/raid1/www/Hosts/bankrupt/TCRLA_Public/220912.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
Monday, September 12, 2022, Vol. 23, No. 176
Headlines
A R G E N T I N A
ARGENTINA: Gets Vote of Support as IDB Boosts Loan on Massa Trip
GAUCHO GROUP: Incurs $5.3 Million Net Loss in Second Quarter
B R A Z I L
ENTREVIAS CONCESSIONARIA: Fitch Affirms BB- on BRL1BB Debentures
GREAT PANTHER: NYSE American to Commence Delisting Proceedings
MINERVA SA: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable
RIO DE JANEIRO: Fitch Assigns 'B+' LongTerm IDRs, Outlook Stable
D O M I N I C A N R E P U B L I C
[*] DOMINICAN REPUBLIC: Earmarks US$2.17B for Partnerships
J A M A I C A
DIGICEL GROUP: Fitch Lowers LongTerm IDR to 'CCC-'
M E X I C O
CREDITO REAL: Fitch Cuts IDR to 'D' & Then Withdraws Rating
GRUPO MEXICO: Unit Agrees to Buy Planigrupo Latam
MEXARREND SAPI: S&P Downgrades ICR to 'CCC+', Keeps Watch Neg.
V I R G I N I S L A N D S
TANORE FINANCE: Chapter 15 Case Summary
VASCO INVESTMENT: Chapter 15 Case Summary
X X X X X X X X
[*] BOND PRICING: For the Week Sept. 5 to Sept. 9, 2022
- - - - -
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A R G E N T I N A
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ARGENTINA: Gets Vote of Support as IDB Boosts Loan on Massa Trip
----------------------------------------------------------------
Patrick Gillespie and Eric Martin at Bloomberg News report that
Argentina's Economy Minister Sergio Massa has won a major loan
commitment from a key lender on his first trip abroad, a symbolic
victory in his bid to restore some confidence for a government hit
by inflation and political turbulence.
The Inter-American Development Bank proposed a US$1.2-billion loan
to Argentina for the last quarter of the year, larger than the
original US$800 million spread over two loans, according to
Bloomberg News. If the bank's board approves all the expanded
loans, IDB lending to Argentina this year would total US$2.4
billion, according to an IDB statement obtained by the news
agency.
Massa, Argentina's third economy minister since early July, is in
Washington trying to assure US officials and multilateral
institutions that President Alberto Fernandez's government will
fully implement its US$44-billion program with the International
Monetary Fund, the report relays.
Massa, 50, is a career politician who has been dubbed a "super
minister" by local press for consolidating several ministries into
one and giving his position more political weight, the report
notes.
For the IDB, increasing lending to Argentina is a sharp change from
the position of its leader a month ago. IDB President Mauricio
Claver-Carone, a former Trump administration official, wrote a
letter to The Wall Street Journal before Massa took office in July,
hinting that the IDB would withhold new disbursements as political
uncertainty rocked the economy that month, the report discloses.
"Argentina's tumultuous financial record uniquely affects the
bank's costs," Claver-Carone wrote on July 26. "As much as the IDB
wants to approve new funds for Argentina, it cannot rubber-stamp
requests to do so without prudently ensuring it has a development
impact," the report relays.
Claver-Carone sided with Massa in front of reporters and praised
the minister's "coherent and clear policies and clear objectives,"
the report relays.
Massa will meet with IMF managing director Kristalina Georgieva
today, September 12, in Washington, 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.
GAUCHO GROUP: Incurs $5.3 Million Net Loss in Second Quarter
------------------------------------------------------------
Gaucho Group Holdings, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $5.29 million on $405,335 of sales for the three months ended
June 30, 2022, compared to a net loss of $1.32 million on $340,360
of sales for the three months ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $7.56 million on $830,932 of sales compared to a net loss
of $2.46 million on $615,399 of sales for the six months ended June
30, 2021.
As of June 30, 2022, the Company had $25.01 million in total
assets, $10.25 million in total liabilities and $14.75 million in
total stockholders' equity.
As of June 30, 2022, the Company had cash and a working capital
deficit of approximately $255,000 and $4.5 million, respectively.
Gaucho Group said, "Since inception, our operations have primarily
been funded through proceeds received in equity and debt
financings. We believe we have access to capital resources and
continue to evaluate additional financing opportunities. There is
no assurance that we will be able to obtain funds on commercially
acceptable terms, if at all. There is also no assurance that the
amount of funds we might raise will enable us to complete our
development initiatives or attain profitable operations.
"We have not achieved a sufficient level of revenues to support our
business and development activities and have suffered substantial
recurring losses from operations since our inception. Further, as
of June 30, and through the issuance date of these financial
statements, the Company has been unable to sell additional shares
under the Common Stock Purchase Agreement, since the Company is
unable to sell shares under the Common Stock Purchase Agreement at
any time when the Company's common stock is trading below $1.00 on
the Nasdaq. These conditions raise substantial doubt that we will
be able to continue operations as a going concern."
A full-text copy of the For 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1559998/000149315222022821/form10-q.htm
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc. --
http://www.algodongroup.com-- was incorporated on April 5, 1999.
Effective Oct. 1, 2018, the Company changed its name from Algodon
Wines & Luxury Development, Inc. to Algodon Group, Inc., and
effective March 11, 2019, the Company changed its name from
Algodon Group, Inc. to Gaucho Group Holdings, Inc. Through its
wholly-owned subsidiaries, GGH invests in, develops and operates
real estate projects in Argentina. GGH operates a hotel, golf and
tennis resort, vineyard and producing winery in addition to
developing residential lots located near the resort. In 2016, GGH
formed a new subsidiary and in 2018, established an e-commerce
platform for the manufacture and sale of high-end fashion and
accessories. The activities in Argentina are conducted through
its operating entities: InvestProperty Group, LLC, Algodon Global
Properties, LLC, The Algodon - Recoleta S.R.L, Algodon Properties
II S.R.L., and Algodon Wine Estates S.R.L. Algodon distributes its
wines in Europe through its United Kingdom entity, Algodon Europe,
LTD.
Gaucho Group reported a net loss of $2.39 million for the year
ended Dec. 31, 2021, a net loss of $5.78 million for the year
ended Dec. 31, 2020, and a net loss of $6.96 million for the year
ended Dec. 31, 2019. As of March 31, 2022, the Company had $25.16
million in total assets, $10 million in total liabilities, and
$15.16 million in total stockholders' equity.
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B R A Z I L
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ENTREVIAS CONCESSIONARIA: Fitch Affirms BB- on BRL1BB Debentures
----------------------------------------------------------------
Fitch Ratings has affirmed Entrevias Concessionaria de Rodovias
S.A.'s BRL1.0 billion second debentures issuance due in 2030 at
'BB-'/'AA-(bra)' and has revised the Rating Outlook for the
International Scale Rating to Stable from Negative. The Outlook for
the National Scale Rating remains Stable.
The revision of the Long-Term Rating Outlook to Stable from
Negative reflects the revision of the 'BB-' sovereign Rating
Outlook to Stable from Negative on July 14, 2022, as Entrevias is a
toll road and its performance is highly correlated with the
domestic economic environment. Moreover, the concessionaire is
performing in line with Fitch's expectations and current metrics
are commensurate with the assigned ratings as per the applicable
criteria.
RATING RATIONALE
The ratings reflect the operational profile of the concessionaire,
with heavy vehicles representing approximately 60% of the paying
axles. The North Section of the toll road, which crosses Ribeirão
Preto (SP), has a proven traffic base, present moderate volatility
and corresponds to approximately 70% of total traffic. The South
Section, a more recent stretch, is crucial for the region's
agricultural production flow. Entrevias is finishing the
duplication between Marília and Echaporã with almost 80%
completed in July 2022, after that additional tariff could be
charged. The concession agreement provides for annual tariff
increases that track inflation and has an extensive capex plan
until 2025.
The senior debt structure is indexed to inflation and includes a
six-month reserve account. Until 2024, the obligation to perform a
large amount of investments causes debt service coverage ratios
(DSCRs) to be below 1.0x. Nonetheless, the existent restrictions on
cash distribution up to 2024 provide adequate liquidity leading to
a minimum loan life coverage ratio (LLCR) of 1.3x in Fitch's rating
case.
After that period, minimum DSCR is 1.1x and average DSCR is 1.2x,
which is in line with the assigned rating, according to the
applicable criteria. Fitch does not view the minimum DSCR as a
constraint and believes the concessionaire has flexibility to
accommodate the capex plan and preserve the project's liquidity, if
needed.
KEY RATING DRIVERS
Volume Strongly Linked to Economy (Volume Risk - High Midrange)
Entrevias' concession is divided into the North and South sections.
The North Section, which crosses Ribeirão Preto, has a long
traffic track record of operations. The right to collect tolls was
granted to Entrevias in May 2018, after the maturity of the prior
concession. The South Section, which crosses Marília, connects the
states of São Paulo and Paraná, and is crucial for agricultural
production flow. This stretch started collecting tolls for the
first time in October of 2018. The Brazilian logistics network
narrows competition between toll roads. Therefore, the price
elasticity is moderate.
Fitch has revised its assessment of Revenue Risk (Volume) to 'High
Midrange' from 'Midrange' following the publication of its new
Transportation Infrastructure Rating Criteria, which assesses
volume risk on a five-point scale.
Tariffs Adjusted by Inflation (Price Risk - Midrange)
The concession falls under the state of São Paulo jurisdiction and
is regulated by Agência de Transporte do Estado de São Paulo
(ARTESP). Concession contract stipulates annual tariffs
readjustments based on accumulated inflation. Historically, the
grantor has either granted the tariffs adjustments or compensated
for the lack of full pass-through in accordance with the financial
rebalancing mechanisms defined in the concession contract. Despite
the tariff readjustment postponement for the first six months of
2022, the framework is considered robust, and projections consider
an annual tariff increase.
Extensive Capex Plan in the Next Years (Infrastructure
Development/Renewal - Midrange)
Entrevias is expected to undertake a heavy capex plan in order to
comply with the concession agreement, and to accommodate
medium-term traffic forecasts in the South Section of the road in
the region of Marília. Although the company has an adequate
infrastructure and renewal plan, it does not have an Engineering,
Procurement and Construction (EPC) agreement with a major
construction company. However, the construction works are standard,
making it easier to replace the contractor if necessary. Entrevias
forecasts that expansion capex should be concluded by 2025 and no
additional funding will be required.
Cash Trap Mechanism up to 2024 (Debt Structure - Midrange)
The debentures are senior and indexed to inflation, which is also
used to readjust tariffs, providing a natural hedge to the debt.
The amortization profile is fully amortizing, back-loaded and the
debt structure benefits from a six-month debt service reserve
account (DSRA). The debt includes limitations related to additional
indebtedness, restrictions on cash distribution up to 2024 and
dividend lock-up triggers after 2025.
Financial Profile
Entrevias' average DSCR is below 1.0x until 2024. However, the
deficit in cash generation is mitigated by the existence of
significant retained cash balances in the concessionaire to fund
for the high investment plan. Up to 2024, the minimum LLCR under
the rating case is 1.3x. From 2025 onwards, the minimum and average
DSCRs are 1.1x and 1.2x, respectively. The average DSCR is
commensurate with the assigned rating and the minimum DSCR that
occurs in 2028 is not viewed as a constraint as Fitch believes the
concessionaire has some flexibility to accommodate the capex plan.
Entrevias' Long Term rating is currently constrained at the
Sovereign rating level by its strong correlation with the domestic
economic environment. Also, in Fitch's base case, the
concessionaire is able to withstand a 11% traffic decrease in 2024
or a 10% Capex increase before defaulting on its debt service.
These break-evens do not support a rating above the sovereign.
PEER GROUP
Peer Analysis
The closest peer in the region is Autopista del Sol
(B/AA-(cri)/Stable). Autopista do Sol has a lower minimal DSCR
(0.9x) and average DSCR (1.2x), its lower rating is driven by the
tight financial profile that is expected for the coming years with
DSCR close to 1x until 2025.
In Brazil, Entrevias' closest peer is ViaRondon Concessionaria de
Rodovia S.A. (ViaRondon, second debentures issuance's National
Long-Term rating AA-(bra)/Stable Outlook). Both assets are located
in São Paulo state and present some years of DSCR below 1.0x in
Fitch's Rating Case, which is mitigated by retained cash balance.
Furthermore, both concessionaires have similar capex obligations
and DSCR volatility, and present minimum LLCR of 1.3x and average
DSCR of 1.2x under the rating case, which drive the same national
scale rating, despite Entrevias presenting a stronger volume risk
assessment than ViaRondon.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Unexpected completion difficulties leading to delays and cost
overruns beyond those already contemplated in Fitch's
scenarios.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Traffic growth above 5% until the end of 2023, as long as
Capex and cost profile is in line with Management
expectations.
TRANSACTION SUMMARY
Entrevias Concessionaria de Rodovias S.A. is an SPV that owns the
concession rights to explore, to invest and maintain 570km of roads
in the State of Sao Paulo, divided in seven highways and two
stretches that connect the north of the state of Parana and the
southeast of the state of Minas Gerais. The concession was granted
by the State Government of Sao Paulo, intermediated by ARTESP, in
2017 for a period of 30 years (maturity in June 2047).
CREDIT UPDATE
In 2021, traffic levels were in line with Fitch´s base case. In
2022, all months through July presented traffic above 2021 levels.
From January to July of 2022, Entrevias' accumulated traffic was
10.5% above that of 2021 (in equivalent axles). As with many other
assets in São Paulo State, the recovery of light vehicles has
boosted the performance, especially in the second quarter of the
year.
The concessionaire is allowed to charge a higher amount of tariff
for the duplicated section of the road when it concludes the
investments, and as of July 1, almost 80% of the duplication
between Marília and Echaporã was concluded. Entrevias presented
an EBITDA of BRL181 million in the first half of 2022 and as of end
of June 2022 it had a total cash balance (including DSRA) of BRL251
million.
FINANCIAL ANALYSIS
The main assumptions of Fitch's Base Case include:
-- Brazilian Inflation: 8.8% in 2022, 4.5% in 2023 and 3.3% from
2024 onward;
-- Brazilian GDP growth: 1.4% in 2022, 1.0% in 2023, 2.1% in 2024
and 1.5% from 2025 onwards;
-- 2022 traffic would be the actual until July and increase of
1.2x the GDP from August onwards;
-- Investments of BRL1.3 billion between 2022 and 2025.
The same assumptions were used in the rating case, except for the
following:
-- 2022 traffic would be the actual until July and increase of
1.0x the GDP from August onwards;
-- Investments of BRL1.4 billion between 2022 and 2025.
In Fitch's base case and rating cases, minimum LLCR is 1.4x and
1.3x, respectively. The average DSCR under base and rating cases is
1.3x and 1.2, respectively. DSCRs mentioned on this rating action
commentary are calculated according to Fitch's criteria and,
therefore, do not include cash balance.
RATING ACTIONS
Rating Prior
------ -----
Entrevias Concessionaria
de Rodovias S.A.
Entrevias Concessionaria
de Rodovias S.A./
Debentures/1 LT LT BB- Affirmed BB-
Entrevias Concessionaria
de Rodovias S.A./
Debentures/1 Natl LT LT AA-(bra) Affirmed AA-(bra)
GREAT PANTHER: NYSE American to Commence Delisting Proceedings
--------------------------------------------------------------
NYSE American LLC on Sept. 6 disclosed that the staff of NYSE
Regulation has determined to commence proceedings to delist the
common shares of Great Panther Mining Limited -- ticker symbol
"GPL" -- from the Exchange.
NYSE Regulation has determined that the Company is no longer
suitable for listing and will commence delisting proceedings
pursuant to Section 1003(c)(iii) of the NYSE American Company
Guide. On September 6, 2022, the Company disclosed that it has
determined to file a notice of intention to make a proposal under
the Bankruptcy and Insolvency Act (Canada), which will provide
creditor protection while the Company seeks to restructure its
affairs. NYSE Regulation noted the uncertainty as to the timing and
outcome of this process, as well as the ultimate effect on the
value of the Company's common shares.
The Company has a right to a review of staff's determination to
delist the common shares by a Committee of the Board of Directors
of the Exchange. The NYSE American will apply to the Securities and
Exchange Commission to delist the Company's common shares upon
completion of all applicable procedures, including any appeal by
the Company of the NYSE Regulation staff's decision.
The NYSE will announce a suspension date and suspend trading at
such time as i) the Company does not request a review by the
Committee within 7 calendar days of this notice, ii) the Company
determines that it does not intend to appeal, iii) the subsequent
review of the Committee determines that the Company should be
suspended, or iv) there are other material developments. After the
suspension announcement, the NYSE American would then apply to the
Securities and Exchange Commission to delist the common shares.
About Great Panther Mining
Great Panther Mining is a precious metals producer focused on the
operation of the Tucano Gold Mine in Brazil where the Company
controls a land package covering nearly 200,000 hectares in the
prospective Vila Nova Greenstone belt. Great Panther is listed on
the Toronto Stock Exchange under the symbol GPR and on the NYSE
American under the symbol GPL.
MINERVA SA: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Minerva S.A.'s Long-Term Foreign and
Local Currency Issuer Default Ratings (IDRs) at 'BB'. Fitch has
upgraded Minerva's National Scale rating to 'AA+(bra)' from
'AA(bra)' due to the good operational performance, strong liquidity
and expected deleveraging. The Rating Outlook is Stable.
KEY RATING DRIVERS
Improvements to Net Leverage: Fitch expects Minerva's net leverage
to trend toward 2.0x by YE 2022 (2.6x in YE 2021), supported by an
increase in EBITDA close to BRL3 billion in 2022 from BRL2.4
billion in 2021. Our ratings case projects gross leverage to
decrease below 4x by 2023 (5.7x in 2021) and FCF after dividends to
be positive in 2022. In 2Q22, driven by international demand and
high beef prices, LTM net revenues increased by 33.3% yoy to
BRL30.6 billion and LTM EBITDA increased by 27.6% yoy to BRL2.8
billion.
Regional Production Presence: Minerva operates mainly in the beef
business in South American countries, and therefore is less
diversified from a product standpoint than Brazilian-based protein
company JBS S.A. The company acquired two meatpacking units
specialized in sheep in Australia in late 2021, which is still in
the ramp-up phase with limited revenues and profitability
contribution expected in 2022.
As a beef producer, Minerva is exposed to sanitary, environmental,
deforestation and import or export restriction risks. These factors
are somewhat mitigated by the group's geographical diversification,
as Minerva has operations in several countries, including Paraguay,
Uruguay, Argentina, Colombia and Australia.
Steady Profitability Margins: Minerva's sales and earnings are
subject to volatility caused by changes in input costs and protein
prices due to the supply and demand dynamics of commodity meat. The
company has shown resilience in profitability, with an EBITDA
margin of about 9%-10% over the last four years. EBITDA margins are
projected to be maintained at about 9%-10% over the next two years
(9.2% of LTM 2Q22) due to Minerva's geographic diversification and
strong beef demand. Exports accounted for 71% of the company's
total gross revenue as of 2Q22, as Minerva is among the largest
producers of beef in the region, accounting for 20% of total beef
exports in South America.
Strong Export Demand: The beef market continues to benefit from
limited supply and high international demand -- notably in Asia,
while domestic consumption in Brazil remains challenged due to weak
consumer environment and high inflation. The USDA forecasts
Brazil's exports to increase by about 17% in 2022 (-9% yoy in
2021), but expects beef consumption to slightly decline in Brazil
due to a weak consumer environment and high inflation. As of 2Q22,
36% of Minerva's gross revenue came from exports went to China.
DERIVATION SUMMARY
Minerva's ratings reflect its solid business profile as a
pure-player in the beef industry, with a large presence in South
America and small presence in Australia. The ratings consider
Minerva's lack of diversification across other proteins making the
company less diversified from a product standpoint than JBS S.A.
(BBB-/Stable) or Tyson Foods (BBB/Stable).
Minerva has developed a more export-oriented business model,
whereas Marfrig Global Foods S.A. (BB/Positive) has a strong
presence in the U.S. domestic market through its subsidiary
National Beef. About 71% of Minerva's gross revenue is derived from
exports, maintaining Minerva's position as the largest beef
exporter in South America, with a market share of 20% in the
continent.
The company has been able to maintain a stable operating margin
over the years despite several challenges in 2018-2021. These
challenges included external factors such as truck driver strikes
in Brazil in 2018, the temporary shutdown of the Chinese market for
Brazilian beef producers in 2019 and 2021, and the pandemic in
2020.
Minerva is smaller than its peers, such as JBS or Tyson. From a
financial standpoint, the ratings are supported by Minerva's strong
liquidity position, with cash sufficient to amortize its debt
through 2026 and good profitability for the sector due to exports.
KEY ASSUMPTIONS
-- Revenue growth driven by export and high beef prices;
-- EBITDA to reach BRL3 billion in 2022;
-- Net debt/EBITDA close to 2x by YE22.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Substantial decrease in gross and net leverage to below 3.5x
and 2.0x, respectively, on a sustained basis;
-- Sustainable positive FCF generation;
-- Increased scale, product and geographical diversification in
an investment-grade country.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Gross leverage above 4.5x and net leverage above 3.0x on a
sustainable basis;
-- Sharp contraction of Minerva's performance.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: Cash and cash equivalents totaled BRL6.2 billion
and short-term debt totaled about BRL1.9 billion as of June 30,
2022. Total debt was BRL12.8 billion, of which 15% was short-term
debt. Minerva's cash and cash equivalents are sufficient to
amortize its debt through 2026. 68% of gross debt was denominated
in foreign currency (mainly U.S. dollars) as of 2Q22. The company
hedges at least 40% of the long-term foreign exchange exposure.
ISSUER PROFILE
Minerva Foods is the South American leader in beef exports,
operating in the processing segment and selling its products to
over 100 countries. Currently, the company has a daily slaughtering
capacity of 29,350 head of cattle. Present in Brazil, Paraguay,
Argentina, Uruguay, Colombia and Australia, Minerva operates 27
slaughter and deboning plants and three processing plants.
ESG CONSIDERATIONS
Minerva S.A. has an ESG Relevance Score of '4' for Governance
Structure due to ownership concentration, which has a negative
impact on the credit profile, and is relevant to the rating[s] in
conjunction with other factors.
Minerva S.A. has an ESG Relevance Score of '4' for Waste &
Hazardous Materials Management; ecological impacts due to land use
& supply chain management as Minerva is exposed to cattle sourcing
and need to monitor direct and indirect suppliers in South America
which could expose Minerva as well the beef sector in general to
export bans which has a negative impact on the credit profile, and
is relevant to the rating[s] in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
RATING ACTIONS
Rating Prior
------ -----
Minerva Luxembourg S.A.
senior unsecured LT BB Affirmed BB
Minerva S.A. LT IDR BB Affirmed BB
LC LT IDR BB Affirmed BB
Natl LT AA+(bra) Upgrade AA(bra)
RIO DE JANEIRO: Fitch Assigns 'B+' LongTerm IDRs, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has assigned the City of Rio de Janeiro Long-Term
Foreign Currency and Local Currency Issuer Default Ratings (IDRs)
of 'B+'. The Rating Outlook is Stable. Fitch has also assigned the
city Short-Term Foreign and Local Currency IDRs of 'B', a National
Long-Term rating of 'A(bra)', and a National Short-Term Rating of
'F1(bra)'. The City of Rio de Janeiro Standalone Credit Profile
(SCP) is assessed at 'b+' and no other factors affect the
municipality's ratings.
The City of Rio de Janeiro's ratings reflect the combination of a
'Weaker' risk profile and 'a' debt sustainability assessment under
Fitch rating case scenario. The SCP is assessed at 'b+' and factors
in a comparison with national and international peers. The city's
'B+' IDRs are not affected by any other rating factors. Its
national scale rating is based on a national peer comparison.
KEY RATING DRIVERS
Risk Profile - Weaker
The Weaker assessment reflects Fitch's view of a high risk that the
issuer's ability to cover debt service with the operating balance
may weaken unexpectedly over the scenario horizon (2022-2026) due
to lower revenue, higher expenditure or an unexpected increase in
liabilities or debt-service requirements.
Revenue Robustness - Midrange
The Brazilian tax collection framework transfers to states and
municipalities a large share of the responsibility to collect
taxes. Constitutional transfers exist as a mechanism to compensate
poorer entities, so a high dependency on transfers is a weak
feature for a Brazilian Local and Regional Government (LRG).
Fitch assesses the transfers ratio (transfers to operating
revenues) to evaluate LRGs' revenue dependency. LRGs that report a
transfer ratio above or equal to 40% are classified as weaker,
while others with a ratio below 40% are classified as Midrange. The
City of Rio reports relatively high fiscal autonomy, which drives
this factor to midrange. Transfers represented 32.6% of operating
revenues for the average of 2017-2021.
Historically, revenue growth has performed above GDP growth. During
2017-2021 CAGR was 4.6% in real terms for operating revenues,
compared to average annual GDP growth of 0.9%.
Revenue Adjustability - Weaker
Brazilian states and municipalities have low capacity for revenue
increase in response to a downturn. There is low affordability of
additional taxation given that tax tariffs are close to the
constitutional national ceiling.
The most important municipal tax is the ISS (imposto sobre
serviços - tax on services), which represented 48% of tax
collection in 2021. The top-10 ISS tax payers represented 11.8% of
ISS tax collection as of 2022.
Per capita GDP reached BRL 52,833 in 2021, which represents 1.5x
the national per capita GDP. Nonetheless, as with other large urban
centers in Brazil, Rio suffers from high inequality, with a
significant proportion of its population working on the informal
sector, creating challenges for tax collection adjustability.
Expenditure Sustainability - Midrange
Municipalities are mostly engaged in providing healthcare and
elementary education services. Expenditure tends to grow with
revenues as a result of earmarked revenues. This results in a
procyclical behavior in good times, as periods of high revenue
growth result in a similar behavior for expenditures. However, due
to the big weight of personal expenditures and salary rigidity,
downturns that result in lower revenues are not followed by similar
drops in expenditures.
The City of Rio demonstrated moderate control over expenditure
growth over the last five years. There were salary delays and also
accumulated arrears towards suppliers by the end of 2020. The
recovery started in the 2Q2021, and the municipality is now current
on its payroll and has worked a repayment schedule with suppliers.
There were no salary increases in 2019-2020, following the federal
Complementary Law 173, which transferred extraordinary resources to
LRGs, but required measures to curb expenditure growth.
Operating margins averaged 4.8% between 2017-2020 and recorded an
impressive 22% ratio in 2021 on the back of a stable payroll bill
and the economic recovery that followed the pandemic, further
boosted by high inflation. Going forward, the City of Rio has
adopted measures to control expenditure growth, such as the New
Fiscal Regime (municipal law), which provides the municipality with
instruments to cut expenditures when its classification under the
CAPAG (National Treasury - Payment Capacity Assessment)
deteriorates.
Expenditure Adjustability - Weaker
Fitch assesses the municipality's ability to reduce spending in
response to shrinking revenue as weak. As per the Brazilian
constitution, there is little room for expenditure reduction
especially in salaries. As a result, when there is an unpredictable
reduction in revenues, operating expenditure does not follow
automatically. In addition, there is high share of inflexible costs
since there is close to 90% share of mandatory and committed
expenditures. Consequently, capex represented on average 5% of the
municipality's total expenditures for the 2017-2021 period, which
supports the weaker assessment.
Liabilities & Liquidity Robustness - Midrange
There is a moderate national framework for debt and liquidity
management since there are prudential borrowing limits and
restrictions on loan types.
Under the Fiscal Responsibility Law (LRF) of 2000, Brazilian LRGs
have to comply with indebtedness limits. Consolidated net debt for
municipalities cannot exceed 1.2x (120%) of net current revenue.
The City of Rio complies with the Fiscal Responsibility Law,
reporting a debt ratio of 42.8% as of December 2021. The LRF also
sets limits for guarantees (22% of net current revenues). The City
of Rio reported no guarantees as of December 2021.
As of December 2021, external debt totaled BRL5.9 billion,
corresponding to 31% of total financial debt. Foreign debt
amortization is expected to average BRL 330 million annually until
2026 and there is no significant maturity concentration throughout
the amortization period. External debt is largely owed to
multilateral organizations and counts with federal government
guarantee. Debt directly owed to the Federal Government represented
only 3.2% of direct debt in December 2021.
There is some off-balance sheet risk stemming from the pension
system for the City of Rio, which is low when compared to Brazilian
States, given that municipalities do not carry the burden of
pensions related to public security. The municipality transfers
additional resources annually to cover for the pension deficit.
The Brazilian credit market for subnational government is rather
limited and highly controlled by the federal government. Often,
LRGs will opt for new loans with federal guarantees, which are only
granted to subnationals rated 'A' or 'B' under the National
Treasury CAPAG. Rio has an agreement with the federal government,
which allows it to access new loans with federal guarantee in the
amount of up to 3% of net current revenues, even if the
municipality is not complying with the CAPAG. Rio currently has a
CAPAG score of 'B'.
Liabilities & Liquidity Flexibility - Weaker
One of the metrics analyzed by the Brazilian National Treasury for
LRGs to borrow with Federal Government guarantees (CAPAG) is the
liquidity rate, measured by LRGs' short-term financial obligation
to net cash.
The requirement in order for the Federal Government to rate this
ratio 'A' is 100%. Similarly, Fitch has set a trigger of 100% on
the average of last three years (2019-2021 year-end) together with
the last year-end available (Dec 2021) below 100% to assess this
factor as "midrange". The City of Rio presented an average of this
index of -370.5 and 158.3% as of December 2021.
Debt Sustainability - 'a' category
Debt sustainability is assessed as 'a'. Fitch rating case
forward-looking scenario indicates the payback ratio (net direct
risk to operating balance), which is the primary metric of the debt
sustainability assessment, will reach an average of 7.2x for the
2024-2026 period, which is aligned with the 'aa' category. Fitch
applies an override due to the actual debt service coverage ratio,
the secondary metric, at 1.4x for the average of 2024- 2026, which
is aligned with the 'bbb' category. Fiscal debt burden is projected
at 46.3% for the same period.
For its rating case, Fitch takes into consideration the
municipality's historical performance and projections for main
macro variables, such as GDP growth and inflation. The rating case
is inherently a stressed scenario. Operating revenues are expected
to grow 3.8% on average between 2022 and 2026, largely driven by
tax collection. Operating spending growth reflects government
projections for 2022-2023. Going forward, Fitch applies a growth
rate related to inflation plus spread.
Fitch considers new loans disbursement to follow the schedule
informed by the government. Debt amortization and interest payments
also reflect government projections.
KEY ASSUMPTIONS
Risk Profile
Weaker
Revenue Robustness
Midrange
Revenue Adjustability
Weaker
Expenditure Sustainability
Midrange
Expenditure Adjustability
Weaker
Liabilities and Liquidity Robustness
Midrange
Liabilities and Liquidity Flexibility
Weaker
Debt Sustainability
a
Budget Loans (Notches)
N/A
Ad-Hoc Support (Notches)
N/A
Asymmetric Risks (Notches)
N/A
Cap
'BB'
Floor
N/A
Quantitative Assumptions - Issuer Specific
Fitch's rating case is a "through-the-cycle" scenario, which
incorporates a combination of revenue, cost and financial risk
stresses. It is based on 2017-2021 figures and 2022-2026 projected
ratios. The key assumptions for the scenario include:
- Yoy 3.8% increase in operating revenue on average in 2022-2026;
- Yoy 6.9% increase in tax revenue on average in 2022-2026;
- Yoy 8.0% increase in operating spending on average in 2022-
2026;
- Net capital balance of - BRL 863 million on average in 2022-
2026;
- Cost of debt: 4.5% in 2022, 4% in 2023; 3.5% in 2024-2026.
Quantitative assumptions - sovereign related
Figures as per Fitch's sovereign actual for 2021 and forecast for
2022-2026.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The City of Rio de Janeiro's IDRs would be upgraded if its
actual debt service coverage ratio improves to above 1.5x over the
forecast horizon, provided that its payback ratio remains below
9x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The City of Rio de Janeiro's IDRs would be downgraded if its
operating balance deteriorates significantly, leading to a payback
ratio above 13x and an actual debt service coverage ratio below
1x.
LIQUIDITY AND DEBT STRUCTURE
Net adjusted debt considers BRL 18.8 billion of direct debt and
unrestricted cash of BRL3.6 billion as of December 2021. Fitch
estimates that close to 39% of debt is guaranteed by the federal
government, while 3% is debt owned directly to the federal
government. Rio's largest creditors are the World Bank, BNDES and
CEF. The large debt with the World Bank refers to a contract of
2010, when Rio restructured its debt towards the federal government
in exchange for a debt with the World Bank. All foreign currency
debt is guaranteed by the federal government.
Liquidity improved in 2021 on the back of strong revenue growth and
tight control over expenditures. Rio had accumulated delayed
payments towards suppliers and even salaries, with negative
unrestricted cash in 2020. The municipality is now current on its
payroll and entered into an agreement with suppliers to perform
delayed payments. The sizable cash position is expected to be used
to finance CAPEX. Going forward, unrestricted cash is expected to
decrease but remain positive.
ISSUER PROFILE
Fitch classifies the City of Rio de Janeiro as a Type B LRG, which
are required to cover debt service from cash flow. Rio has the
second highest municipal GDP in Brazil, accounting for 4.8% of
national GDP. The city is headquarters to Brazilian oil, mining and
telecommunication companies. It is one of the most visited cities
in the Southern Hemisphere, known for its natural attractions and
festivities such as Carnival. Rio's economy is highly related to
the performance of the oil and tourism sectors.
RATING ACTIONS
ENTITY RATING PRIOR
------ ------ -----
Rio de Janeiro, City of
LT IDR B+ New Rating WD
ST IDR B New Rating WD
LC LT IDR B+ New Rating WD
LC ST IDR B New Rating WD
Natl LT A(bra) New Rating WD(bra)
Natl ST F1(bra) New Rating WD(bra)
===================================
D O M I N I C A N R E P U B L I C
===================================
[*] DOMINICAN REPUBLIC: Earmarks US$2.17B for Partnerships
----------------------------------------------------------
Dominican Today reports that the General Directorate of
Public-Private Partnerships (APP) has channeled investment of
RD$119.6 billion (US$2.17 billion) with 20 works received, of which
four have been declared of public interest and two are in the
competitive process, nine are being evaluated and seven have been
discarded because they do not meet the requirements established by
law.
The director of this institution, Sigmund Freund, indicated that
the support of multilateral organizations such as the World Bank,
USAI, CABEI, CAF and other financial institutions has been
obtained, which have been key to institutional strengthening,
knowledge of good practices and the guidelines for an efficient
structure of PPP initiatives, according to Dominican Today.
First Project
Among the first results is the tender for the construction of the
first hotel of three to be built in Pedernales, as part of the
tourism development project for that province and the southern
region, which the government has proposed, the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
=============
J A M A I C A
=============
DIGICEL GROUP: Fitch Lowers LongTerm IDR to 'CCC-'
--------------------------------------------------
Fitch Ratings has downgraded the Long-Term Issuer Default Rating
(IDR) of Digicel Group Holdings Limited (DGHL) to 'CCC-' from 'CCC'
as well as the IDR of Digicel Limited (DL) to 'CCC-' from 'CCC+'.
The IDR of Digicel International Finance Limited (DIFL) was also
downgraded to 'CCC+' from 'B-'.
The downgrade of DL reflects the high refinancing risk of its $925
million unsecured notes maturing in March 2023 due to challenging
market conditions; limited cash flow from DIFL was also a
consideration in the downgrades of DL and DGHL.
The downgrade of DIFL reflects the risk of a comprehensive
restructure with incremental debt being added to its capital
structure, as was done during Digicel's 2020 debt restructuring.
KEY RATING DRIVERS
Elevated Refinancing Risk: The group's ability to successfully
refinance DL's USD925 million senior unsecured notes due in March
2023 outside of a coercive exchange remains uncertain due to
deteriorating macroeconomic fundamentals, rising interest rates and
unfavorable market conditions. There is a low margin of safety for
the company, and a default and/or default like process is a real
possibility. In Fitch's view, there is an increasing likelihood a
comprehensive restructure across the various entities due to the
maturity of more than 70% of the group's consolidated debt within
two years.
Unsustainable Leverage: The company's operating performance has
been stable to declining given weak macro conditions in its key
markets and foreign exchange weakness. The Haitian Gourde has been
volatile in the last years, and has continued to depreciate so far
this year. Fitch forecasts consolidated net leverage around 7x in
FY24 considering proforma debt of USD4.5 billion, cash declining to
less than USD400 million from close to USD600 million proforma as
of 2Q22, and operating EBITDA recovering slightly from USD580
million in FY22 to USD610 million in FY24. This level of EBITDA
after maintenance capex is not sufficient to reduce debt in a
meaningful way.
Rating Compression: Fitch rates DIFL, DL and DGHL using its Parent
and Subsidiary Linkage Rating Criteria (PSL), which limits DIFL's
rating to two notches higher than the 'CCC-' rating of its ultimate
parent, DGHL. The PSL factor Access & Control for DIFL was deemed
to be porous due to the limited visibility regarding DIFL's ability
to maintain its capital structure. The most recent restructuring
suggests that there has been an ability to move credit risk between
subsidiaries and holding companies.
The PSL factor Legal Ring Fencing is also deemed as porous due to
limited visibility about the permanence of existing covenants given
the amount of debt maturing within the group within the next 24
months. Depending on the final outcome on
refinancing/restructuring, the rating differential between DL and
DGHL and DIFL could compress. DL and DGHL are seen as having
similarly distressed credit profiles resulting in IDRs at the same
level.
Varying Recovery Prospects: Fitch forecasts recovery rates
commensurate with RR1 for DIFL creditors due their closeness to the
assets and outstanding recovery prospects; however, these debt
instruments are capped at 'RR4', resulting in ratings equal to the
IDRs. Fitch's Country-Specific Treatment of Recovery Ratings
Criteria constrains the upward notching of instruments, based on
concerns about the rule of law, insolvency regimes and creditor
protections in a given jurisdiction. The ratings of the senior
unsecured at DL have an 'RR5' given below average recovery
prospects while DGHL's unsecured and convertible debt reflect poor
recovery prospects.
ESG - Aggressive Corporate Governance: Digicel's decision to
restructure debt twice remains a constraint on the ratings and its
corporate governance is deemed weak. The group has a concentrated
ownership and control structure with a single shareholder who owns
and controls the group and is heavily involved in the day-to-day
operations of the business. Digicel's complex group structure and
incorporation status in dozens of countries results in a complex
group structure that weakens both Digicel's corporate governance
and the group's consolidated credit profile.
DERIVATION SUMMARY
DGHL's solid business profile, with leading mobile market shares in
its well-diversified operational geographies supported by network
competitiveness, is stronger than Oi S.A. (CCC+), which has also
restructured its debt. Similar to Oi, Digicel has very limited
financial flexibility and a weak financial structure.
Digicel's financial profile is materially weaker than its regional
diversified telecom peers in the speculative-grade rating
categories, including Millicom International Cellular S.A.
(BB+/Stable), and Cable & Wireless Communications Limited
(BB-/Stable). Digicel's business profile is relatively less
diversified on a service basis, given its reliance on mobile and a
position in generally poorer countries with significant exchange
rate volatility.
The aggressive corporate governance resulting in two debt
restructurings is a negative for the group's ratings. Under Fitch's
Country-Specific Treatment of Recovery Ratings Criteria, the agency
caps Digicel's debt instruments at 'RR4'; therefore, the
instruments' ratings are capped at the issuers' IDRs.
KEY ASSUMPTIONS
-- Revenues trend toward USD2.0 billion in FY 2025 from
USD1.8billion in FY 2022;
-- Operating EBITDA margins around 33% relatively flat compared
with FY 2022;
-- Cash taxes of USD90 million/year;
-- Average capex of around USD275 million/year to USD300
million/year.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful refinancing of outstanding debt without a material
reduction of the original terms, such as but not limited to, a
reduction to principal and/or interest or fees;
-- Faster than expected growth in mobile service revenues leading
to EBITDA expansion coupled with net leverage declining toward
5.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade may occur if, in Fitch's judgment, a default or
default-like process has begun, which would be represented by
a 'CC' or 'C' rating.
LIQUIDITY AND DEBT STRUCTURE
Weak Liquidity: DL faces USD925 million in notes maturing in March
2023. There is only minimal cash at this subsidiary as USD162
million of consolidated cash of USD168 million as of June 2022 was
at DIFL and its subsidiaries. In addition to cash at DL and DIFL,
DGHL's proforma cash as of 2Q22 considering the sale of DPL and
repaying USD1.1 billion of debt was around USD400 million. In
addition, USD2.2 billion of DIFL's secured debt matures in 2024 of
which USD1.2 billion is fixed rate debt at risk of resetting at
higher rates
Fitch believes that DGHL will consume close to USD150 million in
FY23 on a consolidated neutral working capital basis and including
lease payments while DIFL should generate only around USD20 million
to service debt at higher parts of the capital structure.
DGHL's proforma financial debt as of 2Q22 was approximately USD4.4
billion of which USD2.8 billion is at the DIFL, USD1 billion at DL
and USD0.6 billion at DGHL. In addition, there are approximately
USD100 million of accrued interest. DGHL's debt includes USD212
million of convertible PIK notes.
DGHL received net proceeds of USD1.3 billion from the sale of its
Pacific operations of which it used USD1.1 billion to redeem the
DGHL 10.0% senior secured notes due 2024 in July 2022. The
transaction included an additional USD250 million in earnouts
should DPL meet certain revenue performance targets in fiscal years
2022-2024. The target for FY22 was met, which represents USD50
million to be received in September 2022. The remaining USD200
million earnouts could represent additional liquidity should DPL
continue to perform. In addition, there is close to USD200 million
in various escrows. Fitch has not built the remaining earnouts or
escrow amounts into its projections given the uncertainty in
receiving these funds.
ISSUER PROFILE
Digicel is a diversified telecom operator that provides mobile and
fixed-line services to consumers and businesses in the Caribbean.
ESG CONSIDERATIONS
Digicel Group Holdings Limited has an ESG Relevance Score of '5'
for Group Structure due to its complex group structure and
incorporation status in dozens of countries, which has a negative
impact on the credit profile, and is highly relevant to the rating,
resulting in an implicitly lower.
Digicel Group Holdings Limited has an ESG RS of '5' for Governance
Structure due to the concentrated nature of its decision and
willingness to restructure debt, which has a negative impact on the
credit profile, and is highly relevant to the rating, resulting in
an implicitly lower rating.
Digicel Group Holdings Limited has an ESG RS of '4' for Exposure to
Environmental Impacts due to its presence in a hurricane prone
region, which has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
Digicel Group Holdings Limited has an ESG RS of '4' for Financial
Transparency due to the company's relatively opaque financial
strategy and willingness to restructure debt, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
RATING ACTIONS
ENTITY / DEBT RATING RECOVERY PRIOR
------------- ------ -------- -----
Digicel International
Finance Limited
LT IDR CCC+ Downgrade B-
senior secured LT CCC+ Downgrade RR4 B-
senior unsecured LT CCC+ Downgrade RR4 B-
junior subordinated LT CCC+ Downgrade RR4 B-
Digicel Group Holdings
Limited
LT IDR CCC- Downgrade CCC
senior unsecured LT C Downgrade RR6 CC
Subordinated LT C Downgrade RR6 CC
Digicel Limited
LT IDR CCC- Downgrade CCC+
senior unsecured LT CC Downgrade RR5 CCC+
===========
M E X I C O
===========
CREDITO REAL: Fitch Cuts IDR to 'D' & Then Withdraws Rating
-----------------------------------------------------------
Fitch Ratings has downgraded Credito Real, S.A.B. de C.V., Sociedad
Financiera de Objeto Multiple, Entidad No Regulada's (Credito Real)
Long- and Short-Term Local and Foreign Currency Issuer Default
Ratings (IDRs) to 'D' from 'RD'. Fitch has also downgraded Credito
Real's Long- and Short-Term National Scale ratings to 'D(mex)' from
'RD(mex)'.
At the same time, Fitch has withdrawn all of Credito Real's
ratings, including the 'C'/'RR4' unsecured debt ratings and
'C'/'RR6' hybrid notes ratings, due to the default of the entity.
KEY RATING DRIVERS
The ratings downgrades to 'D' and 'D(mex)' indicate that, in
Fitch's opinion, some form of liquidation proceeding is ongoing, as
signaled by the announcements made by the company over the past two
months.
On July 14, 2022, Credito Real announced the publication of a
judgment issued by a commercial court in which its dissolution was
recognized and its judicial liquidation was ordered. The company
also indicated that a duly qualified judicial liquidator has been
appointed and has assumed office.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Negative rating sensitivities are not applicable as the ratings
have been withdrawn.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Positive rating sensitivities are not applicable as the ratings
have been withdrawn.
ESG CONSIDERATIONS
Following the withdrawal of ratings for Credito Real, Fitch will no
longer be providing the associated ESG Relevance Scores.
GRUPO MEXICO: Unit Agrees to Buy Planigrupo Latam
-------------------------------------------------
Reuters reports that a unit of Mexican mining company Grupo Mexico
has agreed to buy Planigrupo Latam for 14.20 pesos per share, the
companies said.
The offer by Mexico Proyectos y Desarrollos values the Mexican
shopping mall company at around 4.7 billion Mexican pesos ($235.7
million), Grupo Mexico said in a statement.
Planigrupo said an agreement had been reached with affiliates of
majority owner Southern Cross Group, a private investment firm that
represents shareholders such as Atevco, Builtex and Pylon Holding.
Planigrupo had initially set its IPO price at 19.75 pesos per share
when it launched on Mexico's stock exchange in 2016.
The shares have since fallen to around 17 pesos, according to
Refinitiv data, which puts the company's market value at 5.4
billion pesos during closing.
Planigrupo had said earlier this year it had received buyout offers
from Grupo Acosta Verde but that it was considering other options.
Grupo Mexico said the purchase "represents a strategic investment
for the company's infrastructure division" and would diversify its
revenue streams.
The companies said the deal remains subject to approval from
regulators and shareholders.
About Grupo Mexico
Grupo Mexico SA de C.V. -- http://www.grupomexico.com/-- through
its ownership of Asarco and the Southern Peru Copper Company,
is the world's third largest copper producer, fourth
largest silver producer and fifth largest producer of zinc and
molybdenum.
* * *
As of August 14, 2010, Grupo Mexico continues to carry Fitch's
BB+ Issuer Default ratings.
MEXARREND SAPI: S&P Downgrades ICR to 'CCC+', Keeps Watch Neg.
--------------------------------------------------------------
S&P Global Ratings lowered its long-term global scale issuer credit
rating on Mexican lender, Mexarrend S.A.P.I. de C.V. to 'CCC+' from
'B-'. S&P also lowered its national scale rating to 'mxB-/mxB' from
'mxB+/mxB'. At the same time, S&P lowered its issue-level rating on
Mexarrend's senior unsecured bonds to 'CCC+' from 'B-'. S&P's
maintaining all ratings on CreditWatch negative.
Mexarrend has market debt maturities of about $127 million during
the next 12 months. These include $30 million of its international
bond due Oct. 11, 2022, the equivalent of $66 million in short-term
maturities in the Mexican bond market (Cebures), and $31 million in
interest payments.
Mexarrend is also exploring other funding alternatives that could
strengthen its liquidity and could be used to pay short-term
obligations while enabling the entity to keep originating credit
loans. Nonetheless, some of these options remain pending, which
increases the lender's refinancing risk, especially amid the highly
challenging financing conditions for the nonbanking financial
institution (NBFI) sector in Mexico.
S&P said, "In our opinion, Mexican NBFIs will confront a grimmer
economic outlook in the next 12 months. In addition to the NBFIs'
already restricted access to international debt markets, we now
believe Mexarrend could also struggle accessing funding in the
domestic capital market. In this sense, Mexarrend was unable to
refinance its most recent short-term market debt maturity in the
Mexican local market (Cebures) last week for MXN110 million.
"Given Mexarrend's low cash in hand, we believe if some of its
funding plans don't materialize while the Mexican bond market
remains closed to the entity, its ability to meet its short-term
financial obligations would be undermined. Mexarrend has debt
market maturities of about $127 million during the next 12 months,
which include $30 million of its international bond due next month,
the equivalent of $66 million in short-term maturities in the
Cebures market, and $31 million in interest payments. Mexarrend has
maintained a monthly average cash balance of MXN438 million ($20
million) during 2022, which gives the lender a narrow buffer to
comply with its short-term maturities.
"As a result of difficult financing conditions, Mexarrend is
seeking alternative funding sources that rely on obtaining
securitized debt. However, we expect Mexarrend to face obstacles in
tapping these alternative funding sources because of the adverse
financing conditions, which increase its refinancing risk ahead of
its upcoming maturities. Mexarrend is still negotiating a secured
loan, which it could use to pay its market debt maturity of Oct.
11, 2022. Nevertheless, this negotiation is still ongoing."
Mexarrend has also three warehousing credit facilities for $345
million from the U.S. International Development Finance Corp.,
Credit Suisse, and HSBC to fund its expected portfolio loan growth
in 2022-2023. Mexarrend has disclosed that it could use these
credit facilities to repay its upcoming maturities. Nevertheless,
Mexarrend must accumulate a sufficient portfolio act as a
collateral for disbursements of these facilities. According to the
company, it has more than $50 million of eligible loans that it
could use as collateral for these credit lines. Additionally, the
company could use its collateral collection as a liquidity source
to comply with its obligations.
Nevertheless, given that Mexarrend will have to use the bulk of its
eligible loan portfolio as a collateral, this will undermine its
financial flexibility and liquidity.
===========================
V I R G I N I S L A N D S
===========================
TANORE FINANCE: Chapter 15 Case Summary
---------------------------------------
Chapter 15 Debtor: Tanore Finance Corporation
Trident Chambers
P.O. Box 146
Road Town, Tortola VG1110
British Virgin Islands
Foreign Proceeding: Eastern Caribbean Supreme Court, High
Court of the BVI, Commercial Division
Chapter 15 Petition Date: August 31, 2022
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 22-16803
Foreign
Representatives: Angela Barkhouse
Helen Janes
Carl Jackson
142 Seafarers Way
George Town, Grand Cayman KY1-9006
Cayman Islands
Foreign
Representatives'
Counsel: Gregory S. Grossman, Esq.
Juan J. Mendoza, Esq.
Jennifer Mosquera, Esq.
SEQUOR LAW, P.A.
1111 Brickell Avenue, Suite 1250
Miami, FL 33131
Tel: (305) 372-8282
Email: ggrossman@sequorlaw.com
jmendoza@sequorlaw.com
jmosquera@sequorlaw.com
Estimated Assets: Unknown
Estimated Liabilities: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/YFUXXFI/Tanore_Finance_Corporation__flsbke-22-16803__0001.0.pdf?mcid=tGE4TAMA
VASCO INVESTMENT: Chapter 15 Case Summary
-----------------------------------------
Chapter 15 Debtor: Vasco Investment Services S.A.
Level 1, Palm Grove House
Wickham's Cay 1
Road Town, Tortola VG1110
British Virgin Islands
Chapter 15 Petition Date: August 31, 2022
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 22-16808
Foreign Proceeding: Eastern Caribbean Supreme Court,
High Court of the BVI, Commercial
Division
Foreign Representatives: Angela Barkhouse
Helen Janes
Carl Jackson
142 Seafarers Way
George Town, Grand Cayman KY1-9006
Cayman Islands
Foreign Representatives'
Counsel: Gregory S. Grossman, Esq.
Juan J. Mendoza, Esq.
Jennifer Mosquera, Esq.
SEQUOR LAW, P.A.
1111 Brickell Avenue, Suite 1250
Miami, FL 33131
Tel: (305) 372-8282
Email: ggrossman@sequorlaw.com
jmendoza@sequorlaw.com
jmosquera@sequorlaw.com
Estimated Assets: Unknown
Estimated Liabilities: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/YP7MR5Q/Vasco_Investment_Services_SA__flsbke-22-16808__0001.0.pdf?mcid=tGE4TAMA
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week Sept. 5 to Sept. 9, 2022
-------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Esval SA 3.5 49.9 2/15/2026 CL CLP
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
*********
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
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Chapman, Editors.
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