/raid1/www/Hosts/bankrupt/TCRLA_Public/230124.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, January 24, 2023, Vol. 24, No. 18
Headlines
A R G E N T I N A
ARGENTINA: $1 Billion Bond Buyback Plan Has Investors Stumped
ARGENTINA: S&P Affirms 'CCC+/C' For. Curr. Sovereign Credit Ratings
B R A Z I L
AMERICANAS SA: Fitch Lowers LongTerm IDRs to 'D' on Bankr. Petition
AMERICANAS SA: Moody's Lowers CFR to 'Ca' on Judicial Recovery
BRAZIL: After Lula's Criticism, Future Interest Rates Skyrocket
CITY OF NITEROI: S&P Assigns 'BB-' Global Scale Rating
GENESIS GLOBAL: Case Summary & 50 Largest Unsecured Creditors
C O L O M B I A
COLOMBIA: S&P Affirms 'BB+' Foreign Curr. Sovereign Credit Ratings
G U Y A N A
GUYANA: To Invest in Broiler Facility to Reduce Importing Eggs
J A M A I C A
[*] JAMAICA: More Locals Optimistic About Business in 2022
M E X I C O
MEXARREND SAPI: S&P Cuts ICR to 'D' on Failure to Make Debt Payment
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Food Prices Jump 13.80% in November
TRINIDAD & TOBAGO: Retail Industry is Dying But Not Dead
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A R G E N T I N A
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ARGENTINA: $1 Billion Bond Buyback Plan Has Investors Stumped
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Buenos Aires Times, citing Bloomberg News commentary, reports that
Argentina's plan to repurchase $1 billion of its deeply distressed
dollar bonds has emerging-market investors scratching their heads.
Economy Minister Sergio Massa announced the plan to buy back
securities maturing in 2029 and 2030 trading at 30-some cents on
the dollar, according to Buenos Aires Times.
The notes jumped to their highest prices in more than a year after
Massa spoke, extending a rally that had already produced 60%
returns for investors since October, the report notes. While
repurchasing the bonds at a fraction of their face value could
ultimately save the country hundreds of millions of dollars in
interest and principal payments, investors point out that the
government doesn't have very much room in central bank coffers to
fund such a lavish buyback. Argentina's long-standing financial
woes are, of course, partly why the bonds were so cheap in the
first place, the report relays.
The plan makes so little sense that the market gains may be short
lived once investors sort through the details, according to Pablo
Waldman, a senior strategist at Inviu in Buenos Aires, the report
says.
"There are very limited resources, and this is a very risky way of
deploying them," Waldman said, the report notes.
"If they don't follow through with other measures, the very limited
scope of this plan likely won't cause bonds to rally further," he
added.
The announcement is all the more perplexing because while central
bank reserves have climbed in recent months, net reserves are still
dangerously low at just over $6 billion, according to local
brokerage Portfolio Personal Inversiones, the report says.
The nation is under pressure to bolster those reserves to comply
with targets laid out in its $44 billion program with the
International Monetary Fund, and it's facing a severe drought that
looks set to sap export dollars from flowing into the central bank
later this year, 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.
ARGENTINA: S&P Affirms 'CCC+/C' For. Curr. Sovereign Credit Ratings
-------------------------------------------------------------------
S&P Global Ratings, on Jan. 20, 2023, affirmed its 'CCC+/C' foreign
currency and 'CCC-/C' local currency sovereign credit ratings on
Argentina. The outlook on the long-term ratings remains negative.
S&P's 'CCC+' transfer and convertibility assessment is unchanged.
Outlook
The negative outlook on the long-term ratings reflects risks
surrounding pronounced economic imbalances and policy uncertainties
before and after the 2023 national elections. Global capital
markets are closed to Argentina. Moreover, disagreement within the
government coalition and infighting among the opposition constrains
the sovereign's ability to implement timely changes in economic
policy.
Downside scenario
S&P could lower the foreign currency ratings over the next six to
12 months on unexpected negative policy or political developments
that undermine already limited access to financing. Meaningful
setbacks in execution under the Extended Fund Facility (EFF) would
complicate access to IMF financing, and potentially from other
multilateral lending institutions. This scenario would likely
further damage local investor confidence and hamper access to
peso-denominated debt markets--exacerbating the need for recourse
to central bank financing amid high inflation--and lead to a
downgrade. Heightened pressure in local financial markets,
including the banking system's deposit base, or difficulties in
managing central bank debt (LELIQs) could also lead to a downgrade.
Finally, at such low rating levels, S&P generally consider debt
exchanges as distressed and tantamount to a default.
Upside scenario
S&P could raise the foreign currency ratings over the next six to
12 months following:
-- A track record of successful execution under the EFF, and
-- Clarity on how policy will ease financing challenges in the
local market and provide a road map to address Argentina's major
structural macroeconomic imbalances.
S&P could also raise the ratings if there is a more pronounced
economic recovery that supports stronger fiscal outcomes that take
pressure off the government's financing needs.
Rationale
S&P said, “We affirmed our foreign currency ratings on Argentina
because we consider the announced plan to buy back global bonds in
the secondary market as opportunistic rather than a distressed
exchange. We consider the announced buyback equivalent to a debt
restructuring under our criteria. At such low ratings levels, we
generally consider these transactions distressed.
"Participating bondholders will receive less than originally
promised. However, in our view, absent significant participation,
we believe the government would not default on these foreign
currency bonds over the coming months. The eligible local and
international law bonds include the 2029 1% and 2030, 2035, 2038,
2041, and 2046 step-up bonds. Partial principal repayments kick in
during 2024 for the 2030 step-ups, but the $1.2 billion due 2024
rises to $6 billion in 2025. That said, $2 billion in interest
payments on all these eligible bonds is due 2023.
"This view contrasts with the Jan. 3 swap of peso-denominated
bonds, which we considered as distressed and tantamount to default.
That decision reflected our view of the government's constraint in
placing paper in Argentina's small local market, which complicates
peso debt management. Particularly with elections forthcoming amid
macroeconomic and political stress, the government relies on
exchanges to manage the majority of its peso maturities,
thereafter, tapping the market to refinance smaller amounts of debt
coming due. While the January swap eased peso-denominated
maturities due in first-quarter 2023, it leaves significant
maturities in the second and third quarters. We estimate some $85
billion in peso-denominated debt due this year.
"We will continue to analyze any subsequent debt exchanges at this
low rating level on a case-by-case basis, incorporating the
macroeconomic and political context. Our methodology indicates that
we classify exchanges as a distressed exchange when, in our view,
absent participation, a conventional default would likely ensue."
Ratings List
RATINGS AFFIRMED
ARGENTINA
Sovereign Credit Rating
Foreign Currency CCC+/Negative/C
Local Currency CCC-/Negative/C
Transfer & Convertibility Assessment
Local Currency CCC+
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B R A Z I L
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AMERICANAS SA: Fitch Lowers LongTerm IDRs to 'D' on Bankr. Petition
-------------------------------------------------------------------
Fitch Ratings has downgraded Americanas S.A.'s (Americana)
Long-Term Foreign Currency (FC) and Local Currency (LC) Issuer
Default Ratings (IDRs) to 'D' from 'C', its Long-Term National
Scale Rating to 'D(bra)' from 'C(bra)', as well as the rating of
its unsecured debentures to 'D(bra)' from 'C(bra)'. Fitch has also
affirmed the rating of the senior unsecured global notes issued by
its wholly owned subsidiaries JSM Global S.a.r.l. and B2W Digital
Lux S.a.r.l. at 'C', revising the recovery rating to 'RR5' from
'RR4'.
The downgrade follows Americanas' petition for bankruptcy
protection, announced on Jan. 19, 2023, declaring BRL43 billion in
debt.
KEY RATING DRIVERS
Bankruptcy Protection: Americanas filed a petition for bankruptcy
protection after its inability to negotiate with creditors and
suppliers. The company declared approximately BRL43 billion in debt
while liquidity rapidly deteriorated, to BRL800 million at present
date, from BRL8.8 billion on Sept. 30, 2022. Additionally, part of
the cash is blocked by financial institutions, preventing the
company to continue to operate. Americanas' shareholders were not
able to capitalize the company in a timely manner to avoid the
bankruptcy of the business.
ESG Affected: Weak Corporate Governance negatively affects
Americanas' ratings. The accounting inconsistencies announcement
highlights several years of material weakness in the quality of the
company's financial statements, as well as the lack of transparency
in its financial reporting, as reverse factoring information has
not been adequately disclosed in its financial statement notes. The
event raises questions about the financial controls of the company,
and pressures the company's ability to raise additional debt with
banks, capital market and other third parties, including
suppliers.
ESG - Corporate Governance: Americanas S.A. for several years has
not properly disclosed its supplier financing mechanisms in its
financial statements, which is highly relevant to the rating and a
key rating driver with a high weight.
KEY ASSUMPTIONS
Key Recovery Rating Assumptions
- The recovery analysis assumes that Americanas would be liquidated
in a bankruptcy rather than considered a going concern;
- Fitch assumed a 10% administrative claim.
GC Approach
Fitch excluded the going concern approach due to expectations of
significant weakening in EBITDAR and business profile in the
foreseeable future.
Liquidation Approach
Fitch considered 80% of the accounts receivables, 50% of the
inventory and 50% of net PP&E reported in September 2022 to
calculate the liquidation value (LV). The allocation of value in
the liability waterfall corresponds to a 'RR5' recovery for the
company's BRL43 billion debts, which Fitch assumed pari passu. The
'RR5' Recovery Rating reflects below-average recovery prospects,
and indicates a recovery ranging from 11%-30%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Success in completing a debt restructuring with creditors that
strengthens Americanas' liquidity and capital structure.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Negative rating actions are not possible as the company is the
lowest level of the rating scale.
LIQUIDITY AND DEBT STRUCTURE
Americanas' liquidity is dramatically compromised.
ISSUER PROFILE
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by Jorge Paulo Lemann,
Carlos Alberto Sicupira and Marcel Telles.
SUMMARY OF FINANCIAL ADJUSTMENTS
- Fitch uses a multiple of 5x to capitalize Brazilian companies
leasing adjusted debt;
- Fitch includes the factoring of account receivables on debt.
Fitch adjusts short-term and long-term marketable securities back
to cash and equivalents. Fitch considers the financing to the
marketplace sellers as finance activity. Applying methodology, the
finance service activity has a debt/equity leverage ratio of 2.0x.
The asset of the financial service activity corresponds to the
receivables related to the marketplace business, so half of this
asset is financed by debt, which is deconsolidated from total
debt.
ESG CONSIDERATIONS
Americanas S.A. has an ESG Relevance Score of '5' for Corporate
Governance and Financial Transparency due to the inconsistencies of
reporting reverse factoring in its financial statements., which has
a negative impact on the credit profile, and is highly relevant to
the rating.
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
----------- ------ -------- -----
B2W Digital Lux
S.a.r.l.
senior unsecured LT C Affirmed RR5 C
Americanas S.A. LT IDR D Downgrade C
LC LT IDR D Downgrade C
Natl LT D(bra)Downgrade C(bra)
senior unsecured Natl LT D(bra) Downgrade C(bra)
JSM Global S.a r.l.
senior unsecured LT C Affirmed RR5 C
AMERICANAS SA: Moody's Lowers CFR to 'Ca' on Judicial Recovery
--------------------------------------------------------------
Moody's Investors Service has downgraded to Ca from Caa3 Americanas
S.A.'s Corporate Family Rating and the ratings of the backed senior
unsecured notes issued by JSM Global S.a r.l. and B2W Digital Lux
S.a r.l., both guaranteed by Americanas S.A.
The downgrade follows the court approval of Americanas' judicial
recovery request under the Brazilian Bankruptcy and Reorganization
Law. The judicial recovery in Brazil is the closest equivalent to
chapter 11 in the US. Subsequent to the actions, all Americanas'
ratings will be withdrawn.
The rating actions conclude the review for downgrade initiated on
January 16, 2023 following the announcement that a provisional
injunction was granted to the company suspending the effects of all
contractual imposition of debt acceleration or obligations
regarding the financial instruments of the group. The rating
actions also highlights the heightened governance risks, in
particular lack of adequate controls and transparency, which
substantially undermines management credibility.
Rating Actions:
Issuer: Americanas S.A.
LT Corporate Family Rating, Downgraded to Ca from Caa3;
Issuer: B2W Digital Lux S.a r.l.
Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Ca
from Caa3;
Issuer: JSM Global S.a r.l.
Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Ca
from Caa3;
Outlook Actions:
Issuer: Americanas S.A.
Outlook, Changed to Negative from Ratings Under Review
Issuer: B2W Digital Lux S.a r.l.
Outlook, Changed to Negative from Ratings Under Review
Issuer: JSM Global S.a r.l.
Outlook, Changed to Negative from Ratings Under Review
RATINGS RATIONALE
The downgrade follows the court approval of Americanas' judicial
recovery request under the Brazilian Bankruptcy and Reorganization
Law. The judicial recovery in Brazil is the closest equivalent to
chapter 11 in the US. Subsequent to the actions, all Americanas'
ratings will be withdrawn.
ESG CONSIDERATIONS
Governance considerations have been a key driver of the rating
action reflecting lack of adequate controls and accounting
transparency. Moody's Governance Issuer Profile Score (IPS) remains
G-5 (very highly negative) and the company Credit Impact Score
remains CIS-5 (very highly negative). Moody's has changed Board
Structure and Policies to very highly negative (5) reflecting the
lack of effectiveness of oversight.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade Americanas' CFR if the recovery prospects
for its creditors deteriorate.
An upgrade is unlikely, given the negative outlook.
Subsequent to the actions, all Americanas' ratings will be
withdrawn.
Headquartered in Rio de Janeiro, Americanas S.A. is one of the
largest retailers in Brazil with a nationwide presence, largest
store footprint and own logistics footprint. The company has more
than 3,600 physical stores in different formats that are integrated
with its digital platform. The digital platform comprises both
e-commerce operations (1P) and marketplace platforms (3P) and has
reached more than BRL58.1 billion in gross merchandise value (GMV).
In the 12 months that ended September 2022, it reported net revenue
of BRL27.9 billion ($5.3 billion, converted using the average
exchange rate for the period), with an adjusted EBITDA margin of
14.2%.
The principal methodology used in these ratings was Retail
published in November 2021.
BRAZIL: After Lula's Criticism, Future Interest Rates Skyrocket
---------------------------------------------------------------
Richard Mann at Rio Times Online reports that futures interest
rates in Brazil started high this Jan. 19, after criticism from
president Luiz Inácio Lula da Silva (PT, progressive-globalist) to
the independence of the Central Bank (BC) and the current inflation
target, defined by the National Monetary Council (CMN).
In an interview with GloboNews, Lula questioned the purpose of an
independent Central Bank "if inflation and interest rates are the
way they are" and also declared that the inflation target for this
year (3.25%, possibly reaching 4.75%) is exaggerated and forces a
"squeeze" on the economy with interest rate increases, according to
Rio Times Online.
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 recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings, in December 2022, 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.
Standard & Poor's affirmed its 'BB-/B' long- and short-term
foreign and local currency sovereign credit ratings on Brazil, and
the outlook remains stable (June 2022). The stable outlook
reflects S&P's base-case assumption that Brazil will maintain its
fiscal anchors over the next two years despite an increasing
interest burden, preventing significant fiscal slippage and
limiting the rise in its already high debt burden.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
CITY OF NITEROI: S&P Assigns 'BB-' Global Scale Rating
------------------------------------------------------
S&P Global Ratings, on Jan. 19, 2023, assigned its 'BB-' global
scale and 'brAAA' national scale ratings on the city of Niteroi.
The outlook is stable.
Outlook
The stable outlook reflects S&P's view that the city will continue
posting strong fiscal surpluses in the next 12-18 months despite
funding capex with its own financial resources. Sizeable oil
royalties will help maintain high cash reserves and low debt. The
outlook incorporates risks to the city's fiscal performance and
liquidity from volatility in oil prices.
Downside scenario
S&P said, "Given that we cap our ratings on Niteroi at the
sovereign level, we could lower the ratings in the next 12-18
months if we were to downgrade Brazil. We could also lower the
ratings if Niteroi's fiscal performance deteriorates due to
higher-than-expected volatility in the oil sector, given the city's
dependence on royalties. In addition, we could lower the ratings if
the administration were to sacrifice its fiscal balance amid
soaring capex, more specifically, registering a rapid deterioration
of its cash position or the need to access a high amount of new
borrowings."
Upside scenario
S&P said, "While Niteroi's intrinsic creditworthiness is stronger
than the 'BB-' rating, we cap our ratings on the city to those on
Brazil (BB-/Stable/B). As a result, we could only upgrade the city
if we were to upgrade Brazil. Also, we could raise the rating on
the city above that on the sovereign if the institutional framework
for Brazilian LRGs improves and Niteroi can overcome a sovereign
stress scenario."
Rationale
Niteroi's SACP of 'bb+' reflects the city's very prudent policies
that result in strong fiscal performance, along with its higher GDP
per capita than the national average, and its economic growth
outpacing the national average. Sizeable oil royalties bolstered
the city's liquidity position and alleviated its debt burden. The
accumulated financial resources and cash flows allow Niteroi to
maintain its stabilization fund and to finance its substantial
capex. The SACP also incorporates the city's vulnerability to the
oil sector's heightened volatility, given Niteroi's heavy
dependence on industry through royalties.
S&P said, "We expect strong fiscal performance and prudent fiscal
policies to remain in place amid a limited institutional framework.
With the extraordinary inflow of oil royalties and somewhat
stability in capex execution, Niteroi has been able to consistently
post strong operating and after-capex surpluses. Our base-case
scenario assumes that operating surpluses will average 24% of
operating revenues and after-capex surpluses will average about 13%
in 2022-2024 because we expect the city to fund higher capex
through cash flows. Royalty revenue peaked in 2022 thanks to high
oil prices and the Brazilian real's lower value. This revenue will
moderate in following years due to falling oil prices but to remain
at a still high level."
Niteroi's conservative fiscal policies accumulated fiscal buffers
to manage revenue volatility and lower its debt burden. This has
been the case even amid the economic and fiscal crisis at the
federal and state levels, but as well as during the recovery cycle.
The city has realistic budgeting with satisfactory oversight over
revenue and expenditures. As an example of precautionary actions
taken to mitigate revenue-volatility risks is the creation of a
stabilization fund out of oil royalties. Niteroi is one of the few
municipalities in the state of Rio de Janeiro that has created such
fund and pre-paid its debt. However, in S&P's view, the high and
still growing oil royalties' flows outpace the city's capacity to
execute capital and infrastructure works. As a result, while recent
fiscal performance has remained strong, potential investments are
left unrealized.
Thanks to its fiscal buffers, Niteroi overcame the fiscal and
economic challenges posed by Covid-19. In order to soften the
pandemic's impact on businesses and households, the city deferred
tax collection, disbursed cash payments to the vulnerable
population, and increased spending on healthcare. Niteroi partly
drew down its stabilization fund to cover countercyclical and
containment measures. Since 2020, the stabilization fund's amount
recovered and is currently at its highest level thanks to sharply
higher oil prices.
Niteroi's economy has grown faster than those of other Brazilian
cities, it's relatively more prosperous and has better healthcare
infrastructure. S&P said, "But we consider its exposure to the
volatile oil sector a credit weakness. We estimate Niteroi's GDP
per capita at about $23,000 in 2022, more than double than the
national average of $9,000." The economy depends heavily on the oil
sector through direct or indirect activities, despite expansion of
local healthcare and technology sectors.
S&P said, "We assess the Brazilian LRGs' institutional framework as
volatile and unbalanced, which constrains our ratings on the city.
Structural rigidities of Brazil's intergovernmental
system—particularly, high spending requirements determined at the
national level--tend to prevent LRGs from balancing their finances.
Although Niteroi's royalty revenue provides a partial cushion, it
remains constrained by other elements of the system, including
limited access to financing and intervention from certain branches
of the federal government in revenue sharing. Nonetheless, we
believe the system continues to have a certain degree of
predictability and transparency, with enhanced oversight over LRGs'
finances and adherence to fiscal discipline."
Extraordinary royalties have bolstered liquidity and alleviated
debt burden, although volatility persists
S&P said, "We expect the city to partly use its liquidity and debt
buffers to increase capex, and to preserve a substantial cushion to
manage through future revenue shocks, including those stemming from
volatile oil prices. We expect capex to increase to about 13% of
total spending in 2022-2024 from its historical average of 9%,
above that of other Brazilian cities amid subdued nation's economic
growth. We expect Niteroi's capex to be mostly for education,
healthcare, urban mobility, and public transportation.
"However, we consider the reliance on royalties (which account for
about 40% of operating revenues) to pose risks to Niteroi's
budgetary performance, given a possible downturn in value of oil
production or changes in royalties' formula. In order to mitigate
this volatility, the city established a revenue stabilization fund
to save 10% of the incoming royalties for the next years. The fund
is not available for commercial debt service; however, under a
stress scenario, the city can tap the fund to cover up to 20% of
the decrease in annual revenue. We expect Niteroi's liquidity
position to remain very strong under this scenario, although we
consider its cash position to be vulnerable to volatility in the
oil sector and royalties."
Niteroi's net free cash and liquid assets are sufficient to
comfortably cover its very low debt and interest burden, and we
assess access to external liquidity as limited, given legal
restrictions imposed on Brazilian LRGs on the use of debt.
S&P said, "Our base-case scenario assumes that Niteroi will cover
its infrastructure needs with available cash, keeping a low debt
burden. Given that the city won't need to access large borrowings,
we expect its debt level to decline in the next three years to
about 13% of operating revenue by 2024, and interest payments to
remain below 1%. We believe that Niteroi's very high operating
surpluses mitigate the risks stemming from its debt profile. The
city has used its extraordinary oil royalties to prepay debts,
reducing its debt stock down from about 40% in 2017."
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
NEW RATING; CREDITWATCH/OUTLOOK ACTION
NITEROI (CITY OF)
Issuer Credit Rating BB-/Stable/--
Brazil National Scale brAAA/Stable/--
GENESIS GLOBAL: Case Summary & 50 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Genesis Global Holdco, LLC
250 Park Avenue South
5th Floor
New York, NY 10003
Business Description: Genesis Global Holdco, LLC (together with
the other Debtors and Holdco's Non-Debtor
Subsidiaries) and its non-Debtor affiliate
Genesis Global Trading, Inc. provide
lending and borrowing, spot trading,
derivatives and custody services for
digital assets and fiat currency. The
Debtors engage in lending, borrowing and
certain trading services, while the Non-
Debtor Subsidiaries engage in derivatives,
custody and most of the Company's trading
services. Holdco is a sister company of
GGT and 100% owned by Digital Currency
Group.
Chapter 11 Petition Date: January 19, 2023
Court: United States Bankruptcy Court
Southern District of New York
Three affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Genesis Global Holdco, LLC (Lead Case) 23-10063
Genesis Global Capital, LLC 23-10064
Genesis Asia Pacific PTE. LTD. 23-10065
Debtors' Counsel: Sean A. O'Neal, Esq.
Jane VanLare, Esq.
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, NY 10006
Tel: 212-225-2000
Email: soneal@cgsh.com
Debtors'
Financial
Advisor: ALVAREZ & MARSAL HOLDINGS, LLC
600 Madison Avenue
New York, NY 10022
Debtors'
Financial
Advisor,
Capital
Markets
Advisor, &
Investment
Banker: MOELIS & COMPANY LLC
399 Park Avenue, 4th
Floor, New York, NY 10022
Debtors'
Claims,
Noticing &
Solicitation
Agent: KROLL RESTRUCTURING ADMINISTRATION
55 East 52nd Street
17th Floor, New York, NY 10055
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $100 million to $500 million
The petitions were signed by A. Derar Islim as interim CEO.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/5LAKS2Q/Genesis_Global_Holdco_LLC__nysbke-23-10063__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/55VGYNQ/Genesis_Global_Capital_LLC__nysbke-23-10064__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/5G3QTDQ/Genesis_Asia_Pacific_PTE_LTD__nysbke-23-10065__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 50 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Various Lenders as Loan Payable $765,900,135
defined in certain Master Digital
Asset Loan Agreements entered into
with Gemini Trust Company, LLC,
as agent for the Lenders
2. On File Loan Payable/ $462,209,125
Collateral Payable
3. On File Loan Payable Undetermined
4. On File Collateral $230,023,000
Payable
5. Mirana Corp. Loan Payable $151,568,100
Level 30 Six Battery Road
Singapore, 049909
Singapore
Attn: Jonathan Allen
Title: Managing Partner
Tel: 916-337-8516
Email: jonathanallen@mirana.xyz
6. Moonalpha Financial Loan Payable $150,015,000
Services Limited
Amtel Building
148 Des Voeux Road Central
9th Floor
Central Hong Kong,
Hong Kong
Attn: Del Wang
Title: CEO
Email: del@babel.finance.com
7. On File Loan Payable $114,507,650
8. Coincident Capital Loan Payable/ $112,272,921
International, Ltd. Collateral Payable
C/O Forbes Hare Trust Company
Cassia Court 716
10 Market Street
Camana Bay,
Grand Cayman, KY1-9006
Cayman Islands
Attn: Wen Hou
Title: Chief Investment Officer
Tel: 312-588-6891
Email: wen@coincidentcapital.com
9. On File Loan Payable $90,000,000
10. Donut, Inc. Loan Payable $78,037,054
c/o Proskauer Rose LLP
Attn: Brian S. Rosen
Tel: 212-969-3000
Email: brosen@proskauer.com
11. On File Loan Payable $75,451,600
12. On File Loan Payable $64,912,001
13. Altcoinomy SA Loan Payable $61,801,095
Place des Florentins 1
1204
Geneva,
Switzerland
Attn: Konstantinos Lanaras
Title: CEO
Tel: +41 22 707 73 99
Email: konstantinos@altcoinomy.com
14. Streami Inc. Loan Payable $56,766,174
18th floor, 42
Olympic-ro 35da-gil
Songpa-gu
Seoul,
Republic of Korea
Attn: Junhaeng Lee
Title: CEO
Tel: +82 4328700120
Email: junhaeng.lee@streami.co
15. Heliva International Corp Loan Payable $55,005,190
MMG Tower
23rd Floor
Ave. Paseo Del Mar, Costa Del Este
Panama City, Panama
Attn: Santiago Esponda
Tel: 598-972-21410
Email: santiago@decentraland.org
16. VanEck New Finance Loan Payable $53,101,676
Income Fund, LP
666 Third Avenue
New York, NY 10017
United States
Attn: Jan van Eck
Title: CEO
Tel: 914-960-9809
Email: jvane@vaneck.com
17. On File Loan Payable $51,785,259
18. On File Loan Payable $47,202,205
19. Claure Group LLC Loan Payable $45,857,828
200 South Biscayne Blvd.
Suite 4420
Miami, FL 33131
United States
Attn: Joan Papadakis
Title: CFO
Tel: 954-306-2489
Email: joan5825@aol.com
20. On File Loan Payable $40,822,287
21. On File Loan Payable/ $40,266,984
Collateral Payable
22. On File Collateral Payable $39,787,136
23. On File Loan Payable $38,532,747
24. Digital Finance Group Loan Payable $37,907,447
111 Ellis Street
Floor 2 & 3
San Francisco, CA 94102
United States
Attn: Terry Culver
Title: Executive Director
Tel: 212-998-5700
Email: terry.culver@dfg.group.com
25. On File Loan Payable $35,214,334
26. On File Loan Payable $32,557,600
27. Plutus Lending LLC Loan Payable $30,003,000
958 California Street
Mountain View, CA 94041
United States
Attn: Bill Barhydt
Title: CEO
Tel: 650-723-6961
Email: bill@abra.com
28. Ripio International Loan Payable $27,552,174
Willow House
Floor 4
Cricket Square
Grand Cayman, KY01-9010
Cayman Islands
Attn: Sebastián Serrano
Title: CEO
Tel: 650-390-3966
Email: sebastian@ripio.com
29. Winah Securities S.A. Loan Payable $26,896,243
Avenida Del Pacifico Y
Avenida Paseo Del Mar
Costa Del Este MMG Tower
Piso 23, Ciudad De Panama, 0801
Panama
Attn: Esteban Ordano
Title: Attorney in Fact
Tel: 415-316-3327
Email: eordano@winah.dev
30. On File Loan Payable $26,176,466
31. Levity & Love, LLC Loan Payable $25,534,533
1622 West James Place
#2F07
Kent, WA 98032
United States
Attn: Jon Collins-Black
Title: Owner
Tel: 323-573-2825
Email: levitylovellc@gmail.co
32. On File Loan Payable $21,622,568
33. Caramila Capital Loan Payable $21,561,663
Management LLC
157 Columbus Ave
Fl 4
New York, NY 10023
United States
Attn: Marko Simovic
Tel: 1-631-334-0396
Email: markobarko@gmail.co
34. On File Loan Payable $20,645,334
35. On File Loan Payable $20,152,817
36. Big Time Studios Ltd. Loan Payable $20,000,000
Cayman Fiduciary Limited
64 Earth Close
3rd Floor, Landmark Square
Grand Cayman, KY1-9006
Cayman Islands
Attn: Ari Meilich
Title: CEO
Tel: 917-257-4219
Email: arimeilich@gmail.co
37. Cumberland DRW LLC Collateral Payable $18,720,061
540 W. Madison Street
Suite 2500
Chicago, IL 60661
United States
Attn: Chris Zeuhlke
Title: Global Head
Tel: 847-891-9583
Email: czeuhlke@drw.com
38. On File Loan Payable $17,463,057
39. On File Loan Payable $17,246,080
40. On File Loan Payable $15,445,729
41. Coinhouse Loan Payable $14,857,000
14 Avenue De L'Opera
Paris, 75002
France
Attn: Nicolas Louvet
Title: CEO
Tel: +330-153009260
Email: nicolas@coinhouse.com
42. Stellar Development Foundation Loan Payable $13,187,008
292 Ivy Street
Unit e
San Francisco, CA 94102
United States
Attn: Denelle Dixon
Title: CEO
Tel: 408-431-6919
Email: denelle@stellar.org
43. On File Loan Payable $13,127,878
44. Bayhawk Fund LLC Loan Payable $12,562,500
One Penn Plaza
Suite 5320
New York, NY 10119
United States
Attn: Gregory Racz
Title: President
Tel: 1-212-356-6102
Email: gracz@mgginv.com
45. On File Loan Payable $11,292,345
46. On File Loan Payable $10,905,742
47. On File Loan Payable $10,369,828
48. The Badger Technology Loan Payable $10,245,821
Company Holdings, Limited
Campbells Corporate Services Limited
Willow House Floor 4
Cricket Square
Grand Cayman, KY19010
Cayman Islands
Attn: Sonia Garica
Tel: +52 556382 8572
Email: banking_gibraltar@bitso.com
49. Valour, Inc. Collateral Payable $10,239,290
65 Queen Street W
Toronto, ON M5H 2M5
Canada
Attn: Olivier Roussy Newton
Title: CEO
Tel: +114168612269
Email: olivier@btq.li
50. Schnutz Investments LP Loan Payable $10,148,492
Rua Marcos Lopes 233
Apto 162
Vila Nova Conceicao
Sao Paulo, 04513-080
Brazil
Attn: Maria Teresa Felix
Title: Analyst
Tel: 1-917-672-3311
Email: maria.felix@sierracap.com
===============
C O L O M B I A
===============
COLOMBIA: S&P Affirms 'BB+' Foreign Curr. Sovereign Credit Ratings
------------------------------------------------------------------
S&P Global Ratings, on Jan. 20, 2023, affirmed its 'BB+' long-term
foreign currency and 'BBB-' long-term local currency sovereign
credit ratings on Colombia. The outlook on its long-term ratings
remains stable. S&P also affirmed its 'B' short-term foreign
currency and 'A-3' short-term local currency ratings.
Outlook
S&P said, "The stable outlook indicates our expectation that fiscal
adjustment and continued economic growth over the next two to three
years will stabilize net general government at just below 60% of
GDP and curtail recent large current account deficits (CADs).
Moreover, we expect broad continuity in fiscal, monetary, and
pro-growth economic policies as the administration of President
Gustavo Petro implements its ambitious social reforms."
Downside scenario
S&P said, "We could downgrade Colombia during the next two years if
economic growth is below our expectations, potentially indicating
less economic resilience or weaker investor confidence that affects
private investment. We could also lower the rating if unexpected
fiscal slippage contributes to a higher sovereign debt burden or if
persistently large CADs worsen its already weak external profile."
Upside scenario
S&P said, "Conversely, we could upgrade Colombia during the next
12-24 months if economic growth is consistently and significantly
faster than expected, coupled with policy steps that improve the
sovereign's financial profile. A larger and more diverse export
sector, helping to reduce external vulnerability and strengthen
economic resilience, could improve Colombia's weak external
profile. That, along with smaller fiscal deficits that strengthen
public finances by containing the annual growth of the general
government's debt burden, could lead to an upgrade."
Rationale
S&P said, "Our ratings on Colombia are based on its stable
democracy and political institutions, which have sustained
predictable economic policies for many years, despite several
economic shocks. They also incorporate monetary policy flexibility
based on inflation targeting and a flexible exchange rate, which
remain key economic buffers against external shocks. Our ratings
are constrained by a weak external profile, reflecting high
external debt and volatile terms of trade, and by the sovereign's
limited fiscal flexibility."
Institutional and economic profile: Pragmatic and predictable
economic policies are likely to continue
-- The election last year of a center-left president heralds
important changes in social policies to address deep-seated
inequalities.
-- The recent approval of a tax reform to garner more resources to
fulfill ambitious social policy goals indicates pragmatism in
fiscal policy.
-- GDP growth will decelerate in 2023 after two years of rapid
expansion.
Colombia's stable democracy, separation of powers, independent
judiciary, and checks and balances are likely to sustain pragmatic
and predictable economic policies following a change in government
in 2022. The election of center-left candidate Gustavo Petro as
president, in a country that has long been governed by centrist or
conservative leaders, reflects strong antiestablishment sentiment
among substantial segments of the population. President Petro, a
former mayor of Bogota, has formed a coalition with centrist and
conservative parties in Congress to gain a majority, as his own
party has a minority presence in the chamber. The need to negotiate
with coalition partners will likely encourage the administration to
seek compromise to pass new laws.
The government began its term by passing a tax reform to garner
more resources to improve social services (especially health and
pensions), reduce poverty and inequality, combat climate change,
and integrate segments of society that have traditionally been
marginalized. President Petro will propose pension, labor, and
energy reform in 2023. Energy reform is likely to respect existing
contracts with firms operating in the hydrocarbon sector.
The change in government, along with economic recovery, has lowered
social tensions after massive public protests in 2021. However,
failure to meet expectations of change could weaken President
Petro's public standing and hurt economic policy (especially
government spending). Similarly, domestic investor confidence may
decline if there is persistent uncertainty or deeper concerns about
the Petro administration's economic policies.
The Colombian economy recovered rapidly from the pandemic, with GDP
growth around 8% in 2022, helped by the removal of pandemic
restrictions, favorable export prices for oil and mining, and
active fiscal policy. Growth is likely to drop toward 1% in 2023,
in large part because of higher interest rates and, perhaps, lower
oil prices. S&P expects growth to return to Colombia's trend rate
of just above 3% in the following couple of years.
Colombia's long-term growth prospects depend largely on
accelerating the development of infrastructure to reduce costs and
spur diversification of exports. They also depend on managing the
transition from hydrocarbon production toward renewable energy.
Hydrocarbons are about 40% of exports, 20% of foreign direct
investment (FDI), and 10%-20% of government revenues, highlighting
their contribution to the economy.
Colombia is exposed to the adverse effects of climate change
(especially flooding) despite having more than half its land
covered by forests and over 70% of electricity generation from
hydropower. More than 80% of its population and economic activity
is in about 20% of its land and is vulnerable to natural disasters.
Illegal mining and unauthorized cattle ranching contribute to
deforestation in some parts of the country, where law enforcement
is weak.
Flexibility and performance profile: Fiscal adjustment will
stabilize public finances in the coming two years
-- Active fiscal policy during the pandemic led to net general
government debt approaching 57% of GDP from 43% in 2019.
-- Colombia's fiscal challenge is likely to be in 2024 or later,
reflecting the risk of potential shortfalls in revenues due to
lower commodity prices.
-- Tighter monetary policy will likely bring inflation back within
the central bank's target range in 2024.
Active fiscal policy--with general government deficits averaging 7%
of GDP during 2020-2022--contributed to a rapid economic recovery
but also boosted the sovereign debt burden. Net general government
debt approached 57% of GDP in 2022 from 43% in 2019. The general
government deficit (S&P Global Ratings includes the central bank,
local and regional governments, social security, a fuel price
stabilization fund, and a deposit guarantee fund) was likely around
6% of GDP in 2022. The fuel price stabilization fund (FEPC in its
Spanish acronym) incurred a deficit of around 1.3% of GDP in 2022,
as the government subsidized retail fuel prices.
The general government deficit is likely to decline toward 4% of
GDP in 2023, thanks to rapid growth in revenues from the 2022 tax
reform and an earlier 2021 tax reform, and from a higher
contribution from Ecopetrol, the largely government-owned energy
company. The government will likely allocate much of the higher
revenues in 2023 to social spending (pensions, health, and other
social services).
Colombia faces a bigger fiscal hurdle in 2024 or later from
potential shortfalls in revenues due to lower commodity prices. The
2022 tax reform targets around 1.3% of GDP in added revenues but
could yield less money if collections from commodity sectors of the
economy decline. Nevertheless, S&P expects that fiscal adjustment
over the next two to three years will stabilize the net debt burden
below 60% of GDP and limit the annual increase in net general
government debt to around 4% of GDP during 2023–2025. Interest
spending spiked above 15% of general government revenues in 2022
but is likely to stabilize in 2023 and decline toward 12%-13% of
revenues in future years.
S&P said, "We assess the sovereign's contingent liabilities as
limited. Our assessment of Colombia's financial system, with assets
at 70% of GDP, is based on a Banking Industry Country Risk
Assessment of '6'. (Our BICRA groups are on a scale from 1-10, with
'1' denoting the lowest risk and '10' the highest risk.)" The
banking system has an average capitalization above 17% of
risk-weighted assets. Reported nonperforming loans are 2.5% of
total loans, and the "portfolio at risk" category loans (which
include loans reprogrammed during the pandemic) are around 5.6%.
Other contingent liabilities (from court orders for compensation,
public-private partnerships, natural disasters, and other sources)
are below 10% of GDP.
Colombia's CAD contributes to a weak international investment
position. The CAD likely exceeded 6% of GDP in 2022, underpinned by
a trade deficit around 4% of GDP. The deficit in primary services,
resulting from record outflows of dividends and profits, exceeds 5%
of GDP (compared with around 2% of GDP in 2020), bigger than a 3.6%
of GDP surplus in current transfers (mainly remittances). Colombia
has had limited success in expanding nontraditional exports, with
oil and coal accounting for around half of total exports over the
past decade. The CAD may shrink toward 4% of GDP in 2023 as the
economy decelerates. The recent depreciation of the peso will boost
nontraditional exports and tourism inflows while net FDI is likely
to fund most of the CAD in the coming years.
As a result, S&P forecasts Colombia's narrow net external debt to
remain around 140% of current account receipts (CAR) and its gross
external financing needs just below 100% of CAR and usable reserves
during 2022-2025. The availability of a flexible credit line from
the IMF of US$9.8 billion supports Colombia's external liquidity.
Colombia's central bank continues to adhere to its long-standing
policy of targeting inflation and letting the currency float
freely. Inflation exceeded 10% in 2022 and will likely dip below 7%
in 2023, above the bank's target of 3% plus/minus 1%. Inflation is
likely to hover around 3%-4% in 2024. Recent tightening of monetary
policy has helped to keep long-term inflation expectations largely
anchored within the central bank's target range.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
RATINGS AFFIRMED
COLOMBIA
Sovereign Credit Rating
Foreign Currency BB+/Stable/B
Local Currency BBB-/Stable/A-3
Transfer & Convertibility Assessment
Local Currency BBB
COLOMBIA
Senior Unsecured BB+
Senior Unsecured BBB-
===========
G U Y A N A
===========
GUYANA: To Invest in Broiler Facility to Reduce Importing Eggs
--------------------------------------------------------------
RJR News reports that the Guyana government says it will invest in
a broiler breeder facility this year to bolster the poultry
industry as part of its efforts to reduce dependency on the
importation of hatching eggs.
The government said the facility will greatly aid poultry
production since Guyana is importing approximately 52 million eggs
each year at an estimated cost of GYD$350 million, according to RJR
News.
The move is in keeping with the government's commitment to ensure
food security and increase agricultural production in line with its
goal to reduce the CARICOM food import bill by 25 per cent by 2025,
the report notes.
=============
J A M A I C A
=============
[*] JAMAICA: More Locals Optimistic About Business in 2022
----------------------------------------------------------
RJR News reports that more Jamaicans were optimistic about current
business and job conditions in 2022 than they were in 2021.
The negative views of current business conditions fell by four
percentage points in 2022, according to RJR News.
Business confidence was however up by 3.3 percentage points, the
report notes.
Pollster Don Anderson says in 2021, 12 per cent of those
interviewed believed that current business conditions were good,
the report relays.
That number increased to 15.3 per cent in 2022, the report
discloses.
Current job conditions have also improved, the report says.
In 2021, five per cent of consumers interviewed felt that jobs were
plentiful. That moved up to 11 per cent in 2022, the report notes.
Additionally, 60 per cent of people interviewed in 2021 felt that
jobs were in short supply, but that fell to 46 per cent in 2022,
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.
===========
M E X I C O
===========
MEXARREND SAPI: S&P Cuts ICR to 'D' on Failure to Make Debt Payment
-------------------------------------------------------------------
S&P Global Ratings, on Jan. 20, 2023, lowered its long-term global
scale issuer credit rating on Mexico-based nonbank financial
institution (NBFI), Mexarrend S.A.P.I. de C.V. to 'D' from 'CC'.
S&P also lowered its national scale rating to 'D/D' from
'mxCC/mxC'. At the same time, S&P kept its 'CC' issue-level rating
on the lender's international senior unsecured notes on CreditWatch
negative.
S&P said, "We lowered the issuer credit rating to 'D' after the
lender didn't pay principal and interest of about MXN85 million on
its short-term notes due Jan. 19, 2023, issued in the Mexican debt
market. Additionally, the rating on the lender's international
senior unsecured notes remains at 'CC' on CreditWatch Negative. We
believe this action results in a general default, given Mexarrend's
announcement that it won't pay its financial obligations as they
come due.
"Mexarrend announced that it won't honor its upcoming financial
obligations and won't make the interest payment on its 2024 senior
unsecured notes on January 24. Based on the company's announcement,
we don't expect these interest payments to occur within the
applicable grace periods. The company will initiate conversation
with the short-term debtholders and senior bondholders to address
liquidity constraints."
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Risk management, culture, and oversight
-- Transparency and reporting
S&P considers that the recent announcement about accounting errors
reflects governance deficiencies.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Food Prices Jump 13.80% in November
------------------------------------------------------
Trinidad Express reports that prices of food and non-alcoholic
beverages in Trinidad and Tobago jumped by 13.80 per cent on
average between November 2021 and November 2022, data released by
the Central Statistical Office (CSO) revealed.
And, according to the CSO data, prices of food and non-alcoholic
beverages were 20.77 per cent higher on average in November 2022
than in November 2020, according to Trinidad Express.
The methodology used by the CSO gives food and non-alcoholic
beverages a 17.3 per cent weight in its All Items Index, the report
notes.
The All Items Index - which measures all of the items used by the
CSO in coming up with the monthly inflation number- was 8.01 per
cent higher in November 2022 than in November 2021, the report
relays.
Prices last November were 11.95 per cent higher than in November
2020, the report discloses.
Apart from the double-digit rise in food prices, the two main
contributors to the 8.01 per cent increase in the All Items Index
for the period November 2021 to November 2022 were transport and
homeownership, the report says.
According to the CSO data, the cost of transportation in November
2022 was 14.62 per cent higher than in November 2021, the report
discloses. Between November 2020 and November 2021, the cost of
transport increased by 3.08 per cent, the report relays. Transport
costs contribute 14.71 per cent of the All-Items Index, the report
notes.
The category of housing, water, electricity, gas and other fuels
was 4.98 per cent higher in November 2022 than in November 2021,
the report relays. That category contributes 27.5 per cent of the
All-Items Index, the report notes. Home ownership prices were 4.98
per cent higher in November 2022 than in November 2021, the report
discloses. The category of housing, water, electricity, gas and
other fuels contributes a total of 27.5 per cent to the All-Items
Index and is the largest single category, the report relays.
In a news release, the CSO said the inflation rate for November
2022 - measured as the percentage change in the average All Items
Index for the period January to November 2022/January to November
2021) was 5.6 per cent, the report discloses.
This represents an increase from 5.3 per cent which was recorded in
the previous period (January to October 2022/January to October
2021), the report relays. The Inflation Rate for the comparative
period (January to November 2021/January to November 2020) was 1.9
per cent, according to the CSO, the report says.
The national statistical agency also indicated that prices did not
change very much between October and November 2022, the report
notes.
The All Items Index of Retail Prices calculated from the prices
collected for the month of November 2022 was 122.7, representing an
increase of 0.2 points or 0.2 per cent above the Index (All Items)
for October 2022, the report discloses.
The Index for Food and Non-Alcoholic Beverages increased from 144.5
in October 2022 to 145.9 in November 2022, reflecting an increase
of 1.0 per cent, the report relates.
"Contributing significantly to this increase was the general upward
movement in the prices of chilled or frozen beef; fresh beef;
chilled or frozen pork; melongene; carrots; cucumber; pumpkin;
onions; green (sweet) pepper and cabbage, the report notes.
"However, the full impact of these price increases was offset by
the general decreases in the prices of tomatoes; ochroes; powdered
milk-full cream; garlic; oranges; steak-fresh; shrimp-fresh; salted
pig tail; Irish potatoes and crab— fresh," according to the CSO,
the report adds.
TRINIDAD & TOBAGO: Retail Industry is Dying But Not Dead
--------------------------------------------------------
Kimoy Leon Sing at Trinidad Express reports that online sales
around the world soared throughout the pandemic. This led to some
physical stores closing their doors, some indefinitely, according
to the report. Popular cineplexes like MovieTowne closed its
Chaguanas facility as more people turned to the Internet, for
streaming services like Netflix or for education, the report
notes.
Omar Hadeed, president of the Trinidad and Tobago Retailers
Association, told Express Business: "The rapid digitization of
commerce is completely altering, rather than overtaking, the role
of the physical store, and we need new ways of quantifying its
influence," the report relays.
Hadeed said: "The economic consequences of the pandemic had an
unnerving echo throughout all industries with challenges never
before experienced in a modern economy as large sections of the
country shut down, the report notes.
"Brick-and-mortar retail was of course hugely affected by this, but
in truth, was already facing severe competition from e-commerce
sales before. For the most part, local retailers stepped up out of
survival to improve their online platforms and offer omni-channel
service. This has allowed them to serve newer channels to which
they can offer their customers," the report discloses.
Despite competition from international e-commerce behemoths like
Amazon that serve millions of customers online in any part of the
world, local brick-and-mortar retail is demonstrating a surprising
level of resistance post-pandemic as online sales growth has slowed
and physical shopping is once more on the rise, Hadeed said, the
report relays.
"Local online shopping is still in its infancy stage and will take
many more years to be able to compete with international
competitors. While society has definitely become more
technologically driven, the Government will have to play a very
important role in regard to 'digital transformation' that will
allow the facilitation of this educational and experimental growth
to truly compete on a global level," he added.
Hopeful in Chaguanas
According to Richie Sookhai, president of the Chaguanas Chamber of
Industry and Commerce, the retail sector is down but not out
entirely, the report notes.
"Over the past ten years, the retail scene has changed
significantly, and it changed even more during and after the
pandemic, when we saw an increase in Internet purchasing and many
brick-and-mortar establishments were unable to operate," the report
discloses.
Sookhai said in the aftermath of the pandemic, many companies in
the Chaguanas area had become more resilient by focusing on items
that people could not easily get online, the report relays. He
said retailers have been forced to create competitive price points
to entice customers to purchase goods produced locally, the report
relays.
"Given that we have so many constraints with foreign exchange and
all the other bureaucracies where global supply chains have been
crashing, our local retailers have tried to concentrate on
different niches which will help give them a competitive advantage.
Some areas of interest include greater customer service and
providing a seamless shopping experience that will encourage people
to come to their physical stores," said Sookhai, the report notes.
During the Christmas season, sales were down, sharply compared to
before the Covid-19 pandemic, he said, adding that there is more
activity going forward, the report says.
While overall digital transformation of the economic landscape
stirs hope, many store owners believe the local retail industry has
not been the same since the pandemic, the report discloses.
Express Business visited retailers in Chaguanas, who said the lack
of foot traffic at the malls in the area is a good indication that
sales are down, the report relays.
A supervisor at Phone Mart in Chaguanas, Sanjay Beharry, said as a
tech company, they gets consistent sales, the report relays.
"With everyone going online and wanting to upgrade their
technology, we have seen some growth, but nowhere near the level we
saw pre-pandemic," said Beharry, the report notes.
Located inside Centre City Mall in Chaguanas, the manager of Meg
Enterprises Limited, Rupatie Maharaj, said, "I saw things pick up
slightly during the Christmas period, but overall sales have been
slow. People are really only looking to buy essential items for
their children or household," the report discloses.
Carlene Ho, a sales clerk at Stephenson's store in Centre City
Mall, said, "The retail industry in Trinidad and Tobago is dying.
People are not shopping as much as they did before. The malls are
empty. The cost of living is going up, and some people don't have
jobs, so they are just struggling to make ends meet. While many
people rushed during the pandemic to stock up on food items, it is
not the case now. Some can barely make groceries from month to
month," the report discloses.
Sando Retailers
Some storeowners along High Street in San Fernando told Express
Business that the local retail industry is definitely sluggish but
not dead, the report notes.
"There is no doubt people are watching how much they are spending.
People are becoming more thrifty as they look for bargains to
stretch their money," said Shakeem Harikissoon at Jay's City Mart
in San Fernando, the report discloses.
While Harikissoon can see the retail industry in Trinidad and
Tobago bouncing back to pre-pandemic levels, he said it will take a
lot of work by everyone, especially the Government, to find
innovative ways to further stimulate growth in the industry, the
report says.
Similar sentiments were echoed by the owner of Artist World in San
Fernando, who did not wish to give his name. He said that while
the economy is far from normal, the local retail industry is slowly
picking up, the report relays.
"I was surprised to see a slight increase during the Christmas
season. Recovery is slow, but the retail industry in Trinidad and
Tobago is not dead. I am seeing things pick back up, but the road
to recovery is a slow one," he added.
The manager of Home Land Furnishings on High Street in San Fernando
also expressed similar sentiments, the report relays.
Going by her first name, Marjorie said, "The pandemic had a
significant impact on the industry, and it will take a long time
for it to fully recover. People just don't have as much disposable
income as before," the report adds.
*********
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