/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220215.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 15, 2022, Vol. 23, No. 27 Headlines A R G E N T I N A ARGENTINA: IMF Aiming to Finalize Loan Quickly, Says Spokesperson B R A Z I L BRAZIL: Still Has "a Lot of Work Ahead" for Monetary Tightening IMCOPA: Says Bunge's Supply Deal Violates Antitrust Law C O S T A R I C A AUTOPISTAS SOL: Fitch Gives B Rating to Int'l Notes, Outlook Neg. E L S A L V A D O R LA HIPOTECARIA: Fitch Gives CCC Rating to Class C Notes H A I T I HAITI: Central Bank Sees Deterioration of Business Climate P A R A G U A Y PARAGUAY: IDB OKs $200M Loan for State Transformation Process PARAGUAY: President Says Tenure "Most Difficult" T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Bad Roads Cause Closure of Moruga Chicken Farms - - - - - ================= A R G E N T I N A ================= ARGENTINA: IMF Aiming to Finalize Loan Quickly, Says Spokesperson ----------------------------------------------------------------- Buenos Aires Times reports that International Monetary Fund staff are working closely with officials in Argentina to secure an agreement on a new financing deal "as quickly as possible," a spokesman for the multilateral lender said. President Alberto Fernandez's government in late January announced it had reached an "understanding" with the IMF on key policies needed for a deal on its existing US$44.5-billion debt with the crisis lender, according to Buenos Aires Times. In recent weeks, the government has paid just over US$1 billion in principle and interest on the loan, but is seeking to restructure the remaining payments, which were due this year and next, the report notes. "Discussions are ongoing, fairly intensively," but there is no timeline for reaching an agreement, IMF spokesman Gerry Rice told reporters. "We will be looking to do this as quickly as possible, so stay tuned for updates," the report discloses. The government is working to fine-tune the technical and legal documents necessary to reach a staff-level agreement before March, according to government officials who asked not to be named, the report relays. Former president Mauricio Macri in 2018 originally agreed to a US$57-billion loan, the IMF's biggest-ever credit-line, but which the lender recently acknowledged had failed to achieve the objectives of restoring confidence in the country's fiscal viability and fostering economic growth, the report notes. President Fernandez refused to accept the final disbursements of US$13 billion upon taking office in December 2019, the report says. Rice said the IMF staff team "continues working very closely with the authorities" on a deal, which would require final approval from the Fund's board, the report discloses. Rice said there was no date set for the visit of an IMF mission team to Argentina. Nor would he answer whether the IMF would agree to postpone an upcoming debt maturity of about US$2.9 billion, due in March, if a new agreement was not approved by then, the report notes. The focus is on "a realistic, pragmatic, credible approach to designing a program with Argentina that will strengthen the country's macroeconomic stability and begin to address the deep-seated challenges facing the country," Rice said, the report relays. Under the new deal, Argentina has committed to progressively reducing its fiscal deficit from 3% of GDP in 2021 to 0.9% in 2024. The gradual reduction -- to 2.5% in 2022 and 1.9% in 2023 -- would "not prevent the recovery" of the economy, according to Economy Minister Martin Guzman, the report discloses. IMF managing director Kristalina Georgieva called for a focus on finalizing the terms of the agreement and implementing it, saying there is "no alternative," the report relays. "Our main focus is to get Argentina off this very dangerous path of high inflation," she told reporters, the report adds. About Argentina Argentina is a country located mostly in the southern half of South America. Its capital is Buenos Aires. Alberto Angel Fernandez is the current president of Argentina after winning the October 2019 general election. He succeeded Mauricio Macri in the position. Argentina has the third largest economy in Latin America. The country's economy is an upper middle-income economy for fiscal year 2019, according to the World Bank. Historically, however, its economic performance has been very uneven, with high economic growth alternating with severe recessions, income maldistribution and in the recent decades, increasing poverty. Standard & Poor's credit rating for Argentina stands at CCC+ with stable outlook, which was a rating upgrade issued on Sept. 8, 2020. Moody's credit rating for Argentina was last set at Ca on Sept. 28, 2020. Fitch's credit rating for Argentina was last reported on Sept. 11, 2020 at CCC, which was a rating upgrade from CC. DBRS' credit rating for Argentina is CCC, given on Sept. 11, 2020. As reported by The Troubled Company Reporter - Latin American, DBRS noted that the recent upgrade in Argentina's ratings (September 2020) follows the closing of two debt restructuring agreements between the Argentine government and private creditors. The first restructuring involved $65 billion in foreign-law bonds. The deal achieved the requisite participation necessary to trigger the collective action clauses and finalize the restructuring on 99% on the aggregate principal outstanding of eligible bonds. DBRS added that the debt restructurings conclude a prolonged default and provide the government with substantial principal and interest payment relief over the next four years. DBRS further relayed that Argentina is also seeking a new agreement with the International Monetary Fund (IMF) to replace the canceled 2018 Stand-by Agreement. Formal negotiations on the new financing began in November 2020. Obligations to the IMF amount to $44 billion, with major repayments coming due in 2022 and 2023. =========== B R A Z I L =========== BRAZIL: Still Has "a Lot of Work Ahead" for Monetary Tightening --------------------------------------------------------------- globalinsolvency.com, citing Reuters, reports that Brazil's central bank still has further interest rate hikes to make as inflation remains in double digits, Monetary Policy Director Bruno Serra said, reinforcing policymakers' will to extend aggressive monetary tightening. During an online event hosted by Modalmais bank, Serra said that considering current risks, especially those related to the country's fiscal prospects, 2023 inflation is now seen above the target, forcing authorities to keep a hawkish stance, according to globalinsolvency.com. "The battle is still far from won, we still have double-digit inflation. So there's a lot of work ahead in my opinion," he said, the report notes. According to Serra, the central bank will carry on a more contractionary adjustment cycle than what was being forecast by the market, which had considered a 100 basis-point rate hike in March, followed by a 25 basis-point rise in May, the report relays. "We have to do something above that," Serra said, referring to the previous market expectations for rate hikes. "The central bank should deliver more interest (hikes), making a longer cycle," he added. 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). IMCOPA: Says Bunge's Supply Deal Violates Antitrust Law ------------------------------------------------------- Ana Mano at Reuters reports that the owner of two strategic soy crushing plants in southern Brazil has appealed to the country's antitrust body for a probe into a signed supply deal between U.S.-based grains trader Bunge and brewer Cervejaria Petropolis, which is leasing the facilities. In documents filed with regulator CADE, the plants owner Imcopa said the deal falls foul of antitrust laws because the parties involved were already working together to implement it before they sought CADE's approval, according to Reuters. Bunge, in a response to Reuters, said: "The parties are following all legal requirements for the full implementation of the transaction." Bunge previously tried to buy the plants but the deal fell through. The assets are coveted because they produce high value soy byproducts for export using non-genetically modified grains, according to Reuters. One plant is also close to Paranagua, a key port in southern Brazil, the report notes. The report discloses that Imcopa accused Bunge of trying to hide the true legal nature of the contract with Cervejaria Petropolis, which it said goes beyond a simple supply deal and grants Bunge control over the assets. Under the two-phase agreement, signed in August 2021, Bunge would supply soy and soy molasses to Cervejaria Petropolis, the report relays. The brewer, in turn, would supply processed products for Bunge, according to CADE filings describing the operation, the report notes. The agreement was then modified in October after Bunge exercised an option to get exclusive rights to supply soy and market products like soyoil made at the plants, potentially under Bunge's own brand, the report discloses. The amended agreement "would transfer control of production from the Imcopa Group, currently held by Cervejaria Petropolis, to Bunge," according to a CADE review of the contract, the report says. But Imcopa, which filed for bankruptcy protection and then leased both plants to Cervejaria Petropolis in 2014, is concerned the deal could impact the value of the assets which it plans to sell when possible, the report relays. Imcopa claims that Bunge and Cervejaria Petropolis are "gun jumping," by which companies coordinate and implement changes before a deal has been approved by regulators, the report notes. Imcopa said the companies have already made personnel changes to reflect the supply deal, the report says. In separate public documents submitted to CADE on Jan. 21, rebutting the accusations by Imcopa, Bunge said it was not legally obliged to notify CADE of the deal until the non-exclusive phase had passed, the report discloses. The report relays that it also denied controlling Imcopa's plants, rejecting any responsibility over staffing changes as part of its arrangement with Cervejaria Petropolis. Bunge defended the deal as the most effective way to protect Imcopa's plants, since soy supplies will be guaranteed and their finished products will be distributed to the market, the report notes. Cervejaria Petropolis did not reply to a request for comment. Old Courtship Bunge has been vying for Imcopa's assets for some time, the report relays. In May 2020, Bunge made an offer for them, but the deal came undone amid a multi-jurisdictional legal battle, the report discloses. Imcopa, which hoped to emerge from bankruptcy after divesting the plants, accused Cervejaria Petropolis of breaching their contract in August 2019, the report notes. It then tried to end the lease before the 2024 expiration date, sparking a prolonged and ongoing legal fight, the report relays. In its filing, Imcopa also told CADE a higher court in Parana ruled the company may enforce the termination of its contract with Cervejaria Petropolis, the report notes. But should CADE agree with Bunge's tie-up with the brewer, Imcopa wants the regulator to impose conditions on the deal, including a commitment to keep Imcopa soy buyers and sales teams in place and without any communication with Bunge's personnel, and assurances that Imcopa-branded products will not be discontinued, filings show, the report discloses. Imcopa had also requested that CADE give it access to the contract between Bunge and Cervejaria Petropolis, the terms of which remain confidential, the report adds. As reported in the Troubled Company Reporter-Latin America on April 28, 2020, Reuters, citing court filings, said that a previously unreported Brazilian court injunction threw a wrench into Bunge Ltd's (BG.N) plan to take over two soy processing plants from local crusher Imcopa. The injunction was granted on behalf of two Panamanian entities identified in the filings as "third parties," according to Reuters. It effectively suspended a bankruptcy court auction in which Bunge had bid a combined BRL50 million ($9.16 million) for the plants, the report relayed. The Feb. 17 offer, made under an Imcopa reorganization plan approved by creditors in 2017, also entailed assumption by Bunge of around BRL1 billion ($183.11 million) of debt related to the assets, the report noted. =================== C O S T A R I C A =================== AUTOPISTAS SOL: Fitch Gives B Rating to Int'l Notes, Outlook Neg. ----------------------------------------------------------------- Fitch Ratings has affirmed the 'B' rating on Autopistas del Sol, S.A.'s (AdS) international notes with a Negative Rating Outlook. Fitch has also affirmed the 'AA-(cri)' national scale rating on AdS' local notes with a Negative Outlook. The international and local notes are supported by the cash flow generation of the Costa Rican toll road known as Ruta 27. RATING RATIONALE The ratings reflect the asset's traffic and revenue profile, supported by an adequate toll adjustment mechanism. Mostly used by commuters, the project may face significant competition in the short-to-medium term once the main competing road is improved and especially if its tariffs are significantly lower than those of Ruta 27. Toll rates are adjusted quarterly to exchange rate and annually to reflect changes in the U.S. CPI. The ratings also reflect a fully amortizing senior debt structure with a fixed interest rate and a net present value (NPV) cash trap mechanism that prevents an early termination of the concession before debt is fully repaid. Fitch's Rating Case minimum and average debt service coverage ratios (DSCR) are 0.9x and 1.1x, respectively, which remain in line with Fitch's criteria guidance for the assigned rating. The eventual shortfalls in coverage ratios will likely be covered by the reserve accounts available within the structure. Under this scenario, Fitch expects the project will receive minimum revenue guarantee (MRG) payments from 2025 onward, which totals 11% of annual revenues in average. The Negative Outlook reflects Fitch's view on Costa Rica's sovereign credit risk and the links to the sovereign credit quality through the MRG. It also reflects the potential for further financial deterioration as a result of a slower traffic recovery following the material reduction in 2020 and increased competition from the San Jose-San Ramon alternative route after the first phase of improvement construction works are completed, which is aggravated by the fact that the debt service reserve fund is not fully funded. KEY RATING DRIVERS Mostly Commuter with Growing Heavy Traffic [Revenue Risk - Volume: Midrange]: Light vehicles account for approximately 90% of all users. The road is used by commuters on workdays and by residents of San Jose traveling to the beaches on the weekends. It could face significant competition once major improvements to the existing and congested San Jose-San Ramon Route are made. The concession agreement provides an MRG that compensates the issuer if revenue is below certain thresholds, somewhat alleviating this risk. Adequate Rate Adjustment Mechanism [Revenue Risk - Price: Midrange] Toll rates are adjusted quarterly to reflect changes in the Costa Rican Colon (CRC) to USD exchange rate and annually to reflect changes in the U.S. CPI. Tolls may be adjusted prior to the next adjustment date if the U.S. CPI or the CRC/USD exchange rate varies by more than 5%. Historically, tariffs have been updated appropriately. Suitable Capital Improvement Program [Infrastructure Development & Renewal: Midrange] The asset is operated by an experienced global company with a higher-than-average expense profile due to its geographical attributes. The majority of the investments required by the concession have been made. The concession requires lane expansions when congestion exceeds 70% of the ideal saturation flow, which triggers the need for further investments. However, the project would only be required by the grantor to perform these investments to the extent they do not represent a breach in the DSCRs assumed by the issuer in the financing documents. Structural Protections Against Shortened Concession [Debt Structure: Midrange] Debt is senior secured, pari passu, fixed-rate, and fully amortizing. It is USD-denominated but no significant exchange rate risk exists due to the tariff adjustment provisions set forth in the concession and because CRC-denominated toll revenues will be converted to USD daily. There is an NPV cash trap mechanism to prepay debt if revenue overperforms, which largely mitigates the risk of the concession maturing before the debt is fully repaid. Typical project finance features include a six-month debt service reserve account (DSRA), a six-month backward and forward-looking 1.20x distribution trigger and limitations on investments and additional debt. Financial Summary: Under Fitch's Rating Case, the project yields a minimum and average DSCR of 0.9x and 1.1x, respectively. The concession is expected to expire in July 2033, which matches its concession maturity. It assumes payments under the MRG starting in 2025, which amounts in average to 11% of annual revenues. Even though coverage metrics signal potential difficulties to meet debt service, shortfalls in debt service coverage are expected to be covered with reserves, which along with other structural features such as the MRG, which is expect to complement revenues in the medium term, support the assigned rating. PEER GROUP Comparable projects in the region include TransJamaican Highway (TJH; BB-/Stable) in Jamaica. AdS and TJH are similar projects since they both are strong commuting assets within their respective country's capital cities. They also share all attributes at the midrange level, but the difference in ratings comes from AdS' lower metrics (average DSCR of 1.1x versus 2.1x under Fitch's rating case) and because TJH has no dependency on traffic growth in order to repay the rated debt. TJH is rated above the Jamaican sovereign (B+/Stable) and is constrained by Jamaica's Country Ceiling of 'BB-'. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Negative rating action on Costa Rica's sovereign ratings could trigger a corresponding negative action on the rated notes. -- Traffic recovery significantly below the Fitch's rating case expectation of 90% of 2019 levels in 2022 and/or a substantially greater than expected traffic loss occurs due to the completion of works in the competing route. -- A deterioration of the liquidity available for debt service, including reserves. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- The Negative Outlook on the international rating could be revised to Stable following a corresponding rating action on Costa Rica's sovereign ratings along with observed traffic levels above Fitch's rating case expectations, maintaining a Weighted Annual Average Daily Traffic (WAADT) above 40,000 without significant deviations from the O&M budget and keeping adequate levels of liquidity. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. TRANSACTION SUMMARY The asset serves as a connection between the city of San Jose and its metropolitan area with Puerto Caldera, along the Pacific Coast. The asset is operated by Globalvia, one of the world leaders in infrastructure concession management, which manages 28 concessions in six countries. The concessionaire was established in 2007 by FCC Group and Bankia Group. In March 2016, Globalvia was acquired by pension funds OPSEU Pension Plant Trust Fund (40%), PGGM N.V. (40%) and Universities Superannuation Scheme Ltd (20%). CREDIT UPDATE During 2021, traffic recovered 91% of 2019 traffic, which surpasses Fitch's Rating Case projection of 85%, as Fitch expected the competing road to start having a negative impact on Ruta 27 earlier in the year. The completion of the first phase of the competing road is now expected for late 2Q22, so the negative impact in traffic due to competition is anticipated to occur in 3Q22. Revenues in 2021 was USD74 million, which is in line with the USD72 million expected by Fitch in its Rating Case, due to the increase of heavy vehicle traffic which pay higher toll-rates. As per Fitch's expectations, the MRG was not drawn. Operational expenses were USD20 million, 25% higher than Fitch's expectations of USD16 million due to the need to higher expenditures in pavements and slope stabilization as well as higher payments engaging external advisors. Total disbursements were USD25 million, higher than the USD22 million in Fitch's Rating Case, mainly due to the aforementioned expenses. Actual DSCR in 2021 was 1.07x, in line with Fitch's Rating Case DSCR of 1.06x. The DSRA has not been drawn, however, at USD19.2 million, its target balance is only 87% funded, given the lack of cash available to catch-up with the most recent six-month debt service target. Improvements to the competing route San Jose-San Ramon (Ruta Uno) are underway. The government of Costa Rica is developing four projects that it has labeled as undelayable. This is the first phase of a total of 17 projects expected to improve and expand this road. Fitch expects the first phase will be completed late 2Q22 and the second phase is expected to start construction in February 2023 and to conclude in 2024. Ruta Uno announced that they will increase the toll tariffs of the road, however, total tolls are expected to be materially cheaper than those of Ruta 27. FINANCIAL ANALYSIS Fitch is not differentiating between its Base and Rating case assumptions, given the level of uncertainty about future traffic performance as the impacts of the coronavirus pandemic are still being felt in the asset. Fitch has revised its Rating Case assumptions to reflect Fitch's current expectations of traffic recovery in light of the delay in the enhancements to the competing road. For 2022, Fitch assumes a recovery of 90% relative to 2019 levels based on the following average assumptions of quarterly traffic: 1Q22 (94%), 2Q22 (96%), 3Q22 (83%); and 4Q22 (85%). For 2023 and 2024, Fitch assumes average recoveries of 88% and 71%, relative to 2019 levels, which considers, among other factors, the negative impact from the competing route that will likely complete its improvements in 2Q22 and 2024.From 2025 until 2033, Fitch expects a compounded annual growth rate of 2.6%. O&M and major maintenance expenses were projected following the issuer's budget plus 7.5% for every year U.S. inflation is projected at 2.8% for 2022, 2.4% for 2023 and 2.0% afterward. This scenario resulted in a minimum and average DSCR of 0.9x and 1.1x, respectively. Available liquidity is sufficient to withstand transitory shortfalls when CFADS cannot fully cover debt service. Under this scenario, MRG will be received from 2025 onwards. Fitch also developed a Severe Downside Case that assumed a more extended traffic recovery compared to the Rating Case. Traffic in 2022 was assumed to be 85% relative to 2019 levels based on the following average assumptions of quarterly traffic:1Q22 (89%), 2Q22 (91%), 3Q22 (78%); and 4Q22 (80%). For 2023 and 2024, Fitch assumes average recoveries of 83% and 66%, relative to 2019 levels, which also considers, among other factors, the negative impact from the competing route. From 2025 until 2033, Fitch expects a compounded annual growth rate of 2.6%. Inflation was projected at the same levels as in the Rating Case described above. If the Severe Downside Case materializes, credit metrics deteriorate to minimum and average DSCR of 0.8x and 1.1x, respectively, with further use of the DSRA until its near depletion in 2026. 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. ===================== E L S A L V A D O R ===================== LA HIPOTECARIA: Fitch Gives CCC Rating to Class C Notes ------------------------------------------------------- Fitch Ratings has downgraded the ratings for the series A notes on La Hipotecaria Eleventh Mortgage-Backed Notes Trust, La Hipotecaria Thirteenth Mortgage-Backed Notes Trust, and La Hipotecaria Fifteenth Mortgage-Backed Notes Trust. The Rating Outlook on the notes is Stable following the downgrade. The rating actions follow the downgrade of El Salvador's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'CCC' from 'B-' and it's Country Ceiling (CC) to 'B-' from 'B'. In addition, Fitch has affirmed the ratings for La Hipotecaria El Salvadorian Mortgage Trust 2013-1 certificates, La Hipotecaria El Salvadorian Mortgage Trust 2016-1 certificates, and La Hipotecaria Trust 2019-1 certificates at 'AAA' with a Negative Outlook and the Series B and C notes issued by La Hipotecaria Fifteenth Mortgage-Backed Notes Trust at 'B-'/Stable and 'CCC'/Stable, respectively. DEBT RATING PRIOR ---- ------ ----- La Hipotecaria Thirteenth Mortgage-Backed Notes Trust A PAL3008861A4 LT B-sf Downgrade Bsf La Hipotecaria El Salvadorian Mortgage Trust 2013-1 Series 2013-1 Certificates 501716AA2 LT AAAsf Affirmed AAAsf La Hipotecaria El Salvadorian Mortgage Trust 2016-1 2016-1 50346VAA7 LT AAAsf Affirmed AAAsf La Hipotecaria Eleventh Mortgage-Backed Notes Trust Series A Notes PAL3005461A6 LT B-sf Downgrade Bsf La Hipotecaria Trust 2019-1 Series 2019-1 Certificates LT AAAsf Affirmed AAAsf La Hipotecaria Fifteenth Mortgage-Backed Notes Trust A LT B-sf Downgrade Bsf B LT B-sf Affirmed B-sf C LT CCCsf Affirmed CCCsf KEY RATING DRIVERS Higher Stresses Applied Due to Coronavirus Pandemic Fitch expects El Salvador's real GDP to rebound 5.5% in 2021 after contracting 7.9% in 2020. Measures to limit the spread of the coronavirus are less restrictive than in 2020, but Fitch continues to apply higher stress scenarios as described in "La Hipotecaria RMBS: Criteria Assumptions Updated Due to Pandemic Impacts" for loans originated by La Hipotecaria in El Salvador. In the additional stress scenario analysis, the 'Bsf' representative pool weighted average foreclosure frequency (WAFF) for La Hipotecaria S.A. de C.V. (LHES) in El Salvador increased to 4.91% from 4.2% in the current assumptions. However, the additional stress scenario analysis does not envisage significant changes to the Structured Finance Rating Cap (level defined at 'BB-' for El Salvador) foreclosure frequency (FF) assumptions as they are sufficiently remote to withstand significant deterioration relative to historical performance and Fitch's expectations. Therefore, Fitch lowered the rating multiples. Country of Assets Determines Maximum Achievable Ratings On Feb. 9, 2022 Fitch downgraded El Salvador's IDR to 'CCC' from 'B-' and its CC to 'B-' from 'B'. According to Fitch's 'Structured Finance and Covered Bonds Country Risk Rating Criteria' the ratings of Structured Finance notes cannot exceed the CC of the country of the assets, unless the T&C risk is mitigated. While the series A notes of La Hipotecaria Eleventh Mortgage-Backed Notes Trust, La Hipotecaria Thirteenth Mortgage-Backed Notes Trust and La Hipotecaria Fifteenth Mortgage-Backed Notes Trust have sufficient credit enhancement to be rated above the country's IDR, the T&C risk is not mitigated, so the ratings remain constrained by the CC and ultimately linked to the rating of El Salvador. Frequency of Foreclosure Assumptions Affected by the Coronavirus Pandemic La Hipotecaria Fifteenth Mortgage-Backed Notes Trust: To gauge the impact of the pandemic Fitch reviewed its FF parameter. Under Fitch's updated assumptions in a 'Bsf' scenario, the A note would need to support a WAFF of 14.0% and a WARR of 65.5%. Under a 'B-sf' scenario, the Series B notes would need to support a WAFF of 11.0% and a WARR of 70.1% and in the expected scenario for the Series C notes would need to support a WAFF of 5.3% and a WARR of 78.9%. These assumptions consider the main characteristics of the assets, where OLTV is 87.0%, the seasoning average 75 months and remaining term 275 months, WA current loan-to-value is 78.3% and the majority of performing borrowers (67.8%) pay through payroll deduction mechanism. The assumptions also consider a PAF of 0.7x considering the historical performance of the portfolio. Transaction Performance Supports Assigned Ratings La Hipotecaria Eleventh Mortgage-Backed Notes Trust: CE has increased during the last year due to the sequential nature of the structure. As of Sept. 30, 2021, CE has increased to approximately 45.1% up from 38.6% observed in September 2020 for the Series A notes. A few factors including stability in the excess spread, good asset performance, and servicer advances made by LHES on the amounts due from debtors on payment holidays has also helped to improve this metric. The Series A notes also benefit from reserve accounts equivalent to six times its next interest payment. Considering the improvements explained above, the stability of delinquencies and the transaction structure, and the fact the series A notes are in their maximum achievable rating, Fitch did not run its ResiGlobal Model: LATAM nor its LATAM RMBS CF Model. La Hipotecaria Thirteenth Mortgage-Backed Notes Trust: CE has increased during the last year due to the sequential nature of the structure. As of Sept. 30, 2021, CE has increased to approximately 17.9% up from 16.4% observed in September 2020 for the Series A notes. A few factors including stability in the excess spread, good asset performance, and servicer advances made by LHES on the amounts due from debtors on payment holidays has also helped to improve this metric. The Series A notes also benefit from reserve accounts equivalent to 1.0625% the outstanding balance of the series A notes, covering almost three times its next interest payment. Considering the improvements explained above, the stability of delinquencies and the transaction structure, and the fact the series A notes are in their maximum achievable rating, Fitch did not run its ResiGlobal Model: LATAM nor its LATAM RMBS CF Model. La Hipotecaria Fifteenth Mortgage-Backed Notes Trust: CE has increased during the last year due to the sequential nature of the structure. As of Sept. 30, 2021, CE has increased to approximately 15.3% up from 13.8% observed in September 2020 for the Series A notes, 4.9% up from 3.5% observed in September 2020 for the Series B notes, and 2.3% up from 1.2% observed in September 2020 for the Series C notes. A few factors including stability in the excess spread, good asset performance and servicer advances made by LHES on the amounts due from debtors on payment holidays has also helped to improve this metric. The series A notes and the series B notes also benefit from reserve accounts equivalent to three times their next interest payment in the form of a letter of credit. La Hipotecaria S.A. de C.V. Experience Mitigate Operational Risk: Pursuant to the servicer agreement, Grupo ASSA, S.A. (the primary servicer), which is rated 'BBB-'/Outlook Stable by Fitch, has hired LHES (the sub-servicer) to be the servicer for the mortgages. Fitch has reviewed LHES's systems and procedures and is satisfied with its servicing capabilities. Additionally, Banco General S.A., which is rated 'BBB-'/Stable by Fitch, has been designated as back-up servicer in order to mitigate the exposure to operational risk, and will replace the defaulting servicer within five days of a servicer disruption event. Guarantor Credit Quality Supports Ratings: The ratings assigned to the La Hipotecaria El Salvadorian Mortgage Trust 2013-1, La Hipotecaria El Salvadorian Mortgage Trust 2016-1, and La Hipotecaria Trust 2019-1 certificates are commensurate with the credit quality of the guarantee provider. The credit quality of DFC is directly linked to the U.S. sovereign rating (AAA/F1+/Negative), as guarantees issued by, and obligations of, DFC are backed by the full faith and credit of the U.S. government, pursuant to the Foreign Assistance Act of 1969. Reliance on DFC Guaranty: Fitch assumes the payment on the La Hipotecaria El Salvadorian Mortgage Trust 2013-1, La Hipotecaria El Salvadorian Mortgage Trust 2016-1, and La Hipotecaria Trust 2019-1 certificates will rely on the DFC guaranty. Through this guaranty, DFC will unconditionally and irrevocably guarantee the receipt of proceeds from the underlying notes in an amount sufficient to cover timely scheduled monthly interest amounts and the ultimate principal amount on the certificates. Ample Liquidity in Place: The La Hipotecaria El Salvadorian Mortgage Trust 2013-1, La Hipotecaria El Salvadorian Mortgage Trust 2016-1, and La Hipotecaria Trust 2019-1 certificates benefit from liquidity in the form of a five-day buffer between payment dates on the underlying notes and payment dates on the certificates. Additionally, the certificates benefit from liquidity in the form of an interest reserve account or a letter of credit at the underlying note level. Fitch considers this sufficient to keep debt service current on the guaranteed certificates until funds under a claim of DFC are received. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- El Salvador: The ratings of La Hipotecaria Eleventh Mortgage- Backed Notes Trust Series A Notes, La Hipotecaria Thirteenth Mortgage-Backed Trust Series A Notes and La Hipotecaria Fifteenth Mortgage-Backed Notes Trust Series A Notes could be downgraded in case of a downgrade of El Salvador's CC. In addition, severe increases in foreclosure frequency as well as reductions in recovery rates could lead to a downgrade of the notes. -- The ratings of La Hipotecaria Fifteenth Mortgage-Backed Notes Trust Series B and C Notes could be downgraded in case of a decrease of CE to a level, caused by a more than expected deterioration in asset quality. -- DFC Guaranteed: In the case of La Hipotecaria El Salvadorian Mortgage Trust 2013-1 certificates, La Hipotecaria El Salvadorian Mortgage Trust 2016-1 certificates, and the La Hipotecaria Mortgage Trust 2019-1 notes, the rating assigned could be downgraded in the case of a downgrade on the U.S. sovereign rating. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- El Salvador: The ratings of La Hipotecaria Eleventh Mortgage- Backed Notes Trust Series A Notes, La Hipotecaria Thirteenth Mortgage-Backed Notes Trust Series A Notes and La Hipotecaria Fifteenth Mortgage Backed Notes Trust Series A Notes are currently capped at El Salvador's CC level. These ratings could only be upgraded in case of an upgrade of El Salvador's CC. -- The ratings of La Hipotecaria Fifteenth Mortgage-Backed Notes Trust Series B and C Notes could be upgraded in case of a future improvement of CE. -- DFC Guaranteed: In the case of La Hipotecaria El Salvadorian Mortgage Trust 2013-1 certificates, La Hipotecaria El Salvadorian Mortgage Trust 2016-1 certificates, and the La Hipotecaria Mortgage Trust 2019-1 notes, the Rating Outlook could be revised to Stable if the U.S. sovereign ratings Outlook is revised to Stable from Negative. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven 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 seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS The ratings of the La Hipotecaria Eleventh Mortgage-Backed Notes Trust Series A Notes, La Hipotecaria Thirteenth Mortgage-Backed Trust Series A Notes and La Hipotecaria Fifteenth Mortgage-Backed Notes Trust Series A & B Notes are driven by El Salvador's credit quality as measured by its Country Ceiling. 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. ========= H A I T I ========= HAITI: Central Bank Sees Deterioration of Business Climate ---------------------------------------------------------- RJR News reports that the Bank of the Republic of Haiti says economic activity in the country has been marked by the deterioration of the business climate, due to the breakdown of security conditions and prolonged periods of scarcity of fuel. In its review of the first quarter of the 2021-22 fiscal year, the central bank said this situation affected the production of goods and services and further reinforced the wait-and-see posture of economic agents, according to RJR News. Imports amounted to US$293.78 million, down by 5.69% compared to July 2021, while exports increased by 25.68% compared to July to reach US$130.72 million, the report notes. The central bank said the outlook for the Haitian economy in 2022 remains mixed, the report adds. =============== P A R A G U A Y =============== PARAGUAY: IDB OKs $200M Loan for State Transformation Process ------------------------------------------------------------- Paraguay will continue its process of transforming the State and improving public sector effectiveness with the State Transformation Support Program, a $200 million loan approved by the Inter-American Development Bank (IDB). This is the first of two consecutive operations technically related to one another but independently financed under the Programmatic policy-based loan (PBP) modality. The operation is expected to contribute to a greater effectiveness within the public sector by increasing management efficiency and efficacy, as well as improving its integrity and transparency. To this end, the State Transformation Support Program will back reforms in key management systems such as public procurement and human resources, which will directly impact the quality of 65 percent of public spending; and in enabling factors that are critical to public management such as national statistics, digitalization, and public employee integrity. The program also includes reforms to strengthen governance in public institutions like the Development Finance Agency, which play a strategic role in sustained economic growth. Policy measures in the program include the introduction of gender equality as an overarching principle of civil service, promotion of women's access to decision-making positions, and rules and mechanisms to guarantee equal participation in recruitment and selection processes. The program will benefit Paraguay's population as a whole, especially taxpayers, citizens interested in working in the public sector, people with an interest in national statistics, and public service users. Businesses, particularly micro, small, and medium-sized enterprises (MSMEs), and public institutions will also benefit from the initiative. This operation is in line with the IDB's Vision 2025 - Reinvesting in the Americas: A Decade of Opportunities, to achieve recovery and inclusive growth in Latin America and the Caribbean in the areas of institutional governance, small and medium-sized enterprises, digital economy, gender, and climate change. The IDB loan of $200 million has a 20-year repayment term, a 5.5-year grace period, and an interest rate based on SOFR. Paraguay currently has 'BB' issue rating on its US$500.6 million notes due 2033. The rating on the notes is the same as the long-term foreign currency sovereign credit rating on Paraguay (BB/Stable/B). PARAGUAY: President Says Tenure "Most Difficult" ------------------------------------------------ Rio Times Online reports that the president of Paraguay, Mario Abdo Benitez, considered that he had the "most difficult period of government in the last 80 or 100 years", after the two wars the country went through, and once again vindicated his task in health and public works, areas on which "opinions can be had, but the numbers are auditable". The president highlighted the "commitments" of his administration with "the people" and remarked that "the great legacy" he intends to leave is "the trust between the ruler and the people since there is always a great discord and distrust from the citizenship in general towards the authorities," according to Rio Times Online. As reported in the Troubled Company Reporter-Latin America on Jan. 25, 2022, S&P Global Ratings assigned its 'BB' issue rating to Paraguay's US$500.6 million notes due 2033, at a 3.849% interest rate. The rating on the notes is the same as the long-term foreign currency sovereign credit rating on Paraguay (BB/Stable/B). ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Bad Roads Cause Closure of Moruga Chicken Farms ------------------------------------------------------------------ Nikita Braxton Benjamin at Trinidad Express reports that poultry farmers in Moruga are blaming water leaks for the deplorable condition of the road, which has led to the closure of their 20-year-old business. Franklyn and Joanne Mohammed said delivery trucks have refused to traverse a major landslip at Harper Trace, off Weston Trace, in St Mary's Village, and this has led to them being unable to obtain, for almost three months, the birds and feed needed to operate their business, according Trinidad Express. The couple said it is their only form of income, and their savings are being depleted, the report discloses. Their four employees from the area have also lost their jobs, the report notes. The Mohammeds added that apart from their business place, their home and their son's house have also been damaged due to the situation, the report says. Joanne Mohammed said WASA would fix the leaks, but they would recur days later, the report relays. About 120 people from 30 households have been affected by the situation, which has been going on for about two years, the report notes. The residents came together and used their own material to patch the area to allow a patient in the area to attend his clinic appointment, the report discloses. Member of Parliament for the area Michelle Benjamin said she wrote both WASA and the Local Government Minister Kazim Hosein on the problem. WASA's corporate communications senior manager, Daniel Plenty, said the Authority continues to experience challenges related to land movement along various parts of Weston Trace, which has resulted in several leaks at different points in time, the report discloses. He said three leaks along Weston Trace were repaired on February 2 and 4, the report notes. ********* 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 * * *