/raid1/www/Hosts/bankrupt/TCRLA_Public/230209.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, February 9, 2023, Vol. 24, No. 30
Headlines
A R G E N T I N A
ARGENTINA: Averaged a 30% Yearly Inflation for Past Two Decades
BLOCKFI INC: Gets Court Okay to Auction Mining Assets
B R A Z I L
AMERICANAS SA: Brazilian Court Orders Seizure of Emails
LIGHT SA: Moody's Cuts CFR to B3, On Review for Further Downgrade
OI SA: Seeks Creditor Protection Ahead of Debt Payments
C A Y M A N I S L A N D S
TOURADJI PRIVATE: Chapter 15 Case Summary
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Inflation Affects 100% Income of The Poor
G U A T E M A L A
BANCO G&T: S&P Affirms 'BB-/B' ICRs on Business Stability
V E N E Z U E L A
PETROLEOS DE VENEZUELA: Venezuela Tightens Oil Prepayment Rules
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A R G E N T I N A
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ARGENTINA: Averaged a 30% Yearly Inflation for Past Two Decades
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Buenos Aires Times reports that a new report has calculated that
Argentina's average annual inflation between 2003 and 2022 was 30
percent, within a scenario where public spending tops revenue by 11
percent on average.
The study by the IDESA (Instituto para el Desarrollo Social
Argentino) private consultancy firm links the phenomenon of
inflation to instability experienced following the exit from
convertibility some two decades ago, according to Buenos Aires
Times.
The work points out that during that period the various governments
on average increased the money supply by 34 percent every year, the
report notes.
"These data show that over the last two decades the national public
sector covered less than 90 percent of its spending with genuine
revenues, thus explaining the excesses of debt and money printed,"
said the report's authors, the report relays.
IDESA maintains: "Without ignoring that inflation is a multi-causal
phenomenon, the chronic fiscal deficits oblige pesos to be printed
beyond public demand, thus leading to high inflation," the report
discloses.
"The current situation (with revenues only covering 80 percent of
spending and money printed along with three-digit inflation) is the
extreme manifestation of a process beginning soon after
convertibility imploded in 2002 with consistent deterioration in
the last 20 years," indicates the consultancy firm, headed by the
economist Jorge Colina, ther eport notes.
The report continues: "The key to explaining this process of
decadence is a disorganised state," explaining that in turn with "a
disordered pension system and overlapping taxes and spending among
the three levels of government, compounded by the lack of a
professional civil service," the report relays.
This phenomenon, says IDESA, leads to the state automatically
tending "to spend constantly beyond its means and administering
that spending very badly," the report notes.
"The problem with these state flaws is not only excess spending but
the loss of socio-economic productivity provoked by bad
public-sector intervention. This ends up destroying the currency,"
concludes the study, 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.
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.
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.
Fitch Ratings, on the other hand, downgraded in October 2022
Argentina's Long-Term Foreign-Currency (FC) and Local-Currency (LC)
Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrade
reflects deep macroeconomic imbalances and a highly constrained
external liquidity position, which Fitch expects to increasingly
undermine repayment capacity as foreign-currency debt service ramps
up in the coming years.
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS 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.
BLOCKFI INC: Gets Court Okay to Auction Mining Assets
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Mrinalini Krishna of Investopedia reports that BlockFi, the crypto
lender that declared bankruptcy after the failure of FTX, won
approval from a New Jersey bankruptcy court to start auctioning its
cryptocurrency mining assets -- and says it has suitors seeking to
buy all or part of the company.
The firm said in a filing earlier January that it had approached
106 potential buyers to sell a part or all of its business.
According to BlockFi's petition, it aims to receive buyer bids by
Feb. 20, 2023, and complete the auction a week later. The company
will then file the motion of sale for any deal it reaches before
the court by March 1, 2023.
"We've received substantial interest in the market for bidding
purposes," BlockFi's lawyer, Francis Petrie, said during a hearing,
according to Bloomberg.
In its Chapter 11 bankruptcy filing in November 2022, BlockFi said
its assets and liabilities were in the range of $1 billion to $10
billion and that it owed money to more than 100,000 creditors.
Court documents show BlockFi owes FTX $275 million, making the
embattled crypto exchange BlockFi's second-largest creditor.
The crypto-lender had been struggling even before the collapse of
FTX. In July 2022, FTX extended a $400 million line of credit to
BlockFi.
The sudden drop in cryptocurrency prices caused a liquidity crunch
for BlockFi.
BlockFi's relationship with FTX is complicated. According to CNBC,
BlockFi has up to $1.2 billion of assets stuck with FTX and its
associated entities. Once FTX went belly up last November 2022,
BlockFi was forced to suspend activity and client withdrawals. As
a part of the bankruptcy proceedings, BlockFi asked the courts to
allow withdrawals for some customers in December 2022.
About BlockFi Inc.
BlockFi is building a bridge between digital assets and
traditional
financial and wealth management products to advance the overall
digital asset ecosystem for individual and institutional
investors.
BlockFi was founded in 2017 by Zac Prince and Flori Marquez and in
its early days had backing from influential Wall Street investors
like Mike Novogratz and, later on, Valar Ventures, a Peter
Thiel-backed venture fund as well as Winklevoss Capital, among
others. BlockFi made waves in 2019 when it began providing
interest-bearing accounts with returns paid in Bitcoin and Ether,
with its program attracting millions of dollars in deposits right
away.
BlockFi grew during the pandemic years and had offices in New York,
New Jersey, Singapore, Poland and Argentina.
BlockFi worked with FTX US after it took an $80 million hit from
the bad debt of crypto hedge fund Three Arrows Capital, which
imploded after the TerraUSD stablecoin wipeout in May 2022.
BlockFi had significant exposure to the companies founded by former
FTX Chief Executive Officer Sam Bankman-Fried. BlockFi received a
$400 million credit line from FTX US in an agreement that also gave
FTX the option to acquire BlockFi through a bailout orchestrated by
Bankman-Fried over the summer. BlockFi also had collateralized
loans to Alameda Research, the trading firm co-founded by
Bankman-Fried.
BlockFi is the latest crypto firm to seek bankruptcy amid a
prolonged slump in digital asset prices. Lenders Celsius Network
LLC and Voyager Digital Holdings Inc. also filed for court
protection this year. Kirkland & Ellis is also advising Celsius and
Voyager in their separate Chapter 11 cases.
BlockFi Inc. and eight affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No. 22-19361) on
Nov. 28, 2022. In the petitions signed by their chief executive
officer, Zachary Prince, the Debtors reported $1 billion to $10
billion in both assets and liabilities.
Judge Michael B. Kaplan oversees the cases.
The Debtors taped Kirkland & Ellis and Haynes and Boone, LLP as
general bankruptcy counsels; Walkers (Bermuda) Limited as special
Bermuda counsel; Cole Schotz, P.C., as local counsel; Berkeley
Research Group, LLC as financial advisor; Moelis & Company as
investment banker; and Street Advisory Group, LLC as strategic and
communications advisor. Kroll Restructuring Administration, LLC is
the notice and claims agent.
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B R A Z I L
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AMERICANAS SA: Brazilian Court Orders Seizure of Emails
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globalinsolvency.com, citing Reuters, reports that a Brazilian
court has ordered the seizure of all corporate emails of managers
and board members from bankrupt retailer Americanas SA sent and
received over the last 10 years, according to documents.
Judge Andrea Palma of federal court in Sao Paulo earlier agreed
with a request from Americanas creditor Banco Bradesco SA asking
for the seizure of the emails, citing its belief that "directors,
board members, shareholders and auditors allowed a giant accounting
fraud to happen," according to globalinsolvency.com.
Bradesco in an affidavit said it has loans of 4.7 billion reais
(US$927 million) with the retailer, which filed for bankruptcy
protection earlier this month, days after disclosing nearly $4
billion in accounting inconsistencies, the report notes.
Bradesco said it was seeking evidence for potential litigation
against Americanas, its managers, and potentially its controlling
shareholders over "abuse of power," the report says.
Americanas' largest shareholders are the billionaire founders of 3G
Capital, Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel
Telles. Americanas said it will wait to be formally notified of the
decision to adopt the appropriate measures, the report notes.
Bradesco declined to comment.
About Americanas SA
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.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25,
2023. White & Case LLP, led by John K. Cunningham, is the U.S.
counsel.
LIGHT SA: Moody's Cuts CFR to B3, On Review for Further Downgrade
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Moody's Investors Service downgraded the corporate family rating of
Light S.A. (Light) and the issuer ratings and Backed Senior
Unsecured ratings of its operating subsidiaries Light Servicos de
Eletricidade S.A. (Light SESA) and Light Energia S.A. (Light
Energia) to B3 from Ba3. All ratings were placed under review for
further downgrade.
Downgrades:
Issuer: Light S.A.
Corporate Family Rating, Downgraded to B3 from Ba3; Placed
Under Review for further Downgrade
Issuer: Light Servicos De Eletricidade S.A.
Issuer Rating, Downgraded to B3 from Ba3; Placed Under
Review for further Downgrade
Backed Senior Unsecured Regular Bond/Debenture, Downgraded to
B3 from Ba3; Placed Under Review for further Downgrade
Issuer: Light Energia S.A.
Issuer: Light Servicos De Eletricidade S.A.
Issuer Rating, Downgraded to B3 from Ba3; Placed Under Review
for further Downgrade
Backed Senior Unsecured Regular Bond/Debenture, Downgraded to
B3 from Ba3; Placed Under Review for further Downgrade
Outlook Actions:
Issuer: Light S.A.
Outlook, Changed To Rating Under Review From Stable
Issuer: Light Servicos De Eletricidade S.A.
Outlook, Changed To Rating Under Review From Stable
Issuer: Light Energia S.A.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE
The downgrade of Light's ratings to B3 reflects the lack of
visibility into the company's financing strategy to address
upcoming debt maturities, amid tighter credit market conditions and
higher funding costs. The review for further downgrade follows
Light's announcement to the market On January 31, 2023, that it had
hired Laplace Financas consulting firm to explore possible
financial strategies in order to improve its capital structure. In
face of the unclear design of the company's financial strategy,
Moody's deems the safeguard of debtholders interest at a risk level
that is no longer consistent with a Ba3 rating.
Governance factors are highly relevant to this rating action, and
speak to the fact that Light is redefining its financial strategy
amid higher refinancing risks, which entail a higher probability of
debt renegotiation at unfavorable terms to its creditors. Over the
past few years, the company has also experienced above average
management turnover, blurring the predictability and stability of
its projections and delaying the execution risks of its business
strategy. As a consequence of the heightened governance risks
incorporated into Light's ratings, Moody's updated the governance
issuer profile score to highly negative (G-4) from moderately
negative (G-3), reflecting changes in the following factors:
financial strategy and risk management to highly negative (4) from
neutral-to-low (2), and management credibility and track record to
very negative (4) from moderately negative (3).
Light's liquidity position to support its debt service payments,
capital expenditure and working capital needs is tight for the year
2023. The cash and cash equivalents of R$4 billion reported as of
September 30, 2022, along with unencumbered receivables provide the
company some flexibility for eventual delays in the completion of
its financing strategy. Nonetheless, the amount of debt maturing
through mid-2024 will entail higher funding needs, at a time when
the local capital markets are experiencing high volatility and low
investor risk appetite, in face of the uncertainty on the terms and
conditions for the renewal of Light SESA's Rio de Janeiro
concession ending in June 2026.
During the review process, Moody's will consider eventual changes
in Light's financial policy and other initiatives to sustain an
adequate liquidity and improve its debt maturity profile, amid the
looming refinancing risks.
The next steps to the renewal of Light SESA's concession contract,
ending in June 2026, is also a key credit consideration for the
review process, because higher visibility into the economic terms
and conditions of the concession would support an improvement in
investor confidence with a long term view on the company's future
cash flows to sustainably cover operating, investment and debt
service needs.
The B3 ratings continue to recognize the overall supportive
regulatory framework for electric utilities in Brazil, as
illustrated by the consistent annual tariff adjustments for Light
SESA, including some consideration for the social and economic
specificities of its concession area and compensation mechanisms in
the event of contract termination, although not fully insulated
from political interference and material delays. The rating also
considers a gradual improvement in the company's operating
performance driven by its ongoing business turnaround initiatives.
The ratings assigned to Light SESA and Light Energia are in line
with the ratings assigned to its parent company, due to the
corporate guarantee provided by Light and the cross-default clauses
embedded in the debt issued within the group. Because of these
financial and structural linkages, Light SESA and Light Energia's
credit profile are best assessed through Light's consolidated
profile, as the holding company of the group.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings downgrade could result from the perception of a weakening
liquidity buffer to withstand Light's upcoming debt obligations,
such that its consolidated cash balance is not enough to cover the
debt payments over the next 18 months or the Free Cash Flow becomes
negative.
Ratings could be further downgraded if the company announces a debt
restructuring plan that entails losses for its outstanding senior
unsecured debtholders or with Moody's perception that the Light
SESA's Rio de Janeiro concession will not be renewed.
Alternatively, the outlook could return to stable with higher
visibility into Light's financial plans to improve its debt
amortization profile at reasonable costs, along with a clearer view
on the progress towards Light SESA's concession renewal.
RATINGS OUTLOOK
The rating is currently rating under review. During the review,
Moody's will focus on the company's liquidity position, on the
company's definition of its financial policy and on the evolution
of the negotiations of the renewal of Light SESA's concession of
Rio de Janeiro.
COMPANY PROFILE
Headquartered in Rio de Janeiro - Brazil, Light is an integrated
utility company with activities in generation, distribution and
commercialization of electricity. Light SESA and Light Energia are
wholly owned subsidiaries of Light. In the LTM ended in September
2022, Light reported consolidated net debt of BRL8.5 billion,
according to Moody's standard adjustments.
The principal methodology used in rating Light S.A., and Light
Servicos De Eletricidade S.A. was Regulated Electric and Gas
Utilities published in June 2017.
OI SA: Seeks Creditor Protection Ahead of Debt Payments
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globalinsolvency.com, citing Bloomberg News, reports that Oi SA,
the distressed Brazilian telecom operator, asked a court to shield
it from creditors ahead of a major debt payment, in what may lead
to a second bankruptcy protection process in seven years.
The company, which underwent one of the largest corporate
restructurings in Brazil's history - that began in 2016 and ended
just last year - said it needs urgent help to fend off creditors,
according to a filing to a Rio de Janeiro court seen by Bloomberg
News, according to globalinsolvency.com.
The company confirmed the request for a preliminary injunction, the
report notes. Oi said it currently has about 29 billion reais
($5.7 billion) of debt, with half denominated in dollars, the
report relays. With 600 million reais coming due on Feb. 5, the
company said recent negotiations with bondholders have failed to
yield an agreement and therefore it needs protection to prevent an
acceleration of its liabilities, the report adds.
About Oi SA
Headquartered in Rio de Janeiro, and operating almost exclusively
within Brazil, the Oi Group provides services like fixed-line data
transmission and network usage for phones, internet, and cable,
Wi-Fi hot-spots in public areas, and mobile phone and data
services, and employs approximately 142,000 direct and indirect
employees.
On June 20, 2016, pursuant to Brazilian Law No. 11.101/05 (the
'Brazilian Bankruptcy Law'), Oi S.A. and certain of its
subsidiaries filed for recuperao judicial (judicial reorganization)
in Brazil.
On June 21, 2016, OI SA and its affiliates Telemar Norte Leste S.A.
and Oi Brasil Holdings Cooperatief U.A. commenced Chapter 15
proceedings (Bankr. S.D.N.Y. Lead Case No. 16-11791). Ojas N.
Shah, as foreign representative, signed the petitions.
Coop and PTIF are also subject to proceedings in the Netherlands.
The Chapter 15 cases are assigned to Judge Sean H. Lane.
In the Chapter 15 cases, the Debtors are represented by John K.
Cunningham, Esq., and Mark P. Franke, Esq., at White & Case LLP, in
New York; and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq., and
Laura L. Femino, Esq., at White & Case LLP, in Miami, Florida.
On July 22, 2016, the New York Court recognized the Brazilian
Proceedings as foreign main proceedings with respect to the Chapter
15 Debtors, and granted certain additional related relief.
The company exited bankruptcy protection in December 2022.
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C A Y M A N I S L A N D S
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TOURADJI PRIVATE: Chapter 15 Case Summary
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Debtors: Touradji Private Equity Master Fund Ltd.
Touradji Private Equity Onshore Fund Ltd.
Touradji Private Equity Offshore Fund Ltd.
c/o Michael Pearson & Nicola Cowan
FFP Limited
10 Market Street
PO Box 769
Camana Bay
Grand Cayman, KY1-9006, Cayman Islands
Michael.pearson@ffp.ky
Nicola.cowan@ffp.ky
Business Description: The Debtors are three investment funds
incorporated and registered under the
laws of the Cayman Islands.
Foreign Proceeding: FSD Cause No. 244, 245, and 246 of 2022
(IKJ), Financial Svcs. Div, Grand Court
of Cayman Is.
Chapter 15 Petition Date: February 6, 2023
Court: United States Bankruptcy Court
Southern District of New York
Three affiliates that concurrently filed voluntary petitions for
relief under Chapter 15 of the Bankruptcy Code:
Debtor Case No.
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Touradji Private Equity Master Fund Ltd. 23-10172
Touradji Private Equity Onshore Fund Ltd. 23-10173
Touradji Private Equity Offshore Fund Ltd. 23-10174
Judge: Hon. Philip Bentley
Foreign Representatives: Michael Pearson and Nicola Cowan,
both of FFP Limited
2nd Floor, Harbour Centre,
159 Mary St., George Town
Grand Cayman
Foreign
Representatives'
Counsel: Katherine Rose Catanese, Esq.
FOLEY & LARDNER LLP
90 Park Avenue
New York NY 10016
Tel: (212) 338-3496
Email: kcatanese@foley.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of Touradji Private Equity Offshore's Chapter 15
petition is available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/ZCCILEY/Touradji_Private_Equity_Offshore__nysbke-23-10174__0001.0.pdf?mcid=tGE4TAMA
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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: Inflation Affects 100% Income of The Poor
-------------------------------------------------------------
Dominican Today reports that according to Fuerza del Pueblo
economist Daniel Toribio, inflation is the most severe tax on the
population.
According to the former Finance Minister, the inflation rate in the
last two years has been the highest in history, affecting the
poorest of citizens, Dominican Today relays.
"The poorest devote all their money to spend, the richest save part
of the money. As a result, inflation affects 100% of the poor's
income but only a percentage of the rich's income," he noted, the
report notes.
When asked how he sees 2023 for Dominicans, the former minister
stated that it will be a difficult year, the report relays. In an
interview with CDN, Despierta stated that many of the world's most
developed economies may experience stagnation, which will have an
impact on the Dominican Republic, the report discloses.
"Something that would seem to be good, but it is going to have a
negative impact, is that China will return to the markets as a
result of the elimination of the zero covid policy, the report
notes. By repealing the zero-covid policy, production demands and
growth in China may lead to increased demand for petroleum
products, implying that oil prices will remain high." He stated
that he understands that the authorities are in an optimistic
bubble and that the country's economic situation is slowing down,
the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican To related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'.The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also
affirmed its 'BB-' long-term foreign and local currency sovereign
credit ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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G U A T E M A L A
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BANCO G&T: S&P Affirms 'BB-/B' ICRs on Business Stability
---------------------------------------------------------
S&P Global Ratings affirmed its 'BB-/B' ICR on Banco G&T
Continental S.A. (Banco G&T). The outlook on the bank remains
positive.
The outlook on Banco G&T remains positive, mirroring that on
Guatemala, which constrains S&P's ratings on the bank. A potential
upgrade of Guatemala would result in a similar action on the bank.
Banco G&T's sound internal capital generation and the recent sale
of its subsidiaries in Costa Rica and El Salvador have improved the
banking parent's consolidated capitalization. S&P projects the
group's risk-adjusted capital (RAC) ratio will average 7.7% in the
next two years, which prompted S&P to revise its assessment of the
bank's capital and earnings to a stronger category.
S&P said, "We base our capital and earnings assessment on our
forecasted RAC ratio for Grupo Financiero G&T, which is the
ultimate parent that incorporates financial results of all of its
operating subsidiaries--including Banco G&T, the group's main
source of revenue. After the sale of subsidiaries outside of
Guatemala, Grupo Financiero G&T's capitalization increased due to
lower unconsolidated investment in financial institutions, which we
deduct from our Total Adjusted Capital (TAC) calculation. The
latter, along with solid internal capital generation that the bank
will deploy for credit growth, and our expectation of a focus on
the core business in Guatemala, which will strengthen results above
pre-pandemic levels, have prompted us to increase our projected RAC
ratio for the consolidated group above 7% for the next 12-24
months. This led to the revision of our capital and earnings
assessment to adequate from moderate. Finally, our stand-alone
credit profile (SACP) on Banco G&T remains unchanged at 'bb', given
that the adequate capital and earnings assessment has no ratings
impact.
"We believe Banco G&T's credit growth will continue recovering
while it maintains strict cost controls during the next 12-24
months. We forecast lending growth, along with diverse investments
and operating efficiencies in recent years, will enable the bank to
improve its operating results, and consequently, its capitalization
during the next two years. We forecast Banco G&T's return on
adjusted assets will rise to 1.3%-1.5% in the next 12-24 months.
"We forecast that Banco G&T will focus on continuing to strengthen
its large market share, nationwide footprint, and deposit funding
structure in Guatemala in the coming years, especially after the
sale of its subsidiaries in Costa Rica and El Salvador, and the
strategic consolidation of its operations in Panama last year.
Despite shrinking its presence in other Central American countries,
we expect Banco G&T to maintain its position as the third-largest
lender in Guatemala, in terms of assets and deposits, but with
higher profitability and healthier asset quality metrics than those
prior to the pandemic. In this regard, we assume that the bank's
solid position in the commercial lending segment and increased
participation in retail lending will enable it to continue
improving its operating performance and supporting its business
stability in 2023-2024. Additionally, we expect that Banco G&T's
asset quality metrics and funding sources will remain resilient
despite high inflation and economic uncertainty. We believe Banco
G&T's ample expertise in risk management will keep asset quality
indicators at manageable levels in the next couple of years."
ESG credit indicators: E-2, S-2, G-2
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V E N E Z U E L A
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PETROLEOS DE VENEZUELA: Venezuela Tightens Oil Prepayment Rules
---------------------------------------------------------------
Marianna Parraga of Reuters reports that Venezuela's state oil firm
Petroleos de Venezuela, S.A. (PDVSA) is toughening terms for buyers
after a month-long halt to most exports of crude and fuel,
demanding prepayment ahead of loadings in either cash, goods or
services, company documents showed.
PDVSA's new Chief Executive Pedro Tellechea put the move in place
in January, according to globalinsolvency.com.
It reinforces measures implemented last year after several buyers
skipped out on payments for oil, which provides most of the South
American country's income, the report notes.
After taking the helm, Tellechea launched an extensive audit of
supply contracts, according to a written order to PDVSA seen by
Reuters, the report relays.
His order froze loadings, even pushed some vessels away that had
begun receiving oil, until the review was complete and sale
contracts could be modified or ratified, according to internal
documents and three people familiar with the matter, the report
notes.
As of Jan. 27, a total of 28 vessels including 21 supertankers were
waiting near PDVSA's ports to load some 45 million barrels of crude
and fuel for exports. Another four ships had loaded but were
waiting for authorizations to depart, according to vessel
monitoring service TankerTrackers.com, the report adds.
According to Reuters, the new terms narrow a wide variety of
contract modalities to a few requiring prepayment of cargoes
entirely in cash or allowing payment via goods and services to
Venezuela, but they must be received before Venezuela will release
the oil, according to the documents.
PDVSA did not reply to a request for comment, Reuters relays.
'Solve' Economic Woes
PDVSA explained in a contract viewed by Reuters that cash
prepayment puts the company "in a favorable business position
because it would secure income for the country that is essential to
solve its economic situation."
The new models set deadlines of less than 30 days for completing
bank transfers or settling outstanding debt balances.
In cases of swaps where the related oil sale exceeds the value of
the goods or services, Venezuela must receive any outstanding
balance in kind before the state will assign the next cargo, one of
the documents showed.
Even long-term buyers must abide by the new rules that require
payment in full by cash before each oil delivery.
Reuters relates that so far in January, swap contracts with Cuba's
Cubametales and Iran's state firm Naftiran Intertrade Co (NICO)
were among the few in force.
A contract with Chevron Corp (CVX.N) for repaying debt was
unaffected, Reuters relays. PDVSA has continued to load
Chevron-chartered vessels and discharge imports from the U.S.
firm.
A similar contract to repay debt to China with oil has continued,
although the customer has faced more than 30 days of loading
delays, according to shipping documents and Refinitiv Eikon data.
Since the suspension was imposed in early January, only one of
PDVSA's list of new clients and intermediaries, Hangzhou Energy,
has been authorized to resume loading following a 12-month contract
extension agreed in late January, according to the documents and
one of the sources.
Other contracts are in the final review and should be authorized
soon, another source said, Reuters cites.
About PDVSA
Founded in 1976, Petroleos de Venezuela, S.A. (PDVSA) is the
Venezuelan state-owned oil and natural gas company, which engages
in exploration, production, refining and exporting oil as well as
exploration and production of natural gas. It employs around
70,000 people and reported $48 billion in revenues in 2016.
In May 2019, Moody's Investors Service withdrew all the ratings of
Petroleos de Venezuela, S.A. including the senior unsecured and
senior secured ratings due to insufficient information. At the
time of withdrawal, the ratings were C and the outlook was stable.
Citgo Petroleum Corporation (CITGO) is Venezuela's main foreign
asset. CITGO is majority-owned by PDVSA. CITGO is a United
States-based refiner, transporter and marketer of transportation
fuels, lubricants, petrochemicals and other industrial products.
However, CITGO formally cut ties with PDVSA at about February 2019
after U.S. sanctions were imposed on PDVSA. The sanctions are
designed to curb oil revenues to the administration of President
Nicolas Maduro and support for the Juan Guaido-headed party.
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