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/raid1/www/Hosts/bankrupt/TCRLA_Public/220805.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 Friday, August 5, 2022, Vol. 23, No. 150 Headlines B R A Z I L BANCO DO BRASIL: Moody's Withdraws (P)Ba2 LT FC Program Rating C A Y M A N I S L A N D S PD SUKUK: S&P Assigns 'BB-' Rating to US$1BB Sukuk Program D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: ADA Says Chicken Meat Prices on Downward Trend DOMINICAN REPUBLIC: Gov. Looks to Supply Fresh Fish to Barrios DOMINICAN REPUBLIC: Shortages, Price Hike Alarm Construction Sector E C U A D O R ECUADOR: Dollar-Denominated Bond Holders Receive Interest Payments P U E R T O R I C O PUERTO RICO: Coalition Asks Court to Withhold McKinsey Payments T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Thieves Affecting Telecommunications Services - - - - - =========== B R A Z I L =========== BANCO DO BRASIL: Moody's Withdraws (P)Ba2 LT FC Program Rating -------------------------------------------------------------- Moody's Investors Service has withdrawn the (P)Ba2 long-term foreign-currency program rating of Banco do Brasil S.A. under its USD5 billion global medium-term note program. All other ratings of Banco do Brasil S.A. are unaffected by this rating action. The following rating was withdrawn: Issuer: Banco do Brasil S.A. Senior Unsecured Medium-Term Note Program (Foreign Currency) of (P)Ba2 RATINGS RATIONALE The ratings have been withdrawn following the expiration of the program. =========================== C A Y M A N I S L A N D S =========================== PD SUKUK: S&P Assigns 'BB-' Rating to US$1BB Sukuk Program ---------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue rating on PD Sukuk Ltd.'s U.S. dollar-denominated sukuk program. PD Sukuk Ltd. (PD Sukuk), an orphan special-purpose vehicle incorporated in the Cayman Islands, established a US$1 billion sukuk (trust certificates) program for Private Department of Skh Mohamed Bin Khalid Al Nahyan LLC (PD). The proposed inaugural sukuk issuance under the program is intended to repay existing bank debt and fund general corporate needs. The rating on the sukuk program reflects the rating on Private Department of Skh Mohamed Bin Khalid Al Nahyan LLC (BB-/Stable/--) because the transaction fulfills the five conditions of our criteria for rating sukuk. S&P said, "We therefore equalize the rating on the sukuk program with the long-term issuer credit rating on PD. We understand that the first issuance under the program will be up to $400 million, to repay existing bank debt and fund general corporate needs. If the issuance amount is significantly lower, we will reconsider whether this meets our subordination criteria threshold." The master declaration of the trust specifies that if PD fails to fulfill its obligations under the purchase undertaking, the company will, as an independent, severable, and separately enforceable obligation, fully indemnify the issuer for the purpose of redeeming the certificate (in full or proportionally in case of tangibility event), on the condition that PD (acting in any capacity) is in actual or constructive possession, custody, or control of all or some lease assets. This is also an obligation that PD undertook (as a service agent) to fulfill under the service agency agreement if it was legally possible for them to do so. This conditionality was added to ensure the transaction's Sharia compliance. S&P said, "Our ratings are based on the contractual obligations of the sponsor to buy back the underlying assets at a sufficient price for the redemption of the sukuk. We treats these sponsor's contractual payment obligations under a sukuk transaction toward the issuing SPV or the issuer as financial obligations, the failure to meet any of which leads to a 'D' or 'SD' issuer credit rating on the sponsor, indicating default or selective default. The indemnity kicks-in only after a failure of the issuer to deliver on its contractual obligations. We understand that the indemnity kicks-in only after a failure of the sponsor to deliver on its contractual obligations. As the indemnity provisions in the purchase undertaking are conditional, a sukuk holder may not be able to recover, or may face significant challenges in recovering the principal amount, after the failure of the sponsor to pay the exercise price (that is, after the default of the sponsor), as it may have to establish that there was a breach of contract by the sponsor and also prove damages. As a result, we believe this could leave an investor in the sukuk at a disadvantage, compared with investors in an unsecured bond instrument issued by the same sponsor." =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: ADA Says Chicken Meat Prices on Downward Trend ------------------------------------------------------------------ Dominican Today reports that the price of chicken meat has started a downward trend, which could be accentuated as of September with an expected reduction in international grain prices after the agreement reached to allow the exit of grains banned in Ukraine due to the war between that country and Russia. In addition, the supply for the remainder of the year is guaranteed due to the excellent poultry production in the country, according to Dominican Today. This is what the directors of the Dominican Poultry Association (ADA), Jose Rafael Lopez, president, and Wilfredo Cabrera, Miguel Lajara, Gregory Marte, and Robert Lopez forecast during their participation as guests in the Economic Meeting of HOY, the report notes. The representatives of the poultry sector expressed that chicken production has gone through several difficulties in the last two years due to the increases in the prices of raw materials as a consequence of the crisis generated by covid-19 and currently the war between Russia and Ukraine, as well as an increase in the demand for this meat as a substitute for pork, as its production has been affected by swine fever, the report discloses. However, they assured that despite these inconveniences, poultry producers had taken several measures to satisfy the demand for the rest of this year, including Christmas, the report says. Among them, they cited that in March, they bought some 90 vans of frozen chickens and fertile eggs in Belgium, which has allowed them to increase weekly production, going from 17 million chicken units last year to 19 million at present, with a projection of reaching 21 million by the middle of this month, the report notes. They stressed that the efforts of poultry producers should be valued and recognized since the adaptation of their facilities to air-condition more than 70% of their farms and thus avoid massive deaths of birds, in addition to the acquisition of breeding grandparent stock has given the country to be competitive, to have some independence and offers food security, the report discloses. They also considered that the signing of the agreement between Russia and Ukraine to guarantee world food security, in addition to the excellent production of corn and soybeans in the United States and Brazil, will allow a reduction in the prices of these raw materials, which will reduce the pressure on chicken meat prices, the report relays. They pointed out that despite the increases in production costs and demand, poultry producers maintained prices between RD$44 and RD$46 per pound of farm chicken when it should have cost RD$57, 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. DOMINICAN REPUBLIC: Gov. Looks to Supply Fresh Fish to Barrios -------------------------------------------------------------- Dominican Today reports that the Dominican Council for Fisheries and Aquaculture (Codopesca), through the Pescaderia de Mi Barrio program, has set up 30 fishmongers in the National District and Santo Domingo province, creating sources of employment, mainly for housewives, who sell fresh fish in the main districts of the province. Pescaderia de Mi Barrio aims to provide technical and logistical assistance to low-income people so that they can undertake and thus bring sustenance to their homes, according to Dominican Today. The fishmongers are supplied by the tilapia production system of the Hatillo Dam, Nagua, Bao Taveras, among others, the report notes. Carlos Then, executive director of Codopesca expressed that "the objective is to achieve the expansion of the program throughout the country, in order to continue being the main generator of jobs for Dominican women. Currently, the fishmongers located in La Caleta, El Tamarindo, Ensanche Quisqueya, Pantoja and Los Alcarrizos are managed by women, and we want more housewives to benefit from the program," 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. DOMINICAN REPUBLIC: Shortages, Price Hike Alarm Construction Sector ------------------------------------------------------------------- Dominican Today reports that in addition to the increases in construction materials, the result of the inflationary trend in the country and worldwide, there is an increase in the price and shortage of sand, gravel, and other aggregates, which the builders attribute to the lack of permits from the Ministry of the Environment for the extraction of materials. The president of the Dominican Association of Builders and Housing Developers (Acoprovi), Jorge Montalvo, indicated that they had requested a meeting with the Minister of the Environment, Miguel Ceara Hatton, to discuss this and other matters, according to Dominican Today. "We have received reports of important rises in the aggregates and, above all shortages in the aggregates," said Montalvo when Listin Diario consulted about the situation the construction sector is currently experiencing, the report notes. He assured that the cost of the square meter of construction has shot up by more than 38% since the beginning of the pandemic, according to the index of the cost of housing published by the National Office of Statistics (ONE), and emphasized that in this last month the data reflected a 7.78% increase in this index, the report relays. "The first thing we want to understand is what is happening and when the issue of permits will be regularized so that projects are not stopped due to a shortage of aggregates," said the president of Acoprovi, the report discloses. The president of the Dominican Confederation of Micro, Small, and Medium Construction Companies (Copymecon), Eliseo Cristopher, agreed that in the last few days, there had been a shortage of materials such as sand, gravel, and others, and as a result of the prohibitions to extract materials from the rivers, a measure with which he said they agree, however, he suggested that alternative permits be sought from sources other than the rivers and tributaries, the report relays. He assured that builders are facing an upward trend in the prices of building materials and that this affects to a greater extent the micro, small and medium builders who do not have so much capital for developing their projects, the report discloses. Rising Interest Rates Montalvo and Cristopher pointed out the constant increase of the Monetary Policy Rate (TPM) as another element that complicates the problematic situation of the builders since this makes the financing they have with the banks for the development of different projects more expensive, especially those of low-cost housing, the report relays. The president of Acoprovi, Jorge Montalvo, explained that the interest rates have been rising since the end of last year, which he said is contributing to the slowdown in demand for housing, the report discloses. As a suggestion, Montalvo pointed out that "it is necessary to see how competitive interest rates can be achieved, even if it is focused on low-cost projects," the report notes. Likewise, the president of Copymecom, Eliseo Cristopher, pointed out that the new increase in the monetary policy rate increased the financing they have in the banking entities and said that all this would be reflected in the prices of houses, the report says. 2.28 Points According to the ONE, in June 2022, the Index of Direct Costs of Housing Construction (ICDV) was 226.31 on average, registering a growth of 2.28 points, compared to the previous month, which was 224.04, the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCRLA reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Fitch Ratings, in December 2021, revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-'. The revision of the Outlook to Stable reflects the narrowing of Dominican Republic's government deficit and financing needs since Fitch's last review resulting in the stabilization of the government debt/GDP ratio, as well as the investment-driven economic momentum, reflected in the faster-than-expected economic recovery in 2021 that Fitch expects to carry into above-potential GDP growth during 2022 and 2023. Standard & Poor's, also in December 2021, revised its outlook on the Dominican Republic to stable from negative. S&P also affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings and its 'B' short-term sovereign credit ratings. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12 to 18 months that will likely stabilize the government's debt burden, despite lack of progress with broader tax reforms, S&P said. A rapid economic recovery from the downturn because of the pandemic should mitigate external and fiscal risks. Moody's affirmed the Dominican Republic's long-term issuer and senior unsecured ratings at Ba3 and maintained the stable outlook in March 2021. ============= E C U A D O R ============= ECUADOR: Dollar-Denominated Bond Holders Receive Interest Payments ------------------------------------------------------------------ Reuters reports that some holders of Ecuador's sovereign dollar-denominated bonds maturing in 2030, 2035 and 2040 have received interest payments which had been due on the securities on July 31. A Luxembourg bailiff had ordered banks to freeze assets held by Ecuador at accounts in the country as a result of a dispute over a $391 million settlement award that Anglo-French oil company Perenco says remains unpaid, a document seen by Reuters show, according to the report. As part of the debt restructuring on its international bonds that followed Ecuador's default two years ago, Ecuador sold new bonds maturing in 2030, 2035 and 2040, which are listed on the Luxembourg stock exchange, the report notes. ===================== P U E R T O R I C O ===================== PUERTO RICO: Coalition Asks Court to Withhold McKinsey Payments --------------------------------------------------------------- A coalition of community groups is asking the judge overseeing Puerto Rico's historic bankruptcy to withhold additional payments to McKinsey & Co. for its work on the island's debt restructuring. In a letter sent to US District Court Judge Laura Taylor Swain, a group called Power 4 Puerto Rico said McKinsey's final fee application should be denied. "As of August 2021, the debt restructuring process has cost Puerto Rican taxpayers close to $939 million dollars. This is due, in large part, to the Financial Oversight and Management Board (FOMB)'s procurement of hundreds of bankruptcy attorneys, consultants, and professionals, who bill an average of $700 dollars per hour. The Congressional Budget Office (CBO) estimated the Board would cost Puerto Rico $370 million over a 10-year period. Not even half of that period has passed, and the Board's administrative costs are close to tripling the original estimate," the group said in an e-mail to the judge. "Since 2016, McKinsey & Company has been one of the consulting firms benefitting from the Board's procurement of professional services, and its fiscal weight is substantial. By August 2019, the firm had billed close to $72 million, with an approximate monthly cost of $3.3 million dollars. McKinsey's final fee application is expected to sum up to $120 million dollars. If this amount were to be approved and paid, it would constitute not only an additional exorbitant expense shouldered by Puerto Rico's taxpayers but also a potential violation to the disclosure requirements imposed by PRRADA, and a reward to a firm that has inflicted pain and austerity to Puerto Ricans, as well as to other citizens globally." Power 4 Puerto Rico is a national coalition of the Puerto Rican Diaspora and allies that promotes fair recovery, economic growth and self-sufficiency for the island. Among the issues raised by the group against McKinsey are: 1. McKinsey was and may still be a creditor of Puerto Rico, and therefore could be considered a party with adverse interests in the case. 2. The consulting firm has helped the Board review contracts with companies that are also its clients. These contracts total tens of billions of dollars. Some of the companies that have been awarded contracts while retaining McKinsey as their consultant are: a. Quanta Services Inc. which owns half of the joint venture to operate the electric service in Puerto Rico for 15 years. LUMA Energy, LLC (LUMA) is the joint venture between Quanta Services Inc. and Canadian Utilities Limited, an ATCO Ltd. Company (ATCO). b. Puma Energy Caribe LLC more than $2.1 billion to ship diesel to run PR's utility system. c. EcoElectrica LP and Nature Energy Group SA $9 billion for EcoElectrica to provide power and Naturgy to supply natural gas. d. New Fortress Energia LLC - $1.5 billion to convert two publicly owned power-generation facilities to natural gas. e. Molina Healthcare $900 million to provide healthcare services through a managed care model. f. Manpower Group $250 million to provide workforce management services. 3. McKinsey held an adverse interest when the Government of Puerto Rico sued the company and sought civil penalties for its involvement in the opioid crisis. 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. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Thieves Affecting Telecommunications Services ---------------------------------------------------------------- RJR News reports that copper thieves in Trinidad and Tobago caused an estimated one million dollars in damage to Telecommunications Services of Trinidad and Tobago (TSTT) Limited. TSTT's fibre optics and copper cables were cut and stolen from one of its main arteries in Cross Crossing, San Fernando, according to RJR News. The incident caused disruption to mobile, Internet and cable service to tens of thousands of customers throughout the country, the report notes. Chief executive of Digicel Trinidad, Abraham Smith, says he is deeply concerned about the increasing number of instances of deliberate cable vandalism caused by persons searching for copper, the report relays. TSTT is reportedly in the process of moving its customers away from its copper network to an advanced fibre network and commenced the movement of its copper plant, the report adds. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *