/raid1/www/Hosts/bankrupt/TCRLA_Public/220826.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 26, 2022, Vol. 23, No. 165
Headlines
A R G E N T I N A
ARGENTINA: Prepares to Restrict Imports Amid Forex Shortage
B R A Z I L
ALTERA INFRASTRUCTURE: Files Chapter 11 Bankruptcy Protection
ALTERA INFRASTRUCTURE: U.S. Trustee Appoints Creditors' Committee
BRAZIL: Central Bank Chief Predicts 6.5% Inflation in 2022
C H I L E
CHILE: Current-Account Crisis Overshadows Peso Intervention
C O L O M B I A
COLOMBIA: IDB Group and Davivienda Bank Issue 1st Blockchain Bond
M E X I C O
AXTEL SAB: S&P Downgrades ICR to 'BB-', Outlook Negative
CREDITO REAL: Faces Mexican Securities Regulator Probe
P E R U
NAUTILUS INKIA: S&P Affirms BB Issuer Credit Rating, Outlook Stable
- - - - -
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A R G E N T I N A
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ARGENTINA: Prepares to Restrict Imports Amid Forex Shortage
-----------------------------------------------------------
Reuters reports that Argentina's government will launch three
measures in the coming days aimed at restricting imports and
preserving the central bank's dwindling foreign currency reserves.
The measures come as new data showed a trade deficit in July of
$437 million, the second deficit in a row for Latin America's
third-largest economy, according to the report.
"Smoother coordination is required between (Argentina's tax
collection entity) AFIP, Customs and Commerce, with measures aimed
at ordering imports, taking care of the Argentine central bank's
dollars and avoiding abuses," said the source, who asked not to be
identified, Reuters relates.
Argentina's exports in the first seven months of the year increased
by 22.4% compared to the same period in 2021, while imports jumped
44.6%, the report relays. One of the measures seeks to accelerate
exports by reducing the time frame for those who import goods
without paying taxes, the report notes. The measure will reduce
the time to export the goods to 120 days from 360, 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.
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
Aug. 12, 2022, S&P Global Ratings affirmed its foreign and
local-currency sovereign credit ratings of 'CCC+/C' on the
Republic of Argentina. The outlook remains stable. S&P also
affirmed its national scale 'raBBB-' rating and its 'CCC+' transfer
and convertibility assessment. S&P said the stable outlook reflects
the challenges in managing pronounced economic imbalances ahead of
the 2023 national elections given disagreement on policy within the
government coalition and financing pressures in the local market.
Last April 14, 2022, Fitch Ratings affirmed Argentina's Long-Term
Foreign 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.
On July 19, 2022, Fitch Ratings placed Argentina's Long-Term
Foreign Currency Issuer Default Rating (IDR) and Long-Term Local
Currency IDR 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 as a direct result of the final criteria. It
does not indicate a change in the underlying credit profile, nor
does it affect existing Rating Outlooks.
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
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ALTERA INFRASTRUCTURE: Files Chapter 11 Bankruptcy Protection
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Altera Infrastructure LP, an offshore energy services provider
owned by affiliates of Brookfield Asset Management, filed for
Chapter 11 bankruptcy protection in Houston.
Altera is a midstream services provider to the oil and gas
industry, supplying critical infrastructure assets to its
customers
primarily in offshore regions of the North Sea, Brazil, and the
East Coast of Canada. Altera has 2,450 employees who either serve
as crew or in onshore support roles for Altera's 41 vessels around
the world.
Altera operates in five principal business segments:
(a) the processing and storage of hydrocarbons through
Altera's four wholly owned and two joint-venture floating
production, storage, and offloading vessels ("FPSO"), as well as
the management of FPSOs owned by third parties;
(b) the provision of supplementary storage capabilities
through Altera's two floating storage and off-take vessels
("FSO");
(c) the deployment of eight long-distance towage vessels to
assist with, among other things, the tow from yard to operating
area and installation of large floating production facilities,
storage units, exploration units, and other vessels ("Towage");
(d) the operation of one unit to provide accommodations and
maintenance and safety services to projects on offshore
installations ("Accommodation" and together with FPSO, FSO and
Towage, "FFTA"); and
(e) the transportation of hydrocarbons from offshore oil
field
installations to terminals and refineries located onshore, as well
as conventional tanking operations, using Altera's 24 shuttle
tanker vessels ("Shuttle Tankers").
The Debtors consist only of FFTA entities. The FPSO joint ventures
and the Shuttle Tankers entities are not Debtors in these chapter
11 cases.
CFO Jan Rune Steinsland explained in court filings that Altera has
recently faced declining revenues as a result of market headwinds,
contract expirations, and the aging of its fleet, which has
necessitated the recycling or sale of certain older vessels.
These
challenges have been exacerbated by significant payment
obligations
due under various interest-rate swap arrangements. While the
recent
rise in energy prices has helped, Altera's ability to capture that
upside is limited by the terms of its existing contracts and the
fact that re-contracting its most significant assets requires
substantial lead time and investment.
This has resulted in a mismatch between operating cash flows and
the cost of the Debtors' ongoing debt service. Cash flows
currently generated from the FFTA assets are not sufficient to
support the funded debt obligations. Because of this mismatch,
the
Debtors have been proactive over the course of this year in
approaching the holders of their funded debt obligations regarding
a balance sheet restructuring, initiating negotiations with their
secured bank lenders and Brookfield Business Partners L.P.
(together with certain of its affiliates and certain of its and
their respective managed funds and accounts, collectively,
"Brookfield") in its capacity as both secured lender and equity
sponsor. After many months, these negotiations have proven
successful. The Debtors have been able to achieve consensus with a
diverse group of stakeholders and enter chapter 11 with the broad
support necessary to efficiently implement a comprehensive balance
sheet restructuring that will position them well for success in
the
future. While a group of unsecured noteholders does not presently
support the restructuring, the Debtors intend to continue
negotiations with them during chapter 11 to try to build
additional
consensus.
Debtors' Capital Structure
The Debtors' capital structure includes: (a) approximately $552
million of asset-level bank debt (the "Bank Facilities," and the
lenders thereunder, the "Bank Lenders") spread across seven
facilities and secured by certain of the Debtors' vessels and
earnings and guaranteed by Altera Parent; (b) approximately $769
million of secured debt (the "IntermediateCo Obligations") issued
at Altera Parent's 100%-owned direct subsidiary, Altera
Infrastructure Holdings L.L.C. ("IntermediateCo"), which is
structurally junior to the Bank Facilities and also guaranteed by
Altera Parent (and all of which is held by Brookfield); and (c)
approximately $276 million of unsecured notes (the "Altera Parent
Unsecured Notes") issued by Altera Parent, which are structurally
junior to the Bank Facilities and the IntermediateCo Obligations.
The total amount of debt guaranteed by Altera Parent is $1.32
billion. Altera Parent also issued preferred equity with an
aggregate liquidation preference of approximately $408 million.
Brookfield owns 97.98% of Altera Parent's common equity.
Separately, the non-Debtor entities comprising Altera's wholly
owned Shuttle Tankers business and FPSO joint ventures (and
certain
direct parent companies thereof) are obligated on approximately
$2.1 billion of additional debt obligations, none of which will be
affected by the Debtors' restructuring or these chapter 11 cases.
As of the Petition Date, the Debtors were liable for approximately
$1.6 billion in aggregate principal amount of funded debt
obligations, and, through Altera Parent, had issued $408 million
of
outstanding preferred equity. In addition, the entities
comprising
the Shuttle Tankers business, the FPSO joint ventures, and certain
other non-Debtors are liable for approximately $2.1 billion in
additional funded debt obligations:
Principal
Outstanding
(USD) as of
Funded Debt Petition Date
----------- -------------
Debtor Facilities:
FPSO Segment
$815M facility due 2023–2026 (Knarr Facility)
$290,625,000
$75M facility due 2024 (Petrojarl I Facility) $43,750,000
FSO Segment
$230M facility due 2022 (Gina Krog Facility) $52,026,865
$26.25M facility (Suksan Salamander Facility) $12,500,000
Towage Segment
$185M facility due 2028 (4x ALP Facilities) $101,705,413
$150M of facilities due 2023 (6x ALP Facility) $42,544,000
Accommodation Segment
$112.5M facility due 2023 (Arendal Facility) $8,500,000
IntermediateCo Obligations
$32M facility due 2022 $32,000,000
11.50% PIK Notes due 20267 $736,872,300
Altera Parent Obligations
8.50 % Senior Notes due 2023 $275,730,000
Non-Debtor Facilities:
$120M facility due 2027 (Libra HoldCo Facility) $92,262,744
FPSO Joint Venture Obligations
Joint Venture Secured Debt $221,544,320
Shuttle Tankers Obligations
Secured Vessel-Level Debt $1,256,679,914
Unsecured Notes (Publicly Held) $449,463,619
Unsecured Brookfield PIK Notes $74,912,149
--------------
Total Debt Obligations $3,691,116,324
Through these chapter 11 cases, the Debtors seek to re-profile the
obligations under the Bank Facilities to better match anticipated
vessel-level cash flows, achieve an overall deleveraging through
the equitization of more than $1 billion in junior debt
obligations
(comprised of the IntermediateCo Obligations and the Altera Parent
Unsecured Notes), and eliminate Altera Parent's preferred and
common equity.
As reflected in the restructuring support agreement dated as of
August 12, 2022 (the "Restructuring Support Agreement"),
Brookfield
(in its capacity as equity sponsor and holder of 100% of the
IntermediateCo Obligations) and 71% of the Bank Lenders (the
"Consenting Bank Lenders") have agreed to support the Debtors'
restructuring.
Restructuring Support Agreement
According to Altera, Brookfield has provided substantial financial
support to Altera since 2019, including through more than $374
million in capital infusions and by exchanging approximately $699
million of indebtedness from cash interest bearing obligations to
"paid in kind" IntermediateCo Obligations that extended the
relevant maturities to 2026. These steps were critical in
creating
the necessary runway to reach the agreement embodied in the
Restructuring Support Agreement.
A key component of the RSA is Brookfield's commitment to equitize
the IntermediateCo Obligations in exchange for 100% of the common
equity in reorganized Altera Parent. The Altera Parent Unsecured
Notes will also be equitized under the Restructuring Support
Agreement in exchange for the New Warrants issued by reorganized
Altera Parent.
The Restructuring Support Agreement contemplates the following key
terms, among others:
(a) Brookfield will provide a $50 million new-money
debtor-in-possession financing facility on a junior basis relative
to the claims and liens of the Bank Lenders (together with the
proposed roll-up of a portion of the IntermediateCo RCF, the "DIP
Facility") to fund these chapter 11 cases, which Brookfield has
agreed to equitize, along with certain associated fees, upon
emergence in connection with the restructuring contemplated by the
Restructuring Support Agreement (unless repaid from the proceeds
of
an equity rights offering);
(b) Brookfield will equitize all outstanding IntermediateCo
Obligations in return for 100% of the common equity in reorganized
Altera Parent, together with any equitization of the DIP Facility;
(c) the Consenting Bank Lenders will agree to a comprehensive
re-profiling of the Bank Facilities, including maturity
extensions,
interest and amortization relief, and other covenant relief, and
will agree to the satisfaction of their Altera Parent guarantees
in
exchange for warrants to acquire their pro rata share of 7.6% of
the new common stock of Reorganized Altera Parent (the "New
Warrants");
(d) the Consenting Bank Lenders will agree to the Debtors'
consensual use of their cash collateral;
(e) a corporate reorganization, the result of which will be a
"siloed" FFTA structure providing for certain cross-guarantees to
the Bank Lenders and direct ownership by reorganized Altera Parent
of the Shuttle Tankers business and FPSO joint ventures;
(f) certain of the Consenting Bank Lenders and Brookfield
will
agree to provide commitments for an approximately $183 million
new-money financing facility to fund the Debtors' portion of the
financing of the Knarr FPSO upgrade costs under the Knarr
Contract;
(g) the Altera Parent Unsecured Notes will be equitized in
exchange for their pro rata share of the New Warrants;
(h) general unsecured claims at subsidiary Debtors, trade and
contract claims, and administrative and priority claims will
generally be paid in full in cash in the ordinary course of
business; and
(i) all existing common and preferred equity in Altera Parent
will be canceled without any distribution.
With a deal in hand -- and in a significantly strained liquidity
position -- the Debtors commenced these chapter 11 cases to gain
access to the DIP Facility and implement the terms of the
Restructuring Support Agreement. To limit the administrative cost
and burden on the Debtors' businesses, it is critical that the
Debtors move through their chapter 11 process as efficiently as
possible. To that end, the Debtors propose to proceed with these
chapter 11 cases along the following timeline:
(a) no later than 5 days after the Petition Date, the Debtors
shall have obtained entry of an interim order approving the DIP
Facility and authorizing the use of cash collateral;
(b) no later than 45 days after the Petition Date, the
Debtors
shall have obtained entry of a final order approving the DIP
Facility and authorizing the use of cash collateral;
(c) no later than 90 days after the Petition Date, the
Debtors
shall have obtained entry of an order approving the form of
solicitation materials to be used in connection with voting on the
Debtors' plan of reorganization (the "Plan") and scheduling a
hearing to consider confirmation of the Plan;
(d) no later than 120 days after the Petition Date, the
Debtors shall have obtained confirmation of the Plan; and
(e) no later than the earlier of (i) 150 days after the
Petition Date and (ii) the maturity of the DIP Facility, the
Debtors shall have consummated the transactions contemplated by
the
Plan.
About Altera Infrastructure
Westhill, United Kingdom-based Altera Infrastructure L.P. (NYSE:
ALIN-A) is a global energy infrastructure services partnership
primarily focused on the ownership and operation of critical
infrastructure assets in the offshore oil regions of the North
Sea,
Brazil and the East Coast of Canada. Altera has consolidated
assets of approximately $3.8 billion comprised of 44 vessels,
including floating production, storage and offloading (FPSO)
units,
shuttle tankers, floating storage and offtake (FSO) units,
long-distance towing and offshore installation vessels and a unit
for maintenance and safety (UMS). The majority of Altera's fleet
is
employed on medium-term, stable contracts.
After agreeing to a debt-for-equity plan with bank lenders and
owner Brookfield, Altera Infrastructure L.P. and 37 affiliate
sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No.
22-90130) on Aug. 12, 2022.
As of the Petition Date, the Debtors were liable for approximately
$1.6 billion in aggregate principal amount of funded debt.
Kirkland & Ellis LLP and Jackson Walker LLP serve as the Debtors'
counsel. Stretto is the claims agent.
ALTERA INFRASTRUCTURE: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Altera
Infrastructure, LP and its affiliates.
The committee members are:
1. The Bank of New York Mellon
Attn: David M. Kerr
385 Rifle Camp Road
Woodland Park, NJ 07424
Tel: 973-247-4143
Email: david.m.kerr@bnymellon.com
Counsel: Carter Ledyard & Milburn LLP
c/o Leonardo Trivigno, Esq.
28 Liberty Street, 41st Floor
New York, NY 10005
Tel: 212-732-3200
Fax: 212-732-3232
Email: trivigno@clm.com
2. American High-Income Trust
Attn: David Daigle
333 S. Hope Street, 55th Floor
Los Angeles, CA 90071
Tel: 212-641-1748
Email: david_daigle@capgroup.com
Counsel: Capital Research and Management Company
c/o Kristine Nishiyama
333 S. Hope Street, 55th Floor
Los Angeles, CA 90071
Tel: 213-486-9652
Email: knn@capgroup.com
3. CI Canadian Short-Term Bond Pool
Attn: Grant Connor
15 York Street, 2nd Floor
Toronto, ON, M5J 0A3
Tel: 647-402-2633
Email: gconnor@ci.com
Counsel: Wachtell, Lipton, Rosen & Katz
Michael Benn, Esq.
51 West 52nd Street
New York, NY 10019
Tel: 212-403-1158
Fax: 212-403-2158
Email: msbenn@wlrk.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Altera Infrastructure
Westhill, United Kingdom-based Altera Infrastructure L.P. (NYSE:
ALIN-A) is a global energy infrastructure services partnership
primarily focused on the ownership and operation of critical
infrastructure assets in the offshore oil regions of the North Sea,
Brazil and the East Coast of Canada. Altera has consolidated
assets of approximately $3.8 billion comprised of 44 vessels,
including floating production, storage and offloading (FPSO) units,
shuttle tankers, floating storage and offtake (FSO) units,
long-distance towing and offshore installation vessels and a unit
for maintenance and safety (UMS). The majority of Altera's fleet
is employed on medium-term, stable contracts.
After agreeing to a debt-for-equity plan with bank lenders and
owner Brookfield, Altera Infrastructure L.P. and 37 affiliate
sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No.
22-90130) on Aug. 12, 2022.
As of the Petition Date, the Debtors were liable for approximately
$1.6 billion in aggregate principal amount of funded debt.
Kirkland & Ellis LLP and Jackson Walker LLP serve as the Debtors'
counsel. Stretto is the claims agent. David Rush, Senior
Managing Director of FTI Consulting, Inc., serves as restructuring
advisor to the Debtors.
The DIP Lenders are represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP, as counsel to the DIP Lenders, Ducera Partners LLC,
as financial advisor, and Porter & Hedges LLP, as their Texas
counsel.
A Committee of Coordinators was appointed under and as defined in
the appointment letter originally dated May 6, 2022, among Altera
Infrastructure L.P. and each member of the CoCom (as amended,
restated, amended and restated, supplemented, or otherwise
modified from time to time). The CoCom is represented by Norton
Rose Fulbright US LLP and Norton Rose Fulbright LLP, as counsel,
and PJT Partners (UK) Ltd., as financial advisor.
BRAZIL: Central Bank Chief Predicts 6.5% Inflation in 2022
----------------------------------------------------------
Reuters reports that Brazilian central bank chief Roberto Campos
Neto predicted that inflation will reach 6.5% or a little lower
this year, amid government measures that lowered taxes on key
goods.
The estimate is more optimistic than private economists'
expectations of inflation at 6.82%, according to a central bank
weekly survey, but still above the official target of 3.5%, plus or
minus 1.5 percentage point, according to Reuters.
"This year, inflation is going to be around 6.5%, perhaps a little
bit lower. We are not celebrating that very intensively, we still
think there is a very hard job to do," said Campos Neto during an
event hosted by Moneda Asset Management in Chile, the report notes.
He stressed that cooling prices would benefit from lower taxes on
key goods. As some government measures expire in December, Campos
Neto said there will be "a payback" for inflation in 2023, the
report relays.
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.
DBRS Inc. confirmed Brazil's Long-Term Foreign and Local Currency
Issuer Ratings at BB (low) on Aug 12, 2022. At the same time,
DBRS Morningstar confirmed the Federative Republic of Brazil's
Short-term Foreign and Local Currency Issuer Ratings at R-4.
The trend on all ratings is Stable.
=========
C H I L E
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CHILE: Current-Account Crisis Overshadows Peso Intervention
-----------------------------------------------------------
globalinsolvency.com, citing Bloomberg News, reports that Chile's
record current account deficit will keep the peso under pressure
long after the central bank's $25 billion intervention program is
done and dusted.
The deficit swelled to 8.5% of gross domestic product in the second
quarter, the highest for at least two decades, according to
globalinsolvency.com.
That was roughly triple the year-earlier figure and represented
$6.6 billion leaving the country in just three months, the report
notes.
Not only is that rate of outflow unprecedented this century, it
also comes at the worst possible moment as financing costs rise
worldwide, the report relays.
With commodity prices subdued amid the threat of a global
recession, the only way for Chile to narrow that gap without
allowing the peso to slump is by slashing demand, and that means a
recession -- potentially a deep one, the report relays.
"The deficit has reached levels that raise alarm bells," said
Sergio Lehmann, chief economist at Banco de Credito e Inversiones
in Santiago. "Excessive spending in 2021, along with a significant
reduction in household savings has led to a dangerous widening of
the deficit, which should be corrected with urgency," the report
adds.
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C O L O M B I A
===============
COLOMBIA: IDB Group and Davivienda Bank Issue 1st Blockchain Bond
-----------------------------------------------------------------
The IDB Group - comprised of the Inter-American Development Bank,
IDB Invest and IDB Lab - and Colombia's Davivienda Bank
successfully issued the first blockchain bonds in Latin America and
the Caribbean, as a pilot project within Colombia's regulatory
innovation sandbox. This pilot is the first of its kind in the
region.
The processes of authorization, initial registration, and
subsequent cancellation of the bond's registration in the National
Registry of Securities and Issuers (RNVE), as well as the issue,
trading, payment registration and compliance of the bond were done
entirely on blockchain. This approach allowed the banks to test
ways to streamline the process and bring down its costs over a
complete trading cycle on the Colombian capital market.
The bond, underwritten in its entirety by IDB Invest, had a total
issue size of COP$110 million. It was purchased by IDB Invest
through a transaction conducted on the LACChain blockchain network,
the infrastructure enabled by IDB Lab as a regional public good.
The pilot issue was carried out within "la Arenera" -- the sandbox
of the Financial Superintendence of Colombia for testing
innovations in financial technology (fintech). IDB Group provided
logistical and regulatory support for the project.
The Bank of the Republic of Colombia, which is the country's
central bank, and the Financial Superintendence of Colombia
supervised the entire processes of the bond's trading and
compliance cycles.
"Davivienda has been one of the pioneers in working with blockchain
technology in Colombia. On this occasion, we are very pleased to
announce the success of this first pilot, which we had the
opportunity to develop together with such important partners. The
use of this technology transforms the role of actors in the
securities market and the way in which bonds are issued and
processed, resulting in a more transparent, rapid, and secure
market. This facilitates a reduction in the costs and complexity of
issuance, allowing for more and more participants. In this way, the
success of this pilot represents an opportunity to continue working
towards financial inclusion, in this instance in the stock market."
Javier Suárez, President of Davivienda indicated.
"This goes to show how joint work by the IDB Group and countries'
public and private sectors can lead to innovation in the capital
markets. The pilot opens the door to fundamental changes to the
existing axioms of securities trading and allows new models to be
explored in the future to generate more financial inclusion. We
hope this experience can be replicated in similar pilot projects in
Latin America and the Caribbean," said Kelvin Suero, Acting
Representative of the IDB Group in Colombia.
The pilot was spearheaded by a multidisciplinary team from
Davivienda Bank, IDB Group, SFC, Bank of the Republic of Colombia
and LACChain. The team devised the financial, operational,
technological, legal and regulatory solutions that made the pilot
issue possible. The experience of carrying out the first bond issue
using blockchain in Latin America and the Caribbean showcases the
benefits of new decentralized technologies like blockchain,
increasing the efficiency of the region's capital market, including
secondary markets. The project lays the groundwork for promoting
and encouraging the use of new technologies in finance for
Colombia.
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M E X I C O
===========
AXTEL SAB: S&P Downgrades ICR to 'BB-', Outlook Negative
--------------------------------------------------------
On Aug. 24, 2022, S&P Global Ratings downgraded its issuer-credit
and issue-level ratings on Mexican integrated telecommunication
company (ITC), Axtel S.A.B. de C.V. (Axtel) to 'BB-' from 'BB'.
S&P said, "The negative outlook reflects our expectation that the
decline in revenues and customer losses will not be offset in the
next 12 months, reflecting a weakening of its business risk
profile. This could cause Axtel to continue to lose market share,
have declining cash flow, and increase refinancing risk for its
next maturity in 2024.
"The downgrade reflects the company's failure to meet our
deleveraging expectations of debt to EBITDA below 3.0x, mainly due
to continued revenue losses over the past two years. These revenue
losses began in the wake of the COVID-19 pandemic, when the Mexican
government made cuts to its nonessential spending budget, mainly
affecting the nonrecurring services Axtel provided to federal
entities. Axtel reported debt to EBITDA of 3.6x in the last 12
months as of June 30, 2022 (versus 3.0x in the same period of 2021
and 3.0x we expected in our previous review). This is due to delays
in deploying 5G, constructing data centers in Mexico, as well as
disruptions in the worldwide semiconductor supply. We now expect
Axtel to take more than two years to deleverage below 3.0x, so we
revised our financial risk assessment for the entity to a weaker
category.
"Even though our previous forecast for the company from Dec. 31,
2021, already included lower revenue generation from government
entities through the first half of 2022, we didn't expect some
extraordinary pressures on Axtel's EBITDA generation, such as the
provisions related to the amount due under telecom company Altan's
bankruptcy proceedings of about MXN300 million (plus tax) as
reported in 2021 audited financial statements. Axtel is supporting
Altan in the $388 million financing agreement reached by Altan in
June 2022 with the federal government, creditors, shareholders, and
customers. This will translate in EBITDA margins for Axtel below
30% for 2022 (versus our previously expected 35%).
"Because we expect Alfa to complete the spin-off of Axtel in
upcoming months, we expect Axtel to focus its decision-making on
its future growth and on mitigating the negative effects of high
competition in the market. We will continue to monitor Axtel's
growth strategy and customer growth in the next 12 months to assess
the company's effectiveness and positioning in the industry.
Otherwise, this could lead to a weakening of the business risk
profile.
"Axtel has an upcoming maturity of its senior unsecured notes in
2024. In our view, the company will continue to evaluate and
address in the coming months different refinancing options through
discussions with financial institutions to refinance its notes well
ahead of their maturity. We believe Axtel has well-established
access to different liquidity sources and relationships with banks.
We will continue monitoring this refinancing strategy and if the
company does not provide any updates within the next 12 months, we
could see refinancing risks that could trigger a downgrade."
ESG credit indicators: E-2, S-2, G-2
CREDITO REAL: Faces Mexican Securities Regulator Probe
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Michael O'Boyle of Bloomberg News reports that Credito Real SAB,
Mexico's biggest payroll lender, said it's being probed by the
country's securities regulator.
According to the report, the non-bank lender, which defaulted
this 2022, said in a filing August 17, 2022, that it had
received notification of a raid by the National Banking and
Securities Commission, known as the CNBV. It didn't specify if
regulators had already carried out the inspection.
Representatives for the CNBV and Mexico's finance ministry didn't
immediately respond to requests for comment placed after normal
business hours, the report notes.
Credito Real, which defaulted on a Swiss bond in February 2022,
is seeking to liquidate, adds the report.
About Credito Real SAB
Credito Real SAB de CV SOFOM ENR is a Mexico-based company that
provides consumer financing. Credito is Mexico's biggest payroll
lender and second largest non-bank lender after Real Unifin.
Credito Real provides loans, either by providing direct financing
to consumers or by establishing financing programs with consumer
financing dealers that sell to Credito Real the collection rights
from consumer financing products. It also provides financing
directly to individuals that are employed by corporations with
payroll deduction agreements with consumer financing dealers
authorized by Credito Real. Credito Real operates through a
number
of subsidiaries, including AFS Acceptance LLC.
Three alleged creditors signed a petition to send Credito Real to
Chapter 11 bankruptcy on June 22, 2022 (Bankr. S.D.N.Y. Case No.
22-10842). Institutional Multiple Investment Fund LLC, of Boston,
Massachusetts; Banco Monex, S.A., of Mexico, and Solitaire Fund,
of Liechtenstein, who claim to own an aggregate $8 million of
unsecured bond debt, signed the involuntary Chapter 11 petition.
David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP is
advising the three bondholders.
Despite efforts by bondholders to force the company to pursue a
Chapter 11 restructuring in the U.S., the Debtor opted to pursue
proceedings in Mexico instead. On June 28, 2022, Angel Francisco
Romanos Berrondo, one of the Debtor's shareholders and the former
CEO of Credito Real, filed a petition, in his capacity as a
shareholder, with the Mexican Court seeking to commence the
Mexican Liquidation Proceeding.
On June 30, 2022, the Mexican Court entered an order commencing
the dissolution and liquidation proceedings for the Company and
appointing Mr. Fernando Alonso-de-Florida Rivero as the Mexican
Liquidator.
The liquidator for Credito Real filed a Chapter 15 bankruptcy
petition (Bankr. D. Del. Case No. 22-10630) on July 14, 2022, to
seek U.S. recognition of the Mexican proceedings. The petition
was signed by Robert Wagstaff, the foreign representative of the
liquidator. Richards, Layton & Finger, P.A., led by John Henry
Knight, is counsel in the U.S. case.
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P E R U
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NAUTILUS INKIA: S&P Affirms BB Issuer Credit Rating, Outlook Stable
-------------------------------------------------------------------
On Aug. 24, 2022, S&P Global Ratings affirmed its 'BB' rating on
Nautilus Inkia Holdings SCS, Nautilus Distributions Holdings LLC,
and Nautilus Isthmus Holdings LLC (all referred to as Inkia;
BB/Stable/--) and 'BB-' issue-level rating on its notes.
S&P said, "The stable outlook reflects that we expect leverage of
the parent, Nautilus Energy Holdings LLC (Nautilus or the group;
not rated) to remain below 5.0x in 2022 and 2023 because we
consider this transaction to be neutral in terms of consolidated
leverage.
"We affirmed our ratings on Inkia and kept the stable outlook after
the company's announcement of its cash tender offer for up to $200
million of its $600 million senior unsecured notes due 2027. In
accordance with our criteria, we believe that the transaction is
proactive liability management, well ahead of the notes' final
maturity. Inkia won't face any insolvency or bankruptcy risks if
the offer isn't accepted." The tender offer will be funded through
cash on balance sheet as a result of additional debt that Inkia's
subsidiary, Energuate (not rated), issued during the fourth quarter
of 2021.
If the holders of the current $600 million senior unsecured notes
accept the tender offer prior to the early tender date (Sept. 1,
2022), the notes will be purchased at $990 for every $1,000
exchanged. However, if the tender is accepted between Sept. 2 and
Sept. 16, 2022, the note holders will receive $940. Inkia's
strategy, in this regard, is to repay a portion of its consolidated
debt and decrease associated interest expenses. In addition, as
part of the continuing strategy of generating value through
portfolio optimization, the group could divest assets in the
future. Depending on which assets are sold, net cash sale proceeds
could be used to make additional offers to repurchase the existing
notes. In addition, if future asset sales significantly affect the
company's current scale and business strengths, S&P could lower the
ratings.
S&P said, "We prepared our analysis at the level of Nautilus, which
consolidates several subsidiaries, including Nautilus Inkia
Holdings, Nautilus Distribution Holdings, and Nautilus Isthmus
Holdings. These subsidiaries are co-issuers and jointly responsible
for the $600 million existing bullet notes, which we rate 'BB-'. In
addition, Nautilus consolidates the financial results of the rated
company, Orazul Energy Peru S.A. (Orazul Peru; BB-/Stable/--) and
other operating companies located in Latin America. We treat
Nautilus as a single economic entity bearing the same default risk,
given the level of integration and synergies among the members of
the group, as well as the sharing of the top management and
controlling shareholder."
ESG credit indicators: E-3, S-2, G-2
*********
S U B S C R I P T I O N I N F O R M A T I O N
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