/raid1/www/Hosts/bankrupt/TCRLA_Public/220228.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, February 28, 2022, Vol. 23, No. 36
Headlines
A R G E N T I N A
ARGENTINA: President to Outline Details of IMF Deal in Congress
SALTA: S&P Affirms 'CCC+' Issuer Credit Rating, Outlook Stable
B O L I V I A
BOLIVIA: Fitch Assigns 'B' Rating to USD850MM Bonds Due 2030
B R A Z I L
BRAZIL: Records 13.2% Unemployment Rate in 2021
SA USINA CORURIPE: S&P Assigns 'B' ICR, Outlook Negative
C H I L E
CHILE: Unions Point to Imports due to Meat Shortage
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: 8.7% Inflation Ranks 4th in Region
DOMINICAN REPUBLIC: Material Price Increase Affects Housing Sector
DOMINICAN REPUBLIC: Salary Hike Will Not Benefit Workers, MST Says
P A N A M A
BAC INTERNATIONAL: Fitch Maintains 'BB+' LT IDR on Watch Negative
X X X X X X X X
[*] BOND PRICING: For the Week Feb. 21 to Feb. 25, 2022
- - - - -
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A R G E N T I N A
=================
ARGENTINA: President to Outline Details of IMF Deal in Congress
---------------------------------------------------------------
Buenos Aires Times reports that President Alberto Fernandez is
expected to reveal the main outlines of Argentina's agreement with
the International Monetary Fund during a speech to Congress opening
new sessions, although it is still uncertain when the draft
agreement will reach lawmakers.
Sources close to the government told the Noticias Argentinas news
agency that the international crisis sparked by Russia's invasion
of Ukraine "will not affect negotiations" with the multilateral
lender, which they said were "practically concluded," according to
Buenos Aires Times.
The source, who asked not to be identified, acknowledged that
Argentina and the IMF had disagreements over the updating of
utility tariffs, an issue which is "delaying the final agreement,"
the report notes.
The conflict in Ukraine could complicate that issue further, with
oil and gas prices on the rise in recent days following the
outbreak of war in eastern Europe, the report relays.
Reports in recent weeks said that the government wanted to submit
the IMF agreement to Congress for approval before the start of
March and the opening of ordinary sessions. At press time, that
was considered unlikely, though the bill is still expected to reach
Congress by the middle of next week, the report discloses.
Lower House Speaker Sergio Massa has reportedly offered to open the
Chamber of Deputies, a national holiday, should an agreement with
the Fund be reached over the weekend, the report relays.
Any deal will still need approval from the IMF's Executive Board,
though that will not prevent the president from providing details
of the agreement, 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.
SALTA: S&P Affirms 'CCC+' Issuer Credit Rating, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' global scale issuer credit
and issue-level ratings on the province of Salta. The outlook
remains stable.
Outlook
The stable outlook balances the risks, stemming from low liquidity
buffers, and limited access to funding with the province's improved
debt amortization profile resulting from the recent international
debt restructuring.
Downside scenario
S&P could downgrade the province if a sharply weaker-than-expected
fiscal performance or liquidity position increases the risk of
default or the likelihood of a distressed debt exchange in the next
12 months. In addition, a downward revision of our transfer and
convertibility (T&C) assessment on Argentina would result in a
downgrade of Salta, given that scarcity of cash levels could prompt
tensions in subnational governments' access to foreign currency for
debt service payments.
Upside scenario
Given that S&P doesn't believe that Argentine local and regional
governments (LRGs) meet the conditions to have ratings above that
on the sovereign, it could only upgrade the province of Salta if it
takes a similar action on the sovereign in the next 12 months. This
would have to be accompanied by Salta's stronger liquidity buffers
or greater certainty about its capacity to tap debt markets.
Rationale
The 'CCC+' ratings on the province of Salta reflect S&P's view that
while the risk of default in the next two years has diminished
thanks to the new debt service profile following the restructuring,
financial challenges remain. Debt service will increase because
capital payments from the restructured international bond begin in
2023 (principal and interest of $65 million) and will increase to
$79.4 million in 2024 and to about $100 million annually from 2025
to 2027. While these amounts are not substantial, Salta's liquidity
constraints amid limited access to financing in Argentina
underscore risks to debt service in the medium term.
Fiscal results have been resilient, although cash reserves will
remain limited
S&P expects Salta to post operating surpluses averaging 6% of
operating revenue in 2022-2024 and deficits after capex of 1% of
total revenue as the province resumes infrastructure spending
following the pandemic-related cuts in 2020 and 2021. Economic
rebound last year and inflation boosted the province's revenue
collection, while spending remained under control. S&P estimates
that the province posted a surplus of 7.1% of operating revenue and
after capex surpluses 3.1% of total revenue in 2021, respectively,
compared with 3.1% and a deficit of 1.7% in 2020, respectively.
S&P said, "Our forecast assumes increases in Salta's own-source
revenue and transfers from the national government (75% of total
revenue) in line with nominal GDP growth. We incorporate potential
pressures on the operating spending, particularly payroll (60% of
the government's outlays) amid high inflation. However, unlike in
other Argentine provinces, public-sector salaries in Salta didn't
plummet in real terms over the past couple of years. Nonetheless,
we believe that high inflation can lead to volatility in Salta's
fiscal performance. We also believe that Salta's budgetary
flexibility is limited due to low-income levels, reliance on
national government transfers, and sizable infrastructure needs.
"We assume international debt markets will remain closed to
Argentine LRGs, and Salta will cover funding needs with
pre-approved and potentially new loans from multilateral lending
agencies, as well as with the financing from the national
government. The province hasn't issued short-term notes for several
years, which could also be a funding source in the future (up to
2.5% of the budgeted revenues for the year).
"We believe that the lack of liquidity buffers remains a key risk
to the creditworthiness of Argentine provinces. We estimate that
Salta's free and available cash covers about 81% of debt repayment
for 2022. Nevertheless, volatility in the ratio is likely, given
that we believe the expected increases in infrastructure spending
will shrink cash accumulated in 2021, while debt service in U.S.
dollars gradually increases.
"The province's debt stock continued to decrease and represented
27% of the province's operating revenue in 2021, according to our
estimates. We expect the debt burden to diminish in coming years
largely because financing conditions remain limited. About 75% of
the debt is denominated in U.S. dollars, which underscores
potential currency risk. Interest burden is expected to average 2%
of operating revenues during 2022-2024."
Argentina's sluggish economic growth and low-income levels in the
province constrain the rating
S&P said, "Our economic outlook for Salta is somber, in line with
that for the sovereign. Argentina's GDP contracted 9.9% in 2020 and
we forecast growth of 7.5% in 2021 and about 2% afterward. To
tackle its considerable economic challenges, Argentina needs to
establish policy consistency and reduce fiscal and monetary
imbalances, including lower inflation and a more stable
exchange-rate regime. At the same time, Salta's low GDP per capita
limits the province's budgetary flexibility and is a key rating
constraint. According to our estimates, it was $3,600 last year,
which was less than half of the estimated national GDP for the same
year ($10,000)."
Salta's administration closely monitors fiscal performance and is
working on initiatives to raise tax collection and limit the impact
of payroll on the budget. Nevertheless, the province's financial
management is hindered by its subpar debt payment culture, given
that amid increasingly strained financial conditions, including
very limited access to funding, the administration decided to
prioritize operating and capital spending over timely debt
payments.
Finally, S&P assesses the institutional framework for Argentina's
LRGs as very volatile and underfunded, reflecting its perception of
the sovereign's very weak institutional predictability and volatile
intergovernmental system that has been subject to various
modifications to fiscal regulations, and lack of consistency over
the years. This jeopardizes the LRGs' financial planning and
consequently their credit quality.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
RATINGS AFFIRMED
SALTA (PROVINCE OF)
Issuer Credit Rating CCC+/Stable/--
SALTA (PROVINCE OF)
Senior Secured CCC+
Senior Unsecured CCC+
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B O L I V I A
=============
BOLIVIA: Fitch Assigns 'B' Rating to USD850MM Bonds Due 2030
------------------------------------------------------------
Fitch Ratings has assigned a 'B' rating to Bolivia's USD850 million
bonds maturing March 2, 2030. The notes have a coupon of 7.5%.
Proceeds from this issuance are being used for general budgetary
purposes and a concurrent liability management operation involving
buyback of existing bonds.
KEY RATING DRIVERS
The bond ratings are in line with Bolivia's Long-Term Foreign
Currency Issuer Default Rating (IDR) of 'B'.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- The bond rating would be sensitive to any negative changes in
Bolivia's Long-Term Foreign Currency IDR.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- The bond rating would be sensitive to any positive changes in
Bolivia's Long-Term Foreign Currency IDR.
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.
ESG CONSIDERATIONS
Bolivia has an ESG Relevance Score of '5' for Political Stability
and Rights as World Bank Governance Indicators have the highest
weight in Fitch's SRM and are therefore highly relevant to the
rating and a key rating driver with a high weight. As Bolivia has a
percentile rank below 50 for the respective Governance Indicator,
this has a negative impact on the credit profile.
Bolivia has an ESG Relevance Score of '5' for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight. As Bolivia has a percentile rank
below 50 for the respective Governance Indicator, this has a
negative impact on the credit profile.
Bolivia has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver. As Bolivia has a percentile rank below 50 for the
respective Governance Indicator, this has a negative impact on the
credit profile.
Bolivia has an ESG Relevance Score of '4' for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Bolivia, as for all sovereigns. As Bolivia
has a fairly recent restructuring of public debt in 2006, this has
a negative impact on the credit profile.
Except for the matters discussed above, the highest level of ESG
credit relevance, if present, 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 to the way in which they
are being managed by the entity.
===========
B R A Z I L
===========
BRAZIL: Records 13.2% Unemployment Rate in 2021
-----------------------------------------------
Rio Times Online reports that Brazil recorded an average annual
unemployment rate of 13.2% in 2021, a year still marked by the
effects of the coronavirus pandemic and representing the
second-highest level of unemployment since the new statistical
measurement started in 2012, official sources reported.
The average unemployment rate fell from 13.8% in 2020 - the highest
recorded since 2012 - to 13.2% in 2021, according to Rio Times
Online.
The average unemployment rate fell from 13.8% in 2020 - the highest
recorded since 2012 - to 13.2% in 2021, which still translates into
13.9 million people looking for a job and the second-highest level
in a decade, according to a report released by the Brazilian
Institute of Geography and Statistics (IBGE), the report notes.
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).
SA USINA CORURIPE: S&P Assigns 'B' ICR, Outlook Negative
--------------------------------------------------------
S&P Global Ratings, on Feb. 23, 2022, assigned its 'B' global scale
issuer credit rating to Brazilian sugarcane processor S.A. Usina
Coruripe Acucar e Alcool (Coruripe). The rating on the new bond
remains at 'B', the same level as the credit rating.
The negative outlook reflects S&P's view that although Coruripe was
able to reduce liquidity risks and exposure to foreign-exchange
(FX) rate variation, the lower-than-expected refinancing amount
wasn't sufficient to lessen liquidity risks for the next 6-12
months.
Coruripe issued a $300 million bond, instead of $400 million - $500
million in our preliminary scenario. Although the new amount is
enough for the prepayment of the syndicated loan (nearly $265
million), which will eliminate several covenants and collateral,
liquidity remains tight. Sources of cash for the next 12 months
won't be enough to match its uses, despite new long-term funding
Coruripe is currently seeking. In addition, the company could face
seasonal working capital requirements, inherent to the industry,
during its inventory peak in September. In this sense, the negative
outlook reflects the likelihood of a downgrade should liquidity
weaken if the company is unable to issue new long-term debt amid
insufficient free operating cash flows (FOCF) to meet leasing
payments. The latter could result from stagnating sugarcane
crushing levels, lower ethanol prices, and a weaker Brazilian real
that raise the company's unhedged interest burden, while sugar
prices remain mostly fixed. Debt principal is mostly hedged, and
currently less than 10% of total debt is linked to the dollar
(versus 50% before the bond issuance that was fully hedged). This
reduces currency mismatch risks, but raises the cost of debt, which
exceeds 15% for the hedged bond and will depress funds from
operations (FFO).
Coruripe's operating efficiency and cash cost lag those of most its
rated peers, but its medium scale, geographic diversification, and
sugar hedging mitigate operating volatility. Coruripe has capacity
to crush 15.1 million tons of sugarcane per harvest across its five
mills. However, it's crushing about 12.1 million in the current
harvest season due to the drought and frost in the Brazilian state
of Minas Gerais, partly offset by its unscathed operations in the
country's northeast. Coruripe's cash cost is higher than those of
most peers S&P rates, although there has been some improvement in
the past two harvests after sizeable investments in plantations and
industrial plants. The high percentage of hedged sugar prices for
the next two harvests also reduces volatility, but the company's
low flexibility to change its mix towards ethanol could hurt cash
flows in the future, as seen during fiscals 2019, 2020, and the
current one.
EBITDA is currently in line with that in the past fiscal year, and
investments close to maintenance levels should enable the company
to generate FOCF. S&P said, "We expect Coruripe's EBITDA to reach
close to R$1.3 billion in the current fiscal year, slightly below
R$1.325 billion in fiscal 2021. This stems from the strong sugar
and ethanol prices, offsetting the drop of more than 15% in the
company's harvest. We also expect Coruripe to keep investments
close to maintenance levels, with minor expansion projects,
contingent on adequate funding. Coupled with the bond issuance and
higher cash position, adjusted gross debt to EBITDA should pick up
to about 3.5x in the current fiscal year, slipping afterwards to
about 3.0x, while Coruripe generates R$250 million - R$300 million
in FOCF per year, most of which the company will use to pay down
leasing costs."
=========
C H I L E
=========
CHILE: Unions Point to Imports due to Meat Shortage
---------------------------------------------------
Rio Times Online reports that butchers and unions indicate that
problems in international trade and the high domestic consumption
after pension fund withdrawals have caused a lack of meat stock
throughout Chile.
Meanwhile, cattle farmers criticize the lack of incentives for
local production, which has been practically destroyed by the
importation of Paraguayan and Brazilian cuts, according to Rio
Times Online.
For this reason, they have had to take refuge in a new commercial
ally: China. "They take the whole animal, even the hooves, unlike
other countries," they said, the report notes.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: 8.7% Inflation Ranks 4th in Region
------------------------------------------------------
Dominican Today reports that in January 2022, year-on-year
inflation, that is, the variation of the Consumer Price Index (CPI)
with respect to January 2021 in the Dominican Republic was 8.7%,
ranking as the fourth country in the region.
It posted the highest year-on-year increase in your prices;
surpassed only by Brazil (10.4%), Argentina (50.7%) and Venezuela
(405.0%). Bolivia (0.7%), Ecuador (2.6%) and Panama (2.6%) were
the countries with the lowest increase in their prices, according
to Dominican Today.
The information corresponds to an investigation by CREES (Regional
Center for Sustainable Economic Strategies) based on information
from the OECD (Organization for Economic Cooperation and
Development) and central banks, the report relays.
Why are different economies in the world showing greater increases
in their prices than those that occurred before the Covid-19
pandemic? The world's economies are experiencing a period of
inflation that has its origins in the expansionary measures of
central banks, the report discloses.
The US Federal Reserve, like other major central banks around the
world, has recognized that inflation is not temporary, the report
notes.
The argument that the bottlenecks in the production chains were the
main cause of the increase in prices is beginning to lose
importance and it is becoming more and more evident that a
generalized and sustained increase in prices is due to the increase
in the quantity of currency, the report says.
Although central banks have begun to react, it is important to
clarify that international conditions are still ripe for price
increases to continue, 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.
DOMINICAN REPUBLIC: Material Price Increase Affects Housing Sector
------------------------------------------------------------------
Dominican Today reports that the rise in the prices of cement and
other construction materials has raised construction costs with its
consequences of a paralysis of small housing projects.
In this regard, Landy Colon, president of the Cibao Home Builders
and Promoters Association (Aprocovici), declared that the situation
considerably affects the sector, according to Dominican Today.
According to Colon, at the beginning of the pandemic in 2020, the
gray cement cover cost RD$315 in hardware stores, but in December
2021, its cost rose to RD$425, the report notes.
According to Landy Colon, president of the Cibao Association of
Home Builders and Promoters (Aprocovici), in his opinion, this
translates into an increase of 35%, which constitutes a threat to
the construction sector, the report relays.
Likewise, he denounced that this triggers the total cost of the
works, affecting builders and those interested in acquiring houses
and other real estate properties, the report discloses.
He expressed that this percentage is assimilated into the primary
investment that also suffers from the rise in the total cost of the
projects. Therefore, it represents a challenge and a
discouragement for the people who had the goal of building their
houses at this time, the report says.
Not Justified
Landy Colon feels that since cement is a locally manufactured
product, such an increase is not justified, the report relays.
At the same time, he expressed that fewer external factors
intervene in the price of cement since its distribution cycle is
shorter, leaving aside freight and other aspects that affect the
cost of different materials, the report relays.
Likewise, the block prices, the rods, gravel, gravel, nails, wood,
sand, zinc plates, and other materials have risen, the report
notes.
Affected Workers
The Cibao Federation of Construction Workers' Unions affirmed that
this situation affects the working class of that sector, such as
masons, mixers, carpenters, and others, the report relays.
The entity argues that many construction workers are out of work
because small projects are paralyzed due to the problem, the report
notes.
Numerous people who built houses and premises have had to put them
on hold for the moment because the resources are not enough to
continue building them, according to those affected, the report
notes.
This affects sectors of the middle and lower classes who wanted to
build their homes to put aside the hassle of paying house rents,
the report discloses.
The prices of construction materials require local and imported
inputs for their manufacture, with the most significant weight
being the price of oil and its derivatives, also used for
transportation, 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.
DOMINICAN REPUBLIC: Salary Hike Will Not Benefit Workers, MST Says
------------------------------------------------------------------
Dominican Today reports that the Socialist Movement of Workers
(MST) and the Union of Cane Workers (UTC) denounced that the
increase in the minimum wage for workers in the sugar industry,
announced by the government, will not benefit the majority of
workers because they receive payments piecework by production and
do not enjoy a formal employment relationship with a salary.
"Most sugarcane workers, herdsmen, carters, and other functions
within sugar agricultural work do not earn a salary per day but
rather piecework payments, around 200 pesos per ton of cane cut.
They do not benefit from the salary increase decreed by the
government," they declared in a statement, according to Dominican
Today.
The representatives of these organizations demand that the payment
per ton of cane cut be increased to at least RD$580, and have
maintained a fight against semi-slavery, precariousness, and
super-exploitation, for decent wages, freedom of association,
pensions, access to health, housing dignity, and an eight-hour
working day because currently in the sector the workdays run up to
14 hours, the report relays.
According to the declaration of these organizations, the working
class does not have representatives in the dialogues of
businessmen, government, and union bureaucrats, the report
discloses.
"The union bureaucrats of the CNUS, CASC, and CNTD also represent
business interests. That is why Abinader rewarded his leaders with
privilege pensions of 75 thousand pesos. The CNUS, which in the
past supported the PLD governments and Gonzalo Castillo's
candidacy, now fervently supports Abinader and even invited him to
be a speaker at its Congress in December last year," they stated,
the report says.
Increase
The President of the Republic, Luis Abinader, and the Minister of
Labor, Luis Miguel de Camps, announced an "unprecedented" salary
increase of 101.8% for agricultural workers and 97% for
administrative workers in the sugar sector, retroactive to January
2022, 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.
===========
P A N A M A
===========
BAC INTERNATIONAL: Fitch Maintains 'BB+' LT IDR on Watch Negative
-----------------------------------------------------------------
Fitch Ratings has maintained the Rating Watch Negative on BAC
International Bank, Inc.'s (BIB) Long-Term (LT) Issuer Default
Rating (IDR) of 'BB+' and LT National Scale Rating of 'AA(pan)'.
BIB's Rating Watch reflects the possibility that Fitch's assessment
of Banco de Bogota S.A.'s (BB+/Stable) propensity to provide
support to BIB could decrease after the spin-off of BIB's owner,
BAC Holding International Corp. (BHI, formerly Leasing Bogota S.A.
Panama), is completed. Fitch will resolve the Rating Watch upon
close of the transaction, which is expected to be completed during
1Q2022.
Fitch has also withdrawn BIB's Support Rating (SR) of '3' as it is
no longer relevant to the agency's coverage following the
publication of Fitch's updated Bank Rating Criteria on Nov. 12,
2021. In line with the updated criteria, Fitch has assigned BIB a
Shareholder SR (SSR) of 'bb+' on Rating Watch Negative.
KEY RATING DRIVERS
IDRs, SSR, NATIONAL AND SENIOR UNSECURED DEBT RATINGS
BIB's IDRs and SSR are equalized with those of Banco de Bogota,
reflecting the ability and propensity of its parent to provide
support to BIB, if required. Fitch affirmed BIB's Short-Term (ST)
IDR and ST National Scale rating at 'B' and 'F1+(pan)',
respectively. BIB's national ratings indicate the relative credit
strength of Banco de Bogota's support in relation to other rated
entities in Panama. After the spin-off is completed, Fitch will
assess the support opinion from Banco de Bogota; however, any
potential downgrade of BIB's LT IDR would be limited to a one-notch
movement at the level of its current Viability Rating (VR) of 'bb'.
Conversely, if Fitch concludes that the potential support remains
unchanged, BIB's IDR would be affirmed at its current level
Fitch's support assessment is highly influenced by BIB's
fundamental role on Banco de Bogota's international strategy and
regional operations. BIB is a bank with general license in Panama
and consolidates BAC Credomatic group's operations in Central
America and is deemed core operation to its parent. The existence
of legal commitments such as the cross-default clauses present in
Banco de Bogota's debt, also highly influences the agency's opinion
that Banco de Bogota has strong incentives to provide timely
support to BIB as these clauses could grant acceleration repayment
rights to the parent's creditors in case of BIB's default.
Fitch affirmed BIB's commercial paper program ST National rating at
'F1+(pan)' at the same level of the issuer's ST national rating. In
Fitch's opinion, these debt programs' likelihood of default is the
same as BIB given they do not have specific guarantees.
VR
Fitch has also affirmed BIB's VR at 'bb', which encompasses the
relative risks on the operating environments (OE) in which the
group is present, as well as BIB's sound business profile and good
financial performance. BIB's OE is rated 'bb-' with a stable trend,
based on the its international operations through a weighted
average of the operating environments' scores of the jurisdictions
where the group does business, entailing geographic
diversification. In Fitch's opinion, the persistent yet relatively
decreased risks from the regional economic environments are
partially balanced by BIB's resilient and consistent business and
financial profile.
BAC Credomatic is the largest financial group in the region with
significant banking and financial operations in the countries where
it is present. It has highly integrated operations along a strong
focus and leadership in some lending segments and a well-developed
means of payments business. The group has significant market
participation in all the countries where it operates and serves
corporate and retail sectors with diversified products portfolio.
As of September 2021, BIB had consolidated assets of USD26.9
billion and total operating income of USD1.5 billion, YTD.
Despite challenges from OE, BIB's asset quality and profitability
metrics remain reasonable due its well-positioned business and
effective risk framework. As of September 2021, loans overdue above
90 days represented 1.4% of total loans, and operating profit to
risk weighted assets ratio was 2.5% in an annualized basis,
favorable to last year and to some regional peers. In spite the
debt alleviation programs already expired, Fitch believes BIB will
maintain their impairment metrics under control in the foreseeable
future, while would exhibit similar profitability levels due its
sound business position and partly favored by moderate recovery
expectations in commercial and economic activities in the region.
BIB's tightened core capital position, through a CET1 ratio of 9.3%
as of September 2021, is partly favored by its subordinated
perpetual bond program issued, which is accounted as AT1 in the
regulatory capitalization metrics. BIB's Tier 1 capital remains
close to 12% and regulatory capital metric was 12.8%. The
subordinated bonds were acquired by Grupo Aval (Banco de Bogota's
largest owner) and improve the bank's loss absorption ability. BIB
funding profile benefits of its ample and stable deposit base from
the group's solid franchise in the region and by its reasonable
liquidity levels. All subsidiaries have a relevant share of
deposits in their respective countries along diversified
non-deposit funding structures. As of September 2021, BIB's loan to
deposit ratio was 85%.
JUNIOR SUBORDINATED
Fitch also maintained the Rating Watch Negative on BIB's junior
subordinated perpetual debt's national LT rating of 'A-(pan)',
mirroring the same action on the issuer's National LT rating. The
subordinated bonds' national rating is four notches below its
anchor rating, BIB's National LT Rating. According to Fitch's
criteria, a two-notch downgrade is applied to reflect the loss
severity arising from the bonds' deep subordination, as they will
only have payment preference over BIB's common equity. An
additional two-notch downgrade is applied to reflect incremental
non-performance risk relative to its anchor given the bonds'
non-cumulative coupon omission capability.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- BIB's IDR, SSR and national ratings may be downgraded after
the transaction is completed in case of a reduction in Fitch's
assessment of Banco de Bogota's propensity to support its
subsidiary. Any potential IDR downgrade would be limited to a
one-notch movement, at BIB's current VR of 'bb';
-- In case of an IDR downgrade as result of possible changes in
Fitch's support appreciation and considering the floor of the
VR, the agency believes BIB's LT national rating would have a
downside maximum adjustment of two notches with a base case
scenario of one-notch under the current circumstances;
-- Before the transaction is completed any negative action on
Banco de Bogota's IDRs would also lead to a similar action on
BIB's IDRs, SSR and national rating; BIB's IDR, SSR and
national ratings could also be downgraded if Fitch's
assessment of its parent's willingness to support its
subsidiary is reduced;
-- Further deterioration in Fitch's assessment on the already
adverse OE in the Central American region would put additional
pressure to BIB's VR, although OE's downside potential is
relatively contained due the geographical diversification in
BIB's operations;
-- Sustained reductions on BIB's operations volume and business
activities that reflect significant deterioration increases of
its loan book along continuous reductions on its profitability
and capitalization levels, particularly in case of sustained
operating profits to RWAs and CET1 metrics consistently below
1.5% and 9%, respectively would put pressure in BIB's VR;
-- BIB's commercial paper and subordinated perpetual bonds'
National Ratings would be downgraded in case of negative
actions over BIB's National Ratings, as the commercial paper's
ratings will remain in line with BIB's national rating while
the bonds' ratings will maintain its four-notch difference
respect to the issuer's National Rating.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating actions on BIB's IDR, National Ratings and SSR
are unlikely at present due to the Rating Watch Negative;
-- Positive action in the bank's VR are only possible over the
medium term and would reflect relevant improvement in Fitch's
assessment on BIB's OE, proving an overcome of the current
challenges.
-- Under the current OE, upside potential in BIB's VR would come
from maintaining its well-positioned business and sound loan
portfolio, while exhibiting sustained improvements in
profitability and capitalization levels, particularly in case
of operating profits to RWAs and CET1 metrics consistently
above 3% and 12%, respectively;
-- BIB's commercial paper and perpetual subordinated bonds'
National Ratings would be upgraded in case of positive actions
on BIB's National Ratings as the commercial paper's ratings
will remain in line with BIB's national rating while the
bonds' ratings will maintain its four-notch difference with
respect to the issuer's National Rating
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
SUBSIDIARIES AND AFFILIATES: RATING SENSITIVITIES
VR ADJUSTMENTS
Fitch has assigned a Capitalization & Leverage Score of 'bb-',
which is above the 'b' category implied score, due to the following
adjustment reason: regulatory capitalization (positive).
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
BIB's ratings are equalized with those of Banco de Bogota
(BB+/Stable), reflecting Fitch's assessment of the potential
support they would receive from their parent if required.
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.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week Feb. 21 to Feb. 25, 2022
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Esval SA 3.5 49.9 2/15/2026 CL CLP
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
YPF SA 16.5 67.3 5/9/2022 AR ARS
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
*********
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.
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