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/raid1/www/Hosts/bankrupt/TCRLA_Public/221228.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, December 28, 2022, Vol. 23, No. 253 Headlines A R G E N T I N A ARGENTINA: Economy Contracts Again as Unemployment Rises B A H A M A S FTX GROUP: Owner Makes Court Appearance B E R M U D A FTX TRADING: Opposes BlockFi's Claim to Owner's Robinhood Shares B R A Z I L BRAZIL: Dollar Trades Down in a Session of Lower Liquidity D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Spending in 2023 Will Exceed Expectations M E X I C O FORTALEZA MATERIALES: S&P Withdraws BB- Global Scale Credit Rating P E R U PERU: IDB OKs $300M-Loan to Improve Economic Productivity - - - - - ================= A R G E N T I N A ================= ARGENTINA: Economy Contracts Again as Unemployment Rises -------------------------------------------------------- Buenos Aires Times reports that Argentina's economy contracted for the second straight month in October as inflation rocketed toward 100 percent and unemployment rose for the first time since the pandemic. Economic activity fell 0.3 percent compared to September, according to government data published by the INDEC national statistics bureau, according to Buenos Aires Times. From a year ago, the economy expanded 4.5 percent, though the country's crucial agriculture sector contracted slightly on an annual basis, the report notes. Unemployment in Argentina's formal economy also ticked up to 7.1 percent from 6.9 percent during the third quarter, the first increase since 2020, according to separate figures published, the report relays. The underemployed population rose by nearly 200,000 in the first three quarters of the year, returning near pandemic levels, the report notes. South America's second-largest economy is expected to expand over five percent this year before growing less than one percent in 2023, according to the Central Bank's latest market expectations survey of analysts, the report discloses. Activity could lose momentum due to uncertainty stemming from Argentina's presidential election and a crop drought that may impact commodity exports, the report relays. Compounding matters for Argentina's economy, the fiscal deficit widened and the tourism sector, a key source of dollars, saw more travellers depart the country than arrive, the report notes. The government reported a primary fiscal deficit of 227.8 billion pesos in November, the largest monthly shortfall in nominal terms since June, the report says. For the year through October, nearly 600,000 more Argentine travellers left the country than foreigners who arrived, translating into a tourism deficit that puts pressure on the currency, official data showed, the report relyas. World Cup travel in November likely exacerbated that trend, 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 in the Troubled Company Reporter-Latin America on Nov. 18, 2022, S&P Global Ratings affirmed its 'CCC+/C' foreign currency sovereign credit ratings on Argentina. S&P lowered the long-term local currency sovereign credit rating to 'CCC-' from 'CCC+' and the national scale rating to 'raCCC+' from 'raBBB-'. S&P also affirmed its 'C' short-term local currency rating. The outlook on the long-term ratings is negative. S&P's 'CCC+' transfer and convertibility assessment is unchanged. 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 A H A M A S ============= FTX GROUP: Owner Makes Court Appearance --------------------------------------- RJR News reports that FTX founder Sam Bankman-Fried appeared in Manhattan Federal Court marking the first step in a possibly lengthy criminal case over the collapse of the bankrupt exchange. The cryptocurrency exchange's founder was extradited from The Bahamas to face fraud charges, according to RJR News. Prosecutors have accused him of stealing billions of dollars in FTX customer funds to plug losses at his hedge fund, Alameda Research, the report notes. Two of his former associates have pleaded guilty to related charges, the report adds. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal the next day amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10 showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index Lawyers at Paul Weiss represented SBF but later renounced representing the entrepreneur due to a conflict of interest. ============= B E R M U D A ============= FTX TRADING: Opposes BlockFi's Claim to Owner's Robinhood Shares ---------------------------------------------------------------- Dietrich Knauth at Reuters reports that collapsed crypto exchange FTX asked a U.S. bankruptcy judge to stop crypto lender BlockFi from laying claim to more than $440 million worth of Robinhood stock purchased by indicted FTX founder Sam Bankman-Fried. BlockFi had filed a lawsuit on Nov. 28 demanding the turnover of 56 million Robinhood (HOOD.O) shares that were allegedly pledged as collateral for BlockFi's loans to the FTX-affiliated crypto hedge fund Alameda Research, according to Reuters. But FTX and Alameda went bankrupt without repaying the BlockFi loans, and U.S. bankruptcy law protects the companies from debt collection efforts like BlockFi's lawsuit, FTX said in a filing in U.S. bankruptcy court in Delaware, the report notes. FTX said it believes that the shares are actually owned by Alameda Research, and that the bankrupt FTX companies must hold onto the stock while investigating other disputed claims to the equity shares' ownership, the report discloses. FTX said Bankman-Fried sought to claim the Robinhood shares as "a source of payment for legal expenses," the report relays. Bankman-Fried was arraigned in New York on fraud charges, and released on a $250 million bond, the report notes. FTX, Alameda, and more than 100 FTX affiliates filed for bankruptcy protection on Nov. 11, after a three-day period in which customers withdrew $6 billion in assets from the crypto exchange, the report notes. FTX argued that BlockFi is attempting "an end-run" around U.S. legal protections for bankrupt companies by tailoring its lawsuit to target a non-bankrupt holding company rather than Alameda, the report discloses. Even though the company, Emergent Fidelity, holds the Robinhood shares, Alameda ultimately owns the shares and owes the debt to BlockFi, according to FTX, the report relays. BlockFi did not immediately respond to a request for comment. Emergent holds a 7.42% share of Robinhood, according to Refinitiv data. Bankman-Fried began building his stake in Robinhood in the middle of March, according to a U.S. Securities & Exchange Commission filing, the report adds. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal the next day amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10 showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index Lawyers at Paul Weiss represented SBF but later renounced representing the entrepreneur due to a conflict of interest. =========== B R A Z I L =========== BRAZIL: Dollar Trades Down in a Session of Lower Liquidity ---------------------------------------------------------- Rio Times Online reports that due to the proximity of the holiday season, the dollar started Dec. 23's session down, with a smaller number of trades. The session was marked in the morning by the release of the IPCA-15 of December in Brazil, the pre-inflation index to the consumer, according to Rio Times Online. At 9:45 am, the spot dollar traded down 0.51%, quoted at BRL5.1592, while the future contract for January of the U.S. currency showed losses of 0.28% at BRL5.1635, the report notes. The turnover of contracts was around 22 thousand in relation to the most liquid maturity (January), the report relays. About Brazil Brazil is the fifth largest country in the world and third largest in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian general election. He will be sworn in on January 1, 2023, as the 39th president of Brazil, succeeding Jair Bolsonaro. 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: Spending in 2023 Will Exceed Expectations ------------------------------------------------------------- Dominican Today reports that according to the Regional Center for Sustainable Economic Strategies (CREES), the central government's budgeted spending for next year will exceed the estimate for 2022 by RD$84 billion and may be higher because it is a pre-election year. The central government's spending for 2023 will be RD$1.2 billion, representing a 7.2% increase in government spending and an 18.1% increase in GDP, the report relays. According to a CREES website article, the increase in spending is 26.6%, or RD$262 billion, when compared to 2021, the report discloses. Current transfers are the item with the most weight in the budgeted public spending for 2023, totalling RD$334.9 billion, the report relays. This item includes transfers to the electricity sector totalling RD$70.4 billion, which is equivalent to US$1.2 billion; and spending allocated to the Social Policy Cabinet totalling RD$50 billion, of which RD$7.6 billion is a subsidy for liquefied petroleum gas (LPG) for households, the report notes. There will also be a fuel subsidy through the Ministry of Industry, Commerce, and Mipymes worth RD$20 billion, as well as current transfers to pay interest on the Central Bank's recapitalization worth RD$28 billion, or 0.4% of GDP, the report says. According to CREES, employee remuneration items have a large weight within the current expenditure of the 2023 Budget, amounting to RD$297 billion, and debt interest expense, amounting to RD$253 billion, the report notes. The payment of interest on the public debt is budgeted for RD$188 billion in 2022, 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. As reported in the Troubled Company Reporter-Latin America on Dec. 21, 2022, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on the Dominican Republic to 'BB' from 'BB-'. The outlook on the long-term ratings is stable. S&P affirmed its 'B' short-term sovereign credit ratings. S&P also revised its transfer and convertibility (T&C) assessment to 'BBB-' from 'BB+'. The TCR-LA reported in April 2019 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. =========== M E X I C O =========== FORTALEZA MATERIALES: S&P Withdraws BB- Global Scale Credit Rating ------------------------------------------------------------------ S&P Global Ratings withdrew its 'BB-' global scale credit rating on Fortaleza Materiales S.A.P.I. de C.V. (previously known as Fortaleza Materiales S.A.B. de C.V.), at the issuer's request. In the last 12 months ended September 2022, the company posted revenues of around MXN13.8 billion with an EBITDA margin of 24.7% and adjusted debt-to-EBITDA of 3.4x, in line with S&P's base-case scenario for 2022 of MXN13.9 billion, 25.4% and 3.2x, respectively. The outlook at the time of the withdrawal was stable. ======= P E R U ======= PERU: IDB OKs $300M-Loan to Improve Economic Productivity --------------------------------------------------------- Peru will launch a program to improve the productivity and competitiveness of its economy with a $300 million loan from the Inter-American Development Bank (IDB). This operation is the second in a series of two independently financed but technically linked programmatic loans to support policy reforms. The first $50 million operation was approved in 2019. The new program aims to strengthen public institutions that work to enhance competitiveness, improve regulatory quality to increase private investment, and foster innovation. One component of the program will solidify the institutional structure for implementing the National Competitiveness and Productivity Plan. The program will also design a proposed national quality system and reinforce the Specialized Executive Boards Team and the Specialized Investment Monitoring Team, among other measures. The program will also seek to improve the investment climate by raising the quality of regulations for specific industries, in areas affecting multiple industries, and for planning. These actions include support to foster a more competitive and sustainable forestry industry, measures to sustainably expand markets for aquaculture, and work to modify the regulatory framework for prior consultation to streamline the application of regulations during the prospecting phase of mining operations. Additionally, to improve the quality of regulations that support innovation, the program will work to integrate the operations of the National Innovation Program for Competitiveness and Productivity and the National Fisheries and Aquaculture Innovation Program. It will also consolidate existing programs under a national innovation agency and restructure the National Council for Science, Technology and Technological Innovation. Finally, it will seek approval for a strategy and regulatory framework for strategically developing and strengthening the management model and network of the Center for Productive Innovation and Technology Transfer. The program will benefit legally registered productive enterprises-particularly in the industries of forestry, aquaculture, and mining-as well as legally registered innovative enterprises and innovative entrepreneurs by improving public policies in their respective areas. The $300 million IDB loan has a 20-year term, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR). ********* 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 * * *