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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
Tuesday, August 9, 2022, Vol. 23, No. 152
Headlines
A R G E N T I N A
ARGENTINA: New Minister Readies Plan to Boost Dollar Revenue
B A R B A D O S
BARBADOS: Sargassum Hits Fishing Industry, Other Region's Tourism
B R A Z I L
BRAZIL: Posts $5.4B Trade Surplus in July, Lower Than Expected
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Beef Prices Up; Chicken Prices Down Slightly
DOMINICAN REPUBLIC: Government Enters Pact for Power Barge Ops
M E X I C O
MEXARREND SAPI: S&P Places 'B' ICR on CreditWatch Negative
U R U G U A Y
URUGUAY: IDB OKs $45M Loan for Innovation & Productivity
X X X X X X X X
LATAM: Government Bonds are Rarest Find for EM Buyers
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A R G E N T I N A
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ARGENTINA: New Minister Readies Plan to Boost Dollar Revenue
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globalinsolvency.com, citing Bloomberg News, reports that new
Economy Minister Sergio Massa is preparing a set of measures to
address one of Argentina's key problems: a chronic shortage of
dollars that has caused the U.S. currency to soar in parallel
exchange markets.
Massa, who was named by President Alberto Fernandez last week as
the head of an expanded and empowered economy ministry, is expected
to unveil incentives to exporters as well as policies to attract
more foreign investment and to capture additional tourism revenue,
according to people with knowledge of the plan, according to
globalinsolvency.com. Massa tapped Raul Rigo, who had resigned
just a month ago with former Economy Minister Martin Guzman, to
return as treasury secretary, the report notes.
He will continue naming team members, and said that he would start
announcing policies in a press conference on after he's sworn in,
the report relays.
The plan is being finalized with a renewed sense of urgency, the
report notes. The gap between the official and parallel exchange
rates reached the widest level since the hyperinflation days of the
1989-1990s last month before narrowing in recent days, the report
recalls.
Foreign reserves are razor thin as Argentines, fearing an
escalation of the crisis that claimed two economy ministers last
month, continue to withdraw dollars from their accounts, the report
relays.
Among measures under consideration are some that aim to improve
conditions that would encourage farmers to sell their crops, which
is the main source of hard currency for the country, the people
said, the report notes.
That could include some kind of tax incentives for farmers, said
one of the people, or the possibility that they can access a weaker
exchange rate than the official one, said another, the report
discloses. No official decision has been made yet, 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 A R B A D O S
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BARBADOS: Sargassum Hits Fishing Industry, Other Region's Tourism
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Jamaica Observer reports that Sargassum now at record levels or
near 25 million tonnes blanketed on Caribbean coastlines has
threatened to negatively impact key industries of the region.
Experts who first noticed large amounts of sargassum in the
Caribbean Sea since 2011 have said that the problem has occurred
practically every year since then and is now up to this year
elevated some 20 per cent above that of the pre-pandemic era,
according to Jamaica Observer.
The brown algae when at moderate levels help to purify water,
absorb carbon dioxide and is a key habitat for fish and other
marine creatures. Now being declared an environmental emergency by
experts, "the golden tide", as it is being referred, has become
devastating for the region, affecting economies and industries such
as tourism and fishing, the report notes.
Within the fishing industry its weeds has begun to damage fishing
engines and gears, preventing fisherfolk from accessing their tools
and ultimately resulting in reduced catch of fish stocks, the
report relays.
"Barbados had been especially hit hard since flying fish make up 60
per cent of the island's annual landed catch," a University of the
West Indies report said, the report discloses.
It also noted an overabundance of sargassum in Martinique which was
blamed for the recent deaths of thousands of fish in the French
Caribbean island, the report notes.
In other islands such as St Martin, its once turquoise and pristine
waters have become infiltrated by large volumes of the weed which
has forced the country once popular with tourist to scale back
several of its water activities leading to a suspension of its
ferry service along with the cancelling of its kayaking, paddle
boarding and snorkelling tours, the report relays.
Sargassum presents an issue for destinations because its unpleasant
smell and presence can discourage beach-going tourists, the report
relays.
On Union Island, which is part of St Vincent and the Grenadines,
the seaweed invasion has also forced some resorts to close for up
to five months in the past, the report discloses. In addition to
the clientele decrease, some damage has also been recorded among
electronic appliances of coastal hotels (air-conditioning units,
TVs, computer) due to the prolonged exposure to high concentrations
of hydrogen sulphide - a toxic product of the decomposing seaweed,
the report says.
Even as some larger nations have moved to pump significant funds
into reducing the presence of the algae on its beaches, through
procedures utilising heavy machinery, environmentalist have warned
against this citing possible erosion and the destruction of turtle
eggs among its outcomes, the report notes.
While scientists have said that more research is needed to
determine why sargassum levels in the region are so high, the
United Nations' Caribbean Environment Program has linked it to a
possible rise in water temperatures as a result of climate change,
and nitrogen-laden fertiliser and sewage that nourish the algae,
the report relays.
Touting its use as material that can be used for the production of
fertiliser, food, biofuel and construction inputs, Caribbean
islands are not as agile in moving the vast amounts needed for
these purposes largely stemming from its position of limited
resources and small economies, the report adds.
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B R A Z I L
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BRAZIL: Posts $5.4B Trade Surplus in July, Lower Than Expected
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Reuters reports that Brazil posted a lower than expected trade
surplus of $5.444 billion in July, official data showed, with
growth in imports again strongly outpacing that of exports.
The figure came below the median forecast of a $6.993 billion
surplus in a Reuters poll, notes the report.
Imports rose 41.6% in July over the same month last year, to
$24.511 billion, the Economy Ministry said, according to Reuters.
Exports grew by 23%, to $29.955 billion, added the ministry,
stressing that higher prices boosted the results in both cases, the
report notes.
This effect has become more pronounced in recent months, with the
Ukrainian war putting pressure on commodity prices and especially
impacting Brazil's fuel purchases, the report relays.
Year-to-date, the trade balance surplus in Latin America's largest
economy reached $39.751 billion, down from $44.380 billion in the
same period in 2021, the report says.
Last month, the government downgraded its outlook for the trade
balance this year to a $81.5 billion surplus, from $111.6 billion
estimated in April, due to a stronger increase expected for
imports, 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.
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D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Beef Prices Up; Chicken Prices Down Slightly
----------------------------------------------------------------
Dominican Today reports that the price of chicken meat has dropped
slightly in recent weeks, contrary to beef, which continues to
register increases.
The chicken was sold in the markets at RD$72.00 per pound, lower
than the more than RD$80.00 it sold for months ago, according to
Dominican Today.
Likewise, beef is at RD$172.00 per pound, a price which, according
to consumers, is too high for their pockets, the report relays.
Even red meat merchants pointed out that increased meat prices have
affected their sales, the report notes.
"People continue to buy meat, but it is not the same, because they
no longer buy it with the same frequency," said Jose Mendez, a
vendor at the Cristo Rey market, the report discloses.
Luis Cabrera, president of the Association of Tablajeros and Meat
Suppliers of the National District, said that beef prices have
increased due to different factors, the report says.
"Many products have had increases and the same has happened with
beef," he said, the report relays.
He said that pork has also increased, but this has not been
significant, the report notes.
He said that the swine fever problem in pigs continues to have an
effect because it has generated an imbalance, 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: Government Enters Pact for Power Barge Ops
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Dominican Today reports that the Government signed a definitive
concession contract with the company Transcontinental Capital
Corporation, Bermuda, LTD (Seaboard), which operates the Estrella
del Mar III combined cycle thermal plant, which has a generation
capacity of 150 megawatts.
According to a press release from the Presidency, the definitive
concession contract for the exploitation of the electricity
generation work was signed by the executive director of the
National Energy Commission (CNE), Edward Veras, and by the legal
representative of the company, Armando Rodriguez, the report
notes.
The signing of this contract is carried out by virtue of the
Special Power marked with the number 45-22 of last July 7, 2022,
granted by the president to the head of the CN, according to
Dominican Today.
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.
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M E X I C O
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MEXARREND SAPI: S&P Places 'B' ICR on CreditWatch Negative
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S&P Global Ratings placed its 'B' global scale issuer credit and
issue-level ratings and its 'mxBB+/mxB' national scale ratings on
Mexican lender Mexarrend S.A.P.I. de C.V. on CreditWatch negative.
S&P said, "Mexarrend has an upcoming market maturity of $30 million
due Oct. 11, 2022. The company has various ways to get the
resources to pay it, but it has delayed using its available credit
facilities because it has focused on raising the funds through a
secured deal, which isn't closed yet. Because the bond's maturity
is in 65 days, we see this asset and liability management strategy
that prioritizes Mexarrend's profitability as aggressive,
especially amid the challenging financing conditions for the
nonbanking financial institution (NBFI) sector in Mexico.
"Mexarrend has diversified its funding sources in the last 18
months and has raised alternatives to fund its expected portfolio
loan growth in 2022-2023. These alternatives include three
warehousing credit facilities for $345 million with international
banks, where it had more than 80% available of the total amount as
of July 2022. Additionally, Mexarrend's negotiation for a secured
deal is ongoing, however, it has taken longer than we expected.
"As a result, we placed our long-term 'B' global scale issuer
credit and senior unsecured debt ratings and our 'mxBB+/mxB'
national scale ratings on Mexarrend on CreditWatch with negative
implications.
"We intend to resolve the CreditWatch listing in the next 90 days
once we analyze Mexarrend's liquidity position and financial
strategy."
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U R U G U A Y
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URUGUAY: IDB OKs $45M Loan for Innovation & Productivity
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The Inter-American Development Bank (IDB) has approved a $45
million loan to help speed up Uruguay's post pandemic economic
recovery by fostering business innovation and productivity.
The loan is the last in a series of three under a $100 million
conditional credit line approved in 2017 to provide technical and
financial support to the country's National Research and Innovation
Agency.
The latest operation - which, like its predecessors, uses a
results-based model - will support steps to strengthen four areas:
research, human capital, business innovation, and innovative
entrepreneurship.
It will finance some 155 sectoral and applied research projects to
meet the needs of productive and government sectors, while at the
same time promoting an improved gender balance in the composition
of research teams.
In terms of human capital, the operation will finance nearly one
thousand postgraduate grants (both at home and abroad),
postdoctoral grants, and human talent circulation (researchers and
technologists mobility) grants. Priority will be given to women for
postgraduate grants in engineering and technology, mathematics,
computer and information sciences, and physical sciences.
It will also support some 300 business innovation projects, open
innovation projects, and innovation articulation initiatives, such
as those aimed at improving coordination between academia and the
business sector and projects supporting patenting abroad.
Lastly, the operation will finance the creation and development of
innovative triple-impact ventures, with a special focus on women
entrepreneurs, and the design of an acceleration instrument for
ventures. Approximately 100 entrepreneurs or new ventures will be
able to benefit from this component.
Each one of these credit lines has specific goals for
climate-change related projects, with an estimated 15.58% of the
credit's resources expected to support mitigation and adaptation
activities.
The $45 million IDB loan is for a 24.5-year term, with a 6-year
period of grace, and interest based on SOFR.
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X X X X X X X X
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LATAM: Government Bonds are Rarest Find for EM Buyers
-----------------------------------------------------
Sydney Maki at Bloomberg News reports that it's slim pickings for
investors seeking fresh sovereign bonds from Latin America as the
region's pipeline of new foreign debt empties faster than in any
other pocket of emerging markets.
Latin American governments sold just US$21.6 billion worth of
dollar, euro or yen-denominated debt this year as of Aug. 5, a 61%
decline compared to the same period of 2021, according to data
compiled by Bloomberg. It's the steepest slowdown of any
developing-market region as officials around the globe shy away
from higher borrowing costs tied to the Federal Reserve and
European Central Bank's fights against inflation, according to
Bloomberg News.
The supply of new foreign bonds around the globe has taken a major
hit this year as key central banks hiked interest rates, making it
more expensive for governments to tap international debt markets,
Bloomberg News notes. Russia's invasion of Ukraine and its impact
on commodities also complicated some countries' financing plans,
Bloomberg News relays. Emerging-market dollar sovereign bonds
handed investors losses of nearly 17% this year, compared with a
7.5% drop in US Treasuries, according to Bloomberg indexes.
"Issuance is lower across the board, but the drop may look larger
in Latin America because issuance is declining from a quite high
level in 2020 and 2021," said Teresa Alves, an emerging markets
strategist at Goldman Sachs Group Inc, Bloomberg News discloses.
"This increase was driven by high Covid-related spending in the
region, which is now likely reverting," she added.
In Latin America, officials sold US$55 billion in hard-currency
bonds in 2021, more than any other developing-market region that
year, according to data compiled by Bloomberg.
This year, though, sales have been less common. Mexico's government
has so far been the biggest bond seller in Latin America with
US$6.7 billion in new bonds, followed by Chile's $6 billion in
sales, according to data compiled by Bloomberg. Guatemala was the
region's most recent country to tap international debt markets,
while Brazil -- which is typically a big issuer in the region --
didn't sell bonds overseas this year, Bloomberg News notes.
Still, the region stands out for its sales of debt with proceeds
that claim to be earmarked for environment, social or
governance-related projects, Bloomberg News relays. All Chile and
Peru's government issuance has been marketed as ESG this year,
accounting for about half of such bonds in emerging markets, data
show, Bloomberg News discloses.
JPMorgan Chase & Co. strategists Nishant Poojary and Trang Nguyen
estimate Latin American governments could offer a total of US$41.9
billion in gross issuance in 2022, Bloomberg News discloses.
Emerging markets more broadly could sell over US$124.2 billion,
with Asia forecast to issue about US$26 billion and Europe, Middle
East and Africa on the hook for the remaining US$56.3 billion, they
said, Bloomberg News relays.
Another reason new issuance is drying up is that 18 countries now
have bonds that trade at average spreads of more than 1,000 basis
points over comparable US Treasuries -- a sign of distress,
Bloomberg News discloses.
"Argentina, Ecuador and El Salvador remain shut out of the market,"
said Fitch Ratings' Christopher Dychala and Shelly Shetty in a
Tuesday note. Plus, "higher borrowing costs at a time when debt
burdens have risen across the region highlight vulnerability to
tightening external financing conditions," Bloomberg News relays.
*********
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.
.
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