/raid1/www/Hosts/bankrupt/TCRLA_Public/221025.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 25, 2022, Vol. 23, No. 207
Headlines
A R G E N T I N A
ARGENTINA: Must Aim to Let Peso Float, Says Buenos Aires Mayor
B R A Z I L
ALAGOAS: S&P Affirms 'BB-' LongTerm ICRs, Outlook Stable
BR MALLS: Fitch Affirms 'BB' Foreign Currency IDR, Outlook Stable
BRAZIL: Has 2nd Lowest Minimum Wage Among 31 Countries, Says OECD
BRAZIL: Mineral Exports Totaled US$11.62 Billion in 3rd Quarter
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Proposes to Allow for Wage Adjustments
DOMINICAN REPUBLIC: UK Increases Finc'l Facilities to GBP3-Billion
J A M A I C A
1834 INVESTMENTS: Suspended From Trading Ahead of Court Hearing
P U E R T O R I C O
ESJ TOWERS: Court Rules Cuprill Does Not Have Adverse Interest
V E N E Z U E L A
CITGO PETROLEUM: Bondholders' Claim to Be Decided by NY Court
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A R G E N T I N A
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ARGENTINA: Must Aim to Let Peso Float, Says Buenos Aires Mayor
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Buenos Aires Times Online report that Argentina's next government
needs to unwind currency controls and let the exchange rate trade
freely, according to Buenos Aires City Mayor Horacio Rodriguez
Larreta, one of the main opposition leaders seen as a likely
presidential contender next year.
"You have to aim for that," Rodriguez Larreta said in an interview
on the sidelines of the C40 World Mayors Summit in Buenos Aires.
"What you have to do and how fast depends on the situation,
according to Buenos Aires Times Online. You'd have to see how much
foreign reserves the Central Bank has when you take over. Today
it's practically zero," the report notes.
Under pressure by dwindling international reserves, Argentina has
been implementing a cobweb of currency controls and different
exchange rates under the government of President Alberto
Fernández, who took power in late 2019, the report discloses. The
approach led to about a dozen different rates overlapping,
increasing the bureaucracy for companies and consumers and reducing
the incentive for foreign investors to bring dollars into the
country, the report relays.
A free-floating rate, as proposed by Rodríguez Larreta, would be a
reversal of the strategy, which failed to cool annual inflation
heading toward 100 percent but helped prevent a damaging
devaluation, the report relays. Argentina had multiple exchange
rates for several periods of its history, as the wide use of the US
dollar in day-to-day transactions makes the free-floating of its
currency more prone to volatility, the report says.
Rodríguez Larreta is one of Argentina's top opposition leaders and
polls show him as one of the front-runners ahead of the October
2023 presidential election, the report discloses. While he
wouldn't confirm his candidacy during the interview or say when he
might decide, He spoke with a presidential tone about fixing the
economy, by far the main concern of Argentines, the report relays.
"The first message to calm inflation is political before economic,"
Rodríguez Larreta told Bloomberg News. Politically, the next
government must "achieve an agreement broader than what's needed to
win an election. Broader doesn't mean unanimous, but yes broader -
without that there's no economic recipe that'd work," the report
notes.
Other comments by the City mayor:
- On economic plans in next government:
"It definitely has to involve a quick stabilisation plan - quick
means that you have to outline it quickly and clearly, it doesn't
necessarily mean all measures have to be taken quickly."
- On economic policies:
"The fine print details are going to be defined according to the
situation that we'd receive in December of next year. Today you
can't write the fine print if you don't know if you're going to get
a country with 100 percent inflation, 50 percent inflation or 200
percent"
- On whether Fernandez is likely to finish his term in December
2023:
"Make it to the end of the mandate, yes. They'll end badly like
they are today. 100 percent inflation, it's a disaster. I don't see
a way that inflation improves a lot because there's no plan to
improve it, but he has to finish his mandate," the report adds.
About Argentina
Argentina is a country located mostly in the southern half of
South America. Its capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning
the October 2019 general election. He succeeded Mauricio
Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019, according to the World Bank. Historically, however,
its economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Last March 25, 2022, Argentina finalized agreement with the IMF
for a new USD44 billion Extended Funding Facility (EFF) intended
to fund USD40 billion in looming repayments of the defunct
Stand-By Arrangement (SBA), with an extra USD4 billion in up-front
net financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
As reported by The Troubled Company Reporter - Latin America on
Aug. 12, 2022, S&P Global Ratings affirmed its foreign and
local-currency sovereign credit ratings of 'CCC+/C' on the
Republic of Argentina. The outlook remains stable. S&P also
affirmed its national scale 'raBBB-' rating and its 'CCC+' transfer
and convertibility assessment. S&P said the stable outlook reflects
the challenges in managing pronounced economic imbalances ahead of
the 2023 national elections given disagreement on policy within the
government coalition and financing pressures in the local market.
Last April 14, 2022, Fitch Ratings affirmed Argentina's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDR) at 'CCC'.
Fitch said Argentina's 'CCC' ratings reflect weak external
liquidity and pronounced macroeconomic imbalances that undermine
debt repayment capacity, and uncertainty regarding how much
progress can be made on these issues under a new IMF program.
On July 19, 2022, Fitch Ratings placed Argentina's Long-Term
Foreign Currency Issuer Default Rating (IDR) and Long-Term Local
Currency IDR Under Criteria Observation (UCO) following the
conversion of the agency's Exposure Draft: Sovereign Rating
Criteria to final criteria. The UCO assignment indicates that
ratings may change as a direct result of the final criteria. It
does not indicate a change in the underlying credit profile, nor
does it affect existing Rating Outlooks.
Moody's credit rating for Argentina was last set at Ca on
Sept. 28, 2020.
DBRS has also confirmed Argentina's Long-Term Foreign Currency
Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at
CCC (high) on July 21, 2022.
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B R A Z I L
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ALAGOAS: S&P Affirms 'BB-' LongTerm ICRs, Outlook Stable
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S&P Global Ratings, on Oct. 19, 2022, affirmed the global scale
'BB-' long-term foreign and local currency issuer credit ratings on
the state of Alagoas. S&P also affirmed its 'brAA+' long-term
national scale rating. The outlook on both ratings remains stable.
Outlook
S&P said, "The stable outlook reflects our view that after two
years of extraordinary spending with excess resources stemming from
fiscal aid from the federal government and a large sanitation
concession, Alagoas will post operating surpluses and balanced
results after capex in the next 12-18 months. We expect the debt
burden to stabilize and cash levels to be sufficient to service
debt."
Downside scenario
S&P said, "We could lower the ratings on Alagoas in the next 12
months if its budgetary performance deteriorates, with large
deficits after capex eroding liquidity, signagling a weaker fiscal
management. In addition, in our opinion, the ratings on Alagoas are
capped by the ratings on Brazil; therefore, a downgrade of the
sovereign would also result in a downgrade of Alagoas on the global
scale."
Upside scenario
S&P said, "Given that we don't believe Alagoas meets the conditions
to have higher ratings than those on Brazil, we would only raise
the global scale ratings on the state in the next 12 months if we
were to raise our local and foreign currency ratings on Brazil.
That would also have to be accompanied by the state's stable and
strong budgetary performance, consistently high cash levels, and a
declining debt burden. We could raise the national scale rating if
the state's liquidity position emerges from upcoming budgetary and
economic difficulties stronger than expected and if debt declines
to below 60% of operating revenue."
Rationale
S&P said, "We expect Alagoas to significantly reduce its capex in
2023 from currently record-high levels, and that the administration
will prudently manage available cash by balancing capex needs with
its other obligations, including debt service. Therefore, despite
the potential pressures on the state's budget, we expect fiscal
results to be balanced. While Alagoas remains somewhat reliant on
the federal government's transfers, its solid financial management
has supported financial performance and a decline in debt levels,
while also boosting public and private investment in the state. On
the other hand, Alagoas' weaker socioeconomic profile than those of
other Brazilian states, still moderately high debt, and a volatile
and unbalanced institutional framework constrain our ratings on the
state.
"We expect capex to fall significantly in 2023, following two years
of record-high execution of infrastructure projects with
extraordinary revenue
"We forecast operating surpluses of 8.5% of operating revenue on
average in 2022-2024, down from 21.5% in 2020-2021. Alagoas' fiscal
results benefited from several factors in the past two years.
Revenue from the concession to operate the water and sewage
services in 13 cities in the metropolitan area of Maceió by
private company BRK Ambiental signed at the end of 2020 for R$2
billion (equal to 15% of the state's operating revenue in 2021)
compensated for the drop in the central government's extraordinary
support in 2021. The concession bolstered Alagoas' short-term
liquidity and will improve the population's access to basic
services.
"The state of Alagoas executed record-high amounts of capex in
2021--28% of total spending--because it used the recently
accumulated cash to boost its infrastructure spending, which
included roadways and urban development projects, among others. We
expect capex will continue to be high in 2022, at almost 20% of
total spending, and then will fall to 8.5% on average in 2023-2024,
similar to historical levels. While we expect inflation-fueled
payroll and pensions will pressure spending in the next 12 months,
our base-case scenario assumes an average surplus after capex of
close to 1% of total revenue in 2023-2024, with Alagoas financing
capex with cash and loans from public banks and multilateral
lending institutions. This expected surplus compares favorably to a
6% deficit in 2021 and an estimated deficit of 9% in 2022.
"Our base-case scenario also incorporates the impact on revenue
collection from approved national legislation to lower the sales
and services tax (ICMS) rates on fuels (29% prior to the law),
transport (18%), communications services (30%), and electricity
(27%) to the basic rate, which is 18% for Alagoas (law 194/2022).
Until the end of this year, we expect lower tax collection will
continue to be compensated by the federal government's repayment of
Alagoas' guaranteed debt, as well as cancelation of debt owed to
the federal government.
"The central government has been stepping in to make payments of
guaranteed debt with local banks and multilateral institutions on
behalf of the state since August. Based on our understanding of the
terms of loan and guarantee agreements, we consider that the
central government is paying creditors in a timely manner. We
consider that through this payment mechanism--established by law
and complemented by judicial decisions--the federal government is
providing formal extraordinary support to the state of Alagoas.
"Record capex has led to a decline in the state's cash levels.
Still, we estimate that free cash will cover slightly more than
100% of debt service for the next 12 months, as Alagoas rebalances
its accounts. We expect liquidity coverage to remain high, but it
could fluctuate due to expected budgetary pressures. Debt payments
will be smooth for the next three years at about R$1 billion
annually.
"We consider Alagoas' access to external liquidity as limited, as
is the case for most Brazilian states. In order to issue debt under
Brazil's intergovernmental framework, states must receive
authorization from the federal government under specific rules and
in compliance with fiscal targets. In addition, states can't
maintain open contingent credit lines from banks.
"We expect Alagoas' debt of just above 70% of operating revenue by
2024. This is down from almost 90% in 2020 and 154% in 2015. The
state's main creditor is the federal government (70% of total
debt), but Alagoas also has loans from multilateral lending
institutions and domestic banks, which the federal government
guarantees. Twenty-one percent of the debt is in foreign currency.
"One longstanding key source of fiscal pressure for Alagoas is its
burdensome pension system. The state passed a pension reform in
December 2019, which in addition to adhering to the national-level
pension reforms, increased the individual contribution rate to 14%
from 11% and expanded the tax base by 20,000 new contributors.
While the reform brought some relief, there are short-term
pressures from the shift to the capitalization fund for new
employees, while we think long-term structural issues are likely to
persist. The pension coverage deficit totaled R$1.4 billion in 2021
(10.7% of operating revenue)."
S&P expects continuity in government policies following the state
election and recent political developments
Paulo Dantas (MDB party) stepped in as governor in May 2022 because
the former governor, Renan Filho, resigned to run for Senate. Mr.
Dantas won the first round of the gubernatorial election on Oct. 2
(46.6% of votes) and will contend with Rodrigo Cunha (Uniao Brasil,
26.8%) in the runoff at the end of the month. On Oct. 11, Mr.
Dantas was removed from office for 180 days following a request by
the federal police to Brazil's Supreme Justice Tribunal amid
corruption investigations. Vice governor Jose Wanderley Neto (MDB)
will take office for 180 days.
Should the incumbent party (MDB) win the election, it will continue
to have broad support in the state legislature following the
election. This has been pivotal to pass key pieces of legislation,
such as the ongoing downsizing in the state payroll in relative
terms, as well as efforts to raise local tax revenue. Alagoas has
been prioritizing strengthening finances, transparency, and
accountability, which S&P considers a rating strength. S&P's
base-case scenario assumes continuity in prudent management
practices.
S&P said, "At the same time, we assess Brazilian local and regional
governments' (LRGs) institutional framework as volatile and
unbalanced. Structural rigidities of Brazil's intergovernmental
system have prevented LRGs from reaching balanced fiscal accounts.
Nonetheless, we believe the system continues to have some degree of
predictability and transparency, with enhanced oversight over LRGs'
finances and adherence to fiscal discipline.
"Alagoas is among Brazil's poorest states, which weighs on its
creditworthiness. Its estimated GDP per capita was $3,700 in 2021,
which is roughly half of our estimate for the national level the
same year. The state's socioeconomic conditions are weaker than
those of other Brazilian states such as those in the southeast,
constraining the ratings. Alagoas' main economic activities are
public administration, tourism, and agriculture (mainly sugar and
alcohol production, which are the second largest employers in the
state after the public sector). We forecast national real GDP to
expand 2.5% in 2022 and 1.3% on average in 2023-2024."
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
RATINGS AFFIRMED
ALAGOAS (STATE OF)
Issuer Credit Rating BB-/Stable/--
Brazil National Scale brAA+/Stable/--
BR MALLS: Fitch Affirms 'BB' Foreign Currency IDR, Outlook Stable
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Fitch Ratings affirmed BR Malls Participacoes S.A.'s Local Currency
(LC) Issuer Default Rating (IDR) at 'BBB-' and National Long-Term
rating at 'AAA(bra)'. In addition, Fitch affirmed BR Malls' local
debentures at 'AAA(bra)' and Long-Term (LT) Foreign Currency (FC)
IDR at 'BB'. The Ratings Outlook is Stable.
The ratings reflect BR Malls' business position as one of the
largest commercial real estate companies in Latin America, with an
adequate asset base in Brazil, its adequate capital structure and
strong financial flexibility.
BR Malls Participaçoes S.A. and Aliansce Sonae Shopping Centers
S.A. (Aliansce Sonae, National LT Rating AAA(bra)/Stable) are in
the process of executing a business combination. The resulted
entity will likely benefit from a larger scale and built synergies
that have the potential to translate in improved margins and cash
flow. Fitch expects the capital structure will be aligned with
those of BR Malls and net leverage will remain below 3.0x. The
transaction is pending approval of Brazil's competition regulatory
entity expected by the end of 2022.
Despite the stronger credit profile, the new entity's FC IDR will
remain constrained by the country ceiling of Brazil at 'BB', given
the monetary transfer and convertibility risk factored into its
ability to serve debt internationally. Therefore, Fitch doesn't
anticipate a rating change for BR Malls.
KEY RATING DRIVERS
Merger Strengthens Business Profile: BR Malls and Aliansce Sonae
are in the process of a business combination. If the transaction is
approved under the proposed terms, it will further strengthen both
entities' credit profile. The combined entity will be the largest
Brazilian shopping mall operator by number of assets and gross
leasable area (GLA) with improved geographic diversification.
Combined, both entities will have stakes in 69 assets and around
1.6 million square meters of owned GLA. Tenant sales of both
companies totaled BRL29.9 billion in 2021. Its credit profile will
be further enhanced by its flexible cost structure and strong
financial flexibility which allows it to maintain stable results
through distressed economic scenarios. The transaction includes a
BRL1.25 billion payment made by Aliansce Sonae to BR Malls'
shareholders, besides share swaps.
Recovering Retail Operations: Fitch expects BR Malls' operations
will be fully recovered in early 2023, when EBITDA of BRL1.0
billion will surpass that of 2019 of BRL926 million. Fitch expects
EBITDA of around BRL920 million in 2022 as the company still
offered rent discounts in the 1Q22 but those are now eliminated.
All of BR Malls' operating assets are open and operating at 100% of
its capacity while occupancy rates are at 97% as of June 2022.
Rental rates are also fully rebounded. Spaces were shut down during
most critical months of 2020.
The merger with Aliansce Sonae will significantly increase BR
Malls' cash flow generation capacity, if approved. Fitch's
projections for 2022 indicate pro forma EBITDA of the combined
entity of BRL1.6 billion, excluding potential operating synergies,
of BRL161 million, which should contribute to further increase the
high operating margins.
Improving Capital Structure: Fitch expects BR Malls' capital
structure will continue to improve after a couple of distressed
years. BR Mall's net leverage measured as total adjusted net debt
over EBITDA after affiliates is expected at 3.1x in 2022 and to
remain below that thereafter. As of June 30, 2022, net leverage
measured as total net debt over EBITDA stood at 3.6x supported by
improved cash flow generation and the repayment of the perpetual
debentures of BRL400 million.
Pro forma net debt/EBITDA ratio of BR Malls and Aliansce Sonae was
3.3x in the LTM ended June 2022, considering the BRL1.25 billion
disbursement, and Fitch expects it to reduce to below 3.0x by the
end of 2023. Fitch's base case does not consider the business
combination proposal.
Mall Fundamentals to Withstand Macroenvironment: The long-term
fundamentals of the Brazilian shopping mall industry are strong.
The pandemic accelerated some evolving consumer trends already
taking place in the sector. Malls are actively managing its tenants
mix towards services, convenience and leisure. Some assets are
being adapted to include residential, office, schools and hospital
buildings. The overall attractiveness of mall spaces in Brazil is
strong as consumers seek for entertainment in a safe environment.
Brazil Macro-Environment: Brazilian issuers are well positioned to
face uncertainties from the electoral process and the following
years. Most companies rated by Fitch Ratings present healthy
balance sheets supported by low to moderate leverage and manageable
refinancing risk. Fitch expects lower inflation for 2H22 and 2023,
which should attenuate the strong cost pressure throughout 1H22,
and allow a gradual recovery of operating margins over 2H22 and
2023.
Credit availability in the local market remains strong. The local
loan portfolio increased in volume and tenor, while many first-time
issuers were able to tap the market in 2021 and 2022. Significant
growth of local debt market also acts as an important additional
liquidity source, especially for larger companies that typically
have strong access the bond market, which is currently more
restricted.
DERIVATION SUMMARY
BR Malls' ratings (FC IDR BB/Stable, LC IDR BBB-/Stable and
AAA(bra)) compare well with other Latin America real estate peers
in the 'BBB' rating category, such as CIBanco, S.A., Institucion de
Banca Multiple, Fideicomiso Numero CIB/3332 (BBB-/Stable).
BR Malls ratings are constrained by the country ceiling of Brazil,
BB. As of YE 2021, BR Malls reported USD2 billion of unencumbered
asset which covers unsecured debt by 13.0x. On the same date, net
loan-to-value (LTV) was low at 18%.
As of 2021, Fibra Soma had USD2 billion of unencumbered asset
covering 3.3x unsecured debt. On the same date, net LTV was 14%.
KEY ASSUMPTIONS
- Owned GLA stable at 797,000 sqm;
- Rental prices of BRL95/m2/month in 2022 growing to
BRL109/m2/month in 2025;
- Occupancy levels around 97% during the next few years;
- Annual average capex of BRL388 million in 2022 and 2023;
- Annual average dividend payment of around BRL124 million in 2022
and 2023.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- BR Malls' LT FC and LC IDRs could be positively affected by a
positive rating action on the sovereign rating of Brazil and/or an
upgrade of its Country Ceiling.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- BR Malls' LT FC IDR could be negatively affected by a negative
rating action on the sovereign rating of Brazil and/or a downgrade
of its Country Ceiling;
- BR Malls' LC IDR would be negatively affected by a negative
rating action on its LT FC IDR. Fitch expects to maintain a
difference of no more than two notches between BR Malls' LT FC and
LC IDRs;
- Fitch would also consider a negative rating action on BR Malls'
ratings if the company's financial profile deteriorates due to some
combination of the following: aggressive capex, adverse
macroeconomic trends leading to weaker credit metrics, significant
dividend distributions, and higher vacancy rates or deteriorating
lease conditions.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
BR Malls' LC IDR and National Long-Term Ratings
- Net leverage consistently above 3.5x;
- Deterioration of the conditions of lease contracts, occupancy
rates and delinquency negatively affecting credit indicators;
- Interest coverage index, measured by EBITDA/interest paid,
consistently trending to levels below 2.5x;
- Substantially less financial flexibility due to the reduction of
unencumbered assets levels.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: BR Malls' liquidity is supported by adequate
cash flow generation, cash position, manageable debt payment
maturity profile and a significant unencumbered asset base. As of
June 30, 2022, the company's readily available cash and short-term
debt were BRL1,279 million and BRL557 million, respectively.
On the same date, the company's total assets value is estimated at
USD3 billion, with unencumbered assets representing approximately
USD2 billion. Its total debt is USD769 million of which 35% is
unsecured.
These results in a high unencumbered asset over net unsecured debt
of 88x and net LTV ratio of 18%.
All of the company's debt is denominated in Brazilian Reais.
ISSUER PROFILE
BR Malls Participações S.A. (BR Malls) is one of the largest
shopping mall operators in Brazil. The company operates 31 malls
with a total GLA of 12.9 million sqf of which it owns 8.6 million
sqf.
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,
either due to their nature or the way in which they are being
managed by the entity.
Entity Rating Prior
------ ------ -----
BR Malls Participacoes S.A.
LT IDR BB Affirmed BB
LC LT IDR BBB- Affirmed BBB-
Natl LT AAA(bra) Affirmed AAA(bra)
senior unsecured
Natl LT AAA(bra) Affirmed AAA(bra)
BRAZIL: Has 2nd Lowest Minimum Wage Among 31 Countries, Says OECD
-----------------------------------------------------------------
Rio Times Online reports that Brazil has the second lowest minimum
wage in a list of 31 countries made by the OECD (Organization for
Economic Cooperation and Development), ahead only of Mexico.
The ranking contains data from 2021 about workers' pay worldwide
and comprises OECD member nations, plus Brazil and Russia,
according to Rio Times Online.
The list traditionally has 32 countries, but this year did not
include Japan, the report discloses.
The minimum wage in Brazil is R$1,212 (about US$212), slightly
higher than the R$1,100 established in the period considered for
the survey last year, the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Jair Bolsonaro is the current president, having
been sworn in on Jan. 1, 2019.
As reported in the Troubled Company Reporter-Latin America on
July 18, 2022, Fitch Ratings has affirmed Brazil's Long-Term
Foreign Currency Issuer Default Rating at 'BB-' and revised the
Rating Outlook to Stable from Negative.
On June 17, 2022, S&P Global Ratings affirmed its 'BB-/B' long-
and short-term foreign and local currency sovereign credit
ratings on Brazil.
Moody's Investors Service also affirmed on April 15, 2022,
Brazil's long-term Ba2 issuer ratings and senior unsecured bond
ratings, (P)Ba2 senior unsecured shelf ratings, and maintained the
stable outlook.
DBRS Inc. confirmed Brazil's Long-Term Foreign and Local Currency
Issuer Ratings at BB (low) on Aug 12, 2022. At the same time,
DBRS Morningstar confirmed the Federative Republic of Brazil's
Short-term Foreign and Local Currency Issuer Ratings.
BRAZIL: Mineral Exports Totaled US$11.62 Billion in 3rd Quarter
---------------------------------------------------------------
Richard Mann at Rio Times Online reports that Brazilian mineral
exports totaled US$11.62 billion in the third quarter of this year,
which indicates a retraction of 36.8% in relation to the same
period last year.
Compared to the previous quarter of 2022, there was an increase of
0.4%, according to Rio Times Online.
Imports totaled US$ 4.77 billion in the third quarter of this year,
with an increase of 86.7% over the result verified in the same
quarter of 2021, the report notes. Compared to the second quarter
of 2022, the drop reached 23.2%, the report relays.
The numbers were released (20) by the Brazilian Mining Institute
(Ibram), the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Jair Bolsonaro is the current president, having
been sworn in on Jan. 1, 2019.
As reported in the Troubled Company Reporter-Latin America on
July 18, 2022, Fitch Ratings has affirmed Brazil's Long-Term
Foreign Currency Issuer Default Rating at 'BB-' and revised the
Rating Outlook to Stable from Negative.
On June 17, 2022, S&P Global Ratings affirmed its 'BB-/B' long-
and short-term foreign and local currency sovereign credit
ratings on Brazil.
Moody's Investors Service also affirmed on April 15, 2022,
Brazil's long-term Ba2 issuer ratings and senior unsecured bond
ratings, (P)Ba2 senior unsecured shelf ratings, and maintained the
stable outlook.
DBRS Inc. confirmed Brazil's Long-Term Foreign and Local Currency
Issuer Ratings at BB (low) on Aug 12, 2022. At the same time,
DBRS Morningstar confirmed the Federative Republic of Brazil's
Short-term Foreign and Local Currency Issuer Ratings.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Proposes to Allow for Wage Adjustments
----------------------------------------------------------
Dominican Today reports that Luis Miguel De Camps, Minister of
Labor, stated that the government is working to find a permanent
solution to the wage issue through a social pact that ensures
decent wages and decent work for the country's working class. "At
various times, we have already pointed out, as President Luis
Abinader said, the intention of the government sector to build a
social pact for a decent salary and decent work," the official said
when questioned by the press during the 42nd anniversary
celebration of the National Institute of Professional Technical
Training (Infotep), according to Dominican Today.
De Camps stated that they are in discussions with the business
sector and the trade union central to ensure that salary increases
are in line with inflation rates, the report notes. "We're talking
in this process so that the solution is not circumstantial, but
rather definitive," he explained, the report relays. Regarding the
government's proposal, Rafael-Pepe-Abreu, president of the National
Confederation of Trade Union Unity (CNUS), stated that it is a
positive measure, as long as it does not undermine the workers'
achievements, the report discloses.
In that order, he thought it was positive that the government
wanted to establish a specific mechanism, but he cautioned that
this measure could create some mechanisms for workers to demand a
review of their wages and request system improvements, the report
relays. According to Abreu, the government is working to advance
labor issues through the decision of each productive sector
(voluntary adjustments), the report discloses. "The government is
attempting to persuade businessmen to reach an agreement through a
call with the National Salary Committee (CNS), which has another
feature," he clarified, 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: UK Increases Finc'l Facilities to GBP3-Billion
-------------------------------------------------------------------
Dominican Today reports that the Minister of State for Foreign
Affairs for the Americas of the United Kingdom, Hon. Jesse Norman,
informed that the UK increased to 3 billion pounds sterling the
availability of funds through the United Kingdom Export Finance
(UKEF) so that the Dominican Republic can access financial
facilities that will allow it to invest in development and
infrastructure projects.
Within the framework of the IX Dominican Week in the United
Kingdom, the British official received a Dominican delegation
headed by the Dominican ambassador to Great Britain, Elnio Durán,
and the president of the British Chamber of Commerce, Amauris
Vásquez, where it was explained how these funds could reach 4.5
billion pounds and that they are already available for the
Government to apply for them and invest them in priority areas such
as aqueducts and drinking water, energy, health, land logistics,
and security, according to Dominican Today.
In the meeting, which was also attended by the director of
Prodominicana, Biviana Riveiro, as well as the businessmen Felipe
Vicini, Pablo Portes, Leonel Melo, and Manuel Jiménez, the
initiatives to be implemented to increase exports from the
Dominican Republic to the United Kingdom were agreed, especially in
the agricultural sector, especially avocado and bananas, as well as
specialized technical services such as free zones of technology and
medical services, the report notes.
On the British side, in addition to the Minister of State, the UK
Ambassador to the Dominican Republic, His Excellency Mockbul Ali,
participated, the report relays. Both delegations agreed to
continue working together to expand bilateral collaboration in
education, migration, tax efficiency, and technology exchange so
that the Dominican Republic can accelerate the transition to an
orange economy focused on creativity and new technologies, the
report discloses.
This meeting was the most important meeting between the British and
Dominican governments together with entrepreneurs, which took place
within the framework of the Dominican Week in the United Kingdom,
which had not been held since 2019 as a result of the pandemic, and
which allows resuming the most relevant issues of the commercial
and collaboration agenda of both countries, the report relays.
The ninth edition of Dominican Week in the UK is possible thanks to
the collaboration of critical Dominican institutions such as the
Ministry of Industry, Commerce and MSMEs, ProDominicana, the
Directorate General of Cinema, the Directorate General of Customs,
and the sponsorship of INICIA, Banco Popular Dominicano, Banco del
Reservas, Grupo Punta Cana, Pernod Ricard Dominicana, Labya,
Brugal, Kah Kow, Hispania, TIMM, United Petroleum, Gulf Oil
Dominicana, Design District Punta Cana, among others, 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.
=============
J A M A I C A
=============
1834 INVESTMENTS: Suspended From Trading Ahead of Court Hearing
---------------------------------------------------------------
Jamaica Observer reports that trading in the ordinary shares, 1834
Investments Limited on the Jamaica Stock Exchange (JSE) will be
suspended effective October 25 to facilitate the processing of
shareholder payment elections ahead of the Supreme Court of Jamaica
hearing scheduled for November 24, the company has indicated.
1834 Investments shareholders voted at its August 10, 2022 court
ordered meeting in favor of the proposed scheme of arrangement
which will see Radio Jamaica Limited acquire all the shares in 1834
Investments, according to Jamaica Observer.
Shareholders in 1834 Investments have been offered $1.29 in cash,
0.4962 Radio Jamaica shares per 1834 Investments share or a
combination of cash and shares, the report notes. The effective
date for shareholders will be December 1 with the cash payment
expected to be completed by December 8 and the Radio Jamaica shares
by December 15, the report relays. If an 1834 Investments
shareholder doesn't make an election on any option, they will have
been deemed to elect the cash consideration, the report relays.
Radio Jamaica will make a supplemental listing application to the
JSE to list the new Radio Jamaica shares.
October 24 will be the final day of trading on the JSE before the
Supreme Court hearing for final approval on the scheme of
arrangement, the report relays. If the scheme of arrangement is
approved, there will be no further trading of the ordinary shares
on the JSE, the report discloses. The shares in 1834 Investments
would be cancelled and new shares would be issued to Radio Jamaica
with 1834 being dissolved and struck off the Register of Companies,
the report relays.
This would mean that one of original companies to have been traded
on the JSE on February 3, 1969, would no longer be listed, the
report says. 1834 Investments was the remaining resulting entity
after the Gleaner Company Limited (GCL) shifted its media assets
and operations into The Gleaner Company (Media) Limited, which
merged with Radio Jamaica in March 2016, the report relays. The
Gleaner Company Limited listed on the JSE via an initial public
offering in 1969 and was incorporated on June 10, 1987, the report
relays.
This would be the latest delisting of ordinary shares on the JSE
after Optima Medical Innovations Corporation (formerly Tree of
Knowledge International Corporation) was delisted on February 19,
2021, for non-compliance with JSE rules, the report discloses.
Sweet River Abbatoir and Supplies Company Limited was delisted from
the JSE on February 10, 2020, for non-compliance with JSE rules as
well, the report relays.
1834 Investments informed the JSE on October 14 that it would not
be publishing an annual report for its 2022 financial year ending
March 31 given the advanced stage of the scheme of arrangement with
Radio Jamaica, the report discloses. The company stated that the
most financially prudent thing would be for merger developments
over the year and the final amalgamation exercise to be discussed
in Radio Jamaica's 2023 annual report and/or media releases, the
report notes.
1834 Investments recorded a consolidated net loss of $29.71 million
in its first quarter compared to the $14.85 million net profit in
the prior period, the report relays. 1834 Investment's total
assets stood at $1.80 billion with shareholders equity standing at
$1.47 billion, the report relays. The book value per share is
$1.21 per share. 1834 Investment's share price currently trades at
$1.15 per share while Radio Jamaica trades at $2.18 per share, the
report discloses. While the current Radio Jamaica share price
makes the cash option appear more attractive, Radio Jamaica entered
into a "cash back-stop" agreement with Victoria Mutual Investments
Limited (VMIL) which will pay up to $700 million in equivalent
value to 1834 Investments shareholders who selected the cash
payment option, the report relays.
Monica Ladd, chair of the August 10 meeting, confirmed that of the
nine shareholders who signed the lockup agreement totaling
634,303,961 shares or 52.37 per cent of the company, one or two
have opted for cash while the remainder have chosen the Radio
Jamaica shares, the report relays. Gary Allen, chief executive
officer of Radio Jamaica, confirmed to the Jamaica Observer in
August that his company is only exposed to paying just under four
per cent or $63 million in value of 1834 Investments shares, the
report adds.
=====================
P U E R T O R I C O
=====================
ESJ TOWERS: Court Rules Cuprill Does Not Have Adverse Interest
--------------------------------------------------------------
In its opinion and order dated Oct. 13, 2022, the U.S. Bankruptcy
Court for the District of Puerto Rico confirms that the Debtor's
counsel, Attorney Charles A. Cuprill, does not have a conflict or
adverse interest with ESJ Towers, Inc. or the bankruptcy estate.
Therefore, the Cuprill Law Firm may continue representing the
Debtor, cognizant of its continuous duty of disclosure.
The Cuprill Law Firm Application disclosed that on April 7, 2022,
Charles A. Cuprill P.S.C. Law Offices received a $75,000 retainer
from Around the World Holdings, LLC ("ATWH"), made on behalf of the
Debtor, and that as of May 14, 2022, $53,000 of the advance had not
been consumed." ATWH is the holding company for Conexus Holdings
Puerto Rico ("Conexus"), the Debtor's parent company.
Mary Ida Townson, U.S. Trustee for Region 21, alleges that attorney
Cuprill received his retainer from ATWH, and that the Debtor may
have accounts receivables from ATWH and possibly avoidance actions
against this entity. ATWH is the holding company of Conexus, which
in turn is the holding company of the Debtor. The concerns were
prompted when at the Meeting of Creditors, the Debtor's
representatives testified that the Debtor owed monies to ATWH
pursuant to a management agreement between the parties. The
schedules and statements then on file did not clearly disclose the
above.
Cuprill answers that the Cuprill Law Firm had no knowledge of
Debtor's, ATWH's or Conexus' existence or corporate structure,
their principals and officers, prior to Debtor's inquiry as to
Cuprill Law Firm's availability to act as Debtor's counsel. Before
the execution of the professional services agreement and the
payment of the $75,000 advance, Cuprill advised Keith St. Clair and
attorney Brian K. Tester that the services by the Cuprill Law Firm
would be solely to the Debtor, and that the Cuprill Law Firm would
not represent ATWH, Conexus, or Mr. St. Clair, who advised Cuprill
that Mr. Tester was his and ATWH's counsel.
The Court finds that the Cuprill Law Firm is not currently
representing or has represented any of the creditors which are in
turn affiliated corporations of the Debtor and whose shareholders
are common to the shareholders of the Debtor's sole shareholder"
namely Costa Bonita Holding Company, Inc.
The Court notes that in the prior case there were payments made by
the Debtor's related entities to the Cuprill Law Firm. Even though
they may not have been fully disclosed in the prior case, the same
have now been clarified to the Court as it relates to the motion to
disqualification. In the instant case, the Court finds that the
Debtor's counsel has not received a retainer from related entities
that are creditors as pursuant to the Debtor's counsel Disclosure
of Compensation. In addition, the Debtor's counsel in the verified
statement attached to his application for employment disclosed that
the source of the funds of the Debtor's counsel compensation will
be from the Debtor and/or by entities related to or belonging to
Costa Bonita Holding Company, Inc.'s shareholders.
The Court concludes that the Debtor's counsel's compensation
payments from creditors of the Debtor that are related entities
with common shareholders does not create for the Debtor's counsel
a
"meaningful incentive to act contrary to the best interests of the
estate and its sundry creditors" an incentive sufficient to place
those parties at more than an acceptable risk"or the reasonable
perception of one," since these creditors, which are related
entities, do not have an adverse interest to that of the bankruptcy
estate.
In fact, Attorney Cuprill has disclosed all existing connections
with the Debtor and its affiliates. Hence, there is no specific
fact that shows that Cuprill will fail to comply with his fiduciary
duties to the Debtor and the estate. After a thorough analysis of
all relevant facts, the Court cannot discern any actual or
potential dispute that may create a predisposition to act in
detriment of the estate. The source of the funds to pay Cuprill's
retainer has been disclosed and explained by Cuprill and
corroborated in the verified statement by Marini Pietrantoni
Muniz, LLC.
A full-text copy of the Opinion and Order dated Oct. 13, 2022, is
available at https://tinyurl.com/yauxvw55 from Leagle.com.
About ESJ Towers
ESJ Towers, Inc. owns the ESJ Towers in Carolina, P.R. The luxury
apartments and condo units at ESJ Towers have direct access to Isla
Verde Beach, widely considered one of the best in Puerto Rico.
ESJ sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D.P.R. Case No. 22-01676) on June 10, 2022, listing as much
as $50 million in both assets and liabilities. ESJ President Keith
St. Clair signed the petition.
Judge Enrique S. Lamoutte Inclan oversees the case.
The Debtor tapped Charles A. Cuprill, Esq., at Charles A. Cuprill,
PSC Law Offices as legal counsel and De Angel & Compania, CPA, LLC,
as auditor.
=================
V E N E Z U E L A
=================
CITGO PETROLEUM: Bondholders' Claim to Be Decided by NY Court
-------------------------------------------------------------
globalinsolvency.com, citing WSJ Pro Bankruptcy, reports that a
federal appeals court deferred ruling on whether U.S. bondholders
have valid claims over Venezuela's prized oil refiner Citgo
Petroleum Corp., instead asking New York state's highest court to
decide on the disputed $1.7 billion debt.
The Second Circuit Court of Appeals in New York asked for guidance
on whether bondholders are entitled to seize the controlling stake
in Citgo they hold as collateral after Venezuela's opposition
movement stopped making payments on bonds secured by the
Houston-based refiner, according to globalinsolvency.com.
The ruling leaves unsettled, for now, bondholders' ability to
foreclose on Citgo or force a negotiated deal with the Venezuelan
opposition leaders who took control of the business in 2019, the
report recalls.
The company, which owns U.S. refineries, pipelines and terminals in
addition to supplying thousands of Citgo-branded gasoline stations
across 30 states, has been tied up in the long standoff between
Venezuelan President Nicolas Maduro, the opposition movement that
has sought to topple him, and their respective international
allies, the report notes.
As part of a U.S. pressure campaign against Mr. Maduro, the Trump
administration in 2019 placed control of Citgo with U.S.-backed
opposition leaders and shielded it from the claims of creditors
owed money by the bankrupt government in Caracas, the report
relays. The opposition didn't make a scheduled payment of
principal and interest in 2019 to bondholders and instead sued in
New York federal court to have the debts declared unenforceable,
the report discloses.
A New York judge sided with bondholders in 2020, prompting the
opposition's appeal to the Second Circuit. President Biden has kept
Citgo's protections against seizure in place even as opposition
fractured in Venezuela and lost political support, the report
relays.
The company's future and its continued Venezuelan ownership are now
clouded by U.S. plans to ease sanctions on Mr. Maduro, in return
for progress toward free elections in 2024, the report adds.
As reported in the Troubled Company Reporter-Latin America in June
2022, S&P Global Ratings affirmed its 'B-' long-term issuer credit
ratings on CITGO Holding Inc. and core subsidiary CITGO Petroleum
Corp.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2022. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to
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of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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* * * End of Transmission * * *