/raid1/www/Hosts/bankrupt/TCRLA_Public/220411.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, April 11, 2022, Vol. 23, No. 66
Headlines
A R G E N T I N A
GAUCHO GROUP: Delays Filing of 2021 Annual Report
C H I L E
WOM MOBILE: Moody's Assigns 'B1' CFR, Outlook Stable
[*] CHILE: Discloses $3.7BB Recovery Plan to Aid Struggling Economy
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Uncertainty Pushes Growth Figures Downward
M E X I C O
FORTALEZA MATERIALES: Fitch Raises LT IDRs to 'BB', Outlook Stable
GRUPO GICSA: S&P Upgrades ICR to 'CCC+', Off CreditWatch Negative
P A N A M A
DIGICEL GROUP: Discloses Exit From Panama
P E R U
BANCO INTERAMERICANO: Fitch Affirms 'BB+' LT IDRs, Outlook Stable
X X X X X X X X
[*] BOND PRICING: For the Week April 4 to April 8, 2022
[*] Economic Recovery in Caribbean Requires Urgent Reforms
- - - - -
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A R G E N T I N A
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GAUCHO GROUP: Delays Filing of 2021 Annual Report
-------------------------------------------------
Gaucho Group Holdings, Inc. filed a Form 12b-25 with the Securities
and Exchange Commission with respect to its Annual Report on Form
10-K for the period ended Dec. 31, 2021.
Gaucho Group has determined that it is unable to file its Annual
Report by the deadline because its consolidated financial
statements for the year ended Dec. 31, 2021 have not been
finalized. The company anticipates that it will be able to file
the Form 10-K within the extension period provided pursuant to Rule
12b-25.
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc. --
http://www.algodongroup.com-- was incorporated on April 5, 1999.
Effective Oct. 1, 2018, the Company changed its name from Algodon
Wines & Luxury Development, Inc. to Algodon Group, Inc., and
effective March 11, 2019, the Company changed its name from
Algodon Group, Inc. to Gaucho Group Holdings, Inc. Through its
wholly-owned subsidiaries, GGH invests in, develops and operates
real estate projects in Argentina. GGH operates a hotel, golf and
tennis resort, vineyard and producing winery in addition to
developing residential lots located near the resort. In 2016, GGH
formed a new subsidiary and in 2018, established an e-commerce
platform for the manufacture and sale of high-end fashion and
accessories. The activities in Argentina are conducted through its
operating entities: InvestProperty Group, LLC, Algodon Global
Properties, LLC, The Algodon - Recoleta S.R.L, Algodon Properties
II S.R.L., and Algodon Wine Estates S.R.L. Algodon distributes its
wines in Europe through its United Kingdom entity, Algodon Europe,
LTD.
Gaucho Group reported a net loss of $5.78 million for the year
ended Dec. 31, 2020, compared to a net loss of $6.95 million for
the year ended Dec. 31, 2019, a net loss of $5.68 million for the
year ended Dec. 31, 2018, and a net loss of $7.91 million for the
year ended Dec. 31, 2017. As of Sept. 30, 2021, the Company had
$17.61 million in total assets, $4.03 million in total liabilities,
and $13.58 million in total stockholders' equity.
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C H I L E
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WOM MOBILE: Moody's Assigns 'B1' CFR, Outlook Stable
----------------------------------------------------
Moody's Investors Service assigned a B1 Corporate Family Rating to
WOM Mobile S.A. and Subsidiaries and affirmed the B1 rating of
Kenbourne Invest S.A.'s existing 2024 and 2028 notes. At the same
time, Moody's withdrew WOM S.A.'s B1 CFR. These actions place the
CFR at the group's holding company level. The rating outlook is
stable.
WOM Mobile S.A. is the parent company of WOM S.A., Conect S.A., and
Multikom S.A. The existing notes issued by Kenbourne Invest S.A.
are guaranteed by WOM Mobile S.A. and its subsidiaries.
Assignments:
Issuer: WOM Mobile S.A. and Subsidiaries
Corporate Family Rating, Assigned B1
Ratings Affirmed:
Issuer: Kenbourne Invest S.A.
Gtd Senior Global Notes, Affirmed B1
Withdrawals:
Issuer: WOM S.A.
Corporate Family Rating, Withdrawn, previously B1
Outlook Actions:
Issuer: Kenbourne Invest S.A.
Outlook, Remains Stable
Issuer: WOM Mobile S.A. and subsidiaries
Outlook, Assigned Stable
Issuer: WOM S.A.
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
WOM Mobile S.A. and Subsidiaries ("WOM")'s B1 CFR reflects its
relatively new but already well-established position in the
competitive mobile services market of Chile. The rating also takes
into consideration WOM's network with nationwide coverage, strong
brand recognition and cost-efficient structure, which support its
profitability and cash generation. Government of Chile's (A1
negative) stable operating and regulatory environments are also
incorporated into the B1 ratings.
WOM's ratings are constrained by its modest revenue size compared
with that of its global and local peers, intense competition in the
Chilean telecom market and its relatively high leverage. Moreover,
the company has only a recent track record of stronger
profitability, with positive EBITDA achieved for the first time in
the fourth quarter of 2017, although it is continuously improving.
Accordingly, the B1 ratings also factor in the execution risks in
WOM's plan to continue expanding its market share in the
competitive Chilean market to extract economies of scale and reduce
leverage. Mitigating the risks are WOM's conservative financial
policies that include maximum leverage and minimum cash levels as
well as restriction in dividend payments focusing on debt repayment
and deleveraging of the balance sheet.
WOM's controlling shareholder, Novator, is an investment firm with
around EUR3.0 billion of assets under management with focus on
telecoms, including incumbents and challengers. Novator has
know-how and proven track record in investing in emerging markets
telecom companies such as Play Communications S.A. ("Play"), the
largest mobile operator in Poland. Novator acquired WOM (formerly
Nextel Chile) in 2015 and invested USD400 million in cash into the
company over the subsequent three years. Moody's expects to see
continued implicit support from the shareholder.
The stable rating outlook reflects Moody's expectation that WOM
will sustain its positive momentum because of its high levels of
customer satisfaction and increased data usage in Chile, resulting
in strong net additions to its subscriber base. The stable outlook
also incorporates Moody's assumption that WOM will maintain its
liquidity at adequate levels while being committed to its net
leverage target of below 3.0x despite the temporary increase
related to the new spectrum acquisition.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive pressure on WOM's rating would arise if the company is
able to reduce debt levels while posting sustained improvements in
profitability and revenue growth. Quantitatively, an upgrade would
be considered if the company reduces leverage below 3.75 times
while maintaining an EBITDA margin higher than 30%, and positive
free cash flow on a sustained basis.
The rating could be downgraded if the company's credit metrics
deteriorate because of weaker than expected performance.
Quantitatively ratings could be downgraded if leverage increases to
a level higher than 4.50 times for a prolonged time.
Higher-than-expected shareholder remuneration that pressures
liquidity and free cash flow generation, leaving no room for gross
debt reduction over time, would be also viewed negatively.
Moody's has decided to withdraw the rating because it believes it
has insufficient or otherwise inadequate information to support the
maintenance of the rating.
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
WOM Mobile S.A. (WOM), domiciled in Santiago, Chile, is a mobile
telecommunications services provider, serving more than 7 million
clients across its business segments, including mobile voice, data
services, mobile broadband and, more recently, Fiber to the Home.
WOM was launched in 2015 after the acquisition and rebranding of
Nextel Chile S.A. (Nextel Chile) by its controlling shareholder
Novator Partners LLP (Novator), and became a well-established
company in the Chilean mobile market. WOM reported CLP611.8 billion
in revenue and CLP183.8 billion in Adjusted EBITDA for the full
year 2021.
[*] CHILE: Discloses $3.7BB Recovery Plan to Aid Struggling Economy
-------------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Chile's
President Gabriel Boric announced a $3.7 billion economic recovery
plan that includes a hike in the minimum wage, subsidies and
financing for sectors of the economy still battling fallout from
the COVID-19 pandemic.
Key goals of the plan, the president said, include creating 500,000
jobs and raising the current monthly minimum wage of 350,000 pesos
($434) to 400,000 pesos ($496) by the end of the year, according to
globalinsolvency.com.
"We all know we're living through hard times and it's our duty from
the government to work to alleviate those worries you have," Boric,
a leftist who took power last month, said in a news conference, the
report notes.
Citing rising prices and inflation, he said the government would
freeze public transit fares for the rest of the year and subsidize
fuel prices. Boric, a former student protester, also announced that
food scholarships for students would increase by 15%, the report
relays.
That was the main demand of the first organized protest during his
presidency in March. The plan also includes subsidies for parents
of young children, a one-time payment for culture workers and $300
million fund for local governments to use for infrastructure, the
report adds.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Uncertainty Pushes Growth Figures Downward
--------------------------------------------------------------
Dominican Today reports that official economic forecasts not only
downgrade the growth of the Dominican economy for 2022, but also
estimate an average inflation slightly higher than last year.
In documents released separately, both the Central Bank and the
Ministry of Economy, Planning and Development project that the
gross domestic product (GDP) of the Dominican Republic will grow 5%
this year, when in January the financial institution had projected
a growth of the economy around 5.5-6.0%, different from the 12.3%
exhibited by the authorities in 2021, compared to the end of the
previous year, according to Dominican Today.
While the average inflation is estimated for 2022 at 8.50%,
slightly higher than the 8.24% of 2021, although it is projected
lower for the coming December, with 7%, contrary to the inflation
of 8.50% with which it closed the same month of last year, the
report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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M E X I C O
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FORTALEZA MATERIALES: Fitch Raises LT IDRs to 'BB', Outlook Stable
------------------------------------------------------------------
Fitch Ratings has upgraded Fortaleza Materiales, S.A.B. de C.V.'s
(Fortaleza) Long-Term Local and Foreign Currency Issuer Default
Ratings (IDRs) to 'BB' from 'BB-' and its National Scale rating to
'A(mex)' from 'A-(mex)'. The Rating Outlook is Stable. Fitch has
upgraded Fortaleza's Short-Term National Scale rating to 'F1(mex)'
from 'F2(mex)'.
The upgrade reflects Fortaleza's continued improvement in operating
cash flow generation in the medium term and its solid capital
structure. The company is in the process of concluding a public
offering to acquire its public shares (OPA) after completing its
spin-off of Elementia Materiales, S.A.B. de C.V. (Elementia). On a
pro forma basis, including MXN2 billion of new debt to fund the
OPA, Fortaleza's net leverage as of Dec. 31 2021, was 2.9x, per
Fitch's calculations. Fitch forecasts Fortaleza's adjusted net
debt/EBITDA ratio to be around 3.2x and 2.4x by YE 2022 and 2023,
respectively.
KEY RATING DRIVERS
Diversified Medium-Size Player: Post spin-off, Fortaleza's primary
assets are three cement plants in central Mexico with 3.75 million
metric tons (MT) of cement production capacity; a 55% stake in
U.S.-based Giant Cement Holding, Inc., which the company will
continue to consolidate in its results; and cement grinding
facilities in southern Mexico and in Costa Rica. Giant's capacity
is approximately 2.8MT. The company is also investing in a new
grinding facility in El Salvador. During 2021, on a pro forma
basis, around 71% of Fortaleza's EBITDA was generated in Mexico,
25% in the U.S. and 4% in Central America.
Mexican Market to Normalize: Cement consumption has been
decelerating over the past months from the high levels during 2020
and early 2021. Fitch expects volumes to normalize throughout
year-end 2022, of around 43 million metric tons (mt) from the 46mt
registered in the last 12 months ending 3Q21 as pandemic driven
homes improvement spending gradually subsides over the next few
years. Overall macroeconomic scenario in terms of consumer
confidence, interest rates, and access to credit remains key to
sustain local demand.
U.S. Market with Positive Momentum: Long-term demand drivers remain
favorable in the U.S., supported by strong residential demand and
recovering non-residential private investment. Economic growth
should support increasing investment going into 2023 while the
execution of works related to an infrastructure bill signed into
law in November 2021 should support demand beginning in 2023 and
more intensely in 2024 and beyond. The bill provides USD110 billion
of funds for new roads, bridges, and major projects, USD40 billion
for the repair and replacement of bridges, and extends the FAST Act
through 2026 while increasing annual funding levels by over 20%.
Inflationary Pressures: Fitch expects soaring oil prices and
overall energy costs to pressure Fortaleza's EBITDA generation
during 2022, and its ability to partially pass costs through prices
will be key. Fitch expects some profitability deterioration, but it
should recover throughout the second half of 2022 and 2023. For
2022 and 2023, Fitch forecasts adjusted EBITDA margin will range
between 23%-25%, which represents a deterioration from the 25.4%
and 26.4% of 2021 and 2020 (pro forma basis), respectively. For
2022 and 2023, Fitch foresees consolidated EBITDA of MNX3.2 billion
and MNX3.7 billion, respectively.
Adequate Leverage: On a pro forma basis, including MXN2 billion of
new debt to fund the OPA, Fortaleza's net leverage as of Dec. 31
2021, would be 2.9x, per Fitch's calculations. Fitch forecasts
Fortaleza's adjusted net debt/EBITDA ratio to be around 3.2x and
2.4x by YE 2022 and 2023, respectively, this reflects a more
challenging scenario in terms of raw material prices during 2022.
For 2022, the expected higher capex also brings pressures on FCF
generation and from 2023 it returns back to positive. For 2022 and
2023, FCF is forecasted to be MSN380 million negative, and positive
in MXN1.3 billion, respectively. Capex are MXN1.7 billion in 2022
and MXN1 billion in 2023.
Good Access to Local Debt Market: Fortaleza has a track record of
keeping relatively low cash balances to short-term debt
obligations, thus implying ongoing refinancing risks. The company
has demonstrated either good access to local debt and capital
markets or maintained committed credit lines, which helps to offset
this weakness compare to other companies in the same
rating/sector.
Standalone Analysis: Fitch expects the links between Elementia and
Fortaleza will wane over time as debt is repaid or refinanced. From
July 15 2022 on, there will be no more debt guarantees from
Fortaleza to Elementia, only from Elementia to Fortaleza until
mid-2024.
DERIVATION SUMMARY
Fortaleza has similar product offering relative to regional cement
producers such as GCC, S.A.B. de C.V. (BBB-/Stable) and Cementos
Pacasmayo S.A.A (BBB-/Stable). GCC derives around 70% of its EBITDA
from the U.S. market. Its eight-plant network is similar to the
regional footprints of global producers CEMEX (BB/Positive) and
Buzzi Unicem, allowing GCC to compete profitably despite being
smaller on a consolidated basis. GCC's contiguous presence from
Chihuahua in northern Mexico to the Canadian province of Alberta
results in an efficient distribution and logistics system allow it
to serve markets in 16 states across the U.S. Midwest, Southwest
and Rocky Mountain regions.
While Pacasmayo's scale is similar to Fortaleza and also benefits
from being part of one of its home country's largest business
groups, its position as a dominant cement producer in northern Peru
is an important differentiator. Pacasmayo has a moderate capital
structure, coupled with low-cost structure and well-developed
logistical network that also support its higher rating.
Fortaleza's weaker competitive position and geographic
diversification relative to major global peers, notably CEMEX,
S.A.B. de C.V. (BB/Positive) based on scale and size of cement
operations, is key rating differentiator. CEMEX's ratings have a
Positive Outlook, reflecting expectations that the company could
continue to generate robust FCF due to solid cement demand in the
U.S. where CEMEX generates approximately 30% of its EBITDA as one
of the country's largest producers. Fitch expects leverage for both
companies to be around 3.0x or less.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Cement volumes increase in the low single-digits in 2022 and
beyond;
-- EBITDA Margin around 23%-25% in 2022 from pressured on raw
material prices and recovery in 2023;
-- Capex around MXN1.7 billion in 2022 and MXN1 billion onwards;
-- Successful refinancing of short-term debt within local credit
and debt market.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A larger scale and increased market position;
-- EBITDA margins sustainable above 27%;
-- Consolidated net debt to EBITDA sustained below 2.5x;
-- Sustainable improvement in financial flexibility with stronger
liquidity position and no refinancing risks within 18-24
months.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A weakening of operating cash flow and FCF expectations that
lead to expectations of net debt to EBITDA being sustainable
over 3.5x;
-- Expectations of a sharp deterioration in Mexico's economic
environment leading to a significant contraction in the EBITDA
outlook;
-- Large debt-funded acquisitions;
-- Perception of weaker financial flexibility and ability to
refinance short term debt at reasonable financial costs.
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
Tight Liquidity Supported by Good Credit Access: Fortaleza faces
debt amortizations of MXN4.3 billion over the next 24months, MXN3.2
billion of which is due within the next 12 months. This compares
with cash of MXN1.9 billion as of 4Q21 and expected negative free
cash flow generation of MXN380 million for 2022 year. Fitch
incorporates the company's ongoing access to credit market into
this analysis and its refinancing strategy over 1Q22 and 2Q22.
Fortaleza's total debt was MXN9.7 billion as of 4Q21 and was mainly
comprised of credit lines with BancoMext (32%), Inbursa (29%),
Santander (12%) and Cebures (10%).
ISSUER PROFILE
Fortaleza produces cement and concrete sold in bulk and in bag
form. It operates six cement plants in the Americas with a
distribution network covering four countries. Around 49% of
revenues are originated in Mexico, 47% in the U.S. and 4% in
Central America. The company is controlled by Kaluz Group (43.3%),
Condumex (37.7%) and Free Float (19%).
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.
DEBT RATING PRIOR
---- ------ -----
Fortaleza Materiales, S.A.B. de C.V.
LT IDR BB Upgrade BB-
Natl LT A(mex) Upgrade A-(mex)
senior unsecured Natl ST F1(mex) Upgrade F2(mex)
GRUPO GICSA: S&P Upgrades ICR to 'CCC+', Off CreditWatch Negative
-----------------------------------------------------------------
On April 8, 2022, S&P Global Ratings raised its long-term global
scale issuer credit rating on Mexican real estate operator and
developer Grupo GICSA S.A.B. de C.V. (GICSA) to 'CCC+' from 'CCC'
and its national scale issuer credit rating on GICSA to 'mxB' from
'mxCCC'. S&P also raised its issue-level rating to 'mxB' from
'mxCCC' on the company's senior notes (GICSA 15, GICSA 17, and
GICSA 19). At the same time, S&P removed the ratings from
CreditWatch with negative implications.
The stable outlook reflects S&P's view that GICSA will be able to
improve its operating performance and cash flow because its
portfolio of properties continues to recover and its growth capital
expenditures (capex) is moderating.
On February 14 and on March 23, 2022, GICSA reached a final
agreement with bondholders to modify certain terms and conditions
of its five outstanding local bonds ("certificados bursatiles").
The agreement with local holders doesn't imply that they will
receive less value than promised when the original debt was issued.
On February 14 and on March 23, 2022, GICSA met with bondholders of
its five instruments denominated in Mexican pesos and reached a
consensus to modify the terms and conditions of the notes. Under
the agreement, the principal on all instruments remains unchanged,
and the company committed to a compensation fee on each instrument.
Also, bondholders will benefit from a security interest in certain
assets, including shares of subsidiaries with ownership interests
in some specific properties. The agreement also considers an
interest rate adjustment and the capitalization of interest
payments. S&P said, "In our view, there is no conclusive evidence
that investors will receive less value than promised when the
original debt was issued, even when considering the time value of
money. This is because the implied interest rate--considering
interest payment capitalizations and the compensation fee--offsets
to a large extent the disadvantage of a longer maturity and a lower
nominal interest rate. Therefore, we don't consider this event
tantamount to default."
GICSA's financial performance should gradually improve, although
its capital structure may be unsustainable in the long term. With
the agreement with bondholders, GICSA now benefits from a longer
debt maturity profile that will help alleviate liquidity pressures.
Also, new terms such as the capitalization of interest payments
will support cash flow generation. S&P said, "However, we consider
that GICSA has a limited capacity to accelerate top-line growth in
the next few years, which will keep leverage metrics close to 10x
and its EBITDA interest coverage ratio below 1.3x. While we don't
expect GICSA to face a credit or payment crisis in the next 12
months, the company has a capital structure that may be
unsustainable in the long term, because in our view, it remains
dependent upon favorable business, financial, and economic
conditions to meet its financial commitments."
S&P said, "The stable outlook reflects our view that GICSA will be
able to improve its operating performance and cash flow generation
through the remainder of 2022 and in 2023, as its portfolio of
stabilized properties continues to recover and the deployment of
capex for growth moderates. The stable outlook also reflects our
expectation that GICSA would not face a credit or payment crisis
within the next 12 months.
"We could downgrade GICSA if its liquidity worsen significantly,
likely through unexpected cash flow deficits, raising the default
risk in the next 12 months. In this scenario, we would expect
average occupancy rates to fall below 80% or the company to face
significant delays in its cash collection cycle.
"Although we consider it unlikely in the next 12 months, we could
raise our ratings on GICSA if its financial performance improves
substantially, not only in terms of credit metrics, but also in
terms of cash flow and liquidity. In this scenario, the improvement
in financial performance would also support the sustainability of
the company's capital structure."
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P A N A M A
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DIGICEL GROUP: Discloses Exit From Panama
-----------------------------------------
RJR News reports that Digicel has announced its exit from Panama.
The report says the decision was made after Panama's Consumer
Protection and Competition Authority cleared the proposed
acquisition of Claro's operations by Cable and Wireless Panama -
in which the Panamanian government holds a 49% stake.
Reuters reported that the combined unit would have a 56% share of
the market, which Digicel claimed effectively spells the end of
competition in the telecoms market for smaller players, according
to RJR News.
Since the merger was first proposed, Digicel noted that it had
enacted several initiatives relating to its Panama unit, including
appointing an investment bank to market the entity to possible
investors or partners and floating the possibility of migrating its
customers to another operator, the report notes.
It was reported that Digicel repeatedly told Panamanian authorities
that it would exit the market unless remedies were applied as it
could not continue to operate in a three-player market, the report
relays.
Following Digicel's exit from Panama, only Millicom's Tigo will
compete against the newly-merged telecoms company, the report
adds.
About Digicel Group
Digicel Group is a mobile phone network provider operating in 33
markets across the Caribbean, Central America, and Oceania
regions.
The company is owned by the Irish billionaire Denis O'Brien, is
incorporated in Bermuda, and based in Jamaica.
As reported in the Troubled Company Reporter-Latin America in
April 2020, Moody's Investors Service downgraded Digicel Group
Limited's probability of default rating to Caa3-PD from Caa2-PD. At
the same time, Moody's downgraded the senior secured rating of
Digicel International Finance Limited to Caa1 from B3. All other
ratings within the group remain unchanged. The outlook is
negative.
Also in April 2020, the TCR-LA reported that Fitch Ratings has
downgraded Digicel Limited to 'C' from 'CCC', and its outstanding
debt instruments, including the 2021 and 2023 notes to 'C'/'RR4'
from 'CCC'/'RR4'. Fitch has also downgraded Digicel International
Finance Limited to 'CCC+' from 'B-'/Negative, and its outstanding
debt instruments, including the 2024 notes and the 2025 credit
facility, to 'CCC+'/'RR4' from 'B-'/'RR4'. Fitch has removed the
Negative Rating Outlook from DIFL.
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P E R U
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BANCO INTERAMERICANO: Fitch Affirms 'BB+' LT IDRs, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Banco Interamericano de Finanzas S.A.'s
(BanBif) Long-Term Foreign and Local Currency Issuer Default
Ratings (IDRs) at 'BB+', and Viability Rating (VR) at 'bb+'. The
Rating Outlook for the IDRs is Stable.
Rating Withdrawals
Fitch has also withdrawn BanBif's Support Rating and Support Rating
Floor, as they are no longer relevant to the agency's coverage
following the publication of updated Bank Rating Criteria on Nov.
12, 2021. In line with the updated criteria, Fitch has assigned a
Government Support Rating (GSR) of 'bb-'.
KEY RATING DRIVERS
BanBif's IDRs are driven by its 'bb+' VR. The bank's VR is in line
with the implied VR, which is underpinned by the operating
environment (OE), the more limited company profile and tight
capital metrics. As the fifth-largest Peruvian bank, BanBif has a
mid-size franchise, and has gradually consolidated and strengthened
its competitive position in the second-tier market. However, the
bank remains small and relatively less diversified compared with
the four largest Peruvian banks. The bank's loan and deposit market
shares reached around 4% at December 2021.
Key Rating Driver 2
Fitch believes the credit profile is sensitive to a material
deterioration in the local OE or a negative sovereign rating
action. Pressure in the OE include a slow recovery of the GDP due
greater political uncertainty and the challenging investment and
business environment.
Key Rating Driver 3
BanBif's Fitch Core Capital (FCC)/risk weighted assets (RWA) ratio
of 8.6% at December 2021 remains under pressure due to its limited
capital size and internal capital generation. Fitch believes that
BanBif's low capital ratios are offset by its ample loan loss
reserves, good asset quality and risk management. Fitch expects
these capital metrics to remain the weakest link for the rating,
exacerbated by the political uncertainty on the OE. However, the
entity consistently monitors the minimum level it must sustain
above 8%, which is Fitch's trigger to remain commensurate to the
rating.
Key Rating Driver 4
BanBif's corporate loan focus and relatively conservative risk
appetite underpin its asset quality performance, which is supported
by a high level of guarantees and leasing contracts. BanBif's 90
days past due loans of 2.9% at YE 2021 remains relatively stable,
with its four-year average and the reserve coverage increased to
mitigate against the bank's pandemic exposure. Although impairments
grew 13% during 2021, gross loan growth in less riskier segments
allow it to control asset quality.
Forbearance programs decreased to 5%, in line with similar Peruvian
banks. Fitch expects some loan impairment pressure and charge-off
during the first half of 2022, which should partially reduce the
relatively high LLRs coverage of 2.1x. Top 20 concentrations is
high at 2.3x the FCC. Normalized performance would depend on a
change in the economic environment for the rest of 2022. However,
PDL levels should remain below the banking system average.
Key Rating Driver 5
BanBif's profitability is low relative to peers due to the bank's
corporate focus and limited size. Operating profitability for 2021
reflect low interest margins, cost control and lower provisions due
to the pandemic. Significant reduction in interest rates due to
pandemic, and still higher loan impairments charges narrowed
BanBif's operating profitability to RWA to 1.0% during 2021, above
the 0.6% at YE 2020, but still below an average of 1.4%
(2016-2019).
Fitch believes the bank's efforts to increase profitability through
its consistent strategy to exploit its second-tier position and
improve its value offer, will benefit profitability recovery.
However, Fitch expects profitability improvement will return to its
historical average of 1.5%-2%, contingent on economic recovery,
increased investor confidence and limited pressure on funding
cost.
Key Rating Driver 6
BanBif has a relatively diversified funding structure and is
reliant on deposits. Dependence on term deposits remains high, but
the bank has made a relevant effort toward growing low cost and
stable funding. BanBif's loans/deposits ratio was 107% at YE 2021
due to deposits reduction offset by credit lines. BanBif
consistently maintains a liquidity coverage ratio above 100% in
both U.S. dollars and Peruvian sols. Fitch believes BanBif's
liquidity will remain adequate, supported on adequate asset and
liability management and high liquidity assets.
Key Rating Driver 7
GOVERNMENT SUPPORT (GS) RATING
The bank's 'bb-' GS Rating reflects its mid-size franchise and
lower systemic importance in the context of the investment-grade
Peruvian operating environment. As the fifth-largest Peruvian bank,
Fitch believes the probability of support from the government would
be moderate if required.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- BanBif's IDRs are sensitive to a material deterioration in the
local operating environment or a negative sovereign rating
action;
-- The ratings could be downgraded if the FCC ratio falls
consistently below 8%, especially considering the tighter
internal capital generation of the bank (i.e. retained
earnings);
-- The GS could be downgraded if the bank loses material market
share in terms of loans and customer deposits.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating actions could occur if BanBif demonstrates a
capacity to sustain improvements in earnings and asset quality
metrics, while also maintaining an FCC ratio greater than 10%
amid the relatively faster loan growth that the bank could
have within a better OE.
GOVERNMENT SUPPORT RATING
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Upside potential for the GS is limited and can only occur over
time with material growth of the bank's systemic importance.
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.
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,
due to either their nature or the way in which they are being
managed by the entity.
DEBT RATING PRIOR
---- ------ -----
Banco Interamericano de Finanzas S.A.
LT IDR BB+ Affirmed BB+
ST IDR B Affirmed B
LC LT IDR BB+ Affirmed BB+
LC ST IDR B Affirmed B
Viability bb+ Affirmed bb+
Support WD Withdrawn 3
Support Floor WD Withdrawn BB-
Government Support bb- New Rating
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week April 4 to April 8, 2022
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
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
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
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
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
YPF SA 16.5 67.3 5/9/2022 AR ARS
Polarcus Ltd 5.6 71.8 7/1/2022 AE 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
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US 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
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
YPF SA 16.5 67.3 5/9/2022 AR ARS
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
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
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
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 del Chubut A 4.5 2208 3/30/2021 AR USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
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
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
[*] Economic Recovery in Caribbean Requires Urgent Reforms
----------------------------------------------------------
Jamaica Observer reports that United States - Economies in Latin
America and the Caribbean (LAC) are on track to recover from the
COVID-19 crisis, but the scars of the pandemic remain and the need
for a more dynamic, inclusive and sustainable growth is ever more
urgent, according to a new World Bank report, "Consolidating the
Recovery, Seizing Green Growth Opportunities".
Following a 6.9% rebound in 2021, regional gross domestic product
(GDP) is expected to grow 2.3% this year and a further 2.2 in 2023,
with most countries reversing the GDP losses from the pandemic
crisis, according to Jamaica Observer.
However, according to the World Bank, these modest projections
place regional performance among the lowest in the world at a time
when the region faces important uncertainties as new variants of
the virus may appear, inflation pressures mount and the war in
Europe threatens the world recovery, the report notes. In fact,
regional growth projections have been revised downward by 0.4%
after the Russian invasion of Ukraine, the report relays.
On the positive side, vaccination is widespread across the region,
firms are again hiring, and schools are reopening, it said, the
report discloses. Nevertheless, long-term scars of the crisis
remain and require attention, the report relays.
Poverty rates rose to 27.5% in 2021 and are still above their
pre-COVID levels of 25.6%, while learning losses could lead to a
10% decrease in future earnings for millions of school-age
children, the report discloses. To avoid returning to the low
growth rates of the 2010s, countries in the region need to engage
long-delayed structural reforms and seize the opportunities offered
by a greening world economy, the Washington-based financial
institution said, the report says.
"We are in a global context of great uncertainty, that could impact
the post-pandemic recovery, the report relays. In the long term,
however, the challenges of climate change will be even more
pressing, which forces us to urgently move to a growth agenda that
is greener, more inclusive and that raises productivity," said
Carlos Felipe Jaramillo, vice-president for Latin America and the
Caribbean at the World Bank, the report discloses.
According to the report, growth advancing reforms in
infrastructure, education and innovation remain paramount, and key
investments should be financed through more efficient spending and
revenue mobilization, the report notes. But these much-needed
reforms should respond to major forces shaping the global economy,
including climate change, the report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2022. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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