/raid1/www/Hosts/bankrupt/TCRLA_Public/230224.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
Friday, February 24, 2023, Vol. 24, No. 41
Headlines
A R G E N T I N A
ARGENTINA: Looks to Roll Over US$1.6BB of Local Debt Mountain
PETROQUIMICA COMODORO: Fitch Affirms LongTerm IDRs at 'B-'
B A H A M A S
FTX GROUP: Judge Rejects Call For New Investigation Into Collapse
B R A Z I L
AMERICANAS SA: BTG Pactual Joins Lenders Hit by Post Provisions
AMERICANAS SA: Taps Citi for Possible Assets Sale
ENGIE BRASIL: Fitch Affirms BB/BBB- LongTerm IDRs, Outlook Stable
SANTA CATARINA: Fitch Affirms & Then Withdraws 'BB-' LongTerm IDRs
P U E R T O R I C O
AZURE DEVELOPMENT: Case Summary & One Unsecured Creditor
PUERTO RICO: Fiscal Board Files $4.3B PREPA Reorganization Plan
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Calypsos May Face Extinction
TRINIDAD & TOBAGO: Promoters Hit by Lower Ticket Sales
- - - - -
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A R G E N T I N A
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ARGENTINA: Looks to Roll Over US$1.6BB of Local Debt Mountain
-------------------------------------------------------------
Scott Squires at Bloomberg News reports that Argentina's local debt
auction scheduled will serve as a final test of local investors'
appetite for government peso debt as annual inflation soars to 99
percent, a three-decade high.
The Treasury will seek to refinance some 305 billion pesos (US$1.6
billion) of local debt, more than half of the 500 billion pesos in
government securities maturing in February, according to local
broker Portfolio Personal Inversiones (PPI), according to Bloomberg
News.
The sale of discount Treasury bills, inflation-linked bonds and
other securities will last until Feb. 15.
Cut off from global credit markets, Argentina's government has
accumulated a debt burden of some 33 trillion pesos (US$174
billion), while being forced to offer higher interest rates and
shorter maturities to attract investors, the report notes.
Analysts fear that this tactic will work for a few more months,
until investors refuse to refinance the securities before the
October presidential elections, triggering Argentina's second local
currency debt default in four years, the report relays.
Still, private sector investors, such as banks and investment
funds, are likely to continue to refinance their local bonds as
long as the government sells very short-term notes that mature
before the election, according to PPI, the report says.
The situation could become complicated when the window for such
short-term debt "shortens in the run-up to the elections," PPI
analysts wrote, 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.
PETROQUIMICA COMODORO: Fitch Affirms LongTerm IDRs at 'B-'
----------------------------------------------------------
Fitch Ratings has affirmed Petroquimica Comodoro Rivadavia S.A.'s
(PCR) Long-Term Foreign Currency (FC) and Local Currency Issuer
Default Ratings (IDRs) at 'B-'. The Rating Outlook is Stable.
PCR's ratings reflect its small oil production size, concentrated
cement business in the Patagonia region of Argentina, and exposure
to the Argentine electricity industry's regulatory risk. PCR's
Argentine operations and cash flows are slightly offset by its
Ecuadorian oil operations, which cover its hard-currency
consolidated interest expense. Fitch estimates PCR's ex-Argentine
EBITDA will cover its hard-currency consolidated interest expense
over the rated horizon, mitigating the impact of capital controls
in Argentina.
KEY RATING DRIVERS
Applicable Country-Ceiling: PCR's FC IDR is rated at the
country-ceiling of Ecuador (B-) because cash flow from its
Ecuadorian operations cover its hard-currency consolidated interest
expense. Fitch estimates PCR's consolidated interest expense is
USD35 million per annum between 2023-2025, of which USD10 million
is in hard-currency, while its Ecuadorian EBITDA will average USD49
million. This covers hard-currency interest expense by more than
4.0x. In the event that cash flow from Ecuador operations does not
cover hard-currency interest expense, the applicable country
ceiling will be that of Argentina, and the company's FC IDR will be
revised in the event it is below its current level of 'B-'.
Cash Flow Diversification Strategy: PCR has embarked on a strategy
to diversify its sources of cash generation. The investment plan
for 2023-2025 is estimated to be close to USD300 million, where 42%
corresponds to the expansion of the renewable energy segment with
the addition of 197MW of installed capacity with the Mataco III,
Vivorata, San Luis Norte I and San Luis Norte II wind farms. These
projects will be contracted under PPAs with private sector
off-takers and are expected to start commercial operations between
3Q23 and 1Q24.
According to preliminary data, FY2022 EBITDA reached USD222
million, including Oil and Gas (O&G) at close to USD130 million,
Renewables at USD65 million and Cement at USD27. Over the rating
horizon, Fitch estimates the share of consolidated EBITDA from the
renewable energy segment will reached 50%, roughly USD110 million
by 2025, contributing to a more predictable cash flow profile,
while maintaining O&G production levels and its strong position in
the Cement business in the Patagonia region.
Adequate Leverage: Fitch estimates PCR's gross leverage at 2.6x in
2022 up from 2.2x in 2021, reflecting additional debt as the
company is deploying its capex plan to expand its renewable energy
generation while O&G cash flows were supported by higher Brent
prices and predictable renewable energy EBITDA. Fitch expects the
company will maintain stable gross leverage, defined as total debt
to EBITDA, close to 3.0x in YE2023 and then descend towards 2.3x
YE2025. Fitch estimates PCR's consolidated debt will end 2022 at
approximately USD559 million as PCR continues expanding renewable
generation and then debt decreasing to roughly USD400 million once
it starts amortizing.
Small Production Profile: PCR's ratings reflect its small and
concentrated production profile, which is consistent with the 'B'
rating category. Although the company has exploration and
production interest in nine blocks in Argentina (five) and Ecuador
(four), most of its asset base as 1P reserves and production is
concentrated in Argentina at 61% and 59%, Ecuador 39% and 41%,
respectively. This limited diversification exposes the company to
operational and macroeconomic risks associated with small-scale oil
and gas production. Fitch expects the company's working interest
production to average 17,800boe per day (boed) over the rating
horizon.
The company reported estimated gross 2021 1P reserves of 30.1
million boe. Fitch expects the company will maintain its 1P reserve
life close to 4.0 years by maintaining production at 17,800 boed.
PCR's largest concession is El Medanito, which currently accounts
for approximately 35% of working interest production and expires in
2026. Other concessions have longer expiration dates.
Uncertain Regulatory Environment: Argentina's electricity
regulatory framework continues to be highly uncertain. The system
is not self-sufficient and relies heavily on government subsidies.
This is not likely to change in the short to medium term, and the
problem is further exacerbated by the government's inability to
afford the subsidies, which has been funded through monetary
expansion. Therefore, upcoming additional regulatory amendments
will be aimed at lowering the overall cost of the system,
negatively impacting generation companies that historically bear
the brunt of the amendments, with regulatory schemes continuously
at risk of being changed.
Around 80% of PCR energy segment revenues depend on payments from
CAMMESA, which acts as an agent on behalf of an association
representing agents of electricity generators, transmission,
distribution and large consumers or the wholesale market
participants (Mercado Electrico Mayorista; MEM). All current
contracts are under the RenovAr program and have a guarantee from
FODER (Argentina Renewable Fund Guarantee) and in certain cases,
with an additional guarantee from the World Bank (the latter
applies to Mataco/San Jorge plant for up to USD21.5 million).
DERIVATION SUMMARY
PCR is a small oil and gas producer with operations in Argentina
and Ecuador. Argentina represents 60% of production while Ecuador
contributed 40%. Production is expected to remain relatively flat
averaging 17,800 boed through 2025, which is comparable with its
'B' rated peers, GeoPark Ltd (B+/Stable), Frontera Energy
(B/Stable), Gran Tierra Energy (B-/Stable) and Compania General de
Combustibles (CGC; B-/Stable).
Over the rated horizon, PCR will have the smallest production
profile amongst rated peers in Latin America. Fitch estimates,
Geopark will average roughly 40,000 boed over the rated horizon,
Gran Tierra around 38,000boed, CGC with increasing to 57,000 boed,
and Frontera Energy 50,000 boed. Further, PCR reported 30.1 million
boe of 1P reserves at the end of 2021 equating to a reserve life of
5.2 years is lower than line GeoPark at 6.7 years, Frontera
Energy's 8.6 years, Gran Tierra's 6.9 years and CGC's 6.4 years
and.
PCR's cement segment is small and geographically focused and does
not compare well to some of its peers in the region. PCR has a
capacity of producing 750,000 tons per year compared with Cementos
Pacasmayo (BBB-/Negative) with capacity: 4.9 million metric tons a
year and GCC, S.A.B. de C.V. (BBB-/Positive) with 5.8 million
metric tons. PCR's cement business is focused in the Patagonia
region and has a strong market share due to its geographic location
and production efficiencies caused by the lower freight and energy
costs. PCR's cement margins averaged 19% from 2018 through 2021,
reaching 25% according to preliminary data as of FY2022, below
peer's median of approximately 30%.
PCR's gross leverage is expected to be close to 2.6x in 2022,
supported by higher EBITDA in its upstream business due to Brent
prices and increased contribution from its renewable energy
business. PCR's gross leverage is higher than oil and gas peer CGC
(2.1x), Geopark (1.8x). Frontera (1.0x), and Gran Tierra (1.2x).
Unlike its oil and gas peers, PCR does have a more diversified
business model with its cement segment and renewable energy
segment. The power business compares to Pampa Energia (B-/Stable),
MSU Energy (CCC-), Capex S.A. (CCC+) and Genneia (CCC-). Similar to
PCR, Pampa Energia and Capex both have oil and gas as well as
energy business segments, taking into consideration that Capex is a
closer peer by scale compared with the much larger Pampa Energia.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Fitch's EOP and average foreign exchange rate for ARS to USD;
- Average working interest production to be 17,800 boed in from
2023 until 2025;
- Fitch's price deck for Brent per barrel (bbl) 2022 USD100, 2023
USD85, 2024 USD65, and USD53 in the long term;
- Cement sales growth linked to Fitch's real GDP growth of
Argentina;
- Capex between 2023-2025 of USD330 million with an average annual
capex of USD110 million;
- Average dividends of USD5 million paid each year from 2023
through 2025;
- Installed Capacity of 329 MW increasing to 526MW in 2024;
- Renewables having 98% availability and 55% capacity factor at a
monomic price of USD45MWh in 2023;
- CAMMESA/FODER pay on time.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Although unlikely, an upgrade of the country ceiling of Ecuador
and/or Argentina could result in a positive rating action;
- Diversification of operations outside of Argentina and Ecuador
with cash flows covering 12 months of hard currency debt service;
- Sustained conservative capital structure and investment
discipline.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Downgrade of the country ceiling of Ecuador and/or Argentina;
- Material delay in CAMMESA/FODER payments that materially affect
working capital;
- Significant cost overruns that result in increased leverage
and/or weaken liquidity;
- A significant deterioration of credit metrics to total
debt/EBITDA of 5.5x or more.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of 3Q22, PCR reported a cash balance of
USD221 million, which covers more than four years of interest
expense. Fitch believes with a strong cash balance and cash flow
from operations, the company will adequately cover its interest
expense and upcoming maturities. Fitch believes the company
maturity profile is manageable and the company has strong access
with local banks in the event it needs additional liquidity.
ISSUER PROFILE
PCR is an Argentine independent energy company focused on three
main activities: the exploration and production of hydrocarbons,
the production and distribution of cement and construction
materials, and renewable power generation.
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
----------- ------ -----
Petroquimica
Comodoro
Rivadavia S.A. LT IDR B- Affirmed B-
LC LT IDR B- Affirmed B-
=============
B A H A M A S
=============
FTX GROUP: Judge Rejects Call For New Investigation Into Collapse
-----------------------------------------------------------------
Dietrich Knauth at Reuters report that U.S. bankruptcy judge
denied calls for a new, independent probe into FTX's collapse,
saying that it would be redundant to other investigations being
carried out by the crypto exchange's new management and law
enforcement.
U.S. Bankruptcy Judge John Dorsey rejected the U.S. Department of
Justice's request for an independent examiner at a hearing
Wilmington, Delaware, noting the proposed investigation would
likely cost more than $100 million and undermine FTX's goal of
"returning value to creditors," according to Reuters.
"There are already multiple investigations underway by incredibly
competent and independent parties," Dorsey said, the report notes.
"Every dollar spent on administrative expenses in these cases is
one dollar less for the creditors," the report relays.
The U.S. Trustee, the Justice Department's bankruptcy watchdog, had
argued that an independent examiner should be appointed to
investigate allegations of "fraud, dishonesty, incompetence,
misconduct, and mismanagement" that were "too important to be left
to an internal investigation," the report discloses.
FTX and the committee representing its junior creditors opposed
that demand, saying that the proposed examiner would merely
duplicate work already being done by FTX, its creditors, and law
enforcement agencies, the report says.
The proposed examination would also drain millions of dollars from
FTX's limited funds, the company argued, the report notes.
Dorsey expressed confidence at the hearing in the investigation
already being handled by FTX's new CEO, John Ray. Ray is a
"consummate professional" with decades of experience cleaning up
the mess left by troubled companies, and he is wholly independent
of FTX's past misconduct, Dorsey said, the report discloses.
Dorsey also said that he intends to appoint a fee examiner to
oversee FTX's spending on professional fees in its bankruptcy, the
report relays.
FTX's bankruptcy attorneys at Sullivan & Cromwell, some of whom are
charging over $2,100 per hour, have incurred nearly $25 million in
fees for work performed from Nov. 12 through Dec. 31, according to
recent court filings, the report notes. An attorney for FTX said
the company will propose someone for the role of fee examiner after
consulting with its creditors, the report says.
FTX, once among the world's top crypto exchanges, shook the sector
in November by filing for bankruptcy, leaving an estimated 9
million customers and investors facing billions of dollars in
losses, the report relays.
FTX's founder Sam Bankman-Fried, who has been accused of stealing
billions of dollars from FTX customers to pay debts incurred by his
Alameda Research hedge fund, has pleaded not guilty to fraud
charges, the report notes.
He is scheduled to face trial in October. Several former top
executives, including Alameda Research CEO Caroline Ellison, have
pleaded guilty to fraud, the report adds.
===========
B R A Z I L
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AMERICANAS SA: BTG Pactual Joins Lenders Hit by Post Provisions
---------------------------------------------------------------
Gabriel Araujo at Reuters report that Banco BTG Pactual SA
(BPAC3.SA) became the latest Brazilian lender to be affected by bad
credit provisions due to what it called a "specific, widely
publicized event," likely referring to the bankruptcy of Americanas
SA (AMER3.SA).
BTG, which was among the most exposed lenders to the Brazilian
retailer's debt, echoed measures taken by some of Latin America's
largest banks and set aside billions of reais in the fourth
quarter, leading to a lower-than-expected net profit, according to
Reuters.
Shares in the lender rose more than 3% after the report, placing it
among the top gainers on Brazil's Bovespa benchmark stock index
(.BVSP), as it pledged to improve results this year and the
provisions were somewhat expected, the report notes.
Analysts at Guide Investimentos highlighted BTG's "better operating
results" despite a troubled macroeconomic scenario, forecasting
higher figures in the coming quarter as provision levels fall, the
report relays.
BTG reported a quarterly net profit of 1.64 billion reais ($314.5
million), slightly down from 1.74 billion a year earlier and below
the market consensus of 2.27 billion, according to analysts polled
by Refinitiv, the report discloses.
The "specific event," BTG said in a securities filing, led its
Corporate & SME Lending unit to make provisions of 1.12 billion
reais for bad credit, with the total negative effect on the bottom
line reaching 580 million reais, the report says.
The bank said it remained confident in the quality of its credit
portfolio, and the "isolated incident" didn't reflect the overall
state of its lending unit, the report notes.
Santander Brasil (SANB3.SA), Itau Unibanco (ITUB4.SA) and Bradesco
(BBDC4.SA) had similar setbacks in the quarter, increasing
loan-loss provisions after Americanas' bankruptcy, which was
triggered by what the retailer described as multi-billion-real
"accounting inconsistencies," the report relays.
Analysts at JPMorgan estimated BTG's provisions to have reached
around 30% of its gross exposure to Americanas, in line with the
amount set aside by Santander. Meanwhile, Itau and Bradesco decided
to provision 100% of their exposure, the report discloses.
BTG's "good cost discipline" in the quarter helped reduce the
impact of the provisions, JPMorgan said, the report notes.
On the bright side, BTG also said two key metrics -- revenue and
adjusted net profit -- hit fresh records for the full year, largely
boosted by higher sales and trading revenue, the report relays.
The return on average equity (ROAE), a gauge of profitability, hit
16.7% in the quarter but 20.8% in the full year, above its "soft
guidance" of more than 20% for the long term, the report says.
"Despite all the challenges, we expect higher returns in 2023, with
greater operating leverage and possibly even higher capital and
liquidity levels," BTG Chief Executive Officer Roberto Sallouti
said, the report adds.
AMERICANAS SA: Taps Citi for Possible Assets Sale
-------------------------------------------------
TasFuoco of Bloomberg News reports that Americanas hired Citi to
help structure the possibility of monetizing its assets, in
addition to supporting the search for other financial solutions to
rescue the retailer, Valor said, citing sources who spoke on
condition of anonymity.
Americanas went in search of a bank that was more distant from the
crisis and chose Citi because it is one of the few banks operating
in Brazil without exposure to the retailer, according to the
report.
One of the main assets that Americanas has in its portfolio is
Natural da Terra, hortifruti that it acquired in 2021 for 2.1
billion
reais.
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.
ENGIE BRASIL: Fitch Affirms BB/BBB- LongTerm IDRs, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Engie Brasil Energia S.A.'s (Engie
Brasil) Foreign Currency (FC) and Local Currency (LC) Long-Term
Issuer Default Ratings (IDRs) at 'BB' and 'BBB-', respectively.
Fitch has also affirmed the Long-Term National Scale Rating at
'AAA(bra)' for Engie Brasil and its senior unsecured debenture
issuances. The Rating Outlook for corporate ratings is Stable.
Engie Brasil's ratings reflect its prominent market position as the
second largest electric energy generation company in Brazil, with a
sizable and diversified asset base and operational efficiency. The
company's credit profile also benefits from a solid financial
profile, with a track record of robust operating cash flow
generation, conservative leverage and strong financial flexibility,
which is expected to continue even during the high capex plan from
2023 to 2025.
The company's FC IDR is constrained by Brazil's country ceiling of
'BB', while Brazil's operating environment limits the LC IDR. The
Stable Outlook for the FC IDR follows the same Outlook of Brazil's
'BB-' sovereign rating.
KEY RATING DRIVERS
Robust Business Profile: Engie Brasil's ratings benefit from a
strong business position in the electric power generation segment
in Brazil. It is the second largest energy generation company in
the country, with a total installed capacity of 8,5 GW, to be
expanded to 10,6 GW by the end of 2024. The company presents a
successful track record in its commercial strategy and monthly
allocation of its assured capacity, also benefiting from the
dilution of operational risks through its diversified asset base.
The recent entrance into the transmission segment provides further
diversification and improves predictability to operating cash flow.
Engie Brasil has around 909km of transmission lines in operational
phase and 1,800km under final phase of development, to be concluded
during 1Q23. Permitted Annual Revenues (RAPs) of BRL720 million in
this segment should represent about 10% of the consolidated EBITDA
in 2023.
Aggressive Capex Pressures FCF: High investments of BRL10.0 billion
during 2023-2024 period, considered at Fitch's base case, mainly
concentrated in 2024, combined with strong distribution of
dividends (corresponding to 100% of net income), will pressure free
cash flow (FCF). However, Fitch believes Engie Brasil has room to
reduce dividends if necessary. The ratings base case estimates
EBITDA and CFFO of BRL5.9 billion and BRL4.4 billion in 2023 and
BRL6.3 billion and BRL4.2 billion in 2024, respectively, with
negative FCFs at BRL2.1 billion in 2023 and BRL5.0 billion in
2024.
Fitch expects the EBITDA margin to increase over the next few
years, reaching 60% in 2024, due to the full operation of the
transmission lines and the reduction in energy purchase expenses.
The base case scenario anticipates sales of 5.0GW average in 2023
and 2024, with average tariffs of BRL245/MWh and BRL251/MWh,
respectively.
Leverage Expected to Peak in 2024: Fitch estimates that Engie
Brasil's leverage ratio will reach 3.3x in 2024, after 2.5x in 2022
and 2.7x in 2023. These ratios are still consistent for the current
LC IDR and considers the deconsolidation of the thermal plant Pampa
Sul (UTE Pampa Sul)'s debt of BRL1.8 billion in 2022. The closing
of the asset sale, signed in September 2022, should occur during
the 2Q23 - with a cash inflow of around BRL400 million. Net
debt-to-EBITDA ratio should reduce to levels limited to 3.0x from
2025 on, which gives some room to add new projects.
Additional debt of BRL7.8 billion should finance the negative FCF,
associated to investments in greenfield projects. The company has a
positive track record on capital structure management, even
reducing dividends distribution as needed to bring net leverage to
level around 3.0x.
Manageable Exposure to Hydrologic Risk: Fitch estimates that Engie
Brasil's uncontracted energy volumes of 4% in 2023 and 14% in 2024
will be sufficient to support the expected generating scaling
factor (GSF) of 0.85 and 0.93 in both years, respectively. This
scenario mitigates the company's exposure to the energy price in
the spot market (PLD), whose ceiling defined by the regulator for
2023 is BRL678/MWh.
If needed, Engie Brasil has to obtain energy purchase contracts at
prices compatible with those established in the sales contracts or
maintain uncontracted energy to cover the reduction in its own
generation to avoid higher negative impacts on cash generation. The
company also has protection against hydrological risk in sales
contracts in the regulated market, which represents around 35% of
the energy sold, which limits its assured energy exposure to GSF to
31% of the total.
Exposure to Repricing and Concession Risk in Mid Term: Modest trend
for energy generation prices for the next years could bring EBITDA
margin reduction with average prices reduction from 2027 on.
Despite of the strong revenue's predictability derived from the
high contracted position until 2026, Engie Brasil's uncontracted
position above 45% from 2027 on represents a pricing risk in the
medium term.
Fitch's base case average prices of BRL172/MWh for new contracts
during 2023 to 2026 is significantly that of BRL256/MWh of the
current contracts. In addition, important concessions which totals
3.4GW and represents 47% of the company current installed capacity
expires during 2030-2032. Fitch considers that the group still has
time to manage these exposures and expects a reduction in the
potential impact in the cash flow, capital structure or liquidity
position to be addressed in advance.
Weak Parent Company Linkage: Engie Brasil's ratings are based on
its standalone credit profile, as overall legal, operational and
strategic incentives to its parent company Engie S.A. (IDR,
A-/Stable) to support Engie Brasil, if needed, are weak. Engie S.A.
controls 68.71% of Engie Brasil, but there are no guarantees or
cross-default clauses. Although both have the same core business,
Fitch views operational integration as weak. Strategic incentives
are low to medium, due to reputation risks related to the use of a
common name.
DERIVATION SUMMARY
Engie Brasil's FC IDR 'BB'/Stable is two to three notches below
peers in Latin America, such as Engie Chile (BBB/Stable), the
fourth largest generator in Chile, Enel Colombia (BBB/Stable), the
second largest generation company in Colombia, and AES Andes
(BBB-/Stable), the second largest generator in Chile and one of the
leaders in Colombia, primarily as a result of the Brazilian country
ceiling at 'BB'. Engie Chile, Enel Colombia and AES Andes benefit
from a better economic environment in Chile and Colombia, which are
rated higher than Brasil. Engie Brasil's FC IDR is capped by the
Brazilian Country Ceiling.
Engie Brasil's 'BBB-'/Stable LC IDR is more comparable with these
'BBB' category rated peers. It is well positioned relative to other
Latin American power generators in installed capacity, asset
diversification and contracted position. Engie Brasil has an
installed capacity of approximately 8.4GW, which compares favorably
with AES Andes (5.2 GW), Enel Generacion Chile (6.0 GW) and Enel
Colombia (7.5 GW).
The energy mix of Engie Chile and AES Andes differs from the
related company in Brazil and Enel Colombia. Engie Brasil and Enel
Colombia are more exposed to hydrological conditions, while AES
Andes and Engie Chile need to deal with the coal and natural gas
prices volatility. All the companies have predictable and robust
cash flow generation since they have managed business risks
properly, but Engie Brasil has a stronger financial profile.
KEY ASSUMPTIONS
The main assumptions of Fitch's base scenario for the issuer
include:
- Energy sales of 4.6 average GW in 2023 and in 2024, not including
thermal and quotas capacity;
- Average sales price of BRL245/MWh in 2023 and BRL251/MWh in
2024;
- Energy purchase of 1.3 average GW in 2023 and 0,9 average GW in
2024;
- SG&A expenses adjusted by inflation;
- Average GSF of 0.85 in 2023 and 0.93 in 2024;
- Capital expenditures of BRL11.1 billion from 2023 to 2025;
- Dividends pay-out of 100%;
- Acquisition of HPP Jirau not considered until 2026.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Positive rating action for the company's FC IDR would be
associated with an upgrade of Brazil's sovereign rating;
- Positive rating action for the company's LC IDR would be
associated with improvements in Brazil's operating environment;
- Upgrades are not applicable to the National Scale Rating as it is
at the highest level.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Negative rating action for the LC IDR would be associated with a
deterioration in Engie Brasil's consolidated financial profile,
with net adjusted leverage above 3.5x and/or funds from operations
net leverage above 4.0x, both on a sustainable basis;
- A downgrade on Brazil's sovereign rating would result in a
similar rating action on Engie Brasil's FC IDR;
- A weaker operating environment in Brazil could result in a
downgrade of the LC IDR;
- A two-notches downgrade of Engie Brasil's LC IDR may lead to a
downgrade of the National Scale Rating.
LIQUIDITY AND DEBT STRUCTURE
High Financial Flexibility: Engie Brasil has ample access to
funding sources and a strong liquidity profile, with robust cash
position and no short-term debt concentration. As of December 2022,
cash and marketable securities of BRL2.2 billion - net of
restricted cash of BRL229 million - were strong enough to cover the
short-term debt of BRL1.7 billion. The high cash balance,
reinforced by capex financing, will be partially used to fund the
negative FCF in 2023 and 2024.
During this two-year period, the wind complexes Santo Agostinho and
Serra do Assururá and the solar complex Assu Sol will require
capex of BRL1.4 billion, BRL4.6 billion and BRL3.3 billion,
respectively, mostly supported by long-term project finance debt.
The two wind complexes have BRL3.0 billion contracted with Banco
Nacional de Desenvolvimento Economico e Social (BNDES), with BRL2.4
billion to be received according to the capex execution. As of
December 2022, Engie Brasil's total debt of BRL18.1 billion was
mainly composed of BNDES (BRL7.6 billion) and debentures (BRL5.9
billion).
ISSUER PROFILE
Engie Brasil is the second largest power generation company in
Brazil, with a total installed capacity of 8.4 GW and 2,1 GW under
development. The issuer also has 1,800km of transmission lines
under implementation and 909km under operation. In addition, Engie
Brasil owns 32.5% in the gas transportation company Transportadora
Associada de Gas S.A. Engie Brasil is indirectly controlled by
Engie S.A. (Engie; IDR A-/Stable).
SUMMARY OF FINANCIAL ADJUSTMENTS
Net revenues and EBITDA net of construction revenues and cost.
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
----------- ------ -----
Engie Brasil
Energia S.A. LT IDR BB Affirmed BB
LC LT IDR BBB- Affirmed BBB-
Natl LT AAA(bra) Affirmed AAA(bra)
senior unsecured Natl LT AAA(bra)Affirmed AAA(bra)
SANTA CATARINA: Fitch Affirms & Then Withdraws 'BB-' LongTerm IDRs
------------------------------------------------------------------
Fitch Ratings has affirmed the State of Santa Catarina's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-'.
The Rating Outlook is Stable. In addition, Fitch has affirmed Santa
Catarina's Short-Term Foreign and Local Currency IDRs at 'B', and
National Long-Term Ratings at 'AA(bra)'/Stable Outlook and National
Short-Term Rating at 'F1+(bra)'. Santa Catarina's Standalone Credit
Profile (SCP) was assessed at 'bb-'.
All ratings have simultaneously been withdrawn. At the time of the
withdrawal, the Outlooks were Stable.
Fitch has chosen to withdraw the ratings for commercial reasons. It
will no longer provide ratings or analytical coverage of the
affected entities.
KEY RATING DRIVERS
The issuer's key rating drivers are the same as those detailed in
Fitch's rating action commentary "Fitch Affirms State of Santa
Catarina at 'BB-'; Outlook Stable," published Aug. 17, 2022.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Not applicable, as the ratings have been withdrawn.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Not applicable, as the ratings have been withdrawn.
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
----------- ------ -----
Santa Catarina,
State of LT IDR BB- Affirmed BB-
LT IDR WD Withdrawn BB-
ST IDR B Affirmed B
ST IDR WD Withdrawn B
LC LT IDR BB- Affirmed BB-
LC LT IDR WD Withdrawn BB-
LC ST IDR B Affirmed B
LC ST IDR WD Withdrawn B
Natl LT AA(bra) Affirmed AA(bra)
Natl LT WD(bra) Withdrawn AA(bra)
Natl ST F1+(bra)Affirmed F1+(bra)
Natl ST WD(bra) Withdrawn F1+(bra)
=====================
P U E R T O R I C O
=====================
AZURE DEVELOPMENT: Case Summary & One Unsecured Creditor
--------------------------------------------------------
Debtor: Azure Development, Inc.
Condominio Esquire
Calle Vela 2
San Juan, PR 00918
Business Description: Azure owns properties in Luquillo, Puerto
Rico valued at $3.14 million.
Chapter 11 Petition Date: February 17, 2023
Court: United States Bankruptcy Court
District of Puerto Rico
Case No.: 23-00462
Judge: Hon. Enrique S. Lamoutte Inclan
Debtor's Counsel: Charles A. Cuprill, Esq.
CHARLES A. CUPRILL, PSC LAW OFFICES
356 Fortaleza Street (2nd Floor)
San Juan, PR 00901
Tel: 787-977-0515
Email: ccuprill@cuprill.com
Total Assets: $3,142,794
Total Liabilities: $3,246,910
The petition was signed by Jose Ricardo Martinez as
vice-president.
The Debtor listed Doris Maldonado Vallejo as its only unsecured
creditor holding a claim of $16,000.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/PELXGVY/Azure_Development_Inc__prbke-23-00462__0001.0.pdf?mcid=tGE4TAMA
PUERTO RICO: Fiscal Board Files $4.3B PREPA Reorganization Plan
---------------------------------------------------------------
The Financial Oversight and Management Board for Puerto Rico said
on Feb. 9, 2023, that it filed an amended proposed Plan of
Adjustment to restructure the debt of the Puerto Rico Electric
Power Authority (PREPA), including a schedule to repay the reduced
debt.
The Plan proposes to cut PREPA's more than $10 billion of debt and
other claims by almost half, to approximately $5.68 billion. The
Plan would allow PREPA to end its bankruptcy and provide the
financial stability necessary to invest in a modern, resilient, and
reliable energy system essential for the Puerto Rico economy to
grow. The substantially reduced debt would be paid by a hybrid
charge consisting of a flat connection fee and a volumetric charge
based on the amount of PREPA customers' electricity usage that
would be added to the electricity bills.
"This Plan would lower the potential burden on Puerto Rico
residents and businesses more than any agreement the Oversight
Board or the Government had reached with creditors in the past,"
said the Oversight Board’s Chairman David Skeel.
"Every board member is keenly aware that this PREPA legacy charge
is painful for Puerto Rico, its residents, and its business," Skeel
said. "Customers are not to blame for PREPA's bankruptcy. That is
why the Oversight Board continues to be mindful of the effect even
greatly reduced debt payments would have on Puerto Rico's residents
and households when negotiating a Plan that we believe the U.S.
District Court should confirm. PREPA has not been required to pay
its debt while it is in bankruptcy, but there is no legal way to
erase PREPA's liabilities completely. PREPA needs to move on from
this bankruptcy and return its focus to servicing Puerto Rico's
power needs."
The estimated PREPA legacy charge for customers not currently
benefiting from subsidized electricity rates would be, on average,
about $19 a month. The PREPA legacy charge would exclude qualifying
low-income residential customers from the connection fee and kWh
charge for up to 500 kWh per month.
"Almost half of PREPA's roughly 1.4 million residential customers
would not pay any PREPA legacy charge if they consumed less than
500 kilowatt-hours of electricity per month," Skeel said.
"Customers who reduce energy consumption would be less affected."
For non-subsidized residential customers, the proposed PREPA legacy
charge would be:
* A flat $13 per month connection fee.
* 0.75 cents per kilowatt-hour (kWh) for up to 500 kWh
per month of electricity provided by PREPA, and
3 cents per kWh for electricity above 500 kWh per month.
For commercial, industrial, and government customers, the PREPA
legacy proposed charge would be:
* A connection fee of between $16.25 for small business
customers, $20 per month for smaller industrial companies,
and $1,800 per month for large businesses proportional
to their current rate.
* Between 0.97 cents and 3 cents per kWh per month for
electricity provided by PREPA.
The proposed PREPA legacy charge is subject to approval by the
Puerto Rico Energy Bureau (PREB), the independent energy
regulator.
PREB may not implement the PREPA legacy charge the way it is
described in the Plan. PREPA's rates, however, must comply with its
obligations on the reduced debt. The Oversight Board took many
factors and data into consideration to determine the PREPA legacy
charge, and carefully analyzed how much Puerto Rican households pay
for their energy needs as a share of their income. The Oversight
Board also considered the significant risks PREPA faces from
volatile fuel costs, which make up the largest share of customers'
bills, the increased needs for future investments in PREPA's grid
and power generation, and the potential effect of customers
switching to alternative sources of energy in the future.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son
of former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's
PROMESA petition is available at
http://bankrupt.com/misc/17-01578-00001.pdf
On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation
(COFINA) commenced a case under Title III of PROMESA (D.P.R. Case
No. 17-01599). Joint administration has been sought for the Title
III cases.
On May 21, 2017, two more agencies -- Employees Retirement System
of the Government of the Commonwealth of Puerto Rico and Puerto
Rico Highways and Transportation Authority (Case Nos. 17-01685 and
17-01686) -- commenced Title III cases.
U.S. Chief Justice John Roberts named U.S. District Judge Laura
Taylor Swain to preside over the Title III cases.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are onboard as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
TRINIDAD & TOBAGO: Calypsos May Face Extinction
-----------------------------------------------
Michael Mondezie at Trinidad Express reports that there is a
financial crisis facing traditional calypsonians, with reports of
some unable to earn any money during the season as dwindling
patrons and a lack of corporate support place the art form on the
brink of financial ruin.
Veteran calypsonian and educator Chalkdust (Dr Hollis Liverpool),
Chalkie, as he is fondly called in both cultural and academic
circles, has spoken at length on the demise of the calypso product
and its failure to effectively engage the populace, according to
Trinidad Express.
The University of Trinidad and Tobago (UTT) Academy of Arts Senior
Academic Fellow said dwindling patronage, uninterested private
sector investors and a resulting decline in earning potential for
individual calypsonians are all symptoms of a fraternity allergic
to change, the report notes.
"It will take everybody. Everyone has to throw something in the
mortar to fix the cracks. First time in my life I see only six
people in a calypso tent. How yuh go sing to six people? One sit
down there, one sit down quite over there. Changes have to occur,"
Chalkdust lamented, as he revealed his experiences at the Kalypso
Revue tent this year, the report notes.
The nine-time National Calypso Monarch said there are many
calypsonians who to date "have not earned a penny" for Carnival
2023. Calypsonians typically earn a couple thousand dollars a
season for performing in a tent, the report relays. A couple
thousand more is up for grabs as a National Calypso Monarch
semi-finalist and tens of thousands more should one progress to the
Big Yard at the Queen's Park Savannah, Port of Spain, on Dimanche
Gras night, the report notes.
"Most of them will go through the whole season and not get a cent.
They can't even pay the band to do their accompanying music, much
less to make a recording," he revealed, the report says.
Two-time National Calypso Monarch Chuck Gordon (Roderick Gordon)
endorsed Chalkie's perspective that change is needed, but was very
pessimistic about a much-needed new direction being embraced by the
genre's older heads, the report discloses.
"They are stuck in their ways. It's on one level a fear of being
alienated. But, they have to examine the space and see how critical
it is for us to do things differently," Gordon claimed, the report
relays.
Staunch Resistance to Change
Gordon knows first-hand exactly how difficult it can be to bring
change to the century-old institution of calypso, the report
relays. Tasked with managing the Trinbago Unified Calypsonians
Organisation (TUCO) led Kaiso House tent, he engaged theatre
producer Abeo Jackson to create the BarrackHARD experience for
their 2023 presentation, the report notes.
The theatre-calypso hybrid experience received rave reviews from
media following its opening on January 27, the report discloses.
The subsequent week saw an increase in patronage as Gordon said
"new faces" came to the tent, the report notes.
Shockingly, the whole project was scrapped after a few veteran acts
openly opposed the tent's new direction and a more traditional
approach has since been adopted, the report relays.
"The problem is that not everybody is interested in coming and
hearing calypso presented in the traditional manner because there
is a serious risk of being bored. They (TUCO) didn't focus on the
audience experience, they focused on the calypsonians feeling of
being disempowered. The idea was calypso was subordinate to the
theatre and they couldn't reconcile with that," Gordon lamented,
the report relays.
TUCO's interim public relations officer Rondell Donawa, however,
said since Ainsley King took over as the organisation's president,
he has been clamouring for TUCO to be self-sustainable, the report
says.
"We want to be self-sustainable, in terms of our ownership and not
have to rely on government for subventions. We see calypsonians
have passed away broken and we need to help fix that," Donawa told
the Express Business, the report notes.
Despite their best efforts Donawa admitted that too many
calypsonians do not earn a fair wage at Carnival time, the report
says.
"We found in the Carnival season, even if they perform in a tent,
the earnings for many calypsonians are not commensurate with what
they should be earning. It's a catch-22 because then we are faced
with the question of decreasing cast numbers at tents in order to
pay the cast more or increasing numbers so everybody eat little and
live long," Donawa continued, the report discloses.
TUCO is on a drive to help calypsonians find alternative streams of
income for their craft throughout the year, Donawa revealed, the
report notes.
"Through education, partnership with sponsors and other avenues we
want to create a lane for them to continuously earn. There are
also major issues in terms of intellectual property. Persons
monetising from calypsonians' work without the calypsonians
receiving earnings . . . . We have to be honest with ourselves and
realise as an organisation we are about membership and whatever
happened in the past in terms of expenditure that ought to be used
to educate our members to understand how they can now use calypsoes
internationally and understand you cannot just write on current
issues but we have to also write songs that can last eras like the
late Stalin (Leroy Calliste) and Shadow (Winston Bailey) did,"
Donawa said, the report relays.
A 'We And Me' Approach
Rising star Aaron Duncan believes giving the genre global appeal
begins with strong collective and individual promotion.
"We lack promotion, not only calypso, but our whole culture. We not
pushing it as we supposed to. Our artistes need to push and market
ourselves more, so we can get that support. We also need to openly
support youth too. That's what we not doing and that is why we see
it failing. The older heads have to embrace the younger ones and
not resent them but support them because that could one day create
more revenue for you," Duncan reasoned, the report relays.
Duncan said he has been focusing on his own self-promotion in an
attempt to broaden his income streams, the report notes.
"Yes, I have seen it translate into earnings. Now I see everything
as pushing and marketing myself. I call myself an entertainer, I'm
not just a calypsonian or a soca artiste. I want to do all genres .
. . I believe putting the youth on major platforms will ultimately
help calypso. Is a way to make the culture grow. But the youth you
choosing to go on these national and international platforms must
have achieved certain things and have certain qualities," Duncan
added, the report says.
Gordon, meanwhile, questioned if any of it is possible, the report
discloses.
The challenge is the People
Currently the main way we earn is through tents and competitions
and if you have some notoriety you get a couple gigs and that is
dependent on exposure of your song and the quality of your
recording and it is limited in that regard, the report relays.
There are a lot of ideas to make the tent more commercially
relevant but who will buy into them?" Gordon asked in frustration,
the report notes.
Chalkdust suggests there should be incremental changes that rock
the boat less, the report discloses.
"People have an idea of what a tent is like and when you bring
changes they feel like you changing the art form. I doh expect the
calypsonians of old to grasp that idea, but it has to be done. But
it has to be done slowly. Bringing change is a most difficult
thing. We have to take one step at a time, but changes must happen.
If it is done well and with good intention it will eventually be
accepted," Chalkdust concluded, the report adds.
TRINIDAD & TOBAGO: Promoters Hit by Lower Ticket Sales
------------------------------------------------------
Trinidad Express reports that the mother of all carnivals does not
appear to be living up to its billing according to Fete Promoters
who admit that the numbers have been smaller than pre-pandemic
years and not in keeping with the demand expected, coming out of
the lockdown.
According to Paige de Leon the spokesperson for the Promoters
Association of Trinidad and Tobago, while there are some
traditional fetes that attract a large crowd and remained
successful, many of the other parties that are usually well
supported did not see the pre-pandemic numbers, the report notes.
She said, "There are some fetes that are in high demand that did
really well this year as they have always done, but there are also
some traditional fetes that were not as well supported and now that
we are into, I think it is fair we can concede that this is not the
mother of all carnivals from the perspective of the promoter,"
according to Trinidad Express.
De Leon said part of the challenge is the country is coming out of
an economically difficult time and to some people, going to a
party, is a luxury. She posited this is one of the reasons that
there could have been lower than expected attendance at some fetes,
the report relays.
"For some people, they are being a little bit more cautious because
as you know we have come out of a long difficult economic period
and unless people feel assured of their economic future they may
see spending a thousand dollars on a fete as a luxury," suggested
de Leon, the report notes.
Asked if part of the challenge has been the increases in the cost
of fetes which many have pointed out is greater than the headline
inflation numbers, the Promoters Association spokesperson said
while the promoters are not equipped to collect and analyze data
they were sure that the average cost of building out the
infrastructure for a fete had increased from $8 a square foot to
$20 a square foot, the report discloses.
De Leo added that the cost of artistes had gone from $20,000 to
$35,000 not to mention the spiralling costs of food and drinks, the
report says.
"We go to the grocery and we see what has happened with food prices
over the last year and no one has to tell us that the cost of food
has sky-rocketed. Many of these events have food in them and
therefore the price of the tickets must reflect that change." De
Leon told the Express Business in an interview, the report notes.
She insisted that there are promoters who have taken a decision to
take some hits on their own profitability in order to keep fete
prices within the reach of their guests and said if you look at the
nature of events in T&T, they are very detailed and therefore there
is not a lot of room for cutting unless you are prepared to risk
your brand, so it's either the prices go up or fewer offerings,
which is not a real option, the report relays.
De Leon admitted that there appeared to be a growing preference for
morning and breakfast parties but said this is perhaps because of
the price point and the demographic with younger people preferring
to attend events that were cheaper and had a particular experience
to them, the report says.
She said this did not mean that the all inclusive model is dead, as
according to her, Carnival and feteing are also an opportunity for
people to get together and the glamour of an all inclusive will
always have its place in the Carnival, the report discloses.
De Leon did admit there are some who suggest that all inclusive
model is on its way out but she did not share this view, the report
relays.
The spokesperson for the Fete Promoters Association also blamed the
fear of Covid-19 as another major reason for the smaller numbers at
fetes, the report notes.
She said, "There are people who are honestly afraid of going out
and partying and that has had an effect on the numbers at some of
the fetes," the report says.
According to de Leon with Carnival week upon us most fetes are
doing much better than the start of what has been a short season,
the report discloses. She was however worried about the number of
cancellations because of the challenges in getting a flight to
Trinidad and the astronomical costs, the report relays.
She said a short season always leads to a challenge for promoters
because people are coming out of Christmas expenditure but she
argued as a country we have to plan better to ensure we have the
kind of airlift and accommodations required for the festival to be
successfully hosted and grow, the report adds.
*********
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
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Information contained herein is obtained from sources believed to
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balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
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* * * End of Transmission * * *