/raid1/www/Hosts/bankrupt/TCRLA_Public/230308.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
Wednesday, March 8, 2023, Vol. 24, No. 49
Headlines
A R G E N T I N A
ARGENTINA: JPMorgan Sees Economy Facing Prospect of Hard Landing
ARGENTINA: Suspends All Poultry Exports Amid Bird Flu Scare
B R A Z I L
AMERICANAS SA: Fallout Fuels Painful Rout in Brazil Corporate Debt
BRAZIL: Says Sharp 2022 Slowdown Reflects Monetary Tightening
J A M A I C A
DIGICEL GROUP: Fitch Lowers LongTerm Issuer Default Rating to 'C'
DIGICEL GROUP: O'Brien to Lose Control as Firm Plans to Cut Debt
T R I N I D A D A N D T O B A G O
TRINIDAD & TOBAGO: Dip in Ammonia Prices to Register Lower Revenue
TRINIDAD CEMENT: Pay Workers Outstanding Money, OWTU Head Urges
U R U G U A Y
FUCEREPS: S&P Lowers ICR to 'B-', Outlook Negative
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A R G E N T I N A
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ARGENTINA: JPMorgan Sees Economy Facing Prospect of Hard Landing
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Patrick Gillespie at Bloomberg News reports that Buenos Aires Times
relays that Argentina's economy is facing the prospect of a "hard
landing" scenario this year as a crop drought deepens expectations
of a larger downturn, according to a note published by analysts at
JPMorgan Chase & Co.
South America's second-largest economy is forecast to contract 1.7
percent this year versus the bank's previous forecast of a 0.5
percent decline, according to Bloomberg News. That's one of the
most bearish outlooks for Argentina, Bloomberg News notes.
Economists surveyed by the Central Bank in January saw 0.5 percent
growth this year while the government penciled two percent growth
into its annual budget, Bloomberg News relays.
JPMorgan economists Diego Pereira and Lucila Barbeito see
"stagflation entering a new phase with inflation and growth trends
diverging: inflation higher and real growth trending lower,"
according to the note, Bloomberg News discloses.
On top of annual inflation nearing 100 percent, a historic crop
drought is worsening the outlook for key commodity exports that
boost activity, tax revenue and Central Bank reserves, Bloomberg
News notes. Pereira and Barbeito estimate the top three crop
exports - soy, corn and wheat - may fall this year to US$36.6
billion of shipments down from US$51.6 billion in 2022, Bloomberg
News says.
High inflation and worsening harvest expectations are fuelling what
the economists call a "recessionary environment," Bloomberg News
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.
ARGENTINA: Suspends All Poultry Exports Amid Bird Flu Scare
-----------------------------------------------------------
Buenos Aires Times reports that Argentina has automatically
suspended all poultry exports after confirming its first positive
case of highly pathogenic avian influenza (HPAI), or bird flu, in
industrial birds at a broiler farm in the southern province of Rio
Negro.
The news, confirmed by health officials from the National Agri-Food
Health and Quality Service (Senasa) body, means that the country
temporarily loses its disease-free status and automatically
suspends the export of poultry products, in compliance with
international standards, according to Buenos Aires Times.
This is the first case detected at a broiler chicken farm in the
country, Agriculture, Livestock & Fisheries Minister Juan Jose
Bahillo said in a post on Twitter, the report notes.
However, poultry production for consumption within Argentina will
continue normally, government officials said, as HPAI is not
transmitted through the consumption of poultry meat and eggs, the
report discloses.
Industrial farms that usually export their products will be able to
sell their products on the domestic market while the international
suspension persists, the report relays.
"Our poultry products continue to be safe for Argentines. The
suspension of exports responds to the requirements of international
regulations," said Bahillo, who said containment measures are being
taken to avoid the spread of the virus, the report notes.
Confirmation of the case, coming at a time of economic crisis and
runaway inflation, is another blow to President Alberto Fernandez's
government, the report says. Argentina exported more than US$380
million in poultry products last year to more than 56 countries,
though most national production is sold on the domestic market, the
report relays.
Health and sanitary officials in Argentina have been closely
watching the progression of bird flu, which is spreading across
South America. Their biggest concern has been the potential for the
virus to reach industrial farms and lead to the halting of exports,
the report notes.
To date, Senasa officials have confirmed at least 25 cases
nationwide, with 21 in backyard birds and three in wild birds (the
last case being at the broiler farm in Rio Negro), the report
discloses.
Cases have been spread across the country, with 13 of the
confirmed cases in Cordoba, four in Buenos Aires Province, two in
Rio Negro, two in Santa Fe, one in Jujuy, one in Neuquen, one in
San Luis and one in Salta, the report says.
The commercial positive case came from a broiler chicken farm
located in the town of Mainque, Rio Negro Province, an area of "low
poultry density," according to officials, the report notes.
Senasa has ordered the farm's bosses to comply with the
corresponding containment measures detailed in the Avian Influenza
Contingency Manual, in order to avoid the spread of the disease in
other establishments producing poultry destined to the commercial
circuit, the report relays.
At the same time, following international protocols, Senasa
officials will officially communicate the news to the World
Organisation for Animal Health (OIE), the report relays.
Senasa authorities, professionals and technicians are already
working to achieve the prompt reinstatement of the country's
disease-free status and the resumption of poultry exports, the body
said in a statement, 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.
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B R A Z I L
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AMERICANAS SA: Fallout Fuels Painful Rout in Brazil Corporate Debt
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globalinsolvency.com, citing Bloomberg News, reports that Brazilian
corporate bonds got hammered in February after the implosion of
Americanas SA, further weakening the outlook for firms already
wrestling with high borrowing costs.
Six of the 10 worst-performing issuers in Latin America are
Brazilian companies, data compiled by Bloomberg show.
Dollar-denominated notes from Gol, Atento and Light lost at least a
quarter of their value, while Azul, Stone and BRF bonds delivered
losses of between 10% and 15%, according to globalinsolvency.com.
The pile of Brazil corporate debt trading at distressed levels -
which yield an average of at least 10 percentage points more than
US Treasuries - climbed to $11.9 billion, according to data
compiled by Bloomberg.
That compares to $9.6 billion at the end of last year, the report
notes.
The default of retailer Americanas temporarily halted the sales of
local bonds and led to widening spreads, with banks striking a more
cautious tone on the pace of credit origination, the report relays.
The Rio de Janeiro-based company filed for bankruptcy protection on
more than 42 billion reais of debt in late January, the report
discloses.
Oi SA, which emerged from one of the largest corporate
restructurings in Brazil's history just last year, filed for
emergency protection from creditors earlier, the report says. The
telecom operator is expected to enter bankruptcy protection later,
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.
BRAZIL: Says Sharp 2022 Slowdown Reflects Monetary Tightening
-------------------------------------------------------------
globalinsolvency.com, citing Reuters, reports that Brazil's
Secretariat of Economic Policy (SPE) said that the sharp 2022
economic slowdown is mainly due to reduced liquidity in the
external environment and the contractionary cycle of monetary
policy in the country.
In a statement about the GDP performance, which rose 2.9% last year
compared to 5% in 2021, SPE said that the country's high benchmark
interest rate worsens the conditions of both bank and non-bank
credit, posing a risk to activity this year by making it difficult
for companies to roll over debt, according to
globalinsolvency.com.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022
Brazilian general election. He was sworn in on January 1, 2023, as
the 39th president of Brazil, succeeding Jair Bolsonaro.
As recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings, in December 2022, affirmed Brazil's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook. The ratings are constrained by high
government indebtedness, a rigid fiscal structure, weak economic
growth potential, and a record of governability challenges that
have hampered efforts to address these fiscal and economic issues
and clouded policy predictability. The Stable Outlook reflects
Fitch's expectation that growth will slow in the coming year and
that recent fiscal improvement will erode under a new government,
but within a margin consistent with the current rating, and from a
better starting point than previously expected. Uncertainty is
elevated regarding the plans of the incoming government and the
extent to which these could ease or aggravate fiscal and economic
challenges. However, Fitch does not expect policies that
jeopardize broad economic stability.
Standard & Poor's affirmed its 'BB-/B' long- and short-term
foreign and local currency sovereign credit ratings on Brazil, and
the outlook remains stable (June 2022). The stable outlook
reflects S&P's base-case assumption that Brazil will maintain its
fiscal anchors over the next two years despite an increasing
interest burden, preventing significant fiscal slippage and
limiting the rise in its already high debt burden.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
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J A M A I C A
=============
DIGICEL GROUP: Fitch Lowers LongTerm Issuer Default Rating to 'C'
-----------------------------------------------------------------
Fitch Ratings has downgraded the Long-Term Issuer Default Rating
(IDR) of Digicel Group Holdings Limited (DGHL) to 'C' from 'CC' as
well as the IDR of Digicel Limited (DL) to 'C' from 'CC'. Fitch has
also downgraded, in a related rating action, the IDR of Digicel
International Finance Limited (DIFL) to 'C' from 'CC'.
These downgrades reflect DL's entrance into a grace period for
financial payments related to its notes due on March 1, 2023, as
well the announcement by the company that it has reached an
agreement in principal for a comprehensive restructuring of
multiple debt obligations. The ratings will be downgraded to 'RD'
(Restricted Default) if in Fitch's opinion DGHL or any of its
subsidiaries experiences an uncured payment default on any material
financial obligation, or if they successfully enter into and
complete an exchange offering. Subsequently, Fitch will re-rate the
group's IDRs to a level that is consistent with their post-exchange
capital structure and risk profile.
KEY RATING DRIVERS
Entering Grace Period: DL entered into a grace period under the
amended indenture of its 2023 notes on March 2, 2023. The grace
period can be extended up to 90 days if the company enters into a
restructuring support agreement with holders of more than 50% in
aggregate principal amount of the outstanding notes during the
30-day period.
Distressed Debt Exchange: DL and subsidiaries reached an
in-principle agreement on key terms of a restructuring with a
material group of bond holders throughout the group's capital
structure for a proposed comprehensive restructuring of debt at
multiple levels in the capital structure. The proposal seeks to
reduce debt by USD1.8 billion primarily by converting the USD925
million of DL 2023 notes and the USD250 million of DIFL
subordinated 2026 into equity stakes in DL. It would also provide
holders of the USD208 million DGHL subordinated convertible notes
and the USD432 million DGHL unsecured 2025 notes with partial cash
payments.
Rating Equalization: Fitch has applied an analytical overlay to its
rating approach to DIFL, DL and DGHL under its Parent and
Subsidiary Linkage Rating Criteria as debt at all three entities is
being impacted by the amount of debt falling due at DL and DIFL
during 2023 and 2024. This has resulted in a proposed write down of
a significant amount of debt at DL and DGHL plus the pushing back
of the maturities of senior secured debt and term loans at DIFL.
Varying Recovery Prospects: Fitch forecasts recovery rates
commensurate with 'RR1' for the DIFL secured notes and term loan B
due to their position in the capital structure and first liens.
DIFL's senior unsecured creditors are forecast to have recoveries
of 'RR3'. All of these debt instrument recovery ratings are capped
at 'RR4', resulting in ratings equal to the IDRs, in accordance
with Fitch's Country-Specific Treatment of Recovery Ratings
Criteria that constrains the upward notching of instruments based
on concerns about the rule of law, insolvency regimes and creditor
protections in a jurisdiction. The ratings of the DIFL subordinated
notes reflect poor recovery prospects, consistent with an 'RR6', as
do the subordinated DGHL notes. The proposed restructuring of the
2025 DGHL unsecured notes indicate an expected recovery consistent
with an 'RR5'.
ESG - Governance Structure: Digicel's decision to restructure debt
multiple times remains a constraint on the ratings and its
corporate governance is deemed weak.
ESG - Group Structure: Digicel's incorporation status in dozens of
countries and extensive use of contractual features of debt results
in a complex group structure that weakens its corporate governance
and the group's consolidated credit profile.
DERIVATION SUMMARY
Digicel's IDRs reflect the increasing likelihood that the group
will enter a debt restructuring with creditors.
KEY ASSUMPTIONS
The recovery analysis assumes that DGHL would be reorganized as a
going concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
The going concern EBITDA reflects Fitch's estimates of mid-cycle
EBITDA that is achievable in the medium term, given the company's
position primarily in duopoly markets and its growth prospects
under a scenario of only gradual currency depreciation. This going
concern EBITDA of USD550 million is approximately equal to Fitch's
projection for fiscal 2024.
Fitch uses an enterprise value/EBITDA multiple of 5.0x, reflecting
the company's long-term prospects and good market shares in mostly
duopoly markets amid a scenario of financial distress.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade
- A ratings upgrade is unlikely prior to a debt restructuring.
Factors that could, individually or collectively, lead to negative
rating action/downgrade
- An uncured payment default on any material financial obligation
would lead to a downgrade to 'RD';
- The completion of an exchange offer will lead to a downgrade of
the Long-Term IDRs to 'RD'. The IDRs would be subsequently
upgraded
to a rating level reflecting the post-DDE credit profile.
- A filing for bankruptcy protection would lead to a downgrade to
'D'.
LIQUIDITY AND DEBT STRUCTURE
Insufficient Liquidity: DL has entered into a grace period on
USD925 million of note maturities due March 1, 2023. The subsidiary
has almost no cash. DIFL faces USD2.2 billion in secured debt
maturities in May 2024 and is projected to generate neutral to
negative FCF in fiscal year 2024 and holds USD109 million of cash.
Holding company DGHL's standalone cash was USD315 million as of
December 2022.
DGHL's consolidated financial debt as of December 2022 was
approximately USD4.4 billion, of which USD2.8 billion was at DIFL,
USD1.0 billion at DL and USD600 million at DGHL. In addition, about
USD100 million of interest has accrued. DGHL's debt includes USD215
million of payment-in-kind perpetual convertible notes.
Approximately USD1.2 billion of DIFL's USD2.2 billion of debt
maturing in 2024 is fixed-rate debt at risk of resetting at higher
rates.
ISSUER PROFILE
Digicel is a diversified telecom operator that provides mobile and
fixed-line services to consumers and businesses in the Caribbean.
ESG CONSIDERATIONS
Digicel Group Holdings Limited has an ESG Relevance Score of '5'
for Group Structure due to its complex group structure and
incorporation status in dozens of countries, which has a negative
impact on the credit profile, and is highly relevant to the rating,
resulting in an implicitly lower rating.
Digicel Group Holdings Limited has an ESG RS of '5' for Governance
Structure due to its willingness to restructure debt multiple
times, which has a negative impact on the credit profile, and is
highly relevant to the rating, resulting in an implicitly lower
rating.
Digicel Group Holdings Limited has an ESG RS of '4' for Exposure to
Environmental Impacts due to its presence in a hurricane prone
region, which has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
Digicel Group Holdings Limited has an ESG RS of '4' for Financial
Transparency due to the company's relatively opaque financial
strategy, which has a negative impact on the credit profile, and is
relevant to the ratings 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
----------- ------ -------- -----
Digicel
International
Finance Limited LT IDR C Downgrade CC
senior
unsecured LT C Downgrade RR4 CC
junior
subordinated LT C Affirmed RR6 C
senior secured LT C Downgrade RR4 CC
Digicel Group
Holdings Limited LT IDR C Downgrade CC
senior
unsecured LT C Affirmed RR5 C
subordinated LT C Affirmed RR6 C
Digicel Limited LT IDR C Downgrade CC
DIGICEL GROUP: O'Brien to Lose Control as Firm Plans to Cut Debt
----------------------------------------------------------------
Trinidad Express reports that Irish billionaire Denis O'Brien is
set to lose control of telecoms giant Digicel following an
overnight deal with bondholders to reduce the group's debt.
The Irish Times and other international news sites reported that
the agreement will see holders of around 50 per cent of the entire
capital of the business agree to a reduction in the company's total
debt of US$1.8 billion, according to Trinidad Express.
The result of the transaction will be that O'Brien will become a
minority shareholder in the business, sources close to the deal
confirmed, the report notes.
However, O'Brien will remain one of Digicel's largest single
shareholders and an actively involved director of the business,
Trinidad Express discloses.
In a statement, Digicel Group said it would "comprehensively
addresses the company's debt and ensures business continuity and
uninterrupted service to customers," the report relays.
Since shortly after the completion of the sale of Digicel Pacific
in July 2022, the company has been actively engaged with key
creditors, the report notes.
"While parties initially sought solely to extend the maturity of
the DL 6.750 per cent Senior Notes due March 1, 2023, the
deteriorating and unprecedented situation in Haiti since September
2022 led the company to shift its focus to a more holistic solution
for the company's capital structure. Accordingly, discussions have
since focused on a comprehensive transaction," the company stated,
the report says.
Digicel group further noted that O'Brien has endorsed the proposed
transaction as a positive outcome for the business, the report
relays.
O'Brien will remain actively involved in the business as a director
and retain an equity interest in the recapitalised business, the
report notes.
In 2020, the Digicel group brokered a deal with debt holders for a
plan to reduce the burden through a write-down of US$1.7 billion of
the firm's then US$7 billion debt, the report recalls.
The company operates in 25 markets across the Caribbean and Central
America, including Trinidad and Tobago.
About Digicel Group
Digicel Group is a mobile phone network provider operating in 33
markets across the Caribbean, Central America, and Oceania
regions.
The company is owned by the Irish billionaire Denis O'Brien, is
incorporated in Bermuda, and based in Jamaica.
As reported in the Troubled Company Reporter-Latin America in
April
2020, Moody's Investors Service downgraded Digicel Group Limited's
probability of default rating to Caa3-PD from Caa2-PD. At the same
time, Moody's downgraded the senior secured rating of Digicel
International Finance Limited to Caa1 from B3. All other ratings
within the group remain unchanged. The outlook is negative.
Also in April 2020, the TCR-LA reported that Fitch Ratings has
downgraded Digicel Limited to 'C' from 'CCC', and its outstanding
debt instruments, including the 2021 and 2023 notes to 'C'/'RR4'
from 'CCC'/'RR4'. Fitch has also downgraded Digicel International
Finance Limited to 'CCC+' from 'B-'/Negative, and its outstanding
debt instruments, including the 2024 notes and the 2025 credit
facility, to 'CCC+'/'RR4' from 'B-'/'RR4'. Fitch has removed the
Negative Rating Outlook from DIFL.
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T R I N I D A D A N D T O B A G O
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TRINIDAD & TOBAGO: Dip in Ammonia Prices to Register Lower Revenue
------------------------------------------------------------------
Curtis Williams at Trinidad Express reports that there is more bad
news for Finance Minister Colm Imbert and the wider economy as
ammonia prices have been falling globally and therefore lower
revenue will accrue to the Government and the National Gas Company
(NGC).
Within recent weeks, there has been a steep and steady drop in the
price of petrochemicals, according to Trinidad Express. Alone the
fall was US$90 a tonne or close to a 15 per cent decline, the
report notes. There are some traders who are even suggesting that
the Tampa settlement which guides the price T&T will get for its
ammonia could cascade by as much as 25 per cent or US$200 per
metric tonne(t), the report discloses.
The lower ammonia prices follow on the free will of Natural Gas
Prices at the Henry Hub and softer oil prices for both West Texas
Intermediate (WTI) and Brent crude oil, the report says.
It means the Government is being hit all around with lower
commodity prices and while according to the Central Bank, the Keith
Rowley administration was able to achieve its revenues in the first
quarter of the financial year, the second quarter has seen lower
prices, the report relays.
Finance Minister Colm Imbert is on record as saying the higher
revenues received by the Government that led to both a budget
surplus in 2022 and growth after seven years of decline was
significantly helped by revenue from the petrochemical sector, the
report discloses.
Imbert told the Lower House last year that the increase in
government revenue for the first six months of the fiscal year was
due to higher than anticipated receipts of taxes upon incomes and
profits of $3.2 billion, the report says.
"If we drill into the figures what we find is that the good
performance on taxes on incomes and profits was due to higher than
projected receipts collected from other companies and that category
includes the petrochemical companies which are proving to be a
significant, let's call it a life jacket for T&T, due to the
considerably increased prices of petrochemicals," Imbert said, the
report notes.
He added, "For those of us who monitor these things one would see
that the prices of petrochemicals, ammonia, methanol, urea, etc
have doubled, tripled and quadrupled over the last couple of years
and the taxes from the petchem companies is a direct correlation
with the prices of the end product, the petrochemicals, the
methanol and so on. So we have had a significant boost from the
petchem sector," the report relays.
US ammonia prices increased from US$487 per tonne in 2020 to US$746
per tonne in 2021, increasing US$259 per tonne, or a 53 per cent
increase, the report says.
The price for ammonia in the US market then went to over US$1,400 a
tonne last year, the report notes. It is now less than half that
price, the report dicloses.
Argus Media is reporting general declines in ammonia prices in all
regions.
In its February 23 bulletin it said, "Prices continue to correct
lower across all regions, pressured by extremely weak spot demand,
full storage tanks, and steady supply options globally," the report
relays.
It noted that the key benchmarks have been steadily falling for the
past six months, as the market continues to rebalance following
several supply shocks in 2022, the report says.
It added, "But prices are now starting to register steep weekly
drops in an attempt to reinvigorate buying interest," the report
relays.
It noted that current market conditions suggest it is not a
question of the price at the moment, but more a case of finding an
import hub that has free capacity, the report notes.
In the US, sentiment around the upcoming Tampa settlement is
bearish with estimates of the contract ranging from US$600-675/t
while traders say that a $200/t to the February settlement is not
out of the question, the report notes.
With the present fall in prices, Argus is suggesting it may need
some plants globally to come offline to ensure that the prices
stabilise, the report relays.
Argus analysis of the market is in sync with that of S&P's Ferticon
which suggests that the ammonia market in and around Europe remains
at a standstill, with the fertiliser season off to a disastrous
start, clarity on nitrates fertiliser requirements in the region
still lacking, and guidance is pending from Tampa, where a
settlement between Yara and Mosaic for deliveries in March is due,
the report says.
It noted, "The eyes of the market are fixed firmly on Tampa
currently, with a significant decrease on the $790 cfr agreed for
February broadly expected. It is widely anticipated that Yara and
Mosaic will settle at around $600 CFR for March, with spectators
citing poor demand for ammonia and slow nitrates fertiliser uptake
in Europe, a lesser requirement from Morocco, and lackluster demand
in the United States," the report discloses.
Ferticon has reported that the cost of natural gas in Europe has
also slipped and the front month price is currently averaging
around EUR53/MWh for February, suggesting a total theoretical cost
of production of just below US$600, the report notes.
"The import market for ammonia in NW Europe is yet to reach such
depths, but the pending settlement for March should set the stage
for a further significant correction in and around Europe,"
Ferticon noted, the report relays.
Argus revealed that T&T exported a total of 330,000 t of ammonia
and its spot prices are down, the report says.
"FOB (Freight on Board) prices face steep corrections as suppliers
look to keep up with falling global sentiment. Spot prices are down
nearly $60/t on the week to US$650-675/t fob, and could face
further corrections once Tampa price is confirmed," Argus reported,
the report discloses.
Mr. Imbert is also facing headwinds on constrained natural gas and
crude oil production and as reported in the Express Business is
also dealing with tax evasion by some businesses that are not
paying their Value Added Taxes due to the state, the report adds.
TRINIDAD CEMENT: Pay Workers Outstanding Money, OWTU Head Urges
---------------------------------------------------------------
Trinidad Express reports that President-General of the Oilfields
Workers' Trade Union (OWTU) Ancel Roget is calling for workers at
the Trinidad Cement Ltd (TCL) to be paid outstanding monies in
relation to collective agreements dated back to 2015.
Should this continue to be unpaid, the workers will continue to
protest and strike action is also not off the cards, according to
Trinidad Express.
Speaking outside the TCL compound in Claxton Bay during protest
action by retirees and present employees, Roget said that the
outstanding monies include the Cost of Living Allowance (COLA) and
profit sharing over three collective bargaining periods from 2015
to 2024, the report notes.
Roget said, "Those collective agreements were negotiated on the
basis of historic data . . . experience . . . input of workers and
their union. On the basis of collective negotiation, we would have
registered collective agreements with terms and conditions," he
said as he called for these to be respected, the report notes.
He said the retirees were not being paid the correct pensions and
COLA, the report discloses. Roget also claimed that, through the
company, the medical plan is in jeopardy and alleged that the
company has been retrenching permanent workers and bringing other
workers on contract, the report says.
In light of the death of employee Gavin Ramoutar on the job site at
the Mayo branch last November, Roget called for a safe working
environment, the report relays.
He said all these issues have been reported to the relevant
authorities, the report notes.
Asked about the response received thus far from the company, Roget
said that they are being told to settle the current collective
agreement, the report relays. "They want us to accept some sort of
minimal settlement for the current period before they pay what is
due to the workers. We will have none of that," the report notes.
Roget added that the union is prepared to sit down and negotiate
and ensure that a fair settlement is reached where both the company
and the workers win, the report discloses.
Cemex, which is headquartered in Mexico, is the parent company of
TCL.
He added, "We intend to have industrial peace, we intend to have
the highest level of productivity, we intend to ensure that the
production continues smoothly, indeed, we intend to ensure that it
is increased but we do not intend to continue with the disrespect
coming from both the foreign and the local Cemex management . . .
We are not prepared to be held at ransom for provisions of the
collective agreement that have gone, that which workers have
already worked for … This protest is the start of a number of
protests, the dimensions of which we are not going to say but which
dimensions are going to continue until we get our just due," the
report relays.
He said, "Sometime in 2012, out of the frustration to delay to
settle the negotiation, we took strike action here at TCL and that
is not off the cards, it is not off the table because where workers
are exploited, wherever workers are denied their just due, workers
have all right to take action in their own defence and therefore
this is just a call, a clarion call, a collective call here, that
we don't want confrontation, we want productivity, we want
production but we also want justice," the report notes
The Express reached out to the company but was told that it has "no
comment at this time".
=============
U R U G U A Y
=============
FUCEREPS: S&P Lowers ICR to 'B-', Outlook Negative
--------------------------------------------------
S&P Global Ratings downgraded Cooperativa de Ahorro y Credito
Fucereps (Fucerep) to 'B-' from 'B' on the global scale and to
'uyBB-' from 'uyBB+' on the national scale following its downward
revision of its stand-alone credit profile (SACP) to 'b-' from 'b'.
The outlook on both global and national scale ratings is negative.
Additionally, S&P lowered its issue-level rating on Fucerep's
hybrid notes to 'uyB' from 'uyB+'.
Fucerep's net losses amounted to 98 million Uruguayan pesos (UYU)
in 2022, wider than the UYU37 million loss in 2021, only partly
offset by members' contributions. As a result, Fucerep's RAC ratio
decreased to 10.3% in 2022 from 14.1% in 2021, while its regulatory
capital ratio fell to 13.1% from 19.0%.
S&P said, "We expect Fucerep's RAC to average 9.5% and its
regulatory capital ratio to be above 13% in the next two years. Our
base-case scenario assumes narrower losses thanks to higher margins
due to repricing of loans to riskier segments. However, the cost of
risk will remain higher than historical levels, given the risk
nature of Fucerep's portfolio and the write-down of bad loans. Our
projections also incorporate capital infusions of about UYU33
million per year in 2023-2024, consisting of members' net
contributions."
This issuance is part of the cooperative's regulatory capital,
representing only 2% as of December 2022, but it can't absorb
losses on a going concern basis. The issuance will mature on June
29, 2023, and we expect Fucerep to meet its financial commitments
in the next 12-24 months.
S&P said, "Our assessment of Fucerep's risk position reflects its
higher credit risk because of its consumer and SME lending
segments. In 2022, Fucerep's asset quality metrics deteriorated
with nonperforming loans (NPLs; loans more than 60 days past due)
rising to 22% from 13% in 2021, while the cost of risk increased to
11% from 5% for the same period. For the next 12 months, we expect
the nonperforming loans to remain at 21%-24%, given the charge-off
of overdue loans in the SME portfolio, including loans to
cooperatives, will take time to resolve, but fully covered by
reserves. In addition, the lender will maintain its exposure to
riskier retail clients. We will continue to monitor the trajectory
of Fucerep's loans without payroll deduction."
ESG factors have no material influence on S&P's credit rating
analysis of Fucerep.
ESG credit indicators: E-2, S-2, G-2
*********
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
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Chapman, Editors.
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