/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220208.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 Tuesday, February 8, 2022, Vol. 23, No. 22 Headlines B R A Z I L ACU PETROLEO: S&P Affirms 'BB' Rating on Senior Secured Notes EMBRAER SA: Egan-Jones Maintains 'B' Senior Unsecured Ratings JBS SA: To Pay Beef Wholesalers $52.5M in Price-Fixing Settlement PETROLEO BRASILEIRO: Egan-Jones Hikes Sr. Unsecured Ratings to BB- D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Group Supports Central Bank Moves J A M A I C A JAMAICA: Fuel Price Hike Puts Petrol Retailers on Brink M E X I C O CREDITO REAL: Fitch Cuts Rating to 'CC' as CHF170M Bond Due Feb. 9 CREDITO REAL: S&P Lowers ICR to 'CCC-' on Higher Refinancing Risk PLAYA HOTELS: S&P Upgrades ICR to 'B-', Outlook Positive TV AZTECA: Fitch Affirms Default Rating as Creditor Talks Go On UNITED MEXICAN: Egan-Jones Lowers Senior Unsecured Ratings to B+ P U E R T O R I C O EDUCATIONAL TECHNICAL: Wins March 9 Plan Exclusivity Extension METRO PUERTO RICO: April 5 Plan & Disclosure Hearing Set T R I N I D A D A N D T O B A G O TSTT: Will Secure Funding to Cover Restructuring Costs - - - - - =========== B R A Z I L =========== ACU PETROLEO: S&P Affirms 'BB' Rating on Senior Secured Notes ------------------------------------------------------------- S&P Global Ratings affirmed its 'BB' issue-level rating to Acu Petroleo S.A.'s (Acu) senior secured notes, and a recovery rating of '2' on the notes remains unchanged. Brazilian transshipment terminal operator, Acu, is setting up an Eligible Credit Instrument (ECI) with a local financial institution in order to enable Petroleo Luxembourg S.a.r.l. (Acu Lux; the issuer of the notes) to receive or transfer funds from/to Acu in an efficient manner. The implementation of the proposed transactions would slightly improve credit metrics, but not sufficiently enough for an upgrade. In addition, the company won't be exposed to any additional foreign exchange or counterparty risk. S&P said, "Our rating action follows the setting up of an ECI with a local financial institution in order to periodically facilitate Acu Lux to receive or transfer funds from/to Acu in an efficient manner, given that the project's revenues are collected in an onshore account. All the conditions on the ECI, including the principal amount and legal amortization schedule, interest rate, and accrual terms, premia and prepayment terms are equivalent to those of the rated notes. "In our view, the transaction doesn't expose the project to any foreign exchange risk, given that that the maximum timeframe between the fixing of the foreign exchange rate and the actual debt servicing is three days only, while the funds in the onshore account remain invested in dollar-linked instruments. In addition, we view the transaction counterparties as non-material, given that the project doesn't depend on this structure in order to service its debt." From a financial perspective, the transaction implies a slight improvement in Acu's minimum DSCR (to 1.8x from 1.7x in the second stage), but which doesn't affect the 'BB' rating. S&P said, "Our analysis focuses on the project's operations, considering that it started operating in 2016. We assess the assets' class stability--the risk that a project's cash flow will differ from expectations due to operational issues--at '4' (on a scale of '1' to '10', with '1' as the strongest). The score mainly reflects the risk of performing oil transshipment operations, which we view as more complex than transshipment of other materials, such as minerals, due to oil's flammable nature. "Considering Acu's contracted status, we then analyze the project in two phases. The take-or-pay contracts contribute to Acu's cash flow stability, considering that they reduce the potential volatility in both volumes and tariffs. The first phase takes place in 2022, when the project has contracts for around 74% of its volumes. The second phase starts in 2023 and ends in 2035, when Acu holds contracts for 17% of the total volumes sold. Although we expect that Acu will renew or sign new contracts in the next few years, we cannot capture them in our analysis until they are effectively in place. "We view the market exposure as low in the first stage, given that the CFADS might vary less than 20% in case of a market downside scenario. In the second stage, we expect higher volatility with CFADS potentially varying close to 50%. Our market downside scenario includes lower volumes transshipped mainly due to lower oil production amid long-term Brent oil prices at $40 per barrel, versus the $55 per barrel we consider in the base-case scenario. In addition, the market downside scenario captures stable tariffs, aligned with those included in the latest contracts signed, versus rising tariffs included in the base-case analysis. "In our base case, we expect a minimum and average annual DSCR of 1.43x in the first stage. In the second stage, we expect minimum and average metrics slightly higher, of 1.8x and 2.2x, respectively. In addition, the project shows some resiliency under a downside scenario that includes stresses to macroeconomic, industry, and operating variables, because we think that Acu's liquidity reserves would not be depleted during a five-year downside period. Due to these factors, we assess the project's operational phase SACP as 'bb'." EMBRAER SA: Egan-Jones Maintains 'B' Senior Unsecured Ratings ------------------------------------------------------------- Egan-Jones Ratings Company on January 24, 2022, maintained its 'B' foreign currency and local currency senior unsecured ratings on debt issued by Embraer SA. Headquartered in Sao Jose dos Campos, State of Sao Paulo, Brazil, Embraer SA manufactures and markets commercial, corporate, and defense aircraft. JBS SA: To Pay Beef Wholesalers $52.5M in Price-Fixing Settlement ----------------------------------------------------------------- Matthew Sedacca at thecounter.org reports that Brazilian meatpacker JBS SA and its U.S. affiliates agreed to pay $52.5 million to settle litigation alleging that the company and other packing giants colluded to drive up the price of beef. Plaintiffs alleged that, from 2015 on, JBS worked with other meatpackers to methodically suppress slaughter volumes -- an activity that created backlogs at slaughter plants, made ranchers desperate to sell cattle even at dramatically lower prices, and brought in "sky-high margins" for the companies, according to court documents. JBS did not admit wrongdoing as part of the settlement. The deal, which still requires approval by a federal court in Minneapolis, is the first in an ongoing series of related antitrust lawsuits against the so-called "Big Four" meatpackers, which include JBS, Cargill, Tyson Foods, and National Beef, according to thecounter.org. The report notes the settlement has divided a broad swath of cattle producers and industry advocates. While some see the news as a promising sign that additional, related lawsuits may bear fruit, others feel that a patchwork of legal cases will do little to cure the ills of a deeply consolidated marketplace, the report notes. These critics remain focused on obtaining more comprehensive and forceful reforms, renewing calls for the Department of Justice (DOJ) to release the findings of its longer-term investigation into anticompetitive activity, the report relays. "It's not a deterrent. A penalty should be a deterrent for future actions," the report discloses. News of the settlement comes just a month after the Biden administration announced a $1 billion investment to bolster competition in the livestock industry, the report notes. And DOJ and the Department of Agriculture (USDA) launched a new online portal that will allow farmers and ranchers to report their own experiences of anticompetitive behavior, the report relays. However, some cattle producers and their representatives fear that the relatively small settlement will do little to slow corrupt activity in an industry that brings in an estimated $63 billion annually. "They can profit from it, they can pay the fine, and they know they can do it again," Joe Maxwell, president of Farm Action, said of the deal, according to the report. "It's not a deterrent. A penalty should be a deterrent for future actions," he added. Lawyers for the plaintiffs noted the proposed payout was more than double what the company had agreed to pay in 2020 in a settlement with pork wholesalers, which amounted to $24.5 million, the report notes. JBS also agreed last year -- in two additional pork price-fixing suits -- to pay out nearly $13 million to retailers and restaurants, as well as another $20 million in consumer claims, the report discloses. Meanwhile, the company has seen its profits continue to soar, reporting an estimated $1.8 billion in Q3 for 2021 and 146 percent year-over-year growth, the report says. "They represented their plaintiffs but they didn't represent all of us consumers and farmers and ranchers, so JBS takes a walk." Meatpackers' growing record of eight-figure settlements is seen by some industry groups as a mere rebate for their illegal anticompetitive activity and, worse, allows companies to avoid the admission of wrongdoing. Maxwell said that payouts over price-fixing allegations come nowhere close to reflecting the true cost of damages for industry collusion, the report notes. "I can understand the attorneys' zeal to settle for that kind of money but their case didn't involve everyone that paid a price for [the market manipulation]," Maxwell said. "They represented their plaintiffs but they didn't represent all of us consumers and farmers and ranchers, so JBS takes a walk." For their part, lawyers described this latest settlement as a win -- in part because it will require that JBS provide "extensive cooperation" in the plaintiffs' pursuit of further antitrust claims against other non-settling meat packers, the report relates. JBS did not respond to a request for comment. Cattle producers, led by the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA), which advocates for the success and rights of independent producers, brought a similar case in 2019 against meatpackers that include the Big Four, alleging they artificially lowered the slaughter supply, resulting in depressed prices for farmers and ranchers as meat-packers raked in record profits, the report notes. With that case currently in discovery, CEO Bill Bullard said the fact that beef wholesalers reached a settlement at all with JBS is slight cause for optimism, the report discloses. "It suggests that the case is meritorious," he said. "And because of the similarity with our case, you could apply that there too," he added. The report says Senator Chuck Grassley, the Republican from Iowa and member of the Senate Agriculture Committee, used news of the settlement to push for passage of the bipartisan Cattle Price Discovery and Transparency Act, which aims to improve fairness and transparency in the beef market, the report relays. Grassley, one of the bill's authors, said in a statement that "although the settlement is a spit in the ocean compared to JBS' record profit throughout the pandemic, it validates what cattle producers have been telling me when they try to get a fair price in the marketplace. It's time to put an end to these price fixing schemes once and for all," he added. "It is clear from this settlement that cattle producers still don't have all the information they have demanded and is deserved," he added. The report notes the National Cattlemen's Beef Association (NCBA) was the first national organization to request an investigation into beef markets in 2019. It said in a statement that the settlement was "deeply disturbing" because it precedes the release of potentially critical information from DOJ's investigation, which it believes is essential to determining the scope of damages done. But more than a year and a half since the department first subpoenaed JBS, Cargill, Tyson Foods, and National Beef, producers say they have received no updates, the report discloses. "It is clear from this settlement that cattle producers still don't have all the information they have demanded and is deserved," NCBA's CEO Colin Woodall said. "The DOJ has an obligation to finish their investigation. Cattle producers do not have years to wait for the government to determine whether there has been wrongdoing, we demand answers now," he added. In December, attorneys general from 16 states signed a letter addressed to Agriculture Secretary Tom Vilsack, requesting that USDA grant funding through the American Rescue Plan to strengthen their own antitrust investigations and enforcement in the sector, the report notes. "State attorneys general have the potential to have significant impact on agriculture market concentration, but lack of resources is a perennial limitation on what states can do," the group said in its letter, the report discloses. As reported in the Troubled Company Reporter-Latin America in August 2021, S&P Global Ratings revised the global scale outlook on JBS S.A. (JBS) and its fully owned subsidiary JBS USA Lux S.A. (JBS USA) to positive from stable and affirmed its 'BB+' issuer credit rating. The recovery expectations remain unchanged, and S&P affirmed the 'BB+' ratings on the senior unsecured notes and the 'BBB' ratings on the secured term loans. PETROLEO BRASILEIRO: Egan-Jones Hikes Sr. Unsecured Ratings to BB- ------------------------------------------------------------------ Egan-Jones Ratings Company on January 28, 2022, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by Petroleo Brasileiro S.A. to BB- 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 =================================== DOMINICAN REPUBLIC: Group Supports Central Bank Moves ----------------------------------------------------- Dominican Today reports that the Association of Multiple Banks of the Dominican Republic (ABA) deemed "worthwhile" the change in monetary policy stance executed by the Central Bank of the Dominican Republic since August 2021. "This, given the complexities of the global economic and financial panorama, the greater persistence of inflationary pressures and the prevailing uncertainty associated with covid-19 and geopolitical phenomena," according to Dominican Today. The ABA said in a press release the actions to restrict liquidity and increase the benchmark rate, above the level that was before the pandemic, seek to preserve price stability and are essential to promote an adequate climate of favorable business and social peace for investment, job creation and the well-being of the population, 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. ============= J A M A I C A ============= JAMAICA: Fuel Price Hike Puts Petrol Retailers on Brink ------------------------------------------------------- RJR News reports that continually rising gas prices have taken a further toll on the local petroleum retail sector with reports that some operators are on the brink of closing down. Dianne Parram, President of the Jamaica Gasoline Retailers Association, confirmed in an interview with Radio Jamaica News that some of the members are struggling to survive, according to RJR News. Fuel prices have been steadily increasing over the past few weeks, the report notes. According to Parram, the rising prices have impacted JGRA members because of the increased cost of operating their businesses while sales have declined as motorists reduce their purchase of fuel, the report relates. She laments that gas station operators continue to absorb the losses and many of them are failing, the report discloses. "What we're finding is that members safe unable to absorb the increases by reducing their margins and as such, people are saying that they are going to have to thrown it in because it's that difficult. When you look at the increase on charges and the cost of money, it is just very difficult for some of our members . . . ," the report relays. Parram said the overwhelming sentiment in the JGRA is for there to be a reduction in the special tax on gasoline, the report relates. She warns that this will be absolutely necessary in order to prevent some gas stations from folding, the report notes. "Several years ago we had added on the ad velorem tax to the gas when the price was very low and the taxes were not flowing the way that they wanted. When we have rising prices we need to look at the percentage that is taxes. We want the government to revisit that tax and see if they can reduce that percentage," she added, the report notes. Meanwhile, the JGRA will be seeking a meeting with the Prime Minister to discuss concerns about rising fuel prices, the report discloses. "When we tracked the prices last year, we found that 87 went up by more that $55 and 90 went up by more than $59 in one year -- that was a significant impact. So we are really going to seek audience with our Minister and we will ask him to take it further and we will also seek audience with the Prime minister," the JGRA President said, the report adds. As reported in the Troubled Company Reporter-Latin America on Nov. 25, 2021, Moody's Investors Service has affirmed the Government of Jamaica's long-term issuer and senior unsecured ratings at B2. The senior unsecured shelf rating has also been affirmed at (P)B2. The outlook on the ratings remains stable. =========== M E X I C O =========== CREDITO REAL: Fitch Cuts Rating to 'CC' as CHF170M Bond Due Feb. 9 ------------------------------------------------------------------ Fitch Ratings has downgraded Credito Real, S.A.B. de C.V., SOFOM, E.N.R.'s (Credito Real) Long-Term (LT) Local- and Foreign-Currency Issuer Default Ratings (IDRs) to 'CC' from 'B-' and its Short-Term (ST) Foreign- and Local-Currency IDRs to 'C' from 'B'. Credito Real's unsecured debt and hybrid notes were also downgraded to 'CC'/'RR4' from 'B-'/'RR4' and to 'C'/'RR6' from 'CCC'/'RR6', respectively. The LT and ST national scale ratings were downgraded to 'CC(mex)' from 'B(mex)', and to 'C(mex)' from 'B(mex)', respectively. All ratings remain on Rating Watch Negative (RWN). KEY RATING DRIVERS The downgrade reflects increased concerns regarding Credito Real's ability to address its upcoming CHF170 million global unsecured bond maturity on Feb. 9, 2022. While the company continues pushing to settle the funding resources to fulfill its obligations, Fitch believes there is a high level of credit risk due to the closeness of the maturity date. Credito Real's main strategies to meet the bond payment, including the signature of the syndicated secured facility and the confirmation of additional financing strategies that the non-bank lender was negotiating, have not materialized yet. As per Fitch's rating definitions, the 'CC' rating primarily reflects that default of some kind appears probable. The RWN reflects that further negative rating actions could be taken in the following days in the event of failure to secure the additional financing alternatives to meet the payment of the bond. Fitch downgraded the company's funding and liquidity factor to 'cc' from 'b-' with a negative trend as it remains highly subject to creditor sentiment. The very close payment date of the bond signals material room for improvement in management execution and internal control, while it also raises concerns about the company's corporate governance that are no longer consistent with the previous ratings. The rating downgrade also considers the downward revision of Fitch's evaluations of the rating factors 'business profile' to 'b+' from 'bb-', reflecting the agency's perception of a diminished business profile due to the deterioration of Credito Real's funding franchise, which hinders its future business prospects; 'management and strategy' to 'ccc+' from 'b+' based on Fitch´s opinion of a slower than anticipated execution of refinancing strategies to stabilize Credito Real's liquidity position; and 'risk profile' to 'b- from 'b+' due to a less conservative liquidity risk management and increased execution risks in view of the proximity of the maturity payment. The agency will reassess the impact on the company and financial profile after the maturity of the Swiss franc global bond. SENIOR DEBT The senior global notes are rated at the same level as Credito Real's 'CC' international rating, as the likelihood of a default of the notes is the same as for the company. The senior notes rated 'CC(EXP)' have not yet been placed on the financial market. The Recovery Rating of 'RR4' assigned to the notes indicates 'Average' recovery prospects of current principal and related interest upon default. HYBRID SECURITIES Credito Real's hybrid securities rated at 'C' reflects the increased loss severity due to its deep subordination and heightened risk of non-performance relative to existing senior obligations. The Recovery Rating of 'RR6' assigned to the notes indicates 'Poor' recovery prospects of current principal and related interest upon default. Based on Fitch's assessment, the hybrid qualifies for 50% equity credit under Fitch's criteria. Fitch has revised Credito Real's ESG Relevance Score for the Governance Structure factor to '5' from '3' given the agency's concerns over intrinsic governance practices as well as the effectiveness of the supervisory board regarding protection of creditor's rights. Fitch changed Credito Real's ESG Relevance Score for Management Strategy to '5' from '3' as management's ability to handle risks and controls to service debt obligations on time has relevantly deteriorated. This has a negative impact on the credit profile and is highly relevant to the rating. RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade could occur if current negotiations to close the secured syndicated loan or additional funding strategies fail, which would lead to a restricted default; Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade could occur if the company timely meets the principal payment of its Swiss bond. SENIOR DEBT and HYBRID SECURITIES -- The company's debt ratings would mirror any changes on those of Credito Real's IDRs. The senior unsecured debt ratings would continue to be aligned with the company's IDRs, while the hybrid securities would remain rated below its IDRs. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. SUMMARY OF FINANCIAL ADJUSTMENTS Pre-paid expenses and other deferred assets were reclassified as other intangibles and deducted from capital. Results from investments in associates were reclassified as operating income. Income from leasing and factoring operations were reclassified as interest income. Its operational lease portfolio and factoring operations were included in gross loans, with the portion of delinquent leases classified as impaired loans. The coupons of the perpetual notes were reclassified as interests. ESG CONSIDERATIONS Fitch has changed Credito Real's Governance Structure ESG Relevance Score to '5' in contrast to a typical relevance score of '3'. Fitch believes this reflects significant concerns over the effectiveness of the supervisory board with regards to perceived weakness towards the protection of creditors' rights. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Fitch has changed Credito Real's Management Strategy ESG Relevance Score to '5' in contrast to a typical relevance score of '3' due to Fitch perceiving management's diminishing ability to manage risks and control to service debt obligations on time, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Credito Real has an ESG Relevance Score of '4' for Exposure to Social Impacts due to its exposure to shifts in social or consumer preferences or changes in government regulation, or contract agreements on payroll deduction loan products, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Credito Real has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to its exposure to reputational and operational risks, as its payroll deduction loans business targets government employees and dependencies offering relatively high interest rates, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Credito Real has an ESG Relevance Score of '4' for Financial Transparency due to the issuer's approach for reporting and registering accrued interest and the loan portfolio differ from practices disclosed by other payroll lenders, and Credito Real's public information disclosure is weaker than international best practices and lack sufficient detail in some accounts. This 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. CREDITO REAL: S&P Lowers ICR to 'CCC-' on Higher Refinancing Risk ----------------------------------------------------------------- S&P Global Ratings lowered its long-term global scale issuer credit rating on Credito Real S.A.B. de C.V. SOFOM E.N.R. to 'CCC-' from 'B-'. S&P also lowered its national scale rating to 'mxCCC-/mxC' from 'mxB+/mxB'. At the same time, S&P lowered its issue-level rating on the senior unsecured bond to 'CCC-' from 'B-' and its issue-level rating on the subordinated perpetual notes to 'C' from 'CCC-'. S&P is maintaining all ratings on CreditWatch negative. Credito Real is still negotiating to secure a loan, which it plans to use to pay its market debt maturity of Feb. 9, 2022. However, given that the company hasn't closed the transaction and received the funds, its refinancing risk has increased drastically ahead of its CHF170 million bond maturity next week. In S&P's view, Credito Real failed to achieve several initiatives during 2021 to strengthen and improve its liquidity position. These include the sale of its foreclosed assets--MXN1,418 million--the monetization of the collection rights from the MXN695 million loan granted to Nuncio Accipiens S.A. de C.V, and it hasn't received proceeds from the SME portfolio sale. Credito Real's persistent inability to complete some of the plans to obtain funds during the past few months have weakened severely its financial flexibility. In particular, S&P believes the lender had a poor record of execution in slowing its loan origination pace to improve its liquidity through loan repayments and build up internal funds. The ratings incorporate all these factors, which led Credito Real to a highly vulnerable position prior to its market debt maturity in the next few days. PLAYA HOTELS: S&P Upgrades ICR to 'B-', Outlook Positive -------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Mexican and Caribbean all-inclusive resort owner and operator Playa Hotels & Resorts N.V. to 'B-' from 'CCC+'. At the same time, S&P raised its issue-level ratings on Playa's senior secured credit facility to 'B-' from 'CCC+'. S&P said, "The positive outlook reflects that we could raise ratings one notch if Playa's operating performance continues to improve and it makes capital allocation decisions that sustains our measure of leverage below 7x and EBITDA coverage of interest expense of greater than 2x. "We upgraded Playa to 'B-' because we upwardly revised our base case for operating performance that could reduce leverage to around the 6x-7x area and EBITDA coverage of interest expense to around the 2x-3x area in 2022. Following widespread access to vaccination in North America, Playa's portfolio occupancy sequentially improved through 2021. On Jan. 20, 2022, the company reported that its fourth quarter 2021 portfolio occupancy was 66%, despite the impact of the Omicron variant and shifting Centers for Disease Control (CDC) guidance, and that its booking volumes had accelerated in the weeks leading up to the announcement. This compared with portfolio occupancy of 59.3% in the third quarter and 49.9% in the second quarter. Additionally, Playa reported fourth quarter 2021 portfolio average daily rate (ADR) that represented a 39% increase compared with 2019. It is our understanding that recent international arrivals to Mexico and the Dominican Republic increased substantially in recent months, credible press reports indicate a substantial interest in travel to these regions by North American travelers partly because of a belief that virus-related restrictions may be more manageable than other international travel destinations, and an ongoing trend of pent-up leisure demand in the U.S. generally at high ADRs. We believe these drivers support our assumption that Playa's occupancy will continue to recover in 2022 compared with 2021." Additionally, as long as ADRs do not moderate significantly, the expected occupancy recovery should drive substantial improvements in credit measures in 2022 compared with 2021. As a hotel owner, Playa's ability to liquidate properties enhances its financial flexibility. Playa's liquidity in the form of cash and revolver availability is currently adequate and more than sufficient to finance our assumed level of maintenance and growth capital expenditures. However, the company's hotel portfolio continues to be a source of future flexibility, in S&P's opinion, should the company need it. On April 22, 2021, Playa announced the sale of its Riviera Maya-based Capri hotel for $55 million in cash. On Nov. 4, 2020, it announced the sale of its Riviera Maya-based Dreams Puerto Aventuras for a total cash consideration of $34.5 million. Additionally, on May 1, 2020, Playa announced the sale of two Jamaican resorts, the Jewel Dunn's River Beach Resort & Spa and the Jewel Runaway Bay Beach Resort & Waterpark, for a total consideration of $60 million in cash. Although market conditions are typically depressed when asset sales are needed and this may reduce the number of potential buyers, the company could sell additional noncore hotels in its portfolio if it needs to generate additional liquidity. Geographic concentration leaves Playa vulnerable to regional risks. Playa generates the majority of its EBITDA from its Mexican properties, most of which are located in the Yucatan peninsula. This concentration leaves Playa more exposed to regional risks than its higher-rated peers in the lodging industry. Travel-related event risk can significantly impair business conditions in the Mexican and Caribbean resort market, demonstrated by the health scare that deterred travel to the Dominican Republic in 2019. Playa's relationships with Hyatt and Hilton provide it with competitive advantages. After the Hilton Playa del Carmen and Hilton La Romana projects were completed in November 2019, the company converted three of its resorts to the Hilton brand. Additionally, Playa owns and operates eight resorts under the Hyatt brand. The company's partnerships with these brands provide it with a number of benefits, including access to their loyalty programs, quality assurances, and increased exposure to new customers. As global brands expand their all-inclusive offerings, Playa could identify additional opportunities to partner with lodging companies that are well recognized and have good distribution systems. S&P said, "Prior to the pandemic, the competition in the all-inclusive space was heating up and we believe competition could increase over the next several years. Since entering the all-inclusive space in 2019, Marriot has added 28 franchised resorts to its portfolio with plans to continue expanding its all-inclusive presence. We believe traditional lodging brands that have historically eschewed the all-inclusive model are responding to consumer demand and the success of Hyatt's Ziva and Zilara brand launches with Playa a few years ago. Increased competition from branded all-inclusive resorts in the company's markets could diminish the competitive advantages it receives from partnering with brands like Hilton and Hyatt. "The positive outlook reflects that we could raise ratings one notch if Playa's operating performance continues to improve, and it makes capital allocation decisions that sustains our measure of leverage below 7x and EBITDA coverage of interest expense of greater than 2x. "We could raise the rating if we believe Playa will maintain adjusted debt to EBITDA below 7x, incorporating the potential for temporarily leveraging investments, and sustains EBITDA coverage of interest expense above 2x." (ESG) credit factors for this credit rating changed -- Health And safety ESG credit indicators: To E-3, S-3, G-2; From E-3, S-4, G-2 S&P said, "Social factors are a moderately negative consideration in our credit rating analysis of Playa and are reflected in the unprecedented impact on the company's systemwide RevPAR due to the pandemic. Although this was a rare and extreme disruption unlikely to recur at the same magnitude, safety and health scares are an ongoing risk. Playa has mitigating factors that we expect could cause revenues to improve to 2019 levels or greater in 2022 if it sustains recent improvements in occupancy, and package average daily rates do not moderate significantly." Playa's recovery compares favorably to other lodging peers due to its ownership of beachfront all-inclusive resorts in Mexico and the Caribbean, which have benefited from pent up demand for leisure travel. Additionally, Playa is exposed to the risk of terror attacks, geopolitical unrest, health scares, and other events that can have temporary but significantly negative impacts on travel demand and financial performance. The company's limited geographic diversity makes it vulnerable to idiosyncratic regional events, which have included health scares and crime concerns in recent years. Environmental factors are a moderately negative consideration. This reflects the company's potential exposure to severe hurricanes that impair operations in Caribbean markets. Highly destructive storms can diminish traveler demand and cripple local infrastructure, potentially impairing travel volumes to Playa's key markets. TV AZTECA: Fitch Affirms Default Rating as Creditor Talks Go On --------------------------------------------------------------- Fitch Rating has affirmed TV Azteca, S.A.B. de C.V.'s (TV Azteca) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) at 'RD' (Restricted Default). Fitch has also affirmed the company's USD400 million senior notes due 2024 at 'C'/'RR4'. The 'RR4' Recovery Rating assigned to the senior notes' issuances indicate average recovery prospects given default. 'RR4'-rated securities have characteristics consistent with historically recovering 31%-50% of current principal and related interest. The ratings affirmation reflects TV Azteca continued negotiation with creditors of its senior notes due 2024, for which the company has missed the past two interest coupons. Once a debt restructuring is completed, Fitch will re-rate the company based on the new capital structure while considering its business risk. At September 2021, TV Azteca's debt was about MXN12.6 billion, of which about MXN8.1 billion are subject to restructuring. KEY RATING DRIVERS Expiration of Grace Period: The 'RD' rating level indicates that TV Azteca has experienced an uncured payment default related to the interest payment of its USD400 million senior notes due 2024, but has not otherwise ceased operations. The company stated it intentions to meet its other debt obligations related to its 2022 Certificados Bursatiles' (CB) issuance and its bank loans. TV Azteca remains current with its related party loan with Banco Azteca, its CB issuance and a private loan with Capiprom. Debt Restructuring Pending: TV Azteca announced back in 2021 that it hired advisors to evaluate strategic options, that include a debt restructuring process in order to achieve a sustainable capital structure. The company intends to pursue a broader restructuring of its U.S. dollar-denominated debt. Operating Performance Recovering to Pre-Pandemic Levels: As of 3Q21, revenues from the advertising segment improved backed by the reactivation of sports, Olympic Games and reality shows, after the lockdowns in 2020. Also, the company's strategy of cost control has improved the margins. For YE 2021, Fitch expects TV Azteca to reach around MXN13.1 million in revenues with a 26% EBITDA margin. Going forward, EBITDA margin should remain within a 20%-25% range as the company maintains its advertising market share in free-to-air TV. ESG - Governance Structure: TV Azteca has an ESG Relevance Score of '5' for Governance Structure. The company is owned and controlled by Ricardo Salinas and his family. TV Azteca has shown different actions that illustrate a potential conflict of interest through different treatment among different types of creditors. This includes the partial prepayment of its MXN denominated medium term notes called CBs and non-payment to its USD denominated creditors in 2021. Fitch expects the company to remain current in its related party loans with Banco Azteca. DERIVATION SUMMARY TV Azteca's 'RD' rating reflects the end of the extended grace period and the missed coupon payments of its 2024 senior notes. KEY ASSUMPTIONS -- Revenues to increase around 22% in 2021 and 2.4% in 2022; -- EBITDA margins of around 26% during 2021; -- Capex of around MXN660 million during 2021 and 2022; -- Dividends of around MXN17.5 million. RECOVERY ASSUMPTIONS For issuers with IDRs of 'B+' and below, Fitch performs a recovery analysis for each class of obligations. The issue rating is derived from the IDR and the relevant Recovery Rating (RR) and notching, based on the going concern enterprise value of a distressed scenario or the company's liquidation value. The recovery analysis assumes that TV Azteca would be considered a going concern in bankruptcy and that it would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Fitch's recovery analysis for TV Azteca places a going concern value under a distressed scenario of approximately MXN7 billion, based on going-concern EBITDA of MXN1.75 billion and a 4.0x multiple. The going-concern EBITDA estimate reflects Fitch's view of a sustainable post-reorganization EBITDA level, upon which the agency bases the valuation of the company. Fitch assumes that any potential distress that provoked TV Azteca's default could occur due to weak economic factors, dampened advertising demand for free-to-air TV, and potential unpopular content amid high production costs. The MXN1.75 billion going-concern EBITDA assumption reflects a 20% discount from the average annual EBITDA during the last three years and Fitch EBITDA expectations for 2022 which should be sufficient to cover its interest expense, working capital and maintenance capex. A 4.0x enterprise value multiple is used to calculate a post-reorganization valuation and reflects the Mexican operating environment and a mid-cycle multiple. Fitch calculates the recovery prospects for the senior unsecured debtholders in the 31%‒50% range based on a waterfall approach after covering the company's available credit facility. This level of recovery results in the senior unsecured notes being rated in line with its IDR at 'C'/'RR4'. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- The IDRs would be reassessed upon the completion of a debt restructuring process; the IDRs would reflect the new capital structure and credit profile of the issuer. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Although is not considered in Fitch's base case, filing for bankruptcy protection, liquidation, or any other formal winding-up procedure would lead to a downgrade of corporate ratings to 'D'. 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 Poor Liquidity: TV Azteca has not made the last two coupon payments of the 2024 senior notes equivalent to around MXN680 million despite having a cash and equivalents of MXN3,646 million as of September 2021. The company's next coupon is due on Feb. 9, 2022. The company's liquidity is weak due to its poor access to non-related party debt. Fitch considers the company will be able to refinance its debt maturing in 2022. ISSUER PROFILE TV Azteca is the second largest national broadcaster in Mexico, based on the audience and revenue market share. TV Azteca currently owns and operates national television networks in Mexico, which have programming that reaches over 93% of the Mexican population. Advertising is the company's mainstay which represented close to 90% of total sales at YE 2020. ESG CONSIDERATIONS TV Azteca, S.A.B. de C.V. has an ESG Relevance Score of '5' for Governance Structure due to aggressive negotiation tactics, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. TV Azteca, S.A.B. de C.V. has an ESG Relevance Score of '4' for Management Strategy due to concerns related to a deterioration in the company's revenues including the company´s strategy to mitigate decreasing advertising trends. TV Azteca, S.A.B. de C.V. has an ESG Relevance Score of '4' for Financial Transparency due to the level of detail and transparency and timing of financial disclosure, 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. UNITED MEXICAN: Egan-Jones Lowers Senior Unsecured Ratings to B+ ---------------------------------------------------------------- Egan-Jones Ratings Company on January 24, 2022, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by the United Mexican States to B+ from BB-. Mexico, officially the United Mexican States, is a country in the southern portion of North America. ===================== P U E R T O R I C O ===================== EDUCATIONAL TECHNICAL: Wins March 9 Plan Exclusivity Extension -------------------------------------------------------------- Judge Edward A. Godoy of the U.S. Bankruptcy Court for the District of Puerto Rico extended the period within which Educational Technical College Inc. has the exclusive rights to file its Disclosure Statement and secure the votes to confirm a Plan of Reorganization until March 9, 2022. The deadline to procure the votes under the plan is extended for a term of 45 days after the order conditionally approves of the Disclosure Statement. A copy of the Court's Amended Extension Order is available at https://bit.ly/3L08wLf from PacerMonitor.com. About Educational Technical College Bayamon, P.R.-based Educational Technical College, Inc. filed a voluntary petition for Chapter 11 protection (Bankr. D.P.R. Case No. 21-02392) on Aug. 9, 2021, listing $1,969,503 in assets and $1,407,201 in liabilities. Emilio E. Huyke, president of Educational Technical College, signed the petition. Judge Edward A. Godoy oversees the case. Carmen D. Conde Torres, Esq., at C. Conde & Assoc., and Dage Consulting CPA's, PSC serve as the Debtor's legal counsel and accountant, respectively. METRO PUERTO RICO: April 5 Plan & Disclosure Hearing Set -------------------------------------------------------- On Jan. 28, 2022, debtor Metro Puerto Rico LLC filed with the U.S. Bankruptcy Court for the District of Puerto Rico a Disclosure Statement and Plan. On Jan. 31, 2022, Judge Enrique S. Lamoutte conditionally approved the Disclosure Statement and ordered that: * April 5, 2022 at 10:00 AM via Microsoft Teams Video & Audio Conferencing and/or Telephonic Hearings is the hearing for the consideration of the final approval of the Disclosure Statement and the confirmation of the Plan. * That acceptances or rejections of the Plan may be filed in writing by the holders of all claims on/or before ten (10) days prior to the date of the hearing on confirmation of the Plan. * That any objection to the final approval of the Disclosure Statement and/or the confirmation of the Plan shall be filed on/or before ten (10) days prior to the date of the hearing on confirmation of the Plan. A copy of the order dated Jan. 31, 2022, is available at https://bit.ly/3scpayF from PacerMonitor.com at no charge. Attorney for the Debtor: Jose M Prieto Carballo, Esq. JPC LAW OFFICE PO Box 363565 San Juan PR 00936 Tel: (787) 607-2066 Fax: (787) 200-8837 Email: jpc@jpclawpr.com About Metro Puerto Rico Metro Puerto Rico LLC filed its voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-01543) on March 31, 2020. The petition was signed by Felix I. Caraballo, president. At the time of filing, the Debtor estimated $1 million to $10 million in assets and $500,000 to $1 million in liabilities. Judge Enrique S. Lamoutte oversees the case. Jose Prieto, of the JPC LAW OFFICE, represents the Debtor. ===================================== T R I N I D A D A N D T O B A G O ===================================== TSTT: Will Secure Funding to Cover Restructuring Costs ------------------------------------------------------- Trinidad Express reports that majority state-owned telecommunications provider Telecommunications Services of Trinidad and Tobago Limited said it will secure funding from financial markets to cover the separation costs of its proposed restructuring exercise. In a statement, the company said it plans to finance the cost of the separation without the need for a Government guarantee. In the statement, TSTT said, if given effect to, the high anticipated cost of the proposed restructure will be readily offset by savings in personnel costs, according to Trinidad Express. "The elimination of maintenance costs associated with obsolete plant and technology and revenue from new streams of business, which will partially offset the loss of revenue from voice calling services, local and international," the statement said, the report notes. TSTT has previously stated the proposed restructure has been necessitated by several factors including the economic conditions brought on by the Covid-19 pandemic; increased consumer adoption of digital applications and the continued industry-wide trend of substitution of lower-margin data services in place of voice services, the report discloses. "These and other factors continue to have a crippling impact on the company's business and its results, with TSTT's revenue falling by $453 million during the past financial year ended March 31, 2021 -- 18% less than the prior year, the report says. TSTT indicated that it implemented various initiatives to counteract these debilitating conditions, including reducing non-personnel costs in response to these trends, the report notes. These attempts notwithstanding, given the current challenges, the company said it believes that for it to survive and get back to profitability over time it has no choice but to restructure its operations, and has made its proposals in this regard known to its employees and their representative unions, the report discloses. The Communications Workers Union (CWU) secretary general Clyde Elder delivered a letter to the Prime Minister's office calling for an urgent forensic audit into the operations at TSTT, following the announcement of yet another restructuring exercise, the report discloses. The report relays that union received correspondence from the permanent secretary to the Prime Minister and Head of the Public Service Maurice Suite, who indicated Dr Keith Rowley has directed the Finance Minister to meet with TSTT and CWU on this matter. Meanwhile, the Estate Police Association (EPA) president Derek Richardson said his 36 officers who provide security at the company offices are yet to know if they will be on the breadline, the report says. Richardson told the Express that he met virtually with TSTT's human resource manager and he questioned how many officers would be released. She indicated that it would be sent in the document soon, the report notes. "In the afternoon the EPA received the documents, but it was not stated, as to how many officers were going to be affected. I find this to be very alarming and I have since written back to the HR manager demanding for an urgent meeting to clear up the missing pieces, which has left the officers very anxious," Richardson explained, the report relays. He said when 503 junior and staff were released in 2018, the estate officers were spared as they negotiated with TSTT for the officers to accept a pay cut in exchange for keeping their jobs, the report says. "Now we do not know what is going on and the officers are asking us for answers, which is expected. So if the State-owned majority does not answer our first letter demanding for another meeting, we will write another letter. Just as the CWU knows their numbers, we should as well," Richardson remarked, the report discloses. CWU secretary general Clyde Elder has written to Independent Senator Anthony Vieira, in his capacity as chairman of the committee on enterprises, for the Joint Select Committee to launch an urgent enquiry into TSTT's operations, the report relays. In the letter, the union outlined that TSTT engaged in a restructuring exercise in 2018 which resulted in over 500 workers being sent home, the report says. "At that time, TSTT had invested approximately $3.7 billion in the restructuring exercise. Following that exercise, the then-Minister of Public Utilities assured that no one else would lose their jobs since the company was profitable once again. However, another release of over 400 workers is set to happen next month," the letter indicated, the report adds. The CWU further claimed in the letter that wanton waste and corruption had taken place and continue to take place at TSTT, the report notes. Moreover, in a separate Trinidad Express report CWU said that company's situation is reverse of Petroleum Co. of Trinidad & Tobago (Petrotrin) situation. Speaking at a media conference, CWU secretary general Clyde Elder claimed that TSTT's subsidiary, Amplia Communications Ltd, was being positioned to replace TSTT, according to Trinidad Express. "Amplia will be the trojan horse that comes in to take over everything. So when you kill TSTT, Amplia comes in as the knight in shining armour to save the day. Amplia has no union, it's a separate company, they work for a quarter of the salary that TSTT workers getting," Elder claimed, the report notes. "What value did Amplia bring to TSTT, if any? What is the profit and loss statement of Amplia? Because if you look at it critically you will see that Amplia is being propped up by TSTT. You will see that this restructuring is really a Petrotrin situation in reverse, because with Petrotrin, they closed it down and then opened Heritage. In this instance, they opened Amplia first and closed down TSTT," he added. Elder said he expected TSTT to announce mass job losses at the meeting with the CWU, the report relays. Founded in 1991, Telecommunications Services of Trinidad and Tobago Limited is a large telephone and Internet service provider in Trinidad and Tobago. The company is jointly owned by the Government of Trinidad and Tobago and Cable & Wireless Communications. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *