/raid1/www/Hosts/bankrupt/TCRLA_Public/220225.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
Friday, February 25, 2022, Vol. 23, No. 35
Headlines
B R A Z I L
BRAZIL: Records US$24 Billion Primary Surplus in 2021
D O M I N I C A
DOMINICA: COVID-19 Pandemic Took a Heavy Toll at Economy, IMF Says
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Agro Chief Says Staple Prices Are 'Harmonized'
DOMINICAN REPUBLIC: Rice Growers Urge to Keep Grain Prices Stable
E L S A L V A D O R
AES EL SALVADOR II: Fitch Lowers LongTerm IDRs to 'CCC+'
J A M A I C A
138 STUDENT: Sees Profit Decline in December Quarter
JAMAICA: Made Good Progress to Restore Finc'l. Stability, IMF Says
M E X I C O
GRUPO KALTEX: Discloses Termination of Tender Offer for 2022 Notes
- - - - -
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B R A Z I L
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BRAZIL: Records US$24 Billion Primary Surplus in 2021
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Richard Mann at Rio Times Online relates that the report on the
budget execution of the states and the Federal District (DF),
released Feb. 21 by the Brazilian Ministry of Finance (RREO), shows
a primary surplus of R$124.1 billion (US$24 billion) for 2021.
The data is based on the documents of the federal entities
published in the Accounting and Fiscal Information System of the
Brazilian Public Sector - Siconfi - managed by the Ministry of
Finance, according to Rio Times Online.
The amount recorded last year is 91.5% higher than 2020, the report
notes.
Mato Grosso (23%) and Sao Paulo (21%) were the states that achieved
the best primary results in relation to their current net revenues
(RCL), the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Jair Bolsonaro is the current president, having
been sworn in on Jan. 1, 2019.
Standard & Poor's credit rating for Brazil stands at BB- with
stable outlook (April 2020). S&P's 'BB-/B' long-and short-term
foreign and local currency sovereign credit ratings for Brazil were
affirmed in December 2021 with stable outlook. Fitch Ratings'
credit rating for Brazil stands at 'BB-' with a negative outlook
(November 2020). Fitch's 'BB-' Long-Term Foreign and Local
Currency Issuer Default Ratings (IDRs) has been affirmed in
December 2021. Moody's credit rating for Brazil was last set at
Ba2 with stable outlook (April 2018). DBRS's credit rating for
Brazil is BB (low) with stable outlook (March 2018).
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D O M I N I C A
===============
DOMINICA: COVID-19 Pandemic Took a Heavy Toll at Economy, IMF Says
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The Executive Board of the International Monetary Fund (IMF)
concluded on February 2 the Article IV consultation with Dominica
and made these observations below.
The COVID-19 pandemic took a heavy toll at the Dominican economy.
GDP is estimated to have contracted by 11 percent in 2020 and is
expected to recover modestly to 3.7 percent in 2021. The output
decline, driven by a sharp reduction in tourism and related
sectors, was contained by strong growth in the construction sector
stemming from the large public investment program through 2020-21,
financed by exceptionally high revenue from the Citizenship by
Investment (CBI) program.
Despite record CBI revenue, the sharp decline in tax revenue and
increase in health spending and social transfers led to large
fiscal deficits in 2020 and 2021 and caused public debt to peak at
an estimated 106 percent of GDP in 2020. The current account
deficit estimate remained high at around 30 percent of GDP in
2020-21, owing to the loss of tourism exports and an increase in
imports related to higher public investment and commodity prices
-despite a decline in private demand for imports.
The financial sector has remained liquid and stable during the
pandemic, but Non-Performing Loans (NPLs) remain above prudential
benchmarks. The loan service moratoria authorized by the banks and
credit union regulators supported firms and households facing
income loss, containing a deterioration in portfolio performance.
In the medium term, growth is expected to recover underpinned by
the return of tourism, expanding hotel capacity, and high public
investment in infrastructure resilient to natural disasters
financed by CBI revenue. Risks are skewed to the downside and
include renewed worldwide and domestic Covid-19 contagion waves,
CBI revenue and/or official financing below projected levels, which
would slow public investment and economic activity. Weakness in the
financial sector, particularly the credit unions, could amplify
downside risks.
Executive Board Assessment
Executive Directors agreed with the thrust of the staff appraisal.
They commended the authorities for their pandemic response to
support households and businesses. They noted that the outlook for
medium-term growth is promising but remains subject to significant
downside risks, including from the pandemic trajectory and recovery
of tourism. This calls for continued efforts to contain the
pandemic and support the recovery in the near term, including by
addressing vaccine hesitancy. Looking ahead, Directors encouraged
sustained reforms to ensure debt sustainability, strengthen the
financial sector, and improve climate resilience.
Given the increase in public debt during the pandemic, Directors
underscored the importance of maintaining momentum on fiscal
consolidation. They welcomed the approval of the Fiscal
Responsibility Act, which will support the reduction of public debt
and the achievement of the regional debt target. Going forward,
Directors recommended creating space for investment focused on
building resilience to natural disasters, and prioritizing
expenditure efficiency measures, including a civil service reform
and better targeting of social transfers. They also encouraged
measures to improve tax administration and broaden the tax base.
Directors stressed the need for prudent use of Citizenship by
Investment (CBI) revenue. They encouraged the authorities to save
part of CBI revenue for self-insurance against natural disasters
and public debt reduction. Directors also considered that securing
additional insurance, as part of a layered insurance framework,
would help cover losses in the case of large and extreme
disasters.
Directors noted that, while the financial sector remains liquid and
stable, long-standing sectoral vulnerabilities persist, including
high non-performing loans and capital adequacy gaps. In this
regard, they welcomed banks' plans to strengthen capital buffers to
meet increasing loan-loss provisioning requirements. For the
non-bank sector, Directors highlighted the importance of addressing
capital and liquidity requirements and strengthening supervision.
They also encouraged maintaining progress on strengthening the
AML/CFT framework to minimize risk to correspondent banking
relationships.
Directors encouraged the authorities to implement structural
reforms, aimed particularly at reducing informality in the economy
and fostering inclusive, sustainable growth more broadly. They also
noted that progress on structural reforms that boost
competitiveness and build resilience to natural disasters, along
with fiscal consolidation, would help strengthen external
sustainability.
It is expected that the next Article IV consultation with Dominica
will be held on the standard 12-month cycle.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Agro Chief Says Staple Prices Are 'Harmonized'
------------------------------------------------------------------
Dominican Today reports that the Dominican Republic government and
the poultry sector agreed to continue developing plans and projects
to maintain harmonized prices for chicken meat and eggs, and
guarantee food security for the population.
The Minister of Agriculture, Limber Cruz, received in his office
the new directive of the Dominican Poultry Association (ADA) for
the period 2022-2023, with which he will work to guarantee the
production of one of the main proteins of the basic staples, as
well as the stability of prices and profitability of producers,
according to Dominican Today.
"The objective of President Luis Abinader is to work for the good
of the country. That is why we have managed in this government to
guarantee that this protein is not lacking in the tables of
Dominicans," said Cruz, 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 Growers Urge to Keep Grain Prices Stable
-----------------------------------------------------------------
Dominican Today reports that President Luis Abinader met with rice
producers, where the proposals of the sector were discussed, which
had already shown concern about the rise in inputs and the national
overproduction that there has been, among which are that consumer
prices be maintained and that the Dominican Government offer them
support in one way or another.
This was confirmed to Listin Diario by the Minister of Agriculture,
Limber Cruz, adding that there is enough rice in the country, even
exceeding the 13 million quintals produced on average each year
locally, but in the 2021 harvest, there were 14.4 million quintals,
according to Dominican Today. Cruz said that since there was an
overproduction, the rice farmers asked for a guarantee that the
price would remain stable to mitigate some increases related to
inputs, such as fertilizers, labor, and other chemical products,
the report notes.
Since the beginning of its administration, the official added that
the government has been supporting the rice sector and other
productive sectors, be it in land preparation, seed subsidies,
contribution to fertilizers, local roads, and other lines, the
report relays.
Subsidy for Fertilizers
The president of the National Federation of Rice Growers
(Fenarroz), Marcelo Reyes, recalled that the current situation in
the sector is that there has been overproduction, and the costs of
inputs and labor have increased "quite a lot," the report relays.
Hence, President Abinader decided to evaluate each of the points of
the proposal to give them an answer "as soon as possible," the
report notes
Reyes indicated that the State gave a subsidy to the agricultural
sector in general of RD$1.7 billion in November 2021 for
fertilizers, the report notes.
Still, it was not enough because the cost of production for
planting rice has increased by around 30%, the report discloses.
"We hope that the president will give us a positive response, the
report says. The sector needs your help to be able to move
forward," he said upon leaving the meeting with the president, in
which the administrator of the Agricultural Bank, Fernando Duran,
as well as representatives of factories, cooperatives, the
Association of Rice Seed Producers, also participated,
(Asosemilla), the Pledge Execution Unit (UEPI) and the milling
sector, the report notes.
Meanwhile, the administrator of the Agricultural Bank, Fernando
Duran, said that at the meeting, the rice growers raised the need
to expand the pledge program so that the product is not affected by
a drop in price given the amount of rice that is stored plus the
harvest, the report discloses.
Agriculture
Duran said that at the meeting, the rice growers raised the need to
expand the pledge program so that the product is not affected by a
drop in price given the amount of rice that is stored plus the
upcoming harvest, the report relays.
The overproduction of rice could cause a drop in rice prices, which
would affect the producer due to the rise in inputs, the report
adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A
rapid economic recovery from the downturn because of the pandemic
should mitigate external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
=====================
E L S A L V A D O R
=====================
AES EL SALVADOR II: Fitch Lowers LongTerm IDRs to 'CCC+'
--------------------------------------------------------
Fitch Ratings has downgraded AES El Salvador Trust II's (AESL)
Long-term Foreign- and Local-Currency Issuer Default Ratings (IDRs)
to 'CCC+'/Stable from 'B-'/Stable and downgraded the rating of
AESL's senior unsecured notes due 2023 to 'CCC+/RR4' from
'B-'/'RR4'. The downgrade reflects the downgrade of El Salvador's
sovereign rating to 'CCC' and also incorporates the utility
sector's growth and resiliency. Fitch views AESL's credit metrics
as fundamentally strong and consistent with a higher rating
category, but the rating is limited by its operating environment.
AES El Salvador's ratings reflect the combined credit strength of
its operating companies, which guarantee its debt and have a strong
market position, low business risk and predictable cash flow. In
2021, subsidies were 48% of EBITDA of USD94.4 million. That
dependence on sovereign transfers exposes the company to risks from
El Salvador's creditworthiness and payment ability.
KEY RATING DRIVERS
Exposure to Government Subsidies: Fitch expects the government to
continue to support the electricity sector as critical
infrastructure despite its short-term debt uncertainty. Subsidies
from the Salvadoran government will account for roughly half of
AESL's EBITDA going forward, underscoring the importance of
government transfers to the company's cash flow. As of 2021, the
government subsidizes USD5 per year for users consuming a monthly
average of up to 105KWh over a six-month period, which the company
believes equates to roughly USD45 million annually. Under the
current regulatory scheme, the company believes it could pass on
the costs to end users should the subsidies be curtailed or
ceased.
Leverage to Moderate Over Time: Fitch believes AESL will have ample
leverage headroom going forward as new users grow at a rapid pace
and energy demand showed a strong rebound in 2021, compared with
the year prior. AESL's total debt with equity credit/EBITDA is
estimated at 3.6x for 2021, falling to 3.1x in 2022 and 2023 as
growing cash flow is used to pay off maturing debt. EBITDA interest
coverage is expected to improve an average of 4.8x from 2021-2023,
compared with 3.4x in 2020. Fitch assumes the company's tariff
rates will be largely unchanged in 2023 when the regulator is set
to review the tariff.
Political Uncertainty Lingers Surrounding Subsidies: President
Nayib Bukele's government has suggested that subsidies will be up
for review, although no details of a proposed change to the current
system have been forthcoming. Given their size relative to AESL's
EBITDA, Fitch believes continued timely subsidy payments to be
important for the company's liquidity and working capital and that
the electricity subsidies could be targeted in the future should
the government's finances become strained.
Strong Market Position: While the company's distribution service
territories are non-exclusive, Fitch believes the risk of new
competition is low given that significant economies of scale make
it inefficient for more than one distribution company to operate in
any particular geographic area. AESL's four companies combine to
serve almost 1.5 million clients, or nearly 80% of the market, and
provide over 70% of energy distributed, up from 60% in 2014. AESL's
customer base has consistently grown at an average rate of around
2% per year in recent years. Due to AESL's extensive asset base,
territory and number of clients, Fitch considers the company's
market position strong.
Rising Losses and Reduction Efforts: Energy losses have exhibited a
slightly upward trend over the past several years, largely driven
by non-technical losses as the country continues to grapple with
high crime and instability. Total losses as of 2Q21 were 12.69%, up
from 10.96% in 2020. Fitch estimates that nearly 3% of total energy
costs are losses absorbed by AESL and that a 1% change in losses
equates to about a USD5.5 million change in energy margin,
depending on prevailing energy prices. Fitch's base case assumes
losses will fall to 10.35% by 2023 due to AESL's investment in new
technology and community outreach efforts.
Low Business Risk Profile: As an electricity distribution company,
AESL is allowed to pass on to end users, or the government in the
form of subsidies, the full cost of energy purchased, thereby
limiting its commodity price exposure. The company's gross margin
is determined by the regulator every five years and adjusts year to
year depending on factors such as growth in user base and
consumption as well as local inflation. The current tariff period
lasts until the end of 2022. While its concession is non-exclusive,
the capital-intensive nature of its business is inherently
monopolistic and limits competition. Fitch believes these factors
add to AESL's cash flow stability and low business risk.
DERIVATION SUMMARY
AESL benefits from EBITDA margins in line with its regional peers
Energuate Trust (BB-/Stable) and Elektra Noreste S.A. (BBB/Stable),
as well as comparatively better rates of technical and
non-technical losses. AESL also presents strong financial metrics
relative to its rating category with gross leverage of 3.2x as of
3Q21 and interest coverage of 4.7x. By comparison, Elektra reported
leverage of 4.6x and coverage of 3.2x, while Energuate reported
2.5x leverage and 6.1x coverage for the same period.
AESL's rating is principally constrained by its exposure to the
Salvadoran government (CCC) in the form of subsidy receipts.
Historically, the company has faced cash flow volatility stemming
from delayed payment by the government. In 2017, this dynamic
reached critical levels following the government's restricted
default on local pension obligations, with AESL accumulating more
than 10 months of arrears in subsidies. Budgetary amendments have
subsequently improved the government's payment schedule on these
obligations, and AESL says the government has not failed to make a
payment on time since 2017. Nonetheless, the country's weak
operating environment and AESL's direct exposure to government cash
flows will continue to limit its rating to the sovereign.
KEY ASSUMPTIONS
-- New tariff in 2023 will be line with current tariff levels;
-- Customer growth will of over 2% in 2021 and 1% thereafter;
-- Energy losses will fall by approximately 0.5 percentage points
by 2023;
-- Cost of energy purchases to follow Fitch's price deck for WTI.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade to El Salvador's sovereign rating could result in a
positive rating action.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Increased credit risk associated with the government that
could affect its ability to pay energy subsidies;
-- Further political or regulatory intervention that negatively
affects the company's financial performance;
-- Sustained total debt to EBITDA of 5.5x or above.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of Sept. 30, 2021, AESL held USD30 million
in cash, with no significant debt payments due until the maturity
of the company's USD310 million bond in 2023. As of 3Q21, the
company also had USD32 million in short-term bank loans. Account
receivable days stood at 50 as of 3Q21 following a government
relief program, which allowed end users to pay several monthly
invoices from 2020 over the following two years.
This policy was mitigated by the government deferring AESL's tax
liability in 2020 from April until the end of the year and allowing
its distribution companies to pay generators for electricity as it
receives payments from customers corresponding to that energy.
Fitch expects sales receivable days to return to around 35 days by
2023. Meanwhile, Fitch expects the subsidy program to be maintained
in 2022 and for AESL to receive USD45 million per year.
ISSUER PROFILE
AES El Salvador Trust II is the bond issuer for a group of four
electricity distribution companies in El Salvador: AES CLESA y Cia,
Compania de Alumbrado Electrico de San Salvador, Empresa Electrica
de Oriente, and Distribuidora Electrica de Usulutan.
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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J A M A I C A
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138 STUDENT: Sees Profit Decline in December Quarter
----------------------------------------------------
RJR News reports that 138 Student Living Jamaica earned less profit
for the three-month period ended December 31.
After-tax profit declined from $65.9 million in 2020 to $59.6
million, according to RJR News.
However, revenues reflected an increase, amounting to $276 million,
versus $256 million in 2020, the report discloses.
During the period, occupancy recovered from below 30 per cent in
the prior year to an average of 50 per cent, the report notes.
This was driven by the UWI increasing face-to-face classes, the
report adds.
JAMAICA: Made Good Progress to Restore Finc'l. Stability, IMF Says
------------------------------------------------------------------
The Executive Board of the International Monetary Fund (IMF)
concluded the 2021 Article IV consultation with Jamaica in
mid-February and made these notes below.
In the decade preceding the pandemic, Jamaica made good progress to
restore macroeconomic and financial stability. Aided by Fund
financial support, the fiscal deficit was brought down from 11
percent of GDP in 2009 to a surplus; public debt fell from 142
percent of GDP to 94 percent in 2019; and inflation and the current
account deficit declined.
An early lockdown in the Spring of 2020 helped contain the number
of Covid-19 cases but the impact on the economy was severe, with
real GDP shrinking by 10 percent. To mitigate the impact of the
pandemic on public health and the economy, the authorities
suspended the fiscal rule for a year and swiftly implemented public
health measures and a fiscal package to support jobs and protect
the most vulnerable segments of the population. The downturn and
the fiscal package resulted in a fiscal deficit of 3.1 percent of
GDP in FY2020/21.
The economy is rebounding but risks to the outlook are significant.
Real GDP is projected to grow at 4.7 percent in 2021 and 4.3
percent in 2022. Covid-19 remains the main risk. Renewed Covid-19
waves in Jamaica or abroad could lead to a more prolonged
disruption of tourism, trade, and capital flows. Another risk is
posed by the uncertain duration of global inflationary pressures,
which have boosted inflation to well above the central bank's
target range of 4-6 percent. Natural disasters continue to be an
ever-present risk.
Executive Board Assessment
Executive Directors welcomed the authorities' swift and
comprehensive policy response to the pandemic, which helped limit
its health and economic impact. Directors noted that as the economy
is recovering, uncertainty and risks remain elevated. The near-term
policy priority is to protect lives and livelihoods, while
preserving macroeconomic stability. Over the medium term, Directors
stressed the need to rebuild buffers, safeguard debt
sustainability, and prioritize structural reforms that reduce
poverty and boost potential and inclusive growth.
Directors agreed that once the pandemic recedes, it will be
important to resume growth-friendly fiscal consolidation and put
public debt on a downward trajectory toward the authorities'
medium-term target. Directors recommended improving revenue and
prioritizing expenditures to create space for health, education,
infrastructure, and growth-enhancing investment, including for
climate resilience. Enhancing spending efficiency and containing
the wage bill will be crucial in this regard. Directors noted that
the newly established independent fiscal council would help
strengthen fiscal institutions and safeguard the credibility of the
debt anchor.
Directors acknowledged the important role played by monetary
accommodation during the pandemic. In light of inflationary
pressures, they welcomed the authorities' readiness to tighten
monetary policy to firmly anchor inflation expectations and bring
inflation to within the central bank's target range by end-2022.
Directors took positive note of the planned roll-out of the central
bank digital currency, with appropriate safeguards, as part of the
financial inclusion strategy.
Directors observed that the financial sector remains well
capitalized and liquid. Noting the sector's complexity and
potential risks from its concentration and connectedness, Directors
emphasized the need to strengthen group-wide supervision of
financial conglomerates, by adopting the remaining legislation and
improving data collection. They also called for further efforts to
strengthen the AML/CFT framework, including by swiftly implementing
the action plan agreed with the Financial Action Task Force.
Directors encouraged the authorities to address supply-side
constraints to growth through well-prioritized structural reforms,
aimed at boosting competitiveness and resilience, including through
digital transformation. They highlighted the need to strengthen
education and training, upgrade infrastructure, reduce crime, and
build resilience and adaptation to natural disasters.
[1] Under Article IV of the IMF's Articles of Agreement, the IMF
holds bilateral discussions with members, usually every year. A
staff team visits the country, collects economic and financial
information, and discusses with officials the country's economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board.
[2] At the conclusion of the discussion, the Managing Director, as
Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country's authorities. An
explanation of any qualifiers used in summings up can be found
here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
As reported in the Troubled Company Reporter-Latin America on Nov.
25, 2021, Moody's Investors Service has affirmed the Government of
Jamaica's long-term issuer and senior unsecured ratings at B2. The
senior unsecured shelf rating has also been affirmed at (P)B2. The
outlook on the ratings remains stable.
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M E X I C O
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GRUPO KALTEX: Discloses Termination of Tender Offer for 2022 Notes
------------------------------------------------------------------
Grupo Kaltex S.A. de C.V. ("Grupo Kaltex" or the "Company")
announced that it has terminated its previously announced cash
tender offer to purchase any and all of its outstanding 8.875%
Senior Notes due 2022 (CUSIP Nos.: 40054FAA5 and P4953VAJ2; ISIN
Nos: US40054FAA57 and USP4953VAJ28) (the "Notes") from holders of
Notes (the "Tender Offer") and the related solicitation of consents
from the holders of the Notes for the adoption of certain proposed
amendments to the indenture governing the Notes (the "Consent
Solicitation"). All Notes that have been validly tendered (and not
validly withdrawn) will be returned promptly to the respective
holders thereof without any action required on the part of the
holders. No consideration will be paid in the Tender Offer for any
tendered Notes.
Consummation of the Tender Offer was subject to the satisfaction or
waiver of the conditions set forth in the offer to purchase and
consent solicitation statement dated January 26, 2022 (the "Offer
to Purchase"), including the financing condition described therein,
which was not satisfied. The Company has decided to postpone this
transaction and will explore other alternatives in order to access
the market in the short term. This notice confirms the termination
of the Tender Offer and the Consent Solicitation.
This notice is neither an offer to purchase nor a solicitation of
an offer to sell any Notes or any other securities. Persons with
questions regarding the Tender Offer should contact the tender and
information agent, D.F. King & Co., Inc. at (toll-free) (800)
848-3405 or email: kaltex@dfking.com.
As reported in Troubled Company Reporter-Latin America on Feb. 22,
2022, Fitch Ratings has downgraded Grupo Kaltex, S.A. de C.V.'s
Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs)
to 'CC' from 'CCC'. Fitch has also downgraded the company's
outstanding USD218 million senior secured notes due 2022 and the
proposed up to USD220 million senior secured notes issuance to
'CC'/'RR4' from 'CCC'/'RR4'. Additionally, the Rating Outlook
Positive was removed.
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