/raid1/www/Hosts/bankrupt/TCRLA_Public/220223.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
Wednesday, February 23, 2022, Vol. 23, No. 33
Headlines
A R G E N T I N A
ARGENTINA: Central Bank Raises Key Rate to 42.5%
TIERRA DEL FUEGO: Moody's Affirms Ca Issuer Rating
C O L O M B I A
COLOMBIA: Economy Grows the Most in 115 Years as Consumption Booms
FIDEICOMISO PA COSTERA: Fitch Affirms BB+ Rating on USD & UVR Bonds
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Digitals to Pay 18% Tax to Country
DOMINICAN REPUBLIC: Rice Sector Needs Aid, Animpa Head Says
E L S A L V A D O R
TITULARIZADORA DE DPRS: Fitch Lowers Series 2019-1 Loan to 'B+'
P E R U
PERU: Likely to Have Exceeded Pre-Pandemic Levels, Cenbank Says
P U E R T O R I C O
IGLESIAS DIOS: Seeks to Tap Juan Pomales Torres as Accountant
X X X X X X X X
[*] LATAM: Majority of Countries in Region Support Integration
- - - - -
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A R G E N T I N A
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ARGENTINA: Central Bank Raises Key Rate to 42.5%
------------------------------------------------
Patrick Gillespie at Bloomberg News reports that Argentina's
Central Bank raised its benchmark interest rate by 250 basis points
to 42.5 percent, further tightening monetary policy to align with
goals set out in the government's talks with the International
Monetary Fund.
The increase marks its second rate hike this year, according to a
Central Bank statement, Bloomberg News notes. IMF staff have
called for interest rates in Argentina to exceed annual inflation
running at almost 51 percent as part of a pending program to
reschedule the government's US$40 billion of outstanding debt with
the IMF, the report notes.
While the borrowing costs still remain below inflation, the rate
increase will take the effective annual rate to 51.9 percent from
48.3 percent, according to an official who asked not to be named
since the figure wasn't part of the formal statement, the report
discloses.
Policy makers at the Central Bank consider that the effective
annual rate, which accounts for compounded interest, is the one
that needs to exceed inflation to comply with the IMF's goals, the
report notes.
Talks between the government and the IMF picked up momentum, the
report relays. After reaching a tentative agreement on key issues
in late January, the Fund's Executive Board met with staff
officials to discuss the state of talks with Argentina, the report
discloses. The government aims to reach a staff-level IMF
agreement before March, the report says.
The central bank will also create a new 180-day note, known as a
Notaliq, that will have a nominal rate of 47 percent, according to
the statement, 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.
TIERRA DEL FUEGO: Moody's Affirms Ca Issuer Rating
--------------------------------------------------
Moody's Investors Service affirmed the Ca issuer and Ca senior
secured debt ratings of the Province of Tierra del Fuego. The
baseline credit assessment is affirmed at ca. At the same time, the
outlook has been changed to stable from negative.
RATINGS RATIONALE
The affirmation of the ca baseline credit assessment (BCA) and Ca
issuer and debt ratings of the Province of Tierra del Fuego
reflects Moody's expectation that the risk of potential losses to
bondholders in the face of ongoing restructuring negotiations of
the 2027 senior secured notes, remains consistent with the 35%-65%
range associated with a Ca rating.
The rating action incorporates Moody's expectation that if a debt
restructuring is agreed upon, it is unlikely that losses for
investors will be higher than 65% mainly because the province
benefits from a stable revenue stream of oil and gas royalties. At
the same time, while Moody's acknowledges that royalties are an
important credit enhancement to the notes, Moody's considers that
the creditworthiness of the secured notes cannot be completely
delinked from the province's standalone credit profile given the
exposure to potential volatility in royalties. Instances occurred
in the past when royalties were insufficient to cover the senior
secured notes' debt service and the province was required to
supplement the payment with its own internal cash flow generation.
Moody's does not expect that a potential debt restructuring would
materially change Tierra del Fuego's credit profile. A potential
debt restructuring in line with the last public proposal published
by the province, which extends maturity payments, reduces the
coupon rate and does not impose capital haircuts, would bring
temporary liquidity relief but in Moody's view the risk of future
debt restructurings would remain high because of Moody's
expectation of very limited market access to refinance debt
payments for sub sovereign issuers.
The affirmation of the BCA and issuer and debt ratings also
incorporate Moody's expectation of weakening operating and
financial balances in 2021 and 2022, but still commensurate to the
rating category. For the full year 2020, the province registered a
gross operating balance of 4.9% of operating revenue, which
represents a deterioration over the 7.8% registered in 2019. In
2020 the province also reported a cash financing surplus of 1.9% of
total revenue versus a deficit of 3.3% of total revenue posted in
2019, explained by lower capital expenditures. For 2021 and 2022
Moody's expects Tierra del Fuego's financial metrics will be weaker
than historical levels, mostly because of the execution of delayed
operating and capital spending.
Finally, the rating action reflects the very close economic and
financial linkages that exist between Argentina's sovereign and
sub-sovereign governments in Moody's view. Moody's notes that
Argentina presents macroeconomic challenges that constrain sub
sovereign governments' credit profiles and limit the access of
these issuers to financing. Moreover, Moody's views that despite
the recent potential new agreement of the Government of Argentina
with the IMF, full compliance with the program is unlikely and
access to the capital markets will remain limited. Therefore, even
with an IMF program, the likelihood of a new debt restructuring for
Argentina remains very high, further deteriorating sub sovereigns'
operating environment and market access.
The Ca issuer rating incorporates the ca BCA as well as a low
likelihood of extraordinary support from the Argentine government
in the event of acute liquidity stress.
RATIONALE FOR THE STABLE OUTLOOK
The outlook change to stable from negative captures Moody's
expectation that economic and financial pressure faced by the
province will not differ materially over the next 12-18 months and
therefore lead to fiscal pressure commensurate to the rating
category. At the same time, the stable outlook incorporates Moody's
expectation that bondholders will not face losses exceeding that
captured in the Ca rating (a range of 35 - 65%).
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
The Province of Tierra del Fuego ESG Credit Impact Score is highly
negative (CIS-4) reflecting its highly negative exposure to social
and environmental risks and weak governance profile. Tierra del
Fuego's exposure to environmental risks is highly negative (E-4
issuer profile score), reflecting the risk that the loss of natural
capital, physical climate risks and water stress pose to the
province's financial health. Social risk exposure is highly
negative (S-4 issuer profile score), reflecting high levels of
exposure to labor and income and access to basic services related
risks with moderate demographic, housing and health and safety
pressures. Tierra del Fuego's highly negative governance IPS (G-4
issuer profile) reflects the province's aggressive approach
regarding debt and investment management. The province has
exhibited exposure to foreign currency debt and a debt maturity
profile concentrated in the short term. Balancing those risks is
the province's overall stable institutional framework, with a
relatively defined revenue profile supported by a federal tax
sharing regime established by law.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the strong macroeconomic and financial linkages between
Argentine Sub-sovereigns and the Government of Argentina, which
currently carries a stable outlook, Moody's does not expect upward
pressures in the near to medium term for the Province of Tierra del
Fuego. Nevertheless, Moody's would consider an upgrade if the
Government of Argentina is upgraded and if financing conditions
stabilize and the anticipated losses to private creditors in future
debt restructurings are less than currently forecast.
Alternatively, a downgrade in Argentina's bond ratings and further
systemic deterioration, or both, could exert downward pressure on
the ratings. Increased idiosyncratic risks could also translate
into a downgrade. Moody's would also downgrade the ratings in the
event a debt restructuring results in losses greater than those
reflected in the current ratings.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
===============
C O L O M B I A
===============
COLOMBIA: Economy Grows the Most in 115 Years as Consumption Booms
------------------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that
Colombia's economy blew away forecasts as it grew at the fastest
pace in more than a century last year, driven by a rebound in
consumer demand after pandemic curbs were eased, and soaring prices
for the nation's oil, coal and coffee.
Gross domestic product expanded 10.6% in 2021, the nation's
statistics agency said, according to globalinsolvency.com.
That's the fastest pace since at least 1906, according to data
compiled by the central bank, the report notes.
GDP grew 10.8% in the fourth quarter from a year earlier,
surprising all 15 economists surveyed by Bloomberg whose median
forecast was for growth of 9.3%, the report relays.
Output expanded 4.3% from the previous quarter, the report notes.
Central banks across Latin America are withdrawing emergency
stimulus as countries recover from the Covid-19 crisis, and
inflation soars in all the region's major economies, the report
relays.
Colombia's central bank has raised its benchmark interest rate 2.25
percentage points since September, and traders are betting on
further hikes at its coming meetings, the report adds.
As reported in the Troubled Company Reporter-Latin America on
Dec. 13, 2021, Fitch Ratings has affirmed Colombia's Long-Term
Foreign Currency Issuer Default Rating (IDR) at 'BB+'. The Rating
Outlook is Stable.
FIDEICOMISO PA COSTERA: Fitch Affirms BB+ Rating on USD & UVR Bonds
-------------------------------------------------------------------
Fitch Ratings has affirmed the following Fideicomiso P.A. Costera
ratings:
-- USD150.8 million USD bonds at 'BB+', Outlook Stable;
-- COP327,000 million UVR bonds at 'BB+', Outlook Stable and
'AA+(col)', Outlook Positive;
-- COP135,000 million UVR loan at 'BB+', Outlook Stable and
'AA+(col)', Outlook Positive;
-- COP250,000 million COP Loan A at 'AA+(col)', Outlook Positive;
-- COP300,000 million COP Loan B at 'AA+(col)', Outlook Positive.
RATING RATIONALE
The ratings are based on a concession agreement structure that
limits revenue risks due to the existence of traffic top-ups and
grant payments. The ratings are further supported by an adequate
tariff mechanism that allows annual adjustments of toll rates by
inflation and a strong debt structure characterized by several
prefunded reserve accounts, distribution tests, a cash sweep
mechanism and robust liquidity mechanisms.
Under Fitch rating case, the loan life coverage ratio (LLCR) is
1.5x, deemed strong for the rating category according to applicable
criteria and revenue profile, but constrained to the transaction's
exposure to the credit quality of Agencia Nacional de
Infraestructura (ANI). The latter is viewed as a credit-linked
entity to the Government of Colombia (Local Currency IDR
BB+/Stable).
The Positive Outlook on the national ratings reflects satisfactory
progress on construction works, with the completion of four of the
six Functional Units (UFs), and the remaining two expected to
receive certificates of completion in the near term. Financial
metrics are strong for the assigned ratings, according to
applicable criteria. Local ratings are currently constrained by the
project's completion stage. The ratings could be upgraded after the
completion of UF3 and UF6, subject to adequate financial
performance.
KEY RATING DRIVERS
Low Exposure to Volume Risk - Volume Risk: Midrange
The project's main revenue sources are ANI's contributions and toll
revenues in the form of toll collection and traffic top-up
payments. Traffic revenues are not subject to demand or price risk,
even if traffic volumes are severely below expectations or expected
price increases are not implemented. ANI will periodically
compensate the concessionaire if toll collections are below the
amounts established in the concession contract. Historic traffic
data shows low-to-moderate volatility. The road is expected to face
limited competition after completion since the alternatives are
longer and have lower average speeds. Toll tariffs and elasticity
are moderate.
Sources of revenue are subject to infrastructure availability,
service levels and quality standards, based on fulfillment of
indicators provided in the concession agreement. There are clearly
defined, unambiguous, back-to-back penalty deduction mechanisms in
the concession agreement with robust cure periods. Deductions are
legally capped at 10%. Additionally, fines imposed on the
concessionaire and penalty clauses if the agreement is terminated
early are limited by the contract.
Inflation Adjusted Tolls - Price Risk: Midrange
Tariffs are inflation adjusted annually. Toll rates are moderate,
and if the net present value of toll collections received by the
eighth, 13th, 18th, and last year of the concession is below
guaranteed values, ANI is obligated to cover any shortfalls, after
deductions.
Well-Established Maintenance Plan - Infrastructure Development and
Renewal: Midrange
The project depends on the concessionaire directly implementing a
moderately developed capital and maintenance plan. The plan will be
largely funded from project cash flows. The O&M plan,
organizational structure and budget, appear reasonable and in line
with similar projects in Colombia. In addition, the concessionaire
will have a liquid support instrument equivalent to the maximum
amount of O&M expenses forecast for six months. This instrument
must be issued by a financial entity with a minimum credit rating
of 'BBB-' or 'AA+(col)'. The structure also includes a dynamic
12-months, forward-looking O&M reserve to account for routine and
periodic maintenance expenditures.
Robust Debt Structure - Debt Structure: Stronger
The debt is fully amortizing, senior secured, comprising USD-, UVR-
and COP-denominated financings. USD-denominated debt is matched
with USD-linked currency revenues settled in COP (32% of future
budget allocations [Vigencias Futuras] are USD-linked), were issued
at a fixed rate. Furthermore, the transaction contemplates a
short-term hedging mechanism provided by eligible counterparties to
fully cover FX risk exposure. UVR- and COP-denominated debt are
indexed to inflation and are not exposed to basis risk.
Structural features include multiple reserve accounts and a cash
sweep mechanism. Robust liquidity mechanisms are in place to
mitigate liquidity/budgetary risk, construction delays, and reduced
cash flow generation due to low traffic performance. The
transaction has a fully committed, revolving subordinated SMF,
equal to 15% of outstanding senior debt, in which eligible lenders
have committed to disburse funds to the project company when
necessary. Additional liquidity includes 12-month P&I, prefunded
onshore and offshore debt service reserve accounts (DSRA).
Financial Profile
Fitch's rating case LLCR is 1.5x. This metric is strong for the
rating category, according to Fitch's applicable criteria, and when
compared with other similarly rated transactions, especially in
light of the project's low exposure to volume risk.
PEER GROUP
Costera is comparable to Fideicomiso P.A. Pacifico 3 (Pacifico,
BB+/AA+(col)/Stable) and P.A. Autopista Rio Magdalena (ARM,
BB+/AA+(col)/Rating Watch Negative). The projects are part of the
4G toll road program in Colombia, present similar revenue streams
and have debt structures with robust mechanisms that result in a
low exposure to volume risk. However, Pacifico and ARM are still
under the construction phase with varied degree of advance, which
supports lower national scale ratings.
Costera's LLCR is at the same level as Pacifico (1.5x) and higher
than ARM (1.3x). However, Costera's and Pacifico's international
ratings are constrained by the credit quality of ANI, while ARM's
ratings are constrained by the credit quality of one of its EPC
contractors.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deterioration of Fitch's view regarding the credit quality of
ANI's contributions to the project.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- For international ratings, improvement of Fitch's view
regarding the credit quality of ANI's contributions to the
project.
-- The national rating could be upgraded upon successful
completion of all UFs.
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.
CREDIT UPDATE
As of December 2021, overall construction advance was 99.9% versus
programmed progress of 100%. According to the concessionaire,
certificates of completion for the two remaining functional units
(UF3 and UF6) are ready for execution, although they are still
pending ANI's signature. With respect to the Long Stop Dates for
these UFs under the financing documents, the issuer requested an
additional extension as to avoid a breach with the lenders.
In 2021, the project reached an average annual daily traffic (AADT)
of 13,173 vehicles, at the same levels of 2019, and above Fitch's
rating case expectation of an average recovery of 87%. Traffic
outperformance was mainly driven by the substantial increase in
traffic volume in the Galapa and Juan Mina toll stations, as these
tranches continued experiencing a ramp-up during the year. The
other toll plazas had traffic recoveries below 2019 levels due to a
national strike that took place in Colombia in April and May 2021,
that resulted in groups of people blocking the road and causing
vandalic acts, which severely affected traffic.
In line with traffic performance, toll revenues reached COP64
billion in 2021, 12% above 2019's toll revenues and 9% above
Fitch's rating case projection of COP58.6 billion.
In November 2021, tariffs for Galapa, Juan Mina and Papiros were
adjusted downwards between 45% to 60%. The latter due to a
negotiation between the local government (Atlantico deparment) and
ANI, with the purpose of benefit local communities and incentivize
the use of the roads. In January 2022, tariffs in all toll stations
were increased by inflation in 2021.
Operational expenditures and capex reached COP74 billion and were
below with Fitch's projections of COP121 billion, due to retained
payments for the EPC contractor of UF3 since April 2021 by
approximately COP28 billion.
Revenue overperformance in 2021 and lower expenses resulted in a
DSCR of 1.07x, above Fitch's rating case projected DSCR below
1.0x.
FINANCIAL ANALYSIS
Fitch's base case assumes in 2022, for Papiros, Puerto Colombia and
Marahuaco toll booths, a full recovery compared to 2019's traffic.
From 2023-2033, Fitch assumes traffic will grow at a CAGR of 3.5%.
In Galapa and Juan Mina toll stations, Fitch considered actual
traffic in 2022, then assumed for 2022-2033 traffic would grow at a
CAGR of 6.0%.
Toll rates are assumed to increase by inflation, projected at 3.5%
in 2022 and 3.0% afterward. O&M and major maintenance expenses were
increased by inflation plus 5% and 3%, respectively, every year
from the Concessionaire's budget. The performance ratio was assumed
at 98%.
Fitch assumes FBAs payment would present a three-month delay, while
the top-up payment delay would be equivalent to 18 months and would
affect 20% of the compensation. The assumptions represent the
maximum days of delay permitted before a termination event is
triggered according to the concession agreement. Under this
scenario, minimum LLCR is 1.6x.
Fitch's rating case assumed in 2022, for Papiros, Puerto Colombia
and Marahuaco, the same traffic than the base case. From 2023-2033,
Fitch assumes traffic will grow at a CAGR of 2.7%. In Galapa and
Juan Mina toll stations, for 2023-2033, Fitch assumes traffic will
grow at a CAGR of 5.0%.
O&M were increased by inflation plus 7% and major maintenance
expenses were increased by inflation plus 5%, for every year from
the concessionaire's budget. The performance ratio was assumed at
95%. Fitch assumes the same toll rates, and delays in FBAs and
top-up payments than the base case. Under this scenario, minimum
LLCR is 1.5x.
SECURITY
In September 2014, Concesion Cartagena-Barranquilla was granted a
25-year concession for the construction, rehabilitation,
improvement, operation and/or maintenance of 156.8km of roads
located in the departments of Atlantico and Bolivar, Colombia.
Concesion Cartagena-Barranquilla, the project company, is owned
100% by Interconexión Eléctrica S.A.E.S.P. (ISA, BBB/Stable)
through its subsidiary ISA Intervial Chile.
The project aims to connect two of the main ports of Colombia:
Cartagena and Barranquilla. The port of Barranquilla covers two
main routes, the Magdalena River, which communicates with the
interior of the country, and the Caribbean Sea, connecting goods
that are traded from/to the U.S., Europe and Asia. The port of
Cartagena is the third busiest in the Caribbean Sea.
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.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Digitals to Pay 18% Tax to Country
------------------------------------------------------
Dominican Today reports that as in some Latin American countries,
companies providing digital services abroad would have to pay taxes
through special mechanisms in the Dominican Republic, in this case
it would be a rate of 18% for the Tax on Transfers of
Industrialized Goods and Services (ITBIS).
This is explained by the Directorate of Internal Taxes (DGII) in a
statement released, in which it seeks to clarify the doubts
generated by the call for public discussion on the project entitled
"Regulation that regulates the procedure for the application of the
Itbis to the digital services captured in the Dominican Republic
and that are provided by foreign providers, according to Dominican
Today.
"They will pay taxes virtually, presenting the ITBIS through a
special declaration that must be settled before the 20th of each
month," specifies the DGII on the collection initiative for the use
of platforms such as Amazon, Expedia, Google, Netflix, Spotify,
DiDi, Uber, Airbnb, Indriver, among others, the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
DOMINICAN REPUBLIC: Rice Sector Needs Aid, Animpa Head Says
-----------------------------------------------------------
Dominican Today reports that the president of the National
Association of Importers of Agricultural Products (Animpa), Pedro
Espinal, called the Dominican Republic Government's attention to
the country's rice sector situation, which he indicated "is
worrying since producers are experiencing anguish and
desperation."
"Rice, with the current situation of input prices and how it is
being sold, is unsustainable: that is why I agree with what the
president of Fenarroz says, that practically the rice sector is
entering intensive care," explained Espinal, calling on the
Government to come to his aid, according to Dominican Today.
The trade unionist indicated that the cost of production by 2021
was around RD$7,000, and it reaches RD$9,200 per field parcel,
which he said represents about a 30% increase, the report notes.
"We join Castañuela's declaration due to the demands and demands
demanded by the organized rice sector," said Espinal, noting that
it is essential to seek an urgent solution to the issue of prices
per bushel of rice, the report relays.
He argued that Animpa agrees with the price proposed for the short
bushel of 100 kilos, which is RD$2,700, and the long bushel of 120
kilos is sold at RD$3,200, the report discloses.
He added that since last year they have been drawing attention to
the stability of the rice sector and the sustainability of
producers and assured that if the Government does not come to the
aid of this claim, a collapse of national rice production and
massive bankruptcy can definitely come, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A
rapid economic recovery from the downturn because of the pandemic
should mitigate external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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E L S A L V A D O R
=====================
TITULARIZADORA DE DPRS: Fitch Lowers Series 2019-1 Loan to 'B+'
---------------------------------------------------------------
Fitch Ratings has downgraded the Series 2019-1 loan issued by
Titularizadora de DPRs Limited to 'B+' from 'BB-'. The Rating
Outlook remains Negative.
The rating action follows Fitch's downgrade of El Salvador's
Long-Term (LT) Issuer Default Rating (IDR) to 'CCC' from 'B-' and
its Country Ceiling to 'B-' from 'B' on Feb. 9, 2022.
DEBT RATING PRIOR
---- ------ -----
Titularizadora de DPRs Limited
Series 2019-1 Variable Funding Loan LT B+ Downgrade BB-
TRANSACTION SUMMARY
The transaction is backed by U.S. dollar-denominated existing and
future diversified payment rights (DPRs) originated by Banco
Cuscatlan de El Salvador, S.A. (BC). DPRs are processed by
designated depository banks (DDBs) that have executed
acknowledgement agreements (AAs), irrevocably obligating them to
make payments to an account controlled by the transaction trustee.
Fitch's rating addresses timely payment of interest and principal
on a quarterly basis.
KEY RATING DRIVERS
Future Flow Rating Driven by Originator's Credit Quality: The
rating of the transaction is tied to the credit quality of the
originator, BC. The bank's LT IDR is limited by El Salvador's
Country Ceiling, which was downgraded to 'B-' from 'B' on Feb. 9,
2022. BC's LT IDR is driven by the potential support BC would
receive from Grupo Terra if required, through its holding company,
Imperia Intercontinental Inc. Fitch's appreciation of the group's
good financial capacity is highly linked to that of Petroholding,
S.A. de C.V. (Petroholdings), one of its largest affiliates and
with which it shares the main shareholder.
Going Concern Assessment (GCA): Fitch uses a GCA score to gauge the
likelihood that the originator of a future flow transaction will
stay in operation throughout the transaction's life. Fitch assigns
BC a GCA score of 'GC2' based on the bank's moderate systemic
importance and potential support from Petroholdings.
Several Factors Limit Notching Differential: The 'GC2' score allows
for a maximum uplift of four notches from the bank's IDR; however,
uplift is tempered to two notches due to BC's IDR and GC score
being support-driven, El Salvador's lack of last resort lender, and
DDB concentration risk.
Future Flow Debt Size Not a Constraint: Future flow debt represents
approximately 1.8% of BC's total funding and 16.1% of non-deposit
funding when considering the current outstanding balance on the
program ($55 million) as of December 2021 and utilizing September
2021 financials. Fitch considers these ratios to be small, and, as
a result, they do not currently pose a constraint to the rating.
Flows Remain Resilient Amidst Pandemic: BC's DPR program flows
continued to exhibit growth despite pandemic pressures processing
approximately $2.59 billion in DPR flows in 2020, up slightly from
$2.58 billion in 2019. This trend continued into 2021 with BC
processing $3.67 billion in DPR flows for the year, an increase of
41% yoy. Stability of BC's growing DPR business line is supported
by the bank's moderate positioning within El Salvador, as well as
El Salvador's growing export and family remittance sectors.
Strong Coverage Levels Remain Supportive of Assigned Rating:
Considering average rolling quarterly DDB flows over the last five
years (January 2017-December 2021) and the maximum periodic debt
service over the life of the program, including Fitch's interest
rate stress, projected quarterly debt service coverage ratio (DSCR)
is 114.6x. Fitch considers this coverage level to be strong. The
transaction can withstand a decrease in flows of over 99% and still
cover the maximum quarterly debt service obligation. Nevertheless,
Fitch will continue to monitor the performance of the flows as
potential pressures from the ongoing health crisis could negatively
impact the assigned rating.
No Lender of Last Resort: El Salvador is a dollarized economy
without a true lender of last resort. While certain mechanisms are
in place to help fend off a banking system crisis, this limits the
notching differential of the transaction.
Potential Redirection/Diversion Risk: The structure mitigates
certain sovereign risks by collecting cash flows offshore until
collection of periodic debt service amount. In Fitch's view,
diversion risk is partially mitigated by the acknowledgments signed
by the three DDBs. The largest DDB, Citibank N.A., continues to
process more than 75% of DPRs (78% in 2021). While this trend is
decreasing, Fitch believes Citibank's still relatively heavy DDB
concentration exposes the transaction to a higher degree of
diversion risk relative to other Fitch-rated DPR programs in the
region, limiting the overall notching differential.
The Key Rating Drivers listed in the applicable sector criteria,
but not mentioned above, are not material to this rating action.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The transaction ratings are sensitive to changes in the credit
quality of the originating bank, which in turn is sensitive to
changes in the credit quality of El Salvador and its operating
environment. A deterioration of the credit quality of BC by
one notch is likely to pose a constraint to the rating of the
transaction from its current level;
-- The transaction ratings are sensitive to the ability of the
DPR business line to continue operating, as reflected by the
GCA score, and a change in Fitch's view on the bank's GCA
score can lead to a change in the transaction's rating. The
quarterly DSCRs are expected to be more than sufficient to
cover debt service obligations and should therefore be able to
withstand a significant decline in cash flows in the absence
of other issues. However, significant declines in flows could
lead to a negative rating action. Any changes in these
variables will be analyzed in a rating committee to assess the
possible impact on the transaction ratings.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch does not anticipate developments with a high likelihood
of triggering an upgrade. However, the main constraint to the
program rating is the originator's rating and bank's operating
environment. If upgraded, Fitch will consider whether the same
uplift could be maintained or if it should be further tempered
in accordance with criteria.
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.
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.
=======
P E R U
=======
PERU: Likely to Have Exceeded Pre-Pandemic Levels, Cenbank Says
---------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Peru's economy
is expected to have stayed above pre-pandemic levels in December
and January, due to the recovery of internal demand and a record in
exports, despite lower mining output after recurring social
conflicts, the central bank said.
"The economy is recovering, the output gap is closing, but it would
still be below its potential," said Adrian Armas, manager of
economic studies at the Central Bank, citing the bank's December
and January advance indicator reports, according to
globalinsolvency.com.
Peru's economy has consistently exceeded monthly pre-pandemic
levels since June 2021, according to central bank data, the report
relays.
Business expectations about the local economy remain pessimistic,
however, amid political uncertainty triggered by the administration
of leftist President Pedro Castillo, who just named his fourth
Cabinet in six months in office, the report notes.
Armas said there was the possibility of a deterioration in
political stability, but that "the bank, as it has already done,
has a high response capacity to deal with this situation," the
report relays.
The bank also expects that Peruvian inflation, which registered its
highest annual rate in 13 years last year, will begin to slow down
from July and fall to within the target range of between 1% and 3%
in the fourth quarter of 2022, Armas said, the report discloses.
=====================
P U E R T O R I C O
=====================
IGLESIAS DIOS: Seeks to Tap Juan Pomales Torres as Accountant
-------------------------------------------------------------
Iglesias Dios Es Amor, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ Juan Pomales
Torres, an accountant practicing in Rio Grande, P.R., to provide
general accounting and financial counseling services.
Mr. Torres will be paid at his hourly rate of $200.
Mr. Torres disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The accountant can be reached at:
Juan C. Pomales Torres
Urb. Ponderosa
668 Trinitaria St.
Rio Grande, PR 00745
Telephone: (787) 564-1935
Email: juancarlos.pomales@gmail.com
About Iglesias Dios Es Amor
Iglesias Dios Es Amor, Inc. filed its voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case
No. 21-03508) on Nov. 29, 2021, listing as much as $1 million in
both assets and liabilities. Elias Reyes Ortiz, president, signed
the petition.
Judge Edward A. Godoy oversees the case.
The Debtor tapped Gerardo L. Santiago Puig, Esq., at Santiago Puig
Law Offices as legal counsel and Juan C. Pomales Torres as
accountant.
===============
X X X X X X X X
===============
[*] LATAM: Majority of Countries in Region Support Integration
--------------------------------------------------------------
Seven out of ten Latin Americans favor their country integrating
further with other Latin American and Caribbean countries,
confirming widespread support for greater trade integration,
according to a study by the Inter-American Development Bank.
This is one of the findings of the report The Voice of Latin
America: Views on Regional Integration and Trade (Spanish),
prepared by the Institute for the Integration of Latin America and
the Caribbean (INTAL) of the IDB's Integration and Trade sector.
The survey was conducted by Latinobarómetro, which annually
captures Latin Americans' opinions, attitudes, behaviors, and
values.
The study found that pro-integration sentiment is strongest among
younger people (16- to 25-year-olds). Over half of Latin Americans
look positively at the trade agreements between their country and
others in the region. About seven out of ten are in favor of free
trade.
"The clear support of Latin America and the Caribbean citizens for
regional integration, free trade and trade agreements is a key
factor that countries should take advantage of to design and
implement policies that stimulate inclusive and sustainable growth
in our region," said Fabrizio Opertti, manager of the IDB's
Integration and Trade Sector.
The study on views on trade, foreign investment, digitalization,
and immigration was based on 20,000 interviews conducted in 2020
and finished in 2021 with citizens of 18 countries in the region.
The report also found that:
-- 92 percent of the population of Latin America use social
media, but only 23 percent shop online.
-- Almost half of Latin Americans recognize progress in regional
integration in the last five years.
-- 54 percent of Latin Americans believe that Foreign Direct
Investment is beneficial for their country, and only 15 percent
believe it is detrimental. Twenty-nine percent of respondents felt
they did not know enough about the issue to form an opinion.
-- Seven out of every ten people believe that consumers stand to
benefit from the free importation of goods and services.
"Three-quarters of Latin Americans between the ages of 16 and 25
support regional integration, which is encouraging news for
regional integration efforts and projects," said Ana Basco,
director of IDB INTAL.
The results are aligned with the IDB's Vision 2025, which seeks to
achieve sustainable growth in Latin America and the Caribbean by
promoting regional integration and the digital economy, and
empowering women and vulnerable populations.
Latinobarometro is one of the largest databases on public opinion
in Latin America and the Caribbean. Its surveys cover a
representative sample of 600 million inhabitants.
*********
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
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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
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Information contained herein is obtained from sources believed to
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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.
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* * * End of Transmission * * *