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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
Thursday, July 28, 2022, Vol. 23, No. 144
Headlines
A R G E N T I N A
ARGENTINA: Black-Market Peso Hits Record as Crisis Mounts
B R A Z I L
BRAZIL: Sao Paulo Has No Money to Celebrate Street Carnival
C U B A
CUBA: Reports Economic Growth of 10.9% in Q1FY22
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Cost to Formalize Firms is Lowest in LatAm
DOMINICAN REPUBLIC: Seeks to Reduce Unemployment & Inflation Rates
J A M A I C A
JAMAICA: Spending on Imports Up, Export Earnings Decline
M E X I C O
CREDITO REAL S.A.B.: Chapter 15 Case Summary
P U E R T O R I C O
PUERTO RICO: 1st Circuit Affirms Takings Ruling in Bankruptcy Plan
- - - - -
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A R G E N T I N A
=================
ARGENTINA: Black-Market Peso Hits Record as Crisis Mounts
---------------------------------------------------------
Buenos Aires Times report that the unofficial Argentine peso
dropped to a historic low, exacerbating the crisis provoked by the
resignation of former Economy minister Martin Guzman earlier this
month.
The nation's black market exchange rate, known locally as the
"dolar blue," topped 300 pesos per dollar on July 19, according to
the website Dolarhoy.com, notes Buenos Aires Times.
The contado con liquidacion parallel but legal exchange rate,
derived from buying international shares locally and selling them
abroad, advanced even further to 308 pesos per dollar, also a
record, the report relays.
The drop of the parallel exchange rate pushes the difference with
the official exchange rate to 137 percent, the report discloses.
The gap has been around or beyond 125 percent for eight consecutive
days, the longest streak since hyperinflation crippled the
Argentine economy in 1989-90, according to Portfolio Person
Inversiones (PPI), a local broker, the report notes.
"It should be noted that during the financial turbulence of October
2020, the gap was maintained for only three days above this
threshold, and later it was decompressed by a fiscal and monetary
package launched by then minister Martin Guzmán," PPI analysts led
by Joaquin Bagues wrote in a memo to clients. The new Economy
Minister Silvina Batakis, "does not appear to have the political
backing to implement similar measures in the current scenario."
The growing gap only adds fuel to the chorus of economists,
investors and operators calling on the government to devalue the
currency in order to reduce the imbalance between the official and
parallel exchange rates, the report discloses. Argentines are
already dealing with the prospect of 90 percent inflation by the
end of the year after the departure of the economy minister
triggered overnight price rises, the report relays.
Argentina, which devalues the official peso daily through a system
of "crawling pegs," allowed it to depreciate at the fastest pace of
the Alberto Fernández administration but continued to rule out the
possibility of a one-off devaluation, the report notes.
"The possibility of a one-off devaluation has increased
considerably," wrote PPI, "however, we believe that the government
will find a way to avoid at all costs a sudden devaluation," the
report relays.
About Argentina
Argentina is a country located mostly in the southern half ofSouth
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.
Last March 25, 2022, Argentina finalized agreement with the
IMF for a new USD44 billion Extended Funding Facility (EFF)
intended to fund USD40 billion in looming repayments of the
defunct Stand-By Arrangement (SBA), with an extra USD4 billion in
up-front net financing. This has averted the risk of a default to
the IMF and is facilitating a parallel rescheduling of Paris Club
debt.
As reported by The Troubled Company Reporter - Latin America on
July 19, 2022, Fitch Ratings placed Argentina's Long-Term
ForeignCurrency Issuer Default Rating (IDR) and Long-Term Local
CurrencyIDR Under Criteria Observation (UCO) following the
conversion of the agency's Exposure Draft: Sovereign Rating
Criteria to final criteria. The UCO assignment indicates that
ratings may change asa direct result of the final criteria. It does
not indicate a change in the underlying credit profile, nor does
it affect existing Rating Outlooks.
Last April 14, 2022, Fitch Ratings affirmed Argentina's
Long-TermForeign and Local Currency Issuer Default Ratings (IDR) at
'CCC'.Fitch said Argentina's 'CCC' ratings reflect weak external
liquidity and pronounced macroeconomic imbalances that undermine
debt repayment capacity, and uncertainty regarding how much
progress can be made on these issues under a new IMF program.
Fitch added that it is uncertain whether the EFF will be a strong
anchor for macroeconomic stabilization. Its policy requirements are
fairly unambitious relative to other IMF programs and in light of
the economy's deep imbalances, but it faces heightened risk
nonetheless from weak political support and spill-overs from the
Russia-Ukraine war, says Fitch.
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.
DBRS has also confirmed Argentina's Long-Term Foreign Currency
Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at
CCC (high) on July 21, 2022.
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B R A Z I L
===========
BRAZIL: Sao Paulo Has No Money to Celebrate Street Carnival
-----------------------------------------------------------
Rio Times Online reports that in a statement, the authorities of
Sao Paulo, the wealthiest city in Brazil, mentioned that two
tenders were held to find sponsors for the city's festival, but
there were no interested parties.
One of the tenders was held on June 17, and the minimum bid of
BRL10 (US$1.8) million was for 300 blocks, according to Rio Times
Online. Another tender worth BRL6 million was issued for 216
organizations, the report notes. "In both cases, however, there
was no interest from private companies to finance the event," he
said, the report relays.
According to the city administration, the measure is due to a lack
of sponsors, the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Jair Bolsonaro is the current president, having
been sworn in on Jan. 1, 2019.
As reported in the Troubled Company Reporter-Latin America on
July 18, 2022, Fitch Ratings has affirmed Brazil's Long-Term
Foreign Currency Issuer Default Rating at 'BB-' and revised the
Rating Outlook to Stable from Negative.
On June 17, 2022, S&P Global Ratings affirmed its 'BB-/B' long- and
short-term foreign and local currency sovereign credit ratings on
Brazil.
Moody's Investors Service also affirmed on April 15, 2022, Brazil's
long-term Ba2 issuer ratings and senior unsecured bond ratings,
(P)Ba2 senior unsecured shelf ratings, and maintained the
stable outlook.
=======
C U B A
=======
CUBA: Reports Economic Growth of 10.9% in Q1FY22
------------------------------------------------
Rio Times Online reports that Cuba recorded a growth of 10.9
percent in the first quarter of this year compared to the same
period in 2021, Cuban Deputy Prime Minister and Economy Minister
Alejandro Gil said.
"It is a great rate, but it contrasts with the first quarter of
2021 in which we were practically paralyzed," the senior official
said during his speech to the National Assembly of People's Power
(unicameral parliament), according to Rio Times Online.
The minister announced that as part of the measures to revive the
economy, the Cuban government would establish a foreign exchange
market for the population, the report notes.
Cuban Deputy Prime Minister and Economy Minister Alejandro Gil
pointed out that Cuba is sticking to its projections of achieving
growth of around 4 percent by the end of 2022, describing the
energy situation in the country as "complex" that slows down the
functioning of the economy, the report adds.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Cost to Formalize Firms is Lowest in LatAm
--------------------------------------------------------------
Dominican Today reports that according to figures from the World
Bank Group, the average cost of formalizing a business in Latin
America is US$652. In contrast, in the Dominican Republic, the
figure is less than half, and US$233 is needed to start a micro,
small and medium-sized enterprise (MSME).
According to Encuesta Nacional de Hogares de Propositos Multiples,
there are almost 1.5 million MSMEs in the Dominican Republic; they
represent 98% of the total number of companies and generate up to
two million jobs that contribute 38.6% of the nation's GDP, the
report notes.
Likewise, 46.7% of these companies belong to the commerce sector,
followed by the services sector with 38.4% and the industry sector
with 14.9%. The traditional activities in which they are engaged
are stores and grocery stores, beauty salons and barbershops,
textiles and footwear, restaurants, bars and canteens, and repair
of personal effects, according to Dominican Today.
Haydee Cabrera, strategic leader of Alegra.com, the accounting,
administration, and electronic invoicing platform for MSMEs,
explained that opening a business in the Dominican Republic, as in
most Latin American countries, involves significant work, both
financially and in terms of time and effort, registration,
administrative procedures, investment, etc., as well as being
prepared for possible external events such as uncertainty and
political instability, the report notes.
Before starting the procedures, he explained that the type of
company to be created must be identified and then proceed to
register the Commercial Name and the legal documents, the report
relays.
Cabrera urged the companies to keep an orderly accounting to manage
their finances in the best way, the report discloses.
Cabrera pointed out that they recommend to entrepreneurs:
"Complying with the steps before the formation of a company is as
necessary as its correct management and administration, the report
says. Having a strategic vision and tools that allow the business
to be run in order, controlling income and expenses, is the key to
guaranteeing a return on the money invested in the company," the
report discloses.
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: Seeks to Reduce Unemployment & Inflation Rates
------------------------------------------------------------------
Dominican Today reports that the Minister of Economy, Planning, and
Development, Pavel Ernesto Isa Contreras, outlined the challenges
facing the Dominican Republic in the context of the post-pandemic
recovery of productive activity, which he cited: reducing the
unemployment rate, increasing formal employment, lowering inflation
and reducing the poverty rate.
Isa Contreras described the factors contributing to the economy's
recovery in 2021, according to Dominican Today. In this sense, he
pointed out that 61% of last year's economic growth was explained
by gross capital formation, and more than 95% is private
investment, the report notes.
He highlighted that the investment coefficient (gross capital
formation/GDP) remained above 30% throughout 2021. He indicated
that final consumption explains 38% of real economic growth, half
of the 2019-201 contribution, the report discloses.
The official was speaking on the subject while giving a conference
on the economic prospects of the Dominican Republic for the second
half of 2022, organized by the Chamber of Commerce and Production
of La Vega and the Ministry Of Economy Planning and Development,
according to a release, the report notes.
Irlonca Tavarez, president of the Chamber, offered the words of
welcome and introduction to the economist's participation, the
report relays.
"As the Chamber of Commerce we feel committed to put on the table
the issues that are crucial for our development. One of the
actions that link our strategic axes for the integration and
productive activation of La Vega is precisely the business
luncheon," said Tavarez, the report discloses.
The activity, which brought together representatives of the Vega
business community, was attended by Kelvin Cruz, mayor of the
municipality of La Vega, Luisa de La Mota, provincial governor,
Senator Ramon Rogelio Genao, Vladimir Viloria, president of the
Board of Coraavega, among others, 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.
=============
J A M A I C A
=============
JAMAICA: Spending on Imports Up, Export Earnings Decline
--------------------------------------------------------
RJR News reports that Jamaicans spent more money on imports during
the first quarter of this year, when compared to the corresponding
period last year.
The Statistical Institute of Jamaica (STATIN) says expenditure on
goods during January to March increased by 38.7 per cent, according
to RJR News.
STATIN's Director General, Carol Coy, revealed that total imports
during the period under review were valued at US$1.826.3 billion,
significantly up from the $1.316.9 billion spent during the
corresponding period in 2021, the report relays.
This increase, she said, was primarily due to "higher imports of
fuel and lubricants, raw material, intermediate goods and consumer
goods," the report notes.
These items increased by 42.1 per cent, 41.1 per cent, and 42.1 per
cent, she said, the report discloses.
Earnings
Jamaica earned 5.5 per cent per cent less from exports during the
January to March quarter, STATIN reported, due largely to a 57.8
per cent decline in exports from the mining & quarrying sector, the
report says.
In total, the country earned US$290.5 million from exports during
the quarter, with domestic exports accounting for 85.3 per cent of
that, the report adds.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
===========
M E X I C O
===========
CREDITO REAL S.A.B.: Chapter 15 Case Summary
--------------------------------------------
Chapter 15 Debtor: Credito Real, S.A.B. de C.V., SOFOM, E.N.R.
Av. Insurgentes Sur, No. 730, 20th Floor
Col. Del Valle Norte, Alcadia Benito Juarez
Mexico City, 03103
Mexico
Business Description: The Chapter 15 Debtor is a publicly-traded
entity with variable capital (Sociedad
Anonima Bursatil de Capital Variable or
S.A.B. de C.V.) and unregulated multiple-
purpose financial entity organized in
Mexico under the Mexican Corporations Law,
the Ley General de Organizaciones y
Actividades Auxiliares del Credito, and the
Ley del Mercado de Valores.
Chapter 15
Petition Date: July 14, 2022
Court: United States Bankruptcy Court
District of Delaware
Case No.: 22-10630
Judge: Hon. John T. Dorsey
Foreign Representative: Robert Wagstaff
600 Brickell Avenue, Suite 2550
Miami, FL 33131
United States of America
Foreign Proceeding: Mexican Liquidation Proceeding
(Case No. 691/2022) pending in the 52nd
Civil State Court of Mexico City
Foreign
Representative's
Counsel: John H. Knight, Esq
RICHARDS LAYTON & FINGER, P.A.
One Rodney Square 920 North King Street
Wilmington, DE 19801
Tel: (302) 651-7700
Email: knight@rlf.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/J5FTIDY/Credito_Real_SAB_de_CV_SOFOM_ENR__debke-22-10630__0001.0.pdf?mcid=tGE4TAMA
=====================
P U E R T O R I C O
=====================
PUERTO RICO: 1st Circuit Affirms Takings Ruling in Bankruptcy Plan
------------------------------------------------------------------
Vince Sullivan of Law360 reports that the First Circuit has
affirmed the confirmation of Puerto Rico's bankruptcy plan,
saying the judge who issued the order was right to require the
commonwealth to provide just compensation for eminent domain
claims to comply with the Fifth Amendment's takings clause.
In the July 18, 2022, opinion, U.S. Circuit Judge William J.
Kayatta Jr. said the Fifth Amendment to the U. S. Constitution
contemplates a clear obligation to provide just compensation to
property owners whose private property is taken by the government,
and that the lower court correctly required such payments to be
made to eminent domain and inverse condemnation claims under the
plan.
A copy of the 31-page opinion is available
athttp://media.ca1.uscourts.gov/pdf.opinions/22-1119P-01A.pdf
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
* * *
The two Title III plans of adjustment have been confirmed to date,
for the Commonwealth and COFINA debtors.
*********
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
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Information contained herein is obtained from sources believed to
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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.
.
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