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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 31, 2022, Vol. 23, No. 16
Headlines
A R G E N T I N A
ARGENTINA: IMF Debt Deal the Roots of Economic Crisis
ARGENTINA: Peso Weakens Against USD in Parallel Exchange Markets
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Big Business Urges Booster Shot
DOMINICAN REPUBLIC: Prices Reflect Variations in Establishments
E L S A L V A D O R
BANCO AGRICOLA: S&P Affirms 'B-/B' ICRs, Outlook Negative
P U E R T O R I C O
PUERTO RICO: Religious Leaders Vital to Success of Restructuring
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: 'Blacklisting' Getting 'Level of Attention'
X X X X X X X X
[*] BOND PRICING: For the Week Jan. 24 to Jan. 28, 2022
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A R G E N T I N A
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ARGENTINA: IMF Debt Deal the Roots of Economic Crisis
-----------------------------------------------------
Buenos Aires Times reports that Argentina, which has been battling
a deep economic crisis since 2018, has unveiled a new debt
repayment deal with the International Monetary Fund.
Here is a recap of recent turmoil.
Currency Collapse
In April and May 2018, Argentina's peso loses nearly 20 percent of
its value in 45 days, according to Buenos Aires Times. The Central
Bank intervenes several times, hiking its benchmark interest rate
to 40 percent and selling foreign currency reserves, the report
notes.
Massive IMF Loan
In June, the IMF approves a US$50-billion bailout, the report
notes. President Mauricio Macri's government agrees to take
austerity measures, the report relays.
Strike, Protests
Later that month, the country grinds to a halt in a general strike
to protest the loan. In July and August, there are demonstrations
over soaring inflation in Buenos Aires and other cities. In
September, the government announces new austerity measures. Another
major strike takes place in response, the report relays.
Even Bigger Loan
The IMF agrees to boost its crisis loan package to US$57.1 billion,
with US$44 billion eventually paid out, the report relays.
Argentina ends 2018 in recession. On April 4, 2019, tens of
thousands of people protest against austerity, the report
discloses. To limit inflation, the government freezes the price of
basic goods and public services, the report notes. The fifth
general strike of Macri's presidency brings the country to a
standstill on May 29, the report adds.
Macri Poll Setback
In August, Macri loses a key primary election to Peronist leader
Alberto Fernandez, the report discloses. Macri announces minimum
wage hikes, tax cuts and a freeze on fuel prices. Fitch and S&P
downgrade Argentina's credit rating, the report says. In late
August, Argentina asks the IMF to reschedule its debt, the report
notes.
Food Emergency
On September 1, the government imposes exchange controls. On
September 19, Congress adopts a food emergency law to allocate
greater resources to social programs, the report relays.
Fernandez President
Fernandez wins the October presidential election. Argentina's
Central Bank says it has sharply tightened currency exchange
controls to temper capital flight. Fernandez says that he will
renounce the remaining US$13-billion tranche of Argentina's IMF
loan as soon as he takes office in December, the report relays. At
his swearing in ceremony, Fernandez insists Argentina "wants to
pay" its external debt but that it doesn't have "the means to do
so," the report notes,
'Selective Default'
On December 20, the government postpones paying some US$9 billion,
leading ratings agencies to downgrade its debt, the report notes.
Emergency Measures
On December 24, the government adopts a package of emergency
measures. Inflation reaches 53.8 percent in 2019, while the economy
shrinks by 2.1 percent, the report says.
Debt Restructuring
In February 2020, the IMF says Argentina's debt is "not
sustainable," the report relays. In March, the government proposes
to restructure US$68.8 billion of the US$311-billion public debt,
which accounts for 90 percent of GDP, the report discloses. On
April 6, Argentina defers payments of up to US$9.8 billion on its
local public debt until 2021 in response to the coronavirus crisis.
In mid-April, Fernandez says his country has found itself in "a
sort of virtual default," the report adds.
On May 22, Argentina defaults for the ninth time after failing to
pay US$500 million of interest on its bond debt. Fitch and S&P
reduce its credit rating, the report adds.
Accord
In August, Argentina announces it has reached an agreement with
three major creditors over the restructuring of a US$66-billion
debt, the report relays.
Discussions with IMF
Argentina then launches discussions with the IMF for a new
financial program, the report discloses. In 2020, Argentina's GDP
contracts by nearly 10 percent, the report adds.
Avoids Default
In June 2021, Argentina reaches an agreement with the Paris Club of
creditor countries to avoid defaulting on its loan repayments, the
report relays. On January 28, 2022 Argentina's president announces
what he says is a "reasonable" accord with the IMF, 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.
ARGENTINA: Peso Weakens Against USD in Parallel Exchange Markets
----------------------------------------------------------------
Buenos Aires Times reports that Argentina's currency depreciated
even further on parallel foreign exchange markets, hitting a record
221 pesos per US dollar.
Tensions are increasing on the currency markets ahead of a
scheduled US$730-million payment to the International Monetary Fund
(IMF) due Jan. 28, according to Buenos Aires Times. The
government is currently seeking a new financing program with the
multilateral lender to replace the US$57-billion credit-line it
agreed back in 2018, of which it has received US$44 billion, the
report notes.
Under the current terms of the deal, Argentina faces maturities of
some US$19 billion this year, an amount President Alberto Fernandez
has said the country cannot pay, the report relays.
With talks said to be stalled, uncertainty is dominating the
parallel exchange markets. Record high means that there is now a
difference of 111 percent between the official exchange rate of
110.15 pesos per dollar and the parallel or 'blue' dollar, the
report discloses.
Guzman's Wet Dream
"In Argentina, every time there is a crisis or the perception of a
crisis, the population goes out to buy dollars," Gabriel Torres, a
senior analyst at Moody's risk rating agency, told the AFP news
agency, the report says.
As yet, the government has not confirmed if or how it will meet
this US$730-million payment, the first of the year, the report
notes.
Argentina must make payments this year totaling US$19 billion, with
another US$20 billion due in 2023 and US$4 billion more in 2024,
the report relays. The government is seeking an extended
facilities agreement that would lengthen payment terms and replace
its current stand-by program, the report discloses.
Argentina's government agrees new financing deal with IMF
With restricted access to international credit markets and no more
international reserves available, the Central Bank has limited its
interventions in the foreign exchange market in recent weeks, the
report relays.
In Argentina, currency controls have been tightening since 2019.
Individuals can only legally purchase US$200 dollars a month at the
official exchange rate, 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.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Big Business Urges Booster Shot
---------------------------------------------------
Dominican Today reports that the deadline for resolution 000069, of
the Ministry of Public Health, to take effect, expires on January
31, which representatives of the business and union sectors take
advantage of to call on the population to contribute their grain of
sand and go to the vaccination centers to comply with the norm and
continue reactivating the economy.
"We advocate that citizens make a great effort to get vaccinated
and protect themselves from this and other variants that may come,"
said Pedro Brache, president of the National Business Council
(Conep), according to Dominican Today.
It emphasized that the Dominican State has made an effort and
sacrificed resources to ensure the health of the population and
added that now "it is up to each one of us to do our bit for the
collective health of our country," 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.
DOMINICAN REPUBLIC: Prices Reflect Variations in Establishments
---------------------------------------------------------------
Dominican Today reports that in monitoring prices of products in
supermarket chains in the country, the National Institute for the
Protection of Consumer Rights (Pro Consumidor) notes that from
January 7 to 13, 2022, the value of foods of the basic food basket
stands out. In addition, an increase in the price of oil is
observed.
On an average of the prices of 13 of the largest supermarkets and
minimarkets, soybean oil for a 128-ounce gallon is RD$495 to
RD$632.22, the 64-ounce gallon of oil ranges from RD$334 to RD$307,
while the 16-ounce gallon ranges from RD$97 to RD$85. On the other
hand, depending on the brand and size, olive oil costs between
RD$333 and RD$250, according to Dominican Today.
A 10-pound bag of rice, depending on the brand, costs between
RD$338 to RD$319, while bulk rice goes for RD$25 a pound on
average, the report notes.
A pound of auyama goes for RD$21, bell peppers for RD$59, cubanela
peppers for RD$35, super select garlic for RD$142, purple eggplants
for RD$27, red onions for RD$43, salad tomatoes for RD$33, and
carrots for RD$33, the report relays.
The unit of barahonero plantains costs RD$15, the pound of the
other groceries costs the following: the white potato is RD$28, and
the cassava RD$16, 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.
=====================
E L S A L V A D O R
=====================
BANCO AGRICOLA: S&P Affirms 'B-/B' ICRs, Outlook Negative
---------------------------------------------------------
S&P Global Ratings affirmed the 'B-' long- and 'B' short-term
issuer credit ratings on El Salvador-based commercial bank, Banco
Agricola S.A. The outlook remains negative. The bank's stand-alone
credit profile (SACP) remains at 'bb-'.
S&P said, "We believe Banco Agricola's diversification and position
as the largest bank in El Salvador (about 25% of market share in
terms of loans and deposits as of November 2021) have mitigated the
fallout from the pandemic-induced economic shock. While the
pandemic caused the bank's loan book and operating revenue to
shrink in 2020, they expanded 6.5% and 7.7% during 2021,
respectively, thanks to El Salvador's strong economic recovery. The
country's economic rebound stemmed from the rise in exports and
remittances, and from significant progress in vaccinations. We
expect lending to increase about 4.5% in 2022-2023, mainly in the
corporate and consumer sectors. We also project the bank's
operating revenue to grow 3.6% on average during 2022 and 2023 due
to a similar level of net interest margins as in 2021 and
increasing fees and commissions.
In line with its parent company, Bancolombia S.A. y Companias
Subordinadas (BB+/Stable/B), the Salvadorian subsidiary is focusing
on digital expansion for the next few years. This will continue
meeting customers' demands, given the new trends and changes in
consumption patterns, while increasing competitive advantages over
its peers. Following the country's Bitcoin (BTC) adoption, Banco
Agricola enabled BTC payments for loans and credit cards, in line
with the country's regulatory framework. The latter is processed
through a mobile app (Wompi) to pay in BTC for dollar–based loans
at the exact fair market rate, without any additional fees or
spread. This scheme prevents banks' balance sheets from direct
exposure to BTC, avoiding potential losses due to market
performance. While Banco Agricola offer BTC-based products, the
number of transactions has been low, with a small number of
clients, and an average payment of less than $70 per transaction.
In this sense, S&P believes potential impact on the bank´s
financial performance due to BTC exposure is limited and well
managed.
Bancolombia's support during 2021 helped the bank build up a large
capital buffer by year-end and compensate for the 33% contraction
of its net income in 2020. S&P said, "Although Banco Agricola's
dividend policy influenced our risk-adjusted capital (RAC) for
2021, which we estimate at 6.7%, the internal capital generation
was also an important driver of our capital metric because
bottom-line results were up 63% compared with the 2020 results.
This was due to higher lending, Banco Agricola's cost of risk
returning to pre-pandemic levels, and greater efficiencies stemming
from expense-control initiatives. For 2022-2023, we project RAC
ratio at 6.2%, assuming moderate lending growth rates and a
dividend payout close to 100%. We expect the bank's 2021
profitability to recover to pre-pandemic levels, as the economic
activity continues to rebound. Core earnings to adjusted assets
will be about 2.0% in 2021 and 1.8% during the next two years."
Banco Agricola's COVID-19 relief program covered 51% of its total
loans at its peak in June 2020. Nevertheless, as of September 2021,
the vast majority of borrowers under this program have resumed
payments, while the remaining loans became past-due loans or
charge-offs. As of September 2021, the bank's nonperforming assets
(NPAs) were 2.5%, with a reserve coverage of 180%, and net
charge-offs were 1.1% of the total portfolio. In line with Banco
Agricola's conservative lending standards amid the economic slump,
S&P expects NPAs to be about 1.8% in the next two years, fully
covered by reserves. In its view, these indicators are still
manageable and slightly better than those of the banking system
average. Additionally, Banco Agricola's well-diversified risk
portfolio in terms of clients and economic sectors could help limit
future losses and help it navigate difficult conditions during
2022. Finally, the bank has continued to reduce its risk
concentrations, and S&P expects it to continue to do so in the next
12 months. As of the third quarter of 2021, the bank's top 20
customers represented about 17% of total loans and 0.9x of its
total adjusted capital, lower than historical levels of more than
20% and 1.0x, respectively.
Banco Agricola's funding structure continues to be resilient to
adverse conditions, given that customer deposits make up 88% of the
total funding base as of September 2021, followed by interbank
credit facilities (7%) and market debt (5%). Additionally, although
access to funding could narrow and liquidity needs could increase
during adverse economic and market conditions, we expect Banco
Agricola to keep its stable deposit base due to its strong brand
reputation as the largest financial institution in the country,
which should support client stickiness under the
"flight-to-quality" conditions. In this regard, S&P expects its
stable funding ratio to remain above 100% during 2022 as it doesn't
foresee significant changes in the funding mix composition.
About 60% of the bank's investment portfolio is allocated in
government securities. While nominal exposure hasn't increased
dramatically, an impairment of those securities under a sovereign
credit stress could tie the bank´s liquidity sources and pressure
its funding profile. Nevertheless, due to its funding structure,
which relies on deposits, Banco Agricola doesn't have significant
debt maturities and/or large short-term financial obligations. In
this sense, S&P expects liquid securities (excluding the sovereign
paper) to provide the bank with relatively enough liquidity to
cover expected and unexpected cash flows disbursements in the next
12 months.
Banco Agricola will continue benefiting from Bancolombia's risk
management systems, procedures, and infrastructure. S&P said, "In
this regard, we expect the Salvadorian subsidiary to remain linked
to the group's brand and reputation. We believe that Bancolombia
would provide support under almost any foreseeable circumstance,
including during El Salvador's currently economic downturn. We have
observed support in the form of capital injections and funding to
expand Banco Agricola's operations." More recently, the parent
suspended Banco Agricola's dividend payments to maintain its
capital levels at high levels amid economic uncertainty.
=====================
P U E R T O R I C O
=====================
PUERTO RICO: Religious Leaders Vital to Success of Restructuring
----------------------------------------------------------------
Michael Sean Winters of the National Catholic Reporter reports that
religious leaders were essential to the success of Puerto Rico's
debt restructuring.
On Jan. 18, 2022, Judge Laura Taylor Swain approved a debt
restructuring plan for Puerto Rico that was the culmination of five
years of negotiations and legal challenges. The deal, which was
overseen by a federal oversight board first appointed in 2016,
dwarfs earlier bankruptcy cases and navigates the especially
fraught legal and political terrain caused by Puerto Rico's status
as a U.S. territory.
"The court's confirmation of Puerto Rico's plan of adjustment
completes the largest public debt restructuring in American
history" far bigger than Detroit, the next biggest restructuring,"
David Skeel, the chair of the oversight board, said in an email.
"The plan sharply reduces the amount of debt Puerto Rico will have
going forward, and every dollar of Puerto Rico's $50 billion of
unfunded, accrued pension obligations will be paid in full," he
said. "These features and other protections such as a pension
trust to help fund pension payments will ensure the problems of the
past no longer burden Puerto Rico's future."
The causes of the fiscal crisis were many. Part of the problem, as
in most cases of sovereign debt, is that bond markets have been
governed by neoliberal economic premises the past 40 years, and
those premises often lead to inhumane results. Part of the problem
has been the widespread corruption of the public sector on the
island. Part of the problem was the departure of pharmaceutical
factories that benefited from tax provisions that expired over 10
years from 1996-2006, and that fled to other locations once those
tax benefits ceased to exist.
Puerto Rico's economy was on its heel before the Great Recession of
2008. In 2015, the government announced it could no longer pay its
bills and the federal oversight began.
Mr. Skeel also pointed to the role that the island's religious
leaders played in the long process of recovering from the
bankruptcy. "Archbishop Roberto Gonzalez [of San Juan] and
Reverend Heriberto Martinez [head of the Bible Society of Puerto
Rico, the leading evangelical association] have played an essential
role at every stage of the process, both before and after Congress
enacted the legislation that made the restructuring possible," Mr.
Skeel told NCR.
"They have been a powerful and persistent voice for the most
vulnerable Puerto Ricans -- the least of these -- whose views too
often are not represented when major economic decisions are made.
They have constantly reminded the participants that debt
forgiveness and other economic issues are moral issues, and that it
isn't accidental that Jesus so often framed his teaching in
economic terms."
Eric LeCompte, executive director at Jubilee USA, which advocates
for debt relief for developing countries, concurs with Skeel's
assessment as to the significance of the deal. "While some smaller
portions of Puerto Rico's debt still need to be restructured,
roughly out of the $72 billion in debt about 55% of the debt was
cut," LeCompte said. "In comparison, the previous largest municipal
bankruptcy was Detroit and the city saw its debt cut by 38%. We
also saw innovations that protect Puerto Rico, its pensioners and
people living in poverty."
LeCompte also agreed with Skeel about the pivotal role played by
religious leaders, both on the island and in the states. "At
Jubilee USA we were privileged to walk with Archbishop Gonzalez and
Reverend Martinez on this journey, and we saw a historic
mobilization of U.S. and Puerto Rico religious groups aid the
people of Puerto Rico," LeCompte said.
"The leadership and mobilization of the US Conference of Catholic
Bishops and Catholic Charities was absolutely incredible," he
added. "New York Cardinal Timothy Dolan and other bishops raised
their voices for Puerto Rico. That support from the Catholic
bishops and the Episcopal, Lutheran, Methodist, Presbyterian and
United Church of Christ churches continues to this day."
Full disclosure: Early on in the Puerto Rican debt crisis, I asked
Archbishop Gonzalez if he knew LeCompte and helped arrange their
first meeting. I hope that when I stand before the judgment seat of
God, and the angels have grown tired of listing my catalogue of
sins, one of them will pipe up and cite this one good deed in my
favor!
It is impossible to overstate the importance of LeCompte's ability
to combine biblical values with detailed knowledge of both the
economics and the law surrounding sovereign debt. "Basic services
like the police, public schools and municipal hospitals were left
almost inoperable," said Archbishop Gonzalez, recalling the
bankruptcy crisis in 2015. Gonzalez convoked a meeting of religious
leaders on the island, "to try to identify a way in which we could
be of service to this country."
"None of us had either the experience or the knowledge of how to
engage ourselves in a constructive way to serve the common good of
our people," Gonzalez said, "until we learned of Eric LeCompte, the
executive director of Jubilee USA." The archbishop acknowledges
that the plan will involve some more pain, but that the protections
for programs that assist the poor and for workers' pensions were an
important victory.
Will it be enough? That is harder to know. "The debt can be
sustainable and we can tackle social problems on the island if we
can raise revenue on the island and ensure disaster and economic
aid are approved by Congress," LeCompte told NCR. "Our work
continues to expand manufacturing jobs in Puerto Rico and win
another $55 billion in disaster relief. Puerto Rico needs to get
the same funding as U.S. states for nutrition, child poverty,
health, disability and tax relief programs."
Damon Silvers, policy director at the AFL-CIO, thinks that what is
still needed is an industrial policy for the island. "While the
bankruptcy is not perfect, it is a step forward," Silvers told
NCR.
"Until there is a viable economic and industrial policy in place,
however, it is unclear if any debt strategy will be viable."
He mentioned sustainable energy as the obvious candidate for
rebuilding the island's economy. Gloria Gonzalez at Politico said
the same thing in December, and I made a similar case back in
2017!
Interestingly, the critics of the original creation of the federal
oversight board and of the final debt restructuring deal fall into
two categories. On the woke left are critics like MSNBC opinion
columnist Julio Ricardo Varela who condemned the deal as the
bitter
fruit of colonization " "the restructuring is just the latest
example of an utterly failed colonial experiment but offered no
actual solutions to the fiscal problems facing the island. His
criticisms are delivered in the language of the academic left, not
the language of the Puerto Rican people and its actual leaders.
The other principal critics are the hedge fund managers who
purchased Puerto Rican debt at deeply discounted rates when it was
apparent that the island's government would not be able to repay
it, and who have pursued legal strategies to stop the
restructuring. The bankruptcy deal did not reward the vulture
funds.
Explains Skeel: "The plan also provides fair treatment for
creditors and other constituencies, paying more to creditors whose
debt is unquestioned than to more legally problematic debt."
Neoliberal economics will not be dismantled in one, full swoop. No
debt restructuring deal will ever be perfect this side of the
eschaton. Puerto Rico must still develop a political culture that
is allergic to corruption. An industrial policy is still needed.
But the role of the island's religious leaders in this long process
is both interesting and instructive. Most bishops in the U.S. have
become increasingly averse to the kind of civic engagement that
Archbishop Gonzalez exercised in this situation, and indeed, the
kind of civic engagement over the years that made his intervention
possible.
When aided by the kind of expertise developed by LeCompte and the
staff at Jubilee USA, religious leaders can still make a difference
in their support for public policies that help the poor and serve
the common good. I hope Gonzalez' example might prove a model for
the U.S. bishops' conference going forward.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that
may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets
Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: 'Blacklisting' Getting 'Level of Attention'
--------------------------------------------------------------
Andy Johnson at Trinidad Express reports that the head of the
European Union delegation in Trinidad and Tobago has said the
matter of the "blacklisting" of the country is receiving "the
highest level attention" and a solution is imminent.
Ambassador Peter Cavendish told the Express during an interview at
his office the matter has been receiving "the highest level
attention", and that it is "close to achieving agreement,"
according to Trinidad Express.
He said there have been very senior contacts with the relevant EU
institutions on the matter and the discussions now involve the
respective directors general at the EU, the Trinidad and Tobago
Attorney General, and "associated parties," the report notes.
The ambassador was asked to respond to the declaration by Finance
Minister Colm Imbert when asked about the matter on January 14. A
story in the Express on January 15 quoted Minister Imbert as saying
he was "well aware" of the matter, the report discloses.
The report relays that this was in response to a question from
Opposition MP Rodney Charles who had asked the Finance Minister
whether he was aware that the Government had repeatedly promised to
get off the blacklist, but had not been able to do so since 2017.
The minister's response was as follows: "I am well aware of that
and just this week (week of January 14) I wrote to the European
Union in furtherance of our objective to move to the grey list in
2022," the report notes.
Asked about this, Ambassador Cavendish said the Attorney General
was "fully conversant with the latest developments" in this matter
and that there were no existing grounds for confusion on either
side, the report relays. He said, in fact, there was goodwill on
both sides. He said from the EU's position the objective was to try
to avoid what he termed "de-listings," the report notes.
Known in the Caribbean as "blacklisting", this is the system under
which some countries are penalised because of their failure to meet
financial commitments in the trading and financial system with EU
countries, the report says.
Trinidad and Tobago has been among other countries which have
complained about what they deem punitive arrangements, with some
leaders protesting that such action is often taken unilaterally,
the report discloses.
The EU delegation leader then explained that in the EU system
itself, countries which did not meet their commitments in this
regard are taken to court, the report relays.
The report discloses that he added that the EU managing director
for the Americas Brian Glynn was due to pay a visit to the region
in mid-February, but this timetable was being adjusted due to an
imminent visit to Brussels by the US Secretary of State Anthony
Blinken.
Glynn is due to visit Trinidad and Tobago, as well as Barbados and
St Lucia, Cavendish said.
During the interview Cavendish outlined what appeared to be a
comprehensive plan for a multi-pronged revised partnership
agreement between the EU and countries in the Americas, and in
other developing countries, the report notes.
It is being referred to as "The Global Gateway," the report relays.
It is essentially a program for investment across major social and
economic sectors. It is meant to compete with the Chinese Belt and
Road Initiative, the report says.
The EU's High Representative for Foreign Affairs and Security has
presented a paper the European Parliament, its Council, the
European Economic and Social Committee and the Committee of the
Regions and the European Investment Bank, on this initiative, the
report notes.
Key objectives under are bundled under such lofty guiding
principles as: democratic values and high standards; good
governance and transparency; equal partnerships; a green and clean
climate-neutral strategy; security and the catalysing of private
sector investment, the report discloses.
In the case of Trinidad and Tobago, Cavendish rhapsodized about the
potential reviving the country's cocoa industry towards the
production of high-grade chocolates, the report says. This is seen
as one means by which significant agricultural activity could be
catalysed. Other significant potential exists in the modernization
of the country's two major industrial and commercial ports, he
said, the report adds.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week Jan. 24 to Jan. 28, 2022
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
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
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
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Esval SA 3.5 49.9 2/15/2026 CL CLP
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
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