/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220207.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, February 7, 2022, Vol. 23, No. 21 Headlines A N T I G U A A N D B A R B U D A ANTIGUA & BARBUDA: $200 Million Bond Fully Subscribed A R G E N T I N A ARGENTINA: Government Pays IMF $370 Million in Debt Interest B R A Z I L ALUPAR INVESTIMENTO: Fitch Affirms 'BB' LT FC IDR, Outlook Neg. BRAZIL: Takes Top Spot in Real Interest Rates Ranking BRF SA: Raises in $1 Billion in Discounted Share Sale COMPANHIA SIDERURGICA: Fitch Assigns 'BB' to $1B Notes Due 2032 CSN RESOURCES: Moody's Rates Proposed Senior Unsecured Notes 'Ba2' EMBRAER SA: Moody's Affirms 'Ba2' CFR & Alters Outlook to Stable PETROLEO BRASILEIRO: Egan-Jones Hikes Senior Unsecured Ratings B+ D O M I N I C A N R E P U B L I C BANCAMERICA: Regulator Takes Over, to Dissolve Bank DOMINICAN REPUBLIC: Group Warns of Impact of Fuel Subsidy Removal M E X I C O ARMOUR SECURE: A.M. Best Affirms B(Fair) Financial Strength Rating T R I N I D A D A N D T O B A G O CL FINANCIAL: CLICO Claim Remains Pending CL FINANCIAL: Liquidators File 9th Report X X X X X X X X [^] BOND PRICING: For the Week Jan. 31 to Feb. 4, 2022 - - - - - ===================================== A N T I G U A A N D B A R B U D A ===================================== ANTIGUA & BARBUDA: $200 Million Bond Fully Subscribed ----------------------------------------------------- RJR News reports the Antigua and Barbuda government says a US$200 million bond it issued on the international market has been fully subscribed. Prime Minister Gaston Browne says the bond is a 10 year, 4.5% instrument registered on Euroclear, according to RJR News. Mr. Browne says proceeds from the bond will be used to implement projects that will stimulate the Antiguan economy and secure growth of 8% this year, the report notes. As reported in the Troubled Company Reporter-Latin America on Aug. 23, 2021, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Antigua and Barbuda. Antigua and Barbuda has been hit hard by the global pandemic. The domestic lockdown and border closure in early 2020 prompted a collapse of tourism-related activities. The economy contracted by an estimated 17.3% in 2020. The government promptly took public health measures to limit the spread of the virus and introduced social programs to support the vulnerable. The pandemic was well contained in 2020, even after the reopening of borders in the summer, but the winter tourism season saw a temporary surge in COVID-19 cases. Infection rates have since stabilized with about one-third of the population fully vaccinated. ================= A R G E N T I N A ================= ARGENTINA: Government Pays IMF $370 Million in Debt Interest ------------------------------------------------------------ Buenos Aires Times reports Argentina paid US$370 million to the IMF as interest on a US$44-billion debt that was rescheduled late last month, officials said. The Central Bank's bulletin showed international reserves of US$37.18 billion following the payment, according to Buenos Aires Times. "The interest payment is about 370 million dollars," a source told AFP, the report notes. It was the second payment of the year by Argentina, after a transfer of approximately US$730 million, the day that the rescheduling announcement was announced, the report relays. Argentina and the IMF had announced an agreement in principle on the renegotiation of the country's US$44 billion debt in return for economic reforms, the report notes. Under the new deal, Argentina committed to progressively reducing its fiscal deficit from 3% of GDP in 2021 to 0.9% in 2024, the report adds. The gradual reduction -- to 2.5% in 2022 and 1.9% in 2023 -- would "not prevent the recovery" of the economy, Economy Minister Martín Guzmán said, the report relays. About Argentina Argentina is a country located mostly in the southern half of South America. The 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 as 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 R A Z I L =========== ALUPAR INVESTIMENTO: Fitch Affirms 'BB' LT FC IDR, Outlook Neg. --------------------------------------------------------------- Fitch Ratings has affirmed Alupar Investimento S.A.'s Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer Default Ratings (IDRs) at 'BB' and 'BBB-', respectively. In addition, Fitch has affirmed Alupar's and its subsidiary Foz do Rio Claro Energia S.A.'s (Foz do Rio Claro) National Scale ratings and outstanding local debentures at 'AAA(bra)'. The Rating Outlook for the IDRs is Negative, and the Outlook for the National Scale ratings is Stable. Alupar's ratings reflect its low business risk relative to its diversified portfolio of power transmission assets in Brazil, with predictable revenues and high operating margins. The group should continue to reduce leverage and present a positive FCF starting in 2023. The company's FC IDR is constrained by Brazil's country ceiling of 'BB', while Brazil's operating environment limits the LC IDR. The Negative Outlook for the FC IDR reflects Brazil's 'BB-' sovereign Rating Outlook. The Negative Outlook for the LC IDR reflects the potential weaker operating environment for the country. KEY RATING DRIVERS Low Business Risk: Alupar's credit profile benefits from the combination of its activities in energy transmission and generation, mainly in Brazil, through a sizeable and diversified asset base that dilutes potential operational and regulatory risks. Groups' concessions will not begin to expire until 2030 in transmission, and 2038 in generation, and will occur on a staggered basis over the following years. In transmission, concessions' revenue (Annual Permitted Revenues, PAR) is generated through the availability of its assets, without demand risk and annually adjusted for inflation. This segment will remain the company's main business. In the generation segment, long-term contracts for the sale of a large part of the assets' assured energy and the partial protection for hydrological risk also create an expectation of strong performance. The importance of this segment for the group's EBITDA, estimated at 18% for 2021, should remain at similar levels over the next few years. Expected Leverage Reduction: Alupar's consolidated leverage should gradually decline and remain consistent with the current IDRs. Alupar should return to historical conservative credit ratios after punctual increase in the group's net leverage during the strong investment cycle in 2019-2021. During the LTM ended Sept. 30, 2021, the adjusted net debt-to-EBITDA ratio was 4.1x, according to Fitch's criteria, and should gradually decrease to 3.3x in 2022 and 2.7x in 2023, after a peak of 4.7x in 2020. Favorable Tariff Readjustments: High exposure to transmission concessions IGPM-indexed (about 50% of consolidated PAR) will strengthen the groups consolidated results in 2021 and 2022. PAR readjustment of 37% for IGPM-indexed concessions and 8% for IPCA-indexed concessions from July 2021, and the conclusion of new projects will boost EBITDA, calculated through regulatory accounting, to BRL2.0 billion in 2021 from BRL1.5 billion in 2020. For 2022, the base case scenario for the rating expects an EBITDA of BRL2.3 billion, which also incorporates the benefits of new projects (one in Dec. 21 and one in Feb. 22). EBITDA margins are high, ranging 80%-85%, characteristic of transmission companies in Brazil. Manageable Negative FCF: Alupar should have negative consolidated FCFs of BRL247 million in 2021 and BRL94 million in 2022, pressured by disbursements of the capex program of approximately BRL2.2 billion in the period, and dividend distribution corresponding to 50% of net income. Dividend paid should reach BRL570 million in 2022 after BRL757 million in 2021. The forecast consolidated annual cash flow from operations (CFFO) of around BRL1.6 billion during the 2021-2022 period, represents growth from BRL1.2 billion in 2020. The additional PAR of BRL244 million from the conclusion of two projects until Feb. 22 should boost Alupar's CFFO to BRL1.7 billion in 2023, which in combination with the reduction in the capex level to around BRL400 million, will allow a positive FCF of BRL776 million. Manageable Construction Risk: Alupar's positive track record of developing and obtaining long-term financing for its new transmission and generation projects mitigates the risks associated with the construction phase. Pending the project finance structure of two transmission lines and of the generation projects is not a major concern. The group needs to raise BRL750 million long-term debt in 2022. Alupar has three transmission projects and three energy generation plants under construction. Transmission lines will add 476 km and require BRL980 million capex in 2022 and 2023, while the conclusion of the generation plants in 2022 will add an installed capacity of 125 MW and require capex of BRL653 million. Licensing is pending only in the project located in Colombia and is scheduled for the first half of 2022. TNE Should Not Affect Ratings: The base case scenario for the rating does not include the development of Alupar's largest pre-operational project, the transmission line Transnorte Energia S.A. (TNE), as it is under negotiation with regulators regarding indigenous compensation. Alupar has 51% of the project, but does not consolidate it. Should Alupar obtain the approval to continue with the construction, it will require capex of BRL2.5 billion and at least 36 months to conclude the construction of the 715 km between the States of Amazonas and Roraima. Incorporating equity injections and debt guarantees to Alupar's credit metrics, the adjusted net debt-to-EBITDA ratio should slightly increase to 3.4x in 2022 and 3.0x in 2023 compared with the current base case. Subsidiary Rating Equalized: Fitch equalizes the National Scale ratings of Foz do Rio Claro and Alupar due to the strong legal, operational and strategic incentives between the subsidiary and the controlling shareholder. Alupar holds 100% of Foz do Rio Claro's shares and is the guarantor of the company's single debt, whose financial covenants are verified based on Alupar's consolidated figures. DERIVATION SUMMARY Alupar's financial profile is stronger than Latin American peers Interconexion Electrica S.A. E.S.P. (FC IDR BBB/Stable) and Consorcio Transmantaro S.A. (FC IDR BBB/Stable), in Colombia, and Transelec S.A. (FC IDR BBB/Stable), in Chile. All these peers have low business risk profiles and predictable cash flow generation, characteristic of transmission electricity companies in a regulated industry. The main differentiation in the IDRs of Alupar and those companies is the country where they generate their main revenues and the location of assets. While its peers are located in countries with higher IDRs, Alupar's ratings are negatively affected by Brazil's country ceiling of 'BB'. In the case of Transmissora Alianca de Energia Eletrica S.A.'s (FC IDR BB/Stable), also located in Brazil, both have similar credit profile, with diversified portfolio of transmission companies and a robust financial profile, with some expected decrease in leverage metrics due to reduction in investments. KEY ASSUMPTIONS Fitch's main assumptions of its base scenario for the issuer include: -- RAPs adjusted annually by inflation, with a 50% reduction for transmission assets whose concession agreement contemplates this movement after the 15th year of operation; -- Readjustments of 2021/2022 cycle PAR: IGPM-indexed concessions: +37% / IPCA-indexed concessions: +8%; -- Generation scaling factor of 0.80 in 2022, 0.85 in 2023 and 0.93 in 2024; -- Operating expenses adjusted by inflation; -- Distribution of dividends equivalent to 50% of net income; -- Total investments of BRL2.7 billion during 2021-2024 period and absence of acquisitions and/or new investments out of the current portfolio. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Positive rating action for the company's FC IDR would be associated to an upgrade on Brazil's sovereign rating; -- Positive rating action for the company's LC IDR would be associated to improvements on Brazil's operating environment; -- Upgrade not applicable to the National Scale rating as it is at the highest level. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Negative rating action for the LC IDR would be associated to a deterioration in Alupar's consolidated financial profile, with net adjusted leverage above 3.5x and funds from operations net leverage above 4.0x, both on a sustainable basis; -- A weaker Brazilian operating environment may result in a downgrade of the LC IDR; -- A downgrade on Brazil's sovereign rating would result in a similar rating action on Alupar's FC IDR; -- A two-notches downgrade on Alupar's LC IDR would lead to a downgrade on the National Scale rating. 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 Sound Liquidity Profile: Alupar group should continue to benefit from a high liquidity position and broad access to the banking and capital markets. On a consolidated basis, the group's cash position of BRL1.5 billion at the end of September 2021 covered its short-term debt of BRL1.1 billion by 1.3x. Fitch also expects that the operating cash generation of new transmission lines will be adequate to service their debt. On Sept. 30, 2021, total consolidated adjusted debt of BRL9.4 billion mainly consisted of debentures issuances (BRL6.9 billion, or 73%) and Banco Nacional de Desenvolvimento Economico e Social (BNDES; BRL821 million, or 9% of the total). The holding company should use its significant cash reserves to supply the needs of its projects, maintaining a debt maturity schedule compatible with its cash flow expectations. As of Sept. 30, 2021, its cash position of BRL611 million (41% of the consolidated amount) was slightly smaller than the total debt of BRL664 million. The dividends inflow is its main source of funds, with BRL671 million received in the LTM ended on Sept. 30, 2021. In the same period, the total debt-to-received dividends ratio was 1.0x. Alupar should be able to maintain the net debt-to-received dividends ratio below 1.0x over the following years. ISSUER PROFILE Alupar is a non-operational holding company that operates in the energy transmission and generation segments mainly in Brazil, with small operations in other countries in Latin America. The company's shares are traded at B3 in Brazil. SUMMARY OF FINANCIAL ADJUSTMENTS Net revenues and EBITDA net of construction revenues and cost. 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. BRAZIL: Takes Top Spot in Real Interest Rates Ranking ----------------------------------------------------- Brazil is once again the country with the highest real interest rate globally, according to a ranking compiled by MoneYou and Infinity Asset Management, according to Rio Times Online. Rio Times Online reports that the country was in second position but 'recovered' the top with the Selic high to 10.75% on Feb. 2. Ranking takes into account the interest rates practiced in 40 countries. The country had already taken the lead in October last year, but Turkey overtook it in December, which has now dropped to 8th place, the report discloses. Brazil retook the top of the ranking after the Monetary Policy Committee (Copom) decision of the Central, the adds. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Jair Bolsonaro is the current president, having been sworn in on Jan. 1, 2019. Standard & Poor's credit rating for Brazil stands at BB- with stable outlook (April 2020). S&P's 'BB-/B' long-and short-term foreign and local currency sovereign credit ratings for Brazil were affirmed in December 2021 with stable outlook. Fitch Ratings' credit rating for Brazil stands at 'BB-' with a negative outlook (November 2020). Fitch's 'BB-' Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) has been affirmed in December 2021. Moody's credit rating for Brazil was last set at Ba2 with stable outlook (April 2018). DBRS's credit rating for Brazil is BB (low) with stable outlook (March 2018). BRF SA: Raises in $1 Billion in Discounted Share Sale ----------------------------------------------------- thepigsite.com, citing Reuters, reports that Brazilian food processor BRF SA said it had priced its share offering at 20.00 reais per share, a 7.5% discount to Feb. 1's closing price, raising 5.4 billion reais ($1 billion). BRF, a major poultry and pork processor, said in a securities filing it would use the proceeds to boost its capital structure, expand activities and make strategic investments, according to thepigsite.com. The offering was comprised of 270 million new shares and raised BRF's total share capital to 13.05 billion reais, the company said, adding an overallotment of 54 million shares - or 20% of the original offering - was not sold, the report discloses. The report notes BRF counts meatpacker Marfrig Global Foods SA, pension funds Petros and Previ, and asset manager Kapitalo Investimentos among its largest shareholders. Local media reported earlier in the week that only Petros refrained from buying stock during the share sale, the report relays. When the offering was first announced in December, market players speculated that Marfrig could acquire a controlling stake in the company without the risk of triggering a poison pill to block such a move, but its shareholders ended up approving it to only take part in the offering within the "limit of its stake in BRF's capital," the report says. Investment banks Citigroup, Bradesco BBI, BTG Pactual, Itau BBA, J.P. Morgan, Morgan Stanley, Safra, Santander Brasil, Bank of America, Credit Suisse and UBS BB managed the offering. As reported in the Troubled Company Reporter-Latin America on Feb. 4, 2022, S&P Global Ratings raised its global scale issuer credit rating on Brazil-based food company BRF S.A. to 'BB' from 'BB-' and its national scale issuer credit rating to 'brAAA' from 'brAA+'. S&P also raised the issue-level rating to 'BB' from 'BB-', with a recovery rating remaining at '3'. COMPANHIA SIDERURGICA: Fitch Assigns 'BB' to $1B Notes Due 2032 --------------------------------------------------------------- Fitch Ratings has assigned a 'BB'/'RR4' rating to Companhia Siderurgica Nacional's (CSN) proposed senior unsecured notes of up to USD1.0 billion due 2032 issued by its subsidiary CSN Resources S.A. The proceeds of the notes will be used for general corporate purposes, including debt refinancing. CSN's ratings reflect its strong iron ore business and Brazilian flat steel market position, as well as the cost competitiveness of these businesses. The Positive Outlook reflects Fitch's expectation of additional deleveraging in the next 12 to 18 months of more than USD1.3 billion. Fitch expects the proposed transaction will improve the company's liquidity and debt maturity profile, and its pro forma gross leverage is estimated to be 3.0x over the rated horizon. KEY RATING DRIVERS Solid FCF Generation: Fitch projects that CSN will generate BRL15.0 billion of EBITDA and BRL6.4 billion of FCF during 2022 after spending BRL4.1 billion on capex, which is a hike from BRL2.8 billion of investments in 2021. This results primarily from prices normalizing to USD90/ton from historical highs in 2021 of USD160/ton that Fitch expects will allow CSN to generate BRL22.0 billion of EBITDA and FCF of BRL11.5 billion. Fitch's base case forecasts 31 million tons of iron ore production for CSN, the sale of an additional 7 million tons of iron ore bought from third parties. These volumes are similar to those of 2021, 22% higher than those of 2020, when intense rainfall affected CSN's first half of the year production but remain 1% below 2019 levels. Lowering Debt Burden: Fitch calculates that CSN's strong FCF generation will lower net debt to USD2.6 billion in 2021 from USD4.7 billion at the end of 2020, and USD6.7 billion at the end of 2019. The company had BRL33.7 billion of Fitch adjusted total debt at the end of Sept. 30, 2021 and BRL15.9 billion of readily available cash and marketable securities. Fitch includes BRL2.9 billion of advances received from Glencore for a 33 million tons iron ore supply contract and excludes lease related debt from its debt adjustments. Fitch forecasts that CSN will end 2021 with a net debt/EBITDA ratio of 0.6x, after its recent cement business acquisitions are projected to add BRL 2.5 billion in gross debt. This ratio is expected to weaken as iron ore prices fall. The impact of the fall in iron ore prices will be partially offset by stronger results from CSN's steel division, new production coming from the Itabirite projects and cement business growth. Iron Ore Prices: Iron ore posted record levels of more than USD200/ton in 1H21, ending 2021 at an average of USD160/ton. The high prices are partially explained by the constrained supply since Vale's dam collapse in 2019 and Australian supply issues in 2021 met demand weakness. Chinese steel production registered Government mandated supply cuts and new trouble in its real estate market following the fallout of Evergrande but policies appear able to mitigate the deterioration. Fitch expects prices to fall in 2022 for a yearly USD90/ton average, and follow a multiyear downtrend through 2025 to USD70/ton. Steel Environment: Fitch anticipates CSN's steel volumes will grow 3% and domestic prices fall 40% in 2022. Fitch projects that steel volumes rose 10% and domestic steel prices grew more than 80% in 2021. According to the Brazilian Steel Institute, while crude steel production rose by 21% in the first nine months of 2021 from the same period a year ago, apparent consumption was 36% higher. As noted by CRU Group, the commodities business intelligence company (CRU), Brazilian sheet product imports increased by 114% in 9M21, with higher volumes from China and CIS, while exports fell by 18% supporting a more balanced market into 2022. Fitch expects EBITDA/ton of more than USD250 in 2022. Short-Term Debt Concentration: CSN had about 30% of its debt falling due by the end of 2023 as of Sept. 30, 2021. Approximately 70% of the debt falling due during this timeframe is with Brazilian banks. Caixa Economica Federal, Banco do Brasil, Nippon Export and Investment Insurance and Santander are CSN's largest lenders. Banco do Brasil have also lent money to CSN's controlling shareholder. CSN's 2021 liability management program has led to the refinancing of the 2023 bond, the tender offer of its perpetual bonds and targets a repayment of BRL 4 billion of bank debt, a decrease in annual amortization to BRL2 billion from BRL4 billion between 2022 and 2025, and an extension of cash coverage of near-term debt from 30 months to more than 60 months. CSN Mineracao Listing: The BRL4.1 billion (USD760 million) of proceeds from the Sao Paulo Stock Exchange IPO of CSN Mineracao on February 2021 was split between the parent and the subsidiary. Approximately BRL1.3 billion remained within the company to expand its mining projects and port terminal and BRL2.8 billion funded CSN's debt prepayment efforts with its Brazilian banks. CSN Cimentos Listing: CSN plans to raise up to BRL3.5 billion through the listing of CSN Cimentos. Proceeds would be used to finance half of CSN's USD1.025 billion (approximately BRL5.4 billion) acquisition of LafargeHolcim's assets in Brazil. The transaction, which was announced on Sept. 10, 2021, and if approved by the Brazilian anti-trust agency CADE, would increase CSN's cement production capacity to 16.3 million tons from 6 million tons per year and make CSN Cimentos the third largest cement producer in Brazil. The transaction would further diversify CSN's cash flow and revenue stream, as the business is now expected to contribute to about 6% of consolidated EBITDA and targets a 10% contribution in the near term. This listing is expected to follow CSN's adoption of a new strategy during the past few years to accelerate its deleveraging through the sale of minority positions in its businesses and other assets. This included a reduction of its preferred shares in Usiminas, resulting in BRL1.3 billion in proceeds. The disposal of its remaining shares in Usiminas remains under consideration. DERIVATION SUMMARY CSN's more integrated business profile and diversified portfolio of assets compare well with Usinas Siderurgicas de Minas Gerais S.A.'s (Usiminas; BB/Stable). Both issuers are highly exposed to the local steel industry in Brazil. CSN and Usiminas show weaker business positions than Brazilian steel producer Gerdau S.A (BBB-/Stable), which has a diversified footprint of operations with important operating cash flow generated from its assets abroad, mainly in the U.S., and flexible business model (mini-mills) that allow it to better withstand economic and commodities cycles. Among the three business steel producers, Gerdau has consistently maintained the strongest balance sheet, most manageable debt amortization schedule, and has consistently made efforts to improve its capital structure through assets sales or equity issuances. Gross debt levels at CSN remain high relative to Gerdau and Usiminas. CSN also has a more challenging debt amortization schedule than either Usiminas or Gerdau. CSN's first quartile position on the hot rolled coil steel cost curve compares similarly to global peers such as PAO Severstal (BBB/Stable) and Metalloinvest (BBB-/Stable), as the company benefits from its vertical integration and the weak BRL. CSN and Severstal both benefit from a significant share of high value-added products that make up their sales. CSN and Metalloinvest have a similar operating profile with iron ore contributing to more than 75% of EBITDA. CSN exhibits weaker credit metrics when compared to Severstal or Metalloinvest, particularly in gross debt levels, and its significant refinancing risks reflect the differential between its rating and those of its global peers. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include : -- Benchmark iron ore prices average USD160/ton in 2021, USD90/ton in 2022 and USD85/ton in 2023; -- Iron ore volumes rebound by 22% in 2021, remain flat in 2022, and grow 4% in 2023; -- Steel volumes increase by 10% in 2021, grow by 3% in 2022 and stay flat in 2023; -- Capex reaches BRL2.8 billion in 2021, and averages BRL5 billion till 2024 to build the Itabirite expansion. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Additional asset sales in order to support gross debt reduction; -- Improved debt amortization schedule; -- Sustained adjusted total debt/EBITDA ratio below 3.0x and/or adjusted net debt/EBITDA ratio below 2.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Inability or unwillingness to reduce gross debt levels with cash proceeds from asset sale; -- Sustained adjusted total debt/EBITDA ratio above 4.0x and/or adjusted net debt/EBITDA ratio above 3.0x; -- Adverse regulatory changes in Brazil's mining industry. 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: CSN's liquidity improved in 2021 supported by strong FCF generation, the implementation of its liability management program, the IPO of CSN Mineraca, and the sale of preferred shares of Usiminas. The liability management initiative included the repurchase of perpetual bonds and refinancing of the 2023 notes. The new issuance intends to refinance the 2026 notes. CSN had BRL18.4 billion of cash and BRL33.6 billion of Fitch adjusted total debt as of Sept. 30, 2021. Cash position covered by 11x its short-term debt of BRL1.6 billion. Fitch's debt figure includes BRL3.5 billion of advances received from Glencore for a 33 million tons iron ore supply contract and excludes lease related debt from its adjustments. Capital markets debt represents 52% of the Fitch adjusted debt total, while banks account for 39% of debt, and the Glencore advance represents the final 9% of debt. Including the Glencore debt, approximately 75% of the company's debt is denominated in U.S. dollars or euros. ISSUER PROFILE CSN is an integrated high value-added steelmaker with a large market share in the Brazilian flat steels market and presence in Germany, the U.S. and Portugal. CSN is the second largest iron ore exporter of Brazil. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch's debt figure includes BRL2.9 billion of advances received from Glencore for a 33 million tons iron ore supply contract and excludes lease related debt from its adjustments. Fitch does not consider equity holdings as part of cash equivalent marketable securities. ESG CONSIDERATIONS Companhia Siderurgica Nacional (CSN) has an ESG Relevance Score of '4' for Governance Structure due to key person risk and limited board independence through a single powerful shareholder, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. 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. CSN RESOURCES: Moody's Rates Proposed Senior Unsecured Notes 'Ba2' ------------------------------------------------------------------ Moody's Investors Service has assigned a Ba2 rating to the proposed senior unsecured notes due in up to 10 years to be issued by CSN Resources S.A. and unconditionally guaranteed by Companhia Siderurgica Nacional (CSN) (Ba2 stable). CSN's existing ratings including its Ba2 corporate family rating remain unchanged. The outlook is stable. The proposed issuance is part of CSN's liability management strategy and proceeds will be used for debt prepayment, including a tender offer for the company's outstanding notes due 2026, and general corporate purposes, thus not affecting the company's debt protection metrics. The rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and assume that these agreements are legally valid, binding and enforceable. Rating Assigned: Issuer: CSN Resources S.A. Gtd Senior Unsecured Notes due in up to 10 years: Ba2 The outlook is stable. RATING RATIONALE CSN's Ba2 ratings reflect the company's position as a leading manufacturer of flat-rolled steel in Brazil (Ba2 stable), with a favorable product mix that is focused on value-added products, and as a major producer of iron ore (second-largest exporter in Brazil). Historically, the company has reported a strong Moody's-adjusted EBITDA margin of 20%-35% (47.1% in the last twelve months ended September 2021), supported by its solid domestic market position, wide range of products across different segments and globally competitive production costs for both steel and iron ore. The ratings also incorporate the improvement in the company's leverage and liquidity after several measures taken over the past two years and the improved operating performance related to a favorable environment for both iron ore and steel. The ratings are constrained by CSN's recent track record of aggressive financial policies, including a highly leveraged capital structure, appetite for growth and dividend requirements to cover debt service at the parent level, although Moody's recognizes that the recent actions taken by the company evidences a change in approach to financial management. Additional credit concerns include the company's exposure to the volatility of the steel business in Brazil and to iron ore prices, its concentration in a single production site in the mining segment, and potential overhangs related to ongoing judicial disputes, such as the ones regarding the Transnordestina project, a recent arbitrage process and investigations involving the company's controlling shareholder. CSN's operating performance and credit metrics have improved materially since 2019, backed by the strong performance of the iron ore export business and a better than expected performance for steel in 2021. CSN's adjusted EBITDA increased to BRL22.3 billion in the twelve months ended September 2021 from BRL10.1 billion in 2020 and adjusted leverage declined to 1.4x from 3.6x in the same period. Overtime, Moody's expects CSN's adjusted leverage ratios to remain within 2.0 -- 3.0x based on a range of price scenarios for iron ore 62% Fe of $80-$125 per ton and normalized steel operations. The proposed transaction is part of CSN's liability management strategy and proceeds will be used for debt prepayment, including a tender offer for CSN's outstanding notes due 2026, and general corporate purposes, thus improving liquidity while lengthening the company's debt amortization schedule. The new issuance adds to several liquidity-enhancing initiatives, such as the BRL4 billion IPO of its mining subsidiary and the monetization of BRL1.3 billion related to Usiminas' preferred shares. CSN's debt amortization schedule also improved substantially with liability management initiatives that reduced debt costs and increased debt tenor. Moody's expects that CSN will maintain a recurring cash position close to BRL20 billion, compared to previous expectations of BRL10 billion, and CSN has stated its target to maintain net leverage below 1x overtime. Such milestones increase the visibility over CSN's ability to maintain solid credit metrics and liquidity, while still investing in growth and pursuing M&A activities, such as the recently announced acquisition of LafargeHolcim (Brasil) S.A. for $1.025 billion. The acquisition does not jeopardize the company's current sound liquidity and the additional 10.3 million tons annual capacity in the cement segment will help diversify CSN's cash flows further. The company's historically low leverage and strong free cash flows offset leverage and liquidity risks coming from this transaction, and the acquisition could be partially financed at CSN Cimentos level assuming the successful conclusion of the subsidiary's IPO, giving CSN additional flexibility to pursue growth while still strengthening its balance sheet this year. The acquisition will also help to consolidate Brazil's fragmented cement market, improving the competitive landscape by rationalizing competition. LIQUIDITY CSN's cash position increased to BRL15.9 billion at the end of September 2021 (BRL18.5 billion including Usinas Siderurgicas de Minas Gerais S.A. (Usiminas, Ba2 stable)' shares) from BRL1.6 billion at the end of 2019 (BRL3.7 billion with Usiminas shares) as a result of the BRL15.6 billion in free cash flow generated since mid-to-late 2020. CSN recently repurchased the totality of its $925 million notes due in 2023 with proceeds from a new $850 million issuance, thus addressing near-term maturities. Additionally, the company concluded in September 2021 the early redemption of its $1 billion perpetual notes and continues to negotiate the refinancing of debt with Caixa Economica Federal (Caixa) (Ba2/Ba2 stable, ba3). Pro forma to all transactions, CSN's cash position will cover debt maturities through 2025, and the company's debt amortization schedule will be even more comfortable, with only BRL2 billion in debt coming due through the end of 2022, compared to BRL9.2 billion at the beginning of 2021. The company's total debt will also decline further with the payment of the perpetual notes, although CSN continues to raise new credit lines to fund growth. RATING OUTLOOK The stable outlook reflects Moody's expectation that the company's operations will continue to perform well in the next 12-18 months, and that CSN will maintain a strong balance sheet and liquidity while pursuing growth. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be upgraded if CSN proves to have a conservative financial management for an extended period time, or if the company is able to maintain its financial flexibility, either through a strengthened cash position or lower debt balance through commodity cycles. An upgrade would also require total leverage (measured by total adjusted debt to EBITDA) below 3.0x (1.4x in the last twelve months ended September 2021) and interest coverage ratios (measured by EBIT to Interest expenses) above 4x (5.9x in the last twelve months ended September 2021) on a sustainable basis. The ratings could be downgraded if performance over the next 12 to 18 months deteriorates such that leverage remains above 4.0x and EBIT/interest below 2.5x on a sustained basis. Evidence of more aggressive financial policies or a deterioration in the company's liquidity profile would also trigger a rating downgrade. The principal methodology used in this rating was Steel published in November 2021. COMPANY PROFILE With an annual capacity of 5.6 million tons of crude steel, Companhia Siderurgica Nacional (CSN) is a vertically integrated, low-cost producer of flat-rolled steel, including slabs, hot and cold rolled steel, and a wide range of value-added steel products, such as galvanized sheet and tinplate. In addition, the company has downstream operations to produce customized products, pre-painted steel and steel packaging. CSN sells its products to a broad array of industries, including the automotive, capital goods, packaging, construction and home appliance sectors. CSN owns and operates cold rolling and galvanizing facilities in Portugal, along with long steel assets in Germany through its subsidiary Stahlwerk Thüringen GmbH (SWT). The company also has a long steel line (500,000 tons capacity) in the Volta Redonda plant. CSN is a major producer of iron ore (the second-largest exporter in Brazil) and has operations in other segments, such as cement, logistics, port terminals and power generation. CSN reported revenue of BRL47.3 billion ($8.8 billion) in the 12 months that ended September 2021, with an adjusted EBITDA margin of 47.1%. EMBRAER SA: Moody's Affirms 'Ba2' CFR & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service has affirmed Embraer S.A.'s Ba2 corporate family rating and senior unsecured debt rating, and the Ba2 ratings of the senior unsecured notes issued by Embraer Overseas Limited and Embraer Netherlands Finance BV and guaranteed by Embraer. The outlook for all ratings was changed to stable from negative. Ratings affirmed: Issuer: Embraer S.A. Corporate Family Rating: Ba2 $500 million global senior notes due 2022: Ba2 Issuer: Embraer Netherlands Finance BV $1,000 million Gtd global senior notes due 2025 guaranteed by Embraer S.A.: Ba2 Issuer: Embraer Overseas Limited $540.52 million Gtd global senior notes due 2023 guaranteed by Embraer S.A.: Ba2 Outlook actions: Issuer: Embraer S.A. Outlook changed to Stable from Negative Issuer: Embraer Netherlands Finance BV Outlook changed to Stable from Negative Issuer: Embraer Overseas Limited Outlook changed to Stable from Negative RATINGS RATIONALE The change in Embraer's rating outlook to stable from negative reflects (i) the ongoing improvement in credit metrics related to a gradual recovery in market conditions, operating performance and backlog, and (ii) the improvement in the company's liquidity position following the recent asset sale in Portugal, the initiatives to reduce cash burn and the business combination and subsequent IPO of the eVTOL business EVE Holding, Inc. (EVE), all of which mitigates the risks that could trigger a negative rating action in the short term. Moody's expects that Embraer's adjusted gross leverage will decline to 7x-6x by year-end 2022 and to 6x-5x in 2023, from around 9x in 2021 and 19.1x in 2020, when credit metrics were hurt by lower deliveries related to the pandemic and the additional debt raised by the company to cover cash needs. The recovery will come on the back of higher deliveries of aircrafts in the commercial segment, firm demand for services and support agreements, executive jets, and higher profitability in the defense and security business with the beginning of commercialization of the KC-390 aircraft. Despite potential volatility in existing contracts with the Brazilian government, Embraer's backlog will continue to grow with additional orders in the commercial aviation segment, as illustrated by the recently announced agreement with Azorra for up to 50 E190-E2 or E195-E2 aircrafts worth $3.9 billion based on list prices, of which $1.6 billion is firmly committed. The company's liquidity profile will also improve with proceeds from asset sales and the expected inflow related to the business combination of EVE in 2022, which will help to reduce net leverage ratios to below 3x in 2022-23, from around 4x in 2021. Embraer's cash flows will also benefit from its strategy to reduce cash burn through efficiency gains, such as better inventory management, reduction in the production cycle of aircraft by more than 35% by 2022, and the optimization of investments to respond to market the conditions, as illustrated by the postponement of the 175-E2 jet entrance to 2024 from 2022 because of the pilot contract scope clause limitations in the United States. Such milestones will help abate liquidity risks coming from the capital intensity of its business and the development costs of the new eVTOLs business and investments needed to comply with new service agreements -- which require less employed capital than the jet business --, freeing up cash for debt reduction and a faster recovery in gross leverage ratios. Lower cash needs will also support the maintenance of adequate net leverage ratios during the volatile recovery in the company's commercial aircraft business. Embraer's Ba2 rating continue to reflect its solid position as a leading regional jet maker and its reputation as a reliable airplane producer, bolstered by its good liquidity derived from large cash balances and a manageable debt maturity profile. The Ba2 rating also takes into consideration the fact that funding from Brazilian public banks would be available, if needed. In Moody's view, Embraer is still a strategic asset to the Government of Brazil (Ba2 stable), which owns a golden share in Embraer with veto rights. At the same time, the cyclical nature of the aviation business and increasing competition constrain Embraer's rating, particularly given the significant investments required on an ongoing basis to keep up with evolving customer needs. The company's high financial leverage coming from working capital pressure and high investments, exacerbated by significant earnings and cash flow erosion during the pandemic, is an additional rating constraint that is partially mitigated by adequate net leverage ratios. Embraer's financial performance and balance sheet were severely hit by the impact of the coronavirus pandemic on demand for new commercial and business aircraft in 2020, with a more sustained recovery likely only in 2022-23. LIQUIDITY Embraer's good liquidity is an important factor underpinning its rating. The company has consistently maintained a high cash balance, matching the level of its outstanding debt, except in 2020, when net leverage increased because of the additional debt raised during the pandemic and the cash burn posted during the crisis. As of the end of September 2021, the company's cash on hand and short-term investments of BRL13.3 billion were enough to cover all its debt maturities through 2024. Moody's expects Embraer to continue to proactively pursue liability management initiatives to lengthen its debt tenor and reduce debt cost, thus preserving its liquidity profile. RATING OUTLOOK The stable outlook reflects Moody's expectations that Embraer's credit metrics will continue to recover through 2023 and that the company will maintain its good liquidity to mitigate risks related to the volatility in market conditions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating pressure is unlikely until Embraer's credit metrics and free cash flow generation recovers sustainably from the pandemic slump. Quantitively, an upgrade would require positive free cash flow generation on a sustained basis, and net leverage ratios strengthening to pre-pandemic levels of around 2-3x. The maintenance of a strong liquidity profile and of conservative financial policies would also be required for an upgrade. Expectations of deeper and longer declines in demand for new aircraft as a result of the pandemic, particularly if not matched by additional sources of liquidity, could result in a rating downgrade. A downgrade could also result from wider liquidity concerns, for instance because of cost inflexibility, or from clear expectations that the company will not be able to maintain financial metrics compatible with a Ba2 rating following the pandemic with gross adjusted leverage above 5x and retained cash flow/net debt below 15% on a sustained basis. The principal methodology used in these ratings was Aerospace and Defense published in October 2021. COMPANY PROFILE Embraer is a leading manufacturer of commercial jets with up to 150 seats, with a growing defense and security segment, and a line of business jets, including new types for the medium-sized and super-medium-sized segments. Founded in 1969 by the Brazilian federal government and privatized in 1994, Embraer is headquartered in São Jose dos Campos, Brazil. In the 12 months that ended September 2021, the company reported net revenue of BRL25.2 billion ($4.6 billion) with an adjusted EBITDA margin of 10.8%. PETROLEO BRASILEIRO: Egan-Jones Hikes Senior Unsecured Ratings B+ ----------------------------------------------------------------- Egan-Jones Ratings Company on January 20, 2022, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by Petroleo Brasileiro SA to B+ from B. Headquartered in Rio de Janeiro, State of Rio de Janeiro, Brazil, Petroleo Brasileiro S.A. - Petrobras explores for and produces oil and natural gas. =================================== D O M I N I C A N R E P U B L I C =================================== BANCAMERICA: Regulator Takes Over, to Dissolve Bank --------------------------------------------------- Dominican Today reports Bancamerica has been intervened by the Superintendence of Banks with the aim of dissolving it. The measure sparked annoyance and confusion in customers, while the shareholders announced legal measures opposing it, according to Dominican Today. The Superintendence of Banks reported that Bancamérica presents accumulated losses for years prior to 2021 of RD$851 million and losses of RD$147 million during the last year (as of November), the report notes. In addition, "the entity made business decisions that affected its prudential indicators, specifically its solvency," it added, the report relays. Bancamérica is a small bank with barely 0.13% of the assets of the national financial system. It has 28,485 depositors, which represent 0.34% of the system. Only 15,260 have a balance in their savings accounts or instruments, with a total of RD$3.3 billion (US$58 million), the report discloses. DOMINICAN REPUBLIC: Group Warns of Impact of Fuel Subsidy Removal ----------------------------------------------------------------- Dominican Today reports National Association of Fuel Retailers (Anadegas) Juan Matos estimated that if the government removed the fuel subsidy, fuel would increase by at least 37 pesos. At the same time, Matos warned that if fuel prices rise exorbitantly, not only would there be more inflation in the country, but also station sales, which they have said have dropped considerably due to the pandemic, would drop even more, according to Dominican Today. "Increases always decrease sales. It is not convenient for us that fuel becomes more expensive," Matos said Feb. 2 during a press conference in which they expressed their opposition to the government restoring the subsidy to carriers, the report notes. Recently, President Luis Abinader recognized that the fuel subsidy is a significant burden for the State that, according to his words, is impossible to maintain, the report relays. "It is impossible to continue. We subsidized the price of oil, of all hydrocarbons, last year for about 13 billion (pesos). . . .It is impossible to continue with that. It is impossible," said the president during an interview in the morning program Hoy Mismo, which is broadcast on Color Vision (channel 9), the report discloses. Days later, the Ministry of Industry, Commerce, and Mipymes (MICM) communicated that the government would continue to assume part of the increases in fuel prices not to transfer the increases to the population, the report says. The MICM indicated that it would try, according to the possibilities of the national budget, to absorb most of the increases, as it has done since last year, 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 five centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. 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. =========== M E X I C O =========== ARMOUR SECURE: A.M. Best Affirms B(Fair) Financial Strength Rating ------------------------------------------------------------------ AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of B (Fair), the Long-Term Issuer Credit Rating (Long-Term ICR) of "bb" (Fair), and the Mexico National Scale Rating (NSR) of "a.MX" (Excellent) of Armour Secure Insurance S.A. de C.V. (Armour) (Mexico). The outlook assigned to the FSR is stable, while the outlook assigned to the Long-Term ICR and NSR is positive. The Credit Ratings (ratings) reflect Armour's balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile, and marginal enterprise risk management (ERM). The positive outlook on the Long-Term ICR and NSR reflects the corrective actions taken on financial leverage at the holding company level, which was derived from changes in the organizational structure of the group that occurred within the last year. The strong balance sheet assessment reflects Armour's capital base, consistently strengthened through the reinvestment of earnings. Armour has been able to sustain a profitable domestic operation through its underwriting results and investment income. Armour's business profile is limited due to its concentration in the niche market of title insurance in Mexico, coupled with challenges ahead for the real estate market amid Mexico's weakened economy. AM Best's view of the company's ERM is marginal due to concerns regarding governance and availability of information at its holding company, Trebuchet Group Holdings Limited. Positive rating actions could take place if Armour's holding company correctly manages its financial leverage, in AM Best's view, as well as the current and prospective changes in its structure and capital management. Negative rating actions also could take place if operating performance deteriorates to the point of affecting the company's risk-adjusted capitalization. The methodology used in determining these ratings is Best's Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM Best's rating process and contains the different rating criteria employed in the rating process. ===================================== T R I N I D A D A N D T O B A G O ===================================== CL FINANCIAL: CLICO Claim Remains Pending ----------------------------------------- Trinidad Express reports that in 2018, the insurance company, CLICO submitted a $11 billion claim to its parent company, CL Financial (CLF) which is in liquidation. To date, CLF has only repaid $335,317,275 of the claim, according to Trinidad Express. The liquidation is being managed by Grant Thornton. In an interview with the Sunday Express, CLICO's executive chair Claire Gomez-Miller observed that none of the claims submitted have been rejected but some claims, in the form of trust deeds, have been subject to court proceedings. The trust deeds have been a thorny issue for the liquidators. Gomez-Miller said she had hired a former central banker, Corey Gomez, to investigate the trust deeds and build out a paper trail, the report relays. In the liquidators' seventh report, dated December 18, 2020 they noted: "Our investigations have identified eight deeds of trust of which CLF is allegedly a counterpart, the report discloses. Should these trusts be determined to be valid the impact, among other things, would see CLF's shareholding in HCL reduce from 70 per cent to 37 per cent and CLF's shareholding in CL World Brands (the indirect owner of the CLF Group's 44.87 per cent shareholding in Angostura Holdings Ltd) drop from 100 per cent to approximately 38 per cent," the report relates. It continued: "Accordingly, the determination of the validity of the various trust agreements will have a material impact on the value of CLF estate, potentially in excess of $1 billion. The trust deeds therefore necessitate an exhaustive investigation to be undertaken by the liquidators to fully understand how they arose, along with expert legal analysis to be undertaken with respect to their validity," the report relays. In 2020, CLICO was victorious with one trust deed with regard to its shareholding in Methanol Holdings (International) Ltd, the Oman-based methanol company. On August 20, it was ordered that the declaration of trust was validly executed and MHIL shares belonged to CLICO, the report notes. Trinidad Express says Gomez-Miller noted that CLICO is now in court with the liquidators over CL World Brands as there are three trust deeds by which the insurance company is claiming ownership of 42 per cent of the beverage holding company. She described CLICO as a "victim" and the organization as one that has been badly wounded and unfortunately stigmatized as a result, the report notes. However, the power of the CLICO brand has endured, she said. In March 2021, the Central Bank in its quarterly report on the Central Bank, which is filed in the High Court pursuant to section 44E (7) of the Act, said that CLICO is now solvent. The report noted: "The 2019 statutory fund calculation has indicated that the CLICO statutory fund has sufficient and appropriate assets to back the traditional portfolio and other statutory fund liabilities," the report notes. About CL Financial/CLICO CL Financial was one of the largest privately held conglomerate in Trinidad and Tobago. It was originally founded as an insurance company and has since expanded to be the holding company for a diverse group of companies and subsidiaries. CL Financial is the parent company of Colonial Life Insurance Company (Trinidad) Limited (Clico). CLICO is now the Company's insurance division. CL Financial however experienced a liquidity crisis in 2009 that resulted in a "bail out" agreement by which the government of Trinidad and Tobago loaned the company funds ($7.3 billion as of December 2010) to maintain its ability to operate, and obtained a majority of seats on the company's board of directors. The companies to be bailed out were: CL Financial Ltd (CLF); Colonial Life Insurance Company Ltd (CLICO); Caribbean Money Market Brokers Ltd (CMMB); Clico Investment Bank (CIB) and British American Insurance Company (Trinidad) Ltd (BAICO). As reported in the Troubled Company Reporter-Latin America in July 2017, CL Financial Limited shareholders vowed to pay back a TT$15 billion (US$2.2 billion) debt to the Trinidad Government. CL FINANCIAL: Liquidators File 9th Report ----------------------------------------- Asha Javeed at Trinidad Express reports CL Financial Limited shareholders will have to wait to get a dividend from the company which is in liquidation. In its ninth report to the Court for the period June 18 to December 22, 2021, the liquidators said that while the company received dividends from its subsidiaries for the reporting period, its creditors were first in line to be paid, according to Trinidad Express. For the reporting period, CLF received $49.4 million from its subsidiaries -- $3.3 million from Colfire, US$1.5 (TT$10 million) from Caribbean Petrochemical Manufacturing Limited (CPML) and $36.1 million from Angostura Holdings Limited (AHL) -- the report notes. The report noted CLF now had $392.5 million in its accounts. "The liquidators note that they are unable to pay a dividend from the CLF estate until a point where the claims of creditors have been substantially adjudicated," the report said. Among the creditors is its subsidiary company, CLICO, which is under the management of the Central Bank, with an outstanding claim of $10 billion against its parent company, Trinidad Express notes. The liquidators said noteworthy progress has been made with regard to claims on CL Financial, the report notes. "However, some creditors are struggling to properly prove their claims or are slow in providing the liquidators with responses to information requests," they observed, the report discloses. For the period, the liquidators admitted creditor claims to the value of $36,907,846.09, which brings the value of claims admitted to $2.1 billion, the report says. In comparison, they have rejected $1 billion in claims since they assumed their role in September 2017, the report discloses. "In addition, during the period, the liquidators have identified further claims for rejection totalling approximately $752 million. Finally, in the period the liquidators sought and received legal advice on a claim totalling $1.6 billion. As a result of that legal advice, the liquidators have written to the creditor involved seeking additional information to assist with the liquidators adjudication of that particular claim," the Liquidators' report said, according to Trinidad Express. CL World Brands CLICO claims 42% of CL World Brands (CLWB) via three trust deeds, the report discloses. The liquidators noted that they have filed an affidavit on the matter with over 2,300 pages, which had taken years of correspondence with the trust counterpart to research and compile, the report says. CL World Brands owns 92,551,212 shares in Angostura Holdings Ltd, through a company called Rumpro Company Ltd. About 42% of the CL World Brands stake would be 38,871,509 shares, which is 18.8% of the shareholding in Angostura, the report relays. That block of shares was worth $777 million on Jan. 31. The initial hearing of the matter was heard on July 12, 2021 with a supplemental hearing on July 22, 2021. A third hearing was held on September 10, 2021, the report adds. "During the period, on November 30, 2021, CLICO have supplied their responding affidavit which numbers over 500 pages with exhibits. The liquidators are currently reviewing this material and determining whether a responding affidavit will be filed by January 12, 2022. The liquidators expect to be before the court on February 17, 2022 for the substantive hearing on this matter," the Liquidators' report said, according to Trinidad Express. The outcome of this matter could affect the dividends paid to CL Financial by Angostura, the report says. The liquidators noted that for the reporting period, CLF had received $36.1 million from AHL -- on September 21 and 25, a dividend of $27.8 million and $8.3 million respectively was paid to CL Financial -- the report notes. AHL is listed on the Trinidad and Tobago Stock Exchange and CLF, indirectly through CLWB's subsidiaries, is a significant owner. "Approximately 62 per cent of these monies are ringfenced subject to legal proceedings," the report noted. Colfire Sale The liquidators expect the sale of Colfire to be concluded in the next six to nine months. CLF is a 94.2% shareholder of Colfire, the report relays. On November 25, 2021, Tatil, the insurance company of the ANSA McAl conglomerate, announced it had signed a lock up agreement to purchase Colfire, the report discloses. "The liquidators will now oversee the various steps to be undertaken by the purchaser to obtain regulatory approval and complete the sale," the report said, adding that they expect, barring any extraordinary events, that the sale of the Colfire shares will complete in the next six to nine months, the report notes. The liquidators did not disclose the price but the value of the transaction is about $320 million, the report relays. ANSA McAL is the majority shareholder of ANSA Merchant Bank and both companies are listed on Trinidad and Tobago Stock Exchange (TTSE), the report adds. CPML The liquidators said two offers it received for the sale of CPML were lower than the valuation of the company. The valuation was done on March 5, 2020. "Of those two bids, one was materially higher than the other. However, neither of the two bids received were equal to or higher than the value stated in the valuation report dated 5, March 2020," the report said, according to Trinidad Express. To this end, the JLs sought a revised valuation report dated September 14, 2021, the report relays. "In light of the robust sales process and the estimated value of the CPML shares according to the revised Valuation Report, the JLs approved the sale of the shares to the materially higher bidder subject to the approval of the Court. Terms of the Sale have been agreed and as Sale and Purchase Agreement executed," the report noted, according to Trinidad Express. The JLs noted that given the value is lower than the March 2020 valuation, it would need approval of the court to proceed with the sale, the report adds. * * * As reported in the Troubled Company Reporter-Latin America on Aug. 6, 2015, Trinidad Express reports that the Constitution Reform Forum (CRF) has called on Finance Minister Larry Howai to refrain from embarking on an "unnecessary drain on the Treasury" by appealing the decision of a High Court judge, who ordered that the Minister fulfil a request by president of the Joint Consultative Council (JCC) Afra Raymond for financial details relating to the bailout of CL Financial Limited. The CRF issued a release stating that if the decision is appealed, not only will it be a waste of finance but such a course of action will also demonstrate a "lack of commitment by the Government to the spirit and intent of the Freedom of Information Act FOIA", under which the request was made, according to Trinidad Express. On July 7, 2014, Trinidad Express said that the Central Bank has placed the responsibility of voluntary separation package (VSEP) negotiations for workers at insurance giant Colonial Life Insurance Company Ltd. (CLICO) with the company's board, after which it will review accordingly, the bank said in a statement. The bank's statement follows protest action by CLICO workers, supported by their union, the Banking, Insurance and General Workers' Union (BIGWU), outside the Central Bank in Port of Spain, according to Trinidad Express. In a separate TCRLA report on June 26, 2014, Caribbean360.com said that the Trinidad and Tobago government has welcomed an Appeal Court ruling that the Attorney General Anand Ramlogan said saves the country from paying out more than TT$1 billion (TT$1 = US$0.16 cents) to policyholders of the cash-strapped CLICO. The Appeal Court overturned the ruling of a High Court that ruled members of the United Policyholders Group (UPG) were entitled to be paid the full sums of their polices. CLICO financially caved in on itself at the end of 2008 after the investment instruments of major policyholders matured and they wanted hundreds of millions of dollars they were owed. On Aug. 6, 2013, the TCR-LA, citing Caribbean360.com, said that over TT$8 billion worth of CLICO's profitable business will be transferred to Atruis, a new company that will be owned by the state. The Trinidad Express said that the Cabinet approved the transfer as the Finance and General Purposes Committee continues to discuss a letter of intent hammered out by the Ministry of Finance and CL Financial's 400 shareholders, which envisions taxpayers will recover the more than TT$20 billion Government has injected since 2009 to keep CL subsidiary CLICO and other companies afloat. At its annual general meeting in Sept. 2013, CL Financial shareholders voted to extend the agreement with Government until August 25, 2014, while Cabinet decides on a new framework accord to recover the debt owed to Government through divestment of CL subsidiaries, including Methanol Holdings, Republic Bank, Angostura Holdings, CL World Brands and Home Construction Ltd., Caribbean360.com related. Proceeds from the divestment of these assets will go toward Government's recovery of the billions it pumped into CLICO. TCRLA reported on Sep 22, 2011, Caribbean News Now, citing Reuters, said that the cost of the Trinidad and Tobago government bailout of CL Financial Limited is likely to rise to more than TT$3 billion. =============== X X X X X X X X =============== [^] BOND PRICING: For the Week Jan. 31 to Feb. 4, 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 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 co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. 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