/raid1/www/Hosts/bankrupt/TCRLA_Public/220712.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, July 12, 2022, Vol. 23, No. 132
Headlines
A R G E N T I N A
ARGENTINA: New Economy Minister Takes Office
ARGENTINA: New Economy Minister Vows Continuity Amid Slump
B E R M U D A
APEX STRUCTURED: Moody's Affirms B2 CFR, Outlook Stable
C H I L E
LATAM AIRLINES: Taps Deloitte Tax for Additional Tax Services
C O L O M B I A
COLOMBIA: IDB Loan to Strengthen Participation in Value Chains
E C U A D O R
ECUADOR DPR: Fitch Affirms 'BB-' Rating on Existing 2020-1 Loans
J A M A I C A
EASTERN CARIBBEAN CENTRAL BANK: Incurs EC$49.1 Million Net Loss
M E X I C O
AXTEL SAB: Moody's Cuts CFR to B1, On Review for Further Downgrade
TULUM: Fitch Affirms 'BB' Local Currency Issuer Default Rating
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Groups Say Crime Can Affect Economic Growth
V I R G I N I S L A N D S
THREE ARROWS: Liquidating in BVI, Files Chapter 15 in US
- - - - -
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A R G E N T I N A
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ARGENTINA: New Economy Minister Takes Office
---------------------------------------------
Buenos Aires Times reports that Silvina Batakis assumed office on
Monday as Argentina's new economy minister in an Argentina full of
uncertainties: with one of the world's highest inflation rates and
tough targets to meet from the US$44.5-billion restructuring deal
with the International Monetary Fund are at the top of her
in-tray.
"We are convinced that Argentina's course has to do with the fiscal
management of our accounts, with following the economic program
that the president [Alberto Fernandez] has laid out and with
ensuring that Argentina has more exports and revaluing our
currency," she said in brief comments to the press, delivered
minutes after she was sworn-in, according to Buenos Aires Times.
"I believe in fiscal balance and I think we have to move in that
direction," she emphasized, delivering a brief message that aimed
at reassuring the markets, the report discloses.
The statement failed to deliver calm, however, the report notes.
The peso suffered a sharp depreciation in the informal or parallel
exchange market, jumping from 239 pesos per greenback at the close
to 280, before slowing to around 260, the report relays.
Meanwhile, Argentina's country risk rate, measured by JP Morgan,
soared, the report says.
"The market is made up of real people. I appeal to them to get to
know me a little better," Batakis said in an interview with C5N
channel a few hours after she began work, the report notes.
A career civil servant and a militant in the sector most critical
of the IMF agreement, Batakis must now define the instruments she
will use to tackle the fiscal deficit, the shortage of foreign
currency and rising prices, the report discloses.
The challenges are plentiful.
The IMF Agreement
The government renegotiated this year - with former minister Martin
Guzman at the helm - a new refinancing package with the IMF, which
Congress ratified, the report relays. Under the deal, Argentina's
fiscal deficit must be reduced from three percent of GDP in 2021 to
2.5 percent in 2022, 1.9 percent in 2023 and 0.9 percent in 2024,
the report says.
"The first question the new minister will have to answer is whether
the agreement with the International Monetary Fund is still in
force," said Víctor Beker, director of the Centre for the Study of
the New Economy at the University of Belgrano, the report notes.
"The question is whether there will be a restatement of goals or
whether Argentina is heading towards a break with the IMF," Beker
said, the report discloses.
Tackling Inflation
Argentina has one of the highest inflation rates in the world,
running at 60.7 percent over the last 12 months and there are fears
that price rises could accelerate further, with opposition
lawmakers warning of the potential for hyperinflation, the report
says.
Batakis will have to determine what kind of measures to prioritise:
whether it be a tightening of the Precios Cuidados price-controls
scheme, a voluntary price control mechanism in which the private
sector participates, or greater restrictions on monetary issuance,
the report notes.
"Argentina has had high and sustained inflation for many years. We
cannot attack it with a single instrument," Batakis said, the
report relays.
Fiscal Deficits And Subsidies
To ease the pressure on public finances, Guzman devised a
segmentation plan for electricity and gas bill subsidies so that
only the most disadvantaged sectors would benefit, the report
notes.
The scheme had not yet been implemented and he suffered pushback
from the Kirchnerite wing of the ruling coalition. Batakis said she
would maintain the principle of segmentation, the report relays.
In 2021, energy subsidies accounted for US$11 billion - equivalent
to 2.3 per cent of GDP, the report adds.
International Reserves
Batakis intends to strengthen Argentina's international reserves
and also "plan their use for the good of Argentines - it is not
just a question of the market," the report relays
Gross reserves stand at around US$42.5 billion, the report notes.
But analysts point out that liquid reserves are much lower and also
insufficient for the country's requirements, the report discloses.
"Argentina is not achieving the goal of accumulating international
reserves agreed with the IMF and this generates expectations of
further devaluation or depreciation of the peso," economist Andrés
Wainer told the AFP news agency, the report says.
The outlook for the second half of the year does not look good
either, as the agricultural harvest has already passed and
therefore no more foreign currency is coming in; the increase in
interest rates in the United States - which tends to strengthen the
dollar - is also a factor, added Wainer, 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.
ARGENTINA: New Economy Minister Vows Continuity Amid Slump
----------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that
Argentina's new Economy Minister Silvina Batakis vowed to continue
the government's economic plans, in a bid to stem a market plunge
following a weekend filled with political turmoil in the
crisis-prone nation.
In her first words since taking over for her predecessor Martin
Guzman, who suddenly resigned, Batakis sought to reassure the
public she wouldn't overhaul economic policy, according to
globalinsolvency.com.
"I believe in a balanced budget," Batakis told the press in Buenos
Aires after being sworn in, without taking questions. "We're going
to continue with the economic program."
Argentines, already battling 61% annual inflation, have yet to be
convinced, the report notes.
The country's black market exchange rate, widely used by the public
due to tight capital controls, plunged as much as 15% to a
record-low 280 pesos per dollar, before paring back some losses,
the report relays.
By contrast, the official spot rate dropped 0.4% to 125.97 pesos
per dollar, the report says.
Savers yanked money out of bank accounts with online platforms
posting five minute wait times just to log on, the report
discloses.
Local businesses reported people rushing to stock up on imported
goods, like coffee, fearing the price would jump soon after the
depreciation of the currency, the report says.
Suppliers sent companies notices that previously announced price
increases had been annulled for bigger ones, 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.
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B E R M U D A
=============
APEX STRUCTURED: Moody's Affirms B2 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service ha affirmed the B2 corporate family
rating and B2-PD probability of default rating of Apex Structured
Intermediate Holdings Ltd. ("Apex", or "the group"). Concurrently,
Moody's has assigned a B1 instrument rating to the contemplated
non-fungible $300 million senior secured first-lien term loan
issuance by Apex Group Treasury LLC with maturity in 2028, as well
as affirmed the B1 instrument ratings of the existing outstanding
$1,325 million senior secured first-lien term loan due 2028 issued
by Apex Group Treasury LLC; the EUR745 million senior secured
first-lien term loan due 2028 and the $200 million senior secured
first-lien revolving credit facility due 2026 issued by Apex Group
Treasury Limited. The outlook on all ratings entities remains
stable.
The proceeds of the additional $300 million debt issuance, together
with the $220 million of new preferred equity raised from existing
shareholders, will mainly be used to finance Apex's acquisitions of
Maitland International Holdings plc and MMC Group Holdings Limited
for a combined consideration of around $400 million.
RATINGS RATIONALE
The affirmation of Apex's B2 CFR with stable outlook reflects
Moody's expectation that Apex will be able to reduce its
Moody's-adjusted leverage to around 6.5x by the end of 2023. The
deleveraging is particularly dependent on the successful
integration of Maitland and MMC, as well as the closing and
integration of the GBP1.5 billion acquisition of Sanne announced in
October 2021, as well as the realisation of related synergies.
While Moody's positively notes that over 40% of funds raised for
the two sizeable acquisitions are accounted for by equity
contributions from existing shareholders, and that the strong
operating performance of Apex in 2021 has helped to limit the
re-leveraging impact, the contemplated transaction will lead to a
delay in the deleveraging trajectory towards Moody's expected
leverage level for the rating of 6.5x by nearly one year compared
to Moody's previous forecast. As a consequence, the rating will
continue to be weakly positioned in the current rating category.
B2 CFR further reflects (1) the group's established market position
as one of the largest independent fund services providers globally
with a comprehensive product offering and global footprint, which
will be further improved by the contemplated acquisitions; (2) the
largely recurring revenue streams supported by a sticky and
diversified customer base and strong underlying market
fundamentals; and (3) the group's good profitability levels that
should translate into strong free cash flow generation going
forward.
Conversely, the CFR is constrained by (1) Apex's exposure to
regulatory and legal risk; (2) the elevated financial leverage of
8.1x Moody's-adjusted Debt/EBITDA, based on the year ended December
2021 and pro forma for the contemplated transaction, and high level
of pro forma adjustments to EBITDA; (3) Apex's M&A-driven growth
strategy that could constrain deleveraging potential; and (4) the
integration risk related to the Maitland, MMC and Sanne
acquisitions, such as potential delays in the realisation of
targeted synergies or increased implementation cost, and potential
distraction resulting from the substantial integration causing
delays in the forecasted strong organic growth.
ESG CONSIDERATIONS
Apex's ratings factor in certain governance considerations such as
Apex's ownership structure with Genstar as the majority
shareholder. As it is common for companies that are majority owned
by private equity firms, Apex's financial policy is characterised
by a tolerance for high financial leverage and a debt-funded M&A
driven growth strategy.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that Apex will be
able to sustainably increase its revenue and EBITDA through
continued organic growth and successfully integrate the recent
acquisitions, including the realisation of targeted synergies. The
outlook further assumes that Apex's liquidity remains good,
supported by solid free cash flow generation, and that there will
be no additional large debt-funded acquisitions that lead to
significant re-leveraging.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings are weakly positioned in view of the high leverage,
relatively aggressive financial policy and the substantial
integration to be delivered, as a result of which limited upward
rating pressure is expected. Upward pressure on the rating could
occur if Moody's-adjusted Debt/EBITDA sustainably decreases to
below 5.5x, whilst maintaining its high operating profitability and
substantial free cash flow generation. An upgrade would also
require the company to successfully execute the integration of the
recently closed acquisitions and realise targeted synergies.
Downward pressure on the rating could develop if Apex fails to
reduce its Moody's-adjusted Debt/EBITDA to around 6.5x by 2023,
EBITA margins significantly decrease from current high levels or
free cash flow generation reduces towards zero for a sustained
period of time.
LIQUIDITY PROFILE
Pro forma for the contemplated transaction, Moody's considers
Apex's liquidity profile as good. At closing of the transaction,
pro forma on December 31, 2021, the company has $173 million of
cash on balance sheet available, as well as $129 million that are
considered as restricted for regulatory purposes. The group's
liquidity is supported by its fully undrawn $200 million revolving
credit facility (RCF), pro forma for the transaction. Apex's
liquidity profile further benefits from its good cash generation
ability and Moody's forecasts free cash flow to reach over $150
million in 2023, following an only marginally positive free cash
flow in 2022 due to sizeable one-off costs.
STRUCTURAL CONSIDERATIONS
The company's debt facilities, pro forma for the contemplated
transaction, consist of a first-lien term loan due 2028, divided
into tranches of $1,365 million and EUR745 million, as well as the
incremental $300 million, a pari passu ranking $200 million RCF due
2026 and a $455 million second-lien term loan due 2029.
The B1 rating on the first-lien senior secured facilities is one
notch above the B2 CFR and reflects the priority position of these
facilities ahead of the second-lien facility and non-debt
liabilities consisting mainly of leases, earn-outs and trade
payables at the operating companies.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CORPORATE PROFILE
Apex is one of the largest independent providers of fund
administration services, financial and corporate solutions, founded
in 2003 by its current CEO and with headquarters in Bermuda. The
group is a global operator with presence in 50 countries across the
world, serving more than 7,600 clients with over $2.2 trillion of
assets on its platforms. Apex is majority-owned by private equity
firm Genstar, with minority shareholders TA Associates, founder
Peter Hughes, Mubadala and Carlyle holding most the remaining
equity. During the fiscal year ended December 2021, the group
generated pro forma revenue of around $1.2 billion.
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C H I L E
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LATAM AIRLINES: Taps Deloitte Tax for Additional Tax Services
-------------------------------------------------------------
LATAM Airlines Group S.A. and its affiliates obtained an order from
the U.S. Bankruptcy Court for the Southern District of New York
authorizing Deloitte Tax LLP to provide additional tax services.
The firm's supplemental engagements include:
(a) Transfer Pricing Work Order. Assist the Debtors by providing
transfer pricing services to satisfy the transfer pricing
document requirements of Debtor affiliate Professional
Airline
Services, Inc.
(b) Tax Form Engagement Letter. Prepare and file, on behalf of
the
Debtors, the information reporting Form 1099-MISC/NEC, Form
1042 and Form 1042-S for the Debtors for the 2021 tax year.
(c) 2022 Tax Advisory Engagement Letter. Provide tax services
related to federal, foreign, state and local tax matters, as
requested by the Debtors, through Dec. 31, 2022.
(d) 2021 Tax Compliance Engagement Letter. Assist the Debtors
by preparing the 2021 federal, state and local income tax
returns.
The firm will be paid at these rates:
* Pursuant to the Transfer Pricing Work Order, Deloitte Tax's
fees are as follows:
Partner/Principal/
Managing Director $650 - $670
Sr. Manager $550
Manager $475
Senior $380
Staff $295
* For the preparation of Form 1099-MISC/NEC, Deloitte Tax will
bill the Debtors at a rate of $55 per form.
* For the preparation of Form 1042 and Form 1042-S, Deloitte
Tax's fees are as follows:
Partner/Principal/
Managing Director $450 - $475
Sr. Manager $355
Manager $275
Senior $195
Associate $155
* Pursuant to the 2022 Tax Advisory Engagement Letter, Deloitte
Tax's fees are as follows:
Partner/Principal/
Managing Director $650 - $670
Sr. Manager $550
Manager $475
Senior $380
Staff $295
* Pursuant to the 2021 Tax Compliance Engagement Letter,
Deloitte Taxes fees will be $126,365.
* Deloitte Tax will charge $900 for each additional Form 5472
prepared.
* Deloitte Tax will charge $150 for each additional monthly
return, $225 for each additional quarterly return and $600
for each additional annual return, and $600 for each
additional personal property tax return.
Deloitte Tax is a "disinterested person" as that phrase is defined
in Section 101(14) of the Bankruptcy Code, as modified by Section
1107(b) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Matthew Smith
Deloitte Tax LLP
37 Ottawa Avenue NW, Suite 600
Grand Rapids, MI 49503
Phone: (404) 942-6858
Email: matthesmith@deloitte.com
About LATAM Airlines Group
LATAM Airlines Group S.A. 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 Airlines Group 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 general
bankruptcy counsel; FTI Consulting as restructuring advisor;
Togut,
Segal & Segal LLP and Claro & Cia in Chile as special counsel;
PricewaterhouseCoopers Consultores Auditores SpA as independent
auditors; and Larrain Vial Servicios Profesionales Limitada as
Latin America investment banker. Prime Clerk LLC is the claims
agent.
The U.S. Trustee for Region 2 appointed a committee of unsecured
creditors on June 5, 2020. The committee is represented in the
Debtors' bankruptcy cases by Dechert, LLP. The committee also
tapped Morales & Besa LTDA to provide advice on matters related to
the Chilean and cross-border insolvency law.
===============
C O L O M B I A
===============
COLOMBIA: IDB Loan to Strengthen Participation in Value Chains
--------------------------------------------------------------
The Inter-American Development Bank (IDB) will promote a more
competitive and inclusive integration of Colombia's economy into
global and regional value chains, benefiting especially micro,
small and medium-sized enterprises (MSMEs) and women
entrepreneurs.
Although the country's economy had a solid recovery in 2021, it
still faces major fiscal and employment challenges as well as
inflationary pressures. In this context, the reconfiguration of
global value chains (GVCs), which accelerated during the Covid-19
pandemic, paves the way for Colombia to leverage its foreign sector
and create long-term sustainable growth conditions.
The program includes a series of measures to improve the business
environment to attract productive investments and facilitate
foreign trade. It also aims to boost MSMEs' productive and export
capabilities so they can successfully participate in the
internationalization process and maximize their impact on
employment and the local economy.
The lending program reflects Colombia's commitment with the
consolidation of a competitive legal framework sustained over time
so that its production sector can compete in the global market,
creating quality jobs, boosting productivity and fostering
sustained economic growth.
The loan has a potential to benefit 900 new and current investors,
more than 41,000 companies involved in foreign trade operations,
and some 171,000 MSMEs with export potential. The loan program
reflects Colombia's potential to compete in the global economy,
creating quality jobs and more sustainable growth.
A 10 percent increase in a country's participation in GVCs
translates into a 1.6 percent rise in labor productivity and up to
a 14 percent increase in per capita GDP. Companies participating in
GVCs typically adopt and transfer knowhow and technology, require
better qualified personnel, pay better wages and hire more women.
Colombian firms already participating in GVCs are 38 percent more
productive than other exporting businesses not participating in
these value chains.
Relocating global value chains to the hemisphere is one of the top
priorities of Vision 2025, the Bank's roadmap for the region's
economic recovery.
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E C U A D O R
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ECUADOR DPR: Fitch Affirms 'BB-' Rating on Existing 2020-1 Loans
----------------------------------------------------------------
Fitch Ratings has affirmed the existing series 2020-1 loans
originated by Ecuador DPR Funding at 'BB-' and expects to rate the
$300 million series 2022-1 notes to be issued 'BB-(EXP)'. The
Rating Outlook is Stable.
DEBT RATING PRIOR
---- ------ -----
Ecuador DPR Funding
2020-1 LT BB- Affirmed BB-
2022-1 LT BB-(EXP) Expected Rating
TRANSACTION SUMMARY
The future flow program is backed by existing and future U.S.
dollar-denominated diversified payment rights (DPRs) originated by
Banco Pichincha C.A. (BP) in Ecuador. The majority of DPRs are
processed by designated depository banks (DDBs) that have signed
acknowledgement agreements (AAs), irrevocably obligating them to
make payments to an account controlled by the transaction trustee.
Upon issuance of the proposed series 2022-1 notes, the total
program size will be approximately $425.0 million.
Fitch's ratings address timely payment of interest and principal on
a quarterly basis.
KEY RATING DRIVERS
Originator's Credit Quality: Banco Pichincha C.A. has a Long-Term
Issuer Default Rating (IDR) of 'B-'/Stable. The bank's ratings are
highly influenced by its operating environment and were reviewed by
Fitch on Dec. 6, 2021. Fitch affirmed the sovereign's IDR at
'B-'/Stable on Aug. 31, 2021. The Stable Outlook assigned to BP
reflects Fitch's operating environment assessment for the
Ecuadorian banking system as Fitch expects a favorable environment
for economic and credit growth, as well as for the Ecuadorian
banks' financial performance recovery.
Going Concern Assessment: Fitch uses a Going Concern Assessment
(GCA) score to gauge the likelihood that the originator of a future
flow transaction will stay in operation through the transaction's
life. Fitch assigns a GCA score of 'GC1' to BP based on the bank's
systemic importance and standing as the largest bank in the
Ecuadorian banking system in terms of assets and deposits. The
score allows for a maximum of six notches above the Local Currency
(LC) IDR of the originator; however, additional factors limit the
maximum uplift.
Factors Limit Notching Uplift from LC IDR: The 'GC1' score allows
for a maximum six-notch rating uplift from the bank's IDR, pursuant
to Fitch's future flow methodology. However, uplift is tempered to
three notches from BP's IDR given certain factors including no
lender of last resort in Ecuador and high future flow debt relative
to BP's balance sheet.
High Future Flow Debt: Fitch estimates future flow debt will
represent 3.5% of BP's total funding and 43.9% of non-deposit
funding based on March 2022 nonconsolidated financials and
adjusting to include the proposed new issuance of $300 million and
the current outstanding balance on the program today ($125.0
million).
Fitch does not allow the maximum uplift for originators that have
future flow debt greater than 30% of the overall non-deposit
funding; nevertheless, given the benefits of the proposed structure
and quality of flows, the agency allows for some differentiation
(three notches) from BP's Long-Term LC IDR. Fitch is comfortable
with this level at the assigned rating and expects these levels to
continue to be high given the program remains a main source of
funding for the bank.
Coverage Levels Commensurate with Rating: The proposed notes are
expected to have an interest-only period of two years with the
first principal payment not expected to be due until September
2024. When considering average rolling quarterly DDB flows over the
past five years (May 2017-April 2022) and the maximum periodic debt
service over the life of the program, including the proposed new
issuance amount of $300 million, Fitch's projected quarterly debt
service coverage ratio (DSCR) is 63.7x.
The program can withstand a reduction in flows of approximately
98.5% and still cover the maximum quarterly debt service
obligation. Nevertheless, Fitch will continue to monitor the impact
of macroeconomic pressures on the performance of the flows as this
could potentially affect the assigned rating.
No Lender of Last Resort: Ecuador is a dollarized economy without a
true lender of last resort. While certain mechanisms are in place
to help fend off a banking system crisis, this limits the notching
differential of the transaction.
Reduced Redirection/Diversion Risk: The structure mitigates certain
sovereign risks by collecting cash flows offshore until collection
of the periodic debt service amount, allowing the transaction to be
rated over the sovereign country ceiling. Fitch believes payment
diversion risk is partially mitigated by the AAs signed by the five
correspondent banks processing the vast majority of U.S. dollar DPR
flows originating in the U.S.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The transaction ratings are sensitive to changes in the credit
quality of BP. A deterioration of the credit quality of BP by
one notch could pose a further constraint to the rating of the
transaction from its current level;
-- The transaction ratings are sensitive to the ability of the
DPR business line to continue operating, as reflected by the
GCA score, and a change in Fitch's view on the bank's GCA
score can lead to a change in the transaction's rating.
Additionally, the transaction rating is sensitive to the
performance of the securitized business line. The expected
quarterly DSCR is approximately 63.7x, and should therefore be
able to withstand a significant decline in cash flows in the
absence of other issues;
-- However, significant further declines in flows could lead to a
negative rating action. This new issuance will also result in
high future flow debt relative to BP's balance sheet. If these
ratios were to increase further this could also lead to a
negative rating action. Any changes in these variables will be
analyzed in a rating committee to assess the possible impact
on the transaction ratings;
-- No company is immune to the economic and political conditions
of its home country. Political risks and the potential for
sovereign interference may increase as a sovereign's rating is
downgraded. However, the underlying structure and transaction
enhancements mitigate these risks to a level consistent with
the assigned rating.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The main constraint to the program rating is the originator's
rating and BP's operating environment. If upgraded, Fitch will
consider whether the same uplift could be maintained or if it
should be further tempered in accordance with criteria;
-- Fitch has revised global economic outlook forecasts as a
result of the Ukraine war and related economic sanctions.
Downside risks have increased and Fitch has published an
assessment of the potential rating and asset performance
impact of a plausible, but worse than expected, adverse
stagflation scenario on Fitch's major SF and CVB subsectors
(What a Stagflation Scenario Would Mean for Global Structured
Finance). Fitch expects LatAm's Global Cross-Sector's
financial future flow transactions in the assumed adverse
scenario to experience a "Virtually No Impact" indicating a
low risk for rating changes.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
=============
J A M A I C A
=============
EASTERN CARIBBEAN CENTRAL BANK: Incurs EC$49.1 Million Net Loss
---------------------------------------------------------------
RJR News reports that the Eastern Caribbean Central Bank (ECCB)
recorded a net loss of EC$49.1 million for the year ended March 31
compared to a net profit of EC$25.2 million last year.
The bank said this was largely driven by losses on foreign
investment securities, combined with a decline in interest income
earned on foreign reserve assets, as interest rates globally
remained at historically low levels over the year, according to RJR
News.
ECCB Governor Timothy Antoine said despite the weak global
financial environment which resulted in the first loss-making year
in six years, the Bank continues to manage the reserves prudently
thereby maintaining the strength and stability of the EC dollar,
the report notes.
===========
M E X I C O
===========
AXTEL SAB: Moody's Cuts CFR to B1, On Review for Further Downgrade
------------------------------------------------------------------
Moody's Investors Service downgraded Axtel, S.A.B. de C.V.
corporate family rating and senior unsecured rating to B1 from Ba3
given weaker credit profile and higher refinancing risk.
Simultaneously, Moody's placed the ratings under review for further
downgrade.
Downgrades:
Issuer: Axtel, S.A.B. de C.V.
Corporate Family Rating, Downgraded to B1 from Ba3; Placed Under
Review for further Downgrade
Senior Unsecured Regular Bond/Debenture, Downgraded to B1 from
Ba3; Placed Under Review for further Downgrade
Outlook Actions:
Issuer: Axtel, S.A.B. de C.V.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE/FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The Axtel's ratings downgrade was based on i) the company's
weakening credit profile and ii) the announced spin-off from parent
company Alfa, S.A.B. de C.V. (Alfa, Baa3 stable), given its
inability to sell Axtel as planned, which in Moody's view reflect
low confidence on Axtel's business and operating prospects. These
factors increase refinancing risk for Axtel's 2024 notes. Moody's
believes that the negative operating trend will not revert in the
next 12-24 months given the prevalence of an austerity stand from
the Mexican government, continued weakness on the overall Mexican
economy, tighter liquidity available in the debt capital markets
and cost inflation pressures that will limit Axtel's ability to
deleverage below 4x.
Governance is a key consideration for initial rating actions.
Considerations include that following the spin-off from Alfa, Axtel
will maintain the same shareholders, management and board.
During the review, Moody's will consider Axtel's plans to revert
the negative operating trend and secure sources to timely refinance
the global notes due 2024.
Alfa recently announced that it will hold an extraordinary
shareholders meeting on July 12 to vote on the spin-off of Axtel.
Once approved, Alfa will form a new entity, Controladora Axtel,
that will be listed in the Mexican Stock Exchange and that will
hold Alfa's entire share ownership in Axtel. Following the
spin-off, Axtel will maintain the same shareholders, management and
board. However, the spin-off signals weaker willingness of current
shareholders to support Axtel in case of need and, even if some
form of support continues to be offered, it may not be as strong or
readily available as the one that could be provided by Alfa to its
consolidated subsidiaries. Although Axtel's rating has historically
reflected the company's standalone credit quality, Moody's
considered the qualitative benefits from its majority owner; such
benefits include access to capital markets, which is key as the
2024 debt maturity approaches while operating environment and
liquidity availability has deteriorated.
Axtel's operating performance has deteriorated since 2021 amid a
declining trend in its government business segment, and lower
revenue from enterprise customers due to the coronavirus pandemic.
However, revenue has been negatively affected since 2018, when the
currently ruling party in Mexico took office and its austerity
stand took a toll on most of its service providers. Back then,
Axtel's government related revenues accounted close to 20% of
revenues and declined 13% in 2019. The negative trend continued
and, in 2021, Axtel reported another 33% decline in government
segment revenues, an effect that was no longer offset by the
enterprise sector that saw a more sluggish performance as corporate
clients downsized their budgets amid the coronavirus pandemic. For
the majority of the pandemic Axtel was able to hold to its credit
metrics with leverage ranging 3.3x – 3.4x. However, in the Q4
leverage peaked to 4.0x and was sustained during the Q1 2022.
The weak prospects for the Mexican economy offer limited
opportunities for Axtel to fully recover. Moody's has recently
revised down its growth forecast incorporating higher commodities
prices that contribute to higher inflation in Mexico. For 2022,
Moody's forecast GDP growth at 1.1% and for 2023, to range
2.0%-2.5%. Also an important driver of the slow recovery has been
the weak investment dynamics since 2018 and that will continue.
Although Axtel has been able to sustain other key credit metrics it
has done so though lower capex in absolute terms a trend that
should revert once revenues recover. From 2018 to 2021, capex as
reported declined from MXN1.9 billion to MXN1.5 billion, allowing
Axtel to hold Retained Cash Flow (RCF) to Net Debt above 20% and
EBITDA minus Capex to Interest Expense at 1.3x. In terms of
revenues, capex has been stable ranging 13% - 15%.
Axtel's liquidity is tempered by heightened refinancing risk amid
weak operating performance and lack of external support. As of
March 31, 2022, Axtel's cash on hand of MXN1.5 ($74) million
covered 3.8x the company's short-term obligations. In addition, the
company has committed facilities for up to $70 million, with $40
million currently undrawn. For the 12 months ended March 31, 2022
Axtel's debt-to-EBITDA ratio of 4.0x including Moody's standard
adjustments, up from 3.6x in 2020, and maintained since then
interest coverage ratio of 1.3x, measured as EBITDA minus capital
spending/interest expense.
Factors that could lead to an upgrade
A rating upgrade is unlikely at this point given the review for
downgrade but Moody's could stabilize the rating outlook if there
is strong evidence of operating recovery, specifically with
Revenue recovering towards pre-pandemic MXN12.5 billion
Profitability recovering with Adjusted EBITA margin above 8%
Leverage (adjusted debt/EBITDA) sustained below 3.75x
In order to stabilize the outlook, Axtel should also have a plan to
refinance the 2024 maturity and increase capex in line with revenue
recovery while maintaining
Retained cash flow above 20% of net debt and
(EBITDA - CAPEX) / Interest Expense at least at 1.5x
Factors that could lead to a downgrade
Leverage remaining above 4.0x
Adjusted EBITA margin remaining below 8%
Flat or declining revenue growth
Deteriorating liquidity
Evidence of debt restructuring
Based in Monterrey, Mexico, Axtel, S.A.B. de C.V. (Axtel) is a
Mexican information and communication technology company that
serves the enterprise and government segments with a portfolio of
IT and telecommunication solutions. Axtel's infrastructure includes
a network of more than 47,300 kilometers of fiber. The company is
fully consolidated by Alfa, which holds around 53.9% of the
subsidiary. For the 12 months that ended March 31, 2022, Axtel's
revenue totaled MXN11.0 billion.
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
TULUM: Fitch Affirms 'BB' Local Currency Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has affirmed Tulum's Long-Term Local Currency Issuer
Default Rating at 'BB' and its National Long-Term Rating at
'A+(mex)'. The Rating Outlook is Stable. The standalone credit
profile is assessed at 'bb'.
The rating action considers Fitch's expectations that Tulum will
maintain low debt metrics, with a payback ratio expected of less
than 5x and debt service coverage ratios above 1.4x. The
municipality's rating reflects its 'Weaker' risk profile and 'aa'
debt sustainability under Fitch's rating case scenario. No
asymmetric risks were identified.
KEY RATING DRIVERS
Risk Profile: 'Weaker'
Fitch assesses Tulum's risk profile as 'Weaker' based on a
combination of three 'Midrange' factors and three 'Weaker' factors.
All six factors carry equal weight in the overall assessment.
Relative to international peers, the risk is high that Tulum's
ability to cover debt service with its operating balance may weaken
over the forecast horizon (2022-2026). This could occur either
because of lower-than-expected revenue, expenditure above
expectations or an unanticipated rise in liabilities or
debt-service requirements.
Revenue Robustness: 'Midrange'
Fitch considers Tulum's institutional framework for national
transfers predictable and stable. They also come from a
counterparty rated 'BBB-'. Tulum's total revenues demonstrate
superior performance when compared to the national real GDP growth
with deflated total revenues average annual growth rate of 8.3% vs.
an annual increase of 4.3% in Mexico´s GDP. The municipality's
operating revenue structure is composed of 68.3% taxes and fees and
31.7% transfers. National transfers are a stable source of revenue.
In the last five years the CAGR was 1.5%.
Taxes collected locally represent an important share of the
municipality's revenue structure. This feature is a common
characteristic in Mexican touristic destinations, as they are
highly dynamic in terms of land acquisitions, hotel constructions,
and commercial activities. At YE 2021, taxes represented 44.1% of
total revenue with a18.5% CAGR for the last five years.
Non-earmarked federal transfers have shown a stable trend (CARG for
2017-2021: 1.5%), even considering that for YE 2021, they decreased
by 14.6% (yoy) mainly because the federal stabilization fund and
extraordinary state support to face the coronavirus pandemic's
effects, which increased the amount of transfers received.
Revenue Adjustability: 'Weaker'
Tulum stands out for its tax collection efficiency, with much lower
dependence on federal transfers than other Mexican municipalities.
At YE 2021, own-revenue collection represented 75.2% of total
revenue (65.9% on average in 2017-2021); however, its concentrated
economy in tertiary activities, mainly linked to tourism, poses a
risk relative to peers during an economic recession. Tulum has
limited independent ability to increase taxes or fees given
political approval through the state congress and local council,
limiting its position with international peers.
Expenditure Sustainability: 'Midrange'
Tulum is responsible for moderately countercyclical expenditures
(maintenance and public services) matched by adequate local taxes
and central government transfers to finance these expenses. During
2017-2021, operating revenue outpaced operating expenditure (CAGR
of 14.8% vs 9.6% respectively); operating balances are adequate,
representing 8.7% of operating revenue on average in the last three
years.
The municipality presented a containment in operating expenditure
of 7.5% at YE 2021 and of 13.7% at YE 2020, after an important
increase in 2019 explained by non-recurring items. Fitch will
monitor the performance and management in Opex considering levels
are still above historical patterns and operating balances show
high volatility in the analysis period, that, if maintained in
further reviews, might change the assessment of this KRF to
Weaker.
Expenditure Adjustability: 'Weaker'
The Financial Discipline Law mandates every local and regional
government (LRG) in Mexico must generate sustainable budgetary
balances. The budget balance rule is relatively weak, as LRGs can
report operating balances equal to zero permanently or negative
(under certain assumptions) and still comply with the rule. In
addition, the budget balance rule was put in place in 2018 for
municipalities, with a low track record of application.
Tulum has a weaker expenditure adjustability with no track record
of fiscal rules in place. The current level of capex is at around
13.1% of total expenditure (2019-2021) and could be discretionarily
adjusted or subject to reductions. Salaries, wages and pension
expenditure represents on average 34% of total expenditure for the
same period, highly linked to administrative outlines.
Operating expenditure averaged 86.2% of total expenditure
(2019-2021), a level assessed as weaker considering that in only
one year it was below the established benchmark of 82.5% for
Mexican municipalities. Tulum presents important social needs, with
a 'Low' marginality index, low levels of education and a growth in
population (5-year CARG: 7.4%) and floating population that could
pose a risk to the expenditure structure (growth in touristic
activities, hotels, among others).
Liabilities & Liquidity Robustness: 'Midrange'
Fitch views the national framework for debt and liquidity
management as moderate. The federal financial discipline law in
force (since 2016) has a very recent track record of application
and allows sub-nationals to acquire short-term bank lines for a
limit of up to 6% of their annual revenues and 15% of its
own-revenue for long-term debt.
As of the end of 1Q 2022, Tulum does not register long-term nor
short-term debt, and the municipality shows low appetite for risk.
The last disposal of short-term debt was fully paid YE 2021. The
municipality does not register off balance-sheet risks.
In terms of pension liabilities, Tulum covers its retirees through
operating expenditure partly explained by its recent creation as a
municipality, with a current total workforce of 1,599 employees as
per the most recent figures. No actions are currently considered in
terms of adhering to a state or federal regime.
Liabilities & Liquidity Flexibility: 'Weaker'
Mexican framework provides no emergency liquidity support from
upper tiers. Tulum has a limited liquidity position in terms of
cash to liabilities. At YE 2021, total cash totaled MXN194.6
million and in the last three years it has averaged MXN113.7
million. When compared to its current liabilities, the ratio for YE
2021 was 0.55x (YE 2020: 0.51x), as the ratio is consistently below
1x, the KRF remains assessed as weaker.
Debt Sustainability: 'aa category'
Tulum's debt sustainability score of 'aa' is the result of a low
payback ratio (net adjusted debt /operating balance under Fitch's
rating case) that is expected to remain below 5x until 2026. The
secondary metrics are the debt service coverage ratio (DSCR), which
reaches a minimum of 1.4x in 2024, and a very low fiscal debt
burden (8.8% in 2026).
Our rating case expects new long-term debt to increase MXN91
million in 2022 and MXN40 million of short-term debt in the same
year. Operating balances are expected to recover to historical
levels assuming a slow economic recovery in the following years.
Payback ratios remain below 5.0x and fiscal debt burden still very
low. Coverage ratios will reach a one-time minimum of 1.4x in
2024.
DERIVATION SUMMARY
Tulum´s SCP of 'bb' is derived from a combination of a 'Weaker'
risk profile assessment and debt sustainability metrics assessed at
the 'aa' category under Fitch´s rating case scenario (actual
coverage). The SCP also factors in appropriate rated peers'
positioning. Fitch does not apply any asymmetric risk, given
neutral assessment of management, governance and pension
liabilities. Moreover, no extraordinary support from the upper-tier
government is applied as it is non-existent in the Mexican
subnational framework.
Short-Term Ratings
As of the end of March 2022, Tulum does not hold short-term debt.
National Ratings
Tulum is comparable with its Mexican peers in the 'A+(mex)'
category, since it has a 'Weaker' risk profile. Also, the
municipality present string features such as no short nor long term
debt. Debt metrics remain unchanged and in adequate levels since
last review.
KEY ASSUMPTIONS
Qualitative assumptions:
Risk Profile: 'Weaker'
Revenue Robustness: 'Midrange'
Revenue Adjustability: 'Weaker'
Expenditure Sustainability: 'Midrange'
Expenditure Adjustability: 'Weaker'
Liabilities and Liquidity Robustness: 'Midrange'
Liabilities and Liquidity Flexibility: 'Weaker'
Debt sustainability: 'aa'
Support (Budget Loans): 'N/A'
Support (Ad Hoc): 'N/A'
Asymmetric Risk: 'N/A'
Sovereign Cap: 'BBB-'
Sovereign Floor: 'N/A'
Quantitative assumptions - Issuer Specific
Fitch's rating case is a "through-the-cycle" scenario, which
incorporates a combination of revenue, cost and financial risk
stresses. It is based on 2017-2021 figures and 2022-2026 projected
ratios. The key assumptions for the scenario include:
-- Operating revenue CAGR of 18% 2021-2026;
-- Operating expenditure CAGR of 27.2% for 2021-2026;
-- Variable interest rate (TIIE 28) average of 10.5% for 2022-
2026;
-- Additional long-term debt in 2022 as per the Fiscal Discipline
Law of 15% of available operating revenues, which equals to
MXN131 million;
-- Additional short-term debt in 2022 as the highest historical
disposal, which equals to MXN40 million, with payment in 2024.
Quantitative assumptions - Sovereign Related
-- Operating revenue CAGR of 18% 2021-2026;
-- Operating expenditure CAGR of 27.2% for 2021-2026;
-- Variable interest rate (TIIE 28) average of 10.5% for 2022-
2026;
-- Additional long-term debt in 2022 as per the Fiscal Discipline
Law of 15% of available operating revenues, which equals to
MXN131 million;
-- Additional short-term debt in 2022 as the highest historical
disposal, which equals to MXN40 million, with payment in 2024.
Liquidity and Debt Structure
At YE 2021, Tulum registered the following figures:
Issuer Profile
Fitch classifies Tulum as Type B, as it covers annual debt service
from cash flow. Tulum is one of the 11 municipalities of the state
of Quintana Roo created on May 19, 2008. It has a population of
46,721 inhabitants according to the 2020 census, and its main
economic activities are concentrated in local commercial activities
and tourist services.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Even with a payback ratio below 5x, the rating could be
downgraded if DSCR under Fitch´s rating case scenario were
consistently below 1.5x, which could result from an important
deterioration in the operating balance and long-term debt
disposal;
-- A weaker relative position with peers in the rating level.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- If DSCR are consistently above 2x in the rating case scenario
for the whole forecast period;
-- Improvement relative to position with peers in higher rating
levels;
-- An improvement on any of its KRF, which is currently not
expected by Fitch.
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.
Sources of Information
The principal sources of information used in the analysis are
described in the Applicable Criteria.
Best/Worst Case Rating Scenario
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
DEBT RATING PRIOR
---- ------ -----
Municipio de Tulum LC LT IDR BB Affirmed BB
Natl LT A+(mex) Affirmed A+(mex)
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Groups Say Crime Can Affect Economic Growth
--------------------------------------------------------------
Trinidad Express reports that business groups are expressing grave
concerns over the crime surge, along with the protests that erupted
in East Port of Spain, which they say can result in the stunting of
this country's economic growth.
Chaguanas Chamber of Industry and Commerce president Richie Sookhai
told the Express that the negative impact created by these
scattered demonstrations did not only disrupt communities in the
surrounding environs, but the entire population would have been
impacted either directly or indirectly, according to Trinidad
Express.
Sookhai said the authorities have failed to inspire trust and hope
in various communities throughout the nation, which is evidenced by
various marches and acts of unrest that are being witnessed, the
report notes.
"The Government needs to take proactive and progressive action to
strengthen these institutions. Only then will confidence and trust
be restored," he said, the report relays.
Arguing that situations like the protest directly impact general
economic activity, he said: "For example, airlines are forced to
cancel multiple flights, and goods entering and leaving Port of
Spain port were put on hold, thus creating more strain on the
business community by having to pay additional rental fees, wages,
and transportation costs, the report notes.
"Additionally, these can negatively impact local and foreign
investor confidence. This, coupled with the escalating crime
situation, will only discourage prospective foreign direct
investment and local expansion," the report relays.
Out of Control
The San Juan Business Association (SBJA), in a statement, also said
the association is seriously concerned not only with the escalation
in crime, but the reasons it has been allowed to spiral out of
control, the report discloses.
"This country did not get here overnight, and we cannot get out
overnight. We need a holistic approach to crime fighting, our
institutions are broken and need to be fixed with immediate action,
the report notes.
"Our Police Service cannot do it alone. The Judiciary, National
Security, Office of the Director of Public Prosecutions (DPP),
Attorney General's office, Education, Social Services, Customs and
Immigration all need to step up to the plate and address their
inefficiencies urgently, the report relays.
"The outcome of the inefficiencies in our State agencies could
clearly be seen today with the complete disregard for law and
order," the release added.
And the Greater San Fernando Chamber of Commerce president Kiran
Singh said because of the mayhem hundreds of thousands of dollars
were lost, as business access to Port of Spain literally came to a
halt, the report notes.
"Lives lost can never come back. While we share in the anguish of
the families of the victims (three killed by police), the country
cannot be held to ransom by unlawful activity, the report says.
"Residents' claims of innocent youths losing their lives in a gun
battle remain unsettled. The burden of proof remains with the
Trinidad and Tobago Police Service (TTPS). They must demonstrate
that their actions were warranted. There is a legal channel with
which the families can pursue the matter," Singh said, the report
relays.
He noted that this country is facing tremendous economic
challenges, adding that the solutions are not found by strong
emotional responses from those who vent their frustrations at the
unknowing public where additional suffering occurs at the hands of
the self-appointed few.
"We had banks, Government offices and private sector offices all
close within minutes of the protests, for fear of personal safety.
Where are we going as a country when such a few, and even less,
have been arrested for disturbing the peace, destroying public
property with no regard for accounting for their actions?" Singh
added.
Also expressing concern was Fyzabad Chamber president Angie Jairam,
who said there is urgent need for drastic intervention by security
agencies and other law enforcement bodies in order to quell further
social and economic unrest in T&T, the report relays.
Jairam said the huge increase in murders over the weekend was
worrying, the report discloses.
"Reports of home invasions are on the rise, theft of vehicles,
domestic violence, school violence, and the increase and the abuse
to the elderly, is a sign of total weakness in the security system,
the report says.
"The constant reports on cable theft in various areas with very
little response and support from the security agencies is a typical
example of a breakdown of social and moral values in our country,"
Jairam said, the report notes.
And, the Tobago Business Chamber chairman Martin George, in a
WhatsApp video to the media, said the chamber is very concerned
with the crime problem engulfing the country, the report
discloses.
George said the chamber waited with bated breath to hear what Prime
Minister Dr Keith Rowley had to say about a crime plan at the news
conference, but was left disappointed as Rowley decided to be
combative with reporters, the report relays.
"The conference did not appear to address the pressing issues
facing the nation. Crime is our biggest challenge, and we had hoped
to see more sustainable and sufficiently sound proposals coming
forth. However, no concrete plan was given at the news conference,"
he lamented, the report relays.
George questioned the Prime Minister's statement that crime is a
public health emergency. "How does that present itself as a
solution? You declare crime a public health emergency, but what
does that do? The nation is looking for solutions, not a
meaningless declaration," he added.
George said as safety and security is at risk, so too is economic
growth. "Business persons and citizens are once again saying they
are seeking to migrate as a result of the crime situation, the
report notes.
"We the chamber pledge our support once again to help the
Government come up with proper solutions, but there must be that
vision from this administration to accept the help," he added.
===========================
V I R G I N I S L A N D S
===========================
THREE ARROWS: Liquidating in BVI, Files Chapter 15 in US
--------------------------------------------------------
Three Arrows Capital, Ltd., an investment firm that heavily
invested in cryptocurrency, including Luna, is undergoing
liquidation proceedings in the British Virgin Islands. Its
liquidators have filed for Chapter 15 bankruptcy in the U.S. to
seek recognition of the BVI proceedings.
As of April 2022, the Debtor was reported to have over $3 billion
of assets under its management.
On May 3, 2012, Debtor was incorporated as a Business Company under
the laws of the British Virgin Islands ("BVI"). It was co-founded
by Kyle Davies and Su Zhu. It had three directors: Davies, Zhu, and
Mark James Dubois, a BVI resident. Its sole shareholder owning all
of its "management shares" is Three Arrows Capital Pte. Ltd.
Three Arrows Capital Pte. Ltd. (the direct parent entity of the
Debtor) operated as a regulated fund manager in Singapore until
last year, when it shifted its domicile to the BVI, as part of a
global corporate plan to relocate operations to Dubai. On June 30,
2022, the Monetary Authority of Singapore (the "MAS") issued a
"reprimand" of Three Arrows Capital Pte. Ltd. for providing false
information to the MAS and exceeding the assets under management
for a registered fund management company. Mr. Davies and Mr. Zhu's
current location remains unknown, but they are rumored to have left
Singapore. Teneo's Russell Crumpler, on the liquidators, said in
court filings.
The Debtor was well known in the cryptocurrency industry as a
leading proprietary trading fund. Since Debtor began trading in
cryptocurrency in recent years, it grew into one of the largest and
best known cryptocurrency hedge funds.
The Debtor borrowed digital and fiat currency from multiple lenders
to fund its cryptocurrency investments. A substantial portion of
the Debtor's investment portfolio was comprised of one type of
cryptocurrency called Luna.
In mid-May 2022, Luna lost 99% of its value. Following this
"crash" in the value of Luna, prices of other cryptocurrencies also
experienced further rapid declines, which were in addition to
general downward trends in the cryptocurrency markets that have
been prevalent during 2022.
In the weeks that followed, the Debtor reportedly defaulted on its
obligations to several of its major lenders, many of which
liquidated the Debtor's positions. By mid-June 2022, the Debtor
was rumored to be facing more than $400 million in liquidations.
Later that month, some of the Debtor's known creditors publicly
acknowledged that the Debtor had failed to repay hundreds of
millions of loaned assets, including one creditor who publicly
stated Debtor owed it the equivalent of $675 million in
cryptocurrencies, and that it planned to pursue recovery against
the Debtor.
One of the Debtor's largest known creditors initiated arbitration
against the Debtor seeking repayment of amounts loaned and
provisional relief on an emergency basis with respect to the
Debtor's remaining assets, but has agreed to temporarily stay those
proceedings.
With many creditors seeking to enforce their rights to collect on
the Debtor's outstanding debt obligations, the risk increased that
the Debtor would dissipate it assets without consideration of each
individual lender's ability to recoup its losses.
On June 24, 2022, one of the Debtor's many creditors -- DRB Panama
Inc. -- filed an application to appoint joint provisional
liquidators -- and thereafter, full liquidators -- in the Eastern
Caribbean Supreme Court in the High Court of Justice (Commercial
Division) located in BVI (the "BVI Commercial Court").
Subsequently, on June 27, 2022, the Debtor filed its own
application for the appointment of joint liquidators before the BVI
Commercial Court, and requested that the application be heard
urgently on an ex parte basis. Despite seeking the appointment of
joint liquidators through its own petition, DRB did not oppose the
Debtor's request. The Debtor's application was assigned claim
number BVIHC(COM)2022/0119.
Following a hearing on June 29, Justice Jack then formally
appointed joint liquidators of the Debtor in the matter (also
referred to as the "BVI Proceeding"), with the power to act jointly
or severally on behalf of Debtor of all matters relating to the
winding up of its business.
The BVI Insolvency Act and the BVI Proceeding encompass all of the
Debtor's assets worldwide. Upon commencement of a liquidation, no
proceedings may be commenced against the entity or steps taken to
enforce any right over the entity's assets without the BVI Court's
permission, save in respect of secured creditors.
The liquidators have filed for Chapter 15 bankruptcy in the U.S. to
seek U.S. recognition of the BVI liquidation and stop creditors
from exercise self-help remedies in the United States and
elsewhere, in contravention of the BVI Commercial Court's order.
About Three Arrows Capital
Three Arrows Capital Ltd. was an investment firm engaged in
short-term opportunities trading, and is heavily invested in
cryptocurrency, funded through borrowings.
As of April 2022, the Debtor was reported to have over $3 billion
of assets under its management.
Three Arrows Capital Ltd. was incorporated as a business company
under the laws of the British Virgin Islands. Its sole shareholder
owning all of its "management shares" is Three Arrows Capital Pte.
Ltd., which previously operated as a regulated fund manager in
Singapore until 2021, when it shifted its domicile to the BVI, as
part of a global corporate plan to relocate operations to Dubai.
The Debtor borrowed digital and fiat currency from multiple lenders
to fund its cryptocurrency investments. After cryptocurrency lost
99% of its value, and then prices of other cryptocurrencies had
rapid declines, the Debtor reportedly defaulted on its
obligations.
On June 24, 2022, one of the Debtor's many creditors -- DRB Panama
Inc. -- filed an application to appoint joint provisional
liquidators -- and thereafter, full Liquidators -- in the Eastern
Caribbean Supreme Court in the High Court of Justice (Commercial
Division) located in BVI. The application was assigned claim number
BVIHCOM2022/0117.
Subsequently, on June 27, 2022, the Debtor filed its own
application for the appointment of joint liquidators before the BVI
Commercial Court.
On June 29, 2022, the Honorable Mr. Justice Jack of the BVI
Commercial Court appointed Russell Crumpler and Christopher Farmer
of Teneo (BVI) Limited as joint liquidators of Three Arrows Capital
Ltd.
On July 1, 2022, liquidators of Three Arrows Capital filed a
Chapter 15 bankruptcy in the U.S. (Bankr. S.D.N.Y. Case No.
22-10920) to seek recognition of the BVI proceedings. Judge Martin
Glenn is the case judge. Latham & Watkins, led by Adam J. Goldberg
is counsel in the U.S. case.
The law firm of Ogier, led by Grant Carroll, is advising the
liquidators in the BVI proceedings.
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