/raid1/www/Hosts/bankrupt/TCRLA_Public/230109.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
Monday, January 9, 2023, Vol. 24, No. 7
Headlines
B R A Z I L
BRAZIL: Stock Market Further Drops Over Uncertain Economic Policy
LIGHT SA: Fitch Affirms 'BB-' IDRs, Alters Outlook to Neg.
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Gov't. Must Increase Public Spending in 2023
J A M A I C A
TRANSJAMAICAN HIGHWAY: Deal Moving Forward
P U E R T O R I C O
PUERTO RICO: Oversight Board Defends Motions in PREPA Case
T R I N I D A D A N D T O B A G O
DIGICEL GROUP: Wins Case Against US Rival it Accused of Fraud
TRINIDAD & TOBAGO: No Price Hike for Eggs
U R U G U A Y
NAVIOS SOUTH AMERICAN: S&P Affirms 'B' ICR, Outlook Stable
X X X X X X X X
[*] BOND PRICING: For the Week Jan. 2 to Jan. 6, 2023
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B R A Z I L
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BRAZIL: Stock Market Further Drops Over Uncertain Economic Policy
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Richard Mann at Rio Times Online reports that uncertainties in
relation to economic policy hindered the performance of the
financial market for the second day in a row.
The Ibovespa, the leading indicator of the stock market, closed the
day at 104.1 thousand points, a fall of 2.1%, according to Rio
Times Online's January 4 report.
The dollar surpassed the BRL5.45 barrier, closing at BRL5.4520, the
report relays.
The interest of the Interfinancial Deposit (DI) contract for
January 2024 rose from 13.53% to 13.72% per year, the report
notes.
Analysts and operators point out that the market has been seeking
predictability, the report adds.
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 was sworn in on January 1,
2023, as the 39th president of Brazil, succeeding Jair
Bolsonaro.
As reported in the Troubled Company Reporter-Latin America
on January 3, 2023, Fitch Ratings has affirmed Brazil's
Long-Term Foreign Currency Issuer Default Rating (IDR) at
'BB-' with a Stable Outlook. The ratings are constrained by
high government indebtedness, a rigid fiscal structure, weak
economic growth potential, and a record of governability
challenges that have hampered efforts to address these fiscal
and economic issues and clouded policy predictability.
The Stable Outlook reflects Fitch's expectation that growth
will slow in the coming year and that recent fiscal
improvement will erode under a new government, but within a
margin consistent with the current rating, and from a better
starting point than previously expected. Uncertainty is
elevated regarding the plans of the incoming government and
the extent to which these could ease or aggravate fiscal and
economic challenges. However, Fitch does not expect policies
that jeopardize broad economic stability.
LIGHT SA: Fitch Affirms 'BB-' IDRs, Alters Outlook to Neg.
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Fitch Ratings has affirmed the Foreign Currency (FC) and Local
Currency (LC) Issuer Default Ratings (IDRs) for Light S.A. (Light)
and its wholly owned subsidiaries Light Servicos de Eletricidade
S.A. (Light Sesa) and Light Energia S.A.'s (Light Energia) at
'BB-'. Fitch has also affirmed Light's National Scale Ratings at
'AA-(bra)' and the ratings of the subsidiaries' debt instruments.
Fitch revised the Rating Outlook for the corporate ratings to
Negative from Stable.
The Negative Outlook reflects concerns about Light's ability to
access new credit lines, given uncertainties on the renewal of
Light Sesa's concession. Fitch considers the renewal in the base
case, but expects relevant refinancing needs in 2023 and 2024,
prior to the definition for the concession. Light Sesa's capacity
to securitize its receivables may be an important source of funding
in 2023, but may not be sufficient to support refinancing in 2024.
Challenges for Light Group will include preserving liquidity by
reducing opex and capex, despite potentially negative effects on
operation, in Fitch's opinion.
KEY RATING DRIVERS
Renewal Uncertainties Bring Refinancing Concerns: Fitch expects the
renewal of Light Sesa's concession to occur before June 2025, the
deadline imposed by debts maturing after 2026.But uncertainty
through 2024 might constrain Light's ability to secure funding. The
base case considers debt issuance up to BRL1.8 billion in 2023,
backed by Sesa's receivables, with a funding requirement of at
least BRL1.5 billion in 2024, which may be difficult given the
expected timing for a definition on the concession. In case of
non-renewal, Light Sesa should receive an amount equal to its asset
base, currently valued at BRL10.1 billion, which, together with
other assets, fully covers the concession's liabilities.
Refinancing in 2024 should rely on the renewal assumption and on
the expectation that, in case of non-renewal, the outstanding debts
(BRL10.3 billion) will be carried out by the new concessionaire or
prepaid with proceeds from the indemnity.
Sesa's concession ends in June 2026, and the renewal assumption is
based on the company's track record of service quality and on the
expectation that the government will support fundamental changes in
energy losses requirements. A potential breach of financial
covenants established by the concession agreement, as of 2023,
should not compromise the renewal, in Fitch's opinion.
Negative FCF in 2023: Higher interest rates and the transfer of
BRL840 million in tax credits to Sesa's consumers will pressure
cash flows in 2023. These negative effects will be partially offset
by a significant reduction in Sesa's opex and capex, reflecting a
shift in strategy to prioritize liquidity, although it will likely
result in higher energy losses. Average EBITDA in 2023-2024 is
estimated at BRL1.9 billion for Light Sesa and BRL590 million for
Light Energia. FCF should average negative BRL1.2 billion in
2022-2023 and positive BRL270 million in 2024-2025, assuming
maintenance of a 25% dividend payout. The group's investments are
expected to decrease to around BRL950 million in 2024-2025, on
average, from BRL1.4 billion in 2021-2022 and BRL1.1 billion
expected for 2023.
Fitch expects the group's net adjusted leverage to remain at 4.3x
in 2022, as observed in 2021, declining to 4.1x and 3.9x in 2023
and 2024, following a modest market growth and tariff adjustments.
The ratio for 2023 incorporates an increase by 0.3x from the
transfer of tax credits and a decrease by 0.1 from the expected
reduction in opex and capex. These ratios incorporate guarantees
provided to Norte Energia S.A. as off-balance sheet debt (BRL733
million on September 2022). Gross leverage is estimated in 4.8x in
2022-2024, on average, from 6.2x in 2021.
Poor Performance on Distribution: Light Sesa's EBITDA is limited by
energy losses and provisions for credit losses above tariff
coverage and by higher-than-average indemnities to consumers. The
last tariff review in March 2022 incorporated a BRL1.7 billion
increment (+20%) in asset base and heightened the regulatory limit
for energy losses. This uplift resulted in annual savings of around
BRL350 million, but it is set to gradually decline as of the next
tariff adjustment.
Fitch expects the cost of energy losses to increase by around
BRL115 million in 2023 and 2024 and energy consumption to grow by a
modest 0.5% rate as of 2022, after an average annual decrease of
1.6% in 2016-2021. The expected EBITDA of BRL1.5 billion in 2022
should be 33% below the regulatory standard, compared to a 44% gap
in 2021. The expected reduction in energy cost from Itaipu and
Norte Fluminense, in 2023 and 2025, will reduce tariffs, with
favorable effects on energy losses and delinquency. Possible
exemptions on the Tax on the Circulation of Goods and Services
(ICMS) would be especially positive for Light.
Balanced Business Profile: Light Energia should benefit from high
contracted prices and favorable hydrology in 2023, as observed in
2022. For 2024 onwards, Fitch expects a decrease in EBITDA due to
potentially declining prices. Contracted sales for 2023 and 2024
account for only 63% and 50% of its assured energy of 621 aMW, on a
consolidated basis, and less than 20% as of 2025. This strategy
reflects a conservative hedge against hydrological risk, which
compensates for the lack of diversification or protections, such as
quotas or regulatory insurance.
Light Energia sold its energy to industrial clients at
above-average prices, averaging around BRL255/MWh in 2023-2026. It
contributes with cash flow predictability but faces uncertainty on
the renewal of its hydroelectric plant's concessions, expiring in
2028.
DERIVATION SUMMARY
Light's credit profile is weaker than that of Companhia Energetica
de Minas Gerais (Cemig), rated with Local-Currency and
Foreign-Currency IDRs of 'BB+' and 'BB', respectively. Cemig has
stronger credit profile, with most of its cash flows coming from
energy generation and transmission. These segments account for
around 38% of the group's EBITDA, compared with 46% for
distribution, where Cemig operates with greater efficiency and
better market prospects, despite being more exposed to the
exponential growth of distributed generation.
Cemig's financial leverage is expected to increase over the rating
horizon, due to a strong capex plan in the distribution business,
but should still remain below the levels projected for Light.
KEY ASSUMPTIONS
- Light Sesa's energy demand and market growing by 0.5% and 0.1% as
of 2023, respectively;
- Cash outflow of BRL840 million mostly in 2023 for refund of tax
credits;
- GSF from 2022 to 2024, on average: 0.80, 0.85 and 0.93;
- Energy short-term prices from 2022 to 2024, on average (BRL/MWh):
189, 115 and 99;
- Light Energia's existing sales contracts of 309 aMW at BRL223/MWh
in 2022-2025, on average;
- Average annual investments of BRL1.3 billion in 2022-2023 and
BRL950 million in 2024-2025;
- Dividend distribution equivalent to 25% of net income.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a Stable
Outlook:
- Renewal of Light Sesa's concession and a reduction of the group's
refinancing risk.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Renewal of Light Sesa's concession under more favorable terms;
- Improvements in distribution segment operating performance;
- Net leverage consistently less than or equal to 3.5x;
- Total leverage consistently less than or equal to 4.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Fitch's expectation that Light Sesa's concession will not be
renewed;
- Deterioration of the group's liquidity;
- Net leverage consistently at or above 4.5x;
- Total leverage consistently at or above 5.5x.
LIQUIDITY AND DEBT STRUCTURE
High Refinancing Risk: Fitch projects a total refinancing need of
BRL3.3 billion in 2023-2024. Fitch anticipates debt issuance of up
to BRL1.8 billion in 2023, backed by Sesa's receivables and
projects a funding requirement of at least BRL1.5 billion in 2024.
This financing should rely on the renewal assumption and on the
expectation that, in case of non-renewal, the outstanding debts
will be carried out by the new concessionaire or prepaid with
proceeds from the indemnity.
Light's consolidated cash and equivalents were BRL4.0 billion at
the end of September 2022, which covered the expected negative FCFs
(BRL1.6 billion) and debt payments (BRL2.2 billion) through 2023.
Short-term debt was BRL2.6 billion. Total adjusted consolidated
debt of BRL13.5 billion mainly consisted of debentures (BRL7.8
billion) and Eurobonds issued in June 2021 (BRL3.2 billion), and
included off-balance sheet debt of BRL733 million related to
guarantees provided to Norte Energia S.A. There is no debt at the
holding level.
ISSUER PROFILE
Light Sesa is the fourth largest power concession in Brazil,
serving more than 70% of Rio de Janeiro's consumption, and accounts
for 70% of the group's EBITDA. Light Energia has 511 aMW of assured
energy, on a consolidated basis. Light S.A. is listed on B3 and has
a pulverized share ownership.
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
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Light Servicos de
Eletricidade S.A. LT IDR BB- Affirmed BB-
LC LT IDR BB- Affirmed BB-
Natl LT AA-(bra)Affirmed AA-(bra)
senior unsecured LT BB- Affirmed BB-
senior unsecured Natl LT AA-(bra) Affirmed AA-(bra)
Light Energia S.A. LT IDR BB- Affirmed BB-
LC LT IDR BB- Affirmed BB-
Natl LT AA-(bra) Affirmed AA-(bra)
senior unsecured LT BB- Affirmed BB-
senior unsecured Natl LT AA-(bra) Affirmed AA-(bra)
Light S.A. LT IDR BB- Affirmed BB-
LC LT IDR BB- Affirmed BB-
Natl LT AA-(bra) Affirmed AA-(bra)
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D O M I N I C A N R E P U B L I C
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DOMINICAN REPUBLIC: Gov't. Must Increase Public Spending in 2023
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Dominican Today reports that the economist Antonio Ciriaco stated
that the government must increase public spending in 2023 to make
the Dominican Republic's economy more resilient and inclusive in
the face of an international economic recession.
According to Mr. Ciriaco, to maintain the country's 5% growth rate,
greater investment in public spending, primarily on infrastructure,
is required, as this will allow the country to reactivate internal
demand, notes Dominican Today.
"Low public investment is one of the current government's
shortcomings. Subsidies were not included in the budget for 2022,
but more than RD$662 billion were allocated, including RD$38
billion to control fuel prices and RD$18 billion to the energy
sector, among other things," assures Mr. Ciriaco, the report notes.
He maintains that the Dominican economy grew quite well in 2022,
but the projection for next year is the government's handling of
risk situations such as indebtedness and subsidies, the report
relays.
"The government's public indebtedness is approximately US$52
billion. Meanwhile, we are talking about nearly US$67 billion
between the Central Bank, which represents 60% of GDP. "There is
something that needs to be addressed for the next pre-election
year," Mr. Ciriaco clarifies, add the report.
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.
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.
The TCR-LA reported on December 12, 2022, that Fitch Ratings has
affirmed Dominican Republic's Long-Term Foreign Currency Issuer
Default Rating (IDR) at 'BB-' with a Stable Rating Outlook. Fitch
said Dominican Republic's ratings are supported by a track record
of robust economic growth, a diversified export structure, high
per-capita GDP and social indicators, and governance scores that
compare favorably to peers' after sustained improvement in the
past
decade.
Standard & Poor's, in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also affirmed
its 'BB-' long-term foreign and local currency sovereign credit
ratings and its 'B' short-term sovereign credit ratings. The
stable
outlook reflects S&P's expectation of continued favorable GDP
growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack
of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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J A M A I C A
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TRANSJAMAICAN HIGHWAY: Deal Moving Forward
------------------------------------------
Jamaica Observer reports that following the requisite consent from
most of its bondholders, TransJamaican Highway Limited (TJH) will
move forward with the proposed changes to various agreements which
will pave the way for it to acquire Jamaican Infrastructure
Operator Limited (JIO).
TJH received requisite consent from 81.68 per cent of the holders
of its US$225 million senior secured notes due 2036 on December 16,
according to Jamaica Observer. TJH would have paid US$1.25 in cash
for each US$1,000 principal amount which constitutes the consent
fee totaling US$229,737.50 on December 20, the report notes. These
notes are listed on the Singapore Exchange Securities Trading
Limited, the report relays.
These amendments include a supplemental indenture to the indenture
governing the notes, amendments to the direct agreement among JIO,
Vinci Concessions, Bouygues Travaux Publics, the Bank of New York
Mellon and JCSD Trustee Services Limited and an amended O&M party
direct agreement, the report discloses. TJH would increase the
amount in the O&M reserve required account from three to six
months, the report notes. There would also be the termination and
release of certain guarantees among TJH, Vinci and Bouygues
relating to JIO's payment obligations to TJH under the O&M
agreement, the report relays.
Once the consent fee is deemed to have been paid to each entitled
noteholder, the effective date would be established and allow the
company to acquire Vinci's 51 per cent stake in JIO upon the
consummation of the consent solicitation, the report relays.
Bouygues' 49 per cent stake in TJH cannot be sold until National
Road Operating and Constructing Company Limited (NROCC) has given
approval to changes related to the concession agreement on behalf
of the Government of Jamaica, the report discloses. However, the
company has a call option granted by Vinci and Bouygues which
expires in December 2024 related to the acquisition of their
interest in JIO for an aggregate amount of US$16.1 million, the
report says.
TJH is the company responsible for the development, operation and
maintenance of Highway 2000 East-West under a 35-year concession
agreement granted by the NROCC while JIO manages and operates the
highway on behalf of TJH under an operation and maintenance
agreement, the report discloses.
Rating agency Fitch Ratings views the acquisition of Vinci's stake
in JIO as credit neutral which leaves it at BB- with a stable
rating outlook. Fitch noted, "Although the O&M fee reduction
increases the issuer's capacity to fulfil its debt commitments,
TJH's rating is currently constrained by Jamaica's Country Ceiling
at 'BB-'.
In a tweet no longer visible, posted on Twitter, NROCC Managing
Director Stephen Edwards said, "If you have received retro pay as
part of the Government's compensation reform, consider investing it
in TransJamaican Highway," the report relays.
Edwards also sits on TJH's board of directors where NROCC has the
largest stake at 20 per cent in the publicly listed company, the
report notes. NROCC board member Dr Ventley Brown also sits on the
TJH board, the report says.
TJH has seen a rebound in traffic volumes with the first nine
months of 2022 being seven per cent higher than 2019 which was the
last year unaffected by COVID-19, the report relays. This has
translated to its revenues increasing 25 per cent to US$47.02
million which is not far from the US$53.29 million earned in 2019,
the report notes. Net profit has also experienced a 134 per cent
surge to US$4.14 million which exceeds 2021's earnings, the report
discloses.
Under the proposed changes to the O&M agreement, JIO's monthly
fixed fee component cut by 72 per cent and its variable rate
increased from 3.0 per cent to 5.0 per cent on theoretical toll
revenues, the report relays. These changes would cut TJH's
expenses in half and result in JIO sharing more of the variability
of the risk of traffic flow, the report notes. JIO's fees
accounted for 83 per cent of TJH's 2021 expenses excluding the
amortisation of intangible assets, the report discloses.
TJH's asset base shrunk two per cent year over year to US$309.19
million due to the amortization of intangible assets, the report
relays. Total liabilities went up to US$257.92 million with
shareholders equity at US$51.27 million, the report relates.
TJH's stock price hit a record $1.91 and US$0.0117 in April but has
since trended back to $1.39 and US$0.0099 which is just below the
initial public offering price of $1.41/US$0.01, the report notes.
TJH paid a US$7 million ($1.07 billion) dividend on October 25 to
its ordinary shareholders, the report discloses.
TJH is expected to operate phase 1C of Highway 2000 East-West which
is to extend the toll road by 28km, the report says. The US$188.5
million project was 82 per cent complete in September and is
expected to be completed by March 2023, the report notes. NROCC is
now negotiating with TJH for the sale of Phase 1C of the highway,
the report adds.
As reported in the Troubled Company Reporter-Latin America on Dec.
27, 2022, S&P Global Ratings affirmed its 'B+' rating on
Transjamaican Highway Ltd.'s (TJH or the project) debt.
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P U E R T O R I C O
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PUERTO RICO: Oversight Board Defends Motions in PREPA Case
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Robert Slavin of The Bond Buyer reports that the Puerto Rico
Oversight Board defended its latest actions in the Puerto Rico
Electric Power Authority bankruptcy and rejected bondholder and
unsecured creditor challenges to its proposals.
The urgent motion filed December 16, 2022 was "purely
administrative in nature," requesting the scheduling of a
disclosure statement hearing, deadlines for briefing on the
disclosure statement and the Confirmation Discovery Procedures
Motion, and document depository procedures, the board said in its
reply to the challenges in the U.S. District Court for Puerto
Rico.
Further, the board said, the plan is "confirmable in all
reasonable
and legally relevant outcomes."
About Puerto
Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son
of former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's
PROMESA petition is available at
http://bankrupt.com/misc/17-01578-00001.pdf
On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation
(COFINA) commenced a case under Title III of PROMESA (D.P.R. Case
No. 17-01599). Joint administration has been sought for the Title
III cases.
On May 21, 2017, two more agencies -- Employees Retirement System
of the Government of the Commonwealth of Puerto Rico and Puerto
Rico Highways and Transportation Authority (Case Nos. 17-01685 and
17-01686) -- commenced Title III cases.
U.S. Chief Justice John Roberts has named U.S. District Judge Laura
Taylor Swain to preside over the Title III cases.
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 LLP; and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are onboard as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
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T R I N I D A D A N D T O B A G O
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DIGICEL GROUP: Wins Case Against US Rival it Accused of Fraud
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RJR News reports that Digicel Group has won an eight-year legal
battle involving a US rival it accused of fraud.
The Irish Times is reporting that Digicel Haiti has been awarded
more than US$10 million in damages against Oregon company UPM
Technology and its CEO, Bruce Tran, according to RJR News.
In the matter first brought in 2015, Digicel built a case against
UPM for what is described as "bypass fraud," the report notes.
That is when one telecommunications firm uses technology to
override the systems of another, in a bid to resell it calls
cheaper, the report relays.
UPM admitted to the practice but claimed it did not amount to
fraud, the report notes.
The case went to trial in the Oregon district court a few weeks
before Christmas, the report discloses.
Legal filings show the jury decided UPM and Mr. Tran had "engaged
in fraud by active concealment", by using software to trigger
Digicel's systems in Haiti to give cheap calls, the report relays.
Digicel sought tens of millions of dollars in damages, but the
court ruled that the respondent must pay US$5.4 million in
compensation, of which 75 per cent is to be paid by UPM, the report
says.
The rest is to be covered by Mr. Tran.
Digicel got an additional US$3.6 million in punitive damages to be
paid by UPM, and a further US$700,000 in punitive damages against
Mr. Tran, 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.
TRINIDAD & TOBAGO: No Price Hike for Eggs
-----------------------------------------
Andrea Perez-Sobers at Trinidad Express reports that the
Association of Trinidad and Tobago Table Egg Producers says while
the increase in electricity rates has not been discussed yet, the
association is pleading with other stakeholders and suppliers to be
flexible at this time.
Since the Regulated Industries Commission (RIC) announced the
increase in electricity, some sectors have been expressing concern,
while the Supermarket Association president Rajiv Diptee is
reported as saying that the new rates can result in a higher cost
for grocery items, according to Trinidad Express.
The Association of Trinidad and Tobago Table Egg Producers vice
president Dennis Ramsingh told the Express farmers use a lot of
electricity for the water pumps, 24/7, so that chickens can get
water in their pens, and electricity is also used for the lighting
of the pens at night, the report notes.
While Ramsingh said no collective discussions have been had on the
matter, he urged producers to improve on efficiency, striving to
reduce the impact of higher prices on consumers, however, he said
the producers will arrive at a point where they will be unable to
do such but as for now producers haven't increased any prices, the
report relays.
Bird Flu Risk
"There is always room for our members to adjust according to our
suggested wholesale prices with their clients, as every producer
faces different circumstances and the cost of production will vary.
We have not discussed any increases and are pleading with other
stakeholders and suppliers to be flexible, adjusting the cost of
their products, not only increasing but decreasing when benefited
from a lower cost of freight and raw materials," Ramsingh said, the
report discloses.
On the issue of Avian Influenza, also known as bird flu, which
spread to South American countries such as Colombia, Peru, Ecuador,
Venezuela, and Chile, last month at their poultry production sites,
the association president said there isn't much the organization
can do to ensure it does not reach this country, the report says.
"What we will consider are practices of improving on-site
sanitation and reducing entrance of stray birds into our farmhouses
and request the officials including Ministry of Agriculture and
Customs and Excise to ramp up imports inspection and security of
poultry produce. Also clamp down on illegal smuggling of livestock,
which may pose a greater risk," Ramsingh said, the report notes.
He noted that during the Covid-19 pandemic, many producers of eggs
were forced out of operation, due to the farmers' inability to
compete with the price for imported eggs, the report says.
Ramsingh said from then to now farmers strive to get back into
operation, with so many hurdles, torrential rains, terrible road
infrastructure, and water shortage, the report relays.
He called on local food producers to keep strong as there is light
at the end of the tunnel, the report adds.
=============
U R U G U A Y
=============
NAVIOS SOUTH AMERICAN: S&P Affirms 'B' ICR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings affirmed it 'B' issuer credit and issue-level
ratings on Navios Maritime Holdings Inc. (NMH; Navios South
American Logistics Inc.'s [NSAL's] parent company).
The outlook remains stable, reflecting NSAL's comfortable debt
amortization schedule with no significant maturities until its $500
million secured notes come due in July 2025. S&P expects funds from
operations (FFO) to debt of 7%-11% and positive free operating cash
flows (FOCF).
In August 2022, NMH sold its dry-bulk shipping fleet to Navios
Maritime Partners L.P. (10.3% of which NMH owns) for about $835
million and used the proceeds for the repayments of NMH's senior
secured notes. Therefore, NMH no longer has any outstanding debt,
and the ratings on the company were discontinued. Following the
asset sale, NMH exited direct fleet ownership (previously, the Dry
Bulk Vessel Operations segment), and NSAL is now NMH's only
operating business. S&P believes that the sale provides certain
relief to NSAL's liquidity, given the risk in the past of NMH
impairing its subsidiary's liquidity and leverage (subject to
certain limitation under the senior secured notes due 2025) to pay
down its upcoming debt maturities.
If water continues to rise to normal levels in the river system,
known as the Hidrovía network, performance of NSAL's barge
business should improve in 2023 due to price recovery and higher
volumes. S&P said, "We assume a 15% increase in rates and volumes
in the barge business in 2023, after volumes dropped due to very
lower water levels in 2020 and 2021 and only started to recover in
the second half of 2022. In this sense, we expect the barge
segment's EBITDA to jump to about $6 million in 2023 from $2
million - $3 million in 2021-2022."
S&P said, "New iron ore storage and transshipment contract with
Vetria and 4B Mining will add about 500,000 tons in 2023, which
coupled with rate adjustments to inflation (we estimate U.S.
inflation of 4.3% in 2023) should increase the port's EBITDA to
about $100 million in 2023 from forecasted $88 million in 2022.
Although we're not aware of committed capital expenditures (capex),
we expect higher capital investments in 2023 than in 2022. However,
NSAL's reported debt would remain fairly stable, given that the
company's internal cash flows should fund capital spending. We
assume FOCF of $27 million - $30 million in 2023. We forecast
NSAL's consolidated leverage will drop to 4x-5x in 2023-2024 from
7.2x in 2021 and an estimated 5.6x in 2022."
ESG credit indicators: E-2, S-2, G-3
Governance factors are a moderately negative consideration in S&P's
credit rating analysis of NSAL. NMH owns a 64% stake in NSAL. The
chairman and CEO, as well as officers and directors of NMH have
about 26% ownership stake, with the remainder listed on NYSE. This
constrains the board's independence and points to the chairman and
CEO's high degree of influence.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week Jan. 2 to Jan. 6, 2023
-----------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Esval SA 3.5 49.9 2/15/2026 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
*********
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 2023. 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
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Information contained herein is obtained from sources believed to
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balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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