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/raid1/www/Hosts/bankrupt/TCRLA_Public/221102.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 Wednesday, November 2, 2022, Vol. 23, No. 213 Headlines A R G E N T I N A ARGENTINA: 3rd Straight Drought is Upending Key Planting Season B E R M U D A APEX STRUCTURED: Fitch Affirms LongTerm IDR at 'B', Outlook Stable B R A Z I L BANCO MASTER: Moody's Assigns First Time 'B3' Deposit Ratings MINAS GERAIS: S&P Upgrades ICRs to 'CCC+', Outlook Stable PEREGRINE I LLC: $233M Bank Debt Trades at 76% Discount PEREGRINE I LLC: $25M Bank Debt Trades at 76% Discount D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Fiscal Deal is Necessary in Order to Cut Debt DOMINICAN REPUBLIC: Inflation Moderated, Central Bank Says J A M A I C A MAYBERRY INVESTMENTS: Posts $2.2 Billion Third Quarter Loss M E X I C O GRUPO AXO: Fitch Affirms LongTerm IDRs at 'BB', Outlook Stable P U E R T O R I C O PUERTO RICO: Pays $492-Mil. to Cover Cofina Debt Service T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Gov't Gets US$5.84MM for October Flood Damage URUGUAY: Issues Global Sustainability-Linked Bond, w/ IDB Support - - - - - ================= A R G E N T I N A ================= ARGENTINA: 3rd Straight Drought is Upending Key Planting Season --------------------------------------------------------------- Jonathan Gilbert at Bloomberg News reports that a near-relentless drought is jeopardising soybean and corn growing in Argentina, a gut-punch for global crop markets already on edge from US weather risks and Ukraine disruptions. Dryness that's accumulated over three straight years has already shrivelled wheat plants to be harvested in November and December, according to Bloomberg News. The situation is so dire that the government needs to restrict shipments to ensure wheat-flour supplies at home, Bloomberg News notes. Now farmers on the Pampas, Argentina's prized fertile plains, are facing one of the toughest starts in recent memory to planting the country's biggest cash crops: soy and corn, Bloomberg News relays. Argentina is the number one supplier of soy meal for livestock feed and soy oil for cooking and biofuels, so traders from Chicago to Kuala Lumpur are watching closely, Bloomberg News relays. So too are government leaders gearing up for general elections next year. That's because Argentina's delicate finances depend on exports from next year's soy harvest potentially worth US$25 billion, Bloomberg News discloses. Normally soy planting starts right around now, with three quarters of fieldwork done by the end of November. But many farms are too parched to embed seeds, Bloomberg News notes. Rain on the night of October 25 came as a welcome relief, Bloomberg News says. But it largely missed a key slither of the Pampas and farmers that did get precipitation need more, Bloomberg News adds. "These rains barely change anything," said María de Estrada, a top official in the government's agricultural emergency department. De Estrada says farmers are undertaking the 2022-23 season in even drier conditions than 2008-09, a parched year of sore memories on the Pampas, Bloomberg News discloses. While the La Niña climate phenomenon that's created the drought will weaken over the southern hemisphere's summer, it's still a bleak picture over the next two months, with dryness set to persist for most of the planting window, Bloomberg News relays. In La Pampa Province, only half of grower Julio Reumann's 600 hectares (1,480 acres) set aside for soy have been wet enough to think about getting seeds in the ground, Bloomberg News notes. Corn planting has also made its slowest start to a season ever. That means maize from Argentina, the third-biggest supplier, will arrive on global markets later than usual as farmers plead for rains to produce a late crop, Bloomberg News relates. If it stays dry, they'll instead take a chance on soy, which requires less spending on nutrients and can withstand drought better, accentuating a pre-season shift to the oilseed, Bloomberg News says. "If it rains enough, from here we'll plant 100 hectares of late corn and a hundred of soy; if it doesn't, we'll plant it all with soy," said Ariel Striglio, a farmer in Santa Fe Province, Bloomberg News notes. Up to an extra 300,000 hectares of soybeans may end up being sown on top of the Buenos Aires Grain Exchange's current national estimate of 16.7 million hectares, said Martin Lopez, a prognosticator at the bourse, Bloomberg News says. Cold fronts that bring bursts of wetness - like the one on October 25 - can form within La Niña, and another may appear around November 8, said Natalia Gattinoni, a government agricultural meteorologist, Bloomberg News discloses. It's these pockets of precipitation that can at least help farmers get off on the right foot. "Making a false start in these La Niña conditions is asking for big economic trouble," the Rosario Board of Trade said in a Thursday report, Bloomberg News relays. The problem with waiting for rain is that soybeans yield less when they're planted later. Argentine farmers need a strong soy season to rescue the crop investment cycle next year. Reumann is already paying penalties on wheat contracts he won't be able to fulfill, Bloomberg News notes. Argentina's solvency as a nation is also at stake since the Central Bank can't do without crop dollars, Bloomberg News notes. "The small wheat crop and later corn crop leaves a long summer ahead until soy is harvested," said Mateo Reschini, a research analyst at Inviu. "And if soy plants don't get rain, it could be a disaster. We may face a scenario where the foreign exchange balance doesn't add up," Bloomberg News relays. "I've never seen it this bad," said farmer Striglio. "I pray for rain," he added. 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. ============= B E R M U D A ============= APEX STRUCTURED: Fitch Affirms LongTerm IDR at 'B', Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Apex Structured Intermediate Holdings Limited's (Apex) Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Fitch has also affirmed Apex Group Treasury Limited's and Apex Group Treasury LLC's first-lien term loans (TLB) at 'B+' with a Recovery Rating of 'RR3'. The ratings of Apex reflect its high leverage that is balanced against its scale, growth prospects and positive free cash flow (FCF) generation, albeit lower than Fitch's previous expectation as a result of rising interest payments. The company's geographic and customer diversification, combined with low churn levels, provides recurring revenue streams and supports cash flow stability. Fitch forecasts Apex's total debt at 8.8x EBITDA at end-2022, above the 7.5x downgrade threshold. Fitch however, expects this to decline to 7.5x by end-2023. The pace of decline is slower than originally anticipated due to higher levels of acquisition spend and the potential impact of a weakening macroeconomic outlook. KEY RATING DRIVERS Slower Deleveraging: Fitch's revised base-case forecasts assume slightly slower deleveraging. This is due to additional, partly debt-funded acquisitions with fairly low initial EBITDA contribution and a potentially weakening macroeconomic environment. Fitch estimates Apex's total debt-to-EBITDA to remain above its 7.5x negative rating sensitivity in 2022. However, Apex maintains good capacity to organically deleverage to 7.5x by end-2023 and 6.7x by end-2024 in its base case. This is driven by EBITDA growth and realised synergies. Deleveraging pace will also depend on the successful integration of its acquired companies. Decreasing Interest Coverage: Apex's debt is at floating rates with margins ranging from 4% to 7.25% over EURIBOR, LIBOR and SOFR. Fitch expects the company's EBITDA interest coverage to decrease to 1.8x in 2023 as a result of rising interest rates. This is below its previous expectation of 2.9x, and the downgrade trigger of 2.0x. However, Fitch expects interest coverage to improve to 2.0x by 2024 on the back of increasing EBITDA. M&A Growth Strategy: Apex has grown strongly over the past five years both organically and via acquisitions. Its organic growth alone has been in low double digits per year over the last five years. Apex has made 38 acquisitions since 2017 with the latest being MMC and Sanne in 2Q22 and 3Q22, respectively, and Maitland, which Fitch expects to close in 4Q22. Apex has typically financed transactions through a combination of equity and new debt. The acquisitions improve Apex's product and geographic diversification and increase its market shares in several regions. Execution risks are manageable given Apex's successful record with acquisitions and synergy realisation. Strong Market Position: Following the recent acquisitions including Sanne, MMC and Maitland, Apex has become one of the largest alternative asset services platforms globally with over USD3 trillion assets on the platform (AOP), as of August 2022 and around USD1.1 billion of revenue expected in 2022 on a pro-forma basis. Apex has been outperforming its market over the last four to five years. Apex's main competitive advantages are its scale as well as product and geographical diversification, which allow it to be a single-source solution provider. Low Revenue Volatility: The majority of Apex's revenue is based on fixed fees. This limits volatility as a result of capital market movements as demonstrated during the Covid-19 pandemic. While average contract durations are not long, churn levels are minimal, as evident in Apex's retention rates of greater than 99%. This, combined with geographic diversification, an end-to-end product portfolio and low customer concentration, results in low revenue volatility. Cash-Generative Business: Apex has a scalable operating structure that is cash-generative. This is demonstrated by an expected Fitch-defined EBITDA margin improvement to 35% by 2024 from around 28% in 2021, on a pro-forma basis for the acquisitions in 2021-2022. The margin is high versus some of its peers and the expected improvement to above 30% will mainly be driven by economies of scale, cross-selling and synergies. Fitch expects the enlarged group to generate mid-single digit FCF margins in 2022-2023, lower versus its previous forecast of a low double-digit margin as a result of increasing interest payments. Leverage Thresholds Revised: Fitch's corporate finance group is shifting to EBITDA-based leverage metrics from funds from operations (FFO)-based ones. Fitch has, therefore, tightened Apex's leverage thresholds to 7.5x (downgrade) and 6x (upgrade) on a total debt-to-EBITDA basis from respectively 8x and 6.5x FFO gross leverage. This is broadly in line with the average gap between these metrics across business services companies in its portfolio. DERIVATION SUMMARY Apex is one of the largest alternative asset services platforms globally in AOP. Its scale, diversification, low customer concentration and cash flow margins rank well compared with its peers', resulting in a slightly higher leverage capacity with upgrade and downgrade sensitivities of 6.0x and 7.5x, respectively (on a total debt-to-EBITDA basis). The nature of the business allows Apex to realise economies of scale, leading to an EBITDA margin being in line or above 'B' in Fitch's privately rated portfolio of direct peers. Fitch expects the FCF margin to be overall above privately rated 'B' category peers', due to low capex requirements and with no dividend payments expected in the near future. Following the acquisition of Sanne, MMC, Maitland and smaller companies in 2021-2022, Apex has become more diversified than peers and has low customer concentration risk. Compared to other rated companies in our portfolio, Apex is twice as large as TeamSystem Holding S.p.A. (B/Stable) by revenue and has higher geographic diversification. However, Apex's competitive position is not as strong as that of payments company Nexi S.p.A. (BB/Stable) and sports data analytics provider Sportradar Management Ltd (BB-/Stable). KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Its forecast includes full consolidation of recent acquisitions - Revenue growth of 6.7% in 2022 and 6.5%-7.3% in 2023-2025 on the back of alternative assets-under- management (AuM) growth, increasing outsourcing penetration and cross-selling opportunities - Pro-forma Fitch-defined EBITDA margin to improve to 35% by 2024 from 31% expected in 2022, supported by revenue growth and synergies - Restructuring costs of USD20 million per annum included in other items before FFO - Working-capital requirements of around USD17 million in 2022 decreasing to USD12 million-USD13 million per annum in 2023-2025 - Capex around 3.5% of revenue per annum to 2025 - No dividend payments for the next four years - Preferred shares treated as equity Key Recovery Rating Assumptions - Apex would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated given its asset-light business model - Fitch estimates that post-restructuring pro-forma GC EBITDA would be around USD275 million. In this scenario, the stress on EBITDA could result from integration failure of acquired companies, combined with limited synergies, higher competitive intensity leading to revenue losses and end-clients shifting from alternative funds to low-cost exchange traded funds. The GC EBITDA is higher versus its previous base case, reflecting new acquisitions in 2022 - An enterprise value (EV) multiple of 6.0x is applied to the GC EBITDA to calculate a post-reorganisation EV. The multiple is in line with that of other similar peers. This reflects Apex's leading market position following the acquisitions in 2021-2022, good revenue visibility combined with geographic and customer diversification, and a strong cash-generative business - Deducted 10% of administrative claims from EV to account for bankruptcy and associated costs - The total amount of first-lien secured debt for claims includes USD2,542 million senior secured first- lien term loans and an equally ranking USD200 million revolving credit facility (RCF) that Fitch assumes to be fully drawn. This results in the senior secured first-lien debt instrument rating of 'B+' with a Recovery Rating 'RR3' and 54% recoveries, one notch above the 'B' IDR. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Continued organic growth supported by successful integration of acquired companies leading to significant synergies and EBITDA margin approaching 35% - Fitch-defined total debt-to-EBITDA below 6x (equivalent to FFO gross leverage below 6.5x) on a sustained basis - EBITDA interest coverage sustained above 3.0x - FCF margin over 10% on a sustained basis Factors that could, individually or collectively, lead to negative rating action/downgrade: - Stiffer competition resulting in material market share loss combined with a large decline in global AuM - Failure to integrate acquired companies and extract synergies, or to benefit from scale economies, resulting in EBITDA and FCF margin consistently below 30% and 10%, respectively - Debt-funded acquisitions preventing deleveraging, resulting in Fitch-defined total debt-to-EBITDA above 7.5x (equivalent to FFO gross leverage above 8.0x) on a sustained basis - EBITDA interest coverage below 2.0x LIQUIDITY AND DEBT STRUCTURE Satisfactory Liquidity: Apex's pro-forma unrestricted cash is estimated around USD27.6 million at end-June 2022. The liquidity profile is underpinned by an USD200 million of RCF, which Fitch expects to be undrawn at end-2022, positive expected cash flow generation and no near-term debt maturities, although the US dollar first lien term loan has an amortising profile (1% per annum). Refinancing risk is manageable following its debt refinancing in July 2021. ISSUER PROFILE Apex is a leading independent global provider of services to alternative investment management and corporate sectors. Services include fund, corporate and trust administration services, middle office, regulatory reporting, custody, depositary, and banking solutions. 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/Debt Rating Recovery Prior ----------- ------ -------- ----- Apex Group Treasury LLC senior secured LT B+ Affirmed RR3 B+ Apex Group Treasury Limited senior secured LT B+ Affirmed RR3 B+ Apex Structured Intermediate Holdings Limited LT IDR B Affirmed B =========== B R A Z I L =========== BANCO MASTER: Moody's Assigns First Time 'B3' Deposit Ratings ------------------------------------------------------------- Moody's Investors Service has assigned first-time B3 long-term and Not Prime short-term local and foreign currency deposit ratings to Banco Master S.A. (Master), as well as B2 long-term and Not Prime short-term counterparty risk ratings, in local and foreign currency. Concurrently, Moody's has assigned a b3 baseline credit assessment (BCA), a b3 adjusted BCA, and B2(cr) and Not Prime(cr) counterparty risk assessments (CR), in the long- and short-term, respectively. The outlook on the long-term deposit ratings is stable. RATINGS RATIONALE Master's b3 BCA reflects the bank's small franchise focused on providing payroll loans to consumers, as well as loans to companies, which is in early stage of operations, following the acquisition of former Banco Maxima S.A. The bank has an asset structure largely composed of government judiciary loans (precatorios), a small portfolio of payroll-credit card loans, a corporate loan book and credit funds, from which it has been building cross-selling opportunities to its newly created investment banking unit. The b3 BCA incorporates Master's accelerated expansion strategy, in times of a challenging operating environment, when the bank's loan portfolio grew at a compound annual growth rate (CAGR) of 73%. In the context of the fast portfolio expansion, problem loan ratio remained low at just 0.4% in June 2022, but will likely increase with the gradually reduction of federal government judiciary loans (precatórios) and portfolio turnover. Master had a large concentration of government judiciary loans that accounted for 63% of gross loans and 485% of tangible common equity (TCE) in June 2022. Despite its focus on expanding into payroll lending businesses, the loan book is still highly concentrated, with the ten largest exposures accounting for 66% of TCE, resulting in further pressure to asset risks, particularlyamid the anticipated slowdown in economic activity in 2023. Master's regulatory capital position, measured by its common equity tier 1 (CET1) ratio, was 11.7% in June 2022, while capitalization measured by Moody's ratio of tangible common equity to adjusted risk weighted assets (RWA), stood at 8.4%, a relatively low ratio compared to those reported by midsize Brazilian banks. This ratio incorporates Moody's adjustment to RWA, that applies 100% risk-weigh to all government securities, including to its holdings of government judicial loans. The sizeable portfolio of government judicial loans increases the bank's leverage and lowers its loss-absorption capacity. Master's profitability has improved slightly since 2018, demonstrating the bank's discipline in controlling operating costs. Despite that, Master still relies on loan sales to support positive bottom-line results. The bank's strategy to grow in payroll loans will continue to provide recurring earnings, which will also likely benefit from plans to diversify business into insurance, asset management, brokerage, banking as a service and investment banking. In June 2022, net income to tangible assets stood at 0.8%, slightly below 1.1% reported at year end 2021, a decline driven by increased loans loss provisions related to the holdings of credit linked-funds (FIDC) and continued investments in the franchise, particularly personnel and new product platforms. In assigning the b3 BCA, Moody's also acknowledges Master's low funding diversification, which is intrinsic to the early stage of the franchise, with 96% of its funding mix made of customer deposits largely dependent on selected third-party broker platforms. The BCA also takes into account management's current efforts to diversify resources from customers as well as institutional investors. At the same time, a large share of its liquidity position is composed by credit-linked and equity investment funds, less liquid instruments than government securities. These investment funds accounted for 68% of the bank's liquid assets in June 2022. The b3 BCA also reflects ongoing improvements to corporate governance structure and controls implemented by Master in the past five years. Governance risks are largely internal rather than externally driven, and for Master Moody's do not have any particular governance concerns. Nonetheless, corporate governance remains a key credit consideration and requires ongoing monitoring. Master's BCA also incorporates the rating agency's assessment of uncertainties arising from the developing stages of its business model, execution risks related to the bank's expansion into a highly competitive core markets and its relatively high exposure to investment funds and to 'precatórios'. The stable outlook on the long-term deposit ratings reflects the bank's accelerated growth strategy amid a scenario of low economic growth in 2023, which will require disciplined risk management, more diversified funding structure and strong capital buffers to support the expansion. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on Master's BCA could result from significant and sustainable generation of recurring earnings, while the bank is able to reduce portfolio concentration, particularly the holding of government judiciary loans, that could add balance sheet volatility, when compared to other medium market banks in Brazil focused on lending. The bank's BCA could also be affected positively if Master reports consistent growth of its own deposit franchise and reduces its reliance on third party brokers deposits, while it enhances its liquidity profile by increasing the quality of liquid assets. Master's BCA could be downgraded if the bank reports a consistent deterioration of its asset quality and profitability, which could also pressure its capital base negatively. Changes in the regulatory framework on Master's core payroll lending business, or a rapid operational growth to address competitive pressures could result in a sharp deterioration of Master's financial metrics and affect its BCA negatively. Assignments: Issuer: Banco Master S.A. LT Counterparty Risk Assessment, Assigned B2(cr) ST Counterparty Risk Assessment, Assigned NP(cr) LT Counterparty Risk Rating (Foreign Currency), Assigned B2 ST Counterparty Risk Rating (Foreign Currency), Assigned NP LT Counterparty Risk Rating (Local Currency), Assigned B2 ST Counterparty Risk Rating (Local Currency), Assigned NP LT Bank Deposit Rating (Foreign Currency), Assigned B3, Outlook Stable ST Bank Deposit Rating (Foreign Currency), Assigned NP LT Bank Deposit Rating (Local Currency), Assigned B3, Outlook Stable ST Bank Deposit Rating (Local Currency), Assigned NP Baseline Credit Assessment, Assigned b3 Adjusted Baseline Credit Assessment, Assigned b3 Outlook Actions: Issuer: Banco Master S.A. Outlook, Assigned Stable METHODOLOGY USED The principal methodology used in these ratings was Banks Methodology published in July 2021. MINAS GERAIS: S&P Upgrades ICRs to 'CCC+', Outlook Stable --------------------------------------------------------- S&P Global Ratings, on Oct. 27, 2022, raised its long-term foreign and local currency issuer credit ratings on the state of Minas Gerais to 'CCC+' from 'SD'. S&P also raised its national scale rating to 'brBB' from 'SD'. The outlook on both scales is stable. Outlook The stable outlook of Minas Gerais reflects S&P's expectation of its very weak--but improving--fiscal profile in the next 24 months as the state develops its fiscal consolidation plan to participate in the FRR. Minas Gerais' ratification of the FRR would enable the federal government to provide significant support to the state in the form of payment of guaranteed debt and deferral of the state's payments of debt owed to the federal government. Downside scenario S&P could lower its ratings on the state of Minas Gerais in the next 12 months if, contrary to our expectations, the state won't participate in the FRR, sharply increasing annual financial obligations and raising the likelihood of default. Upside scenario S&P could upgrade the state of Minas Gerais in the next 12 months if it duly implements its FRR financial consolidation plan, strengthening its cash flows and its capacity to service debt on a timely basis. Rationale S&P said, "The upgrade reflects our expectation that Minas Gerais will participate in the FRR, which should enable the state to improve its currently very weak fiscal position. Joining the FRR also means that the central government will automatically pay all the debt it guarantees on behalf of the state. In addition, the federal government will defer payments of intergovernamental debt without executing the counter-guarantee that would otherwise lower Minas Gerais' revenue. Minas Gerais is also receiving a compensation in the form of debt forgiveness for a mandated reduction in local tax rates. As a result, we now believe that, while Minas Gerais receives fiscal support, there's a strong likelihood it will honor all its obligations on time in the next 24 months. Our 'CCC+' ratings on Minas Gerais balance our expectation of timely repayments of debt with a fragile fiscal profile, including still weak cash flows and liquidity, as well as high debt. In our opinion, the state's creditworthiness is vulnerable to failure to participate in the FRR if Minas Gerais doesn't implement fiscal measures." The central government has been servicing Minas Gerais' debt, but weak fiscal and liquidity conditions remain in place. Despite the state opposition-controlled legislature's failure to approve accession to the FRR, the Federal Supreme Court allowed Minas Gerais to do so. Nevertheless, the FRR ratification would still require passing legislation, including a spending cap, and the central government's approval of the state's proposed fiscal consolidation plan. S&P believes that the re-election of Governor Zema and his efforts to broaden his political coalition improves prospects of ratifying the FRR accession prior to June 2023 deadline. Once Minas Gerais fulfills all the requirements to ratify the FRR, the federal government will agree to repay the state's guaranteed debt on due date (which becomes intergovernmental) and reschedule intergovernmental obligations, in addition to be precluded from activating counter-guarantees. Moreover, in June 2022, Brazil's Congress classified fuel, natural gas, transport, communications, and electricity as essential goods, all of which have an 18% ICMS tax rate ceiling. To tame the harmful impact of high inflation, Congress reduced the tax rate on these items, but which slashed the potential tax revenue for most states. In response, Congress created a fiscal compensation mechanism in the form of forgiveness of debt owed to the federal government and repayment of the states' guaranteed debt during the second half of 2022. S&P views the compensation mechanism as extraordinary and systemic support. This, along with the prospects for the state joining the FRR, sharply lowering its debt service costs in the forecast period, while Minas Gerais pursues--and achieves--fiscal consolidation, lead S&P to believe that the state is no longer in default. S&P said, "Assuming the implementation of Minas Gerais' fiscal consolidation plan, we estimate an average operating surplus of 4.4% of operating revenues and deficit after capex of 1% of total revenues in 2022-2024. Our forecast assumes debt relief benefits from the FRR, which suspends interest and capital payments, containing Minas Gerais' cash flow slippage in 2023-2024. "Nevertheless, and despite improvements in 2020 and 2021, we expect Minas Gerais to continue facing fiscal strains in 2022-2024. A likely spending ceiling will help restrain spending growth, but the mandatory nature of Minas Gerais expenditures (estimated at 95% of total), which is also indexed or linked to revenue collection, will represent structural challenges. Operating expenditures rose because the state's payroll is pressured, and public activity picked up amid high inflation. The state estimates that tax revenue growth will slow given the reduction in the ICMS tax rates for main consumption items. "We view Minas Gerais' unfunded pension system as one of its key budgetary constraints. The results of a pension reform approved in 2020, mostly replicating that of the federal government, would only occur in the next 10 years. We expect annual pension fund deficits to remain wide and in line with 15% of operating revenue, as in 2021." Liquidity will remain structurally weak. The state lacks free cash and has a very small cash flow capacity, leading to a very low expected debt service coverage ratio. Moreover, the state has no access to new financing, while accounts payable and unfulfilled budgetary commitments total more than 25% of operating revenues as of June 2022. Restrictions on new debt instruments and very low debt service will result in high--but stable--debt levels for the forecasted period. Incorporating the Brazilian real's depreciation trajectory into Minas Gerais debt stock, as well as compounding interest of debt service not paid by the state to the federal government, we forecast Minas Gerais' debt at about 134% of operating revenues during 2022-2024. Interest payments will be less than 1% of operating revenues during the same period, as the state benefits from the central government's extraordinary support. The intergovernmental system and economic recovery act as additional drag on an already constrained financial management After the governor's recent reelection in the first round, we expect continuity in the administration's efforts to strengthen the state's fiscal position. S&P believes the state is making progress towards meeting pre-required criteria to join the federal government's FRR and resumed working with the federal government to finalize a financial recovery plan. Moreover, in addition to joining the FRR, an administrative reform and privatizations are in the works to streamline the government structure. Nevertheless, the administration will need to broaden support at the state assembly in order to pass and implement unpopular fiscal measures. S&P said, "We estimate that the state's GDP per capita is $7,750 for 2022, compared with Brazil's $8,800. Minas Gerais' economy contributes about 9% to the national GDP. Most of the state's economy is based on the services sector, but mining activities have important indirect effects. We expect Minas Gerais' economy to perform generally in line with the sovereign's in 2022-2024; we expect a real GDP growth of 2.5% in 2022, but to average 1.3% in 2023-2024. "We assess the 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 certain degree of predictability and transparency, with enhanced oversight over LRGs' finances and adherence to fiscal discipline." 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 UPGRADED; CREDITWATCH/OUTLOOK ACTION TO FROM MINAS GERAIS (STATE OF) Issuer Credit Rating CCC+/Stable/-- SD/--/-- Brazil National Scale brBB/Stable/-- SD/--/-- PEREGRINE I LLC: $233M Bank Debt Trades at 76% Discount ------------------------------------------------------- Participations in a syndicated loan under which Peregrine I LLC is a borrower were trading in the secondary market around 23.52 cents-on-the-dollar during the week ended Fri., October 28, 2022, according to Bloomberg's Evaluated Pricing service data. The USD233.75 million facility is a term loan that matured in 2015. Peregrine I LLC operates in the oil and gas services and equipment industry. The Company's country of domicile is Brazil. PEREGRINE I LLC: $25M Bank Debt Trades at 76% Discount ------------------------------------------------------ Participations in a syndicated loan under which Peregrine I LLC is a borrower were trading in the secondary market around 23.52 cents-on-the-dollar during the week ended Fri., October 28, 2022, according to Bloomberg's Evaluated Pricing service data. The USD25 million facility is a term loan that matured in 2015. Peregrine I LLC operates in the oil and gas services and equipment industry. The Company's country of domicile is Brazil. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Fiscal Deal is Necessary in Order to Cut Debt ----------------------------------------------------------------- Dominican Today reports that Magin Diaz, an economist and former director of Internal Revenue, stated that a fiscal agreement is necessary in order to reduce the Dominican Republic's public debt because the fiscal deficit has remained consistent over the past 15 years on average. As a result, this year, the government will have a deficit of between RD $200 billion and RD $220 billion, or between 3% and 3.6% of GDP. If it stays like this, he said, the public debt will not improve, according to Dominican Today. The government reports that, barring a crisis, the deficit will be 3.6% of GDP, with total revenues hovering around 15% and expenses hovering around 18%, the report discloses. In order to significantly reduce debt, according to Diaz, one would need to either increase income or decrease spending, which has been shown to be impractical given that when spending is cut in one direction, a global crisis occurs and more subsidies are needed in a number of industries, the report relays. He acknowledged the fiscal responsibility of the government, the report notes. It achieves its goal of preventing a larger deficit by prioritizing macroeconomic stability over all other goals, which effectively modifies investment spending, the report relates. He claimed that although the Dominican Republic is still far from experiencing a serious economic crisis, interest rates are rising globally, which means that as interest payments increase, investment costs will decrease, the report points out. The former head of the General Directorate of Internal Taxes (DGII) also noted that, despite the Federal Reserve's (FED) restraints, inflation in the United States will likely persist longer than previously anticipated, the report says. Because of this, he expressed concern about experiencing an inflationary crisis similar to the one that occurred ten years ago and losing credibility, the report discloses. On the Hoy Mismo Matinal program, carried by Color Vision, he emphasized that "it is very quick to think that rates will begin to fall in January, both in the United States and here, so the time of cheap money and interest rates close to zero in developed countries is over," the report relates. 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: Inflation Moderated, Central Bank Says ---------------------------------------------------------- Dominican Today reports that inflation levels remain high in Latin America, influenced by international commodity prices. However, eleven of the eighteen countries in the region have higher inflation than the Dominican Republic, according to Dominican Today. It indicates that to counteract inflationary pressures, monetary policy rates (TPM) have been significantly increased in relation to their pre-pandemic levels, the report notes. In the Dominican case, monetary measures are helping to moderate inflation in a context where economic growth would be among the highest in the region, 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 ============= MAYBERRY INVESTMENTS: Posts $2.2 Billion Third Quarter Loss ----------------------------------------------------------- RJR News reports that financial advisory and brokerage firm Mayberry Investments registered a loss in its third quarter ended September. Total net losses amounted to $2.2 billion compared with a $1.1 billion loss for the same period last year, according to RJR News. Mayberry Investments also saw more net interest losses for the quarter, valued at $1.8 billion, the report notes. This is compared to a net interest loss of $758.3 million for the same period last year, the report relays. The investment company says its losses were driven by increased operating expenses for the quarter, the report discloses. However, Mayberry's net interest income for the nine months up to September increased by 75 per cent to $241.8 million, the report relays. The company says this growth was mainly driven by increased revenue on repurchase agreements and growth in the margin loan book, which allows customers to borrow funds to invest in shares, the report adds. =========== M E X I C O =========== GRUPO AXO: Fitch Affirms LongTerm IDRs at 'BB', Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Grupo AXO, S.A.P.I. de C.V.'s (AXO) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB' and National Scale Short-Term rating at 'F1(mex)'. Fitch has also upgraded AXO's National Scale Long-Term rating to 'A+(mex)' from 'A(mex)'. The Rating Outlook is Stable. AXO's ratings reflect its position as one of Mexico's main apparel operators, supported by a diversified portfolio of well-known brands and store formats focused on different segments of the population. The ratings also consider the company's long-term relationships with suppliers and real estate developers, as well as its track record and market understanding. AXO's national Long-Term rating upgrade reflects the company's continued strengthened business position over the past 10 years and its demonstrated expertise operating different brands in Mexico. It also considers AXO's profitability recovery after the pandemic, strong revenue growth and neutral to positive FCF. For the next two to three years, Fitch expects AXO to maintain gross adjusted leverage at around 4.0x, including proforma numbers with potential acquisitions. KEY RATING DRIVERS Strong Brand Portfolio: AXO is one of the main operators of apparel, accessories and personal care products in Mexico, operating 30 brands. It has the exclusive rights to commercialize internationally recognized brands products in the country. Its ample portfolio of brands has allowed it to achieve economies of scale in logistics, and has given it a competitive advantage with shopping malls developers compared to peers. The company has been diversifying its revenues in terms of brands. During the LTM ended June 30, 2022, none of the brands in its portfolio represented more than 13% of consolidated revenues. Balanced Format Diversification: AXO commercializes different product categories and operates various store formats to service different socioeconomic segments, which mitigates risks associated to a specific brand, product category and store format. The company divides its brand portfolio into three business segments: lifestyle, off-price (which includes the digital platform) and athletics. According to Fitch's estimations, the lifestyle segment is expected to account nearly half of 2022 consolidated revenues, off-price close to a third and athletics the remaining portion. Improved Operating Performance: AXO's revenue and profitability performance has meaningfully improved over the past year and a half. The company's accumulated revenues as of June 2022 increased 12% compared with the same period of 2021. Revenues increase was mainly driven by a combination of new stores and higher traffic across its segments of lifestyle and athletics. Fitch projects AXO's revenues will increase around 16% in 2022. In addition, during the six months ended June 2022, the company's EBITDAR margin was 18.6%, higher than the 17% in the same period of 2021, this was driven by revenue mix to higher margin products, some operating efficiencies and inventory management, which have reduced markdown activity. Fitch expects EBITDAR to be around MXN3.6 billion with EBITDAR margin of 19.4% by YE 2022. For 2023 and going forward, Fitch estimates AXO's margins will be in the range of 18%-19% assuming inventory levels to normalize and markdowns are reintroduced in the following months. CFFO to Continue Strengthening: Fitch expects AXO's cash flow from operations (CFFO) to continue growing in the upcoming years. For 2022, Fitch projections indicate that AXO's CFFO will be above MXN900 million, which together with a portion of cash in hand will cover the capex and dividends for the year. For 2023 and going forward, AXO's CFFO will be close to or above MXN1 billion, which will be sufficient to cover an average capex of MXN1.2 billion per year projected for 2023 to 2025. The company's FCF is expected to be neutral to positive in the next two years. Stable Leverage Metrics Expected: As expected last year, AXO will end 2022 with a gross adjusted leverage of close to 4.0x. Fitch projects AXO's gross adjusted leverage metric to be around 4.0x in the short to medium term. Further deleverage could continue based on EBITDAR improvement in the absence of major investments or debt funded acquisitions. Fitch believes additional debt is a possibility if AXO explores any relevant acquisition. AXO's funding sources also include internal cash flow generation and potential equity increases. Acquisitions have been Credit Neutral: AXO's ratings incorporate its growth strategy through acquisitions funded with a combination of debt and equity increases. The company's portfolio has evolved via acquisitions and strategic partnerships, which have strengthened the business and diversified operating cash flows by getting access to markets with significant growth potential. Multibrand acquisition in 2015 increased AXO's market to the lower-middle segments of the population and added the off-price channel. The Tennix acquisition in 2018 allowed AXO to increase its product category offering by adding up the athletic category. In addition, Privalia's acquisition in 2019 strengthened AXO's omnichannel strategy, provided an innovative sales channel and gave the company more insight into customer's shopping behavior. DERIVATION SUMMARY AXO is one of the most important apparel retailers in Mexico with a diversified portfolio of recognized brands; AXO has lower scale and is less geographically diversified than peers, such as Capri Holdings Ltd. (BBB-/Stable) and Levi Strauss & Co. (BB+/Stable). However, the company's revenues are more diversified in terms of brands, product categories and store formats than peers. Similar to Capri, AXO has made acquisitions to growth seeking to reduce its reliance on a few brands and diversify into other product categories and segments of the population. However, different from Capri, AXO's acquisitions have shown better operating performance, and have strengthen AXO's market share in Mexico. Peers' adjusted leverage metrics were impacted in 2020 by pandemic-related disruptions but most of them recovered in 2021. AXO's gross adjusted leverage is expected to be close to 4x by 2022-2023, while for Capri and Levi Strauss Fitch expects adjusted leverage to be below 3.5x. KEY ASSUMPTIONS Fitch's Key Assumptions Within The Rating Case for the Issuer: - Revenue growth of 15.8% in average per year during 2022 to 2025; - EBITDAR margin between 18%-19% per year during 2022 to 2025; - CFO above MXN1.0 billion per year from 2023; - Capex of MXN1.2 billion per year in average for 2023 to 2025; - Dividend payments of MXN431 million in 2022 and MXN143 million per year in average from 2023 to 2025; - FCF positive starting 2023; - Hypothetical acquisition in 2023. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Consistent positive FCF generation; - Consistent track record of maintaining on a sustained basis a total adjusted debt to EBITDAR ratio below 3.5x; - Strong liquidity profile. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Adjusted leverage consistently higher than 4.5x; - Significant decline in market share; - M&A activity funded entirely with debt and not performing as expected; - Sustained negative FFL that is not partially or fully compensated with equity contributions; - Weakened liquidity and financial flexibility. LIQUIDITY AND DEBT STRUCTURE Good Liquidity Profile. As of June 30, 2022, the company had available cash for MXN3.1 billion and it did not present short-term maturities. AXO's next significant debt maturities are in 2026, when USD325 million Senior Notes and MXN1.6 billion local bonds come due. ISSUER PROFILE Grupo AXO is the largest multi brand fashion retailer & wholesaler in Mexico, with presence in three business segments: full price, off price (includes digital), and sneakers and athletics. 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/Debt Rating Prior ----------- ------ ----- Grupo AXO, S.A.P.I. de C.V. LT IDR BB Affirmed BB LC LT IDR BB Affirmed BB Natl LT A+(mex)Upgrade A(mex) Natl ST F1(mex)Affirmed F1(mex) senior unsecured LT BB Affirmed BB senior unsecured Natl LT A+(mex)Upgrade A(mex) senior unsecured Natl ST F1(mex)Affirmed F1(mex) ===================== P U E R T O R I C O ===================== PUERTO RICO: Pays $492-Mil. to Cover Cofina Debt Service -------------------------------------------------------- Michelle Kaske of Bloomberg News reports that Puerto Rico transferred $492 million to pay principal and interest costs through June 30 on the island's restructured sales-tax bonds. The commonwealth agency that issued the bonds, called Cofinas, deposited the sales-tax revenue with Bank of New York Mellon, trustee for the securities, according to a filing to bondholders on the Municipal Security Rulemaking Board's Web site. The island dedicates 5.5% of its sales-tax revenue collections to repaying Cofinas Puerto Rico in February 2019 reduced its outstanding Cofina debt by about $5.5 billion when it sold $12 billion of new securities backed by the sales-tax receipts in a debt exchange. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. * * * Title III plans of adjustment have been confirmed for the Commonwealth and COFINA debtors. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Gov't Gets US$5.84MM for October Flood Damage ---------------------------------------------------------------- Trinidad Express reports that Trinidad and Tobago government has received a total of US$5.84 million (TT$39.42 million) from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) following the heavy rainfall that occurred in T&T in early October. Between October 5 and 8, 2022, rainfall caused widespread damage to properties in eastern Trinidad affecting areas including Arouca, Arima, Tunapuna, Sangre Grande, Piarco and St Helena, according to Trinidad Express. Forty-one-year-old farmer Theresa Lynch lost her life when she was swept away by floodwaters in her village of La Pastora in Arouca, the report notes. The Ministry of Rural Development and Local Government reported a total of 75 incidents of flooding, the report relays. There were 36 reports of flooding in Tunapuna/Piarco Regional Corporation including the Eastern Main Road, Five Rivers, Macoya, Piarco Old Road, Priority Bus Route in Arouca, Tunapuna Road, St Cecelia Road, St Augustine, Thomas Street and Paradise Gardens. Twenty-three reports came from the Sangre Grande region. There were also 18 occurrences of landslides, along with around 11 incidents of wind damage, the report discloses. There was also damage caused by flooding in Tobago, as the island's Emergency Management Agency reported debris and fallen trees blocking access to Stonehaven Bay, Black Rock; Culloden Bay, Golden Lane; Sawmill Road, Mt St George; and Big River Hill, Mason Hall, the report says. Landslides were reported along Mason Hall Road and Plymouth Road between Summer Hill and Whim Development, the report notes. The Water and Sewerage Authority (WASA) reported that the heavy rainfall impacted operations at 25 surface water treatment facilities in Trinidad's northern region and four in Tobago, the report says. In a report on its website, the CCRIF said that of the US$5.84 million the T&T Government received from the facility, US$5,115,782 (TT$34.52 million) was made on the country's excess rainfall policy for Trinidad and US$726,932 (TT$4.90 million) on the excess rainfall policy for Tobago, the report relays. In a September 3, 2021, news release on its website, CCRIF said since Trinidad and Tobago purchased coverage for excess rainfall in 2017, the country had received payouts under its excess rainfall policy each year - five payouts totalling US$12.5 million. The payout earlier this month makes it six payouts in six years for a total of US$18.34 million, the report notes. The risk insurance facility said in September 2021, previous payouts to Trinidad and Tobago for excess rainfall were made, for example, for the periods of heavy rainfall on October 18 and October 20 in 2017 and 2018 respectively, with the Government receiving a total of US$9.5 million for those two events, the report discloses. "The two payouts in 2017 and 2018 were used by the Government for general cleanup such as clearing debris; providing building materials and appliances to households impacted by the rains; providing payments to relief workers; and for repairs to the Uriah Butler Highway (the Caroni section of the highway), which was damaged by the 2018 rains," said CCRIF, the report says. The Government of Trinidad and Tobago also has cover for tropical cyclones (one policy for Trinidad and one for Tobago) and for earthquakes, the report relays. The US$5.84 million CCRIF paid to the T&T Government was part of four payouts totaling US$15.2 million that the institution disbursed for rain damage this month, the report notes. Nicaragua received US$8.9 million on the country's tropical cyclone policy following Hurricane Julia, which made landfall in Nicaragua on October 9. And Antigua and Barbuda received US$420,645 on the country's excess rainfall policy following rains associated with Tropical Cyclone Fiona, the report discloses. CCRIF said a country's policy with the facility is triggered when the modelled loss for a hazard event in that country equals or exceeds the attachment point (similar to a deductible in a traditional insurance contract) selected by the country, which is specified in the policy contract between CCRIF and the country, the report relays. Parametric insurance offered by CCRIF provides a level of financial protection for countries vulnerable to natural hazards, the facility said, the report notes. Parametric insurance describes a type of insurance contract that insures a policyholder against the occurrence of a specific event by paying a set amount based on the magnitude of the event, as opposed to the magnitude of the losses in a traditional indemnity policy, the report adds. URUGUAY: Issues Global Sustainability-Linked Bond, w/ IDB Support ----------------------------------------------------------------- The Inter-American Development Bank (IDB) worked with Uruguay's Ministry of Economy and Finance (MEF) to prepare the framework for issuing its first sovereign bond with a price tied to sustainability indicators. On October 20, Uruguay issued its first sustainability-linked bonds (SLB), with a step-down mechanism that is activated if it reaches certain environmental targets. The MEF's aim is to align the country's sovereign debt policy with its climate goals by issuing a bond that links the coupon to compliance with the climate and environmental goals that the country set in its first Naturally Determined Contribution (NDC) to the Paris Agreement. The issue attracted 188 investors from Europe, Asia, the United States, and Latin America, of whom 21% are new holders of Uruguayan debt. Total demand for the bond was $3.96 billion, greatly exceeding the $1.5 billion Uruguay decided to issue. The yield spread between this bond and the US Treasury bond used as a benchmark is 170 basis points. If the bond's goals are met, its spread will narrow by up to 30 basis points. "Thematic bonds focused on achieving the objectives of the 2023 sustainable development agenda can bring major benefits for debt management in the region. This first step-down bond issue shows the market's explicit recognition of Uruguay's commitment," said Matías Bendersky, IDB Representative in Uruguay. "This bond issue marks a milestone in Uruguay, and it reflects the country's commitment to multi-sector work on climate action, which we have backed since the beginning of its first energy transition," he added. The Japanese credit rating agency R&I raised the rating of the Uruguayan sovereign debt note in foreign currency to BBB+ with a stable outlook. This is the highest credit rating in Uruguay's history. In its press release, the rating agency cited the country's strategic commitment to decarbonizing its economy as one of the factors that influenced its rating. The IDB Group has a strong track record of supporting the development of green markets and sustainability bonds in Latin America and the Caribbean. The IDB has supported Uruguay's first energy transition since 2007, and it is now backing the second one. Starting in 2019, the IDB and the country accelerated their environmental partnership, focusing on climate action. However, this is the first time the IDB has backed a sustainability-linked sovereign bond. The cost of servicing the debt issued via this instrument will depend on whether or not Uruguay meets the goals of its NDC. This bond issue is the product of a substantial multidisciplinary and inter-ministry effort. The Ministries of Environment, Industry, and Energy and Mining actively participated and cooperated to achieve the issue, in coordination with Uruguay's Budget and Planning Office. All members of the National Response System for Climate Change and variability (SNRCC) were also involved. More details about Uruguay's bond issue can be found on the website of the Debt Management Unit of the Ministry of Economy and Finance. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *