/raid1/www/Hosts/bankrupt/TCRLA_Public/221004.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
Tuesday, October 4, 2022, Vol. 23, No. 192
Headlines
A R G E N T I N A
ARGENTINA: Strike Hits Airports as Union Tensions Continue to Rise
C A Y M A N I S L A N D S
ZHENRO PROPERTIES: Moody's Cuts CFR to Ca & Sr. Unsec. Rating to C
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Deputy Asks to Lower Gas & Gasoline Prices
DOMINICAN REPUBLIC: Fuel Prices Will Remain The Same This Week
E L S A L V A D O R
BANCO DAVIVIENDA: Fitch Lowers Viability Rating to 'cc'
EL SALVADOR: IDB Approves $106 Million Loan to Revive Tourism
G U Y A N A
GUYANA: Inflation Increased Markedly Since 2021, IMF Says
J A M A I C A
UC RUSAL: Weighs Plans to Sell Aluminum Directly to LME
P E R U
PERU: At the Bottom of the Mining Competitiveness Index
P U E R T O R I C O
WILMER TACORONTE ORTIZ: Creditor OSP Seeks Leave to File Sur-Reply
T R I N I D A D A N D T O B A G O
PETROLEUM CO: No Clear Plans for Refinery, Ex-Exec Shows Concern
- - - - -
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A R G E N T I N A
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ARGENTINA: Strike Hits Airports as Union Tensions Continue to Rise
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Buenos Aires Times reports that domestic and international
travelers going through airports in Buenos Aires were delayed by
strike action as labor unrest forced the cancellation of flights.
Air traffic at Ezeiza International Airport, on the outskirts of
the capital and Buenos Aires City's Jorge Newbery Airport, was
badly affected by industrial action launched by the Association of
State Workers (ATE) union based on a wage and contract dispute,
according to Buenos Aires Times.
At least 12 flights to destinations including San Luis, Formosa,
Jujuy, Rosario, Bahia Blanca and Rio Grande were cancelled with
state airline Aerolineas Argentinas hit by staff shortages, the
report notes.
The strike continued until September 28, said Marcelo Belelli, the
national coordinator of the ATE-ANAC workers unions, in comments
reported by Perfil.com, the report relays.
"Although there were some talks between the parties, no mandatory
conciliation was requested, so the strike continues," he said,
adding that the ATE call for a strike was nationwide, the report
notes.
Belelli said that the union is seeking an "emergency wage increase"
from the government, as well as "the opening of negotiations to
beat inflation and the fulfillment of the transfer of 30,000
workers in the sector to permanent status," the report says.
The decision to walk-off the job was taken by the workers in a
national plenary meeting involving more than 50 delegates from all
over the country, the report notes. Union-workers have called
another strike for October 5 to strengthen their hand, the report
says.
The report relays that chaos prevailed at Aeroparque Jorge Newbery,
where all operations were paralyzed. Three flights to Jujuy were
quickly cancelled, as well as trips to Formosa, Tucumán, Rosario,
San Luis and Bariloche, the report notes.
At Ezeiza, Argentina's main international terminal, three flights
to Bariloche and one to Rio Grande were cancelled, the report
discloses. Flights to Sao Paulo and Porto Seguro were delayed, the
report says.
Rosario International Airport later announced a cessation of
activity for the day, affecting 12 flights to Aeroparque Jorge
Newbery, Bariloche, Salta and Iguazú, the report notes.
"Due to trade union measures at national level, commercial air
operations are affected. We suggest you contact your airline," the
terminal said in a post to customers on Twitter, the report
relays.
On the same social network, the president of Aerolineas Argentinas,
Pablo Ceriani, said: "We want to clarify that the affectation of
flights is due to a measure of force of [the] ATE national [union].
It is not a specific conflict with Aerolineas [Argentinas], nor is
it specific to the airline sector. Unfortunately, this strike
affects all airlines," the report discloses.
Sectors across Argentina have been hit by labour unrest in recent
weeks, the report notes. A strike by workers demanding higher
wages at tyre manufacturers has stopped production across the
sector and forced the suspension of activity at two major car
factories, 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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C A Y M A N I S L A N D S
===========================
ZHENRO PROPERTIES: Moody's Cuts CFR to Ca & Sr. Unsec. Rating to C
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Moody's Investors Service has downgraded the corporate family
rating of Zhenro Properties Group Limited to Ca from Caa2, and the
company's senior unsecured ratings to C from Caa3.
The outlook remains negative.
"The downgrade reflects Moody's expectation of weak recovery
prospects for Zhenro's bondholders following the company's default
on the interest payments of its USD bonds," says Alfred Hui, a
Moody's Analyst.
"The negative outlook reflects Moody's view that the recovery
prospects for Zhenro's creditors could weaken further if the
interest payment default extends to a wider default of other
debts," adds Hui.
RATINGS RATIONALE
Moody's notes that Zhenro has missed the interest payments on some
of its offshore bonds. The rating agency also believes the company
has not settled the missed interest payments within the 30-day
grace period, resulting in interest payment defaults.
The interest payment default reflects the company's weak liquidity
and constrained financial flexibility. As of the end of June 2022,
Zhenro's unrestricted cash balance declined significantly to RMB3.1
billion from RMB14.7 billion from the end of 2021 due to the
repayment of maturing debt and weak operating cash flow. Zhenro
would have to rely on asset disposals or other fundraising plans
for debt servicing. However, these fundraising activities entail
high uncertainties.
Zhenro's C senior unsecured bond rating is one notch lower than its
Ca CFR because of the risk of structural subordination. This risk
reflects the fact that most of the claims are at the operating
subsidiary level and have priority over claims at the holding
company level in a bankruptcy scenario. In addition, the holding
company lacks significant mitigating factors for structural
subordination. As a result, the expected recovery rate for claims
at the holding company will be lower.
In terms of environmental, social and governance (ESG) factors,
Moody's has considered the company's aggressive financial
management and weak liquidity management with its history of
conducting distressed exchanges to preserve liquidity. It further
considers the company's poor management credibility given its track
record of corporate actions that are inconsistent with its market
guidance. Moody's has also considered the company's concentrated
ownership by Mr. Ou Zongrong and his family members, which together
held a 59.6% stake in the company as of July 22, 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could further downgrade Zhenro's CFR if the recovery
prospects for its creditors deteriorate.
An upgrade is unlikely given the negative outlook.
However, positive rating momentum could develop if Zhenro repays
its maturing debt and improves its liquidity position materially.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Zhenro Properties Group Limited was incorporated in the Cayman
Islands in 2014 and listed on the Hong Kong Stock Exchange in
January 2018. As of June 30, 2022, Zhenro had a total land bank
with a gross floor area of 22.15 million square meters in China.
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Deputy Asks to Lower Gas & Gasoline Prices
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Dominican Today reports that the deputy of the Dominican Liberation
Party (PLD) for the province of Santo Domingo, Luis Henriquez,
stated that the president "should not continue abusing" the people
by charging such expensive fuel, in addition to paying a surcharge
of more than 30 and 40 pesos per gallon of gasoline.
"It is unjustifiable that housewives are buying cooking gas at
147.00 pesos a gallon and that vehicle owners are buying gasoline
at 293.00 pesos, when, as I explained before, with the current
prices of oil and the dollar, gas should cost no less than 95.00
pesos and Premium gasoline well below the current price", explained
Henriquez in a press release, according to Dominican Today.
He demanded both the President of the Republic and the Ministry of
Industry and Commerce to regulate fuel prices so that they work on
updating fuel prices that affect the majority of housewives and
drivers, in the sense general, the report notes.
"We claim and call on the Minister of Industry and Commerce and the
President of the Republic to issue resolutions that update fuel
prices because after the passage of Hurricane Fiona and the
economic consequences that exist, it is not possible for the
Dominican men and women continue to pay for gasoline and gas at a
premium price," he specified, the report notes.
He pointed out that oil prices indicate that in the first days of
September the barrel was around 87 dollars, about 28 dollars less
than the price reached in June of this year and assured that the
cost of freight had also been reduced and the Dominican peso had
appreciated against the dollar, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
DOMINICAN REPUBLIC: Fuel Prices Will Remain The Same This Week
--------------------------------------------------------------
RJR News reports that the Dominican Republic's Ministry of
Industry, Commerce, and MiPymes (MICM) informed that the price of
fuels would remain the same for the week of October 1 to 7, 2022.
The usual communiqué indicated that the government would maintain
more than RD$100 million in special subsidies, according to RJR
News.
In this context, premium gasoline will continue to be sold at
RD$293.60 per gallon and regular at RD$274.50, the report notes.
Liquefied Petroleum Gas (LPG) will continue at RD$147.60 per
gallon, and Natural Gas at RD$28.97 per m3 will maintain its price,
the report relays.
Regular diesel maintains a price of RD$221.60 per gallon, optimum
RD$241.10 per gallon, avtur RD$298.91 per gallon, kerosene
RD$338.10 per gallon, the report says.
Meanwhile, fuel oil #6 will continue to be sold at RD$192.11 per
gallon; fuel oil 1% will be at RD$211.77 per gallon, the report
notes.
The average weekly exchange rate is RD$53.49 from the Central
Bank's daily publications, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican Today related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'. The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative. S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said. A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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E L S A L V A D O R
=====================
BANCO DAVIVIENDA: Fitch Lowers Viability Rating to 'cc'
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Fitch Ratings has downgraded Banco Davivienda Salvadoreno, S.A.'s
(Davivienda Sal) Viability Rating (VR) to 'cc' from 'ccc'. Fitch
has also affirmed its Long-Term Issuer Default Rating (IDR) at 'B-'
with a Negative Rating Outlook. Davivienda Sal's Short-Term IDR has
been affirmed at 'B' and the Shareholder Support Rating (SSR) was
affirmed at 'b-'. Also, Inversiones CrediQ Business S.A. (ICQB)'s
Long-Term IDR was downgraded to 'B-' from 'B', with a Stable
Outlook and its Short-Term IDR was affirmed at 'B'.
The rating actions on Davivienda Sal and ICQB follow the downgrade
of El Salvador's Long-Term Foreign Currency IDR to 'CC' from 'CCC'.
This also resulted in a downward revision of Fitch's assessment of
Salvadoran banking system's operating environment (OE) to 'cc' from
'ccc' with a negative trend.
Davivienda Sal's VR of 'cc' is below the implied score of 'ccc' and
reflects the agency's opinion that Salvadoran banks' performance
continue to be highly exposed to the risks from the OE, which is in
turn constrained by El Salvador's low Long-Term IDR. Consequently,
the VR's likelihood of being higher than the sovereign rating is
limited, given the high correlation between sovereign and banks'
credit profile, according to Fitch's criteria.
The national ratings of Davivienda Sal and its holding, as well as
those of other financial institutions rated in El Salvador, are
unchanged since they are not directly affected by the sovereign
downgrade.
ICQB's Long-Term IDR downgrade is also consequence of El Salvador's
sovereign rating downgrade. This reduced the agency's assessment of
its blended OE to 'b-' from 'b', as nearly 26% of the company's
earning assets are located in such country. The Outlook for the
Long-Term IDR changed to Stable from Negative, as a further
deterioration in the jurisdictions where it operates is not the
base case scenario for Fitch.
KEY RATING DRIVERS
Davivienda Sal
Support-Driven Ratings: Davivienda Sal's IDR and SSR are based on
the potential ability and propensity of its shareholder Banco
Davivienda, S.A. (BB+/Stable), to provide support to its
subsidiary, if needed.
Sound Support but Country Risks Restrictions: Fitch's assessment of
the parent's ability to support remains strongly influenced by El
Salvador's country risks. These are reflected in the cap that
Country Ceiling (B-) imposes on the bank's rating, resulting in a
five-notch rating difference its parent's IDR. However, in Fitch's
opinion, the shareholder's commitment to its subsidiary is
sufficiently solid to allow Davivienda Sal to be rated above the
sovereign rating.
According to Fitch's criteria, the Country Ceiling incorporates
transfer and convertibility risks that, in this case, could limit
the subsidiary's ability to use shareholder support. The Negative
Outlook indicates that the bank's IDR could be affected by
downgrades of the Salvadoran sovereign rating and the Country
Ceiling.
Significant Reputational Risk: Fitch, in its propensity to support
analysis, also weighs with high importance the huge reputational
risk that a potential default by Davivienda Sal would mean for its
shareholder and subsidiaries, severely damaging the franchise in
the region.
OE Highly Influence the Credit Profile: Davivienda Sal's financial
profile has exhibited relative stability in recent years, and its
intrinsic credit profile is consistent with relatively higher
rating levels. Fitch believes, despite this, Salvadoran banks will
continue to be sensitive to the country's risks such as lower
economic growth, weaker investor sentiment, tight government
liquidity position and policy uncertainty, which is reflected on
the negative trend in Fitch's assessment of the OE.
Strong Business Profile with Consistent Performance: Davivienda
Sal's VR also considers its robust local franchise, with a market
share of 14.4% by loans as of June 2022 and well developed and
diversified business model but concentrated, like its peers, in a
high-risk jurisdiction such as El Salvador. In addition, its VR
captures its stable loan quality, with an NPL metric in average of
2.0% the last four years (June 2022: 2.0%), and reserve coverage
for NPL of 134% as of 1H22. Its high exposure to government debt
relative to its Fitch Core Capital (FCC) is also considered in this
factor. Its modest but improved profitability, with an operating
profit to risk weighted assets (RWA) ratio of 1.3% (system: 1.9%)
as of June 2022 (2018-2021: 0.6%), is also incorporated in its VR.
Capitalization and Funding Profile: Davivienda Sal's capital
levels, with an FCC to RWA metric of 13.5% at 1H22, as well as the
bank's diversified funding structure, which is sustained on its
solid deposit franchise, good access to several financing sources
and is further reinforced by the support and synergies arisen with
its parent, are aspects that weigh in Davivienda Sal's VR.
ICQB
Good Franchise Position: ICQB's ratings are driven by its
consolidated intrinsic profile and are highly influenced by its
business profile and the OE. ICQB has a strong and consistent
franchise in the auto lending segment in the below investment grade
countries. The intra-group benefits for being the financial
division of Grupo Q, a leading car distributor in Central America,
is also considered.
Controlled Asset Quality and High Profitability: ICQB's asset
quality is consistent, with impaired loans above 90 days
representing 2.1% as of 2Q22 (average from 2019 to 2021: 2.5%). Its
profitability levels increased in 2022 as a result of the good
performance on loans in all its jurisdictions. As of 2Q22, pre-tax
income to average assets reached 4.9% (2019-2021: 3.9%).
Stable Tangible Leverage and Diversified Funding: Fitch considers
ICQB's tangible leverage metric of 4.6x, as of June 2022, is
reasonable for its operations and similar to its average in
2019-2021 of 4.8x. Additionally, ICQB's funding profile is somewhat
diverse compared to its peers, mainly comprised by credit
facilities but complemented by deposits and debt issue programs.
However, the entity has limited financial flexibility, as unsecured
debt represented 23.2% (2019 to 2021: 30.8%) of interest-bearing
liabilities but has successfully obtained financing over the cycle
and has 50% available in lines of total funding.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Davivienda Sal
- Davivienda Sal's IDR and SSR remain sensitive to changes in El
Salvador's sovereign rating and Country Ceiling. Negative
changes in the bank's IDRs and SSR would mirror negative
movements in El Salvador's sovereign rating and Country
Ceiling;
- Davivienda Sal's VR downgrades could come for a consistently
lower operating profit-to-RWA ratio or operating losses. An
FCC-to-RWA ratio consistently below 10% also would pressure the
VR;
- Davivienda Sal's IDRs could be downgraded by a multi-notch
downgrade of Davivienda's IDRs; however, this scenario is
unlikely in the rating horizon given the parent's Stable
Outlook;
- Any perception by Fitch of a relevant reduction of the
strategic importance of Davivienda Sal for its parent may
trigger a negative rating action of its SSR and IDRs;
- The VR is sensitive to changes in the sovereign rating, or
further deterioration on the local OE that leads to a material
deterioration in its financial profile. Given the current low
levels of the VR, downside potential would only arise if the
worsening OE and/or the country's policy framework materially
increases the likelihood of this bank defaulting on its
financial obligations over the short term.
ICQB
- ICQB's IDR could be downgraded due to a sustained deterioration
in its profitability, or a continued pre-tax income to average
assets indicator below 1.0%;
- A downgrade or material deterioration of the main OEs where
ICQB holds its major exposures.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Davivienda Sal
- The Negative Outlook on Davivienda Sal's IDR indicates positive
actions in the ratings are highly unlikely in the foreseeable
future. However, over the medium term, Davivienda Sal's IDR,
SSR and VR could be upgraded in the event of an upgrade of El
Salvador's sovereign rating, and Country Ceiling also
considering that Davivienda Sal's IDR is capped by the
Salvadoran country ceiling;
- The upside potential of Davivienda Sal's VR is limited due to
the Fitch assessment of the OE in negative trend; Davivienda
Sal's VR could only be upgraded over the medium term given an
improvement of the OE, while maintaining its good company and
financial profile.
ICQB
- Ratings can be upgraded if the entity is able to diversify its
revenues sources while maintaining its profitability levels,
along with meaningful improvement in the scale of its
operations without significantly altering ICQB's risk profile;
- By an improvement on Fitch's assessment of the OEs where ICQB
holds its major exposures.
VR ADJUSTMENTS
Davivienda Sal
The bank's 'cc' VR has been assigned below the 'ccc' implied VR,
due to the following adjustment reason: Operating
Environment/Sovereign Rating Constraint (negative).
The Operating Environment score of 'cc' has been assigned below the
implied score of 'b', due to the following adjustment reason:
Sovereign Rating (negative).
The Business Profile score of 'ccc' has been assigned below the
implied score of 'b', due to the following adjustment reason:
Business Model (negative).
SUMMARY OF FINANCIAL ADJUSTMENTS
Davivienda Sal: Prepaid expenses were reclassified as intangibles
and deducted from total equity to reflect their low absorption
capacity.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Davivienda Sal's ratings are based on the potential support it
would receive from its parent, Banco Davivienda, S.A., if needed.
ESG CONSIDERATIONS
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(ies), either due to their nature or the way in which they
are being managed by the entity(ies).
Entity/Debt Rating Prior
----------- ------ -----
Banco Davivienda
Salvadoreno, S.A. LT IDR B- Affirmed B-
ST IDR B Affirmed B
Viability cc Downgrade ccc
Shareholder Support b- Affirmed b-
Inversiones CrediQ
Business S.A. LT IDR B- Downgrade B
ST IDR B Affirmed B
EL SALVADOR: IDB Approves $106 Million Loan to Revive Tourism
-------------------------------------------------------------
The Inter-American Development Bank (IDB) approved a $106 million
loan to help El Salvador's tourism industry rebound and grow. The
operation is designed to make the sector more competitive by
increasing per-visitor spending, creating new jobs, and reducing
gender gaps among its workers. It also aims to make the country's
tourist destinations more environmentally sustainable.
El Salvador has major tourist attractions, especially natural ones,
which have driven a thriving industry. From 2011 to 2019, tourism
accounted for over 17.9% of the country's exports and provided
31,360 direct jobs. This in turn enhanced the quality of life of
thousands of Salvadoran families, many of whom were living in
vulnerable circumstances. To avoid putting El Salvador's tourism
industry in permanent jeopardy, which would undermine the country's
economic outlook and the quality of life of its citizens, it is
crucial to improve the industry's environmental sustainability and
climate resilience.
El Salvador needs good land-use planning for its destinations, a
system of environmental laws governing key aspects like coastal
management, and solutions for gaps in access to drinking water or
solid waste management services, all of which are among the aspects
this program aims to address.
This IDB operation will enable strategic investments in resilient
public infrastructure, with a particular focus on the elements most
exposed to the ravages of climate change. It will also fund the
design and implementation of vital environmental sustainability
programs. For example, it provides resources for building
ecological waterfronts; for restoring critical ecosystems and
preserving them in an inclusive way (including a program to reclaim
and protect mangrove forests in eastern El Salvador); and for
developing environmental sustainability plans for tourist
destinations and environmental certifications for beaches.
The program will expand and improve seven drinking water systems
and four wastewater treatment systems. It also plans to bolster
security services for tourists through investments like street
lighting, lifeguard posts, and signs at destinations and along
access routes.
The operation will also help make the country's tourism business
ecosystem more productive and resilient. For this goal, the program
includes several instruments meant to strengthen the industry's
human capital and improve tourism products, all while mainstreaming
gender and fostering accessible tourism.
Studies show that women in El Salvador's tourist industry have
higher educational gaps than women in other industries. Also, women
make up 60% of the workforce for tourism, but only 36% hold
managerial positions. To advance gender equality and accessible
tourism in the country, the program's technical and financial
assistance, and industry-based training will prioritize enterprises
and investments that address these aspects.
The program also aims to modernize the sector by creating the
conditions for adopting new information and communication
technologies and upgrading the technological and software
infrastructure of government agencies related to tourism.
All these steps will improve quality of life in El Salvador. It is
estimated that the program will benefit over 960,000 people,
counting tourism industry workers and their families.
As recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings has downgraded El Salvador's Long-Term
Foreign Currency Issuer Default Rating (IDR) to 'CC' from 'CCC'.
Fitch does not assign Outlooks to sovereigns with a rating of
'CCC+' or below. Fitch has removed the Long-Term IDR from Under
Criteria Observation (UCO).
===========
G U Y A N A
===========
GUYANA: Inflation Increased Markedly Since 2021, IMF Says
---------------------------------------------------------
The Executive Board of the International Monetary Fund (IMF)
concluded the Article IV consultation [1] with Guyana.
The IMF noted that following the pandemic-induced recession in
2020, and protracted political transition, non-oil economic growth
recovered in 2021 in Guyana, despite being negatively impacted by
floods. Inflation increased markedly since 2021 owing to the floods
and supply-side disruptions, as well as continually rising fuel and
food prices.
Oil production has increased significantly. Oil GDP is expected to
grow over 100 percent in 2022, and by about 30 percent on average
per year during 2023-26. Oil production has the potential to
transform profoundly Guyana's economy (overall real GDP growth rate
is projected to be 57.8 percent in 2022). Guyana's commercially
recoverable petroleum reserves is expected to reach over 11 billion
barrels, one of the highest levels per capita in the world. This
could help Guyana build up substantial fiscal and external buffers
to absorb shocks while addressing infrastructure gaps and human
development needs. Main downside risks to the outlook include
volatility in global oil prices, a slowing global economy, or rapid
increases in investment which could lead to macroeconomic
imbalances, while upside risks include higher global oil prices and
additional gas and oil discoveries.
Executive Board Assessment [2]
Executive Directors agreed with the thrust of the staff appraisal.
They welcomed the broad-based economic recovery in 2021, following
a protracted political transition and the pandemic-induced
recession in 2020, and the unprecedented high real GDP growth,
supported by a steep rise in oil production and accommodative
policies. Directors highlighted that the increasing oil production
could help transform the economy, address development needs, and
build substantial buffers to absorb shocks. Nevertheless,
considering the potential challenges related to volatility in
global oil prices and effective management of natural resources,
they highlighted the need for continued prudent policies and
structural reforms, assisted by Fund technical assistance, to avoid
buildup of macroeconomic vulnerabilities, ensure inclusive growth
and intergenerational equity, as well as address structural
weaknesses and climate challenges.
Directors welcomed the significant decline in public debt and
favorable debt dynamics going forward, the authorities' commitment
to maintain debt sustainability and stressed the importance of
anchoring fiscal policy in a medium-term framework. They welcomed
the restraint in using oil revenues before the passage of the
recent amendments of the Natural Resource Fund Act and encouraged
continued prudent management of oil revenues. Directors called for
moderately ramping up public investment by constraining the annual
non-oil overall fiscal balance to not exceed the expected oil
transfers. They also encouraged the authorities to continue
improving the targeting of social spending.
Directors agreed with the authorities that exchange rate stability
serves Guyana's current needs best and emphasized the importance of
taking measures to further develop and deepen financial and foreign
exchange markets, as the oil production increases. They saw merit
in revising the monetary policy framework over the medium to
long-term to ensure it is well suited for the economy's needs, and
that it allows more flexibility in the exchange rate to absorb
shocks and help maintain competitiveness.
Directors commended the authorities' efforts to maintain financial
stability and promote financial inclusion. They welcomed the
progress in implementing the 2016 FSAP recommendations and the
commitment to fully implement the recently strengthened AML/CFT
framework, while encouraging further efforts in this area, in
particular to strengthen the regulation of digital payments.
Directors called for the continuation of broad-based reforms to
address structural weaknesses and diversify the economy,
emphasizing the significant human development and infrastructure
needs. They commended the authorities' progress in strengthening
Guyana's anti-corruption framework and fiscal transparency and
encouraged continued progress on implementation of the
recommendations provided by the Extractive Industries Transparency
Initiative (EITI). Directors commended the authorities' efforts to
build resilience to climate change as envisioned under their Low
Carbon Development Strategy.
[1] Under Article IV of the IMF's Articles of Agreement, the IMF
holds bilateral discussions with members, usually every year. A
staff team visits the country, collects economic and financial
information, and discusses with officials the country's economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board.
[2] At the conclusion of the discussion, the Managing Director, as
Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country's authorities. An
explanation of any qualifiers used in summings up can be found
here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
=============
J A M A I C A
=============
UC RUSAL: Weighs Plans to Sell Aluminum Directly to LME
-------------------------------------------------------
RJR News reports that Windalco's parent company, Russian
conglomerate, UC Rusal, is weighing plans to sell primary aluminium
directly to the London Metal Exchange (LME) as the firm continues
to have difficulties in identifying purchasers.
Although Rusal is not directly under sanctions, the company has
faced harsh blowback from European and American buyers as many have
cut ties with Russian related entities, according to RJR News.
Additionally, Rusal's continued association with its founder and
former head Oleg Deripaska continues to be problematic due to his
close association with Russian President Vladimir Putin, the report
notes.
In order to get its primary aluminum to market, the company is
considering shipping some of its inventory in the Russian city of
Vladivostok to various LME warehouses in Asia, the report adds.
As reported in the Troubled Company Reported in May 2021, Fitch
Ratings upgraded Russian-based aluminium producer United Company
RUSAL, international public joint-stock company's (RUSAL) Long-Term
Issuer Default Rating (IDR) to 'BB-' from 'B+'. Fitch has also
upgraded RUSAL Capital D.A.C.'s senior unsecured notes to 'BB-'
from 'B+'. The Recovery Rating is 'RR4'. The Outlook on the
Long-Term IDR is Stable.
UC Rusal is the parent company of West Indies Alumina Co
(Windalco), a producer of base metal products like bauxite and
alumina, in Jamaica.
The TCR-LA in August 24, 2021, citing RJR News, reported that UC
Rusal said problems have developed with wage and fringe benefits
negotiations for workers employed to Rusal's operations in
Jamaica.
=======
P E R U
=======
PERU: At the Bottom of the Mining Competitiveness Index
-------------------------------------------------------
Rocco Caldero at Rio Times Online reports that although Peru has a
lot of mining potential, the perception of business people about
the possibility of investing and developing mining projects in the
country has deteriorated.
That is evidenced by the results of the latest Mining
Competitiveness Index (ICM) 2022 prepared by the consulting firm
Macroconsult and the Institute of Mining Engineers of Peru (IIMP),
where the Andean country is at the bottom among six other countries
with extractive operations, according to Rio Times Online.
=====================
P U E R T O R I C O
=====================
WILMER TACORONTE ORTIZ: Creditor OSP Seeks Leave to File Sur-Reply
------------------------------------------------------------------
OSP Consortium, LLC, creditor of Wilmer Tacoronte Ortiz, asks the
U.S. Bankruptcy Court for the District of Puerto Rico for leave to
file a sur-reply to the Debtor's Reply to Opposition Motion to Sell
at Private Sale Real and Personal Property of the Estate pursuant
to Section 363 of the Bankruptcy Code, Free and Clear of all Liens,
Claims, Interests and Encumbrances
On Aug. 22, 2022, Tacoronte filed the Sale Motion. On Sept. 1,
2022, OSP filed an Opposition to the Sale Motion, to which
Tacoronte filed a Reply to the Opposition to Sale Motion on Sept.
12, 2022.
In compliance with PR L. Civ. R. 7(c), OSP requests leave to file a
sur-reply to the Tacoronte's Reply within 14 days, through and
including Sept. 30, 2022. Its sur-reply will be strictly limited
to the Debtors' allegations in their Reply.
OSP respectfully prays the Court to grant leave sought, and issue
any further remedy that is fair and equitable.
Wilmer Tacoronte Ortiz sought Chapter 11 protection (Bankr. D. P.R.
Case No. 19-01178) on March 2, 2019. The Debtor tapped Damaris
Quinones Vargas, Esq., at Bufete Quinonez Vargas & Asoc. as
cousel.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
PETROLEUM CO: No Clear Plans for Refinery, Ex-Exec Shows Concern
----------------------------------------------------------------
Trinidad Express reports that former finance minister Mariano
Browne has expressed concern that no mention was made about plans
for the former Petroleum Co. of Trinidad & Tobago (Petrotrin)
refinery in the budget presentation. The refinery was shut down by
the Government in November 2018.
In June, Finance Minister Colm Imbert told the Lower House of
Representatives that there was a preferred bidder, but they will
remain unidentified until the due diligence process has been
completed, according to Trinidad Express.
He added that during the exclusivity period, the preferred bidder
would be in direct negotiations with Trinidad Petroleum, its
advisers and the Government with respect to an agreement for the
purchase or lease of the refinery, the report notes.
*********
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.
Copyright 2022. All rights reserved. ISSN 1529-2746.
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