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/raid1/www/Hosts/bankrupt/TCRLA_Public/221117.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 Thursday, November 17, 2022, Vol. 23, No. 224 Headlines B R A Z I L BRAZIL: Tough Choices as Lula Gets Down to Business D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Inflation Continues w/ Discrimination by Class E C U A D O R ECUADOR: Egan-Jones Retains BB Sr. Unsec. Debt Ratings J A M A I C A DIGICEL GROUP: Predicts Drop in Performance for Haitian Subsidiary JAMAICA: DBJ Providing $7M in Grants to Targeted Small Businesses JAMAICA: Outlines $60 Billion Budget Hike for Current FY KINGSTON PROPERTIES: Sees Decline in Q3 Profit P U E R T O R I C O SUN BORICUA: Seeks to Hire Joshuan Feliciano Cosme as Accountant - - - - - =========== B R A Z I L =========== BRAZIL: Tough Choices as Lula Gets Down to Business --------------------------------------------------- Buenos Aires Times reports that fresh off a celebratory beach holiday, Brazilian president-elect Luiz Inacio Lula da Silva got down to uglier business: figuring out how to govern with a hostile Congress, nasty budget crunch, and impossible-looking to-do list. The political horse-trading of the transition period now starts in earnest for the veteran leftist, who will be sworn in for a third term on January 1, facing a far tougher outlook than the commodities-fueled boom he presided over in the 2000s, according to Buenos Aires Times. Lula, 77, celebrated his narrow win over far-right incumbent Jair Bolsonaro in the October 30 runoff election by escaping to the sun-drenched coast of Bahia in northeastern Brazil, the report notes. He joked he needed a belated honeymoon with his first-lady-to-be, Rosangela "Janja" da Silva, whom the twice-widowed ex-metalworker married in May, the report relays. His other honeymoon - the political one - could be short, analysts say, the report discloses. Lula is meeting with advisers in Sao Paulo. He will travel to the capital, Brasilia, to finish assembling his 50-member transition team and start negotiating with members of Congress, two allies told AFP, the report relays. He faces a battle to get bills passed in a legislature where conservatives scored big gains in October's elections, the report says. Lula's coalition has around 123 votes in the 513-seat Chamber of Deputies, and 27 in the 81-seat Senate, meaning he will have to strike alliances to get anything done - and even just survive, given the threat of impeachment in Brazil, where two presidents have been impeached in the past 30 years, the report relays. Into the Shark Tank Lula is expected to meet in Brasilia with lower-house speaker Arthur Lira, a key Bolsonaro ally from the loose coalition of parties known as the "Centrao," a group known for striking alliances with whoever is in power in exchange for feeding on the federal pork barrel, the report relays. Lula will be under pressure from the Centrao not to oppose the so-called "secret budget": BRL19.4 billion ($3.8 billion) in basically unmonitored federal funding that Bolsonaro agreed to allocate to select lawmakers to boost support for his reelection bid, the report discloses. Meanwhile, money will be tight for Lula's campaign promises, including increasing the minimum wage and maintaining a beefed-up 600-reals-per-month welfare program, "Auxilio Brasil," the report says. Bolsonaro, who introduced the program, did not allocate sufficient funding to continue it in the 2023 budget, the report discloses. "We can't start 2023 without the 'Auxilio' and a real increase in the minimum wage," the leader of Lula's Workers' Party, Gleisi Hoffmann, said, the report relays. "That's our contract with the Brazilian people." Facing the impossible math of funding such pledges without breaking the government spending cap, Lula's allies are exploring their options, including passing a constitutional amendment allowing exceptional spending next year, the report notes. But they are racing the clock; it would have to be approved by December 15, notes the report. Markets Watching Lula, who ran on vague promises of restoring Latin America's biggest economy to the golden times of his first two terms (2003-2010), faces a bleaker picture this time around, the report relays. "The challenge is . . . how to balance fiscal responsibility with a highly anticipated social agenda," in the face of high inflation and a possible global recession, said political scientist Leandro Consentino of Insper university, the report relays. Markets are watching closely 0 especially his pick for finance minister, the report notes. Lula is expected to split Bolsonaro's economy "super-ministry" into three portfolios: finance, planning, and trade and industry, the report discloses. Analysts predict a political choice for finance minister, a technocrat for planning and a business executive for trade, the report relays. Names floated for the finance job include Lula's former education minister Fernando Haddad and his campaign coordinator, Aloizio Mercadante, the report discloses. COP27 Stage Other closely watched portfolios are the environment and a promised new ministry of Indigenous affairs - both sore spots under Bolsonaro, who presided over a surge of destruction in the Amazon rainforest, the report relays. The former job could go to Lula's one-time environment minister Marina Silva, credited with curbing deforestation in the 2000s, the report notes. In a key gesture, the president-elect will make his return to the international stage at the COP27 UN climate summit in Egypt, where he will arrive on November 14, advisers said, the report discloses. Silva, who will travel with him, told newspaper Folha de Sao Paulo that, "the climate issue is now a strategic priority at the highest level," 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. In July 2022, Fitch Ratings affirmed Brazil's Long-Term Foreign Currency Issuer Default Rating at 'BB-' and revised the Rating Outlook to Stable from Negative. In June 2022, S&P Global Ratings also affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Brazil. Moody's, in April 2022, affirmed Brazil's long-term Ba2 issuer ratings and senior unsecured bond ratings, (P)Ba2 senior unsecured shelf ratings, and maintained the stable outlook. On the other had, DBRS, in August 2022, confirmed Brazil's Long-Term Foreign and Local Currency Issuer Ratings at BB (low). =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Inflation Continues w/ Discrimination by Class ------------------------------------------------------------------ Dominican Today reports that the composition of Dominican families' basic basket of goods and services continues to distort the inflationary impact on the household budget, affecting the wealthy in terms of quantity or value more than those with lower incomes. When general inflation was 0.28% in October, the impact on the poorest households was 0.36% and RD$90.83 in absolute value, while those with higher purchasing power saw an increase of 0.22% and RD$156.30, according to Dominican Today. In absolute terms, however, the national basket increased by RD$118.53, or 28%, from September to October, the report notes. The absolute increase for the poorest families, quintile 1, was RD$90.83, bringing the value of the set of basic goods and services to RD$25,306.56; for those in quintile 5, the higher income stratum, the absolute increase was RD$156.30, raising the cost to RD$70,008.52, 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 To 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. ============= E C U A D O R ============= ECUADOR: Egan-Jones Retains BB Sr. Unsec. Debt Ratings ------------------------------------------------------ Egan-Jones Ratings Company, on October 26, 2022, retained its BB foreign currency and local currency senior unsecured ratings on debt issued by Republic of Ecuador. Ecuador is a country straddling the equator on South America's west coast. ============= J A M A I C A ============= DIGICEL GROUP: Predicts Drop in Performance for Haitian Subsidiary ------------------------------------------------------------------ RJR News reports that telecommunications company Digicel is forecasting a drop in performance for its Haitian subsidiary from October to March of 2023. Digicel says with the uncertainty in the market and fluctuations in the exchange rate, it estimates a US$25-US$35 million decline in income before depreciation, according to RJR News. When compared to the previous six months, the company registered earnings of US$74 million, the report notes. Digicel's Chairman, Denis O'Brien, says the current security situation in Haiti has forced the company to activate its emergency protocols to secure the safety of stakeholders to ensure business continuity, the report says. The crisis, which has also restricted oil supply, has affected Digicel's operations, which depends on fuel to operate much of its network, the report adds. About Digicel Group Digicel Group is a mobile phone network provider operating in 33 markets across the Caribbean, Central America, and Oceania regions. The company is owned by the Irish billionaire Denis O'Brien, is incorporated in Bermuda, and based in Jamaica. As reported in the Troubled Company Reporter-Latin America in April 2020, Moody's Investors Service downgraded Digicel Group Limited's probability of default rating to Caa3-PD from Caa2-PD. At the same time, Moody's downgraded the senior secured rating of Digicel International Finance Limited to Caa1 from B3. All other ratings within the group remain unchanged. The outlook is negative. Also in April 2020, the TCR-LA reported that Fitch Ratings has downgraded Digicel Limited to 'C' from 'CCC', and its outstanding debt instruments, including the 2021 and 2023 notes to 'C'/'RR4' from 'CCC'/'RR4'. Fitch has also downgraded Digicel International Finance Limited to 'CCC+' from 'B-'/Negative, and its outstanding debt instruments, including the 2024 notes and the 2025 credit facility, to 'CCC+'/'RR4' from 'B-'/'RR4'. Fitch has removed the Negative Rating Outlook from DIFL. JAMAICA: DBJ Providing $7M in Grants to Targeted Small Businesses ----------------------------------------------------------------- RJR News reports that Jamaican small businesses and entrepreneurs now have access to up to seven million dollars in grants through the Innovation Grant for New Ideas to Entrepreneurship or IGNITE IV program. The IGNITE program, first introduced in 2016, is funded under a five-year loan agreement between the Government of Jamaica and the Inter-American Development Bank, according to RJR News. The application window for IGNITE IV is now open, and targets innovative businesses which are seeking to grow, the report notes. The program will provide grant funding and capacity building support, the report relays. The Development Bank of Jamaica, which is spearheading the initiative, is placing strong emphasis on projects or businesses in the categories of Climate Change and Gender, Tourism and Creatives, Manufacturing and Agriculture, and Technology, the report adds. As reported in the Troubled Company Reporter-Latin America in March 2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. JAMAICA: Outlines $60 Billion Budget Hike for Current FY -------------------------------------------------------- Jamaica Observer reports that Minister Dr. Nigel Clarke tabled a revised budget in the House of Representatives, outlining that the planned expenditure for the current fiscal year is expected to be $60 billion higher than previously anticipated. Clarke said the increased allocation was due mainly to the Government's response to the impact the Russia/Ukraine war has had on Jamaica, according to Jamaica Observer. The additional sum has pushed the total planned expenditure this year to $972 billion, the report notes. The war, which began on February 24, sent food and fuel prices surging, pushing inflation in Jamaica earlier this year to an 11-year high, and in response Clarke, who had tabled the budget two weeks before, was forced to respond to help the most vulnerable, the report relays. A total of $7.2 billion was spent to help the most vulnerable and those sums are now being properly accounted for in the budget, the report discloses. It includes the $2.2 billion spent between April and July under a co-pay arrangement for prepaid electricity users and households which use under 200 kilowatt hours of electricity each month, the report relays. Also brought on the books is the $600-million gas relief grant and $200-million loan facility to owners of contract carriages and route taxis which are still being disbursed, the report notes. Included also is $702 million which went to both program of Advancment Through Health and Education (PATH) and non-PATH beneficiaries to help students on welfare cope with transportation costs and for others who were given poor relief grants, the report discloses. Also recognised now in the budget is the $1.5 billion which went to poor households to help parents with back-to-school expenses, the report relays. Public sector workers earning below $1.5 million also got help totalling $353 million, while the $150 million allocated to help truck water earlier this year to areas that were experiencing inconsistent rainfall or drought is also being accounted for in the expenditure, the report says. But that was not all. With the hiking of interest rates to tamp down runaway inflation, both locally by the Bank of Jamaica and overseas by other central banks, the Government said interest expenses on the pulic debt to be repaid during the current fiscal year have gone up by $10.8 billion, the report discloses. The flip side of the higher interest rates is that the Jamaican dollar has remained stable over the last few months, and that stability will bring savings to the Government, resulting in principal payments on the debt being $4.8 billion less than originally budgeted for, the report relays. The net effect is that debt repayment this year will go up by only $6 billion, the report says. But the biggest increase in the budget, accounting for about a third, is the money that has been set aside to compensate public sector workers when the negotiations for the wage and fringe benefits are concluded, the report relays. A sum of $21.1 billion has been set aside to cover the anticipated higher compensation with the Government seeking to wrap up the negotiations with trade unions and staff associations in the shortest possible time, the report notes. Also contributing to the increase in compensation of employees is an amount of $2.2 billion requested by the Ministry of Health and Wellness to facilitate the payment of salary-related allowances, the report relays. That aside, monies for patching roads and drain cleaning, funds to purchase drugs and to settle bills owing by the regional health authorities, subvention to the Jamaica Urban Transit Company to help with fuel costs and other operating overheads, funds to purchase laptops for teachers, and to provide breakfast for PATH students, and expanding broadband in schools and an increase in the cash grants to PATH students were also recognised in the budget, the report discloses. Funds were also shifted around, with monies previously allocated for one purpose now going to do something else, the report relays. The biggest beneficiary of this was capital expenditure, chiefly to provide $4.1 billion to continue work on the South Coast Highway Improvement program, the report notes. That reallocation means 50 buses which were to be provided to the JUTC will have to wait along with a delay in the widending and dualisation of Grange Lane in Portmore, St Catherine, the report discloses. But spending plans have to be financed. Clarke told the House that the additional $60 billion the Government is proposing to spend will be financed primarily through an expected $65.5-billion increase in revenue flows, the report relays. The performance of revenues over the first half of the fiscal year has been significantly better than budgeted reflecting the higher-than-anticipated recovery of the economy from the impact of COVID-19, as well as the higher-than-expected inflation, the report relays. At end-September 2022, total revenue flows were $40.4 billion above budget, including $35.0 billion from tax revenue, and this performance has been factored into the current forecast which anticipates total revenue flows of $815.3 billion for the fiscal year which ends on March 31, 2023, the report adds. As reported in the Troubled Company Reporter-Latin America in March 2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. KINGSTON PROPERTIES: Sees Decline in Q3 Profit ---------------------------------------------- RJR News reports that real estate investment company Kingston Properties raked in less profit in its third quarter ended September. Profit for the three months amounted to US$363,000, according to RJR News. This is US$57,000 less than the same period last year, when the company made US$421,000, the report notes. Total earnings for the quarter, however, improved by US$94,000, amounting to US$858,000, the report relays. For the same period last year, the company made US$763,000, the report discloses. The real estate investment firm says its increased earnings were mainly due to an uptick in rental charges at some of its properties, as well as higher occupancy levels at its properties in Jamaica, the report adds. ===================== P U E R T O R I C O ===================== SUN BORICUA: Seeks to Hire Joshuan Feliciano Cosme as Accountant ---------------------------------------------------------------- Sun Boricua Pa'l Mundo Inc., doing business as Sun Boricua, seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Joshuan Feliciano Cosme, an accountant practicing in Arecibo, Puerto Rico. Mr. Cosme will render these services: (a) assist the Debtor in preparing the monthly reports of operation; (b) prepare the necessary financial statements; (c) assist the Debtor in preparing the cash flow projections and or any other projection needed for cash collateral purposes; (d) assist the Debtor in financial and accounting pertaining to, or in connection with the administration of the estate; (e) assist the Debtor in the preparation and filing of federal, state and municipal tax returns; and (f) assist the Debtor in any other assignment that might be properly delegated by management. The accountant will be billed at an hourly rate of $75. Mr. Cosme disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The accountant can be reached at: Joshuan R. Feliciano Cosme HC01 Box 2505 Bajadero, PR 00616 Telephone: (787) 298-3285 Email: jfeliciano.contador@gmail.com About Sun Boricua Pa'l Mundo Sun Boricua Pa'l Mundo, Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 22-02809) on Sept. 27, 2022, with up to $50,000 in assets and up to $500,000 in liabilities. Hector Javier Rullan Nieves, president, signed the petition. Judge Maria de los Angeles Gonzalez oversees the case. The Debtor tapped Homel A. Mercado-Justiniano, Esq., as counsel and Joshuan R. Feliciano Cosme as accountant. ********* 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 * * *