------------------------ globalinsolvency.com, citing Reuters, reports that Brazilian power company Companhia Energetica de Sao Paulo (CESP) said its board of directors has approved terms of a deal with conglomerate Votorantim SA and Canada Pension Plan Investments Board (CPPIB) to merge the trio's energy assets in Brazil. CESP is expected to become a full subsidiary of Votorantim and CPPI's joint venture VTRM Energia once the deal is closed, according to globalinsolvency.com. The terms of the transaction, which valued CESP at about 9.1 billion reais (US$1.67 billion), were disclosed this month, the report notes. The company has also scheduled a shareholder meeting for Feb. 15 to approve details on the deal, with CESP's shares to be incorporated by VTRM and begin trading on the Sao Paulo stock exchange's Novo Mercado segment rather than the current Level 1 segment, the report relays. As reported in the Troubled Company Reporter-Latin America on July 21, 2021, Fitch Ratings has affirmed Companhia Energetica de Sao Paulo's (CESP) Long-Term (LT) Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) at 'BB' and 'BB+', respectively. Fitch has also affirmed the LT National Scale Rating at 'AAA(bra)' for CESP and its senior unsecured debentures issuance. The Outlook for the LT FC IDR is Negative, while the Outlook for both the LT LC IDR and the National Scale Rating is Stable. EMBRAER SA: Fitch Alters Outlook on 'BB+' LongTerm IDRs to Stable ----------------------------------------------------------------- Fitch Ratings has affirmed Embraer S.A.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'BB+' and its National Scale Rating at 'AAA(bra)'. Fitch has also affirmed the 'BB+' unsecured notes of Embraer, Embraer Overseas Limited and Embraer Netherlands Finance BV. The Rating Outlook for the IDRs and National Scale Rating has been revised to Stable from Negative. The revision of the Outlook to Stable reflects Embraer's expected deleverage trend in the next 12-18 months as result of the ongoing rebound in commercial aviation backlog and deliveries during 2022 and 2023, and Embraer's efforts to improve capital structure and operating efficiency. Fitch forecasts Embraer's net debt/EBITDA to reach 4.0x in 2021 and then to decline to 3.1x in 2022 and 2.6x in 2023. Fitch's base case scenario incorporates USD175 million of cash disbursement for its new subsidiary, Eve UAM, LLC (Eve). KEY RATING DRIVERS Ongoing Backlog and Deliveries Recover: Fitch expects commercial aircraft deliveries for 2021 to be 46% below 2019 levels and 21% and 13% for 2022 and 2023, (48, 70 and 77 aircrafts deliveries per year), respectively. For business jet deliveries, the rebound is anticipated to be faster with 15% lower deliveries in 2021, 8% in 2022 and an increase of 8% in 2023 (93, 100 and 118 aircrafts deliveries per year, respectively). Embraer's firm order backlog (commercial aviation) stood at 313 aircraft at the end of 3Q21, up from 281 in 4Q20, and moving close to 338 in 2019 (pre-pandemic). In terms of financial backlog, it has reached already pre-pandemic levels of USD16.8 billion, the same level from 2019, and improvement from USD14.4 billion at the end of 2020. In Fitch's view, Embraer's backlog supports production for the next several years but suffers from concentration and quality. Embraer is expected to continue to face challenges to boost the orders of its new 175-E2 aircraft. Strong Market Position: Embraer's strong market position for commercial jets with fewer than 150 seats and within the global executive jets are key factors supporting the expected recovery in the company's backlog in the medium term. Midsize commercial jets producers are expected to have opportunities with mainline or low-cost carriers that are currently looking to right size their fleet to adjust capacity. The weaker financial or business position of few competitors, or in some cases a change in strategy, are allowing growth opportunities for Embraer that could help the company see deliveries rebound in 2022/2023. Embraer's high exposure to the U.S. regional/domestic market, which is recovering at a better pace than in some markets, is also a key rating consideration. Modest Brazilian Risk: Approximately 90% of Embraer's revenue is generated from exports or from business operations based abroad. Nonetheless, Brazil's economic and political environment is a concern as the majority of Embraer's operating asset base is locally domiciled, and the government represents a large portion of the defense segment backlog. Brazil is listed as a related party in Embraer's SEC filings as a result of the Brazilian government's "golden share" and a direct shareholder stake (approximately 5% of Embraer) via a company controlled by the government. Embraer's recent contract renegotiations with the Federal Government is an item to watch, but Fitch does not expect any major impact in cash flow. Rating Above Country Ceiling: Fitch does not consider Brazil's country ceiling a rating constraint for Embraer currently, given the company's large cash holding outside of Brazil, as well as its heavy focus on exports and growing business outside of Brazil. Based on these factors, under Fitch's criteria, Embraer could be rated up to three notches higher than the Brazilian country ceiling. EBIT Margin Recovering: Embraer's operating performance was weaker than expected during pre-pandemic period as the company was facing pressures as it navigated several new development programs. The lower deliveries in commercial aviation and less favorable mix have affected the company's fixed cost dilution. During 2021, Fitch projects that Embraer's EBIT margins will recover to around 3.4% and will continue to expand in 2022 and 2023 to around 7%, with the likely increase in backlog. Return of Capex to Pressure FCF: The increased operating cash flow generation in 2021 and mostly, an important inflow of working capital (inventory management) is expected to drive FCF to around USD162 million, per Fitch's estimative. This represents an improvement from the USD1 billion of FCF burn in 2020. Capex is estimated around USD280 million. For 2022, FCF is expected to be negative at USD131 million, after capex of USD330 million. For 2023, FCF is expected to be neutral to USD60 million negative. For 2021-2023, Fitch's rating case does not currently assume dividend distributions. For 2022, Fitch has incorporated into its forecasts USD170 million of asset sale that is expected to be used to pre-pay debt and USD175 million of cash outflow to Eve. Leverage Trending Down: Fitch forecasts Embraer's net Debt/EBITDA to reach 4.0x in 2021 and then to decline to 3.1x in 2022 and 2.6x in 2023. This compares with 20.7x in 2020, 4.1x in 2019 and average of 1.0x during the 2015-2017 period. The company's strategy to strengthen its capital structure, particularly following its recent investments in the E-175 and E-195 models, is key to potential positive rating actions in the medium term. DERIVATION SUMMARY Embraer is one the market leaders for commercial jets with fewer than 150 seats. Its aircraft are known for their engineering, commonality across models and interior design. The company had 313 firm jet orders in backlog at the end of Sep. 31, 2021, including jets in the new E2 family. Embraer's total backlog, including contracts from all segments, was USD16.8 billion at Sep. 30, 2021. Embraer's weaker competitive position compared with major global peers, notably Boeing and Airbus, based on scale and financial strength, is partially offset by its good business position in the niche of commercial jets with fewer than 150 seats, and its manageable financial profile. Embraer compares favorably versus its competitor Bombardier Inc. (not rated) in leverage, margins and liquidity. Embraer's bulk of operations are in Brazil, but the company is shifting much of its executive jet assembly to the U.S. Fitch's rating above country-ceiling methodology is being applied. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Embraer's commercial deliveries to be around 48 in 2021 and 70 in 2022 (-46% and -21% versus 2019); -- The business jet market deliveries to be around 93 in 2021 and 100 in 2022 (-15% and -8% versus 2019); -- EBIT margin to be around 3% in 2021 followed by some incremental improvements; -- Embraer to generate USD162 million in FCF in 2021; -- Investment expenditures of around USD280 million in 2021 and USD330 million in 2022; -- Embraer to maintain its strong liquidity throughout the forecast period and active liability management strategy to manage refinancing risks. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade to investment-grade level would be dependent on a return to net leverage below 2.5x on sustainable basis, in addition to maintenance of a strong liquidity position with no major refinancing risks in the medium term; -- Strong rebound in deliveries to 2019 levels earlier than expected leading to EBIT Margins above 7%; -- Solid positive FCF generation with capital allocated toward further enhancing financial flexibility. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Higher than expected capex levels, including additional cash outflows related to EVE; -- Substantial order cancellations in the E1 and E2 programs and business jet segment, or significant delays and cost increases on the E2, KC-390 or other programs; -- Net leverage remaining consistently above 3.5x from end of 2022 on; -- Substantial declines in liquidity without commensurate debt reductions; -- Multiple notch downgrade of Brazil's sovereign rating, along with a similar reduction in the country ceiling. 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 Strong Liquidity: Embraer's financial flexibility is solid and it is a key factor supporting the ratings. The company had USD4.3 billion of debt as of Sept. 30, 2021, with cross-border unsecured bonds representing 74% of this amount. Total cash and investments at the end of the period were USD2.5 billion, which is sufficient to support debt amortization up to at least 2024. The company has around USD332 million of outstanding bond coming due 2022 and USD458 million in 2023. Fitch expects Embraer to remain disciplined with its liquidity position, maintaining its proactive approach in liability management to avoid exposure to refinancing risks. At Sept. 30, 2021, approximately 98% of the company's cash, equivalents and financial investments were in U.S. dollars and a major part being held abroad. Embraer does not have a revolving credit facility, which is not uncommon for Latin American corporate issuers. ISSUER PROFILE Embraer is the market leader for commercial jets with fewer than 150 seats. Its aircraft are known for their engineering, commonality across models and interior design. The Company also manufactures executive jets, and has a Defense & Security aviation segment that primarily serves the Brazilian government. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. =========================== C A Y M A N I S L A N D S =========================== THEVELIA HOLDINGS: Fitch Assigns 'B(EXP)' LT Foreign Currency IDR ----------------------------------------------------------------- Fitch Ratings has assigned Thevelia Holdings Limited (Thevelia) a first-time expected Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B(EXP)'. The Outlook is Stable. At the same time, Fitch has assigned a rating of 'B+(EXP)' with Recovery Rating of 'RR3' to the proposed senior first-lien secured term loan B (TLB) issued by Thevelia (US) LLC, which is wholly owned by Thevelia. The term loan will be used to acquire 100% of business and corporate services provider Tricor Group and meet related transaction costs. The final ratings are contingent upon successful completion of the Tricor acquisition, on the issuance of the rated debt securities, and on the receipt of final documents conforming to information already received. Baring Private Equity Asia entered into a binding agreement to acquire 100% of in Tricor in November 2021, and will do so via Thevelia. The ratings reflect Thevelia's high leverage following the acquisition, but Fitch expects Tricor's high profitability and strong cash flow generation to support subsequent deleveraging. Tricor's business profile is supported by the defensive nature of its revenue, where a high proportion is recurring and from a diverse, high-quality customer base. Its broad range of services allows for cross-selling opportunities, which enhances customer stickiness and allows for potential margin expansion. KEY RATING DRIVERS High Leverage: Fitch expects Thevelia's leverage to be high immediately after the acquisition, but it has the capacity to deleverage through growing scale and FCF generation. Fitch estimates Thevelia's pro forma consolidated FFO gross leverage at 9x by end-2022, before reducing to around 8x by 2024. Delivery of planned cross-selling and cost efficiencies could lead to faster-than-expected deleveraging. Cash-Generative Business Model: In Fitch's view, the asset-light nature of Tricor's business service operations should allow for high cash conversion. FCF generation will be supported by high profitability at around 39% EBITDA margin and low capital intensity, resulting in FCF margin of 11%-13% in 2022-2024, which is high relative to many Fitch-rated business services peers. Tricor's cash generation allows it to be well-capitalised and have the flexibility for debt repayment or to prepare for selective bolt-on acquisitions to supplement its platform. Established Platform in Asia: Tricor is a leading business-expansion specialist focused on Asia offering a unique value proposition for customers as a one-stop shop platform. It has a strong foothold in business/corporate and investor services in key markets like Hong Kong, Malaysia and Singapore. Its multi-jurisdictional expertise with support across many service lines is an advantage compared to single service/region providers, as demand for cross-border platforms rises and high-quality service is required to meet increasingly stringent regulations and the rising importance of brands and reputation. The industry is highly fragmented but Fitch believes Tricor has established barriers to entry with the breadth of its service offerings. Tricor may focus on deleveraging in the near term, but strong cash generation will support sufficient capital for selective bolt-on acquisitions to build expertise. Resilient, Highly Visible Revenue: Tricor benefits from a defensive business model with demand that has performed well through economic cycles, supported by a consistent customer base and a high proportion of recurring services. It has over 16,000 client groups, with low attrition and spread across a wide range of industries. Such diversification supports the stability of its end-market demand. Over 70% of revenue is contractually recurring, and a portion of the remaining services have also frequently re-occurred. Cross-selling also supports customer retention and improves earnings visibility, with the cross-selling rate in its top 3,000 clients at around 50%. Improving Service Quality: Fitch thinks initiatives to improve the customer experience and operating efficiency may underpin widening profitability. Tricor's previous margin expansion demonstrates the scalability of its business, with EBITDA margin estimated to have risen to 39% in 2021 from 28% in 2018. Internal improvements in automation and standardisation as well as expanding service offerings can be a key point of differentiation to win customer mandates. Its capacity to continue investing in technology and compliance capabilities can therefore support further margin expansion. DERIVATION SUMMARY Fitch compares Thevelia to relevant peers in the business services sector. Fitch forecasts Thevelia's FFO net leverage to be at the higher end of the range for the business services sector following the acquisition of Tricor and in line with the typical leverage of peers rated 'B' or below. However, its deleveraging capacity is supported by high profitability and consistent positive FCF generation. Apex Structured Intermediate Holdings Limited (B/Stable) shares a similar operational profile to Thevelia, in terms of having a high proportion of recurring revenue and strong cash flow generation. Fitch expects both companies to have higher leverage following acquisitions, but they have deleveraging capacity from FCF generation. Apex faces integration risks for the prospective acquisition of Sanne, a provider of alternative fund services, but Fitch believes the risks are manageable. Hurricane Bidco Limited (Paymentsense; B/Stable) has smaller scale and limited geographical presence compared with Tricor. Paymentsense's leverage is higher than Thevelia's due to the Covid-19 pandemic reducing revenue growth and additional growth investments affecting profitability, but its normalised leverage, assuming no further major lockdowns in the UK, would be lower than that of Thevelia. EmployBridge Holding Co (B+/Stable) has a weaker business profile than Tricor, with product concentration, lack of contractual sales, and end-market cyclicality being constraining factors. However, EmployBridge's lower leverage justifies the rating above Thevelia. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Revenue growth of 4%-5% yoy in 2022-2024 (the growth rate assumes pro forma contribution in 2021 including acquired companies and full-year contribution from Tricor in 2022); -- Adjusted EBITDA margin of 39%-40% in 2022-2024; -- Capital intensity of 4% in 2022-2024; -- No M&A cash outflow; -- Repayment of Tricor's prior debt upon Thevelia's acquisition in 2022; -- 1% loan amortisation of the first lien TLB annually; -- 1.25% benchmark rate for the TLB. Key Recovery Rating Assumptions -- Tricor would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated given its asset-light business model. -- Fitch estimates that the post-restructuring pro-forma GC EBITDA would be around USD100 million. In this scenario, the stress on EBITDA could result from potential corrective measures taken in reorganisation to offset the adverse conditions that triggered default such as cost cutting effort. -- An enterprise value (EV) multiple of 5.5x is applied to the GC EBITDA to calculate a post-reorganisation EV. The multiple is in line with that of other similar peers. This reflects Tricor's good revenue visibility combined with geographic and customer diversification, and a strong cash-generative business. -- 10% of administrative claims deducted from the EV to account for bankruptcy and associated costs. -- The total amount of first-lien secured debt for claims includes USD760 million senior secured first- lien term loans and an equally ranking USD130 million revolving credit facility that Fitch assumes to be fully drawn. -- The allocation of value in the liability waterfall results in recovery corresponding to an 'RR3' Recovery Rating for the senior secured first-lien debt instrument, which is rated at 'B+(EXP)', one notch above the 'B(EXP)' IDR. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- FFO gross leverage sustained below 6x; -- FFO fixed-charge coverage sustained above 2.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Deterioration in EBITDA margin, for instance due to a loss of customers or contracts, or increased operating costs; -- FFO gross leverage failing to trend towards below 8x; -- FFO fixed-charge coverage sustained below 1.5x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Fitch expects Thevelia to have sufficient liquidity following the acquisition and issuance of the TLB. Fitch expects Tricor's prior outstanding debt will be repaid upon completion of the acquisition by Thevelia. Thevelia will rely on cash flow from Tricor to fund its interest payments, which will be supported by Fitch's forecast of consistent positive FCF generation. ISSUER PROFILE Thevelia is an investment vehicle set up by Baring Private Equity Asia to acquire Tricor. Tricor is a business expansion specialist with operations across Asia. It provides business, corporate, investor and other services to corporate customers. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch reclassifies depreciation of right-of-use assets and interest on lease liabilities as lease expenses for the calculation of adjusted EBITDA. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ========= C H I L E ========= LATAM AIRLINES: Judge to Quickly Rule on Key Aircraft Settlements ----------------------------------------------------------------- Jeremy Hill of Bloomberg News reports that U.S. Bankruptcy Judge James Garrity on January 24, 2022, said he'd "quickly" decide whether to sign off on hefty settlements between Latam Airlines Group SA and some of its largest aircraft leasing creditors. The settlements are a key step toward Latam's bankruptcy exit because they would crystallize some $1.5 billion of aircraft lease modification claims that have been hanging over its reorganization. The creditors -- SVPGlobal, Sculptor Capital Management and Sixth Street Partners, which bought the claims during the bankruptcy -- had previously said they're owed more than $4 billion. About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc. and The Boston Consulting Group UK LLP are the Debtors' strategic advisors while PJT Partners LP serve as their investment banker. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is the committee's Brazilian counsel. The ad hoc group of LATAM bondholders tapped White & Case LLP as counsel. Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew Glenn and partner Shai Schmidt, has been retained as counsel for the ad hoc committee of shareholders. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Fuels Go Up Again ------------------------------------- Dominican Today reports that in the Dominican Republic, fuels go up again where premium gasoline increases RD$5.00. Natural gas was the only one that remained unchanged, the report cites. The Ministry of Industry, Commerce, and Mipymes (MICM) reported that record prices for a barrel of West Texas Intermediate (WTI), hovering around US$87 (up 17% since the end of 2021), continue to put upward pressure on the local fuel market, according to Dominican Today. However, the Government continues to make great efforts to maintain price stability and prevent it from affecting citizens on a large scale, the report notes. The International Energy Agency (IEA) confirmed that the market has a "more tense environment than expected" due to demand and the inability of OPEC+ and its allies to reach their production targets, the report relays. To counteract this situation, the Dominican Government will assume RD$14.31 in the case of liquefied petroleum gas (LPG); RD$4.00 for premium gasoline; RD$12.40 for regular gasoline; RD$25.84 in the case of regular diesel and RD$15.61 for the price of a gallon of optimum, which represents up to 87% of the increase demanded by international prices, a decision protected by Decree 625-11. All this represents a total amount of RD$335 million, the report discloses. This volatility of the hikes in international oil prices causes that for the week of January 22 to 28, 2022; the prices will be as follows: -- Premium Gasoline will be sold at RD$283.60 per gallon, which increases RD$5.00. -- Regular Gasoline RD$266.50 per gallon increases RD$4.00. -- Regular Gasoil RD$212.60 per gallon increases RD$4.00. -- Optimum Gasoil RD$233.10 per gallon increases RD$5.00. -- Avtur RD$194.38 per gallon increases RD$8.70. -- Kerosene RD$223.60 per gallon increases RD$8.80. -- Fuel Oíl #6 RD$158.95 per gallon increases RD$5.31. -- Fuel Oíl 1%S RD$176.29 per gallon increases RD$4.28. -- Liquefied Petroleum Gas (LPG) RD$146.60 per gallon increases RD$2.00. -- Natural Gas RD$28.97 per m3 maintains its price. The average weekly exchange rate is RD$57.89 from the Central Bank's daily publications, 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. ================= G U A T E M A L A ================= CT TRUST: Fitch Assigns First Time 'BB+' LT IDRs, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned a first-time rating to CT Trust's Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) of 'BB+'. The Rating Outlook is Stable. In addition, Fitch has assigned a rating of 'BB+' to CT Trust's senior unsecured debt. The ratings of CT Trust (Comcel) reflect the company's strong market position as the leading mobile provider in Guatemala and its robust financial profile, with low leverage for the rating category. The company's ratings are tempered by its lack of geographical and service revenue diversification, as well as high shareholder returns, which limit any material deleveraging. Comcel's ratings are closely linked to that of its parent, Millicom International Cellular S.A. given its strong financial and strategic linkage. CT Trust is a wholly owned subsidiary of Millicom International Cellular S.A. (MIC; BB+/Stable). The ratings pierce Guatemala's Country Ceiling (BB) due to U.S. dollar revenues generated primarily from the sale of mobile top-up refills in the U.S. KEY RATING DRIVERS Leading Market Position: Comcel is the largest mobile operator in Guatemala, with an estimated subscriber market share of over 64%. Additionally, the company holds a market share of 43% in broadband internet and 38% in the pay-tv. The company's entrenched market position is supported by its solid network and service quality, as well as its strong brand recognition. Fitch expects these competitive strengths to remain intact and ward off competitive pressures over the medium term. Solid Margins: Comcel boasts one of the highest operating margins among telecom operators in the region with a Fitch estimated EBITDA margin of 48% as of 2020. Comcel's EBITDA margins have improved over the past two years, as operational savings have offset erosion in average revenue per unit (ARPU) driven by declining voice/SMS revenues and increasing competitive pressures. Fitch expects further margin improvement will be somewhat limited, as growth in lower-margin fixed-line and equipment sales in addition to a challenging pricing environment in mobile constrain margin expansion. Nevertheless, margins still compare favorably with regional peers. Fitch expects EBITDA margins to stabilize at slightly above 50% over the medium term. Low Leverage: Fitch expects Comcel to maintain moderately low leverage for the rating category, with net debt/EBITDA remaining near 2.0x over the medium term, backed by solid operational cash generation. Fitch does not foresee any material improvement in the company's capital structure in the medium term as excess cash is expected to be upstreamed to Millicom. Cash upstreams should result in neutral or even negative FCF, despite solid cash flow from operations (CFFO), which Fitch expects to remain near USD650 million, comfortably covering the company's annual capex requirements. Parent Subsidiary Relationship: Parent-subsidiary relationship exists as MIC holds a controlling 100% share in Comcel; MIC is a holding company that relies solely on dividends from its subsidiaries. The absence of a legal ring-fencing mechanism to limit cash upstreams to MIC exposes Comcel to dividend distributions that could pressure its FCF generation. Access and control is deemed open as there is no formal policy separating funding and subsidiary upstream lending occurs. No legal ringfencing and open access and control result in a consolidated approach to the rating of Comcel at the level of Millicom's rating. DERIVATION SUMMARY Comcel's largest competitor, Claro Guatemala, is a subsidiary of America Movil S.A.B. de C.V. (A-/Positive). While America Movil has a stronger financial profile than Millicom, Fitch does not expect the company to materially take away market share from Comcel over the rating horizon as Comcel maintains a leading brand presence and superior existing network infrastructure. Comcel's credit profile is strong compared with its regional telecom peers in the 'BB' rating category given its high profitability, robust cash flow generation, and low leverage, underpinned by its leading market shares and solid network quality and coverage. The company's credit profile is in line with its peer Telefonica Celular del Paraguay (BB+/Stable), an integrated telecom operator and MIC's subsidiary in Paraguay. Comcel's credit profile is stronger than VTR Finance (BB-/Stable) given its lack of service diversification and weaker financial profile. Comcel's lack of geographic diversification and weak revenue diversification, as well as its high shareholder return temper the credit. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Robust mid-single-digit mobile subscriber growth in 2021, 2% growth in 2022-2023; -- Low-single-digit ARPU erosion over forecast horizon; -- Low-single-digit growth in homes passed and Home ARPU over forecast horizon; -- RGU per home passed continuing to rise driven by bundling; -- Improving EBITDA margins in 2021, stabilizing near 50% over the medium term; -- Capital intensity remaining steady at 12.5%-13.5% over the medium term; -- Elevated shareholder returns holding leverage at 2.0x-2.1x on a net debt/EBITDA basis over the medium term. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade of Millicom, Comcel's controlling shareholder, to 'BBB-' from 'BB+' would have positive rating implications. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of Guatemala's sovereign rating or country ceiling could lead to a downgrade of Comcel's FC IDR; -- A negative rating action on Millicom due to net leverage exceeding 3.5x on a consolidated basis or 4.5x on a holding company debt/dividend received 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 Solid Liquidity: Comcel has a solid liquidity profile backed by its high cash balance, stable CFFO and well-spread debt maturities. As of Sept. 30, 2021, the company held USD197 million in cash and equivalents, which favorably compares with approximately USD32 million of short-term debt. The company faces no debt maturities over the rating horizon. The company's total debt, as of Sept. 30, 2021 was USD448 million, which consisted mainly of local loans. The company will continue to maintain a strong liquidity profile with no near-term maturities, pro forma with the proposed transaction. Proceeds of the transaction will be upstreamed to Millicom, which will in turn apply the proceeds to pay down the bridge financing it took when it purchased the 45% stake in Comcel from the previous minority shareholders. ISSUER PROFILE CT Trust is a special-purpose vehicle created in the Cayman Islands to issue senior unsecured notes on behalf of Comcel Group, a group of several legal entities providing telecommunication services in Guatemala under the Tigo brand. ============= J A M A I C A ============= NAT'L COMMERCIAL BANK: Fitch Alters Outlook on 'B+' IDRs to Stable ------------------------------------------------------------------ Fitch Ratings has affirmed National Commercial Bank of Jamaica Limited's (NCBJ) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+'. The Rating Outlook on the IDR has been revised to Stable from Negative. The revision of the Outlook to Stable mirrors the Jamaican sovereign's Rating Outlook due to the assignment of a Government Support Rating (GSR) at the level of the sovereign. Fitch has also withdrawn NCBJ's Support Rating and Support Rating Floor as they are no longer relevant to the agency's coverage following the publication of its updated Bank Rating Criteria on Nov. 12, 2021. In line with the updated criteria, Fitch has assigned a GSR of 'b+'. KEY RATING DRIVERS IDRs AND VR NCBJ's VR drives its Long-Term IDRs. The bank's VR is influenced by the Sovereign Rating and broader operating environment considerations. The VR also weights the bank's business profile due to its strong local competitive position as the largest bank in Jamaica with a consolidated market share by assets of 38% and deposits of 33% at September 2021. At the end of September 2021, the 90-days non-performing loan (NPL) deteriorated to 4.1% (FYE 2020: 2.7%), mainly reflecting the deterioration of some of the top borrowers in the commercial segment. Similarly, stage 3 loans increased to 4.1% of total loans at FYE 2021 from 2.7% at FYE 2020. Loan loss allowances and non-distributable reserves cover 78% of impaired loans at FYE 2021. Fitch will monitor NPL trend in 2022 due to the high expected credit growth and the evolution of top deteriorated borrowers that pressure the agency´s asset quality assessment. Fitch does not use the core metrics to assess NCBJ's profitability and capitalization as there are no public Risk-Weighted Assets (RWA) available for the consolidated banking group analyzed. Operating profit to average total assets ratio increased to 2.3% at FYE 2021 from 1.2% at FYE 2020, mainly due to lower loan impairment charges and extraordinary trading income. NCBJ adopted a conservative provisioning approach in 2020 to address the risks stemming from the pandemic, which significantly reduced the need for provisions in 2021. Fitch expects that improvements in profitability will be sustainable in 2022, reflecting credit growth and higher non-interest income generation. NCBJ's capital ratio of tangible common equity to tangible assets was 12.8% at FYE 2021, down from 13.3% at FYE 2020, reflecting asset growth. Fitch does not anticipate significant pressure on the bank's loss absorption capacity in 2022, driven by sufficient reserves coverage (loan and capital reserves), earnings generation and conservative dividend upstreaming. NCBJ's liquidity position is conservative and has strengthened as core deposits grew by 17% at FYE 2021, driven by the banking system's ample liquidity due to the Central Bank accommodative monetary policy stance. Accordingly, the loan-to-deposit ratio is sound, at 80.2% as of FYE 2021. Moreover, NCBJ benefits from the largest market share in the country, a well-diversified and low-cost deposit base that covers more than one-half of the bank's funding needs (61% at FYE 2021) and, in addition, has proven access to local and global capital and debt markets. GOVERNMENT SUPPORT RATING Fitch has assigned NCBJ a GSR of 'b+', the same level of the sovereign rating, to reflect NCBJ's systemic importance. Despite the government's record of having provided extraordinary support to the banking system during prior crises, NCBJ's GSR of 'b+' reflects a limited probability of support being forthcoming because of significant uncertainties about the ability of the sovereign to do so, based on its 'B+' Long-term IDRs. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: IDRs and VR -- In the long term, a rating upgrade would require improved prospects for the operating environment and an upgrade of the sovereign rating. Also, a meaningful and sustained improvement of core profitability, combined with improvements in the bank's asset quality and capitalization. GSR -- NCBJ's GRF could be upgraded if Jamaica's rating is upgraded. Factors that could, individually or collectively, lead to negative rating action/downgrade: IDRs and VR -- Given NCBJ's government support assessment at the sovereign rating level, its IDRs are sensitive to changes in the sovereign rating; -- The VR could be downgraded if an acceleration of growth leads to a consistent decrease in tangible equity ratios to below 10%, and results in a relevant deterioration in asset quality or profitability. GSR -- NCBJ's GSR would be affected if Fitch negatively changes its assessment of the Jamaican government's propensity to provide timely support to the bank. This could also arise in the event of a sovereign negative rating action. 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. 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. =========== M E X I C O =========== CREDITO REAL: S&P Lowers ICR to 'B-' on Higher Refinancing Risk --------------------------------------------------------------- S&P Global Ratings lowered its long-term global scale issuer credit rating on Credito Real S.A.B. de C.V. SOFOM E.N.R. to 'B-' from 'B+'. S&P also lowered its national scale rating to 'mxB+/mxB' from 'mxBBB/mxA-2'. At the same time, S&P lowered its issue-level rating on the company's senior unsecured notes to 'B-' from 'B+' and its issue-level rating on the subordinated perpetual notes to 'CCC-' from 'CCC+'. S&P's maintaining all ratings on CreditWatch negative. S&P said, "Given the large debt maturity in less than a month, we were expecting that some of the lender's most significant initiatives to strengthen its liquidity would have already been completed. This was so because our analysis incorporated Credito Real's high collection levels and the likelihood of slowing its origination to potentially build up internal funds. However, the company failed to accumulate a sufficient cash buffer to cover its upcoming market debt maturity. "Additionally, as we reported in our December 2021 rating action, Credito Real had embarked on several measures to refinance its short-term financial obligations and improve its liquidity position. However, a number of these initiatives--which included raising funds in Swiss francs, securing loans, and a larger amount of portfolio sales--have failed to materialize in the last few weeks. In this sense, the company hasn't received the regulator's approval for the sale of MXN1,500 million of its small- to mid-size enterprise (SME) loan portfolio, while it hasn't obtained one of the secured loans it was negotiating. On the positive side, Credito Real received US$45 million from the sale of its U.S.-based subsidiary, Camino Financial, and sold small tranches of its SMEs portfolio. "In our view, these factors have elevated Credito Real's refinancing risk, weakening its liquidity profile and undermining its capacity to obtain funding under stressful conditions. As a result, we revised our assessment of the company's funding and liquidity to a weaker category, triggering a downgrade. The CreditWatch negative listing reflects that these factors could further curb the lender's ability to meet its financial obligations in the following months." Credito Real is still negotiating a secured loan, which it plans to use to pay its debt market maturity, which would help position the company to cover the upcoming liquidity needs. However, S&P believes Credito Real will continue relying on the sale of its assets, rather on its recurrent business and its payment collection capacity to increase its cash position during 2022. S&P said, "Furthermore, we believe the ongoing effects of the pandemic, accelerating global inflation, and faster-than-expected U.S. monetary tightening could continue undermining the investors' confidence globally. Therefore, we believe the company's fulfillment of its plans will be key to improve its funding and liquidity profile. These include the additional sales of the SME portfolio, shedding the large amount of foreclosed assets on balance sheet -- about MXN1,418 million -- and the monetization of the collection rights from the MXN695 million loan granted to Nuncio Accipiens S.A. de C.V. We believe these strategies could mitigate the company's rising economic risks and potentially increasing funding costs, lower-than-historical net interest margins, and still likely high provisions." GRUPO AEROMEXICO: Faces Drama With Unsecured Creditors ------------------------------------------------------ Daniel Martinez Garbuno of Simple Flying reports that Grupo Aeromexico's drama with a group of unsecured creditors continues, even as the company has announced there was majority support for its Chapter 11 Plan and Exit Financing. It is currently waiting to have a hearing that may propel the carrier out of the bankruptcy proceedings. But what are these creditors arguing? Let's investigate further. Last week, Aeromexico announced that the solicitation of votes on its Chapter 11 had concluded with strong creditor support. The airline received votes on accounts of claims totaling US$2.68 billion, of which about 86% were submitted in favor. Shortly after, Aeromexico's capital increase was also approved by shareholders through a couple of meetings. Currently, Aeromexico is waiting for a hearing, set to happen on January 27, 2022. If the Court approves Aeromexico's Plan, the airline could exit Chapter 11 shortly. Nonetheless, a certain group of unsecured creditors is unhappy with the current terms, and it is asking the court not to confirm the Plan. On January 19, three different groups objected to Aeromexico's Plan: the Invictus Group, the Ad Hoc Group of OpCo Creditors, and the Official Committee of Unsecured Creditors. While it is uncertain if the creditors' claims could derail, in any way, Aeromexico's process, the airline should face some pressure in the next couple of weeks. Plan Objections The Official Committee of Unsecured Creditors wrote, "The Plan is the product of a flawed process whereby the Debtors (Aeromexico) abdicated their fiduciary duties and allowed a group of sophisticated creditors to negotiate directly with the Debtors' insider prepetition shareholders." Meanwhile, the Ad Hoc Group said the plan is a perfect example of insiders benefitting themselves through a private partnership. Finally, Invictus believes the plan fails to comply with the Bankruptcy Code in the United States. According to Invictus, any Chapter 11 Plan that impairs any class of claims "must be accepted by at least one class of claims impaired by the plan." Throughout Aeromexico's proceedings, there was only one creditor for Air Cargo, which was, shockingly, Invictus, and it voted to reject the Plan. 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 R I N A M E =============== SURINAME: Fitch Withdraws 'RD' LongTerm Foreign Currency IDR ------------------------------------------------------------ Fitch Ratings has affirmed Suriname's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'RD', Short-Term Foreign Currency IDR at 'C', and Country Ceiling at 'CCC'. Subsequently, Fitch has withdrawn Suriname's Long-Term and Short-Term-FC IDRs and Country Ceiling ratings. Fitch is withdrawing Suriname's ratings as the issuer has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings (or analytical coverage) for Suriname. KEY RATING DRIVERS Prior to the withdrawal, Fitch affirmed Suriname's Long-Term Foreign Currency IDR at 'RD' reflecting the fact that Suriname is not servicing its 2023 and 2026 USD notes, which Fitch views as an event of default. Suriname's Long-Term Foreign Currency IDR has remained at 'RD' since April 1, 2021. ESG - Governance: Suriname has an ESG Relevance Score (RS) of '5[+]' and '[5]', respectively, for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in proprietary Sovereign Rating Model. Suriname has a medium WBGI ranking at 43rd percentile (2020) reflecting a recent track record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, and established rule of law. RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Not applicable as the ratings have been withdrawn. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Not applicable as the ratings have been withdrawn. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) In accordance with its rating criteria, Fitch's sovereign rating committee decided not to adopt the score indicated by the SRM as the starting point for its analysis because, in Fitch's view, the sovereign has defaulted and been assigned a rating of 'RD' within the past five years. Fitch's sovereign rating committee has not utilized the SRM and QO to explain the ratings in this instance. Ratings of 'CCC+' and below are instead guided by the rating definitions. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign Currency IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within Fitch's criteria that are not fully quantifiable and/or not fully reflected in the SRM. 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. ESG CONSIDERATIONS Suriname has an ESG Relevance Score of '5[+]' for Political Stability and Rights as the Worldwide Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Suriname has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile. Suriname has an ESG Relevance Score of '5' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as the Worldwide Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Suriname has a percentile rank below 50 for the respective Governance Indicators, this has a negative impact on the credit profile. Suriname has an ESG Relevance Score of '5' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Suriname, as for all sovereigns. As Suriname is currently in default on its commercial public debt in 2021-2022and recently in 2020, this has a negative impact on the credit profile. Suriname has an ESG Relevance Score of '4[+]' for Human Rights and Political Freedoms as the Voice and Accountability pillar of the Worldwide Governance Indicators is relevant to the rating and a rating driver. As Suriname has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. 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. Following the withdrawal of ratings for Suriname, Fitch will no longer be providing the associated ESG Relevance Scores. ********* 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 * * *