/raid1/www/Hosts/bankrupt/TCRLA_Public/220418.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 18, 2022, Vol. 23, No. 71
Headlines
A R G E N T I N A
ARGENTINA: Hammer Out Agro-Bio Industry Plan with Brazil
ARGENTINA: Inflation Surged to 20-Year High in March
EDENOR: Moody's Affirms Caa3 CFR, Outlook Negative
B R A Z I L
CAIXA ECONOMICA: Moody's Affirms 'Ba2' Deposit Ratings
MINAS GERAIS: Moody's Affirms B2 Issuer Rating, Outlook Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Fuel Prices Steady; Subsidizes Another RD$820M
[*] DOMINICAN REPUBLIC: Says Remittances to March Topped USD888M
M E X I C O
COATZACOALCOS MUNICIPALITY: Moody's Withdraws 'Caa1' Issuer Rating
LAZARO CARDENAS MUNICIPALITY: Moody's Withdraws 'B2' Issuer Rating
U R U G U A Y
URUGUAY: Concern About the Economy Increases in Country
X X X X X X X X
LATAM: Economic Recovery Requires Urgent Reforms
[*] BOND PRICING: For the Week April 11 to April 15, 2022
- - - - -
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A R G E N T I N A
=================
ARGENTINA: Hammer Out Agro-Bio Industry Plan with Brazil
--------------------------------------------------------
Richard Mann at Rio Times Online reports that socialist-ruled
Argentina and Brazil, with its patriotic Bolsonaro government, are
definitely getting down to business. The two neighbors are both
food and energy giants that could be at the center of world
attention in the coming hunger crises, according to Rio Times
Online.
The U.S.-led Anglo-Saxons and their European junior partners, with
their unprecedented Russia 'canceling', have ensured that
international supply chains, already permanently damaged by covid
lockdowns, will soon cease to function, the report notes. There
will soon be shortages of all sorts, the report relays.
Argentina and Brazil are working on a joint agenda to position
their agro-bio industry in an increasingly hungry world, notes Rio
Times Online. The two countries form a food powerhouse that can
easily compete with and arguably export more than the two largest
agricultural powers, the United States and China, adds the report.
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.
Argentina obtained on March 25, 2022, approval from the Executive
Board of the International Monetary Fund (IMF) of a 30-month
extended arrangement under the Extended Fund Facility (EFF)
amounting to SDR 31.914 billion (equivalent to US$44 billion).
Under the new terms, Argentina secured a much-needed grace period
that postpones repayment of its debt. However, IMF warned of
exceptionally high risks to the program.
ARGENTINA: Inflation Surged to 20-Year High in March
----------------------------------------------------
Buenos Aires Times reports that Argentina's inflation rate galloped
to its fastest pace in March since 2002, challenging a strategy by
the government to cool prices that already lacked support from
within the ruling coalition.
Consumer prices rose 6.7% last month compared to February, the
highest level since Argentina was in one of its worst economic
crises 20 years ago, according to Buenos Aires Times. Inflation
reached 55.1% from a year ago, the highest annual level of
President Alberto Fernandez's presidency and most since June 2019.
Both results were above all forecasts among economists surveyed by
Bloomberg, the report notes.
Prices for education, textiles, utilities and food all exceeded the
headline figure in March. Core inflation accelerated to 6.4% too,
the report relays.
Buenos Aires Times discloses that Economy Minister Martin Guzman
had already warned that price increases for March would be above at
least 6%, surpassing economists' expectations at the time.
Many economists are now forecasting that prices may rise more than
60% annually this year, which would be the highest level since the
nation tamed hyperinflation in the early 1990s, the report notes.
Argentine officials were accused of publishing inaccurate inflation
data from 2012 to 2015, prompting a new administration in 2016 to
overhaul the methodology, the report relays.
Meanwhile, a rift between Fernandez and Vice-President Cristina
Fernandez de Kirchner is sowing public doubt over the government's
anti-inflation strategy under its US$44.5-billion accord with the
International Monetary Fund, the report say.
Argentina's target estimate for inflation this year in the IMF deal
- between 38 to 48% - could be changed when the government holds a
formal review with the Fund's staff in May, according to a person
with direct knowledge of the inflation strategy, who asked not to
be named because the information isn't public yet, the report
discloses.
Government officials believe that meeting the targets in the IMF
programme and implementing its policies will gradually help cool
expectations on price increases, the person added, the report
notes.
Policy makers have taken steps to curb price increases, such as
raising interest rates, narrowing the fiscal deficit and reducing
money printing to finance government spending, the report relays.
But many investors question whether Fernandez's government has
enough support from within its own coalition to continue imposing
tough economic measures as inflation heats up, the report says.
The split between Fernandez and Fernandez de Kirchner over the IMF
deal is challenging Guzman's ability to implement the agreed
policies, the report notes. Although Argentina's Congress largely
approved the agreement in March, lawmakers loyal to the former
president voted against it, the report discloses.
Fractured Coalition
The deal calls on the country to take a range of conventional steps
to fight inflation, such as further narrowing the fiscal deficit,
the report relays. But some investors doubt that the fractured
ruling coalition will let Guzman fully implement the plan, the
report notes.
Successful inflation strategies "need governments with a lot of
credibility," said Martin Rapetti, executive director of consulting
firm Equilibra, who sees inflation ending this year at 65%, the
report notes. "This government has low credibility because the
whole world knows there's infighting," the report relays.
Guzman denied rumors that he'll be forced to quit, the report
notes. But he hinted at the government's internal divide, saying
that Argentina can't tackle inflation unless there's widespread
support for the government's plans under the IMF agreement, the
report relays.
Peso Devaluation
Some local economists argue that the IMF plan may even make
inflation worse in the short term, since it'll raise electricity
bills by removing subsidies, the report discloses. It also
involves devaluing the official peso exchange rate at a faster
pace, the report says.
The IMF sees Argentina's faster inflation last month as largely
tied to price shocks from Russia's invasion of Ukraine, according
to people with direct knowledge, the report notes.
While all nations in Latin America are facing extra price rises
from the European conflict, Argentina's inflation was already above
50% when it started, the report relays. Plus the government also
raised fuel prices nearly 10% last month, the report says.
And while that cocktail of factors is causing inflation to soar,
Fernandez's difficulty in getting Fernandez de Kirchner's faction
to support his policies is raising concerns that temporary price
rises could become more lasting, the report notes.
"Everything that's transitory in the world becomes permanent in
Argentina," said Guido Lorenzo, executive director of consulting
firm LCG, who forecasts 65 percent inflation in Argentina this
year, 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.
Argentina obtained on March 25, 2022, approval from the Executive
Board of the International Monetary Fund (IMF) of a 30-month
extended arrangement under the Extended Fund Facility (EFF)
amounting to SDR 31.914 billion (equivalent to US$44 billion).
Under the new terms, Argentina secured a much-needed grace period
that postpones repayment of its debt. However, IMF warned of
exceptionally high risks to the program.
EDENOR: Moody's Affirms Caa3 CFR, Outlook Negative
--------------------------------------------------
Moody's Investors Service has assigned a Caa3 rating to Empresa
Distribuidora y Comercializadora Norte S.A. (Edenor)'s proposed new
notes due 2025. At the same time, Moody's also affirmed Edenor's
Caa3 Corporate Family Rating and senior unsecured ratings. The
outlook is negative.
The new notes are offered in exchange of Edenor's $98 million
outstanding notes due October 2022 (2022 Notes). If the transaction
is completed, the offer will be considered a distressed exchange
under Moody's definition.
Assignments:
Issuer: Empresa Distribuidora y Com. Norte S.A.
Senior Unsecured Regular Bond/Debenture due 2025, Assigned Caa3
Affirmations:
Issuer: Empresa Distribuidora y Com. Norte S.A.
Corporate Family Rating, Affirmed Caa3
Senior Unsecured Regular Bond/Debenture due 2022, Affirmed Caa3
Outlook Actions:
Issuer: Empresa Distribuidora y Com. Norte S.A.
Outlook, Remains Negative
RATINGS RATIONALE
The rating action was prompted by Edenor's offer to bondholders of
the outstanding 2022 notes, which contemplates two alternatives
consisting of Option A: US$1,050 principal amount of New Notes per
US$1,000 principal amount of Existing Notes (early tender) or
US$1,030 of New Notes (late consideration) and Option B: cash
consideration in an aggregate amount equivalent to 30% of the
oustanding 2022 notes (or USD 29,4 million, payable pro-rata) plus
1.04 times the difference between US$1,000 and the pro-rata amount
of cash received (early tender) or 1.02 times the difference
between US$1,000 and the pro-rata amount of Cash Consideration
received (late consideration).
Edenor's Caa3 credit profile mainly reflects its links to the
credit quality of the Government of Argentina (Ca stable) and the
country's regulatory framework with an inconsistent track record on
the sufficiency of rates and returns, which are balanced by the
company's relatively low leverage and strong market position as the
single provider of essential regulated electricity distribution
services in the northern city of Buenos Aires and its suburbs in
the province of Buenos Aires. The rating also incorporates the
expectation that the company will have a more comfortable debt
maturity profile following the successful completion of the
proposed exchange leading to some financial flexibility amid the
current foreign exchange controls prevailing in Argentina.
The negative outlook incorporates the uncertainties on the
regulatory framework in Argentina amid the country's highly
inflationary environment that is leading to insufficient tariffs to
allow a timely recovery of the company's costs and investment needs
and a higher risk of political interference to address customer
affordability concerns. The lack of adequate tariff adjustments in
2020 and 2021, contributed to a rapid erosion of the company's
profits and cash generation. As a result, Edenor's operation
currently relies on the non-payment of its energy purchases to
Cammesa, as to retain minimum cash balances to pay for its other
operating expenses and capital expenditures to sustain the service
quality.
On March 1st, the regulator ENRE approved Edenor's new tariffs with
an increase of 8% in the company's VAD (value added for
distribution). In Moody's views, this adjustment remains
insufficient to improve the business profitability. Nevertheless,
Moody's understands that there are ongoing negotiations between the
regulator and the company to regularize its payments due to Cammesa
that contemplate the repayment of due amounts in monthly
instalments over an extended period of time along with an
incremental tariff adjustment. Therefore, the outcome from this
negotiation will be key to improve the company's ability to cover
the operating expenses and for the repayment of its outstanding
obligations with Cammesa.
The financial debt of Edenor is relatively low compared to other
regulated electricity peers, as illustrated by a debt to EBITDA
ratio of around 2.2 times. Additionally, leverage could further
decline after the debt exchange is completed, should the majority
of creditors tender existing notes under the Option B, which
incorporates a potential cash payment of up to 30% of the
outstanding debt (or USD 29,4 million). For fiscal year end 2021,
the company reported ARS18,000 in cash holdings, the equivalent of
USD180 million at the official currency conversion rate. As per the
Argentine Central Bank regulation, the monetary authority will only
grant access to foreign currency for up to 40% of debt maturities
coming due in 2022 (30% allowance in Edenor's case because the
company is offering the exchange in advance of the notes maturity
date in October), leading the company to offer to tender the bonds
under a distressed debt exchange because of the forced terms
different from the original schedule.
Overall, the ESG considerations to EDENOR are considered as having
a highly negative impact on the current rating. This is mainly
driven by the company's exposure to adverse regulatory or political
interference on tariffs, which is considered as a social risk under
Moody's ESG framework, reflecting the risk that public concern over
affordability issues could lead to persistent weak margins and
delays in cost recovery. The company's moderately negative exposure
to physical climate risks, which are common for regulated
utilities, and to the challenging financial policies imposed on
companies operating in Argentina are also incorporated in Moody's
ESG assessment.
Rating Outlook
The negative outlook reflects continued cash flow and margin
deterioration in the absence of the pending tariff review and/or a
transitory agreement that provides for more visibility on the
company's future cash generation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
What could change the rating up/down
Given the negative outlook and current constraining factors, an
upgrade of the rating is unlikely. Increased visibility into the
company's tariff regime would be an important consideration for a
stable rating outlook, along with a sustainable improvement in
operating cash generation. A prolonged delay or an unfavourable
outcome of the ongoing tariff renegotiation, which further weakens
Edenor's credit metrics and liquidity will lead to a rating
downgrade.
Profile
Empresa Distribuidora y Comercializadora Norte S.A. (Edenor),
headquartered in Buenos Aires, Argentina, is the country's largest
electricity distribution company covering a major portion of Buenos
Aires and its northern suburbs, serving about 3.2 million clients
and supplying around 20% of the country's total electricity
consumption. According to the terms of Edenor's concession, it has
the monopoly to distribute electricity within its license area and
has the strongest market position within the country in terms of
number of clients and electricity consumption. Since June 2021,
Edenor is controlled by Empresa de Energia del Cono Sur S.A., an
Argentine privately held company.
The principal methodology used in these ratings was Regulated
Electric and Gas Utilities published in June 2017.
===========
B R A Z I L
===========
CAIXA ECONOMICA: Moody's Affirms 'Ba2' Deposit Ratings
------------------------------------------------------
Moody's Investors Service has affirmed all ratings and assessments
assigned to Caixa Economica Federal (Caixa), including the long-
and short-term local and foreign currency deposit ratings of Ba2
and Not-Prime, respectively, as well as its standalone baseline
credit assessment (BCA) and adjusted BCA of ba3. Moody's also
affirmed Caixa's foreign currency senior unsecured debt rating of
Ba2, its long- and short-term local and foreign currency
counterparty risk ratings of Ba2 and Not Prime and its long- and
short-term counterparty risk assessment of Ba2(cr) and Not
Prime(cr). The outlook on Caixa's ratings is stable.
RATINGS RATIONALE
In affirming Caixa's standalone BCA of ba3, Moody's acknowledges
the bank's consistent financial performance, particularly its
strong capitalization and good asset quality, reported in the past
18 months. Caixa's capital position has benefited from a steady
policy of dividend distribution that has remained at about 25% of
net earnings since 2016, which has enabled the bank to improve core
capital in the past five years. In addition, the bank's strategy to
divest of its non-core activities and the constant growth in the
origination of less risky loans, which was supported by a favorable
economic environment in 2021, increased net income by 31.1%.
Moody's expect Caixa's focus on core activities will continue to
benefit its financial and operating efficiency, reflecting a leaner
conglomerate structure and a clear strategic focus towards social
lending and financial inclusion. Despite that, the bank's
profitability will likely grow less in the next 12 months compared
with 2021 as a result of the negative pressure stemming from the
abrupt rise of the basic policy rate SELIC that affects margins,
given the predominance of short-term floating rate funding in the
bank's balance sheet, and an inherently long-term loan book that
will likely take more time to be repriced.
In December 2021, Caixa's capitalization, measured by Moody's
preferred ratio of tangible common equity (TCE) to risk-weighted
assets (RWAs), was 10.13%, up from 9.33% one year prior, and stood
above that of its Brazilian peers. As such, the improvement in
Caixa's capital ratio, which has been more consistent since 2019,
is positive for its financial profile. In addition, in 2021, the
bank had its second highest annual net income in history, which
helped capitalization to support a 10.2% annual expansion in gross
loan volume. In 2022, Moody's expect TCE will be pressured by a
continuation in the payment anticipation of outstanding hybrid
debts to the federal government that amounted to BRL33.5 billion at
the end of 2021. Between 2019 and 2020, the bank already
anticipated to the government a total of BRL11.35 billion. This
strategy has helped Caixa to enhance capital and earnings as it
reduces the debt portion in its equity structure and also lowers
the interest payment component on earnings. Caixa's capitalization
has been supporting the bank's plans to increase lending
origination, particularly to attend low income households and small
and mid-sized companies, by focusing on offering payroll loans,
mortgages and collateralized loans to smaller companies. Moody's
expect this strategy to increase capital consumption in the coming
12 months.
The affirmation of Caixa's BCA at ba3 also incorporates the good
performance of asset quality in the past two years. In December
2021, Caixa's problem loans accounted for 1.95% of gross loans,
compared with 1.73% one year before and 2.17% in year-end 2019. The
low level of loan delinquency stems partly from the bank's
accelerated loan origination since 2020 and its continued focus on
origination of collateralized assets, including mortgage loans,
which grew 9.2% annually and represented 64.3% of gross loans in
2021, and payroll deductible loans, which went up 18.9% and were
9.6% of the total loan book. In addition, the bank's asset quality
metrics also benefited from programs that postponed borrowers'
payments, which has been intensively used at the mortgage
portfolio, and by other emergency government measures that
supported families' income during the COVID-19 pandemic. As a
measure to mitigate future negative pressure on asset quality,
Caixa has kept a comfortable buffer of loan loss reserves, at 4.5%
of gross loans and 229.2% of problem loans in December 2021.
Despite that, in the next 12 to 18 months, Caixa's problem loan
ratios will likely increase because of a combination of high
household indebtedness, inflation and unemployment, drivers that
affect primarily low income individuals, a large share of Caixa's
customer base. In addition, the weaker operating environment
anticipated for Brazil in 2022 will likely increase the volume of
restructured loans, with potential lagging effect on asset quality
in 2023.
Caixa's BCA of ba3 is also supported by the bank's liquidity and
funding position, including a steadily high market share of savings
deposits in Brazil, at 35.4% in December 2021, also positive for
the bank's margins. In 2021, these low-cost resources accounted for
33.2% of total funding. In the past two years, Caixa has continued
to improve risk controls and practices, as well as the quality and
transparency of its financial information. Despite recent
improvements, Moody's continue to monitor Caixa's corporate
governance practices because its status as a wholly-owned
government bank makes it susceptible to political interference,
especially upon changes in government administration, as the bank's
CEO is appointed by the President of Brazil.
As a government-controlled bank with a policy mandate, Moody's
assesses Caixa as government-backed and therefore, the bank's
deposit and senior debt ratings are at the same level of the
Government of Brazil's Ba2 sovereign bond rating. These ratings
carry the stable outlook of the sovereign rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Caixa's BCA could be upgraded if the bank improves its
profitability in the next 12 to 18 months, while still maintain
good metrics for asset quality. The global scale deposit and senior
unsecured debt ratings, which benefit from government support,
could be upgraded if the sovereign rating is upgraded.
Downward pressure on Caixa's BCA could arise if the bank's
financial performance deteriorates as a result of an increase in
loan losses and aggressive loan growth, which could drain capital.
A downgrade of the sovereign rating could affect Caixa's standalone
BCA, as well as its deposit and debt ratings.
METHODOLOGY USED
The principal methodology used in these ratings was Banks
Methodology published in July 2021.
LIST OF AFFECTED RATINGS
Issuer: Caixa Economica Federal (Caixa)
Affirmed ratings and assessments:
Long-term local currency bank deposit rating of Ba2, outlook
stable
Short-term local currency bank deposit rating of Not Prime
Long-term foreign currency bank deposit rating of Ba2, outlook
stable
Short-term foreign currency bank deposit rating of Not Prime
Foreign currency senior unsecured MTN of (P)Ba2
Foreign currency senior unsecured of Ba2, outlook stable
Long-term local currency counterparty risk rating of Ba2
Short-term local currency counterparty risk rating of Not Prime
Long-term foreign currency counterparty risk rating of Ba2
Short-term foreign currency counterparty risk rating of Not Prime
Baseline credit assessment of ba3
Adjusted baseline credit assessment of ba3
Long-term counterparty risk assessment of Ba2(cr)
Short-term counterparty risk assessment of Not Prime(cr)
Issuer level outlook action
Outlook remains stable
MINAS GERAIS: Moody's Affirms B2 Issuer Rating, Outlook Stable
--------------------------------------------------------------
Moody's Investors Service has affirmed the ratings and maintained
the stable outlooks of the Brazilian States of Sao Paulo and Minas
Gerais. Also, Moody's upgraded the rating of Municipality of Belo
Horizonte to Ba2 from Ba3 as well its Baseline Credit Assessment
(BCA) to ba3 from b1 and maintained the stable outlook.
Moody's has taken the following rating actions:
Affirmed the Baseline Credit Assessment (BCA) at ba3 and the
Issuer Rating at Ba2 maintaining the stable outlook for the State
of Sao Paulo;
Affirmed the Baseline Credit Assessment (BCA) at caa1 and Issuer
Rating at B2, maintaining the stable outlook for the State of Minas
Gerais;
Upgraded the Baseline Credit Assessment (BCA) to ba3 from b1 and
the Issuer Rating to Ba2 from Ba3 maintaining the stable outlook
for the Municipality of Belo Horizonte.
The action follows Moody's action on April 12th in which Brazil's
government bond rating was affirmed and maintained stable outlook.
RATINGS RATIONALE
The ratings affirmations for the State of Sao Paulo and Minas
Gerais reflect the close economic and financial linkages that exist
between Brazil's government and Brazilian sub-sovereigns as well as
Moody's expectation that Brazil's economic growth will continue to
support tax revenue for states and municipalities. Moody's expects
that revenue growth will provide only limited relief to their
fiscal position given that personnel expenses, in particular
pension-related costs, will continue rising in coming years.
The Ba2 rating for Sao Paulo reflects the strong likelihood of the
state receiving extraordinary support from the Brazilian government
in the event of acute liquidity stress combined with its long-term
record of positive financial outcomes underpinned by a solid
institutional framework and a strong base of own-source revenue.
Sao Paulo's credit profile is also supported by conservative fiscal
policies and a large and diversified economic base. While Sao Paulo
is Brazil's largest state and contributes significantly to the
country's GDP and national exports, the state's credit profile is
constraint by its large debt-to-revenue levels and growing pension
burden.
The B2 rating for Minas Gerais reflects he challenges faced by the
state to rebalance its deteriorated fiscal position, with
accumulated fiscal deficits over the last years, the large debt and
pension burden in comparison with its peers, and the weak liquidity
profile. On the other hand, the rating incorporates Minas Gerais'
strong and diversified local economy that supports a strong
own-source tax revenue base and the federal government's oversight,
that would provide forthcoming support.
The upgrade of the Municipality of Belo Horizonte speaks to the
relatively strong liquidity, resiliency and stability of operations
during the covid pandemic and low leverage and supportive debt
profile compared to Brazilian peers. Belo Horizonte's cash and
investments cover 0.9x the municipality's net direct and indirect
debt and nearly 0.4x total expenditures, providing sufficient
buffer should the municipality's revenues face a negative shock.
Additionally, the municipality improved its gross operating balance
to 14.8% of operating revenue in 2020, from 12.8% in 2019 and is
expected to improve further to 19.5% in 2021. Although Moody's
forecasts a slowdown in economic activity for Brazil, with real GDP
growth of 0.1% for 2022, the gross operating balance of Belo
Horizonte should remain at 17-18% in the next 12-18 months. The
rating also takes into consideration Belo Horizonte's increasing
capital spending needs following years of historically low levels,
exposure to foreign currency devaluation and significant revenue
reliance on federal transfers in line with other Brazilian
municipalities.
RATIONALE FOR THE OUTLOOK
The stable outlook on the ratings is based on Moody's expectation
that the credit quality of those issuers will continue broadly
stable over the next 12 to 18 months and will remain supported by
the strong institutional framework and the close oversight of
Brazil's federal government on states and municipalities in the
country. Moody's continues to view Brazil's institutional framework
as supportive for states and municipalities relative to
international peers.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Moody's rated Brazilian RLGs have highly negative exposure to
environmental risks, reflected in the E-4 issuer profile scores
mainly due to water management while Moody's see moderately
negative exposure in almost all the environmental categories. Also,
the State of Minas Gerais has a significant exposure to the mining
industry and Moody's assessment of highly negative natural capital
risk.
Social risk exposure is highly negative (S-4 issuer profile score)
for the State of Minas Gerais and Belo Horizonte Municipality
mainly reflecting risks related to health and safety as well as
access to basic services that could be a potential source of social
unrest. These are also risks for the State of Sao Paulo, however
its exposure is moderately negative (S-3 issuer profile score) as
social risks have not led to instability that has adversely
affected Sao Paulo's economic or fiscal performance over the past
15 years.
Sao Paulo's neutral to low governance score (G-2 issuer profile) is
mainly due to the institutional framework compared to other
Brazilian regional and local governments at the same time Belo
Horizonte presents relatively low debt burden and good operating
margins driving its G-2 issuer profile. On the other hand, the
State of Minas Gerais' highly negative governance IPS (G-4 issuer
profile) reflects the state's accumulated fiscal deficits, with
high debt and pension burden combined with weak liquidity. Still,
the governance risks for Brazilian RLGs are partly offset by the
strong support given by the federal government that would provide
forthcoming support should they face a scenario of more pronounced
financial stress.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of Brazil's sovereign rating could exert upward pressure
on the ratings. Also, sustained improvement in key financial
metrics could exert upward pressure on their individual ratings.
Minas Gerais' improved liquidity or ability to timely service its
debt could also trigger the state's upgrade. Conversely, a
downgrade of the sovereign rating, and/or a deterioration in the
key financial metrics of each of these states and municipality
could exert downward pressure on the ratings.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
===================================
D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Fuel Prices Steady; Subsidizes Another RD$820M
------------------------------------------------------------------
Dominican Today reports that so far this year, international fuel
prices have risen by 30.7%. This has led the Dominican government
to implement a hydrocarbon subsidy plan, and it has allocated more
than RD$820 million pesos to mitigate the negative effect on the
national economy, according to Dominican Today.
The government says that this subsidy will prevent dramatic
increases of more than 11 pesos per gallon in the cost of LPG
(Liquefied Petroleum Gas); almost RD$30 per gallon in the case of
Premium gasoline and almost RD$40 per gallon for Regular gasoline;
more than RD$72 per gallon for Regular diesel and more than RD$66
per gallon for Optimum diesel, the report notes.
The Vice Minister of Domestic Trade, Ramon Perez Fermin, said that
the international price of WTI averaged US$98.69 per barrel, almost
the same as April 4-10's average, the report discloses.
The report notes that the Ministry of Industry, Commerce, and
MiPymes established that fuels will be sold at the following prices
for the week from April 16 to 22 2022:
-- Premium gasoline will be sold at RD$293.60 per gallon.
-- Regular gasoline will be sold at RD$274.50 per gallon.
-- Regular diesel will be sold at RD$221.60 per gallon.
-- Optimum diesel will sell at RD$241.10 per gallon
-- Avtur (aviation fuel) will sell at RD$264.40 per gallon
-- Kerosene will sell at RD$300.70 per gallon
-- Fuel oil #6 will be sold at RD$192.11 per gallon
-- Fuel oil 1%S will sell for RD$211.77 per gallon
-- Liquefied Petroleum Gas (LPG) RD$147.60 per gallon
-- Natural gas RD$28.97 per m3
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: Says Remittances to March Topped USD888M
----------------------------------------------------------------
Dominican Today reports that the Central Bank of the Dominican
Republic (BCRD) reported that between January and March 2022 the
remittances received in the country amounted to US$2.4 billion,
some 200 million less than in 2021, although the figure is higher
than the one received in the same period of 2019 and 2020,
according to the data provided by the agency.
Last March, remittances totaled US$888.1 million, an amount higher
than those received in January and February, but lower by 10.7%
compared to the same month in 2021, according to Dominican Today.
"These figures reaffirm the establishment of a new level of monthly
remittance flows," the BCRD statement said, 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.
===========
M E X I C O
===========
COATZACOALCOS MUNICIPALITY: Moody's Withdraws 'Caa1' Issuer Rating
------------------------------------------------------------------
Moody's de Mexico S.A. de C.V has withdrawn the Caa1 (Global Scale,
local currency) and B2.mx (Mexico National Scale) issuer ratings of
the Municipality of Coatzacoalcos. Moody's has also withdrawn the
stable outlook and the caa1 baseline credit assessment (BCA).
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
The period of time covered in the financial information used to
determine Coatzacoalcos, Municipality of's rating is between
January 01, 2016 and December 31, 2020 (source: Financial
Statements of the Municipality of Coatzacoalcos).
LAZARO CARDENAS MUNICIPALITY: Moody's Withdraws 'B2' Issuer Rating
------------------------------------------------------------------
Moody's de Mexico S.A.de C.V, has withdrawn the B2 (Global Scale,
local currency) and Ba2.mx (Mexico National Scale) issuer ratings
of the Municipality of Lazaro Cardenas. Moody's has also withdrawn
the stable outlook and the b2 baseline credit assessment (BCA).
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
The principal methodology used in these ratings was Regional and
Local Governments published in January 2018.
The period of time covered in the financial information used to
determine Lazaro Cardenas, Municipality of's rating is between
January 01, 2016 and December 31, 2020 (source: Financial
Statements of the Municipality of Lazaro Cardenas: 2016-2020).
=============
U R U G U A Y
=============
URUGUAY: Concern About the Economy Increases in Country
-------------------------------------------------------
Rio Times Online reports that a new survey in Uruguay reaffirmed
that the economy represents the main concern of the population, as
expressed this time by 40% of the people consulted.
Thirty-two percent pointed to insecurity, followed by unemployment
(20%), and rising prices and inflation (19%), according to Equipos
Consultores, notes Rio Times Online.
"Inflation continues to eat part of the salary, just as it does
with the passivities, and we are heading towards the third year of
loss of the real value of the same," Pablo Ferreri warned, the
report notes.
===============
X X X X X X X X
===============
LATAM: Economic Recovery Requires Urgent Reforms
------------------------------------------------
Dominican Today reports that 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 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
Dominican Today. However, 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 relays. In fact, regional growth
projections have been revised downward by 0.4% after the Russian
invasion of Ukraine, the report discloses.
On the positive side, vaccination is widespread across the region,
firms are again hiring, and schools are reopening, the report
relays. Nevertheless, long-term scars of the crisis remain and
require attention, the report notes. 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 report
says.
"We are in a global context of great uncertainty, that could impact
the post-pandemic recovery. 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 relays.
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. But these much-needed reforms should respond
to major forces shaping the global economy, including climate
change, the report discloses.
Over the last two decades, the report stresses, countries in Latin
America and the Caribbean lost the equivalent of 1.7% of a year's
GDP due to climate related disasters and up to 5.8 million people
could be pushed into extreme poverty in the region by 2030, the
report relays. Agriculture is likely to be hit hard, with crop
yields decreasing in virtually all countries, and energy generation
stability will be undermined by changes in the hydrological cycle,
the report relates.
"LAC has tremendous green comparative advantages, offering
opportunities for new industries and exports. It has vast potential
in renewable energy, large resources of lithium and copper used in
green technologies, and a rich natural capital, all increasingly
valued in a world where global warming and energy security are
moving center stage", said William Maloney, Chief Economist for
Latin America and the Caribbean at the World Bank, the report
notes. "However, both adapting to climate change and leveraging
these opportunities for diversified and sustained growth will
require improving the region's capabilities to identify, adapt and
implement new technologies," he added.
The report suggests a mix of policies that can help seize the green
growth opportunities, the report discloses.
The report relays that these include:
Pricing policies that encourage the adoption of existing low-carbon
technologies, for example through reforming fossil fuel subsidies
and establishing carbon taxes and emission trading schemes.
Credible verification mechanisms that facilitate access to green
premiums. This allows for exports of carbon credits/offsets, and
draws on the green finance market.
Improved systems for identifying and adopting technologies to
mitigate the region's impact on climate, and to adapt to it, while
leveraging its natural advantages for growth. Climate-smart
agriculture, for example, can help countries adapt to changing
precipitation patterns.
Policy commitments, credible long-term plans, complementary
investments and de-risking mechanisms, which reduce uncertainty and
speed up the adoption of technologies that will promote growth
while adapting to and mitigating climate change.
[*] BOND PRICING: For the Week April 11 to April 15, 2022
---------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
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
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
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
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
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
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
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
*********
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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
* * * End of Transmission * * *