/raid1/www/Hosts/bankrupt/TCRLA_Public/220329.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, March 29, 2022, Vol. 23, No. 57
Headlines
A R G E N T I N A
ENTRE RIOS PROVINCE: S&P Affirms 'CCC+' ICR, Outlook Stable
B A H A M A S
BAHAMAS: IMF Recommends Rise of Interest Rates
B R A Z I L
BRAZIL: Entrepreneurship Rate Fell Again in 2021
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Gov't. Bets on Country's Wine Production
DOMINICAN REPUBLIC: MICM Freezes All Fuel Prices Until April 1
M E X I C O
BRASKEM IDESA: Fitch Raises LT IDRs to 'BB-', Outlook Stable
P E R U
CORPORACION AZUCARERA: Fitch Affirms Then Withdraws 'B+' IDR
P U E R T O R I C O
PUERTO RICO: Bid for Default in Hernandez-Castrodad Suit Denied
PUERTO RICO: Teachers Groups Say Changes in Pension Go Too Far
STONEMOR INC: To Release Full Year Financial Results on March 30
- - - - -
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A R G E N T I N A
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ENTRE RIOS PROVINCE: S&P Affirms 'CCC+' ICR, Outlook Stable
-----------------------------------------------------------
On March 25, 2022, S&P Global Ratings affirmed its 'CCC+' global
scale issuer credit and issue-level ratings on the province of
Entre Rios. The outlook remains stable.
Outlook
The stable outlook balances the risks over the next 12-18 months,
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. S&P's stable
outlook also includes its expectations of budgetary performance
with operating surpluses and limited deficits after capex.
Downside scenario
S&P could downgrade the province if a sharply weaker 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 its transfer and convertibility
(T&C) assessment on Argentina would result in a downgrade of Entre
Rios, given that scarcity of reserve levels could crimp the
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 Entre Rios
if it takes a similar action on the sovereign in the next 12
months. This would have to be accompanied by Entre Rios' stronger
cash flow generation capacity or greater certainty about its
capacity to tap debt markets.
Rationale
S&P said, "The 'CCC+' ratings on the province of Entre Rios reflect
our view that while the risk of default in the next two years has
diminished thanks to the new debt service profile following the
restructuring in March 2021, financial challenges remain. Debt
service will increase because capital payments from the
restructured international bond begin in 2023 (principal and
interest of $86.5 million) and will increase to $129.7 million in
2024 and to $100 million - $120 million annually in 2025-2028.
While these amounts are not substantial, Entre Rios' liquidity
constraints amid limited access to financing in Argentina
underscore risks to debt service in the medium term."
Following record fiscal surpluses, S&P expects erosion in fiscal
results from spending pressures that will constrain cash reserves
S&P said, "We expect Entre Rios to post average operating surplus
of 3.9% of operating revenue in 2022-2024 and deficits after capex
of about 2% of total revenue as the province resumes infrastructure
spending following the pandemic-related cuts in 2020 and 2021. At
the same time, we believe that high inflation can lead to
volatility in Entre Rios' fiscal performance. Economic rebound last
year and inflation boosted the province's revenue collection, while
spending remained under control, leading to operating surplus of
10% of operating revenue and a surplus after capex of 6.1% of total
revenue. This compares to average operating deficits of 2.6% and
6.5% after capex in 2015-2019.
"Our forecast assumes increases in Entre Rios' own-source revenue
and transfers from the national government (60% of total revenue)
in line with nominal GDP growth. We incorporate potential pressures
on the operating spending, particularly payroll and pension
payments (70% of the government's outlays) amid high inflation.
Public-sector salary negotiations in 2020 were suspended and
increases were granted in 2021 in line with inflation.
Infrastructure spending has remained at 5%-6% of total spending,
underscoring limited budgetary flexibility."
Wide pension deficits also pressure the province's budget, given
that they are not entirely covered by national government
transfers. The annual pension deficit has increased over the past
years–-it slipped to 8.7% of operating revenues in 2021 from
10.5% in 2020 given the 61% jump in operating revenue last year.
While the administration recognizes a need for pension reform,
little progress has been made so far.
S&P said, "We assume international debt markets will remain closed
to Argentine LRGs, and Entre Rios 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.
"We believe that the lack of liquidity buffers remains a key risk
to the creditworthiness of Argentine provinces. According to our
estimates, Entre Rios' free and available cash covers about 80% of
debt repayment for 2022. Nevertheless, 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
34% of the province's operating revenue in 2021. We expect the debt
burden to diminish in coming years largely because financing
conditions remain limited. About 77% 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."
A volatile institutional framework and limited growth in Argentina
constrain the rating
-- S&P's economic outlook for Entre Rios is somber, in line with
that for the sovereign. Argentina's GDP contracted 9.9% in 2020 and
posted a 10.2% rebound in 2021. S&P expects growth of about 2% in
2022-2024. 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. Sluggish economic growth plus exchange
rate depreciation resulted in Entre Rios' GDP per capita at $6,500
in 2021, below the estimated national GDP per capita ($10,043).
Entre Rios has shown commitment to curb spending and reduce its
fiscal gap in recent years. Nevertheless, subpar debt payment
culture hinders financial management, 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
ENTRE RIOS (PROVINCE OF)
Issuer Credit Rating CCC+/Stable/--
Stand-Alone Credit Profile ccc+
ENTRE RIOS (PROVINCE OF)
Senior Unsecured CCC+
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B A H A M A S
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BAHAMAS: IMF Recommends Rise of Interest Rates
----------------------------------------------
RJR News reports that the International Monetary Fund (IMF) has
recommended that The Bahamas Central Bank allow interest rates to
rise to support the country's exchange rate peg to the US dollar,
while noting that the COVID-19 pandemic has enacted a tragic human
and social toll that has significantly weakened public finances.
The Washington-based lender shared preliminary findings in its
Staff Concluding Statement of the 2022 Article IV Mission,
according to RJR News.
It projected that The Bahamas' unemployment rate will continue to
decline at 13.9% this year, and drop to 12.7% in 2023, the report
notes.
The unemployment rate rose to 25.6% in 2020 during the COVID-19
pandemic, and fell to 18.1% last year, the report relays.
The IMF noted that the country's real GDP growth is estimated at
around six percent this year, although a full recovery to
pre-pandemic levels is not expected before end-2023, the report
adds.
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B R A Z I L
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BRAZIL: Entrepreneurship Rate Fell Again in 2021
------------------------------------------------
Rio Times Online reports that after losing 9.4 million
entrepreneurs over 2020, Brazil has again registered a drop in the
total national rate of entrepreneurship in 2021.
The Global Entrepreneurship Monitor (GEM) report was conducted by
Sebrae and the Brazilian Institute for Quality and Productivity.
Although "slight" if compared to 2020, the drop last year was
enough for the Total Entrepreneurship Rate (TTE) in 2021 to reach
the lowest level since 2013, the report notes. In 2021, the
proportion was 30.4%, compared to 31.6% in 2020 and 38.7% in 2019,
when the highest rate was recorded after 2015 (39.3%), the report
relays.
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).
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Gov't. Bets on Country's Wine Production
------------------------------------------------------------
Dominican Today reports that through the Special Fund for
Agricultural Development (FEDA), the Dominican Government promotes
the production of wines from the country whose manufacture is
located mainly in Neyba, Bahoruco province, which was recently the
subject of Agreements between President Abinader and his Argentine
counterpart Alberto Fernandez.
The director of FEDA, Hecmilio Galvan, held a meeting with
producers and managers of the Cooperative of Winemakers of the
Neyba Valley COOPEVINE, responding to a request for financing from
the executive director of the National Grape Institute (INUVA),
Jose Santos Manzueta where he delivered a check for three million
pesos to modernize the Cacique Enriquillo Winery with
state-of-the-art technology, that allows improvement to the quality
of the national wine, according to Dominican Today.
The director of FEDA signed an agreement with the director of INUVA
to allow the purchase of equipment for the wine cellar, the report
notes. This investment will improve Dominican wine, which is a
wish of the Government of President Luis Abinader, ratified in his
last International Tour for the Southern Cone, the report says.
Hecmilio Galvan assured that his dream is to improve the quality of
Dominican wine until it is positioned as a flagship wine, which
allows it to be placed on the tables of restaurants and in
Dominican hotels, the report discloses.
According to Galvan, the country imports more than 60 million
dollars in wines and about 30 million dollars in table grapes, the
report notes. The Dominican Republic has sufficient capacity to
produce part of these goods and thus benefits thousands of
producers in the South. Galvan assured that through the FEDA, he
would promote the production of wines and the cultivation of
grapes, the report relays.
Present at the event and referring to the importance of this issue
were Mr. Jose Santos Manzueta, Director of the Grape Institute,
Jose Dario Cepeda, Mayor of Neyba, Teofila Feliz, President of the
COOPEVINE Cooperative, Dagoberto Rodriguez Adames, former Senator
of Independence, as well as Francisco Jimenez, former Senator of
Bahoruco on behalf of Senator Melania Salvador, the report relays.
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: MICM Freezes All Fuel Prices Until April 1
--------------------------------------------------------------
Dominican Today reports that for the week of March 26 to April 1,
all fuel prices will maintain the same price they have maintained
for two weeks, as ordered by the Ministry of Industry, Trade, and
MSMEs (MICM).
Liquefied Petroleum Gas (LPG) remains at RD$147.60, according to
Dominican Today.
Premium gasoline will continue to cost RD$293.60; the regular
RD$274.50; optimal diesel RD$241.10; and the regular 221.60, the
report notes.
The price of avtur and kerosene also remains the same, whose cost
will be RD$249.53 and RD$284.90, the report relays.
Fuel oil will cost RD$192.11; fuel oil 1% RD$211.77 and natural gas
RD$28.97, 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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M E X I C O
===========
BRASKEM IDESA: Fitch Raises LT IDRs to 'BB-', Outlook Stable
------------------------------------------------------------
Fitch Ratings has upgraded Braskem Idesa, S. A. P. I.'s Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) to 'BB-'
from 'B+' and removed the rating from Rating Watch Positive. The
Rating Outlook is Stable. Fitch has also upgraded Braskem Idesa's
senior secured note to 'BB-'/'RR4' from 'B+'/'RR4'.
The upgrade reflects the improvement in Braskem Idesa's business
risk and financial flexibility following the completion of the
amendment to the supply ethane contract with Petroleos Mexicanos
(BB-/Stable), sustainable operation of its fast track project and
refinancing of its project finance debt. Braskem Idesa still has
the challenge to move forward with the investments for the
construction of a new ethane import terminal whose cost is
estimated to be around USD400 million. Fitch expects Braskem
Idesa's net leverage ratio to remain at 4.2x or below during
2022-2024. Fitch rates Braskem Idesa on a stand-alone basis at this
time due to low legal incentives for the parent to support the
subsidiary.
KEY RATING DRIVERS
Pemex Ethane Supply Agreement: The amendment terms reduce
uncertainties regarding business sustainability and profitability,
which should remain strong throughout the petrochemical cycle. The
amendment, announced in September 2021 and approved by shareholders
and creditors in October 2021, changes Pemex's minimum volume
commitment to 30,000 barrels per day of ethane until the earlier of
February 2025 or the start-up of the ethane import terminal. The
date can be extended if there are delays in obtaining licenses for
the terminal and also gives Braskem Idesa preemptive rights to
acquire all ethane Pemex does not use for its own production. The
purchase price will follow international reference prices.
Improved Financial Flexibility: In 4Q21, the company refinanced its
amortizing project finance debt with a USD1.2 billion bullet bond
due 2032 and a USD150 million credit facility with minimal
amortizations until 2026. This will provide the company key
liquidity as it builds its new ethane terminal. The new bond is
pari-passu to the existing USD900 million bond due 2029 and
increases the company's average debt life to 9.3 years from 6.1
years.
Deleveraging Trend: The scenario of strong petrochemical spreads is
benefiting Braskem Idesa's deleveraging. Fitch expects the net
leverage ratio to be around 3.7x in 2022. For 2023, net leverage is
around 4.2x, considering mid-cycle prices. This deleveraging
represents an important improvement from 6.7x in 2020 and 6.0x in
2019. Fitch's base case scenario incorporates Braskem Idesa's
spreads of around USD963, USD858 and USD840 for 2022, 2023 and
2024. This considers Pemex's ethane supply of around 30kbpd in
2022, a drop to 27kbpd in 2023 due to scheduled maintenance at
Pemex and returning to 30kbpd in 2024.
Improved Business Risk: The amendment significantly reduces most
immediate political and operational risks, as observed during 4Q20
when Braskem Idesa stopped its operations for 29 days due to lack
of natural gas and political disputes. Pemex provides Braskem Idesa
with ethane and Cenagas, another governmental company provides the
transportation of natural gas used by BI as fuel and to generate
electrical energy. Fitch's base case scenario indicates that
Pemex's supply of ethane should decline to 45% of total needs in
2022 and to 38% in 2026. Until 2020, when BI implemented the fast
track project to import ethane, the company was dependent solely on
Pemex. As of today, the fast track has a capacity to import up to
25 kpbd, representing around 40% of Braskem Idesa's ethane needs.
Profitability to Remain Sound: Despite increases in feedstock costs
that will result from this agreement, BI will continue to remain
extremely profitable due to its large scale and modern facilities.
EBITDA margins are projected to be around 35%-40% in Fitch's base
case scenario that assumes PEMEX delivers about 30k bpd and that
the pricing structure is revised to consider market price
references plus logistics costs. These margins compare favorably
with margins of peers of between 20% and 25% during high periods in
the cycle.
Favorable Backdrop: The combination of weather-related production
disruptions, logistic constrains and strong demand for resins
resulted in strong petrochemical spreads for 2021. Braskem Idesa is
expected to post record results despite operating rates of around
65%. Fitch's base case EBITDA is around USD610 million for 2021.
For 2022 and 2023, Fitch assumes greater pressure on raw material
costs and mid-cycle price assumptions leading to EBITDA of around
USD475 million and USD410 million, respectively.
Standalone Rating Approach: Fitch considers Braskem Idesa's ratings
and those of its majority shareholder Braskem S.A. (75% equity
interest) to be independent due to Braskem S.A.'s lack of strong
legal incentive to support Braskem Idesa as there are no parent
guarantees or cross default provisions on Braskem Idesa's debt. In
addition, Braskem Idesa's financial contribution in the form of
dividends paid to the parent has been low and operational synergies
between the companies are weak. As of Sept. 30, 2021, Braskem Idesa
reported MXN51 billion of subordinated shareholder loans, MXN38
billion with Braskem and MXN13 billion with Grupo IDESA.
DERIVATION SUMMARY
Historically, Braskem Idesa benefited from access to a competitive
cost feedstock, with its EBITDA margin well positioned relative to
other PE producers such as Braskem S.A. (BBB-/Stable) and more
diversified players such as Dow Chemical Company (BBB+/Stable) in
terms of operating margins. Braskem Idesa compares positively with
its Latin American chemical peers such as Alpek S.A (BBB-/Stable)
or Orbia Advance Corporation, S.A.B de C.V. (BBB/Stable).
Nevertheless, Braskem Idesa has a higher exposure to
supply/contract risks compared with its peers. The company also has
a weaker position in terms of exposure to a single asset and
product, as well as limited geographic diversification. Braskem
Idesa's net leverage ratio is expected to be well above most of its
peers until mid-2022, when its net leverage should be below 4.0x.
The average net leverage for the Latin American investment grade
chemicals peers is around 1.9x, while Dow's net leverage is around
1.1x.
KEY ASSUMPTIONS
-- Pemex providing 30kbpd of ethane in 2022, 27kbpd in 2023 and
30kbpd in 2024;
-- Imported ethane of 28kbpd in 2022, 29kpbd in 2023 and 32kpbd
in 2024;
-- Braskem Idesa polyethylene prices of USD1,324/ton in 2022,
USD1,183/ton in 2023 and USD1,136/ton in 2024;
-- Braskem Idesa polyethylene-ethane spreads of USD963/ton in
2022, USD858/ton in 2023 and USD840/ton in 2024;
-- Average ethane purchase prices of USD361/ton in 2022,
USD325/ton in 2023 and USD296/ton in 2024;
-- The company builds an ethane import terminal at an equity
contribution cost of USD94 million through 2024 and
consolidates additional capex for the project;
-- USD/MXN exchange rates of 21.54 in 2022 and 22 in 2023 and
2024.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch would view positively the full completion of the ethane
import terminal coupled with sustained net debt/EBITDA below
3.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Net debt/EBITDA above 4.5x on a sustained basis;
-- Materially higher operating costs or sustained capacity
utilization levels below 80%;
-- Failure to receive at least 20,000 barrels per day of ethane
from Pemex;
-- Significant delays or cost overruns in the construction of the
new ethane import terminal or failure to secure the required
permits for the project;
-- Shareholder loans are refinanced with external financial debt.
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
New Issuance Bolsters Liquidity: As of Sept. 30, 2021, Braskem
Idesa reported USD306 million of cash and equivalents, USD1.3
billion of short-term debt and USD851 million of long-term debt
obligations. In 4Q21, the company refinanced its amortizing project
finance debt into a USD1.2 billion bond due 2032. It also has a new
USD150 million credit facility with minimal maturities until 2026.
With the new financings, the company's average debt life increased
to 9.3 years from 6.1 years.
ISSUER PROFILE
Braskem Idesa, S.A.P.I. was created in May 2010 as an association
between Braskem, the largest producer of thermoplastic resins and
leader in the Americas, and Grupo Idesa, one of the main Mexican
business groups, to lead the "Ethylene XXI" project, focused on the
development and implementation of a petrochemical complex for the
production of polyethylene in the city of Coatzacoalcos, in the
state of Veracruz.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch does not consider the shareholder loans from Braskem S.A. and
Group Idesa S.A. as financial debt for Braskem Idesa.
ESG CONSIDERATIONS
Braskem Idesa SAPI has an ESG Relevance Score of '4' for Governance
Structure due to shareholder concentration and track record of a
corruption scandal of one of its parent companies, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Braskem Idesa SAPI has an ESG Relevance Score of '4' for Financial
Transparency due to below average financial disclosure, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
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P E R U
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CORPORACION AZUCARERA: Fitch Affirms Then Withdraws 'B+' IDR
------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Foreign-Currency (FC) and
Local-Currency (LC) Issuer Default Ratings (IDRs) of Corporacion
Azucarera del Peru S.A. (Coazucar) to 'B+' with a Stable Rating
Outlook, and subsequently withdrawn the ratings.
Fitch has withdrawn the ratings for commercial purposes.
KEY RATING DRIVERS
The affirmation of the ratings reflects Coazucar's good 2021
performance due to higher sugar prices and an improved debt
maturity profile following the repayment of its international bond
(PEN729 Million) due in August 2022 with secured bank debt at its
subsidiary level. Fitch expects EBITDA to have reached about PEN626
million in 2021 compared with PEN502 million in 2020 and pro-forma
debt of PEN1.8 billion post-debt refinancing and a pro-forma
leverage (excluding dividends paid to minorities) of about 2.9x.
Coazucar also benefits from the support of the Rodriguez family,
which supported the company's liquidity through cash injections for
the period of 2016 to 2018.
DERIVATION SUMMARY
Coazucar's ratings reflect its dominant domestic position as the
largest sugar producer in Peru. The company also benefits from the
support of the Rodriguez family. The rating is tempered by
Coazucar's high inherent business risk due to the industry's
intense price volatility and performance exposure to weather
conditions. Coazucar's operations in Ecuador diversify its
production base, but carry higher sovereign risk than its Peruvian
operations. Coazucar is less diversified in terms of geographies
and products than Tereos SCA.
RATING SENSITIVITIES
Key Rating Drivers do not apply as the company's ratings have been
withdrawn.
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
Manageable Liquidity: Coazucar's liquidity is manageable. As of
Sept. 30, 2021, the company had PEN169 million in cash and
equivalents versus short-term debt of PEN1.18 Billion that was
comprised mainly of its international bond refinanced in February
2022 with new secured bank debt.
ISSUER PROFILE
Coazucar's ratings reflect its dominant domestic position as the
largest sugar producer in Peru. Coazucar's proximity to owned
sugarcane fields and low dependence on third-party producers
enables the company to price sugar in the domestic market at a high
premium compared with international prices.
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.
Following the withdrawal of international ratings for Coazucar,
Fitch will no longer be providing the associated ESG Relevance
Scores.
=====================
P U E R T O R I C O
=====================
PUERTO RICO: Bid for Default in Hernandez-Castrodad Suit Denied
---------------------------------------------------------------
In the case, JOSE ERNESTO HERNANDEZ-CASTRODAD, IRIS MARTA MARCANO,
AND CONJUGAL PARTNERSHIP HERNANDEZ-MARCANO, Plaintiffs v. SIGFRIDO
STEIDEL-FIGUEROA, IN HIS OFFICIAL CAPACITY AS ADMINISTRATOR OF THE
ADMINISTRATION OF TRIBUNALS OF PUERTO RICO, Defendant, Civ. No.
20-1507 (SCC) (D.P.R.), Judge Silvia Carreno-Coll of the U.S.
District Court for the District of Puerto Rico:
(i) denied the Plaintiffs' motion to enter a default against
Sigfrido Steidel-Figueroa; and
(ii) granted Steidel's motion to quash the Plaintiffs' four
subpoenas duces tecum.
I. Background
Jose Ernesto Hernandez-Castrodad, Iris Marta Marcano, and the
conjugal partnership between them bring the putative class-action
lawsuit against Sigfrido Steidel-Figueroa in his official capacity
as Administrator of the Administration of Tribunals of Puerto
Rico.
Initially, the Court granted Steidel's motion to dismiss the
Plaintiffs' complaint and entered judgment in his favor. But then,
on the Plaintiffs' motion, it reconsidered and decided instead to
grant in part and deny in part his motion to dismiss. Now there is
a claim remaining.
The Plaintiffs have moved the Court to enter a default against
Steidel because he has not responded to their complaint. And
Steidel has moved the Court to quash four subpoenas duces tecum
that the Plaintiffs have served.
II. Motion for Entry of Default
The Plaintiffs have asked the Court to enter a default against
Steidel because he has failed to file his answer within 14 days of
receiving notice of the Court's opinion and order where, upon
reconsideration, it granted in part and denied in part his
pre-answer motion to dismiss.
Mr. Steidel contends that he does not have to file an answer until
the Court files an amended judgment and the Plaintiffs file an
amended complaint containing only the allegations that relate to
the remaining claim. He argues as well that the 14-day window to
file an answer after a court denies a pre-answer motion has not
been triggered here because the Court granted in part and denied in
part his motion to dismiss. Because the Court did not deny outright
his pre-answer motion, his argument goes, the 14-day window has not
been triggered.
Judge Carreno-Coll holds that the Court or the Clerk of Court "must
enter a party's default" when it "has failed to plead or otherwise
defend," its failure is shown by "affidavit or otherwise," and
"affirmative relief" is sought against it. Though Steidel has
failed to plead, he has otherwise defended himself. He has
responded to the Plaintiffs' motion to enter a default against him
and filed a motion to quash the Plaintiffs' subpoenas. Because he
is defending himself, Judge Carreno-Coll denies the Plaintiffs'
motion to enter a default against him.
III. Motion to Quash
Mr. Steidel has moved the Court to quash four subpoenas duces
tecum. He argues, as relevant, that these subpoenas are premature
because the parties have not yet conferred pursuant to Rule 26(f).
Judge Carreno-Coll states that a subpoena is a discovery device
and, accordingly, is subject to the discovery limitations in Rule
26. Rule 26(d)(1) provides that "a party may not seek discovery
from any source before the parties have conferred as required by
Rule 26(f)." The Plaintiffs, therefore, cannot use subpoenas to
obtain discovery until the parties have conferred pursuant to Rule
26(f). Because the parties have not yet conferred pursuant to Rule
26(f), the Plaintiffs' subpoenas are improper. Judge Carreno-Coll
notes as well that there is no need to serve subpoenas on a party
to obtain discovery.
IV. Conclusion
Judge Carreno-Coll denied the Plaintiffs' motion to enter a default
against Steidel. She granted Steidel's motion to quash the
Plaintiffs' four subpoenas duces tecum, which are quashed. Finally,
Judge Carreno-Coll ordered Steidel to file his answer on March 23,
2022.
A full-text copy of the Court's March 9, 2022 Opinion & Order is
available at https://tinyurl.com/2r4m8mph from Leagle.com.
PUERTO RICO: Teachers Groups Say Changes in Pension Go Too Far
--------------------------------------------------------------
Rick Archer of Law360 reports that a trio of Puerto Rican teachers
associations continued their press to have the First Circuit
override changes to educators' pension in the commonwealth's
restructuring plan, saying the federal judge who approved the plan
let the island's fiscal board overstep its bounds.
In a motion filed March 21, 2022, the associations said
U.S. District Judge Laura Swain erred in approving the Puerto Rico
Financial Oversight and Management Board's restructuring plan,
saying the plan would make changes to the Puerto Rican laws on
teacher retirement beyond what the board is allowed to do.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
* * *
The two Title III plans of adjustment have been confirmed to date,
for the Commonwealth and COFINA debtors.
STONEMOR INC: To Release Full Year Financial Results on March 30
----------------------------------------------------------------
StoneMor Inc. expects to release 2021 fourth quarter and full year
financial results on March 30, 2022 after the market
closes. In connection with this announcement, StoneMor plans to
hold a conference call to discuss its results later that day at
4:30 p.m. eastern time.
This conference call can be accessed by calling (888) 383-1618.
No reservation number is necessary; however, it is advised that
interested parties access the call-in number 5 to 10 minutes prior
to the scheduled start time to avoid delays. StoneMor will also
host a live webcast of this conference call. Investors may access
the live webcast via the Investors page of the StoneMor website
www.stonemor.com under Events & Presentations.
About StoneMor Inc.
StoneMor Inc. (http://www.stonemor.com),headquartered in Bensalem,
Pennsylvania, is an owner and operator of cemeteries and funeral
homes in the United States, with 304 cemeteries and 70 funeral
homes in 24 states and Puerto Rico. StoneMor's cemetery products
and services, which are sold on both a pre-need (before death) and
at-need (at death) basis, include: burial lots, lawn and mausoleum
crypts, burial vaults, caskets, memorials, and all services which
provide for the installation of this merchandise.
StoneMor reported a net loss of $8.36 million for the year ended
Dec. 31, 2020, compared to a net loss of $151.94 million for the
year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had
$1.74 billion in total assets, $1.87 billion in total liabilities,
and a total stockholders' deficit of $135.75 million.
*********
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* * * End of Transmission * * *