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/raid1/www/Hosts/bankrupt/TCRLA_Public/230220.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Monday, February 20, 2023, Vol. 24, No. 37 Headlines A R G E N T I N A YPF SA: Fitch Affirms LongTerm Issuer Default Ratings at 'CCC-' B A H A M A S FTX TRADING: Customers Sue Financiers For Giving 'Legitimacy' B R A Z I L AMERICANAS SA: Makes Offer to Creditors But No Deal Reached AMERICANAS SA: Taps Coelho Pereira as Chief Executive Officer C O L O M B I A FIDEICOMISO PA COSTERA: Fitch Affirms BB+ Rating on USD180MM Bonds D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Informality & Self-Employment Grow in Country J A M A I C A JAMAICA: Tourism Stakeholders Building Resilience, Says PM T R I N I D A D A N D T O B A G O TRINIDAD & TOBAGO: Still on EU Tax Blacklist X X X X X X X X [*] BOND PRICING: For the Week Feb. 13 to Feb. 17, 2023 - - - - - ================= A R G E N T I N A ================= YPF SA: Fitch Affirms LongTerm Issuer Default Ratings at 'CCC-' --------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDRs) of YPF S.A. at 'CCC-'. Fitch has also affirmed YPF's outstanding senior unsecured notes at 'CCC-'/'RR4'. Fitch maintains the standalone credit profile (SCP) at 'b'. YPF's ratings are in line with Fitch's "Government Related Entities Criteria." YPF is majority owned by the government and strategically important to the country. YPF's dominant market share in the supply of liquid fuels in Argentina, coupled with its large hydrocarbon production footprint in the country, could expose the company to government intervention through pricing policies or investment strategies. KEY RATING DRIVERS Links to Sovereign: YPF is closely linked to the Republic of Argentina due to its ownership structure, as well as recent government interventions. Argentina controls the company through its 51% stake, and provincial government officials serve on the company's board of directors. In addition, the republic sometimes governs the company's strategy and business decisions. The Argentine government has a history of significant interference in the oil and gas sector, particularly in intervening in the company's ability to implement its pricing policy for refined products. SCP of YPF is in the 'b' category, as is reflective of the issuer's weak coverage ratios and a production cost profile that is above average compared to peers in the region. Moderate Leverage; Tighter Coverage Ratios: YPF has maintained a moderate leverage profile. Fitch estimates YPF's total debt/EBITDA will be 1.2x in 2022 compared 1.9x in 2021 and increased to an average of 2.1x over the rated horizon. YPF's total debt/1P has materially improved. The company reported 1,143 mmboe in 2021, translating into a total debt to 1P of reserves of USD6.45boed in 2021 and an estimated USD5.86boe for 2022 for 1P reserves as reported in 2021. The company's leverage profile has been stable, but the company is challenged by limited pool and high cost of capital given the macroeconomic environment in Argentina and its intrusive capital controls. Fitch estimates YPF's EBITDA to interest expense will be 7.3x in 2022 and fall to an average 4.4x thereafter, which is consistent with the b rating category. Stable Production and High Cost Profile: Fitch's rating case assumes production will remain flat averaging 529,000boed over the rating horizon. Fitch estimates YPF's 2021 half-cycle costs of USD28.5boe and full-cycle cost of USD42.3boe, which are both high and above average for players in the region. The company's high cost is mostly attributed to higher than average lifting cost of USD11.1boe and high interest cost per barrel of USD8.0boe in 2021, which has improved from USD12.0boe in 2019. The company's full-cycle break-even implied prices were above weighted average realization prices for oil and gas, primarily as a result of decreasing domestic gas prices and high level of gas production, which accounted for approximately 55% of total production together with natural gas liquids during 2021. Crude oil production comprised 45%. Volatile Operating Environment: While the volatile economic environment in Argentina has made unconventional development in Vaca Muerta difficult, Argentina's limited USD reserves has incentivized the government to implement numerous policies to drive further investment in Vaca Muerta, most notably Plan Gas 4, which is designed to assure Argentina has adequate gas that is sourced domestically to avoid importing expensive liquid natural gas (LNG). YPF is well positioned to benefit for these policies that aim to shift Argentina from a net importer to a net exporter of crude and eventually of LNG. Nonetheless, the domestic economy is plagued high government debt to GDP ratio of 81% in 2022 and 2023, inflation that is estimated to reach nearly 100% in 2023, and low Real GDP growth of less than 0.5% for both 2023 and 2024, per Fitch's estimates. These factors make YPF and Argentine corporates highly exposed to economic disruption. Impact of Capital Controls: Argentina's central bank capital controls (A-7490) have been extended through 2023, with the possibility of yet another extension when the current one expires. The rule requires that all hard-currency debt maturities will need to refinance at least 60% of the outstanding debt in order to access the official foreign exchange market for up to 40% of the maturity, extending the maturities by at least two years. This ruling has negatively impacted multiple issuers, including YPF, leading to numerous Fitch defined Distressed Debt Exchanges. Argentine corporates with USD debt maturities remain highly exposed to refinancing risks, which are heightened by the capital controls. Approximately 92% of YPF's debt is international and USD3.3 billion maturing between 2023-2025. The company reported a healthy cash balance of USD1,108 billion that is trapped in Argentina, and YPF's ability to service its maturities is limited. DERIVATION SUMMARY YPF's linkage to the sovereign is similar in nature to its Latin American national oil companies peers, namely PEMEX (BB-/Stable), Petrobras (BB-/Stable) and Ecopetrol (BB+/Stable), and government-owned entities ENAP (A-/Stable) and Petroperu (BB+/RWN). These companies all have strong linkage to their respective sovereigns given their strategic importance to each country and the potentially significant negative social and financial implication a default could have at a national level. YPF's upstream business closest peers are Pemex, Petrobras and Ecopetrol. YPF's total 2021 production averaged 467,000boed, and the reserve life was 6.7 years, most comparable with Ecopetrol with a production of 679,000boed and a reserve life of 8.1 years in 2021, but less than Petrobras' production of 2.8 million boed and a reserve life of 9.8 years and Pemex's production at 2.5 million boed and a reserve life of 8.3 years. YPF has an adequate capital structure with gross leverage ratio defined as total debt/EBITDA of 1.9x in 2021 and total debt/1P of USD6.5 per boe compared with Ecopetrol at 1.4x and USD8.1 total debt/1P, Petrobras at 0.8x and USD3.6 per boe and Pemex at 14.6x and USD15.3 per boe. Unlike its peers ENAP, Petrobras, Pemex and Petroperu, YPF is not the sole provider of refined fuels in Argentina. In 2021, the company had a 54% market share. YPF is an integrated energy company, similar to Petrobras and Pemex, offering the company more financial flexibility, while ENAP is predominately a refining company that sells to marketers. Historically, YPF has operated autonomously with periodic controls of fuel prices and crude. Similar to Pemex and Petrobras, YPF has administered an import-parity pricing policy and other price controls to help tame inflation. YPF has successfully been able to tighten spread and recuperate losses realized during period of pricing freezes. When compared with downstream-focused entities ENAP and Petroperu, YPF leverage in 2021 level of 1.9x and 1.2x in 2022 is compares with ENAP at 5.5x and Petroperu at 26.9x. Petroperu's elevated leverage is explained by its investment plan to increase capacity by 2021, while ENAP has maintained a higher leverage profile for an extended period of time, but the company is highly strategic for the Chilean government, and thus its rating is aligned as a result. KEY ASSUMPTIONS - Average gross production of 529,000boe from 2021-2024; - Realized oil price of USD63.7/bbl in 2022 and an average of USD50/bbl thereafter; - Natural gas prices rise to USD3.51/MMBTU in 2022 and settle at USD3.50/MMBTU thereafter; - Average annual capex of roughly USD2.9 billion per year from 2022-2026; - Downstream sales volume follows Real GDP forecasts and YPF is a net purchaser of crude; - Effective tax rate of 25%; - Fitch ARS/USD forecasts for year average and end of period during 2021-2022; - No dividend payments over the rate horizon. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - The Foreign Currency IDR is linked to Argentina's sovereign rating, and an upgrade can only occur with an upgrade of Argentina's sovereign rating. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Argentina's sovereign rating is 'CCC-', the lowest level allowed under Fitch's sovereign criteria; therefore, a downgrade of Foreign and Local Currency IDRs would reflect Fitch's belief that a default of some kind appears probable, or a default or default-like process has begun for the company, represented by a 'CC' or 'C' rating. LIQUIDITY AND DEBT STRUCTURE Liquidity Vulnerable to Capital Controls: YPF reported USD1.4 billion in cash and cash equivalents in 3Q22. Per Fitch's estimates, this covers roughly 1.7x the company's interest expense. The company faces significant refinancing risk, heighten by the capital controls, with USD941 million in debt maturing in 2023 followed by USD967 million in 2024 and USD1,421 million in 2025. Fitch expects YPF will continue to roll over short term bank and trade financing debt over the rated horizon. ISSUER PROFILE YPF, S.A is the largest fully integrated energy company in Argentina. YPF participates in three segments: Upstream, Downstream and Gas and Power. The Upstream segment carries out all activities relating to the exploration, development and production of oil and natural gas. Upstream revenues are principally generated from the sale of oil to the Downstream segment, as well as the sale of produced natural gas to the Gas and Power segment. YPF's oil and gas production averaged approximately 504 kboe/d during 3Q2022, composed of 225 kbbl/d of oil (including condensates), 38kbbl/d of NGL and 38MM M3/d of natural gas. For YE 2021, the company reported proved reserves of 707 mm bbl of liquids and 463 mm boe of gas, which translates to 6.2 years of reserve life assuming 100% replacement rate in 2022. The Downstream operations include refining, marketing, transportation and distribution of oil and petroleum products, petroleum derivatives, petrochemicals, liquefied petroleum gas and bio-fuels. YPF sells 86% of its output domestically, while it exports the remaining 14%. YTD 9/22, the company refined 283 kbbl/d of oil, accounting for over 50% of Argentina's total refining capacity. The difference between oil production and oil refining is covered through domestic market purchases. YPF has the most gas stations in the country, and it has a 59.2% and 56.0% market share for diesel and gasoline sales, respectively. The Gas and Power business unit was created in March 2016 and is responsible for the marketing and distribution of natural gas to third parties and the company's downstream segment, as well as the generation of conventional and renewable energy. Residential users consume 40% of the natural gas output; the balance is split between industrial users (31%) and power plants (29%). YPF is controlled by the Argentine government through its majority stake of 51% since 2012. Until 1993, most of the company's predecessors were state-owned with operations dating back to the 1920's. Following privatization in that year, the Argentine government's equity stake was reduced from 100% to 20%. From 1999 until 2012, the company was controlled by Repsol until the May 2012 Expropriation Law was passed by the Argentine Congress. Following the government's expropriation of YPF's controlling stake previously held by Repsol, 51% of the company's share capital is held by the Argentine government. ESG CONSIDERATIONS YPF S.A. has an ESG Relevance Score of '4' for Governance Structure due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. YPF S.A. has an ESG Relevance Score of '4' for GHG Emissions & Air Quality due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. 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 ----------- ------ -------- ----- YPF S.A. LT IDR CCC- Affirmed CCC- LC LT IDR CCC- Affirmed CCC- senior unsecured LT CCC- Affirmed RR4 CCC- ============= B A H A M A S ============= FTX TRADING: Customers Sue Financiers For Giving 'Legitimacy' ------------------------------------------------------------- Jonathan Stempel at Reuters reports that former customers of Sam Bankman-Fried's FTX have sued three venture capital and private equity firms, accusing them in a proposed class action of fraudulently promoting the cryptocurrency exchange before it went bankrupt. According to a complaint filed in San Francisco federal court, Sequoia Capital, Thoma Bravo and Paradigm were "incentivized" in 2021 and 2022 to tout FTX by the more than $550 million they invested prior to its sudden collapse, the report notes. The customers said the defendants lent FTX an "air of legitimacy" by vouching that they had examined its operations -- with a Sequoia executive once saying "we did our homework" -- and found them "safe and secure" for cryptocurrency investors, according to Reuters. "Billions of dollars' worth of customer assets became a casualty of the greed of Bankman-Fried and of his co-conspirators, such as the defendants," the complaint said, the report notes. The lawsuit seeks unspecified damages for alleged violations of California consumer protection laws, as well as fraudulent inducement, intentional misrepresentation and civil conspiracy, the report relays. Earlier litigation accused celebrities like football quarterback Tom Brady, basketball guard Stephen Curry and actor Larry David of improperly inducing people to invest with FTX, the report discloses. Sequoia, Thoma Bravo and Paradigm did not immediately respond to requests for comment. Bankman-Fried is not a defendant. The 30-year-old son of Stanford Law School professors has pleaded not guilty to fraud and other charges for allegedly looting billions of dollars from FTX customers, the report relays. He is living with his parents as part of his $250 million bail package, the report notes. A Manhattan federal court hearing on whether to tighten bail is scheduled, after Bankman-Fried allegedly tried to communicate improperly with potential government witnesses, the report discloses. The case is Rabbitte v Sequoia Capital Operations LLC et al, U.S. District Court, Northern District of California, No. 23-00655. About FTX Trading Ltd. FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10 showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the pagehttps://cases.ra.kroll.com/FTX/Home-Index The official committee of unsecured creditors tapped Paul Hastings as bankruptcy counsel; Young Conaway Stargatt & Taylor, LLP as Delaware and conflicts counsel; FTI Consulting, Inc. as financial advisor; and Jefferies, LLC as investment banker. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. =========== B R A Z I L =========== AMERICANAS SA: Makes Offer to Creditors But No Deal Reached ----------------------------------------------------------- Reuters reports that Brazilian retailer Americanas SA failed to reach a deal on proposal to creditors that included a multi-billion-real capital injection by key shareholders as part of its bankruptcy process. Americanas, which has the billionaire trio that founded 3G Capital as reference shareholders, entered bankruptcy protection earlier this year after uncovering roughly $4 billion in "accounting inconsistencies," according to Reuters. The retailer said the offer presented to creditors by financial advisor Rothschild & Co included a capital increase of 7 billion reais (US$1.34 billion) backed by the trio formed by Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupura, the report relays. The proposal also included the repurchase of debt of about 12 billion reais and conversion of roughly 18 billion reais in debt to equity, Americanas added in a securities filing, while noting no deal had been reached, the report discloses. 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 billionaire 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. AMERICANAS SA: Taps Coelho Pereira as Chief Executive Officer ------------------------------------------------------------- globalinsolvency.com, citing Bloomberg News, reports that Brazilian retailer Americanas SA appointed its third Chief Executive Officer in six weeks as it looks to navigate the firm through bankruptcy and continue operations while negotiating a hefty debt load. The Americanas board named Leonardo Coelho Pereira to the top job at Americanas, according to a filing, according to globalinsolvency.com. He replaces Joao Guerra who will return to his duties as head of human resources, the report notes. Guerra had replaced Sergio Rial, who on Jan. 11 blew the whistle on what he called 20 billion reais ($3.8 billion) of "accounting inconsistencies" after less than two weeks on the job, the report relays. Pereira has been a partner at Alvarez & Marsal since 2011 working in restructurings and has experience as an executive in multinational companies in South America and Europe, Americanas said in the filing, the report discloses. He spent 12 years at Siemens AG, according to his LinkedIn profile, the report says. In addition, Vanessa Claro Lopes, an independent board member at Americanas who had been tapped to help lead an audit group to investigate the accounting issues, has left the committee and will remain on the board, the report relays. She'll be replaced on the committee by Antonio Luiz Pizarro Manso. Americanas sought bankruptcy protection after its shares tumbled 77% in one day and dollar bonds sank to 15 cents on the dollar following the reporting of the massive accounting hole, the report notes. The company has since secured up to 2 billion reais in debtor-in-possession financing to boost liquidity and insure day-to-day operations as its financial adviser Rothschild & Co. negotiates with creditors, the report discloses. The Rio de Janeiro-based company has 42.5 billion reais of outstanding debts with about 9,000 companies and individuals, the report adds. 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 billionaire 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. =============== C O L O M B I A =============== FIDEICOMISO PA COSTERA: Fitch Affirms BB+ Rating on USD180MM Bonds ------------------------------------------------------------------ Fitch Ratings has affirmed the following ratings for Fideicomiso P.A. Costera (Costera): - USD150.8 million USD bonds at 'BB+', Outlook Stable; - COP327,000 million UVR bonds at 'BB+'/Outlook Stable and 'AAA(col)'/Outlook Stable; - COP135,000 million UVR loan at 'BB+'/Outlook Stable and 'AAA(col)'/Outlook Stable; - COP250,000 million COP Loan A at 'AAA(col)', Outlook Stable; - COP300,000 million COP Loan B at 'AAA(col)', Outlook Stable. RATING RATIONALE The ratings are based on a concession agreement structure that limits revenue risks due to the existence of traffic top-ups and grant payments. The ratings are further supported by an adequate tariff mechanism that allows annual adjustments of toll rates by inflation, although its rating cases assume it will not occur in 2023 and 2024. The ratings also incorporate a strong debt structure characterized by several prefunded reserve accounts, distribution tests, a cash sweep mechanism and robust liquidity mechanisms. Under the Fitch rating case, the loan life coverage ratio (LLCR) is 1.5x, which is strong for the ratings according to Fitch's applicable criteria and the project's revenue profile but is constrained by the transaction's exposure to the credit quality of Agencia Nacional de Infraestructura (ANI). ANI is a credit-linked entity to the Government of Colombia (Local Currency IDR BB+/Stable). Costera reports that ANI has recognized approximately half of the expected top-up payment corresponding to the eight year of the concession (DR8) and is in discussions with ANI with respect to the remaining amounts. Fitch ran an additional sensitivity where Costera receives only the amounts already recognized. This scenario results in an LLCR of 1.3x, which is still consistent with the assigned rating, according to Fitch's applicable criteria. Costera can withstand the temporary liquidity stress period as it benefits from 12-month debt service reserve accounts (DSRAs) and a subordinated multipurpose credit facility (SMF). KEY RATING DRIVERS Low Exposure to Volume Risk - Volume Risk: High Midrange (revised from Midrange) The project's main revenue sources are ANI's contributions and toll revenues in the form of toll collection and traffic top-up payments. Traffic revenues are not subject to demand or price risk, even if traffic volumes are severely below expectations or if expected price increases are not implemented. ANI will periodically compensate the concessionaire if toll collections are below the amounts established in the concession contract. Historic traffic data shows low-to-moderate volatility. The road is likely to face limited competition after completion since the alternatives are longer and have lower average speeds. Toll tariffs and elasticity are moderate. Fitch has revised its Revenue Risk - Volume assessment to 'High Midrange' from 'Midrange' following the publication of its new Transportation Infrastructure Rating Criteria, which assesses volume risk on a five-point scale. Sources of revenue are subject to infrastructure availability, service levels and quality standards, based on fulfillment of indicators provided in the concession agreement. There are clearly defined, unambiguous, back-to-back penalty deduction mechanisms in the concession agreement with robust cure periods. Deductions are legally capped at 10%. Fines imposed on the concessionaire and penalty clauses if the agreement is terminated early are limited by the contract. Inflation Adjusted Tolls - Price Risk: Midrange Tariffs are inflation adjusted annually; however, in January 2023 the Colombian government announced that toll rates for 2023 will be frozen as part of the government's anti-inflationary policies. Toll rates are moderate, and if the net present value of toll collections received by the eighth, 13th, 18th, and last year of the concession is below guaranteed values, ANI is obligated to cover any shortfalls, after deductions. Well-Established Maintenance Plan - Infrastructure Development and Renewal: Midrange The project depends on the concessionaire directly implementing a moderately developed capital and maintenance plan. Project cash flows will primarily fund the program. The O&M plan, organizational structure, and budget appear reasonable and in line with similar projects in Colombia. In addition, the concessionaire will have a liquid support instrument equivalent to the maximum O&M expenses forecast for six months. This instrument must be issued by a financial entity with a minimum credit rating of 'BBB-' or 'AA+(col)'. The structure also includes a dynamic 12-month, forward-looking O&M reserve to account for routine and periodic maintenance expenditures. Robust Debt Structure - Debt Structure: Stronger The debt is fully amortizing, senior secured, comprising USD-, UVR- and COP-denominated financings. USD-denominated debt is matched with USD-linked currency revenues settled in COP (32% of future budget allocations, FBA [Vigencias Futuras] are USD-linked), which were issued at a fixed rate. The transaction includes a short-term hedging mechanism provided by eligible counterparties to cover FX risk exposure fully. UVR- and COP-denominated debt are indexed to inflation and are not exposed to basis risk. Structural features include multiple reserve accounts and a cash sweep mechanism. Robust liquidity mechanisms are in place to mitigate liquidity/budgetary risk, construction delays, and reduced cash flow generation due to low traffic performance. The transaction has a fully committed, revolving, subordinated SMF, equal to 15% of outstanding senior debt, in which eligible lenders have committed to disburse funds to the project company when necessary. Additional liquidity includes 12-month P&I and prefunded onshore and offshore DSRAs. Financial Profile Fitch's rating case LLCR is 1.5x. This metric is strong for the ratings, according to Fitch's applicable criteria and when compared with other similarly rated transactions, especially in light of the project's low exposure to volume risk. Fitch ran an additional sensitivity where only half of DR8 is paid. This scenario results in an LLCR of 1.3x, which is still consistent with the assigned rating, according to Fitch's applicable criteria. Costera can withstand the temporary liquidity stress period as it benefited from 12-month DSRAs and the SMF. PEER GROUP Costera is comparable to Fideicomiso P.A. Pacifico 3 (Pacifico, BB+/Stable, AA+(col)/Positive) and P.A. Autopista Rio Magdalena (ARM, BB+/AA+(col)/Rating Watch Negative). The projects are part of Colombia's 4G toll road program, present similar revenue streams, and have debt structures with robust mechanisms that result in a low exposure to volume risk. However, Pacifico and ARM are still under the construction phase with varied degree of advance, which supports lower national scale ratings. Costera's LLCR is higher than both Pacifico (1.4x) and ARM (1.3x). Costera's and Pacifico's ratings are constrained by the credit quality of ANI, while ARM's ratings are constrained by the credit quality of one of its EPC contractors, supporting the Negative Watch. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - For international ratings, deterioration of Fitch's view regarding the credit quality of ANI's contributions to the project; - Delay in receiving the already recognized amount for the top-up remuneration beyond 2023. Factors that could, individually or collectively, lead to positive rating action/upgrade: - For international ratings, improvement of Fitch's view regarding the credit quality of ANI's contributions to the project. CREDIT UPDATE As of December 2022, overall construction advance was 99.9% versus programmed progress of 100%. Certificates of completion for the two remaining functional units (UF3 and UF6) were received between April and May 2022, terminating the construction of every UF. Concerning the project completion status under the financing documents, the issuer was granted an extension; however, according to the independent engineer, there are pending items including the completion of the punch-list for UF3 and resolving an ongoing claim between the concessionaire and the EPC contractor due to the withholding of payments to the latter for quality purposes. In October 2022, subsidence required the closure of approximately 1km of roadway in UF3. This section was not part of the rehabilitation scope of the project, but it is part of the infrastructure built by the previous concessionaire and received by the current concessionaire to perform O&M. Traffic has not been affected because the collapse occurred in only one lane, and the other lane was opened in both directions. Repair works started at the end of December, and so far, there have been no deductions to payments due to this event. In 2022, the project reached an average annual daily traffic (AADT) of 19,849 vehicles, 51% above 2021's traffic and 38% above Fitch's rating case expectation of 14,408 vehicles. Traffic outperformance was mainly driven by the substantial increase in traffic volume at the Galapa, Juan Mina, and Papiros toll stations, boosted by the tariff decreases by around 50% applied in November 2021. In addition, traffic at Papiros increased significantly in the last two months of 2022 due to the closure of a competing road damaged by heavy rains. Despite the lower tariffs mentioned above, toll revenues reached COP85.6 billion in 2022, 33% above 2021's toll revenues and 26% above Fitch's rating case projection of COP67.9 billion. On Jan. 15, 2023, the Colombian government announced, through Decree 050, that toll rates for 2023 will be frozen as part of the government's anti-inflationary policies. The decree also states that the government will design and apply a mechanism to re-establish the tariff scheme by Dec. 31, 2024; therefore, the concessionaire expects tariffs to be frozen in 2024. The decree also states that ANI will meet the contingent obligations generated in the concession projects. The concessionaire expects to be compensated as it has been for the tariff reduction since 2021. Operational expenditures and capex reached COP67 billion and were above Fitch's projections of COP58 billion due to higher-than-expected inflation and higher routine maintenance and insurance expenses. In 2022, the concessionaire should receive its first top-up payment, corresponding to the DR8. However, ANI's calculation recognized roughly half of the amounts expected by the concessionaire and the payment is still pending. As a result, Fitch expects the concessionaire will receive the amounts recognized during 2023 and that ANI is taking measures to review the calculations and amend them to reflect what was initially expected. Due to not receiving the top-up payment in 2022, DSCR was below 1.0x, compared to Fitch's rating case projected DSCR of 1.40x. The shortfall to pay for debt service was covered by one of the project's two DSRAs. FINANCIAL ANALYSIS Fitch's base case assumes actual traffic in 2022 and from 2023-2033, traffic for Galapa, Juan Mina and Papiros toll booths will grow at a CAGR of 2.8%, while Marahuaco and Puerto Colombia will grow at a CAGR of 3.5%. Toll rates are assumed to be frozen in 2023 and 2024, increasing by inflation from 2025 onward, at a rate projected to be 3.0%. O&M and major maintenance expenses were increased by inflation plus 5% and 3%, respectively, every year from the concessionaire's budget. The performance ratio was assumed at 98%. Fitch assumes FBAs payment would present a three-month delay, while the DR8 top-up remuneration is assumed to be for the full amount paid in two equal installments, one in 2023 and the other with a delay equivalent to 18 months of the date indicated in the concession agreement. As for the top-up payments for the 13th, 18th and last year of the concession, a delay of 18 months that would affect 20% of the compensation is assumed. The assumptions represent the maximum days of delay permitted before a termination event is triggered according to the concession agreement. Under this scenario, minimum LLCR is 1.6x. Fitch's rating case assumes actual traffic in 2022, and from 2023-2033, traffic for Galapa and Juan Mina toll booths will grow at a CAGR of 1.8%, while Marahuaco and Puerto Colombia will grow at a CAGR of 2.6% and 2.7%, respectively. Fitch assumes that Papiros' 2023 traffic will decrease by 19% from 2022 levels due to the reopening of the currently closed alternative road, after which it will grow at a CAGR of 1.7%. Fitch's assumptions increased O&M by inflation plus 7% and major maintenance expenses by 5% in addition to CPI growth for every year from the concessionaire's budget. The performance ratio was assumed at 95%. Fitch assumes the same toll rates, delays in FBAs, and top-up payments as the base case. Under this scenario, the minimum LLCR is 1.5x. Fitch ran a sensitivity assuming only a partial DR8 top-up remuneration. Although the minimum loan life coverage ratio decreases compared to the last updated Fitch's cases, the adjusted level is still consistent with the current ratings, indicating that the project can tolerate the hampered DR8 payment without jeopardizing project debt payment. SECURITY In September 2014, Concesion Cartagena-Barranquilla was granted a 25-year concession for the construction, rehabilitation, improvement, operation and/or maintenance of 156.8km of roads located in the departments of Atlantico and Bolivar, Colombia. Concesion Cartagena-Barranquilla, the project company, is owned 100% by Interconexión Eléctrica S.A.E.S.P. (ISA, BBB/Stable) through its subsidiary ISA Intervial Chile. The project aims to connect two of the main ports of Colombia: Cartagena and Barranquilla. The port of Barranquilla covers two main routes, the Magdalena River, which communicates with the country's interior, and the Caribbean Sea, connecting goods that are traded from/to the U.S., Europe and Asia. The port of Cartagena is the third busiest in the Caribbean Sea. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Fideicomiso P.A. Costera Fideicomiso P.A. Costera/Debt/1 LT LT BB+ Affirmed BB+ Fideicomiso P.A. Costera/Debt/1 Natl LT Natl LT AAA(col)Affirmed AAA(col) =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Informality & Self-Employment Grow in Country ----------------------------------------------------------------- Dominican Today reports that the Dominican Republic is one of the countries with incomplete recovery of labor indicators from before the pandemic (2019), with women experiencing a greater lag. This is demonstrated by the International Labor Organization's most recent report, "Labor Overview 2022 for Latin America and the Caribbean" (ILO), according to Dominican Today. Despite the region's economic recovery, labor-force participation fell from 64.9% in 2019 to 62.1% in 2022, employment fell from 60.6% to 59.2%, and unemployment fell from 6.5% to 4.8%, while the informality rate rose from 56 to 57.4% and self-employed workers ranged between 36 and 40%, the report notes. "In the Dominican Republic, the informality rate of 57.4 registered in the second quarter of this year (2022) exceeded the value of the same quarter of 56 (2019) by more than 2 percentage points and by nearly 3 percentage points the record at the end of that year," the report stated, Dominican Today discloses. He notes that, despite government efforts to protect formal employment, the informality rate in several countries in the region in the second or third quarter of 2022 was comparable to or even higher than that observed in 2019, the report relays. According to the statistics presented, the regional informality rate (average of 11 countries) was nearly 50% in mid-2022, while in the Dominican Republic, it is 57.4%, with a total of around 59% informal, Dominican Today says. The report states that informal employment has accounted for between 40 and 80% of the net increase in work between the third quarter of 2020 and 2022, Dominican Today notes. It points out that given the context of a sharp slowdown in economic growth, job creation may continue to be biased towards the generation of informal jobs, Dominican Today 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. ============= J A M A I C A ============= JAMAICA: Tourism Stakeholders Building Resilience, Says PM ---------------------------------------------------------- Halshane Burke at RJR News reports that the COVID-19 pandemic has seen tourism stakeholders becoming more proactive in building resilience across the value chain. Prime Minister Andrew Holness said the pivot by tourism interests was critical to ensuring that the sector rode out the tide of the pandemic and emerged stronger, according to RJR News. He was addressing the opening ceremony of the Global Tourism Resilience Conference at the University of the West Indies, the report relays. According to the Prime Minister, stakeholders had to become creative in how the sector weathered the onslaught of the pandemic, the report notes. Mr. Holness said this resiilence required integration of the latest research findings, innovations and technology to create sustainable tourism, consumption, production and energy use practices, the report discloses. While the COVID-19 pandemic had a devastating impact on the global economy, Mr. Holness noted that countries that have diversified their tourism markets and established strong tourism trade relations have been better able to withstand the impact of the crisis, the report says. He touted the tourism industry as one of the most resilient but admitted it is also one of the most volatile of economies, the report notes. As such, Prime Minister Holness said the Global Tourism Resilience Conference will help ensure that the sector withstands future shocks, 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. ===================================== T R I N I D A D A N D T O B A G O ===================================== TRINIDAD & TOBAGO: Still on EU Tax Blacklist -------------------------------------------- Ria Taitt at Trinidad Express reports that Trinidad and Tobago's legal framework is still not deemed to be robust enough to enable the country to be moved from the European Union's tax blacklist. So said Minister of Finance Colm Imbert as he responded to a question from Naparima MP Rodney Charles, in Parliament, on why Trinidad and Tobago is still listed as a "non-cooperative jurisdiction for tax purposes", despite the Opposition's support of all four pieces of legislation which sought to remove Trinidad and Tobago off the EU blacklist, according to Trinidad Express. The four pieces of legislation are the Companies Amendment Act, The Income Tax Amendment Act, The Mutual Administrative Assistance in Tax Matters Act (MAAC) and the Tax Information Exchange Agreements Act (TIEA), the report notes. Imbert said the legislation brought to Parliament was identified to target the known deficiencies at the time. But subsequently they have given us 23 additional recommendations, the report discloses. "This is the world we live in and we have to swim in it," Imbert said, the report says. Asked why all our Caribbean colleagues had been able to engage the EU and identify all the outstanding issues, passed legislation and come off the blacklist, while T&T was still in the position it is today, Imbert said: "Those countries fortunately for them do not have an Opposition UNC which refuses to co-operate and refuses to pass special majority legislation," the report relays. Imbert said the main reason for Trinidad and Tobago's placement on the EU Commission Tax Blacklist was as a result of a non-compliant Global Forum rating under the Exchange of Information on Request (EOIR) and the Automatic Exchange of Information (AEOI) standards, the report relays. These have legislative, administrative and operational elements, the report notes. He said in 2019 and 2020, after discussions and consultation with the Global Forum, Trinidad and Tobago enacted four key pieces of legislation namely the Companies Amendment Act, The Income Tax Amendment Act, The Mutual Administrative Assistance in Tax Matters Act (MAAC) and the Tax Information Exchange Agreements Act (TIEA), the report relays. He said Trinidad and Tobago consequently engaged the Global Forum Secretariat to review these four pieces of legislation to ensure that they addressed the known deficiencies sufficiently, the report discloses. "The Global Forum Secretariat by way of feedback prepared a Technical Assistance Report (TAR) in December 2020 on the implementation of the EOIR and AEOI standards and further outlined 23 additional recommendations to make the legal framework more robust. To comprehensively address these new recommendations, Trinidad and Tobago is currently involved in an intensive Technical Assistance Program (TAP) to ensure that the country has made the necessary legislative, administrative and operational improvements to undergo its Phase 2 Peer Review," Imbert said, the report discloses. He said through the ongoing work of the TAP, Trinidad and Tobago is in the process of finalising draft legislation that will comprehensively address the outstanding issues identified for the EOIR and AEOI legal frameworks, the report relays. In terms of the administrative and operational dimensions, Trinidad and Tobago's Competent Authority, the Board of Inland Revenue (BIR) is in the process of strengthening the organisation's confidentiality and data safeguards and Exchange of Information (EOI) functions and processes, the report notes. Once all legislative issues are addressed, Trinidad and Tobago will submit its application to become a party to the Multilateral Convention and will be able to take full advantage of exchanging information with the current 146 signatories, the report adds. "Another reason for Trinidad and Tobago's placement on the list was our designation by the OECD, Forum of Harmful Tax Procedure (FHTP) as possessing a harmful tax regime because of what was seen to be our "ring-fenced" Free Zone Regime. Progress has been made in this area whereby Trinidad and Tobago administratively closed off the regime to new entrants by January 1, 2019 and the Special Economic Zones Act 2021 was partially proclaimed in January 2022. In this regard, draft SEZ Regulations are currently being finalised by the Ministry of Trade and Industry," Imbert said, the report relays. Finally, as it relates to our Country-by-Country Reporting (CbCR) status, according to our 2022 Peer Review, Trinidad and Tobago was found to have deficiencies in our legal and administrative frameworks for the exchange of information and the use of CbC reports, Trinidad Express says. Trinidad and Tobago has accordingly made a commitment to the EU to fully implement CbCR by 2023 and for this to be reflected in the 2023 Peer Review Report, Trinidad Express relays. In so doing, Trinidad and Tobago is currently finalizing draft CbCR legislation for enactment in 2023, he said, the report adds. 4% Offer Stands Government is not reconsidering its offer of a four per cent wage increase to public servants, the report relays. This was the inference Imbert's response to another question from Charles on whether the Government would reconsider its offer given the reports of discontent by top trade unions in the public sector, the report notes. Imbert said the Government had been unable to reach agreement with public sector unions for collective agreements for the period 2014-2019 and the matters were reported as unresolved disputes to the Tribunal of the Industrial Court in October 2022, the report discloses. He said under the Essential Services division of the Court was the Special Tribunal established by the Civil Service Act, the report says. He said the Government was awaiting the hearing and determination by the Tribunal of these disputes, the report adds. =============== X X X X X X X X =============== [*] BOND PRICING: For the Week Feb. 13 to Feb. 17, 2023 ------------------------------------------------------- Issuer Name Cpn Price Maturity Country Curr ----------- --- ----- -------- ------- --- Noble Holding Internat 6.2 62.2 8/1/2040 KY USD Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL Fospar S/A 6.5 1.2 5/15/2026 BR BRL Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD Province of Santa Fe 6.9 75.2 11/1/2027 AR USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Sylph Ltd 2.4 65.1 9/25/2036 KY USD Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD Noble Holding Internat 6.1 62.0 3/1/2041 KY USD Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD Esval SA 3.5 49.9 2/15/2026 CL CLP Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD Noble Holding Internat 5.3 60.5 3/15/2042 KY USD Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD Province of Santa Fe 6.9 74.7 11/1/2027 AR USD ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2023. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. . * * * End of Transmission * * *