/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/220524.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, May 24, 2022, Vol. 23, No. 97 Headlines A R G E N T I N A GEOPARK LIMITED: Fitch Affirms 'B+' LongTerm IDRs, Outlook Stable B R A Z I L COMPANHIA DE GAS: Fitch Affirms 'BB' LongTerm Foreign Currency IDR C H I L E CHILE: Receives IMF's First Short-term Liquidity Line LATAM AIRLINES: Arnold & Porter Updates on Unsecured Claimants C O L O M B I A CANACOL ENERGY: Fitch Raises LongTerm IDRs to BB, Outlook Stable COLOMBIA: President Warns Against Reversing Trade Liberalization CREDIVALORES: Fitch Lowers LT Foreign Currency IDRs to 'B' D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Bank Says Jan.-Apr. Remittances Topped US$3B DOMINICAN REPUBLIC: IMF Calls for Guaranteeing Return of Inflation E C U A D O R ECUADOR: Pushes Trade With Chile, Mexico, Peru, and Israel P U E R T O R I C O CONDADO ROYAL PALM: Hits Chapter 11 Bankruptcy PUERTO RICO: Fitch Affirms & Withdraws 'RD' Issuer Default Rating - - - - - ================= A R G E N T I N A ================= GEOPARK LIMITED: Fitch Affirms 'B+' LongTerm IDRs, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed GeoPark Limited's (GeoPark) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+'. The Rating Outlook is Stable. Fitch has also affirmed GeoPark's USD425 million senior notes due 2024 and USD500 million notes due 2027 at 'B+'/'RR4'. GeoPark's ratings reflect the company's track record of increasing production, improving reserve life, and implementation of an effective cost-reduction plan. Fitch's base case scenario assumes that the company will reach production of nearly 50,000 barrels of oil equivalent per day (boed) by 2024 and will have average pro-forma total debt/operating EBITDA of below 1.5x over the rating horizon. Despite strong operating metrics, the ratings remain constrained by GeoPark's relatively small size and low oil field diversification. Production growth, maintaining reserve life and capital structure at existing levels, and continued deleveraging support current ratings. KEY RATING DRIVERS Small Production Profile: GeoPark's ratings remain constrained by its relatively small operations and the low diversification of its oilfields following the sale of its Argentine and Brazilian blocks. Fitch expects GeoPark's daily production to increase yoy, reaching close to 50,000 boed by 2024. During 2021, the company reported declining production to 37,602 boed compared to 2020 levels of 40,192 boed due to lower gas production in Chile and Brazil as well as its divestments in Argentina. Fitch expects that Geopark will increase production to around 40,000 in 2022 and grow through the rating horizon as Brent prices continue to be favorable. Effective Cost Producer: Fitch expects that the company will continue to maintain its cost-efficient production profile in the high oil price environment. GeoPark's competitive advantages are derived from its operations in onshore oilfields in Colombia, which results in lower exploration costs, partially driven by its low transportation costs by selling at the wellhead, than big players in the region. For 2021, Fitch estimates GeoPark's half cycle cost was USD20.58/boe, and full-cycle cost was USD30.98/boe. Since 2015, the company has focused on lower risk projects and concentrated production in Colombia, specifically in the Tigana and Jacana oil fields in the Llanos 34 block. Adequate Reserve Life: GeoPark maintains an adequate reserve life, and Fitch does not consider it a constraining factor for the company's ratings. As of Dec. 31, 2021, GeoPark had proved, developed and producing (PDP) oil and gas reserves of 58.1 million barrels of equivalent (mmboe), while its proved reserves (1P) totaled 91.6 mmboe. This translates into a 1P reserve life of 6.7 years when applying 2021 average production. Fitch estimates the company's 1P reserve life will decrease modestly to 6.3 years in 2022, due to the divestiture of the Argentine assets, in combination with ramping of Colombian production to 42kboed from 31kboed in 2021. However, GeoPark is strategically deploying capital in Ecuador and continues to build reserves in Colombia. Strong Capital Structure: Fitch calculated GeoPark's leverage to be 2.2x in 2021, down from 4.2x in 2020 from 1.3x in 2019 explained by the $118 million debt repayment. Fitch estimates that leverage will continue to decrease in 2022 to 0.7x as GeoPark is using strong cash generation from favorable oil prices to improve balance sheet structure. Over the rating horizon, Fitch expects the company will maintain an average gross leverage, defined as total debt to EBITDA ratio of 1.3x through 2023. Fitch also expects the company will maintain an EBITDA to interest expense ratio above 20.0x in 2022 and 2033. Geopark's total debt to 1P decreased to $7.08/boe in 2021 from $7.18/boe 2020, but Fitch expects this will decrease to $4.53boe in 2022, which assumes a reserve replacement ratio annual average of 116%. Financial Flexibility: Fitch's rating case assumes Geopark will maintain its conservative financial policies, which incorporate hedging a portion of its production, supporting its cost production profile, and maintaining a conservative leverage and liquidity position. Over the rating horizon, funds from operations are estimated to cover capex by an average of 2.3x times under Fitch's price deck assumption. The company has a healthy PDP and 1P reserve life of 4.2 years and 6.7 years respectively, giving it flexibility in allocating capital in the event of price volatility. The rating case assumes dividends will be paid each year but not materially exceed FCF. DERIVATION SUMMARY GeoPark's credit and business profile is comparable to other small independent oil producers in Latin America. The ratings of SierraCol Energy Limited (B+/Stable), Frontera Energy Corporation (B/Stable), Compania General de Combustibles S.A. (CGC; B-/Stable) and Gran Tierra Energy International Holdings Ltd. (B-/Stable) are all constrained to the 'B' category, given the inherent operational risk associated with the small scale and low diversification of their oil and gas production. GeoPark's production profile compares favorably with other 'B' rated Latin American oil exploration and production companies. Over the rating horizon, Fitch expects GeoPark's production will average 49,400 bbld, which is higher than Frontera (37,000 bbl/d), SierraCol (36,000 bbl/d) and Gran Tierra Energy (33,000 bbl/d) but lower than CGC (55,000 boed after the acquisition of Sinopec Argentina in 2021). GeoPark's PDP reserve life is 4.2 years, and its 1P reserve life was 6.7 years in 2021 vs. SierraCol at 5.9 years PDP and 6.3 years 1P, Frontera at 2.4 years PDP and 8.7 years 1P, Gran Tierra 5.3 years PDP and 8.5 year 1Ps, and CGC at 2.3 years PDP and 5.4 years 1P. Geopark's half-cycle cost at $20.58 bbl and full-cycle cost at $30.98 are on the lower side of the range for producers in the region. Frontera's costs were at the higher side of the spectrum at $28.60bbl and $42.20 bbl, respectively, in 2021. Offshore producers such as Trident have higher costs; its half-cycle production cost was $27.4 bbl and its full-cycle cost was $44.9 bbl in 2021. Geopark had gross leverage of 2.2x, Debt to PDP of $11.62 and Debt to 1P of $7.08 bbl in 2021 vs. Gran Tierra at 2.7x, $16.8 bbl and $10.05 bbl; SierraCol at 1.0x, $7.5 bbl and $5.68 bbl; and Frontera at 2.3x, $19.93 bbl and $4.98 bbl. KEY ASSUMPTIONS Fitch's Key Assumptions Within Fitch's Rating Case for the Issuer -- Fitch's revised price deck for Brent per barrel (bbl) of USD100 bbl for 2022, USD80 bbl for 2023, USD 60 bbl for 2024 and USD 53 long-term; -- Production average of 48,200 bbld from 2022 through 2024; -- Effective tax rate of 25% from 2022-2024; -- Average annual dividends of USD20 million in 2022, USD 17 million in 2023, and USD 5.8 million on average thereafter; -- Annual capex of USD 65 million; -- Royalties per boe of USD 20.00 bbl in 2022, USD 11.50 bbl in 2023, USD 9.00 bbl in 2024, USD 6.00 bbl thereafter; -- Production cost per boe of $8.25 between 2022-2024; -- Exploration cost per boe of $1.50 between 2022-2024; -- SG&A cost per boe of $4.00 between 2022-2024; -- Reserve replenishment ratio annual average of 1P of 116%. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Net production rising consistently to 75,000 boed on a sustained basis while maintaining a total debt to 1P reserves of USD8.00 barrel or below; -- Reserve life is unaffected as a result of production increases, at approximately 10 years; -- Maintenance of a conservative financial profile, with gross leverage of 2.5x or below; -- Cash flow generated from take-or-pay contracts from high- quality off-takers covering interest expense by 1.0x; -- Diversification of operations and improvements in realized oil and gas differentials. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Sustainable production falls below 30,000 boed; -- Reserve life declines to below 7.0 years on a sustained basis; -- A significant deterioration of total debt/EBITDA to 3.0x or more. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: GeoPark had cash on hand of USD101 million at Dec. 31, 2021. This compares favorably to short-term debt of USD18 million, and the next maturity is in 2024 when its USD170 million bond is due. The company has additional funding available through a USD15 million oil prepayment facility, which has not been drawn, and USD143 million of uncommitted credit lines. ISSUER PROFILE GeoPark is a small but growing oil and gas E&P company with producing operations in Chile, Colombia, and Brazil. It was founded in 2002 after the acquisition of AES's upstream oil and gas assets in Chile and Argentina. GeoPark is the holding company for the group's Colombian, Chilean, and Brazilian operations. 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. =========== B R A Z I L =========== COMPANHIA DE GAS: Fitch Affirms 'BB' LongTerm Foreign Currency IDR ------------------------------------------------------------------ Fitch Ratings affirmed Companhia de Gas de Sao Paulo - COMGAS' Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) at 'BB', Local Currency (LC) IDR at 'BBB-' and National Long-Term Rating at 'AAA(bra)'. The Rating Outlook is Negative for the IDRs and Stable for the National Long-Term Rating. The ratings reflect the low to moderate risks of the natural gas distribution business in Brazil and COMGAS' historically robust financial profile, significant cash flow from operations (CFFO) and favorable growth prospects. COMGAS benefits from a more diversified client base than its peers in Brazil and its long-term concession, with a non-manageable costs pass-through that protects its results. The analysis assumes recontracting risks of maturing gas supply agreements in 2023 as manageable and no major changes in the company's credit profile due to the still recent regulatory framework. The Negative Outlook for the FC IDR reflects the Outlook of the sovereign rating, while the LC IDR reflects the challenging economic environment in Brazil. KEY RATING DRIVERS Strong Business Profile: COMGAS' business profile benefits from its monopolistic position as a natural gas distribution company in part of the state of Sao Paulo. Positively, its concession maturity extended in 2021 for additional 20 years to 2049. The company presents a more diversified client base compared with peers, with a higher participation of residential and commercial classes on its cash generation. Clients from these two segments are more profitable and tend to present lower volatility during economic downturns in Brazil. In 2021, industrial clients accounted for 69% of revenues and 51% of operating profit, with 15% and 34% for residential and 4% and 8% for commercial, respectively. Robust EBITDA: COMGAS should sustain strong EBITDA and adjusted EBITDA margin in the next three years, being BRL3.1 billion in 2022 and BRL3.4 billion in 2023, supported by adequate tariff increases, maintenance of operating and cost efficiencies, expansion of the client base and growing volumes billed. The adjusted EBITDA margin, which excludes gas acquisition costs from net revenues on the calculation, is expected around 80% in the period, healthy despite of the payment assumption of BRL814 million of regulatory account within 2022-2024. The assumption considers effective margin contribution of BRL0,70/cubic meters and total volume billed growth of 1.1% in 2022 to 5.0 billion cubic meters (ex-thermo clients). During 2021, COMGAS' EBITDA was BRL3.0 billion, with adjusted EBITDA margin of 86%. Dividends Pressure FCF: Forecast strong dividend distributions, relevant capex and higher interest rates during 2022-2024 should maintain COMGAS' negative FCF. Fitch estimates an average annual negative FCF of BRL876 million during this period, including negative BRL1.6 billion in 2022, despite of robust CFFO at BRL1.7 billion-BRL2.1 billion annually. The base case scenario assumes annual average dividend payments of BRL1.5 billion resulting from 100% pay-out ratio and average investments of BRL1.3 billion per year. Standalone Credit Profile: COMGAS' ratings reflect its standalone credit profile (SCP) given perception of an insulated status for the Legal Ring Fence and a porous status for the Access and Control when considered its relation with its ultimate parent Cosan S.A. (Cosan; FC IDR BB/Negative, LC IDR BB+/Stable and National Long-Term Rating AAA(bra)/Stable). As per Fitch's Parent Subsidiary Linkage Rating Criteria, the SCP is mainly supported by the requirement of regulator's approval in case of upstream guarantee or intercompany loans, as well as creditors' approval needs tor equity reductions or breach of financial covenants. Despite Cosan being the dominant shareholder, funding and cash management policy is insulated given company's independence on financial strategy. Conservative Leverage: COMGAS' net leverage should not exceed 2.0x during 2022-2024, which is conservative if considering its low to moderate business risks. COMGAS is Brazil's largest natural gas distribution company in volume billed and is subject to natural gas consumption volatility within the industrial segment as it represents around 50% of its EBITDA generation. This segment's performance is linked with GDP and gas price competitiveness that results in moderate cash flow variation. COMGAS' efficient expense structure and its efforts to expand its residential and commercial client bases, with higher profitability, should mitigate the effects of industrial segment volatility. New Regulatory Environment is Neutral: The new regulatory environment for this industry should be neutral for COMGAS' credit profile. It stimulates higher gas supply competition in the medium term, supporting lower purchase prices and higher demand. Notwithstanding, increases COMGAS exposure of large clients leaving the company's customer base by switching gas supplier. Despite that COMGAS will continue to receive a remuneration for its distribution service, this may not be enough to offset lower volume billed. The company's relevant scale of operations should allow competitiveness on gas purchase prices and mitigate this risk. Manageable Supply Risk: Fitch assumes no gas supply disruptions for COMGAS in the coming years, even though the supply contracts with Petroleo Brasileiro S.A. (Petrobras) will mature in December 2023. Positively, COMGAS has the option to renew its supply agreement until 2027 at its discretion, which mitigates medium-term supply risks. Single-supplier concentration risk remains, which is a common industry characteristic in Brazil, but is expected to change with the new regulation. The natural gas purchase is the company's main cost and considered as nonmanageable, with pass through to tariffs based on contract clauses. Take-or-pay and ship-or-pay clauses of 80% and 100%, respectively, may pressure cash flow during unfavorable macroeconomic scenarios. DERIVATION SUMMARY COMGAS' credit profile compares favorably with Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP; LC IDR BB+/Negative), a water/wastewater utility company that also operates in the state of Sao Paulo, which carries some linkage with its controlling shareholder (state of Sao Paulo). Both companies have sound capital structures and liquidity profiles in addition to proven financial market access. In the case of Transmissora Alianca de Energia Eletrica S.A. (Taesa; LC IDR BBB-/Negative), a Brazilian power transmission company, COMGAS' lower leverage is counterbalanced by Taesa's lower regulatory and business risks, with no volumetric exposure, leading to more predictable CFFO. The FC IDR is also 'BB'/Negative for SABESP and Taesa. Promigas S.A. E.S.P. (LC and FC IDRs BBB-/Stable) has a strong business position in Colombia and predictable cash flow generation, but its gross leverage of around 4.0x-4.5x is higher than COMGAS', at around 2.5x-3.0x. However, Promigas's business profile benefits from diversification within natural gas transportation and distribution, while COMGAS only distributes gas and can face demand volatility. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer -- Total volume billed growth, excluding the thermo power generation segment, of 1.2% in 2022. Annual average increase of 1.8% thereafter, in line with Fitch's GDP projections for Brazil; -- Dividend payout ratio of 100% of distributable net profit; -- Annual average capex of BRL1.3 billion in 2022-2024; -- Annual contribution margin increases in December 2022 of 10% and thereafter in line with Fitch's inflation estimates, adjusted by an efficiency factor of 0.52%; -- Payment of regulatory account balance of BRL814 million within 2022-2024. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Positive rating actions are unlikely; a revision of the Negative Outlook to Stable of the FC and LC IDR could occur with an identical revision to the sovereign's Outlook. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A downgrade of the sovereign rating would trigger a downgrade for the IDRs; -- Expectation of a sustainable increase in net debt/EBITDA to above 3.0x; -- Fitch's perception of increased regulatory or gas supply risk; -- A sharp decline in volumes; -- Deterioration of the company's liquidity profile. LIQUIDITY AND DEBT STRUCTURE Robust Financial Flexibility: COMGAS' credit profile incorporates adequate liquidity position and proven access to credit to support expected negative FCFs and some debt maturity concentration until 2024 totaling BRL4.8 billion. The company issued BRL1.1 billion in February 2022 for debt refinancing and should raise additional BRL1.5 billion for capex until year end. Cash position was BRL1.9 billion by the end of 2021 was equivalent to 0.8x its short-term debt. Total debt of BRL6.6 billion consisted mainly of BRL5.0 billion of debentures and BNDES loans of BRL1.1 billion. ISSUER PROFILE COMGAS is the largest natural gas distributor in Brazil, operating in 88 cities, within its total concession of 177 municipalities in Sao Paulo, the state most economically important in the country, assisting more than 2.2 million clients, mainly residential customers. SUMMARY OF FINANCIAL ADJUSTMENTS -- Construction revenues are excluded from net revenues; -- Debt adjusted with hedging derivatives. 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. ========= C H I L E ========= CHILE: Receives IMF's First Short-term Liquidity Line ----------------------------------------------------- Chile accepted the International Monetary Fund's (IMF) offer of a one-year Short-term Liquidity Line (SLL) arrangement, amounting to about US$3.5 billion (145 percent of quota, or the equivalent of SDR 2.529 billion, the maximum amount under this arrangement). The authorities also notified the Fund on their decision to exit the current two-year Flexible Credit Line (FCL) arrangement ( see Press Release No. 20/227). This is the first ever arrangement under the SLL, which was established on April 21, 2020 ( see Press Release No. 20/180). [1] The facility is designed to be a liquidity backstop for members with very strong policy frameworks and fundamentals that face potential, moderate, short-term balance of payments needs. Recipients can draw from the liquidity line at any time that balance of payment needs arise. Disbursements are not phased nor tied to compliance with policy targets as in regular IMF-supported programs. As envisaged under the SLL policy, the Chilean authorities plan to treat the SLL as precautionary. Following a swift and wide-ranging policy response to the COVID-19 pandemic, Chile's economic recovery is well-entrenched. The authorities have successfully recalibrated macroeconomic policies and built comfortable liquidity buffers, while maintaining macroeconomic stability and fiscal sustainability. The SLL will complement existing buffers, support resilience, and provide a confidence signal on Chile's very strong fundamentals and policies. Chile qualifies for the SLL given its very strong economic fundamentals and institutional policy frameworks, a sustained track record of implementing very strong policies, and the authorities' commitment to maintain very strong policies in the future. Qualification criteria for the SLL are the same as those for the FCL, which facilitates the transition between the two facilities. Following the Executive Board's discussion on Chile, Mr. Bo Li, Deputy Managing Director and Acting Chair, issued the following statement: "I am delighted that Chile has accepted the Fund's offer of an SLL, becoming the first user of this special and innovative instrument. "Chile has very strong fundamentals and policy frameworks, and a sustained track record of implementing policies that have supported the country's resilience in the face of large shocks. The very strong policy frameworks are anchored in a long-standing structural fiscal balance rule, credible inflation-targeting with a free-floating exchange rate, and a sound financial system supported by effective regulation and supervision. "Following an impressive vaccination campaign and an effective and well-coordinated policy response, the Chilean economy has rapidly recovered from the fallout of the Covid-19 pandemic. The progress made in recalibrating macroeconomic policies and building comfortable liquidity buffers facilitates the successful transition to the SLL, which will further support Chile's external resilience by providing a revolving liquidity backstop in foreign exchange." LATAM AIRLINES: Arnold & Porter Updates on Unsecured Claimants -------------------------------------------------------------- In the Chapter 11 cases of LATAM Airlines Group S.A., et al., the law firm of Arnold & Porter Kaye Scholer LLP submitted a second verified statement under Rule 2019 of the Federal Rules of Bankruptcy Procedure, to disclose an updated list of Ad Hoc Group of Unsecured Claimants that it is representing. The Ad Hoc Group is comprised of the following institutions or funds, accounts and entities managed by the following institutions: Avenue Capital Management II, L.P.; Corre Partners Management, LLC; CQS (US), LLC; Hain Capital Group, LLC; HSBC Bank Plc; Invictus Global Management LLC; J.H. Lane Partners, LP; Livello Capital Management LP; and Pentwater Capital Management LP. In or around November and December 2021, members of the Ad Hoc Group retained Arnold & Porter to represent them in their capacities as holders of general unsecured claims against LATAM Airlines Group S.A. and certain of its affiliate entities; holders of LATAM 2024 Bonds; and holders of LATAM 2026 Bonds. Each member of the Ad Hoc Group separately requested that Arnold & Porter represent it in connection with these chapter 11 cases as a holder of claims against the Debtors. On Dec. 29, 2021, Arnold & Porter filed the Verified Statement of Arnold & Porter Kaye Scholer LLP Pursuant to Federal Rule of Bankruptcy Procedure 2019. Since then, the disclosable economic interests in relation to the Debtors held, advised or managed by certain members of the Ad Hoc Group have changed. Accordingly, pursuant to Bankruptcy Rule 2019, Arnold & Porter submitted a Second Verified Statement. As of May 17, 2022, members of the Ad Hoc Group and their disclosable economic interests are: Avenue Capital Management II, L.P. 11 West 42nd Street 9th Floor New York, NY 10036 * LATAM Parent: $17,049,598.00 * Other LATAM Entities: $23,717,900.55 * LATAM 2024 Bonds: $7,550,000.00 * LATAM 2026 Bonds: $500,000.00 Corre Partners Management, LLC 12 East 49th Street 40th Floor New York, NY 10017 * LATAM Parent: $22,817,000.00 * Other LATAM Entities: $21,091,000.00 CQS (US), LLC 152 West 57th Street 40th Floor New York, NY 10019 * LATAM Parent: $20,000,000.00 Hain Capital Group, LLC Meadows Office Complex 301 Route 17 North Rutherford, NJ 07070 * LATAM Parent: $23,780,346.31 * Other LATAM Entities: $1,710,232.76 HSBC Bank Plc 452 Fifth Avenue New York, NY 10018 * LATAM Parent: $12,098,217.00 * LATAM 2024 Bonds: $2,720,500.00 * LATAM 2026 Bonds: $7,383,000.00 Invictus Global Management LLC 310 Comal Street Building A, Suite 229 Austin, TX 78702 * LATAM Parent: $28,376,105.56 * Other LATAM Entities: $15,771,672.75 J.H. Lane Partners, LP 126 East 56th Street Suite 1620 New York, NY 10022 * LATAM Parent: $2,000,000.00 Livello Capital Management LP 1 World Trade Center 85th Floor New York, NY 10007 * LATAM Parent: $5,000,000.00 * Other LATAM Entities: $2,550,000.00 Pentwater Capital Management LP 614 Davis Street Evanston, IL 60201 * LATAM Parent: $126,240,000.00 * LATAM 2024 Bonds: $18,089,000.00 * LATAM 2026 Bonds: $60,271,000.00 * Common Stock: 95,000 shares * Tranche A DIP Commitment: $50,000,000.00 Counsel to the Ad Hoc Group of Unsecured Claimants can be reached at: ARNOLD & PORTER KAYE SCHOLER LLP Michael D. Messersmith, Esq. Sarah Gryll, Esq. 70 West Madison Street, Suite 4200 Chicago, IL 60602 Telephone: (312) 583-2300 Facsimile: (312) 583-2360 E-mail: michael.messersmith@arnoldporter.com sarah.gryll@arnoldporter.com - and - Jeffrey A. Fuisz, Esq. Robert T. Franciscovich, Esq. Madelyn Nicolini, Esq. 250 West 55th Street New York, NY 10019-9710 Telephone: (212) 836-8000 Facsimile: (212) 836-8689 E-mail: jeffrey.fuisz@arnoldporter.com robert.franciscovich@arnoldporter.com madelyn.nicolini@arnoldporter.com A copy of the Rule 2019 filing is available at https://bit.ly/38B8BXj at no extra charge. About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc. and The Boston Consulting Group UK LLP serve as the Debtors' strategic advisors. Prime Clerk LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is the committee's Brazilian counsel. The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as counsel. Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew Glenn and partner Shai Schmidt, has been retained as counsel to the Ad Hoc Committee of Shareholders. =============== C O L O M B I A =============== CANACOL ENERGY: Fitch Raises LongTerm IDRs to BB, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has upgraded Canacol Energy Ltd.'s (CNE) Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDRs) and its senior unsecured notes to 'BB' from 'BB-'. Fitch has removed the 'RR4' Recovery Rating from the debt along with the upgrade. The Rating Outlook is Stable. The upgrade reflects CNE's production of nearly 40,000 boe/d, predictable and stable cash flow profile supported by long-term take-or-pay contracted sales at fixed prices, low production costs, an adequate reserve life of six years, and regional importance for Colombia. Fitch expects that Canacol will maintain average gross leverage of 2.8x over the rating horizon. This includes debt assumed for the construction the Jobo-Medellin pipeline, which is expected to be completed by year-end 2024 and divested shortly after to comply with regulatory requirements in Colombia. Fitch expects the company will deconsolidate the debt of the pipeline, resulting in a gross leverage ratio of 1.9x in 2024. KEY RATING DRIVERS Contracted Revenue: Canacol's long-term, take-or-pay contractual structure at fixed prices with strong credit quality off-takers significantly reduces its business risk, as this mitigates exposure to price and volume risk. This structure is unusual among its peers, as natural gas companies are normally exposed to market risks. Fitch estimates that Canacol will sell approximately 80% of its production volume over the rating horizon under fixed-price, long-term take-or-pay contracts with high-quality off-takers, with an annual weighted average contracted life of seven years at an average price net of transportation costs of USD4.75 per one million British thermal units (MMBtu). Predictable Cash Flows: Canacol's contracted production volumes are expected to support robust and predictable cash flow, with an average EBITDA margin of approximately 70% and an average FFO margin of 37% over the rating horizon. Fitch estimates Canacol's total cost of production (operating expenses plus royalties plus transportation plus general and administrative and other expenses) will average USD2.21/MMBtu over the rating horizon and that the company will be FCF-positive, even when assuming annual average dividend payments of approximately USD30 million. Strong Capital Structure: Fitch's base case calculates net debt to EBITDA at 2.2x in 2021 and average 1.9x in 2022-2024, with an average EBITDA/interest expense of 7.3x during the rating horizon. Canacol's debt to 1P reserves was USD7.66 per barrel of oil equivalent (boe) when applying 1P reserves of 65 million boe in 2021. Fitch expects Canacol to continue to benefit from manageable debt maturities, with its first material maturity in 2028. Growing Production: Fitch estimates that Canacol's production will grow at a CAGR of 8% over 2021-2026, reaching 255 million cubic feet per day (mmcfd) in 2024, up from 185 mmcfd in 2021. This growth is driven by the El Tesorito (a 200MW power plant) and Jobo-Medellin new pipeline expansion projects. The El Tesorito power plant may be operated by CELSIA S.A. E.S.P. started in 2H22, with Canacol owning 10% of the project and supplying 100% of its gas. The project is forecast to consume 30 mmcfd when running at 150MW capacity. The Jobo-Medellin project will have a total capacity of 100 mmcfd, with gas delivery starting in 2H24. The project is currently 100% owned by Canacol. Fitch is assuming that $35 million of the pre-development costs associated to the project will be financed with debt, which will then be reimbursed to Canacol upon the sale of asset. Per local regulations, Canacol cannot own more than 25% of the project and is selling a 75%-100% stake. The sale is expected to take place in the second half of 2023. Regional Importance: Canacol's operations are concentrated in the Lower Magdalena basin, where it is a key gas producer and supplier for the highly dependent Caribbean coast of Colombia. Gas represents 70% of the regional energy matrix, and refineries consume nearly 20% of total supply. Fitch expects that Canacol will remain the largest supplier to Colombia's northern coast region. Limited Competition: Canacol faces limited competition from regional gas producers and liquefied natural gas (LNG) imports. The company has a strong competitive position in its region due to expensive start-up costs and limited conventional reserves. Gas produced in Colombia's prolific llanos basin, which produced 60% of domestic gas in 2021, cannot be efficiently transported to the Caribbean coast, especially to Cartagena. Fitch expects Canacol's contracted gas prices to be below the USD22 per MMBTU total cost of importing, processing and delivering LNG to Colombia when considering the cost of imported U.S. LNG. DERIVATION SUMMARY Canacol's credit profile compares well with other independent gas producers in both Latin America and North America, including Tecpetrol Internacional S.L. (BB/Stable), Hunt Oil Company of Peru L.L.C., Sucursal del Peru (BBB/Stable), CNX Resources Corporation (BB+/Stable), Ascent Resources Utica Holdings, LLC (B/Stable) and Comstock Resources, Inc. (B/Positive). As a gas producer and supplier, Canacol compares favorably to peers, as it is the only entity that contracts an average of 80% of its production volume with solid off-takers. Tecpetrol and Hunt Oil are the closest peers in the region. Both own an equity stake in the Camisea blocks 86 and 56 in Peru, which are strategically important for that country, providing 86% of its natural gas supply. Similarly, Canacol is regionally important to the Caribbean coast of Colombia, which is a large consumer of gas and is very comparable to Camisea. Canacol's capital structure, cash flow generation and liquidity profile are comparable to Tecpetrol and Hunt Oil. Fitch estimates that Canacol's 2021 total debt to EBITDA was 2.6x, higher than Tecpetrol's 0.6x and Hunt's 1.5x but below the average among its U.S. peers (CNX, Ascent and Comstock) of 3.2x. Fitch projects Canacol's pro forma total debt to 1P to be USD7.00 boe not including debt incurred for the Jobo-Medellin pipeline, which is highest among all peers, with Tecpetrol's expected to be USD0.86 boe and U.S. peers averaging USD2.00 boe. Canacol's higher leverage to reserves is partially offset by its contracted revenues and weighted life of contracts. KEY ASSUMPTIONS -- Production volumes of 210,000 mcfd in 2022, 260,000mmcfd in 2023, 270,000mmcfd in 2024, and 325,000mmcfd in 2025; -- Gross weighted average realized price of $5.50/mcf in 2022 and $5.75/mcf between 2023 through 2026; -- Opex average of $.0.30/mcf between 2022 through 2026; -- Royalties average of $0.80/mcf between 2022 through 2026; -- Transportation cost average of $0.70/mcf between 2022 through 2026; -- G&A cost average of $0.45/mcf between 2022 through 2026; -- Total capex of $700MM between 2022 through 2024; -- Dividends of $28 MM per year; -- Effective tax rate of 25% over the rating horizon. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Net production rising to 55,000 boed on a sustained basis; -- Maintenance of a 1P reserve size life at or higher than its weighted average contractual life; -- Sustained conservative capital structure at below 1.0x net debt to EBITDA. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Production size declining below 35,000 boed; -- A 1P reserve size life less than its weighted average contractual life; -- Gross leverage at or above 3.0x; -- Deterioration of the capital structure and liquidity due to a steeper than anticipated decline in production or a marked increase in debt; -- Extraordinary dividends that weakens liquidity. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As year-end 2021, Canacol had cash on hand of $139 million, which covers four years of estimated interest expense. The company has a solid debt maturity profile, with its first major maturity expected to be the $25 million in 2023 followed by $12.8 million in 2024. ESG CONSIDERATIONS Canacol Energy Ltd. has an ESG Relevance Score of '4' for Exposure to Social Impacts due to the potential impact of social pressures and possible pushback from the communities in the region where it operates. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. COLOMBIA: President Warns Against Reversing Trade Liberalization ---------------------------------------------------------------- Rio Times Online reports that reversing Colombia's trade liberalization "would be an unprecedented stupidity," outgoing President Ivan Duque warned his possible successor during a final visit to the United Kingdom to promote trade and attract investment. The Colombian conservative, who previously traveled to London in June 2019, met privately with Prime Minister Boris Johnson, who in a video posted on Twitter "wholeheartedly congratulated" the Colombian people for their work to protect the environment, according to Rio Times Online. Polls suggest that leftist candidate Gustavo Petro could come to power in Colombia's presidential elections, the first round of which will be held on May 29, and challenge the way the process is working, the report notes. CREDIVALORES: Fitch Lowers LT Foreign Currency IDRs to 'B' ---------------------------------------------------------- Fitch Ratings has downgraded Credivalores-Crediservicios S.A.'s (Credivalores) Long-Term Foreign Currency Issuer Default Rating (IDR) to 'B' from 'B+' on Rating Watch Negative (RWN) and the senior debt to 'B'/'RR4' from 'B+'/'RR4' on Rating Watch Negative (RWN). Fitch has maintained the 'B' Short-Term Foreign Currency IDR on RWN. Fitch has also downgraded Credivalores' Long- and Short-Term National Scale ratings to 'A-(col)'/'F2(col)' from 'A(col)'/'F1(col)' on RWN. Fitch has maintained the company's partial credit guarantee (PCG) local issuance national rating of 'AA(col)' on RWN. The downgrade reflects Fitch's downward revision of Credivalores' capital and leverage assessment to 'b' from 'b+' due to structural deterioration of its adjusted core metric. The metric had been under pressure for the rating level for several years due to almost null profitability and high appetite for growth. This rating factor is no longer commensurate with the upper limit of the 'b' category. The ratings also reflect Fitch's downward revision of Credivalores' funding and liquidity assessment to 'b' from 'b+' due to its weakened overall funding profile driven by deteriorated investor confidence and increased risk aversion for NBFIs in Latin America. KEY RATING DRIVERS The Negative Watch reflects continued elevated execution risk associated with refinancing the company's $164 million debt maturity on July 27, 2022, particularly as lender sentiment has deteriorated for Latin American NBFI. Fitch expects to review Credivalores' ratings again within the next few weeks as the current funding plans to address upcoming debt maturities are completed. While Fitch may remove the RWN if all goes according to plan, failure or further delays to formally complete such alternatives could also trigger further downgrades of one or more notches. Thus far, the company has raised only 65% of its 2022 net cash flow needs. The remaining funds needed for the bond repayment are expected to be sourced before the end of this month. However, if the company does not secure the funds needed to meet the bond maturity in the expected timeframe, a downgrade to at least the 'CCC' category is likely. The company has indicated that it is in the process of finalizing several secured loan agreements that could cover remaining 2022 cashflow needs and allow for planned managed loan portfolio growth of approximately 10% to 12%, between May and June. Specifically, Credivalores has indicated that they expect to close a two-year USD100 million facility secured by its credit card portfolio by mid-May. A portion of the proceeds from this new facility would be intended to be used to repay the July bond maturity, alongside nearly USD107 million which has already been raised. Among the potential funding providers is Credivalores' largest shareholder, Gramercy, which owns 36.5% of total shares following a recent equity infusion of COP12 billion (USD3 million) with two other shareholders. Credivalores' ratings are supported by its business profile which is characterized for being one of the largests independent non-bank lender in the country., However, the financial profile has weakened, with relatively weak asset quality metrics along with tight capitalization and leverage, weak profitability metrics, as well as heightened funding and refinancing risk continue to pressure the ratings. As of YE2021, Fitch's adjusted tangible leverage metric remained at a high 7.9x, providing more limited loss absorption for the increasing challenges. Fitch expects the company's tangible leverage to remain below 9x despite new debt acquired during the year will be mostly used to refinance existing debt and for double digit forecasted growth, which could be commensurate with this new rating level. Fitch expects Credivalores' asset quality to remain commensurate to its 'B' rating in 2022 due to a mix of lower risk payroll loans combined with the higher risk, but diversified, credit card products. At YE2021, Credivalores' non-performing loan (NPL) over 60 days ratio was 14.9%, higher than the previous year's 13.5%. Profitability metrics remained low as evidenced by the company's pre-tax income to average assets ratio being slightly above break even at 0.2% at YE2021 mainly impacted by decreasing NIM and increasing impairment charges, pressures that have increased over the past three years. During 2021, the company saw a significant growth in its margins aided by lower credit costs. Fitch believes that the company's profitability metrics will strengthen slowly over the medium term as the benefits from investments to improve operational efficiency begin to materialize and revenues benefit from a stronger operating environment materializing, although higher funding costs could undermine this improvement. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: Fitch expects to review the RWN within the next few weeks, coinciding with the company's expected completion and draw from a soon-to-be completed new secured funding facility. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Failure to obtain the secured credit card facility (or a similar or more favorable facility/issuance) in the next three weeks would result in a downgrade to at least 'CCC' category; -- Even if sufficient near-term liquidity solution is obtained, Credivalores' ratings could still be negatively impacted by an increase in tangible leverage, measured as debt/tangible equity adjusted by the temporary effects from assets and derivatives valuation sustainably above 9x or if pre-tax income to average assets turns negative. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The RWN could be removed if Credivalores addresses near-term refinancing risk and improves its funding and liquidity profile. Under such a scenario, Fitch would likely assign a Negative Rating Outlook, reflecting long-term challenges to the company's business profile, profitability, asset quality and leverage; -- While not Fitch's base case, Credivalores' Outlook could be revised to Stable if the company is also able to show a sustained improvement in its profitability and asset quality metrics while reducing pressure on its tangible leverage metrics. A more consistent, conservative and demonstrated liquidity risk management track record could also contribute to stabilization of the Outlook and/or future positive rating momentum. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS SENIOR DEBT The senior unsecured debt rating of 'B'/'RR4' is equalized with Credivalores' IDR, reflecting Fitch's expectation of average recovery prospects in the event of default of these bonds. PARTIAL CREDIT GUARANTEE ISSUANCE The company's PCG local issuance national rating of 'AA(col)'/RWN is now four notches above Credivalores' long-term national rating of 'A-(col)' due to additional recovery provided by the guarantee has recently increased. The incremental notching corresponds to the enhancement received with such partial guarantee, provided by Fondo Nacional de Garantias (FNG), which improves the recovery rate for the bondholder in the event of a default. In accordance with Fitch's criteria, the higher-notching benefit will generally be applied when the country of the national scale being used is rated in the 'BB' category or below on the international scale, and the national rating of the entity benefiting from the PCG is located in the section of the national scale where the additional granularity compared with the international scale is the greatest. The issuance rating incorporates the long-term national rating of Credivalores, the guarantee and the credit quality of the guarantor, including the strategic importance of FNG for the public policies of the National Government and its business model as the largest guarantee provider for small and medium-sized enterprises in the country. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The company's senior unsecured debt is expected to move in line with the Long-Term IDR, although a material increase in the proportion of secured debt could result in the unsecured debt being notched down from the IDR; PCG Issuance -- Although not Fitch's base case assumption due to the RWN in place, the four-notch relativity of the PCG issuance above Credivalores' long-term national-scale rating could be reduced in the event of future increases in the issuer rating or by an improvement in its intrinsic recovery, in accordance with the agency's methodology; -- A downward move in Credivalores' Long-Term National Scale rating would negatively affect the PCG ratings. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The company's senior unsecured debt is expected to move in line with the Long-Term IDR, although a material increase in the proportion of secured debt could result in the unsecured debt being notched down from the IDR. 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. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Bank Says Jan.-Apr. Remittances Topped US$3B ---------------------------------------------------------------- Dominican Today reports that the Central Bank of the Dominican Republic (BCRD) reported that between the months of January and April 2022, the remittances received reached US$3.2 billion. Likewise, it highlights that this amount exceeds by 877.7 million dollars the remittances received in the first four months of 2019, the period prior to the start of the COVID-19 pandemic, and in which the United States did not yet have payment schemes, aid that were implemented after March 2020 and ended in September 2021, according to Dominican Today. The BCRD points out that in April 2022, in particular, remittances totaled 809.8 million dollars, thus marking a figure below the same month in 2021, when they stood at 910.8 million dollars, the report notes. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCRLA reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Fitch Ratings, in December 2021, revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-'. The revision of the Outlook to Stable reflects the narrowing of Dominican Republic's government deficit and financing needs since Fitch's last review resulting in the stabilization of the government debt/GDP ratio, as well as the investment-driven economic momentum, reflected in the faster-than-expected economic recovery in 2021 that Fitch expects to carry into above-potential GDP growth during 2022 and 2023. Standard & Poor's, also in December 2021, revised its outlook on the Dominican Republic to stable from negative. S&P also affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings and its 'B' short-term sovereign credit ratings. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12 to 18 months that will likely stabilize the government's debt burden, despite lack of progress with broader tax reforms, S&P said. A rapid economic recovery from the downturn because of the pandemic should mitigate external and fiscal risks. Moody's affirmed the Dominican Republic's long-term issuer and senior unsecured ratings at Ba3 and maintained the stable outlook in March 2021. DOMINICAN REPUBLIC: IMF Calls for Guaranteeing Return of Inflation ------------------------------------------------------------------ Dominican Today reports that in the short term, policy priorities should seek to ensure the return of the inflation rate to the target range and maintain a downward trajectory in public debt while supporting the vulnerable population against the impact of global shocks. The statement is in the conclusions of the International Monetary Fund (IMF) mission that visited the country for the Article IV 2022 Consultation, which reiterated that the DR economy continued to demonstrate remarkable resilience to global shocks, which was underpinned by appropriate policies including monetary policy support, and agile covid vaccination campaign and a reopening that allowed it to take full advantage of last year's global economic recovery, according to Dominican Today. The mission of the international organization, headed by Esteban Vesperoni, understands that the pace of the monetary policy tightening cycle should depend on the evolution of domestic and external economic indicators to keep inflationary expectations anchored, safeguarding the well-earned credibility of the inflation targeting regime, the report notes. "The fiscal policy response to the impact of global shocks on inflation should continue to rely on temporary measures included in the budget while improving its targeting where feasible. Inclusive fiscal consolidation can ensure the declining trend of public debt, the report relays. Fipetur defines the DR as a world reference in tourism management in times of crisis, the report discloses. He notes that a plan with well-sequenced reforms, some of which are already underway, should foster inclusive growth in the medium term, the report notes. He says there should be a strengthening of policy and regulatory frameworks, tax revenues, and reforms to support growth and progress in social areas, the report says. Support The mission supports reforms to the electricity sector, ensuring reliable electricity supply, reducing fiscal transfers to the industry, and improving the quality of public spending, the report relays. It also supports reforms to the policy framework that seek to promote more efficient public administration, the report notes. "The electricity sector has been a burden on public finances in the past and the Electricity Pact gives the authorities a mandate to improve governance in the electricity sector, create conditions that facilitate investment, and implement reforms to tariffs and the subsidy system, which have the potential to ensure the sustainability of the sector," the mission said, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCRLA reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Fitch Ratings, in December 2021, revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-'. The revision of the Outlook to Stable reflects the narrowing of Dominican Republic's government deficit and financing needs since Fitch's last review resulting in the stabilization of the government debt/GDP ratio, as well as the investment-driven economic momentum, reflected in the faster-than-expected economic recovery in 2021 that Fitch expects to carry into above-potential GDP growth during 2022 and 2023. Standard & Poor's, also in December 2021, revised its outlook on the Dominican Republic to stable from negative. S&P also affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings and its 'B' short-term sovereign credit ratings. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12 to 18 months that will likely stabilize the government's debt burden, despite lack of progress with broader tax reforms, S&P said. A rapid economic recovery from the downturn because of the pandemic should mitigate external and fiscal risks. Moody's affirmed the Dominican Republic's long-term issuer and senior unsecured ratings at Ba3 and maintained the stable outlook in March 2021. ============= E C U A D O R ============= ECUADOR: Pushes Trade With Chile, Mexico, Peru, and Israel ---------------------------------------------------------- Rio Times Online reports that few months ago, the Ecuadorian government announced its intention to sign more than ten trade agreements in the medium term to strengthen its trade policy and improve its trade balance which, although it has positive numbers (US$933 million in January to March 2022), is highly dependent on oil. The non-oil trade balance has been in deficit with the four countries, so the intention is to reverse that reality, according to Rio Times Online. ===================== P U E R T O R I C O ===================== CONDADO ROYAL PALM: Hits Chapter 11 Bankruptcy ---------------------------------------------- Single Asset Real Estate Condado Royal Palm Inc. filed for chapter 11 protection in the District of Puerto Rico. According to court filing, Condado Royal estimates between 1 and 49 unsecured creditors. The petition states that funds will be available to unsecured creditors. A telephonic meeting of creditors under 11 U.S.C. Sec. 341(a) is slated for June 17, 2022 at 9:00 A.M. About Condado Royal Palm Condado Royal Palm, Inc., primarily engaged in renting and leasing real estate properties, filed a petition for Chapter 11 protection (Bankr. D.P.R. Case No. 22-01282) on May 4, 2022, listing $8,300,995 in total assets and $15,493,286 in total liabilities. Jose A. Ramirez de Arellano, president, signed the petition. Judge Mildred Caban Flores oversees the case. Wigberto Lugo Mender, Esq., at Lugo Mender Group, LLC serves as the Debtor's counsel. PUERTO RICO: Fitch Affirms & Withdraws 'RD' Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed and withdrawn the 'D' ratings on the following bonds of the Commonwealth of Puerto Rico: -- Outstanding general obligation bonds; -- Outstanding commonwealth guaranteed bonds of the Public Buildings Authority; -- Outstanding Employees Retirement System (ERS) senior pension funding bonds series 2008A, 2008B, and 2008C. In addition, Fitch has affirmed and withdrawn the commonwealth's Restricted Default ('RD') Issuer Default Rating (IDR). The withdrawal of the ratings is due to the bankruptcy of the rated entity, debt restructuring or issue/tranche default. It follows the Plan of Adjustment becoming effective on March 17, 2022, which includes the mandatory tender and restructuring of outstanding debt. Fitch will no longer provide ratings or analytical coverage for the Commonwealth of Puerto Rico. SECURITY General obligation and guaranteed bonds are secured by the good faith, credit and taxing power of the commonwealth of Puerto Rico. ERS bonds are limited, non-recourse obligations of the pension system, payable from and secured by a pledge of statutorily required employer contributions to the system. ANALYTICAL CONCLUSION The 'D' ratings reflect Puerto Rico's payment default on GO, guaranteed, and ERS bonds. KEY RATING DRIVERS Fitch has withdrawn Puerto Rico's Issuer Default Rating (IDR) and bond ratings. The previous ratings were 'D'. Following the withdrawal of Puerto Rico's ratings, Fitch will no longer provide associated ESG Relevance Scores for the issuer. RATING SENSITIVITIES Rating sensitivities are no longer relevant given the rating withdrawal. 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. ********* 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 * * *